Apollo Medical Holdings, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Stock Based Compensation

Stock Based Compensation

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

The following table summarizes the stock-based compensation expense recognized under all of the Company’s stock plans for the three and nine months ended September 30, 2021 and 2020, and associated with the issuance of restricted shares of common stock and vesting of stock options, which are included in general and administrative expenses in the accompanying consolidated statements of operations (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Stock options	$	602	$	298	$	1,794	$	1,270
Restricted stock awards	818		350		2,528		1,288

Total share-based compensation expense	$	1,420	$	648	$	4,322	$	2,558

Unrecognized compensation expense related to total share-based payments outstanding as of September 30, 2021, was $7.4 million.

Options

The Company’s outstanding stock options consisted of the following:


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in thousands)
Options outstanding at January 1, 2021	725,864	$	13.25	3.75	$	3,400
Options granted	24,437	23.24		—	—
Options exercised	(40,000)	5.20		—	2,800
Options forfeited	(9,826)	3.89		—	—

Options outstanding at September 30, 2021	700,475	$	14.18	3.18	$	53,800

Options exercisable at September 30, 2021	534,638	$	9.71	2.24	$	41,900

During the nine months ended September 30, 2021, options were exercised for 40,000 shares of the Company’s common stock, resulting in proceeds of $0.2 million. During the nine months ended September 30, 2020, options were exercised for 120,000 shares of the Company’s common stock, resulting in proceeds of approximately $0.3 million.

During the nine months ended September 30, 2021, the Company granted 24,437 stock options with a vesting period of two years to certain ApolloMed executives with an exercise price of $23.24, which were recognized at fair value, as determined using the Black-Scholes option pricing model and the following assumptions:


September 30, 2021	Executives
Expected term	3.5 years
Expected volatility	81.10		%
Risk-free interest rate	0.19		%
Market value of common stock	$	12.86
Annual dividend yield	—		%
Forfeiture rate	—		%

Restricted Stock Awards

The Company grants restricted stock awards to officers and employees which are earned based on service conditions. The grant date fair value of the restricted stock awards is that day’s closing market price of the Company’s common stock. During the nine months ended September 30, 2021, the Company granted restricted stock awards totaling 159,267 shares with a weighted average grant date fair value of $28.24. The grant date fair value of the restricted stock was $4.5 million and will be recognized on a straight-line basis over the awards’ vesting period of one to three years.

Warrants

The Company’s outstanding warrants consisted of the following:


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in thousands)
Warrants outstanding at January 1, 2021	1,878,126	10.39		1.63	14,800
Warrants granted	—	—		—	—
Warrants exercised	(624,760)	10.23		—	20,618
Warrants expired/forfeited	(17,803)	9.72		—	—

Warrants outstanding at September 30, 2021	1,235,563	$	10.49	1.19	99,500


Exercise Price Per Share		Warrants Outstanding	Weighted Average Remaining Contractual Life	Warrants Exercisable	Weighted Average Exercise Price Per Share
$	10.00	635,428	1.19	635,428	$	10.00
11.00		600,135	1.19	600,135	$	11.00

$ 10.00 – 11.00		1,235,563	1.19	1,235,563	$	10.49

During the nine months ended September 30, 2021 and 2020, common stock warrants were exercised for 624,760 and 800,709 shares of the Company’s common stock, respectively, which resulted in proceeds of approximately $6.4 million and $6.2 million, respectively. The exercise price ranged from $9.00 to $11.00 per share for the exercises during the nine months ended September 30, 2021 and 2020, respectively.