| Related Party Transactions |
Note 16 – Related Party Transactions Related party transactions included the following: | ● | The Physician LLCs employ the doctors who work in our hospitals. We have no direct ownership interest in these entities, but they are owned and, in some instances, controlled by related parties including our CEO, Dr. Thomas Vo. The Physician LLCs are consolidated by the Company as VIEs because they do not have significant equity at risk, and we have historically provided support to them in the event of cash shortages and been the primary beneficiary of their services. |
The Physician LLCs had outstanding obligations to their member owners, who are also Company stockholders, totaling less than $0.1 million at March 31, 2025 and $0.8 million at December 31, 2024 reported within accounts payable – related party in our unaudited condensed consolidated balance sheets. Most of our hospital division facilities are leased from real estate entities which are owned by related parties. These leases are typically on a triple net basis where our hospital division is responsible for all operating costs, repairs and taxes on the facilities. Our obligations under these leases are presented in Note 8 – Leases. During the three months ended March 31, 2025 and 2024, we made cash payments for these lease obligations totaling $6.1 million and $4.7 million, respectively. | ● | We consolidate Real Estate Entities as VIEs when they do not have sufficient equity at risk and our hospital entities are guarantors or co-borrowers under their outstanding mortgage loans. The consolidated Real Estate Entities have mortgage loans payable to third parties which are collateralized by the land and buildings. We have no direct ownership interest in these entities, but they are owned and, in some instances, controlled by related parties including our CEO. As of March 31, 2025, two Real Estate Entities continue to be consolidated in our financial statements. |
| ● | Accounts receivable – related party included $4.3 million at both March 31, 2025 and December 31, 2024 due from noncontrolling interest owners of consolidated ER Entities. |
| ● | Micro Hospital Holding LLC, an affiliate controlled by our CEO, and 2GT PLLC, an affiliate controlled by a physician partner, made advances to one of our hospital facilities, SE Texas ER. For Micro Hospital Holding LLC, these advances totaled $1.4 million at both March 31, 2025 and December 31, 2024. For 2GT PLLC, these advances totaled $1.2 million and zero at March 31, 2025 and December 31, 2024, respectively. These amounts are reported as accounts payable – related party in our unaudited condensed consolidated balance sheets. The advances have no stated maturity and bear no interest. |
| ● | Accounts payable – related party in our unaudited condensed consolidated balance sheets included $0.3 million at March 31, 2025 and zero at December 31, 2024 for reimbursement of expenses incurred on our behalf. |
In addition, we have outstanding obligations of contributions for facilities currently under construction totaling $1.9 million and $1.6 million at March 31, 2025 and December 31, 2024, respectively, reported within accounts payable-related party in our unaudited condensed consolidated balance sheets. | ● | We provided managerial services to emergency centers owned and, in some instances, controlled by related parties including an entity controlled by our CEO. In the three months ended March 31, 2025 and 2024, we did not recognize any revenue for these services. |
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