Summary of Significant Accounting Policies (Policies) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies | |||||||||||||||||||||||||||||||||||||||||||
| Basis of presentation | Basis of presentation. These unaudited condensed financial statements present the Company’s consolidated financial condition and results of operations including those of majority-owned subsidiaries and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. The hospital division includes the Company’s healthcare billing and collections organization and hospital entities. In addition, the Company has financial and operating relationships with multiple professional entities (the “Physician LLCs”) and real estate entities (the “Real Estate Entities”). The Physician LLCs employ the physicians who provide services at the Company’s hospitals. These Physician LLCs are consolidated by the Company as VIEs because they do not have sufficient equity at risk to finance their activities independently. The Company is considered the primary beneficiary of these entities because (i) it has the power to direct the activities that most significantly affect their economic performance through its contractuals and operational oversight, and (ii) it has the obligation to absorb losses and the right to receive benefits that could be significant, as evidenced by the Company’s historical practice of providing financial support during periods of cash shortfall and receiving the benefit of services. The Real Estate Entities own the land and buildings used by the Company’s hospital entities and lease these facilities to the Company. These entities have mortgage loans payable to third parties which are collateralized by the land and buildings. The Company consolidates certain Real Estate Entities as VIEs when the Company’s hospital entities are guarantors or co-borrowers under the related mortgage loans. In such cases, the Company is considered the primary beneficiary because it has the power to direct the entities’ most significant activities and has the obligation to absorb losses and the right to receive benefits that could be significant to the Real Estate Entities. While the Company does not hold any direct equity ownership in the consolidated Physician LLCs or Real Estate Entities, it is deemed to have an indirect economic interest through its contractual relationships with intermediary entities such as ER LLCs, which provide operational and functional support to the VIEs. As a result, 100% of the equity in these VIEs is reflected as noncontrolling interest in the Company’s unaudited condensed consolidated balance sheets and statements of operations. Certain of the Physician LLCs and Real Estate Entities are owned in part and, in some cases, controlled by related parties, including members of the Company’s executive management team. The population health management division includes our management services organization. Additionally, Associated Hispanic Physicians of So. California (“AHISP”), an independent physician association (“IPA”) entity not owned by the Company, is consolidated as a VIE of the Company’s wholly-owned subsidiary AHP Health Management Services (“AHP”). AHP is deemed the primary beneficiary of AHISP because it has the power to direct the significant activities of AHISP through a comprehensive management services agreement and has the right to receive substantially all of the economic benefits from its operations. All significant intercompany balances and transactions have been eliminated in consolidation. |
||||||||||||||||||||||||||||||||||||||||||
| Interim financial statements | Interim financial statements. These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). The unaudited condensed consolidated financial statements include all material adjustments of a normal recurring nature that, in the opinion of management, are necessary for a fair presentation of the results of operations for the interim periods presented. These interim financial statements should be read together with the consolidated financial statements and notes thereto included in our audited financial statements for the year ended December 31, 2024. |
||||||||||||||||||||||||||||||||||||||||||
| Use of estimates | Use of estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include (i) estimates of net revenue and accounts receivable, (ii) fair value of acquired assets and liabilities in business combinations and (iii) impairment of long-lived assets and goodwill. Actual results could differ from those estimates. During the year ended December 31, 2024, we effected a change in estimate for estimates of net revenue and accounts receivable. |
||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | Cash and cash equivalents. The Company considers all highly liquid investments with an original maturity of three months or less to be cash and cash equivalents. The Company has cash amounts, that were at times material, held in covered banking institutions in excess of the insured amounts, but does not deem the risk of loss to be likely. The following is a summary of cash, cash equivalents and restricted cash as of March 31, 2025 and December 31, 2024 (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||
| Segment reporting | Segment reporting. A public company is required to report descriptive information about its reportable operating segments. Operating segments, as defined, are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Aggregation of similar operating segments into a single reportable operating segment is permitted if the businesses have similar economic characteristics and meet established criteria. The Company operates three reportable segments – the hospital division, the population health management division and the real estate division. The real estate division is comprised of the Real Estate Entities. Refer to Note 15 – Segment Information for information on the Company’s segments. | ||||||||||||||||||||||||||||||||||||||||||
| Reclassifications | Reclassifications. Financial statements presented for prior periods include reclassifications between common stock and additional paid-in capital that were made to conform to the current year presentation. The reclassifications have no effect on prior period results. |
||||||||||||||||||||||||||||||||||||||||||
| Recent accounting pronouncements - issued, not yet adopted and adopted | Recent accounting pronouncements – issued, not yet adopted In December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-09 – Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. The update is effective for annual periods beginning after December 15, 2024. We are assessing the potential impact of this update. In November 2024, the FASB issued ASU 2024-03 – Income Statement – Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027. The Company is currently evaluating the impact of this update. |
||||||||||||||||||||||||||||||||||||||||||