If you received a “householded” mailing, and you would like to have additional copiesdirectors of the proxy materials for this Special Meeting mailedeleven nominees.

May the Special Meeting be adjourned or postponed? Under Delaware law, we are not required to give any notice of an adjourned meeting ortime of the business2020 Annual Meeting, all proxies received by the proxy holders named on the accompanying proxy card will be voted FOR the election of such other person as either proxy holder may designate in such nominee’s place. In the event that additional persons are nominated for election as directors, the proxy holders intend to be transacted at an adjourned meeting, other thanvote all proxies received by announcementthem for each of the date, time and place at the meeting at which the adjournment is taken,nominees listed below, unless the board fixes a new record date for the adjourned meeting or the meeting date is adjourned to a date more than 30 days later than the date set for the original meeting, in which case a new notice is required. If after the adjournment a new record date for stockholders entitled to vote is fixed for the adjourned meeting, a notice of the adjourned meeting and new record date will beinstructions are given to each stockholder of record entitled to vote at the adjourned meeting. Therefore, if we do not have sufficient votes for a quorum or to approve both the APC Stock Issuance Proposal and the AP-AMH Loan Proposal, it our intention to make an announcement at the Special Meeting of a new date and time for an adjourned or postponed meeting that is within the 30-day period permitted under Delaware law. Thereafter, if required, the ApolloMed Board will fix a new record date and a new meeting date and will deliver a notice of the new meeting date to stockholders entitled to vote at the rescheduled meeting.

What is the mailing address for ApolloMed’s principal executive offices?Our principal executive offices and our mailing address is 1668 South Garfield Avenue, Second Floor, Alhambra, CA 91801. Any written requests for additional information or copies of these proxy materials or any other communications should be sent to this address.

Will ApolloMed’s auditors be at the Special Meeting? Our auditors are BDO USA, LLP. Representatives of BDO are not expected to be present at the Special Meeting and accordingly, will not make any statement nor will there be an opportunity to ask questions of a representative of BDO.

How can you get assistance in connection with the Special Meeting?If you need assistance in completing your proxy card or have questions regarding the various voting options with respect to the ApolloMed Special Meeting, please contact:

Apollo Medical Holdings, Inc.

1668 South Garfield Avenue, Second Floor

Alhambra, CA 91801

Attn: Corporate Secretary

Telephone: (626) 282-0288

Email: Eric.Chin@nmm.cc

NOTE ABOUT FORWARD-LOOKING STATEMENTS

This proxy statement contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any statements about our business, financial condition, operating results, plans, objectives, expectations and intentions, any projections of earnings, revenue or other financial items, such as our projected net income following the APC Transactions and our future liquidity; any statements of any plans, strategies and objectives of management for future operations such as the material opportunities that we believe exist for our company; any statements regarding management’s view of future expectations and prospects for us; any statements about prospective adoption of new accounting standards or effects of changes in accounting standards or regulations; any statements regarding future economic conditions or performance; any statements of belief; any statements of assumptions underlying any of the foregoing; and other statements that are not historical facts. Forward-looking statements may be identified by the use of forward-looking terms such as “anticipate,” “could,” “can,” “may,” “might,” “potential,” “predict,” “should,” “estimate,” “expect,” “project,” “believe,” “think,” “plan,” “envision,” “intend,” “continue,” “target,” “seek,” “contemplate,” “budgeted,” “will,” “would,” and the negative of such terms, other variations on such terms or other similar or comparable words, phrases or terminology. These forward-looking statements present our estimates and assumptions only ascontrary. As of the date of this proxy statement, and are subjectthe Board is not aware of any nominee who is unable or unwilling to change.

Forward-looking statements involve risks and uncertainties and are based on the current beliefs, expectations and certain assumptions of management. Some or all of such beliefs, expectations and assumptions may not materialize or may vary significantly from actual results. Such statements are qualified by important economic, competitive, governmental and technological factors that could cause our business, strategy, or actual results or events to differ materially from those in our forward-looking statements. Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and significant risks and uncertainties that could cause actual condition, outcomes and results to differ materially from those indicated by such statements. Some of the key factors impacting these risks and uncertainties include, but are not limited to:

For a detailed description of the factors that could cause our actual results to differ materially from those expressed in any forward-looking statement, please see “Risk Factors” beginning on page 64 in this proxy statement and Item 1A entitled “Risk Factors,” of our 2018 10-K. Except as required by law, we do not intend, and undertake no obligation, to update any statement, whetherserve as a result of the receipt of new information, the occurrence of future events, the change of circumstances or otherwise. We further do not accept any responsibility for any projections or reports published by analysts, investors or other third parties.

EXPLANATORY NOTE

We are seeking stockholder approval for two substantive proposals – a $545,000,000 loan to AP-AMH and the issuance of 15,015,015 shares of common stock to APC at a price of $300,000,000. However, those two transactions must be understood in the context of all of the interrelated and interdependent components of the APC Transactions as a whole. The ultimate goal of the APC Transactions is to enhance stockholder value in ApolloMed by being able to more fully realize the benefit (and perhaps the detriment) of consolidating the revenue and net income (or net loss) of APC’s Healthcare Services Business on our consolidated statements of income. Although there is no guarantee that there will be a positive impact on our earnings in every future period, management believes that over time, the recharacterization of APC’s net income as it impacts our consolidated results will be in the best interests of our Company and our stockholders.

In this proxy statement we provide extensive details about the each of the individual transactions that, together, constitute the APC Transactions. This includes transactions to which ApolloMed is not a party, but which are critical to achieving the purposes for which the APC Transactions were devised.

No separate approval of the APC Transactions as a whole by our stockholders is necessary; our stockholders are not being asked to vote upon any portion of the APC Transactions other than the AP-AMH Loan and the ApolloMed Private Placement.director. If either Proposal No. 1 or Proposal No. 2 are voted down, the APC Transactions will not be completed. A vote in favor of the AP-AMH Loan and the APC Stock Issuance (i.e., the ApolloMed Private Placement) will be deemed an approval of by our stockholders of the APC Transactions as a whole.

THE BUSINESS OF APOLLO MEDICAL HOLDINGS, INC.

The following summary is not comprehensive. We have limited it to those aspects of our business that may, to some extent, be relevant to the APC Transactions. For a complete description of the business of ApolloMed, our subsidiaries and other affiliated entities, please refer to “Item 1 – Business” in our 2018 Form 10-K.

Overview

We, together with our affiliated physician groups and consolidated entities, are a physician-centric integrated population health management company providing coordinated, outcomes-based medical care in a cost-effective manner and serving patients in California, the majority of whom are covered by private or public insurance provided through Medicare, Medicaid and health maintenance organizations (“HMOs”), with a small portion of our revenue coming from non-insured patients. We provide care coordination services to each major constituent of the healthcare delivery system, including patients, families, primary care physicians, specialists, acute care hospitals, alternative sites of inpatient care, physician groups and health plans. Our physician network consists of primary care physicians, specialist physicians and hospitalists. We operate primarily through Apollo Medical Holdings, Inc. (“ApolloMed”) and the following subsidiaries: Network Medical Management (“NMM”), Apollo Medical Management, Inc. (“AMM”), APAACO and Apollo Care Connect, Inc. (“Apollo Care Connect”), and their consolidated entities, including consolidated VIEs.

Led by a management team with several decades of experience, we have built a company and culture that is focused on physicians providing high-quality medical care, population health management and care coordination for patients. We believe we are well-positioned to take advantage of the growing trends in the U.S. healthcare industry towards value-based and results-oriented healthcare focusing on the triple aim of patient satisfaction, high-quality care and cost efficiency.

Through our NGACO model and a network of independent practice associations (“IPAs”) with more than 6,000 contracted physicians, which physician groups have agreements with various health plans, hospitals and other HMOs, we are currently responsible for coordinating the care for over 970,000 patients in California. These covered patients are comprised of managed care members whose health coverage is provided through their employers or who have acquired health coverage directly from a health plan or as a result of their eligibility for Medicaid or Medicare benefits. Our managed patients benefit from an integrated approach that places physicianselected at the center2020 Annual Meeting, a director will serve until the annual meeting of patient care and utilizes sophisticated risk management techniques and clinical protocols to provide high-quality, cost effective care. To implement a patient-centered, physician-centric experience, we also have other integrated and synergistic operations, including (i) management service organizations (“MSOs”) that provide management and other services to our affiliated IPAs, (ii) outpatient clinics and (iii) hospitalists that coordinate the care of patients in hospitals.

In December 2017, we completed a reverse merger with NMM, a California corporation formed in 1994 (the “Merger”). As a result of the Merger, NMM became a wholly owned subsidiary of ApolloMed and the former NMM shareholders owned more than 80% of the issued and outstanding shares of ApolloMed’s common stock post-merger. The combined company operates under the Apollo Medical Holdings name. NMM is the larger entity in terms of assets, revenues and earnings. In addition, as of the closing of the Merger, the majority of the board of directors of the combined company was comprised of former NMM directors and directors nominated for election by NMM. Accordingly, ApolloMed was considered to be the legal acquirer (and accounting acquiree), whereas NMM was considered to be the accounting acquirer (and legal acquiree).

Our affiliated medical groups provide hospitalist services at multiple acute-care hospitals, long-term acute care facilities and outpatient clinics. ApolloMed and its subsidiaries, including consolidated VIEs, generate revenue by providing administrative, medical management and clinical services to affiliated IPAs and medical groups. The administrative services cover primarily billing, collection, accounting, administrative, quality assurance, marketing, compliance and education. In addition, our NGACO, which served over 30,000 beneficiaries through 2018, is eligible to receive periodic advance payments from CMS for managing care for aligned beneficiaries.

We implement and operate different innovative healthcare models, primarily including the following integrated operations:

We operate under one reportable segment, the healthcare delivery segment. Our revenue streams are diversified among our various operations and contract types, and include:

There will be no change to our business structure or operations as a result of the successful completion of the APC Transactions.

Organization

Subsidiaries

We operate through our subsidiaries, primarily including:

Each of NMM and AMM operates as a MSO and is in the business of providing management services to physician practice corporations under long-term management and/or administrative services agreements (“MSAs”), pursuant to which NMM or AMM, as applicable, manages certain non-medical services for the physician group and has exclusive authority over all non-medical decision making related to ongoing business operations. The MSAs generally provide for management fees that are recognized as earned based on a percentage of revenue or cash collections generated by the physician practices.

APAACO, jointly owned by NMM and AMM, participates in the NGACO Model of CMS as of January 2017. The NGACO Model is a CMS program that allows provider groups to assume higher levels of financial risk and potentially achieve a higher reward from participating in this new attribution-based risk sharing model.

We operated three legacy ACOs that participated in the MSSP to serve the Medicare FFS population: ApolloMed Accountable Care Organization, Inc. (“Apollo-ACO”), majority owned by ApolloMed, as well as APCN-ACO, Inc. (“APCN-ACO”) and Allied Physicians ACO, LLC (“AP-ACO”), wholly owned by NMM. In 2017, we transitioned patients and physicians from the three legacy ACO’s into APAACO, which was established in May 2016 to operate under the NGACO Model.

Apollo Care Connect provides a cloud and mobile-based population health management platform, with an emphasis on chronic care management and high-risk patient management in addition to a comprehensive platform for total patient engagement. Features include a personal health assistant that allows patients to view their health data and interact with their physician and care managers, and evidence-based digital care plans that leverage our expertise in clinical care, care coordination and medical risk management to deliver value-based care.

Variable Interest Entities, Particularly APC

Our financial statements are consolidated and include the accounts of our majority-owned subsidiaries and various non-owned affiliated physician groups that are variable interest entities (“VIEs”), which consolidation is effectuated in accordance with applicable accounting rules promulgated by the Financial Accounting Standards Board (“FASB”). Such accounting rules require that, under some circumstances, the VIE consolidation model be applied when a reporting enterprise holds a variable interest (e.g., equity interests, debt obligations, certain management and service contracts) in a legal entity. Under this model, an enterprise must assess the entity in which it holds a variable interest to determine whether it meets the criteria to be consolidated as a VIE. If the entity is a VIE, the consolidation framework next identifies the party, if one exists, that possesses a controlling financial interest in the VIE, and then requires that party to consolidate as the primary beneficiary. An enterprise’s determination of whether it has a controlling financial interest in a VIE requires that a qualitative determination be made and is not solely based on voting rights.

The primary beneficiary analysis is a qualitative analysis based on power and benefits. We consolidate a VIE if we have both power and benefits – that is, (i) we have the power to direct the activities of a VIE that most significantly influence the VIE’s economic performance (power), and (ii) we have the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE (benefits). As we discuss below, we have determined that APC is a VIE of NMM.

If we have a variable interest in a VIE but are not the primary beneficiary, we may account for our investment using the equity method of accounting.

As a consequence of California being a corporate practice of medicine state, as we discuss below, in addition to our subsidiaries, we mainly operate by maintaining long-term management services agreements with our affiliated IPAs, which are owned and operated by a network of independent primary care physicians and specialists, and which employ or contract with additional physicians to provide medical services. Under such agreements, we provide and perform non-medical management and administrative services, including financial management, information systems, marketing, risk management and administrative support.

NMM has entered into MSAs with several affiliated IPAs, including APC. APC contracts with various HMOs or licensed healthcare service plans, each of which pays a fixed capitation payment to APC. In return, APC arranges for the delivery of healthcare services by contracting with physicians or professional medical corporations for primary care and specialty care services. APC assumes the financial risk of the cost of delivering healthcare services in excess of the fixed amounts received. The risk is subject to stop-loss provisions in contracts with HMOs. Some risk is transferred to the contracted physicians or professional corporations. The physicians in the IPA are exclusively in control of, and responsible for, all aspects of the practice of medicine for enrolled patients. In accordance with relevant accounting guidance, APC is determined to be a VIE of NMM, as NMM is the primary beneficiary of APC with the ability, through majority representation on the APC Joint Planning Board, to direct the activities (excluding clinical decisions) that most significantly affect APC’s economic performance.

APC itself also consolidates the results of certain entities they have been determined to be VIEs of APC, and APC has been determined to be the primary beneficiary of these entities. We also have VIEs through AMM.

Investments

We invested in several entities in the healthcare industry through APC, our VIE. You can find more information about this aspect of our business in our 2018 10-K. We have omitted a detailed description in this proxy statement because we determined that it would not add to our stockholders’ understanding of the APC Transactions.

Our Business Operations

IPAs

Each of our affiliated IPAs is comprised of a network of independent primary care physicians and specialists who collectively care for patients and contracts with HMOs to provide physician services to their enrollees typically under capitated arrangements. Under the capitated model, a HMO pays the IPA a capitation payment and assigns it the responsibility for providing physician services required by patients. The IPA physicians are exclusively in control of, and responsible for, all aspects of the practice of medicine for enrolled patients. Most of the HMO agreements have an initial term of two years renewing automatically for successive one-year terms. The HMO agreements generally allow either party to terminate the HMO agreements without cause typically with a four to six-month advance notice and provide for a termination for cause by the HMO at any time.

MSOs

Our MSOs generally provide services to our affiliated IPAs or ACOs under long-term MSAs, pursuant to which they manage certain non-medical services for the physician groups and have exclusive authority over all non-medical decision making related to ongoing business operations. These services include but are not limited to:

NGACO

On January 18, 2017, CMS announced that APAACO had been approved to participate in the NGACO Model and began operations under this new model. We have devoted, and expect to continue to devote, significant effort and resources, financial and otherwise, to the NGACO Model. You can find a detailed explanation of the NGACO Model and our participation in this CMS program in our 2018 10-K. We have omitted a detailed description in this proxy statement because we determined that it would not add to our stockholders’ understanding of the APC Transactions.

Our Revenue Streams

Our revenue reflected in our consolidated financial statements includes revenue generated by our subsidiaries and consolidated entities. Revenue generated by consolidated entities, however, does not necessarily result in available or distributable cash for ApolloMed. Our revenue streams flow from various multi-year renewable contractual arrangements that vary by types of our business operations in the following manners:

Capitation Revenue

Our capitation revenue consists primarily of capitated fees for medical services provided by us under a capitated arrangement directly made with various managed care providers including HMOs. Capitation revenues are typically prepaid monthly to us based on the number of enrollees selecting us as their healthcare provider. Capitation is a fixed amount of money per patient per unit of time paid in advance for the delivery of healthcare services, whereby the service providers are generally liable for excess medical costs. The actual amount paid is determined by the ranges of services provided, the number of patients enrolled and the period of time during which the services are provided. Capitation rates are generally based on local costs and average utilization of services. Because Medicare pays capitation using a “risk adjustment model,” which compensates managed care providers based on the health status (acuity) of each individual enrollee, managed care providers with higher acuity enrollees receive more, and those with lower acuity enrollees receive less, capitation that can be allocated to service providers. Under the risk adjustment model, capitation is paid on an interim basis based on enrollee data submitted for the preceding year and is adjusted in subsequent periods after the final data is compiled.

Per member per month (“PMPM”) managed care contracts generally have a term of one year or longer. All managed care contracts have a single performance obligation that constitutes a series for the provision of managed healthcare services for a population of enrolled members for the duration of the contract. The transaction price for PMPM contracts is variable as it primarily includes PMPM fees associated with unspecified membership that fluctuates throughout the contract. In certain contracts, PMPM fees also include adjustments for items such as performance incentives, performance guarantees and risk shares. The majority of our net PMPM transaction price relates specifically to our efforts to transfer the service for a distinct increment of the series (e.g., day or month) and is recognized as revenue in the month in which members are entitled to service.

Risk Pool Settlements and Incentives

Capitation arrangements are supplemented by risk sharing arrangements. We have two different types of capitation risk sharing arrangements: full risk and shared risk arrangements. A detailed explanation of these risk sharing arrangements can be found in our 2018 Form 10-K. In addition to risk-sharing revenues, we also receive incentives under “pay-for-performance” programs for quality medical care, based on various criteria, which we explain in greater detail in our 2018 Form 10-K.

Management Fee Income

Management fee income encompasses fees paid for management, physician advisory, healthcare staffing, administrative and other non-medical services provided by us to IPAs, hospitals and other healthcare providers. Such fees may be in the form of billings at agreed-upon hourly rates, percentages of revenue or fee collections, or amounts fixed on a monthly, quarterly or annual basis. The revenue may include variable arrangements measuring factors such as hours staffed, patient visits or collections per visit against benchmarks, and, in certain cases, may be subject to achieving quality metrics or fee collections.

NGACO Revenue

Through APA ACO, we participate in the AIPBP track of the NGACO Model sponsored by CMS. Through the NGACO model, we receive monthly payments and annually, on an all or nothing basis, may receive a payment based on the shared savings APA ACO is able to generate in the prior performance year. A detailed explanation of how we earn NGACO revenue and the risks and rewards of our participation in this program are discussed in our 2018 Form 10-K.

Fee-For-Service Revenue

FFS revenue represents revenue earned under contracts in which we bill and collect the professional component of charges for medical services rendered by our contracted physicians and employed physicians. Under the FFS arrangements, we bill the hospitals and third-party payors for the physician staffing and further bill patients or their third-party payors for patient care services provided and receive payments.

Our Strengths and Advantages

The following are some of the material opportunities that we believe exist for our company.

Combination of Clinical, Administrative and Technology Capabilities

We believe our key strength lies in our combined clinical, administrative and technology capabilities. While many companies separately provide clinical, MSO or technology support services, to our knowledge there are currently very few organizations like us that provide all three types of services to over 970,000 patients.

Diversification

Through our subsidiaries, consolidated affiliates and invested entities, we have been able to reduce our business risk and increase revenue opportunities by diversifying our service offerings and expanding our ability to manage patient care across a horizontally integrated care network. Our revenue is spread across our operations. Additionally, with our ability to monitor and manage care within our wide network, we are an attractive business partner to health plans, hospitals, IPAs and other medical groups seeking to provide better care at lower costs.

Strong Management Team

Our management team has, collectively, several decades of experience managing physician practices, risk-based organizations, health plans, hospitals and health systems, a deep understanding of the healthcare marketplace and emerging trends, and a vision for the future of healthcare delivery led by physician-driven healthcare networks.

A Robust Physician Network

As of March 31, 2019, our physician network consisted of over 6,000 contracted physicians, including primary care physicians, specialist physicians and hospitalists, through our affiliated physician groups and ACOs.

Cultural Affinities with Patients

In addition to delivering premium healthcare, we believe in the importance of providing services that are sensitive to the needs of local communities, including their cultural affinities, which are shared by physicians within our affiliated IPAs and medical groups, and thus promoting patients’ comfort in communicating with care providers. Our network of providers is diverse and serves various diverse cultural communities, including Asian, Hispanic and others, with many of our providers speaking multiple languages.

Long-Standing Relationships with Partners

We have developed long-standing relationships with and have earned trust from multiple health plans, hospitals, IPAs and other medical groups that have helped to generate recurring contractual revenue for us.

Comprehensive and Effective Healthcare Management Programs

We offer comprehensive and effective healthcare management programs to patients. We have developed expertise in population health management and care coordination, in proper medical coding, which results in improved Risk Adjustment Factor (“RAF”) scores and higher payments from health plans, and in improving quality metrics in both inpatient and outpatient settings and thus patient satisfaction and CMS scores. Using our own proprietary risk assessment scoring tool, we have also developed our own protocol for identifying high-risk patients.

Competition

The healthcare industry is highly competitive and fragmented. We compete for customers across all of our services with other healthcare management companies including MSOs and healthcare providers such as local, regional and national networks of physicians, medical groups and hospitals, many of which are substantially larger than us and have significantly greater financial and other resources, including personnel, than what we have.

IPAs

Our affiliated IPAs compete with other IPAs, medical groups and hospitals, many of which have greater financial, personnel and other resources available to them. In the greater Los Angeles area, examples of such competitors include Regal Medical Group and Lakeside Medical group, which are part of Heritage Provider Network (“Heritage”), as well as HealthCare Partners, which is owned by DaVita Medical Group which was recently bought by UnitedHealth Group.

ACOs

Our NGACO competes with sophisticated provider groups in the creation, administration, and management of ACOs, including MSSP ACOs and NGACOs, many of which have greater financial, personnel and other resources available to them. For example, in the greater Los Angeles area, major competitors of APAACO include Heritage California ACO and DaVita Medical ACO California.

Outpatient Clinics

Our outpatient clinics compete with large ambulatory surgery centers and/or diagnostic centers such as Foothill Cardiology (California Heart Medical Group), RadNet and Envision Healthcare, many of which have greater financial, personnel and other resources available to them, as well as smaller clinics that have ties to local communities. HealthCare Partners also has its own urgent care centers, clinics and diagnostic centers.

Hospitalists

Because individual physicians may provide hospitalist services if they have necessary credentials and privileges and thus the markets for hospitalist services are highly fragmented, our affiliated hospitalist groups face competition primarily from numerous small inpatient practices in existing and expanding markets but also compete with large physician groups, many of which have greater financial, personnel and other resources available to them. Some of such competitors operate on a national level, including EmCare, Team Health and Sound Physicians.

Corporate Practice of Medicine

Our consolidated financial statements include our subsidiaries and VIEs. Some states have laws that prohibit business entities with non-physician owners, such as ApolloMed and its subsidiaries, from practicing medicine, employing physicians to practice medicine, exercising control over medical decisions by physicians; which are generally referred to as corporate practice of medicine. States that have corporate practice of medicine laws require only physicians to practice medicine, exercise control over medical decisions or engage in certain arrangements such as fee-splitting, with physicians. In these states, a violation of the corporate practice of medicine prohibition constitutes the unlawful practice of medicine, which is a public offense punishable by fines and other criminal penalties. In addition, any physician who participates in a scheme that violates the state’s corporate practice of medicine prohibition may be punished for aiding and abetting a lay entity in the unlawful practice of medicine.

California is a corporate practice of medicine state. Therefore, we operate by maintaining long-term MSAs with our affiliated IPAs and medical groups, each of which is owned and operated by physicians only and employs or contracts with additional physicians to provide medical services. Under such MSAs, our wholly-owned MSOs are contracted to provide non-medical management and administrative services such as financial and risk management as well as information systems, marketing and administrative support to the IPAs and medical groups. The MSAs typically have an initial term of 3-30 years and are generally not terminable by our affiliated IPAs and medical groups except in the case of bankruptcy, gross negligence, fraud, or other illegal acts by the contracting MSO.

Through the MSAs and the relationship with the physician owners of our medical affiliates, we have exclusive authority over all non-medical decisions related to the ongoing business operations of those affiliates. Consequently, ApolloMed consolidates the revenue and expenses of such affiliates as their primary beneficiary from the date of execution of the applicable MSA. When necessary, Dr. Thomas Lam, our Chief Executive Officer, including through entities in which he is the sole shareholder, serves as a nominee shareholder, on ApolloMed’s behalf, of affiliated medical practices, in order to comply with corporate practice of medicine laws and certain accounting rules applicable to consolidated financial reporting by our affiliates as VIEs.

While under these arrangements our MSOs perform only non-medical functions, do not represent to offer medical services and do not exercise influence or control over the practice of medicine by physicians. The California Medical Board, as well as other state’s regulatory bodies, has taken the position that MSAs that confer too much control over a physician practice to MSOs may violate the prohibition against corporate practice of medicine. Some of the relevant laws, regulations and agency interpretations in California and other states that have corporate practice prohibitions have been subject to limited judicial and regulatory interpretation. Moreover, state laws are subject to change and regulatory authorities. Other parties, including our affiliated physicians, may assert that, despite these arrangements, ApolloMed and its subsidiaries are engaged in the prohibited corporate practice of medicine or that such arrangements constitute unlawful fee-splitting between physicians and non-physicians. If this occurred, we could be subject to civil or criminal penalties, our MSAs could be found legally invalid and unenforceable in whole or in part, and we could be required to restructure arrangements with our affiliated IPAs and medical groups. If we were required to change our operating structures due to determination that a corporate practice of medicine violation existed, such a restructuring might require revising our MSOs’ management fees.

Although we have relationships with many physician-related entities, including APC, we have always been careful to seek to ensure that our operations comply with California’s corporate practice of medicine doctrine. The corporate practice of medicine doctrine, as defined in California and applicable to our operations, is a principal reason that the APC Transactions are structured in the manner they are structured. Even if the parties were inclined, ApolloMed is prohibited from owning an interest in APC because APC is professional medical corporation that operates as an IPA, so an acquisition is not a feasible option. The corporate practice of medicine doctrine further prohibits ApolloMed from participating in any fee splitting arrangement with APC or any other IPA or medical group, which could make certain payments from APC to ApolloMed subject to close scrutiny. The APC Transactions have been structured with a view towards complying with California’s corporate practice of medicine doctrine, with AP-AMH, a professional medical corporation, which is wholly-owned by Dr. Lam, as a facilitating entity. ApolloMed will continue to own no equity or other interest in APC, nor will it own or be permitted to own an equity or other interest in AP-AMH.

Other Regulatory Matters

In addition to the corporate practice of medicine doctrine discussed above, as a healthcare company, our operations and relationships with healthcare providers such as hospitals, other healthcare facilities, and healthcare professionals are subject to extensive and increasing regulation by numerous federal, state, and local government agencies including the Office of Inspector General (“OIG”), the Department of Justice, CMS and various state authorities. These laws and regulations often are interpreted broadly and enforced aggressively. Imposition of liabilities associated with a violation of any of these healthcare laws and regulations could have a material adverse effect on our business, financial condition and results of operations. We cannot guarantee that our practices will not be subject to government scrutiny or be found to violate certain healthcare laws. Government investigations and prosecutions, even if we are ultimately found to be without fault, can be costly and disruptive to our business. Moreover, changes in healthcare legislation or government regulation may restrict our existing operations, limit our expansion or impose additional compliance requirements and costs, any of which could have a material adverse effect on our business, financial condition and results of operations.

Our 2018 Form 10-K includes a detailed summary of some of the most significant laws and regulations that affect our business operations.

Impact of the Pending APC Transactions

We do not anticipate that the consummation of the APC Transactions will materially change our business strategy, plans or operations.

APC AND THE IMPACT OF THE APC TRANSACTIONS

APC is a privately-held California professional medical corporation that is overseen by a board of directors consisting of 26 board members. The APC board has appointed officers of the corporation who are responsible for managing the day-to-day operations of the corporation. ApolloMed is not a shareholder and, under California’s corporate practice of medicine doctrine, it is prohibited from owning an interest in APC. Moreover, it has no right, by contract or otherwise, to suggest, nominate or appoint persons to serve on the APC board of directors.

APC was incorporated on August 17, 1992 for the purpose of arranging healthcare services as an independent physician association. APC has contracts with various health maintenance organizations (“HMOs”) and licensed healthcare service plans as defined in the Knox-Keene Healthcare Service Plan Act of 1975. Each HMO negotiates a fixed amount per member per month that is to be paid to APC. In return, APC arranges for the delivery of healthcare services by contracting with physicians or professional medical corporations for primary care and specialty care services. APC assumes the financial risk of the cost of delivering healthcare services in excess of the fixed amounts received. Some of the risk is transferred to the contracted physicians or professional corporations. The risk is also minimized by stop-loss provisions in contracts with HMOs. APC has a controlling financial interest in other entities, including entities that are consolidated VIEs, in which APC is the primary beneficiary, and other entities that are APC subsidiaries or in which the interests are held in one of APC’s VIEs. Not all of these entities are considered part of APC’s Healthcare Services Business. Following the closing of the APC Transactions, APC will continue to operate its business in the manner and to the extent it has historically operated.

As discussed more fully throughout this proxy statement, the primary purpose of the APC Transactions is to recharacterize certain APC-derived revenue that is currently consolidated on ApolloMed’s statements of income but is not taken into account in “net income attributable to Apollo Medical Holdings, Inc.” or earnings per share derived therefrom. The principal mechanism to achieve this purpose will be the Series A Dividend payable on the APC Preferred Stock and the use of the dividend proceeds as they are paid.

Following the closing of the APC Transactions, AP-AMH will own 1,000,000 shares of APC Preferred Stock that will carry a mandatory cumulative preferred dividend that is based on APC’s net income from its Healthcare Services Business, as set forth in APC’s Certificate of Determination of Preferences that will create its Series A Preferred Stock. Under the Certificate of Determination, AP-AMH will be entitled to receive Series A Dividends that are preferential, cumulative, accrue on a daily basis from the date of purchase of the APC Preferred Stock and are equal for any determination period to the sum of (i) APC’s Net Income from Healthcare Services (as defined in the Certificate of Determination), plus (ii) any dividends received by APC in such period from certain affiliated entities, minus (iii) any Retained Amounts (as defined in the Certificate of Determination). The Retained Amounts allow APC to retain 50% of the Net Income from Healthcare Services in excess of a baseline amount (which baseline amount is subject to annual adjustments based on Consumer Price Index increases, but not decreases), with the other 50% paid to AP-AMH as a part of the Series A Dividends. As a result, APC will retain 50% of increases after the closing of the APC Transactions in the amounts of the Net Income from Healthcare Services, with the remainder paid to AP-AMH. The Retained Amounts will not apply to any APC affiliated entities, including any future-acquired APC affiliated entities. The Series A Dividends are intended to be paid quarterly and will be based on the financial results of APC as of the quarter prior to the quarter in which any payment is made. Although it is contemplated that the Series A Dividends will be paid quarterly, in fact, the APC board of directors will be required to declare the dividend before it can be paid. To the extent it is not declared and paid, the Series A Dividend will cumulate.

The net effect of the APC Transactions generally, and the Series A Dividend formula, in particular, is that the Series A Dividend will not be based on 100% of APC’s assets. The “Excluded Assets” that will remain solely for the benefit of APC and its shareholders currently include (i) a 48.9% ownership in Universal Care Inc., (ii) a 50% ownership of 531 W. College LLC, (iii) certain land owned by APC in El Monte and Monterey Park, California; (iv) (iv) its 5% ownership of ApolloMed shares of common stock; and (v) the proceeds derived from the APC Transactions. Certain of these Excluded Assets support, but do not directly provide, services that are encompassed under the term Healthcare Services Business.

Over time, the assets constituting Excluded Assets could change as APC exercises its independent judgment to purchase or sell assets that do not fall under the definition of Healthcare Services Assets. If and to the extent there is a gain on the sale of any such Excluded Assets, that gain will have no impact on the Series A Dividend and will remain in APC exclusively for the benefit of APC and its shareholders. As such, neither AP-AMH nor ApolloMed will derive any benefit from any upside realized in the APC Excluded Assets.

Historically, certain of APC’s Excluded Assets have suffered losses, but those losses have been offset by APC’s Healthcare Services Business and Healthcare Services Assets. After the closing of the APC Transactions, a substantial portion, if not all (depending on the period), of the Healthcare Services Assets will be unavailable to offset losses in APC’s Excluded Assets portion of its business. Although APC and ApolloMed are distinct corporations, with their own boards of directors elected by their own shareholders, the APC Transactions have the potential to create risk in ApolloMed that would be entirely due to the performance of APC’s Excluded Assets. Specifically, if APC’s Excluded Assets are incurring losses that cannot be offset by its profitable Healthcare Services Business, it could be deemed insolvent or might force APC into bankruptcy. In either scenario, ApolloMed’s financial condition could be materially negatively impacted.

California Corporations Code sections 500 et seq. govern when a California corporation such as APC is permitted to make cash and property distributions to its shareholders. Section 500 allows a corporation to make distributions (including dividends) if: (i) the amount of the corporation’s retained earnings prior to the distribution equals or exceeds the sum of the distribution and the amount of cumulative dividends in arrears on series of preferred stock that are senior in dividend preference to the class or series to which the applicable distribution is being made, or (ii) after giving effect to the distribution, the value of the corporation’s assets equals or exceeds the sum of its liabilities and the amount of preferential rights upon dissolution, including accrued but unpaid dividends, of shareholders with rights upon dissolution superior to those of the shareholders receiving the distributions. However, Corporations Code section 501 prohibits any distributions if the corporation is, or as a result of the distribution would be, likely to be unable to meet its liabilities as such liabilities mature. In essence, Sections 500 et seq. require a solvency threshold determination as to whether or not a corporation can make a distribution of any kind, and if that threshold is met, the corporation must pass either a retained earnings test or a balance sheet test.

Following the closing of the APC Transactions, APC’s Excluded Assets could suffer substantial losses that will not be offset by its Healthcare Services Business. These losses could cause APC to be deemed insolvent, and therefore APC would be prohibited from declaring and paying the Series A Dividend. If APC is prohibited or simply unwilling to pay the Series A Dividend to AP-AMH, AP-AMH will be unable to pay to ApolloMed and NMM the interest pursuant to the Loan Agreement, the licensing fees pursuant to the Tradename Licensing Agreement and the management fees pursuant to the Administrative Services Agreement. Without those expected payments from AP-AMH, ApolloMed’s financial condition, cash flows and results of operations could be severely impaired. Moreover, if APC were forced into bankruptcy as a result of continuing losses in the Excluded Assets portion of its business, the entire structure underlying the APC Transactions would fail.

Prior to the closing of the APC Transactions, the parties anticipate entering into various amendments to the APC Transactions Agreements. (see page 57) Among the amendments contemplated is a provision that would require APC to retain a sufficient amount of assets it receives in the APC Transactions to enable it to fund losses or deficits in that portion of its business that is not considered its Healthcare Services Business, and thereby not be prohibited from paying the Series A Dividends pursuant to California Corporations Code sections 500 et seq. on the basis of insolvency. That provision would provide some measure of protection to AP-AMH and ApolloMed. However, there is no assurance that future losses or deficits might not exceed that reserve.

In addition, as part of the APC Transactions Agreements executed on May 10, 2019, APC and AP-AMH entered into the Special Purpose Shareholder Agreement. Pursuant to that agreement, in the event of any losses or deficits incurred at any time or from time to time by APC pertaining to its Healthcare Services Assets, upon written request of APC, AP-AMH is obligated to make one or more capital contributions to APC in an amount sufficient to cover any such losses or deficits. In the event AP-AMH receives notice of a capital call, it is likely that it will not have sufficient resources to cover its obligation. While ApolloMed is not a party to this agreement and has no obligation thereunder, it is possible that the ApolloMed Board of Directors could determine that it is in the best interests of ApolloMed and our stockholders to fund AP-AMH’s obligation under the Special Purchase Shareholder Agreementbe held in order to protect the economic interests of ApolloMed and our stockholders. There is no cap on the dollar amount of the potential liability. Losses2021 or deficits arising from the Excluded Assets are expressly carved out. However, this agreement also poses risks for ApolloMed.

SELECTED UNAUDITED CONSOLIDATED
CONDENSED STATEMENT OF INCOME DATA

The selected unaudited historical consolidated condensed statement of income data presented below for the fiscal years ended December 31, 2018 and 2017 and for the three months ended March 31, 2019until a successor has been derived from ApolloMed’s audited financial statements for the fiscal years ended December 31, 2018duly elected and 2017, and from our unaudited financial statements for the three months ended March 31, 2019, respectively. These financial statements are not included in this proxy statement, but you may review them inqualified, or until their entirety, including the related notes thereto, in our 2018 Form 10-K, which we filed with SEC on March 18, 2019, and our Quarterly Report on Form 10-Q for the period ended March 31, 2019, which we filed with SEC on May 10, 2019. The results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results of operations for the full yearearlier resignation or any other interim period, and our historical results generally are not necessarily indicative of results to be expected in any future period. ApolloMed’s management prepared the unaudited financial statements as of and for the three months ended March 31, 2019 on the same basis as it prepared our audited consolidated financial statements. In the opinion of ApolloMed management, this information reflects all adjustments consisting of only normal recurring adjustments necessary for a fair presentation of this data for that period.

The following consolidated condensed statement of income data of ApolloMed and its consolidated subsidiaries and VIEs for the periods presented illustrates the extent to which APC’s consolidated operating results has impacted our bottom-line results. See “Modified Selected Unaudited Consolidated Condensed Statement of Income Data” on page 35 for an illustration of the impact the APC Transactions would have had on our historical results.

A critical underpinning of the entire series of APC Transactions is the requirement that ApolloMed secure a credit facility sufficient to enable us to perform our obligation to loan AP-AMH $545,000,000 under the Loan Agreement.removal. As of the date of this proxy statement, we continueare not aware of any relationships by blood, marriage, or adoption, not more remote than first cousin, among any of our current directors, the nominees for directors and our executive officers.