Variable Interest Entities

12 Months Ended

Dec. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Variable Interest Entities

Variable Interest Entities

The variable interest entities (“VIEs”) are: (i) the Affiliated Medical Groups; and (ii) the Affiliated Pharmacies. The Company determined that it is the primary beneficiary of these entities for accounting purposes because it has the ability to direct the activities that most significantly affect the entities’ economic performance and has the obligation to absorb the losses. Under the VIE model, the Company presents the results of operations, cash flows, and the financial position of the VIEs as part of the consolidated financial statements of the Company as if the consolidated group were a single economic entity. The assets of the VIEs can only be used to settle the obligations of the VIEs. There is no noncontrolling interest upon consolidation of the entities. The results of operations and cash flows of the VIEs are also included in the Company’s consolidated financial statements.

As of December 31, 2023 and 2022, the Company’s consolidated balance sheets included current assets of $24.1 million and $7.5 million, respectively, and total assets of $24.1 million and $7.7 million, respectively, for the VIEs. As of December 31, 2023 and 2022, current and total liabilities were $6.0 million and $3.7 million, respectively. All amounts are after elimination of intercompany transactions, balances, and non-cash impact of operating leases.

For the years ended December 31, 2023, 2022, and 2021, the VIEs charged the Company $96.3 million, $64.2 million, and $23.6 million, respectively, for services rendered. For the years ended December 31, 2023, 2022, and 2021 operations of the VIEs generated net income of $3.3 million and $9.1 million, and a net loss of $3.3 million, respectively, inclusive of administrative expenses.