Variable Interest Entities

6 Months Ended

Jun. 30, 2024

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 condensed consolidated financial statements.

As of June 30, 2024 and December 31, 2023, the Company’s condensed consolidated balance sheets included current and total assets of $29.4 million and $24.1 million, respectively, for the VIEs. As of June 30, 2024 and December 31, 2023, current and total liabilities were $9.0 million and $6.0 million, respectively. All amounts are after elimination of intercompany transactions, balances, and non-cash impact of operating leases.

For the three months ended June 30, 2024 and 2023, the VIEs charged $39.0 million and $23.9 million, respectively, for services rendered. For the six months ended June 30, 2024 and 2023, the VIEs charged $72.1 million and $46.4 million, respectively, for services rendered. For the three months ended June 30, 2024 and 2023, operations of the VIEs generated a net loss of $4.6 million and net income of $2.8 million, respectively, inclusive of administrative expenses. For the six months ended June 30, 2024 and 2023, operations of the VIEs generated a net loss of $5.4 million and net income of $5.5 million, respectively, inclusive of administrative expenses.