Apollo Medical Holdings (AMEH), a value based healthcare provider, is warning investors not to trust more than three years of previously filed financial statements. Erroneous treatment of intercompany dividends and assumptions regarding the realizability of prior net operating losses (NOLs) resulted in material misstatements in 2020, 2021, 2022, and the first quarter of 2023.

Apollo Medical says the errors were unintentional.

The company restated its financials for the aforementioned periods and acknowledged a control deficiency shortly after filing its latest annual report. The corrections reveal Apollo Medical has understated income tax expense for years, and:

—Overstated net income $0.2 million, or 0.19% in 2020
—Overstated net income $3.2 million, or 7.03% in 2021
—Overstated net income $4.7 million, or 10.47% in 2022

In the quarter ended March 31, 2023 Apollo Medical overstated net income $1.8 million, or 14.56%.

Ernst & Young (EY) became Apollo’s auditor in 2020, the first year net income was misstated. In each of the three years Apollo misstated its profit, EY gave Apollo’s financials a thumbs up, including the annual report filed five months before the restatement.

In 2022, the last full year Apollo’s financials were misstated, EY received a 60.1% audit fee increase without, in our view, any footnoted explanation materially different from prior year Proxies detailing what the auditor did to merit such an increase.

The audit fee increase does not appear related to the Board review that preceded the restatement as it did not commence until the second quarter of 2023.

Apollo did not immediately respond when DuDil asked the company to explain what motivated the fee increase.

Separately, Apollo paid its Executive Officers more than $54 million during the three years net income was misstated.

Including bonuses, which are awarded at the Board’s discretion, Apollo Executive Chairman Kenneth Sim and Co-Chief Executive Officer Thomas Lam have each received more than $10.7 million in total compensation. The firm’s other Co-Chief Executive Officer Brandon Sim, age 29, received $25.7 million in total compensation. The new Chief Financial Officer Chandan Basho received $4.1 million in 2022.

Nowhere in Apollo’s most recent Proxy or its last three annual reports did we find any mention of an Executive Compensation clawback policy.