Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 01, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | ADVISORY BOARD CO | |
Entity Central Index Key | 1,157,377 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 40,147,292 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 55,088 | $ 71,825 |
Membership fees receivable, net | 621,904 | 605,444 |
Prepaid expenses and other current assets | 20,262 | 22,543 |
Total current assets | 697,254 | 699,812 |
Property and equipment, net | 207,608 | 183,057 |
Intangible assets, net | 260,039 | 274,721 |
Deferred incentive compensation and other charges | 66,554 | 81,181 |
Goodwill | 739,507 | 738,200 |
Equity method investments | 0 | 706 |
Other non-current assets | 0 | 1,800 |
Total assets | 1,970,962 | 1,979,477 |
Current liabilities: | ||
Deferred revenue, current | 570,403 | 581,471 |
Accounts payable and accrued liabilities | 77,193 | 74,879 |
Accrued incentive compensation | 24,126 | 41,173 |
Debt, current | 42,145 | 27,743 |
Total current liabilities | 713,867 | 725,266 |
Deferred revenue, net of current portion | 167,639 | 173,953 |
Deferred income taxes | 81,811 | 93,893 |
Debt, net of current portion | 486,880 | 522,086 |
Financing obligation | 33,186 | 2,700 |
Other long-term liabilities | 16,982 | 12,488 |
Total liabilities | 1,500,365 | 1,530,386 |
Stockholders’ equity: | ||
Preferred stock, par value $0.01; 5,000,000 shares authorized, zero shares issued and outstanding | 0 | 0 |
Common stock, par value $0.01; 135,000,000 shares authorized, 40,135,392 and 41,572,523 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively | 401 | 416 |
Additional paid-in capital | 774,103 | 744,333 |
Accumulated deficit | (302,085) | (295,860) |
Accumulated other comprehensive (loss) income | (1,822) | 202 |
Total stockholders’ equity | 470,597 | 449,091 |
Total liabilities and stockholders’ equity | $ 1,970,962 | $ 1,979,477 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (shares) | 0 | 0 |
Preferred stock, shares outstanding (shares) | 0 | 0 |
Common stock, par value (dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (shares) | 135,000,000 | 135,000,000 |
Common stock, shares issued (shares) | 40,135,392 | 41,572,523 |
Common stock, shares outstanding (shares) | 40,135,392 | 41,572,523 |
Unaudited Consolidated Statemen
Unaudited Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Statement [Abstract] | ||||
Revenue | $ 200,455 | $ 200,492 | $ 599,572 | $ 563,397 |
Costs and expenses: | ||||
Cost of services, excluding depreciation and amortization | 104,215 | 101,362 | 296,604 | 289,388 |
Member relations and marketing | 32,706 | 30,792 | 97,819 | 90,893 |
General and administrative | 32,227 | 30,678 | 96,274 | 93,205 |
Depreciation and amortization | 19,173 | 18,509 | 57,857 | 54,282 |
Operating income | 12,134 | 19,151 | 51,018 | 35,629 |
Interest expense | (4,530) | (5,450) | (13,738) | (16,216) |
Other expense, net | (1,516) | (1,150) | (2,380) | (2,397) |
Loss on financing activities | 0 | 0 | 0 | (17,398) |
Total other expense, net | (6,046) | (6,600) | (16,118) | (36,011) |
Income (loss) before provision for income taxes and gains (losses) from equity method investments | 6,088 | 12,551 | 34,900 | (382) |
Provision for income taxes | (3,279) | (8,590) | (13,812) | (11,684) |
Gains (losses) from equity method investments | 34,729 | (3,289) | 34,284 | (1,668) |
Net income (loss) | $ 37,538 | $ 672 | $ 55,372 | $ (13,734) |
Earnings per share (dollars per share) | ||||
Net income (loss) per share—basic (in dollars per share) | $ 0.94 | $ 0.02 | $ 1.36 | $ (0.33) |
Net income (loss) per share—diluted (in dollars per share) | $ 0.93 | $ 0.02 | $ 1.35 | $ (0.33) |
Weighted average number of shares outstanding: | ||||
Basic (in shares) | 40,102 | 42,320 | 40,651 | 41,900 |
Diluted (in shares) | 40,492 | 42,788 | 40,977 | 41,900 |
Unaudited Consolidated Stateme5
Unaudited Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 37,538 | $ 672 | $ 55,372 | $ (13,734) |
Other comprehensive income (loss): | ||||
Net unrealized loss on available-for-sale securities, net of income tax (benefit) expense of $0 and $0 for the three months ended September 30, 2016 and 2015, respectively; and $0 and $(150) for the nine months ended September 30, 2016 and 2015, respectively | 0 | 0 | 0 | (81) |
Net unrealized gain (loss) on cash flow hedges, net of income tax (benefit) expense of $610 and $(1,316) for the three months ended September 30, 2016 and 2015, respectively; and $(1,350) and $(871) for the nine months ended September 30, 2016 and 2015, respectively | 846 | (2,132) | (2,024) | (1,410) |
Comprehensive income (loss) | $ 38,384 | $ (1,460) | $ 53,348 | $ (15,225) |
Unaudited Consolidated Stateme6
Unaudited Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
Net unrealized (losses) gains on marketable securities, tax | $ 0 | $ 0 | $ 0 | $ (150) |
Net unrealized (loss) gain on cash flow hedges, tax expense (benefit) | $ 610 | $ (1,316) | $ (1,350) | $ (871) |
Unaudited Consolidated Stateme7
Unaudited Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 55,372 | $ (13,734) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 57,857 | 54,282 |
Loss on financing activities | 0 | 17,398 |
Amortization of debt issuance costs | 1,017 | 983 |
Deferred income taxes | (9,776) | 9,912 |
Excess tax benefits from stock-based awards | (3,925) | (2,804) |
Stock-based compensation expense | 22,914 | 22,130 |
Gain on investment in common stock warrants | 0 | (70) |
Loss on cost method investment | 1,800 | 0 |
Gain on partial sale of equity method investment | (29,679) | 0 |
Equity from (income) loss of equity method investments | (4,605) | 1,668 |
Changes in operating assets and liabilities (net of the effect of acquisitions): | ||
Membership fees receivable | (16,460) | (35,774) |
Prepaid expenses and other current assets | 11,945 | 7,596 |
Deferred incentive compensation and other charges | 14,495 | 2,977 |
Other non-current assets | 0 | (258) |
Deferred revenue | (17,382) | 58,469 |
Accounts payable and accrued liabilities | (9,898) | (5,595) |
Acquisition-related earn-out payments | (1,432) | (2,198) |
Accrued incentive compensation | (17,047) | (4,222) |
Other long-term liabilities | 1,263 | (3,203) |
Net cash provided by operating activities | 56,459 | 107,557 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (34,808) | (39,498) |
Capitalized external-use software development costs | (2,434) | (2,965) |
Cash paid for acquisitions, net of cash acquired | (1,900) | (746,693) |
Cash paid for investment in equity method investment | 0 | (3,006) |
Cash received from partial sale of equity method investment | 48,565 | 0 |
Redemptions of marketable securities | 0 | 14,714 |
Net cash provided by (used in) investing activities | 9,423 | (777,448) |
Cash flows from financing activities: | ||
Proceeds from debt, net | 17,000 | 1,280,292 |
Pay down of debt | (38,562) | (739,377) |
Debt issuance costs | 0 | (2,568) |
Proceeds from issuance of common stock, net of selling costs | 0 | 148,786 |
Proceeds from issuance of common stock from exercise of stock options | 3,337 | 3,262 |
Withholding of shares to satisfy minimum employee tax withholding for vested restricted stock units | (3,473) | (6,058) |
Proceeds from issuance of common stock under employee stock purchase plan | 370 | 389 |
Acquisition-related earn-out payments | (3,600) | (1,500) |
Excess tax benefits from stock-based awards | 3,925 | 2,804 |
Purchases of treasury stock | (61,616) | (33,000) |
Net cash (used in) provided by financing activities | (82,619) | 653,030 |
Net decrease in cash and cash equivalents | (16,737) | (16,861) |
Cash and cash equivalents, beginning of period | 71,825 | 72,936 |
Cash and cash equivalents, end of period | $ 55,088 | $ 56,075 |
Business Description and Basis
Business Description and Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Business description and basis of presentation | Business description and basis of presentation The Advisory Board Company (individually and collectively with its subsidiaries, the “Company”) provides best practices research and insight, performance technology software, data- and tech-enabled services, and consulting and management services, through discrete programs to hospitals, health systems, independent medical groups, pharmaceutical and biotechnology companies, health care insurers, medical device companies, and colleges, universities, and other health care-focused organizations and educational institutions. Members of each subscription-based membership program are typically charged a separate fixed annual fee and have access to an integrated set of services that may include best practices research studies, executive education, proprietary content databases and online tools, daily online executive briefings, original executive inquiry services, cloud-based software applications, data- and tech-enabled services, and consulting and management services. The unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures required for complete financial statements are not included herein. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes as reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 and the Company’s Quarterly Reports on Form 10-Q for subsequent quarters. The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The Company uses the equity method to account for equity investments in instances in which it owns common stock and has the ability to exercise significant influence, but not control, over the investee and for all investments in partnerships or limited liability companies where the investee maintains separate capital accounts for each investor. All significant intercompany transactions and balances have been eliminated. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the consolidated financial position, results of operations, and cash flows as of the dates and for the periods presented have been included. The consolidated balance sheet presented as of December 31, 2015 has been derived from the financial statements that have been audited by the Company’s independent registered public accounting firm. The consolidated results of operations for the three and nine months ended September 30, 2016 may not be indicative of the results that may be expected for the Company’s fiscal year ending December 31, 2016, or any other period. In connection with the preparation of the unaudited consolidated financial statements, the Company recorded corrections of certain out-of-period, immaterial misstatements that occurred in prior periods. These corrections resulted in an increase to the provision for income taxes of $ 4.2 million and $4.4 million for the three and nine months ended September 30, 2016, respectively, primarily related to recording reserves for tax positions taken in prior periods. These corrections also resulted in a decrease to income tax expense of $5.1 million included in gains (losses) from equity method investees for the three and nine months ended September 30, 2016 related to recording a deferred tax asset for the outside basis difference in the Company's investment in Evolent, Inc. The impact of these out-of-period corrections on net income for the three and nine months ended September 30, 2016 was not significant. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent accounting pronouncements | Recent accounting pronouncements Recently adopted In April 2015, the Financial Accounting Standards Board ("FASB") issued guidance on the presentation of debt issuance costs. The guidance requires debt issuance costs related to a recognized debt liability to be presented as a direct deduction from the carrying amount of that debt liability and only impacts financial position presentation. In August 2015, the FASB issued guidance related to the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. The guidance codified the SEC staff's view on the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements consistent with prior practice as an asset. The Company adopted these standards retrospectively on January 1, 2016. The impact the adoption had on the Company's consolidated financial position as of December 31, 2015 is disclosed below. The adoption had no effect on the Company's results of operations for any period. As reported Adjustments As adjusted Prepaid expenses and other current assets $ 22,651 $ (108 ) $ 22,543 Deferred incentive compensation and other charges 81,462 (281 ) 81,181 Total assets 1,979,866 (389 ) 1,979,477 Debt, current 27,851 (108 ) 27,743 Debt, net of current portion 522,367 (281 ) 522,086 Total liabilities 1,530,775 (389 ) 1,530,386 Total liabilities and stockholders’ equity 1,979,866 (389 ) 1,979,477 Recently issued In May 2014, the FASB issued accounting guidance related to revenue recognition. The new standard supersedes most of the existing revenue recognition guidance under GAAP, and requires revenue to be recognized when goods or services are transferred to a customer in an amount that reflects the consideration a company expects to receive. The new standard may require more judgment and estimates relating to the recognition of revenue, which could result in additional disclosures to the financial statements. The original effective date of the new standard was for annual and interim reporting periods beginning after December 15, 2016. In July 2015, the FASB decided to defer by one year the effective date of this new revenue recognition standard. As a result, the new standard will be effective for annual and interim reporting periods beginning after December 15, 2017, with an option that permits companies to adopt the standard as early as the original effective date. Early application prior to the original effective date is not permitted. The Company plans to adopt this standard on January 1, 2018. The Company is evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures and has not yet selected a transition method. In February 2016, the FASB issued accounting guidance relating to leases. The guidance requires that lessees recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. The new guidance also requires disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative information. The guidance is effective for annual reporting and interim periods beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements. In March 2016, the FASB issued accounting guidance relating to stock compensation. The guidance simplifies various aspects of the accounting for share-based payments. While aimed at reducing the cost and complexity of the accounting for share-based payments, the amendments are expected to impact net income, earnings per share, and the statement of cash flows. The guidance is effective for annual reporting and interim periods beginning after December 15, 2016, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements. In August 2016, the FASB issued accounting guidance relating to the statement of cash flows. The guidance clarifies how certain cash receipts and cash payments are presented in the statement of cash flows. The guidance is effective for annual reporting and interim periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions Increasing service to members through the introduction and expansion of new programs and services is a key component of the Company's growth strategy. From time to time the Company supplements its organic new program development efforts with acquisitions that allow it to introduce new offerings to its members, or that complement and enhance the value of existing products and services through the addition of new capabilities. Royall Acquisition Co. On January 9, 2015, the Company completed the acquisition of all of the issued and outstanding capital stock of Royall Acquisition Co. (together with its subsidiaries, “Royall”) from Royall Holdings, LLC. Royall is an education market leader in strategic, data-driven student engagement and enrollment management solutions. Total consideration consisted of the following (in thousands): Net cash paid (1) $ 744,193 Fair value of equity issued 121,224 Total $ 865,417 (1) Net of cash acquired of $7,065 and a working capital adjustment payment of $1,278 . On January 9, 2015, in connection with the completion of the acquisition of Royall, the Company entered into a credit agreement with various lenders. See Note 8, "Debt," for further details regarding this credit agreement. The fair value of equity issued was approximately $121.2 million based on 2,428,364 shares of the Company's common stock valued at $49.92 per share, which was the closing price of the common stock on January 9, 2015 as reported on the NASDAQ Global Select Market. The purchase price allocation resulting from the acquisition of Royall is set forth below (in thousands): As of January 9, 2015 Consideration paid for the acquisition $ 865,417 Allocated to: Membership fees receivable, net 29,239 Prepaid expenses and other current assets 8,237 Property and equipment 44,209 Intangible assets, net 262,000 Deferred revenue, current (18,300 ) Accounts payable and accrued liabilities (5,621 ) Deferred income taxes, net of current portion (102,599 ) Fair value of net assets acquired $ 217,165 Allocation to goodwill $ 648,252 Acquisition-related costs of $9.9 million were incurred related to this transaction. Of this amount, $6.6 million was recognized and included in general and administrative costs in the Company’s consolidated statements of operations for the nine months ended September 30, 2015. Royall goodwill impairment Goodwill is reviewed for impairment at least annually as of October 1, which is the first date of the fourth quarter of the Company's fiscal year, or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company performs its goodwill impairment test at the reporting unit level, which is one level below the operating segment. The Company has one operating segment, which is consistent with the way management runs the business and allocates resources. The operating segment has been divided into two reporting units largely as a result of the Royall acquisition and continued integration efforts. The two reporting units are Royall and the remaining Advisory Board business. Goodwill is assigned to the reporting unit or units that benefit from the synergies arising from each business combination. As of the October 1, 2015 goodwill impairment assessment, the Royall reporting unit failed the step one test and the Company performed the step two test. In connection with the step two test, the Company estimated the fair value of identifiable intangible assets and deferred revenue using methodologies consistent with those used in the original Royall purchase price allocation. Key assumptions were updated to reflect the current outlook for the Royall business as well as market conditions. The step two analysis resulted in a goodwill impairment of $99.1 million , which was recorded in the year ended December 31, 2015. In addition, the Company recorded an adjustment to the Royall purchase price allocation resulting in an increase to deferred tax assets and a reduction of goodwill of approximately $1 million during the three months ended September 30, 2016. Pro forma The following table presents the Company’s pro forma consolidated revenues and net income for the three and nine months ended September 30, 2015. The unaudited pro forma results include the historical statements of operations information of the Company and of Royall, giving effect to the acquisition of Royall and related financing as if they had occurred on January 1, 2014. The unaudited pro forma financial information presented below does not reflect the effect of any actual or anticipated synergies expected to result from the acquisition of Royall. Accordingly, the unaudited pro forma financial information is not necessarily indicative of the results of operations that would have been recognized had the acquisition of Royall and the related financing been effected on the assumed date. The unaudited pro forma results are set forth below (in thousands): Unaudited Pro Forma Results Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015 Revenue $ 200,492 $ 578,689 Net income $ 672 $ 11,088 For the nine months ended September 30, 2015 , the pro forma results, prepared in accordance with GAAP, include the following pro forma adjustments related to the acquisition of Royall: (i) an increase in revenue of $2.8 million and an increase in expense of $1.7 million for Royall's activity from January 1, 2015 to the January 9, 2015 acquisition date; (ii) an increase in revenue of $12.5 million representing the purchase accounting fair value effect to revenue that was recognized in the nine months ended September 30, 2015; (iii) an increase in amortization expense related to the fair value of the identifiable intangible assets of $0.4 million ; (iv) the elimination, and replacement, of the historical Royall interest expense with the interest expense from the Company's new senior secured term credit facility totaling $15.0 million ; (v) the elimination of $17.4 million of loss on financing activities related to the acquisition-related debt activity; and (vi) the elimination of $6.6 million of acquisition-related costs. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements | Fair value measurements Financial assets and liabilities The estimated fair values of financial instruments are determined based on relevant market information. These estimates involve uncertainty and cannot be determined with precision. The Company’s financial instruments consist primarily of cash, cash equivalents, and interest rate swaps. In addition, contingent earn-out liabilities resulting from business combinations are recorded at fair value. The following methods and assumptions are used to estimate the fair value of each class of financial assets or liabilities that is valued on a recurring basis. Cash and cash equivalents . This includes all cash and liquid investments with an original maturity of three months or less from the date acquired. The carrying amount approximates fair value because of the short maturity of these instruments. Cash equivalents also consist of money market funds with fair values based on quoted market prices. The Company’s cash and cash equivalents are held at major commercial banks. Contingent earn-out liabilities . This class of financial liabilities represents the Company’s estimated fair value of the contingent earn-out liabilities related to acquisitions based on probability assessments of certain performance achievements during the earn-out periods. The performance targets are specific to the operation of the acquired company subsequent to the acquisition. These inputs are considered key estimates made by the Company that are unobservable because there are no active markets to support them. Contingent earn-out liabilities are included in accounts payable and accrued liabilities and other long-term liabilities on the consolidated balance sheets. Interest rate swaps . The Company uses interest rate swaps to manage interest rate risk. The fair values of interest rate swaps are determined using the market standard methodology of discounting the future variable cash payments, or receipts, over the life of the agreements. The variable interest rates used in the calculation of projected receipts are based on observable market interest rate curves. See Note 8, "Debt." Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The valuation can be determined using widely accepted valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). As a basis for applying a market-based approach in fair value measurements, GAAP establishes a fair value hierarchy that prioritizes into three broad levels the inputs to valuation techniques used to measure fair value. The following is a brief description of those three levels: • Level 1—Quoted prices in active markets for identical assets or liabilities. • Level 2—Observable market-based inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities in active markets; quoted prices for similar or identical assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. • Level 3—Unobservable inputs that are supported by little or no market activity, such as discounted cash flow methodologies. Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. There were no significant transfers between Level 1, Level 2, or Level 3 during the nine months ended September 30, 2016 or 2015. The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the related classifications are as follows (in thousands): Fair value as of September 30, Fair value measurement as of September 30, 2016 2016 Level 1 Level 2 Level 3 Financial assets Cash and cash equivalents (1) $ 55,088 $ 55,088 $ — $ — Financial liabilities Interest rate swaps (2) 3,052 — 3,052 — Contingent earn-out liabilities (3) 1,365 — — 1,365 Fair value as of December 31, Fair value measurement as of December 31, 2015 using fair value hierarchy 2015 Level 1 Level 2 Level 3 Financial assets Cash and cash equivalents (1) $ 71,825 $ 71,825 $ — $ — Interest rate swaps (2) 419 — 419 — Financial liabilities Contingent earn-out liabilities (3) 7,250 — — 7,250 (1) Fair value is based on quoted market prices. (2) Fair value is determined using market standard models with observable inputs. (3) This fair value measurement is based on unobservable inputs that are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value using the income approach. In developing these estimates, the Company considered certain performance projections, historical results, and general macroeconomic environment and industry trends. Contingent earn-out liabilities The Company's fair value estimate of the earn-out liability related to the Company’s acquisition of Clinovations, LLC (“Clinovations”) in November 2014 was $4.5 million as of the date of acquisition. The fair value of the Clinovations earn-out liability is affected by changes in estimates regarding expected operating results through the evaluation periods, which will end on December 31, 2017 with payments extending through April 2018. During the three months ended September 30, 2016, 62,269 shares were issued to pay a portion of the earn-out liability. The maximum payout of the earn-out liability is $9.5 million , while the minimum is $0 . Based on the results of Clinovations’ operating results, the fair value of the contingent obligation for Clinovations as of September 30, 2016 was estimated at $0.8 million . The fair value of the Clinovations earn-out liability is affected by changes in estimates regarding expected operating results, discount rates for each evaluation period, which vary from approximately 6.7% to 7.5% , and the volatility of the Company's common stock, which was 28.0% as of September 30, 2016 . The Company's fair value estimate of the earn-out liability related to the Company’s acquisition of ThoughtWright, LLC d/b/a GradesFirst (“GradesFirst”) in December 2014 was $3.6 million as of the date of acquisition. The fair value of the GradesFirst earn-out liability was affected by changes in estimates regarding expected operating results through the evaluation period, which ended on December 31, 2015. The maximum earn-out potential of $4.0 million was earned during the evaluation period and paid during the nine months ended September 30, 2016 . There is no remaining contingent obligation related to this earn-out agreement. The Company entered into an earn-out agreement in connection with its acquisition of Southwind Health Partners, L.L.C. and Southwind Navigator, LLC (together, “Southwind”) in December 2009. The Company’s fair value estimate of the Southwind earn-out liability was $5.6 million as of the date of acquisition. The fair value of the Southwind earn-out liability was affected by changes in the Company's stock price and by changes in estimates regarding expected operating results through the end of the evaluation period, which was December 31, 2014. As of September 30, 2016 , $21.4 million had been earned and paid in cash and shares to the former owners of the Southwind business, which includes the final payment of $1.0 million that was paid during the nine months ended September 30, 2016 . There is no remaining contingent obligation related to this earn-out agreement. Changes in the fair value of the contingent earn-out liabilities subsequent to the acquisition date, including changes arising from events that occurred after the acquisition date, such as changes in the Company’s estimate of performance achievements, discount rates, and stock price, are recognized in earnings in the periods during which the estimated fair value changes. The following table represents a reconciliation of the change in the contingent earn-out liabilities for the three and nine months ended September 30, 2016 and 2015 (in thousands): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Beginning balance $ 3,280 $ 8,416 $ 7,250 $ 12,946 Addition due to acquisition — — 357 — Fair value change in Clinovations contingent earn-out liability (1) 647 (1,297 ) 1,327 (2,589 ) Fair value change in GradesFirst contingent earn-out liability (1) — 200 — 200 Fair value change in Southwind contingent earn-out liability (1) — 40 — 249 Fair value change in other contingent earn-out liabilities (1) 141 — 166 — Southwind earn-out payments — (334 ) (1,032 ) (2,281 ) Clinovations earn-out share-based payment (2,703 ) — (2,703 ) — GradesFirst earn-out payments — — (4,000 ) — 360Fresh, Inc. earn-out payments — — — (1,500 ) Ending balance $ 1,365 $ 7,025 $ 1,365 $ 7,025 (1) Amounts were recognized in cost of services on the consolidated statements of operations. Financial instruments not recorded at fair value on a recurring basis Equity method investments . The Company's equity method investments represent the Company's ownership interest in Evolent Health, Inc. and its subsidiary, Evolent Health LLC. The fair value of the Company's ownership interest in Evolent Health, Inc. and its subsidiary prior to any discount was $229.9 million as of September 30, 2016 based on the quoted closing stock price as reported on the New York Stock Exchange. For further information, see Note 7, "Equity method investments." The fair value of the Company's equity method investments is measured quarterly for disclosure purposes. The Company's equity method investments are recorded at fair value only if an impairment charge is recognized. Credit facilities . The Company estimates that the fair value of its credit facilities was $530.5 million as of September 30, 2016 . The fair value was determined based on discounting the future expected variable cash payments over the life of the loan. The variable interest rates used in the calculation are based on observable market interest rates. The credit facilities would be classified as Level 2 within the fair value hierarchy if it were measured at fair value. Non-financial assets and liabilities Certain assets and liabilities are not measured at fair value on an ongoing basis but instead are measured at fair value on a non-recurring basis, so that such assets and liabilities are subject to fair value adjustments in certain circumstances (such as when there is evidence of impairment). During the nine months ended September 30, 2016 and 2015, no fair value adjustments or material fair value measurements were required for non-financial assets or liabilities. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | Property and equipment Property and equipment consists of leasehold improvements, furniture, fixtures, equipment, capitalized internal-use software development costs, and acquired developed technology. Property and equipment is stated at cost, less accumulated depreciation and amortization. In certain membership programs, the Company provides software applications under a hosting arrangement where the software application resides on the Company’s or its service providers’ hardware. The members do not take delivery of the software and only receive access to the software during the term of their membership agreement. Software development costs that are incurred in the preliminary project stage are expensed as incurred. During the development stage, direct consulting costs and payroll and payroll-related costs for employees that are directly associated with each project are capitalized and amortized over the estimated useful life of the software once placed into operation. Capitalized software is amortized using the straight-line method over its estimated useful life, which is generally five years. Replacements and major improvements are capitalized, while maintenance and repairs are charged to expense as incurred. The acquired developed technology, which includes acquired software, databases, and analytics, is classified as software within property and equipment because the developed software application, database, or analytic resides on the Company’s or its service providers’ hardware. Amortization for acquired developed technology is included in depreciation and amortization on the Company’s consolidated statements of operations. Developed technology obtained through acquisitions is amortized using the straight-line method over the estimated useful life used in determining the fair value of the assets at acquisition. As of September 30, 2016 , the weighted average useful life of existing acquired developed technology was approximately eight years. The amount of acquired developed technology amortization included in depreciation and amortization for the three and nine months ended September 30, 2016 was approximately $2.1 million and $6.7 million , respectively. The amount of acquired developed technology amortization included in depreciation and amortization for the three and nine months ended September 30, 2015 was approximately $2.4 million and $7.0 million , respectively. Furniture, fixtures, and equipment are depreciated using the straight-line method over the estimated useful lives of the assets, which range from three to seven years. Leasehold improvements are depreciated using the straight-line method over the shorter of the estimated useful lives of the assets or the lease term. There are no capitalized leases included in property and equipment, net for the periods presented. The amount of depreciation expense recognized on furniture, fixtures, and equipment during the three and nine months ended September 30, 2016 was $5.7 million and $16.6 million , respectively. The amount of depreciation expense recognized on furniture, fixtures, and equipment during the three and nine months ended September 30, 2015 was $5.1 million and $15.0 million , respectively. Internally developed capitalized software related to the Company's hosted software is classified as software within property and equipment and has an estimated useful life of five years. As of September 30, 2016 and December 31, 2015, the carrying value of internally developed capitalized software was $75.1 million and $73.2 million , respectively. Amortization expense for internally developed capitalized software for the three and nine months ended September 30, 2016 recorded in depreciation and amortization on the accompanying statements of operations, was approximately $5.6 million and $17.5 million , respectively. Amortization expense for internally developed capitalized software for the three and nine months ended September 30, 2015 recorded in depreciation and amortization on the consolidated statements of operations, was approximately $4.9 million and $13.9 million , respectively. Property and equipment consists of the following (in thousands): As of September 30, 2016 December 31, 2015 Leasehold improvements $ 69,194 $ 63,608 Furniture, fixtures, and equipment 67,593 62,790 Software 224,479 202,384 Construction in progress, subject to a build-to-suit lease 33,186 2,700 Property and equipment, gross 394,452 331,482 Accumulated depreciation and amortization (186,844 ) (148,425 ) Property and equipment, net $ 207,608 $ 183,057 The Company evaluates its long-lived assets for impairment when changes in circumstances exist that suggest the carrying value of a long-lived asset may not be fully recoverable. If an indication of impairment exists, and the Company’s net book value of the related assets is not fully recoverable based upon an analysis of its estimated undiscounted future cash flows, the assets are written down to their estimated fair value. During the nine months ended September 30, 2016 , the Company recognized a $1.0 million impairment loss recorded in depreciation and amortization on the consolidated statements of operations related to certain internally developed software that is no longer in use. The Company did no t recognize any impairment losses on any of its long-lived assets during the nine months ended September 30, 2015 . |
Goodwill and Intangibles
Goodwill and Intangibles | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and intangibles | Goodwill and intangibles Included in the Company’s goodwill and intangibles balances are goodwill and acquired intangibles, as well as internally developed capitalized software for sale. Goodwill is not amortized because it has an estimated indefinite life. Goodwill is reviewed for impairment at least annually as of October 1, or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company believes that no such impairment indicators existed during the nine months ended September 30, 2016 or 2015 . There was no impairment of goodwill recorded in the nine months ended September 30, 2016 or 2015 . The following illustrates the change in the goodwill balance for the nine months ended September 30, 2016 (in thousands): As of September 30, 2016 Beginning balance $ 738,200 Acquisitions 2,258 Adjustment related to Royall acquisition (1) (951 ) Ending balance $ 739,507 (1) Represents an adjustment to the purchase price allocation resulting in an increase to deferred tax assets and a reduction of goodwill. Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives, which range from 2 years to 17 years. As of September 30, 2016 , the weighted average remaining useful life of acquired intangibles was approximately 13.4 years. As of September 30, 2016 , the weighted average remaining useful life of internally developed intangibles was approximately 3.5 years. The gross and net carrying balances and accumulated amortization of intangibles are as follows (in thousands): As of September 30, 2016 As of December 31, 2015 Weighted average useful life Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Intangibles Internally developed software for sale 5.0 $ 19,336 $ (9,177 ) $ 10,159 $ 16,902 $ (6,796 ) $ 10,106 Acquired intangibles: Developed software 5.2 9,450 (8,450 ) 1,000 9,450 (8,075 ) 1,375 Customer relationships 16.2 277,710 (38,678 ) 239,032 277,710 (25,769 ) 251,941 Trademarks 8.6 14,900 (5,593 ) 9,307 14,900 (4,490 ) 10,410 Non-compete agreements 3.8 1,400 (1,400 ) — 1,400 (1,379 ) 21 Customer contracts 4.7 6,449 (5,908 ) 541 6,449 (5,581 ) 868 Total intangibles $ 329,245 $ (69,206 ) $ 260,039 $ 326,811 $ (52,090 ) $ 274,721 Amortization expense for intangible assets for the three and nine months ended September 30, 2016 , recorded in depreciation and amortization on the consolidated statements of operations, was approximately $5.7 million and $17.1 million , respectively. Amortization expense for intangible assets for the three and nine months ended September 30, 2015 was approximately $6.1 million and $18.4 million , respectively. The following approximates the aggregate amortization expense to be recorded in depreciation and amortization on the consolidated statements of operations for the remaining three months of the fiscal year ending December 31, 2016, for each of the following fiscal years ending December 31, 2017 through 2020, and thereafter: $5.7 million , $22.4 million , $21.4 million , $19.8 million , and $18.5 million , respectively, and $172.2 million thereafter. |
Equity Method Investments
Equity Method Investments | 9 Months Ended |
Sep. 30, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity method investments | Equity method investments As of September 30, 2016 , the Company held an 8.6% equity interest in Evolent Health LLC (“Evolent LLC”) and a 9.2% equity ownership interest in Evolent Health, Inc. (“Evolent Inc.”), which had no material operations outside of its 74.6% ownership interest in Evolent LLC. These investments are accounted for under the equity method, with the Company’s proportionate share of the investees’ losses recognized in the consolidated statements of operations. The Company has the right to designate two individuals to Evolent Inc.'s board of directors, who were the Company’s Chief Financial Officer and an unaffiliated designee of the Company as of September 30, 2016 . During the three months ended September 30, 2016, the Company sold a portion of its interest in Evolent Inc., retaining a 9.2% interest immediately after such sale. Total cash received from the transaction was $48.6 million and resulted in the recognition of an after tax gain of $29.7 million in the three and nine months ended September 30, 2016. During the three months ended September 30, 2016 , the Company's proportionate share of the losses of Evolent Inc. was $1.2 million . These losses were not recorded as they exceeded the Company's investment balance. The Company will track these unrecorded losses until such time as the Company's investment in Evolent Inc. produces earnings or a gain sufficient to offset the unrecorded losses. During the nine months ended September 30, 2016 , the Company's proportionate share of the losses of Evolent Inc. was $3.5 million , of which $1.5 million was recognized in the consolidated statements of operations. The carrying balance of the Company’s investment in Evolent Inc. was $0.0 million as of September 30, 2016 . The Company had a total of $1.8 million in unrecorded losses related to its investment in Evolent Inc. as of September 30, 2016 . During the three months ended September 30, 2016 , the Company's proportionate share of the losses of Evolent LLC was $1.3 million . These losses were not recorded as they exceeded the Company's investment balance. During the nine months ended September 30, 2016 , the Company's proportionate share of the losses of Evolent LLC was $3.5 million , of which $1.2 million was recognized in the consolidated statements of operations. The carrying balance of the Company’s investment in Evolent LLC was $0.0 million as of September 30, 2016 . The Company had a total of $1.5 million in unrecorded losses related to its investment in Evolent LLC as of September 30, 2016 . At the time of the reorganization and IPO of Evolent Inc., the Company carried over its basis in the investment resulting in a significant difference between its basis and its proportionate share in the equity of Evolent Inc. As of September 30, 2016 , the basis difference totaled $50.8 million and will decrease over time through amortization and upon any sale or dilutive transactions. The Company has excluded the effects of the purchase and push down accounting applied by Evolent Inc. upon gaining control of Evolent LLC in its determination of the equity in Evolent LLC losses, thereby reducing its share of losses from Evolent LLC for the affected periods. Because of Evolent LLC's treatment as a partnership for federal income tax purposes, the losses of Evolent LLC pass through to the Company and the other members. The Company's proportionate share of the losses of Evolent LLC is recorded net of the estimated tax benefit the Company believes will be realized from the equity in loss of equity method investments on the consolidated statements of operations. Historically, the Company had provided a full valuation allowance against the deferred tax asset resulting from these benefits. During the nine months ended September 30, 2015, the Company determined that it was more-likely-than not able to realize the deferred tax assets associated with its investment in Evolent LLC as a result of the reorganization related to Evolent Inc.'s initial public offering; accordingly, a tax benefit of $6.7 million was recorded to release the valuation allowance previously recorded. An additional tax benefit of $0.9 million was recorded in the nine months ended September 30, 2015 for tax benefits associated with current year losses received from Evolent LLC. In the three and nine months ended September 30, 2016 , additional tax benefits of $5.1 million and $5.4 million , respectively, were recorded for the tax effects of current year losses received from Evolent LLC and prior period adjustments. In the three and nine months ended September 30, 2016 , tax expense of $18.9 million was recorded for the tax effect of the current period gain on sale of shares in Evolent, Inc. The gains (losses) from equity method investments on the consolidated statement of operations for the combined Evolent entities consisted of the following (in thousands): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Dilution gain $ — $ — $ 2,026 $ — Gain on partial sale of investment 48,565 — 48,565 — Allocated share of losses — (2,594 ) (2,732 ) (9,238 ) Tax (expense) benefit (13,836 ) (695 ) (13,575 ) 7,570 Gains (losses) from equity method investments $ 34,729 $ (3,289 ) $ 34,284 $ (1,668 ) In connection with Evolent Inc.'s initial public offering and the related reorganization, the Company and certain investors in Evolent LLC entered into a tax receivables agreement with Evolent Inc. Under the terms of that agreement, Evolent Inc. will make cash payments to the Company and certain investors in amounts equal to 85% of Evolent Inc.'s actual tax benefit realized from various tax attributes related to activity before the initial public offering. Interest will be included on the tax savings at the applicable London interbank offered rate plus 100 basis points. The tax receivables agreement will generally apply to Evolent Inc.'s taxable years up to and including the 15 th anniversary date of the transaction. As of September 30, 2016 , the Company had not received any payments pursuant to the tax receivables agreement. As the amount the Company will receive pursuant to the tax receivables agreement is unknown, the Company will recognize payments, if any, associated with this agreement when such payments are received. The following is a summary of the financial position of Evolent LLC as of the dates presented. The period from June 4 to December 31, 2015 includes the effects of purchase accounting pushed down to Evolent LLC as part of the initial public offering which Evolent Inc. completed on June 4, 2015. As of September 30, 2016 December 31, 2015 Assets: Current assets $ 191,429 $ 184,463 Non-current assets 659,851 831,051 Total assets $ 851,280 $ 1,015,514 Liabilities and members’ equity: Current liabilities $ 65,315 $ 59,506 Non-current liabilities 7,998 111 Total liabilities 73,313 59,617 Members’ equity 777,967 955,897 Total liabilities and members’ equity $ 851,280 $ 1,015,514 The following is a summary of the operating results of Evolent LLC for the periods presented which include the effects of purchase accounting pushed down to Evolent LLC as part of the initial public offering which Evolent Inc. completed on June 4, 2015. The period from June 4 to December 31, 2015 reflects the impact of the push down accounting that was recorded on the Evolent LLC financial statements. Three Months Ended September 30, Nine Months Ended September 30, Period June 4 - September 30, Period January 1 - June 3, 2016 2015 2016 2015 2015 Revenue $ 60,210 $ 40,406 $ 166,177 $ 50,820 $ 61,814 Cost of revenue (exclusive of depreciation and amortization) 33,905 24,762 95,294 32,649 44,839 Gross profit $ 26,305 $ 15,644 $ 70,883 $ 18,171 $ 16,975 Net loss $ (16,029 ) $ (17,192 ) $ (203,199 ) $ (28,718 ) $ (44,079 ) The following is a summary of the consolidated financial position of Evolent Inc. as of the dates presented: As of September 30, 2016 December 31, 2015 Assets: Current assets $ 191,429 $ 184,463 Non-current assets 659,851 831,051 Total assets $ 851,280 $ 1,015,514 Liabilities and shareholders' equity: Current liabilities $ 65,329 $ 59,506 Non-current liabilities 26,094 21,429 Total liabilities 91,423 80,935 Total shareholders' equity (deficit) attributable to Evolent Health, Inc. 562,228 649,341 Non-controlling interests 197,629 285,238 Total liabilities and shareholders’ equity $ 851,280 $ 1,015,514 The following is a summary of the consolidated operating results of Evolent Inc. for the periods presented: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Revenue $ 60,210 $ 40,406 $ 166,177 $ 50,820 Cost of revenue (exclusive of depreciation and amortization) 33,905 24,762 95,294 32,649 Gross profit $ 26,305 $ 15,644 $ 70,883 $ 18,171 Income (loss) before income taxes and non-controlling interests $ (16,031 ) $ (17,192 ) $ (203,199 ) $ 357,250 Net income (loss) $ (15,775 ) $ (17,088 ) $ (201,585 ) $ 328,081 Net income (loss) attributable to Evolent Health, Inc. $ (11,208 ) $ (11,980 ) $ (142,335 ) $ 336,613 Evolent LLC is in the early stages of its business plan and, as a result, the Company expects both Evolent Inc. and Evolent LLC to continue to incur losses. The Company’s investments are evaluated for impairment whenever events or changes in circumstances indicate that there may be an other-than-temporary decline in value. As of September 30, 2016 , the Company believes that no impairment charge is necessary. For additional information on the fair value of the Company’s investment in the Evolent entities, see Note 4, “Fair value measurements.” |
Debt
Debt | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Debt | Debt On February 6, 2015, the Company obtained $675 million of senior secured credit facilities (“credit facilities”) under a credit agreement with a syndicate of lenders. The credit facilities were amended on October 30, 2015. The amended credit facilities consist of (a) a five -year senior secured term loan facility in the principal amount of $475 million (“term facility”) and (b) a five -year senior secured revolving credit facility (“revolving credit facility”) under which up to $200 million principal amount of borrowings and other credit extensions may be outstanding at any time. Amounts drawn under the term facility and revolving credit facilities bear interest, payable quarterly, at an annual rate calculated, at the Company’s option, on the basis of either (a) an alternate base rate plus an initial margin of 1.25% or (b) the applicable London interbank offered rate plus an initial margin of 2.25% , subject in each case to margin reductions based on the Company’s total leverage ratio from time to time. As of September 30, 2016 , based on the Company's historical leverage ratio, the interest rate margin was 2.00% and the stated annual interest rate on outstanding borrowings was 2.53% . In June 2016 the Company drew down $17.0 million of borrowings under its revolving credit facility which was repaid during the three months ended September 30, 2016 . The draw down borrowings had a maturity of three months and accrued interest at an annual rate of 2.66% . As of September 30, 2016 there was $100.0 million outstanding under the revolving credit facility and $80.9 million available for future borrowings. As of September 30, 2016 $19.1 million of standby letters of credit had been issued under the revolving credit facility. Long-term debt is summarized as follows (in thousands): As of September 30, 2016 2.53% term facility due fiscal 2020 ($431,875 face value less unamortized discount of $2,850) $ 429,025 Revolving credit facility 100,000 Less: Amounts due in next twelve months ($43,125 face value less unamortized discount of $980) (42,145 ) Total long-term debt $ 486,880 The credit agreement contains customary representations and warranties, events of default and financial and other covenants, including covenants that require the Company to maintain a maximum total leverage ratio and a minimum interest coverage ratio. The Company's compliance with the two financial covenants is measured as of the end of each fiscal quarter. The Company was in compliance with these financial covenants as of September 30, 2016 . Interest expense for the three months ended September 30, 2016 and 2015 was $4.5 million and $5.5 million , inclusive of $0.3 million and $0.3 million of amortization of debt issuance costs, and $0.5 million and $0.8 million of payments related to the interest rate swaps described below, respectively. Interest expense for the nine months ended September 30, 2016 and 2015 was $13.7 million and $16.2 million , inclusive of $1.0 million and $1.0 million of amortization of debt issuance costs, and $1.7 million and $1.3 million of payments related to the interest rate swaps described below, respectively. Swap agreements Through its term facility, the Company is exposed to interest rate risk. In April 2015, to minimize the impact of changes in interest rates on its interest payments, the Company entered into three interest rate swap agreements with financial institutions to swap a portion of its variable-rate interest payments for fixed-rate interest payments. The interest rate swap derivative financial instruments are recorded on the consolidated balance sheets at fair value, which is based on observable market-based expectations of future interest rates. At hedge inception, the Company entered into interest rate swap arrangements with notional amounts totaling $287.5 million . The swap was structured to have a declining notional amount which matches the amortization schedule of the term facility. As of September 30, 2016 , the principal amount hedged was $265.9 million . The interest rate swap agreements mature in February 2020 and have periodic interest settlements, both consistent with the terms of the Company's term facility. Under this agreement, the Company is entitled to receive a floating rate based on the 1-month London interbank offered rate and obligated to pay an average fixed rate of 1.282% on the outstanding notional amount. The Company has designated the interest rate swap as a cash flow hedge of the variability of interest payments under its term facility due to changes in the LIBOR benchmark interest rate. The difference between cash paid and received is recorded within interest expense on the consolidated statements of operations. As of September 30, 2016 and December 31, 2015, the fair value of the interest rate swaps was a liability of $3.1 million and an asset of $0.4 million , respectively, and was recorded within other long-term liabilities on the Company's consolidated balance sheets. For the three months ended September 30, 2016 and 2015, the change in fair value of the swaps, net of tax, was an increase of $0.8 million and an decrease of $2.1 million , respectively, and was reported as a component of accumulated other comprehensive income (loss). For the nine months ended September 30, 2016 and 2015, the change in fair value of the swaps, net of tax, was a decrease of $2.1 million and an decrease $1.4 million , respectively. There was no hedge ineffectiveness as of September 30, 2016 and 2015. Changes in fair value are reclassified from accumulated other comprehensive income (loss) into earnings in the same period in which the hedged item affects earnings. If, at any time, the swap is determined to be ineffective, in whole or in part, due to changes in the interest rate swap or underlying debt agreements, the fair value of the portion of the swap determined to be ineffective will be recognized as a gain or loss on the consolidated statements of operations for the applicable period. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Stockholders' equity | Stockholders’ equity In November 2015, the Company’s board of directors authorized an increase in its cumulative share repurchase program to $550 million of the Company's common stock. The Company repurchased 211,011 and 1,951,258 shares of its common stock at a total cost of approximately $8.0 million and $61.6 million in the three and nine months ended September 30, 2016 , respectively, pursuant to its share repurchase program. The Company repurchased 677,503 shares of its common stock at a total cost of approximately $33.0 million in the three and nine months ended September 30, 2015 . The total amount of common stock purchased from inception under the program through September 30, 2016 was 19,778,800 shares at a total cost of $513.5 million . All such repurchases have been made in the open market, and all repurchased shares have been retired as of September 30, 2016 . No minimum number of shares subject to repurchase has been fixed, and the share repurchase authorization has no expiration date. As of September 30, 2016 , the remaining authorized repurchase amount was $36.5 million . |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based compensation | Stock-based compensation Royall inducement plan On January 9, 2015, in conjunction with the Royall acquisition, the Company created The Advisory Board Company Inducement Stock Incentive Plan for Royall Employees ("inducement plan") to enable the Company to award options and restricted stock units to persons employed by Royall as an inducement to employees entering into and continuing employment with the Company or its current or future subsidiaries upon consummation of the Royall acquisition. Under the terms of this plan, the aggregate number of shares issuable pursuant to all awards may not exceed 1,906,666 . The awards consisted of performance-based stock options to purchase an aggregate of 1,751,000 shares of common stock and performance-based restricted stock units ("RSUs") for an aggregate of 145,867 shares of common stock. Both the performance-based stock options and performance-based RSUs are also subject to service conditions. Stock options granted under the inducement plan have an exercise price equal to $49.92 , which was the closing price of the Company’s common stock on January 9, 2015 as reported on the NASDAQ Global Select Market. The stock options have a seven -year term and are eligible to vest, if performance-based vesting criteria are satisfied, in installments commencing in January 2017 and ending in January 2020. The RSUs were valued at $49.92 and are also eligible to vest in installments commencing in January 2017 and ending in January 2020, subject to satisfaction of performance-based vesting criteria. The vesting criteria in both cases are based on performance of the Royall programs and services. The aggregate grant date fair value of the performance-based stock options, assuming all performance targets are met, was estimated to be approximately $26.8 million . The aggregate grant date fair value of the performance-based RSUs, assuming all performance targets are met, was estimated at approximately $7.3 million . As of September 30, 2016 , the Company expects that Royall will achieve 70% to 99% of the performance targets, which would result in vesting of 50% of the performance-based stock options and 50% of the RSUs eligible to vest, subject to forfeitures. The option and RSU awards are reflected in the tables below. The actual stock-based compensation expense the Company will recognize is dependent upon Royall satisfying the applicable performance conditions and continued employment of award recipients at the time performance conditions are met. The actual amount the Company will recognize may increase or decrease based on Royall's actual results and the employment status of the award recipients at the time performance conditions are met. Stock incentive plans On June 9, 2015, the Company's stockholders approved an amendment to the Company's 2009 Stock Incentive Plan (the “2009 Plan”) that increased the number of shares of common stock authorized for issuance under the plan by 3,800,000 shares. The aggregate number of shares of the Company’s common stock available for issuance under the 2009 Plan, as amended, may not e xceed 10,535,000 . Performance-based stock option grant. On March 2, 2016, the compensation committee of the board of directors approved a grant of 319,900 nonqualified performance-based stock options under the 2009 Plan to certain executive officers of the Company. These awards are subject to ma rket conditions and portions will vest, with all awards vesting if the highest levels of the performance are achieved, based on the achievement of sustained stock price during the performance period, which could extend to March 2, 2023. The Company has concluded that it is probable that all awards will vest at the highest level of achievement, as the market-based performance obligations for these awards were satisfied during the three months ended September 30, 2016. The estimated requisite service period, which includes the current estimate of the time to achieve the market conditions is one year. The option awards are reflected in the table below. The following table summarizes the changes in common stock options outstanding under the Company’s stock incentive plans during the nine months ended September 30, 2016 and 2015 : Number of performance-based options Weighted average exercise price Number of service-based options Weighted average exercise price Outstanding, as of December 31, 2014 994,605 $ 50.96 1,746,692 $ 37.19 Granted 1,774,820 49.90 328,096 53.42 Exercised — — (144,739 ) 22.53 Forfeited (756,100 ) 49.92 (13,569 ) 60.27 Outstanding, as of September 30, 2015 2,013,325 $ 50.42 1,916,480 $ 40.91 Number of Weighted Number of Weighted Outstanding, as of December 31, 2015 2,013,325 $ 50.42 1,843,110 $ 41.73 Granted 319,900 28.20 1,025,100 28.52 Exercised — — (251,458 ) 15.36 Forfeited (215,370 ) 49.92 (22,195 ) 53.38 Expired — — (17,347 ) 51.77 Outstanding, as of September 30, 2016 2,117,855 $ 47.11 2,577,210 $ 38.88 Exercisable, as of September 30, 2016 26,872 $ 34.91 1,069,703 $ 42.10 The weighted average fair value of the service-based options, valued using a Black-Scholes model, granted during the nine months ended September 30, 2016 was estimated at $9.94 per share on the date of grant using the following weighted average assumptions: risk-free interest rate of 1.2% ; an expected term of approximately 5.1 years; expected volatility of 37.48% ; and dividend yield of 0.0% over the expected life of the option. The weighted average fair value of performance-based options granted with market conditions, valued using a Monte Carlo model, during the nine months ended September 30, 2016 was estimated at $10.21 per share on the date of grant using the following weighted average assumptions: risk-free interest rate of 1.6% ; an expected term of 6.4 years; volatility of 36.5% ; and dividend yield of 0.0% over the expected life of the option. During the nine months ended September 30, 2016 , 6,872 options with performance and/or market conditions vested. During the nine months ended September 30, 2015 , 10,000 options with performance conditions vested. The following table summarizes the changes in RSUs granted under the Company’s stock incentive plans during the nine months ended September 30, 2016 and 2015 : Number of performance-based RSUs Weighted average grant date fair value Number of service-based RSUs Weighted average grant date fair value Non-vested, December 31, 2014 189,497 $ 31.82 857,085 $ 48.94 Granted 169,204 49.74 349,566 53.09 Forfeited (78,005 ) 48.16 (31,152 ) 55.75 Vested (2,200 ) 29.58 (360,454 ) 43.59 Non-vested, September 30, 2015 278,496 $ 38.15 815,045 $ 52.87 Number of Weighted average Number of Weighted average Non-vested, December 31, 2015 301,032 $ 39.10 839,613 $ 52.82 Granted 23,580 32.28 490,165 30.92 Forfeited (66,139 ) 51.15 (56,067 ) 47.36 Vested (893 ) 50.41 (314,553 ) 51.47 Non-vested, September 30, 2016 257,580 $ 35.34 959,158 $ 42.39 The Company recognized stock-based compensation expense in the following consolidated statements of operations line items for stock options and RSUs for the three and nine months ended September 30, 2016 and 2015 (in thousands): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Stock-based compensation expense included in: Costs and expenses: Cost of services $ 2,443 $ 2,423 $ 7,123 $ 6,881 Member relations and marketing 1,342 1,306 3,843 3,907 General and administrative 4,182 3,365 11,948 11,342 Total costs and expenses $ 7,967 $ 7,094 $ 22,914 $ 22,130 There are no stock-based compensation costs capitalized as part of the cost of an asset. As of September 30, 2016 , $58.4 million of total unrecognized compensation cost related to outstanding options and non-vested RSUs was expected to be recognized over a weighted average period of 2.6 years. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes The Company's effective tax rates were 53.9% and 68.4% for the three months ended September 30, 2016 and 2015, respectively. The Company's effective tax rates were 39.6% and (3,058.6)% for the nine months ended September 30, 2016 and 2015, respectively. Included in the tax expense for the nine months ended September 30, 2016 was a discrete tax expense of $1.2 million which primarily related to an increase in reserves for uncertain tax positions. For the nine months ended September 30, 2015 , the Company recognized a discrete tax expense of $10.8 million related to the write-off of accumulated Washington, D.C. tax credits. The write-off was a result of changes in the District of Columbia tax laws effective January 1, 2015 and resulted in income tax expense in the nine months ended September 30, 2015 . The Company uses a more-likely-than-not recognition threshold based on the technical merits of the tax position taken for the financial statement recognition and measurement of a tax position. If a tax position does not meet the more-likely-than-not initial recognition threshold, no benefit is recorded in the financial statements. The Company does not expect that the total amounts of unrecognized tax benefits will significantly change within the next 12 months. The Company classifies interest and penalties on any unrecognized tax benefits as a component of the provision for income taxes. The Company recognized an immaterial amount of interest in the consolidated statements of operations during the three months ended September 30, 2016 and September 30, 2015 . The Company recognized $0.1 million and $0.3 million in interest and penalties in the consolidated statements of operations in the nine months ended September 30, 2016 and September 30, 2015 , respectively. The Company files income tax returns in U.S. federal and state and foreign jurisdictions. With limited exceptions, the Company is no longer subject to U.S. federal, state, and local tax examinations for filings in major tax jurisdictions before 2012. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Earnings per share | Earnings per share Basic earnings per share is computed by dividing net income by the number of weighted average common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the number of weighted average common shares and potentially dilutive common shares outstanding during the period. The number of potential common shares outstanding is determined in accordance with the treasury stock method, using the Company’s prevailing tax rates. Certain potential common share equivalents were not included in the computation because their effect was anti-dilutive. A reconciliation of basic to diluted weighted average common shares outstanding is as follows (in thousands): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Basic weighted average common shares outstanding 40,102 42,320 40,651 41,900 Effect of dilutive outstanding stock-based awards 390 468 326 — Diluted weighted average common shares outstanding 40,492 42,788 40,977 41,900 In the three months ended September 30, 2016 and 2015 , 1.6 million and 0.7 million shares, respectively, related to share-based compensation awards have been excluded from the calculation of the effect of dilutive outstanding stock-based awards shown above because their effect was anti-dilutive. In the nine months ended September 30, 2016 and 2015 , 1.7 million and 2.7 million shares, respectively, related to share-based compensation awards have been excluded from the calculation of the effect of dilutive outstanding stock-based awards shown above because their effect was anti-dilutive. As of September 30, 2016 , the Company had 1.8 million nonqualified stock options and 0.2 million RSUs that contained either performance or market conditions, or both, and therefore are treated as contingently issuable awards. As of September 30, 2015 , the Company had 2.0 million nonqualified stock options and 0.3 million RSUs that contained either performance or market conditions and were treated as contingently issuable awards. These awards are excluded from diluted earnings per share until the reporting period in which the necessary conditions are achieved. To the extent all necessary conditions have not yet been satisfied, the number of contingently issuable shares included in diluted earnings per share will be based on the number of shares, if any, that would be issuable if the end of the reporting period were the end of the contingency period. A total of 42,585 and 11,532 incremental shares for dilution related to contingently issuable awards were included within the diluted earnings per share calculations for the three and nine months ended September 30, 2016 , respectively, as the related performance goals were met as of September 30, 2016 . There were no contingently issuable awards included within the diluted earnings per share calculations for the three and nine months ended September 30, 2015 . |
Supplemental cash flow
Supplemental cash flow | 9 Months Ended |
Sep. 30, 2016 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental cash flow | Supplemental cash flow A summary of supplemental cash flow information for the nine months ended September 30, 2016 and 2015 is presented below (in thousands): Nine Months Ended 2016 2015 Cash paid (received) for: Income taxes $ 10,324 $ (8,363 ) Interest $ 10,648 $ 13,744 Non-cash activities: Clinovations earn-out liability share-based payment $ 2,703 $ — Increase in estimated cost of construction of a building under a build-to-suit lease $ 30,486 $ — |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent events | Subsequent events On October 3, 2016, Evolent Inc. issued stock in connection with the acquisition of Valence Health, Inc. This transaction reduced the Company’s ownership in Evolent Inc. from 9.2% to 7.9% and reduced the Company's ownership in Evolent LLC from 8.6% to 7.7% . The Company is currently evaluating the effect that this dilution has on the recorded value of its investment. |
Recent Accounting Pronounceme22
Recent Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recently issued In May 2014, the FASB issued accounting guidance related to revenue recognition. The new standard supersedes most of the existing revenue recognition guidance under GAAP, and requires revenue to be recognized when goods or services are transferred to a customer in an amount that reflects the consideration a company expects to receive. The new standard may require more judgment and estimates relating to the recognition of revenue, which could result in additional disclosures to the financial statements. The original effective date of the new standard was for annual and interim reporting periods beginning after December 15, 2016. In July 2015, the FASB decided to defer by one year the effective date of this new revenue recognition standard. As a result, the new standard will be effective for annual and interim reporting periods beginning after December 15, 2017, with an option that permits companies to adopt the standard as early as the original effective date. Early application prior to the original effective date is not permitted. The Company plans to adopt this standard on January 1, 2018. The Company is evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures and has not yet selected a transition method. In February 2016, the FASB issued accounting guidance relating to leases. The guidance requires that lessees recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. The new guidance also requires disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative information. The guidance is effective for annual reporting and interim periods beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements. In March 2016, the FASB issued accounting guidance relating to stock compensation. The guidance simplifies various aspects of the accounting for share-based payments. While aimed at reducing the cost and complexity of the accounting for share-based payments, the amendments are expected to impact net income, earnings per share, and the statement of cash flows. The guidance is effective for annual reporting and interim periods beginning after December 15, 2016, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements. In August 2016, the FASB issued accounting guidance relating to the statement of cash flows. The guidance clarifies how certain cash receipts and cash payments are presented in the statement of cash flows. The guidance is effective for annual reporting and interim periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements. Recent accounting pronouncements Recently adopted In April 2015, the Financial Accounting Standards Board ("FASB") issued guidance on the presentation of debt issuance costs. The guidance requires debt issuance costs related to a recognized debt liability to be presented as a direct deduction from the carrying amount of that debt liability and only impacts financial position presentation. In August 2015, the FASB issued guidance related to the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. The guidance codified the SEC staff's view on the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements consistent with prior practice as an asset. The Company adopted these standards retrospectively on January 1, 2016. |
Recent Accounting Pronounceme23
Recent Accounting Pronouncements (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The impact the adoption had on the Company's consolidated financial position as of December 31, 2015 is disclosed below. The adoption had no effect on the Company's results of operations for any period. As reported Adjustments As adjusted Prepaid expenses and other current assets $ 22,651 $ (108 ) $ 22,543 Deferred incentive compensation and other charges 81,462 (281 ) 81,181 Total assets 1,979,866 (389 ) 1,979,477 Debt, current 27,851 (108 ) 27,743 Debt, net of current portion 522,367 (281 ) 522,086 Total liabilities 1,530,775 (389 ) 1,530,386 Total liabilities and stockholders’ equity 1,979,866 (389 ) 1,979,477 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | Total consideration consisted of the following (in thousands): Net cash paid (1) $ 744,193 Fair value of equity issued 121,224 Total $ 865,417 (1) Net of cash acquired of $7,065 and a working capital adjustment payment of $1,278 . |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The purchase price allocation resulting from the acquisition of Royall is set forth below (in thousands): As of January 9, 2015 Consideration paid for the acquisition $ 865,417 Allocated to: Membership fees receivable, net 29,239 Prepaid expenses and other current assets 8,237 Property and equipment 44,209 Intangible assets, net 262,000 Deferred revenue, current (18,300 ) Accounts payable and accrued liabilities (5,621 ) Deferred income taxes, net of current portion (102,599 ) Fair value of net assets acquired $ 217,165 Allocation to goodwill $ 648,252 |
Business Acquisition, Pro Forma Information | The unaudited pro forma results are set forth below (in thousands): Unaudited Pro Forma Results Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015 Revenue $ 200,492 $ 578,689 Net income $ 672 $ 11,088 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements of Financial Assets and Liabilities on Recurring Basis | The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the related classifications are as follows (in thousands): Fair value as of September 30, Fair value measurement as of September 30, 2016 2016 Level 1 Level 2 Level 3 Financial assets Cash and cash equivalents (1) $ 55,088 $ 55,088 $ — $ — Financial liabilities Interest rate swaps (2) 3,052 — 3,052 — Contingent earn-out liabilities (3) 1,365 — — 1,365 Fair value as of December 31, Fair value measurement as of December 31, 2015 using fair value hierarchy 2015 Level 1 Level 2 Level 3 Financial assets Cash and cash equivalents (1) $ 71,825 $ 71,825 $ — $ — Interest rate swaps (2) 419 — 419 — Financial liabilities Contingent earn-out liabilities (3) 7,250 — — 7,250 (1) Fair value is based on quoted market prices. (2) Fair value is determined using market standard models with observable inputs. (3) This fair value measurement is based on unobservable inputs that are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value using the income approach. In developing these estimates, the Company considered certain performance projections, historical results, and general macroeconomic environment and industry trends. |
Reconciliation of Change in Contingent Earn-out Liabilities | The following table represents a reconciliation of the change in the contingent earn-out liabilities for the three and nine months ended September 30, 2016 and 2015 (in thousands): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Beginning balance $ 3,280 $ 8,416 $ 7,250 $ 12,946 Addition due to acquisition — — 357 — Fair value change in Clinovations contingent earn-out liability (1) 647 (1,297 ) 1,327 (2,589 ) Fair value change in GradesFirst contingent earn-out liability (1) — 200 — 200 Fair value change in Southwind contingent earn-out liability (1) — 40 — 249 Fair value change in other contingent earn-out liabilities (1) 141 — 166 — Southwind earn-out payments — (334 ) (1,032 ) (2,281 ) Clinovations earn-out share-based payment (2,703 ) — (2,703 ) — GradesFirst earn-out payments — — (4,000 ) — 360Fresh, Inc. earn-out payments — — — (1,500 ) Ending balance $ 1,365 $ 7,025 $ 1,365 $ 7,025 (1) Amounts were recognized in cost of services on the consolidated statements of operations. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consists of the following (in thousands): As of September 30, 2016 December 31, 2015 Leasehold improvements $ 69,194 $ 63,608 Furniture, fixtures, and equipment 67,593 62,790 Software 224,479 202,384 Construction in progress, subject to a build-to-suit lease 33,186 2,700 Property and equipment, gross 394,452 331,482 Accumulated depreciation and amortization (186,844 ) (148,425 ) Property and equipment, net $ 207,608 $ 183,057 |
Goodwill and Intangibles (Table
Goodwill and Intangibles (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The following illustrates the change in the goodwill balance for the nine months ended September 30, 2016 (in thousands): As of September 30, 2016 Beginning balance $ 738,200 Acquisitions 2,258 Adjustment related to Royall acquisition (1) (951 ) Ending balance $ 739,507 (1) Represents an adjustment to the purchase price allocation resulting in an increase to deferred tax assets and a reduction of goodwill. |
Gross and Net Carrying Balances and Accumulated Amortization of Intangibles | The gross and net carrying balances and accumulated amortization of intangibles are as follows (in thousands): As of September 30, 2016 As of December 31, 2015 Weighted average useful life Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Intangibles Internally developed software for sale 5.0 $ 19,336 $ (9,177 ) $ 10,159 $ 16,902 $ (6,796 ) $ 10,106 Acquired intangibles: Developed software 5.2 9,450 (8,450 ) 1,000 9,450 (8,075 ) 1,375 Customer relationships 16.2 277,710 (38,678 ) 239,032 277,710 (25,769 ) 251,941 Trademarks 8.6 14,900 (5,593 ) 9,307 14,900 (4,490 ) 10,410 Non-compete agreements 3.8 1,400 (1,400 ) — 1,400 (1,379 ) 21 Customer contracts 4.7 6,449 (5,908 ) 541 6,449 (5,581 ) 868 Total intangibles $ 329,245 $ (69,206 ) $ 260,039 $ 326,811 $ (52,090 ) $ 274,721 |
Equity Method Investments (Tabl
Equity Method Investments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Schedule of Investments [Line Items] | |
Equity Method Investments | The gains (losses) from equity method investments on the consolidated statement of operations for the combined Evolent entities consisted of the following (in thousands): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Dilution gain $ — $ — $ 2,026 $ — Gain on partial sale of investment 48,565 — 48,565 — Allocated share of losses — (2,594 ) (2,732 ) (9,238 ) Tax (expense) benefit (13,836 ) (695 ) (13,575 ) 7,570 Gains (losses) from equity method investments $ 34,729 $ (3,289 ) $ 34,284 $ (1,668 ) |
Evolent LLC | |
Schedule of Investments [Line Items] | |
Equity Method Investments Operating Results Table | The following is a summary of the operating results of Evolent LLC for the periods presented which include the effects of purchase accounting pushed down to Evolent LLC as part of the initial public offering which Evolent Inc. completed on June 4, 2015. The period from June 4 to December 31, 2015 reflects the impact of the push down accounting that was recorded on the Evolent LLC financial statements. Three Months Ended September 30, Nine Months Ended September 30, Period June 4 - September 30, Period January 1 - June 3, 2016 2015 2016 2015 2015 Revenue $ 60,210 $ 40,406 $ 166,177 $ 50,820 $ 61,814 Cost of revenue (exclusive of depreciation and amortization) 33,905 24,762 95,294 32,649 44,839 Gross profit $ 26,305 $ 15,644 $ 70,883 $ 18,171 $ 16,975 Net loss $ (16,029 ) $ (17,192 ) $ (203,199 ) $ (28,718 ) $ (44,079 ) |
Schedule Of Equity Method Investments Financial Information Of Balance Sheet Table | The following is a summary of the financial position of Evolent LLC as of the dates presented. The period from June 4 to December 31, 2015 includes the effects of purchase accounting pushed down to Evolent LLC as part of the initial public offering which Evolent Inc. completed on June 4, 2015. As of September 30, 2016 December 31, 2015 Assets: Current assets $ 191,429 $ 184,463 Non-current assets 659,851 831,051 Total assets $ 851,280 $ 1,015,514 Liabilities and members’ equity: Current liabilities $ 65,315 $ 59,506 Non-current liabilities 7,998 111 Total liabilities 73,313 59,617 Members’ equity 777,967 955,897 Total liabilities and members’ equity $ 851,280 $ 1,015,514 |
Evolent Health Inc | |
Schedule of Investments [Line Items] | |
Equity Method Investments Operating Results Table | The following is a summary of the consolidated operating results of Evolent Inc. for the periods presented: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Revenue $ 60,210 $ 40,406 $ 166,177 $ 50,820 Cost of revenue (exclusive of depreciation and amortization) 33,905 24,762 95,294 32,649 Gross profit $ 26,305 $ 15,644 $ 70,883 $ 18,171 Income (loss) before income taxes and non-controlling interests $ (16,031 ) $ (17,192 ) $ (203,199 ) $ 357,250 Net income (loss) $ (15,775 ) $ (17,088 ) $ (201,585 ) $ 328,081 Net income (loss) attributable to Evolent Health, Inc. $ (11,208 ) $ (11,980 ) $ (142,335 ) $ 336,613 |
Schedule Of Equity Method Investments Financial Information Of Balance Sheet Table | The following is a summary of the consolidated financial position of Evolent Inc. as of the dates presented: As of September 30, 2016 December 31, 2015 Assets: Current assets $ 191,429 $ 184,463 Non-current assets 659,851 831,051 Total assets $ 851,280 $ 1,015,514 Liabilities and shareholders' equity: Current liabilities $ 65,329 $ 59,506 Non-current liabilities 26,094 21,429 Total liabilities 91,423 80,935 Total shareholders' equity (deficit) attributable to Evolent Health, Inc. 562,228 649,341 Non-controlling interests 197,629 285,238 Total liabilities and shareholders’ equity $ 851,280 $ 1,015,514 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Long-term debt is summarized as follows (in thousands): As of September 30, 2016 2.53% term facility due fiscal 2020 ($431,875 face value less unamortized discount of $2,850) $ 429,025 Revolving credit facility 100,000 Less: Amounts due in next twelve months ($43,125 face value less unamortized discount of $980) (42,145 ) Total long-term debt $ 486,880 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Changes in Common Stock Options | The following table summarizes the changes in common stock options outstanding under the Company’s stock incentive plans during the nine months ended September 30, 2016 and 2015 : Number of performance-based options Weighted average exercise price Number of service-based options Weighted average exercise price Outstanding, as of December 31, 2014 994,605 $ 50.96 1,746,692 $ 37.19 Granted 1,774,820 49.90 328,096 53.42 Exercised — — (144,739 ) 22.53 Forfeited (756,100 ) 49.92 (13,569 ) 60.27 Outstanding, as of September 30, 2015 2,013,325 $ 50.42 1,916,480 $ 40.91 Number of Weighted Number of Weighted Outstanding, as of December 31, 2015 2,013,325 $ 50.42 1,843,110 $ 41.73 Granted 319,900 28.20 1,025,100 28.52 Exercised — — (251,458 ) 15.36 Forfeited (215,370 ) 49.92 (22,195 ) 53.38 Expired — — (17,347 ) 51.77 Outstanding, as of September 30, 2016 2,117,855 $ 47.11 2,577,210 $ 38.88 Exercisable, as of September 30, 2016 26,872 $ 34.91 1,069,703 $ 42.10 |
Summary of Changes in RSUs | The following table summarizes the changes in RSUs granted under the Company’s stock incentive plans during the nine months ended September 30, 2016 and 2015 : Number of performance-based RSUs Weighted average grant date fair value Number of service-based RSUs Weighted average grant date fair value Non-vested, December 31, 2014 189,497 $ 31.82 857,085 $ 48.94 Granted 169,204 49.74 349,566 53.09 Forfeited (78,005 ) 48.16 (31,152 ) 55.75 Vested (2,200 ) 29.58 (360,454 ) 43.59 Non-vested, September 30, 2015 278,496 $ 38.15 815,045 $ 52.87 Number of Weighted average Number of Weighted average Non-vested, December 31, 2015 301,032 $ 39.10 839,613 $ 52.82 Granted 23,580 32.28 490,165 30.92 Forfeited (66,139 ) 51.15 (56,067 ) 47.36 Vested (893 ) 50.41 (314,553 ) 51.47 Non-vested, September 30, 2016 257,580 $ 35.34 959,158 $ 42.39 |
Summary of Stock-based Compensation Expense | The Company recognized stock-based compensation expense in the following consolidated statements of operations line items for stock options and RSUs for the three and nine months ended September 30, 2016 and 2015 (in thousands): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Stock-based compensation expense included in: Costs and expenses: Cost of services $ 2,443 $ 2,423 $ 7,123 $ 6,881 Member relations and marketing 1,342 1,306 3,843 3,907 General and administrative 4,182 3,365 11,948 11,342 Total costs and expenses $ 7,967 $ 7,094 $ 22,914 $ 22,130 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Reconciliation of Basic to Diluted Weighted Average Common Shares Outstanding | A reconciliation of basic to diluted weighted average common shares outstanding is as follows (in thousands): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Basic weighted average common shares outstanding 40,102 42,320 40,651 41,900 Effect of dilutive outstanding stock-based awards 390 468 326 — Diluted weighted average common shares outstanding 40,492 42,788 40,977 41,900 |
Supplemental cash flow (Tables)
Supplemental cash flow (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Cash Flow, Supplemental Disclosures | A summary of supplemental cash flow information for the nine months ended September 30, 2016 and 2015 is presented below (in thousands): Nine Months Ended 2016 2015 Cash paid (received) for: Income taxes $ 10,324 $ (8,363 ) Interest $ 10,648 $ 13,744 Non-cash activities: Clinovations earn-out liability share-based payment $ 2,703 $ — Increase in estimated cost of construction of a building under a build-to-suit lease $ 30,486 $ — |
Business Description and Basi33
Business Description and Basis of Presentation - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Income tax expense | $ 3,279 | $ 8,590 | $ 13,812 | $ 11,684 |
Gains (losses) from equity method investments | 4,605 | $ (1,668) | ||
Adjustments | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Income tax expense | (4,200) | (4,400) | ||
Gains (losses) from equity method investments | $ (5,100) | $ (5,100) |
Recent Accounting Pronounceme34
Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Prepaid expenses and other current assets | $ 20,262 | $ 22,543 |
Deferred incentive compensation and other charges | 66,554 | 81,181 |
Total assets | 1,970,962 | 1,979,477 |
Debt, current | 42,145 | 27,743 |
Debt, net of current portion | 486,880 | 522,086 |
Total liabilities | 1,500,365 | 1,530,386 |
Total liabilities and stockholders’ equity | $ 1,970,962 | 1,979,477 |
Accounting Standards Update 2015-15 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Prepaid expenses and other current assets | 22,543 | |
Deferred incentive compensation and other charges | 81,181 | |
Total assets | 1,979,477 | |
Debt, current | 27,743 | |
Debt, net of current portion | 522,086 | |
Total liabilities | 1,530,386 | |
Total liabilities and stockholders’ equity | 1,979,477 | |
Accounting Standards Update 2015-15 | As reported | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Prepaid expenses and other current assets | 22,651 | |
Deferred incentive compensation and other charges | 81,462 | |
Total assets | 1,979,866 | |
Debt, current | 27,851 | |
Debt, net of current portion | 522,367 | |
Total liabilities | 1,530,775 | |
Total liabilities and stockholders’ equity | 1,979,866 | |
Accounting Standards Update 2015-15 | Adjustments | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Prepaid expenses and other current assets | (108) | |
Deferred incentive compensation and other charges | (281) | |
Total assets | (389) | |
Debt, current | (108) | |
Debt, net of current portion | (281) | |
Total liabilities | (389) | |
Total liabilities and stockholders’ equity | $ (389) |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Detail) | Jan. 09, 2015USD ($)$ / sharesshares | Jan. 09, 2015USD ($)$ / shares | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)reporting_unitSegment | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) |
Business Acquisition [Line Items] | |||||||
Share price (dollars per share) | $ / shares | $ 49.92 | $ 49.92 | |||||
Number of operating segments | Segment | 1 | ||||||
Number of reporting units | reporting_unit | 2 | ||||||
Impairment of goodwill | $ 0 | $ 0 | |||||
Revenue | $ 200,455,000 | $ 200,492,000 | 599,572,000 | 563,397,000 | |||
Depreciation and amortization | 19,173,000 | 18,509,000 | 57,857,000 | 54,282,000 | |||
Interest expense | 4,530,000 | 5,450,000 | 13,738,000 | 16,216,000 | |||
Gains (loss) on financing activities | 0 | 0 | $ 0 | (17,398,000) | |||
Royall Acquisition Co. | |||||||
Business Acquisition [Line Items] | |||||||
Cash acquired from acquisition | $ 7,065,000 | ||||||
Working capital adjustment payment | 1,278,000 | ||||||
Fair value of equity issued | $ 121,224,000 | ||||||
Equity interest issued (shares) | shares | 2,428,364 | ||||||
Share price (dollars per share) | $ / shares | $ 49.92 | $ 49.92 | |||||
Transaction costs | $ 9,900,000 | $ 9,900,000 | |||||
Acquisition related costs | 6,600,000 | ||||||
Impairment of goodwill | $ 99,100,000 | ||||||
Deferred tax asset | 1,000,000 | ||||||
Goodwill | $ (1,000,000) | ||||||
Pro forma revenue | 2,800,000 | $ 200,492,000 | 578,689,000 | ||||
Pro forma operating expenses | $ 1,700,000 | ||||||
Revenue Expense | Royall Acquisition Co. | |||||||
Business Acquisition [Line Items] | |||||||
Revenue | 12,500,000 | ||||||
Amortization Expense | Royall Acquisition Co. | |||||||
Business Acquisition [Line Items] | |||||||
Depreciation and amortization | 400,000 | ||||||
Interest Expense Elimination | Royall Acquisition Co. | |||||||
Business Acquisition [Line Items] | |||||||
Interest expense | 15,000,000 | ||||||
Non-recurring Loss | Royall Acquisition Co. | |||||||
Business Acquisition [Line Items] | |||||||
Gains (loss) on financing activities | (17,400,000) | ||||||
Acquisition-related Costs | Royall Acquisition Co. | |||||||
Business Acquisition [Line Items] | |||||||
Acquisition related costs | $ (6,600,000) |
Acquisitions - Consideration (D
Acquisitions - Consideration (Details) - USD ($) $ in Thousands | Jan. 09, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Business Acquisition [Line Items] | ||||
Net cash paid | $ 1,900 | $ 746,693 | ||
Royall Acquisition Co. | ||||
Business Acquisition [Line Items] | ||||
Net cash paid | [1] | $ 744,193 | ||
Fair value of equity issued | 121,224 | |||
Total | $ 865,417 | |||
[1] | Net of cash acquired of $7,065 and a working capital adjustment payment of $1,278. |
Acquisitions - Recognized Ident
Acquisitions - Recognized Identified Assets Acquired and Liabilities (Details) - USD ($) $ in Thousands | Jan. 09, 2015 | Sep. 30, 2016 | Dec. 31, 2015 |
Business Acquisition [Line Items] | |||
Allocation to goodwill | $ 739,507 | $ 738,200 | |
Royall Acquisition Co. | |||
Business Acquisition [Line Items] | |||
Consideration paid for the acquisition | $ 865,417 | ||
Membership fees receivable, net | 29,239 | ||
Prepaid expenses and other current assets | 8,237 | ||
Property and equipment | 44,209 | ||
Intangible assets, net | 262,000 | ||
Deferred revenue, current | (18,300) | ||
Accounts payable and accrued liabilities | (5,621) | ||
Deferred income taxes, net of current portion | (102,599) | ||
Fair value of net assets acquired | 217,165 | ||
Allocation to goodwill | $ 648,252 |
Acquisitions - Pro Forma Inform
Acquisitions - Pro Forma Information (Details) - Royall Acquisition Co. - USD ($) $ in Thousands | Jan. 09, 2015 | Sep. 30, 2015 | Sep. 30, 2015 |
Business Acquisition [Line Items] | |||
Revenue | $ 2,800 | $ 200,492 | $ 578,689 |
Net income | $ 672 | $ 11,088 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2014 | Nov. 30, 2014 | Dec. 31, 2009 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Significant transfers between Level 1, Level 2,or Level 3 | $ 0 | $ 0 | ||||
Acquisition-related earn-out payments | 3,600,000 | 1,500,000 | ||||
Fair value adjustments | 0 | $ 0 | ||||
Southwind | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fair value of estimated additional contingent payments | $ 0 | 0 | $ 5,600,000 | |||
Final earn-out payment | 21,400,000 | |||||
Acquisition-related earn-out payments | 1,000,000 | |||||
Clinovations LLC | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fair value of estimated additional contingent payments | $ 800,000 | 800,000 | $ 4,500,000 | |||
Equity interest issued (shares) | 62,269 | |||||
Maximum payment to acquire business | 9,500,000 | |||||
Minimum payment to acquire business | $ 0 | |||||
GradesFirst | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fair value of estimated additional contingent payments | $ 0 | 0 | $ 3,600,000 | |||
Acquisition-related earn-out payments | $ 4,000,000 | |||||
Contingent Earn-Out Liabilities | Clinovations LLC | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Expected volatility rate (percent) | 28.00% | |||||
Contingent Earn-Out Liabilities | Minimum | Clinovations LLC | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fair value estimate discount rate (percent) | 6.70% | |||||
Contingent Earn-Out Liabilities | Maximum | Clinovations LLC | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fair value estimate discount rate (percent) | 7.50% | |||||
Reported Value Measurement | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Variable rate debt instruments | 530,500,000 | $ 530,500,000 | ||||
Evolent LLC | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Equity method investments, fair vale | $ 229,900,000 | $ 229,900,000 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Measurements of Financial Assets and Liabilities on Recurring Basis (Detail) - Recurring - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | |
Financial assets | |||
Cash and cash equivalents | [1] | $ 55,088 | $ 71,825 |
Financial liabilities | |||
Interest rate swaps | [2] | 3,052 | |
Contingent earn-out liabilities | [3] | 1,365 | 7,250 |
Level 1 | |||
Financial assets | |||
Cash and cash equivalents | [1] | 55,088 | 71,825 |
Financial liabilities | |||
Interest rate swaps | [2] | 0 | |
Contingent earn-out liabilities | [3] | 0 | 0 |
Level 2 | |||
Financial assets | |||
Cash and cash equivalents | [1] | 0 | 0 |
Financial liabilities | |||
Interest rate swaps | [2] | 3,052 | |
Contingent earn-out liabilities | [3] | 0 | 0 |
Level 3 | |||
Financial assets | |||
Cash and cash equivalents | [1] | 0 | 0 |
Financial liabilities | |||
Interest rate swaps | [2] | 0 | |
Contingent earn-out liabilities | [3] | $ 1,365 | 7,250 |
Interest Rate Swap | |||
Financial assets | |||
Interest rate swaps | [2] | 419 | |
Interest Rate Swap | Level 1 | |||
Financial assets | |||
Interest rate swaps | [2] | 0 | |
Interest Rate Swap | Level 2 | |||
Financial assets | |||
Interest rate swaps | [2] | 419 | |
Interest Rate Swap | Level 3 | |||
Financial assets | |||
Interest rate swaps | [2] | $ 0 | |
[1] | Fair value is based on quoted market prices. | ||
[2] | Fair value is determined using market standard models with observable inputs. | ||
[3] | This fair value measurement is based on unobservable inputs that are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value using the income approach. In developing these estimates, the Company considered certain performance projections, historical results, and general macroeconomic environment and industry trends. |
Fair Value Measurements - Recon
Fair Value Measurements - Reconciliation of Change in Contingent Earn-out Liabilities (Detail) - Contingent Earn-Out Liabilities - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||
Beginning balance | $ 3,280 | $ 8,416 | $ 7,250 | $ 12,946 | |
Addition due to acquisition | 0 | 0 | 357 | 0 | |
Ending balance | 1,365 | 7,025 | 1,365 | 7,025 | |
Clinovations LLC | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||
Adjustment made to the fair value of contingent liability | [1] | 647 | (1,297) | 1,327 | (2,589) |
Earn-out payments | (2,703) | 0 | (2,703) | 0 | |
GradesFirst | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||
Adjustment made to the fair value of contingent liability | [1] | 0 | 200 | 0 | 200 |
Earn-out payments | 0 | 0 | (4,000) | 0 | |
Southwind | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||
Adjustment made to the fair value of contingent liability | [1] | 0 | 40 | 0 | 249 |
Earn-out payments | 0 | (334) | (1,032) | (2,281) | |
Other Contingent Earn-Out Liabilities | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||
Adjustment made to the fair value of contingent liability | [1] | 141 | 0 | 166 | 0 |
360 Fresh | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||
Earn-out payments | $ 0 | $ 0 | $ 0 | $ (1,500) | |
[1] | Amounts were recognized in cost of services on the consolidated statements of operations. |
Property and Equipment - Additi
Property and Equipment - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Property, Plant and Equipment [Line Items] | |||||
Depreciation and amortization | $ 19,173,000 | $ 18,509,000 | $ 57,857,000 | $ 54,282,000 | |
Capitalized leases included in property and equipment | 0 | 0 | |||
Property and equipment, net | 207,608,000 | $ 207,608,000 | $ 183,057,000 | ||
Asset impairment charges | 0 | ||||
Software Development | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated useful lives of property and equipment (years) | 5 years | ||||
Asset impairment charges | $ 1,000,000 | ||||
Acquired Developed Technology | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated useful lives of property and equipment (years) | 8 years | ||||
Depreciation and amortization | 2,100,000 | 2,400,000 | $ 6,700,000 | 7,000,000 | |
Furniture, Fixtures and Equipment | Minimum | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated useful lives of property and equipment (years) | 3 years | ||||
Furniture, Fixtures and Equipment | Maximum | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated useful lives of property and equipment (years) | 7 years | ||||
Plant, Property and Equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Depreciation and amortization | 5,700,000 | 5,100,000 | $ 16,600,000 | 15,000,000 | |
Developed software | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated useful lives of property and equipment (years) | 5 years | ||||
Depreciation and amortization | 5,600,000 | $ 4,900,000 | $ 17,500,000 | $ 13,900,000 | |
Property and equipment, net | $ 75,100,000 | $ 75,100,000 | $ 73,200,000 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Detail) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Abstract] | ||
Leasehold improvements | $ 69,194 | $ 63,608 |
Furniture, fixtures, and equipment | 67,593 | 62,790 |
Software | 224,479 | 202,384 |
Construction in progress, subject to a build-to-suit lease | 33,186 | 2,700 |
Property and equipment, gross | 394,452 | 331,482 |
Accumulated depreciation and amortization | (186,844) | (148,425) |
Property and equipment, net | $ 207,608 | $ 183,057 |
Goodwill and Intangibles - Addi
Goodwill and Intangibles - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Goodwill And Intangible Assets [Line Items] | ||||
Impairment of goodwill | $ 0 | $ 0 | ||
Estimated useful lives of intangible assets | 3 years 6 months | |||
Estimated average useful lives (years) | 13 years 5 months | |||
Depreciation and amortization | $ 19,173,000 | $ 18,509,000 | $ 57,857,000 | 54,282,000 |
Future amortization expense remainder of fiscal year ending 2016 | 5,700,000 | 5,700,000 | ||
Future amortization expense to be recorded in 2017 | 22,400,000 | 22,400,000 | ||
Future amortization expense to be recorded in 2018 | 21,400,000 | 21,400,000 | ||
Future amortization expense to be recorded in 2019 | 19,800,000 | 19,800,000 | ||
Future amortization expense to be recorded in 2020 | 18,500,000 | 18,500,000 | ||
Future amortization expense to be recorded thereafter | 172,200,000 | 172,200,000 | ||
Intangible Assets | ||||
Goodwill And Intangible Assets [Line Items] | ||||
Depreciation and amortization | $ 5,700,000 | $ 6,100,000 | $ 17,100,000 | $ 18,400,000 |
Minimum | ||||
Goodwill And Intangible Assets [Line Items] | ||||
Estimated useful lives of intangible assets | 2 years | |||
Maximum | ||||
Goodwill And Intangible Assets [Line Items] | ||||
Estimated useful lives of intangible assets | 17 years |
Goodwill and Intangibles - Chan
Goodwill and Intangibles - Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 738,200 |
Acquisitions | 2,258 |
Adjustment related to Royall acquisition | (951) |
Ending balance | $ 739,507 |
Goodwill and Intangibles - Gros
Goodwill and Intangibles - Gross and Net Carrying Balances and Accumulated Amortization of Intangibles (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average useful life (years) | 3 years 6 months | |
Gross carrying amount | $ 329,245 | $ 326,811 |
Accumulated amortization | (69,206) | (52,090) |
Net carrying amount | $ 260,039 | 274,721 |
Internally developed software for sale | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average useful life (years) | 5 years | |
Gross carrying amount | $ 19,336 | 16,902 |
Accumulated amortization | (9,177) | (6,796) |
Net carrying amount | $ 10,159 | 10,106 |
Developed software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average useful life (years) | 5 years 2 months 12 days | |
Gross carrying amount | $ 9,450 | 9,450 |
Accumulated amortization | (8,450) | (8,075) |
Net carrying amount | $ 1,000 | 1,375 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average useful life (years) | 16 years 2 months | |
Gross carrying amount | $ 277,710 | 277,710 |
Accumulated amortization | (38,678) | (25,769) |
Net carrying amount | $ 239,032 | 251,941 |
Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average useful life (years) | 8 years 7 months 6 days | |
Gross carrying amount | $ 14,900 | 14,900 |
Accumulated amortization | (5,593) | (4,490) |
Net carrying amount | $ 9,307 | 10,410 |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average useful life (years) | 3 years 9 months 18 days | |
Gross carrying amount | $ 1,400 | 1,400 |
Accumulated amortization | (1,400) | (1,379) |
Net carrying amount | $ 0 | 21 |
Customer contracts | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average useful life (years) | 4 years 8 months 12 days | |
Gross carrying amount | $ 6,449 | 6,449 |
Accumulated amortization | (5,908) | (5,581) |
Net carrying amount | $ 541 | $ 868 |
Equity Method Investments - Add
Equity Method Investments - Additional Information (Detail) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2016USD ($)people | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Sep. 30, 2016USD ($)people | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Schedule of Equity Method Investments [Line Items] | ||||||
Cash received from partial sale of equity method investment | $ 48,565,000 | $ 0 | ||||
Gain on partial sale of investment | 29,679,000 | 0 | ||||
Gain (loss) from equity method investments | (4,605,000) | 1,668,000 | ||||
Equity method investments | $ 0 | 0 | $ 706,000 | |||
Valuation allowance | $ 6,700,000 | |||||
Tax expense (benefit) | $ (3,279,000) | $ (8,590,000) | $ (13,812,000) | (11,684,000) | ||
Tax receivable percentage | 85.00% | 85.00% | ||||
Tax receivable agreement period (in years) | 15 years | |||||
Evolent LLC | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Equity interest (percent) | 74.60% | 74.60% | ||||
Evolent Health Inc | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Equity interest (percent) | 9.20% | 9.20% | ||||
Number of people designated to board of directors by company | people | 2 | 2 | ||||
Cash received from partial sale of equity method investment | $ 48,600,000 | |||||
Gain on partial sale of investment | 29,700,000 | |||||
Gain (loss) from equity method investments | 1,200,000 | $ 3,500,000 | ||||
Loss from equity method investments | 1,500,000 | |||||
Equity method investments | 0 | 0 | ||||
Equity method investments, difference between carrying amount and underlying equity | 1,800,000 | 1,800,000 | ||||
Equity method investment, discrepancy between company basis and carrying value | 50,800,000 | 50,800,000 | ||||
Equity Method Investment, Gain (Loss) on Sale, Tax Portion | $ 18,900,000 | $ 18.9 | ||||
Evolent LLC | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Equity interest (percent) | 8.60% | 8.60% | ||||
Gain (loss) from equity method investments | $ 1,300,000 | $ 3,500,000 | ||||
Loss from equity method investments | 1,200,000 | |||||
Equity method investments | 0 | 0 | ||||
Equity method investments, difference between carrying amount and underlying equity | 1,500,000 | 1,500,000 | ||||
Tax expense (benefit) | $ 5,100,000 | $ 5,400,000 | $ 900,000 | |||
LIBOR | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Interest on tax savings, percentage | 1.00% | 1.00% |
Equity Method Investments - Equ
Equity Method Investments - Equity in income (loss) of unconsolidated entities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Schedule of Equity Method Investments [Line Items] | ||||
Gain on partial sale of investment | $ 29,679 | $ 0 | ||
Gains (losses) from equity method investments | 4,605 | (1,668) | ||
Evolent Inc and Evolent LLC | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Dilution gain | $ 0 | $ 0 | 2,026 | 0 |
Gain on partial sale of investment | 48,565 | 0 | 48,565 | 0 |
Allocated share of losses | 0 | (2,594) | (2,732) | (9,238) |
Tax (expense) benefit | (13,836) | (695) | (13,575) | 7,570 |
Gains (losses) from equity method investments | $ 34,729 | $ (3,289) | $ 34,284 | $ (1,668) |
Equity Method Investments - Sum
Equity Method Investments - Summary of Financial Position of Evolent (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Evolent Health Inc | ||
Schedule of Investments [Line Items] | ||
Current assets | $ 191,429 | $ 184,463 |
Non-current assets | 659,851 | 831,051 |
Total assets | 851,280 | 1,015,514 |
Current liabilities | 65,329 | 59,506 |
Non-current liabilities | 26,094 | 21,429 |
Total liabilities | 91,423 | 80,935 |
Total shareholders' equity (deficit) attributable to Evolent Health, Inc. | 562,228 | 649,341 |
Non-controlling interests | 197,629 | 285,238 |
Total liabilities and shareholders’ equity | 851,280 | 1,015,514 |
Evolent LLC | ||
Schedule of Investments [Line Items] | ||
Current assets | 191,429 | 184,463 |
Non-current assets | 659,851 | 831,051 |
Total assets | 851,280 | 1,015,514 |
Current liabilities | 65,315 | 59,506 |
Non-current liabilities | 7,998 | 111 |
Total liabilities | 73,313 | 59,617 |
Members’ equity | 777,967 | 955,897 |
Total liabilities and shareholders’ equity | $ 851,280 | $ 1,015,514 |
Equity Method Investments - S50
Equity Method Investments - Summary of Operating Results of Evolent (Details) - USD ($) $ in Thousands | 3 Months Ended | 5 Months Ended | 9 Months Ended | 12 Months Ended | 16 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | Jun. 03, 2015 | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2016 | |
Evolent Health Inc | ||||||
Schedule of Investments [Line Items] | ||||||
Revenue | $ 60,210 | $ 40,406 | $ 166,177 | $ 50,820 | ||
Cost of revenue (exclusive of depreciation and amortization) | 33,905 | 24,762 | 95,294 | 32,649 | ||
Gross profit | 26,305 | 15,644 | 70,883 | 18,171 | ||
Income (loss) before income taxes and non-controlling interests | (16,031) | (17,192) | (203,199) | 357,250 | ||
Net income (loss) | (15,775) | (17,088) | (201,585) | 328,081 | ||
Net income (loss) attributable to Evolent Health, Inc. | (11,208) | (11,980) | (142,335) | $ 336,613 | ||
Evolent LLC | ||||||
Schedule of Investments [Line Items] | ||||||
Revenue | 60,210 | 40,406 | $ 61,814 | 166,177 | $ 50,820 | |
Cost of revenue (exclusive of depreciation and amortization) | 33,905 | 24,762 | 44,839 | 95,294 | 32,649 | |
Gross profit | 26,305 | 15,644 | 16,975 | 70,883 | 18,171 | |
Net income (loss) attributable to Evolent Health, Inc. | $ (16,029) | $ (17,192) | $ (44,079) | $ (203,199) | $ (28,718) |
Debt - Additional Information (
Debt - Additional Information (Detail) | Oct. 30, 2015USD ($) | Feb. 06, 2015USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Sep. 30, 2016USD ($)covenant | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | Apr. 30, 2015USD ($)swap_agreement |
Line of Credit Facility [Line Items] | ||||||||||
Debt instrument, number of financial covenants | covenant | 2 | |||||||||
Interest expense | $ 4,530,000 | $ 5,450,000 | $ 13,738,000 | $ 16,216,000 | ||||||
Amortization of debt issuance costs | 300,000 | 300,000 | 1,017,000 | 983,000 | ||||||
Senior Secured Credit Facilities | Secured Debt | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Debt instrument, face amount | $ 675,000,000 | $ 431,875,000 | $ 431,875,000 | $ 431,875,000 | ||||||
Debt instrument term (years) | 5 years | |||||||||
Amount of revolving credit facility | $ 475,000,000 | |||||||||
Stated interest rate percentage | 2.53% | 2.53% | 2.53% | |||||||
Senior Secured Credit Facilities | Revolving Credit Facility | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Debt instrument term (years) | 5 years | |||||||||
Amount of revolving credit facility | $ 200,000,000 | |||||||||
Senior Secured Credit Facilities | Standby Letters of Credit | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Stated interest rate percentage | 2.53% | 2.53% | 2.53% | |||||||
Base Rate | Senior Secured Credit Facilities | Secured Debt | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Basis spread on variable rate | 1.25% | |||||||||
LIBOR | Senior Secured Credit Facilities | Secured Debt | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Basis spread on variable rate | 2.25% | 2.00% | ||||||||
Interest Rate Swap | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Interest expense, interest rate swaps | $ 500,000 | 800,000 | $ 1,700,000 | 1,300,000 | ||||||
Number of interest rate swap agreements entered into to swap portion of variable rate interest payments for fixed rate interest payments | swap_agreement | 3 | |||||||||
Derivative notional amount | $ 265,900,000 | 265,900,000 | 265,900,000 | $ 287,500,000 | ||||||
Effective portion of gain (loss), net of tax | (800,000) | $ 2,100,000 | (2,100,000) | $ 1,400,000 | ||||||
Hedge ineffectiveness | $ 0 | $ 0 | ||||||||
Interest Rate Swap | Base Rate | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Average base rate paid by the Company (percent) | 1.282% | 1.282% | 1.282% | |||||||
Other Noncurrent Liabilities | Interest Rate Swap | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Interest rate derivative assets at fair value | $ 3,100,000 | $ 3,100,000 | $ 3,100,000 | $ 400,000 | ||||||
Line of Credit | Senior Secured Credit Facilities | Revolving Credit Facility | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Debt instrument term (years) | 3 months | |||||||||
Amount of revolving credit facility | 19,100,000 | 19,100,000 | 19,100,000 | |||||||
Stated interest rate percentage | 2.66% | |||||||||
Proceeds from long-term line of credit | $ 17,000,000 | |||||||||
Amounts outstanding on the revolving credit facility | 100,000,000 | 100,000,000 | 100,000,000 | |||||||
Amounts available for borrowing | $ 80,900,000 | $ 80,900,000 | $ 80,900,000 |
Debt - Schedule of Long-term De
Debt - Schedule of Long-term Debt (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 | Feb. 06, 2015 |
Debt Instrument [Line Items] | |||
Less: Amounts due in next twelve months ($43,125 face value less unamortized discount of $980) | $ (42,145,000) | $ (27,743,000) | |
Total long-term debt | 486,880,000 | $ 522,086,000 | |
Secured Debt | |||
Debt Instrument [Line Items] | |||
Long-term debt | 429,025,000 | ||
Less: Amounts due in next twelve months ($43,125 face value less unamortized discount of $980) | (42,145,000) | ||
Total long-term debt | 486,880,000 | ||
Long-term debt, maturities, repayments of principal in next 12 months | 43,125,000 | ||
Original issue discount, expected to be amortized in next 12 months | $ 980,000 | ||
Secured Debt | Senior Secured Credit Facilities | |||
Debt Instrument [Line Items] | |||
Stated interest rate percentage | 2.53% | ||
Debt instrument, face amount | $ 431,875,000 | $ 675,000,000 | |
Original issue discount | 2,850,000 | ||
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 100,000,000 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | 38 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Jun. 30, 2016 | Nov. 30, 2015 | |
Equity [Abstract] | ||||||
Total amount authorized under repurchase program | $ 550,000,000 | |||||
Number of shares repurchased under stock repurchase program (in shares) | 211,011 | 677,503 | 1,951,258 | 677,503 | 19,778,800 | |
Purchases of treasury stock | $ 8,000,000 | $ 33,000,000 | $ 61,600,000 | $ 33,000,000 | $ 513,500,000 | |
Number of shares subject to repurchase (in shares) | 0 | |||||
Remaining authorized repurchase amount | $ 36,500,000 | $ 36,500,000 |
Stock-based Compensation - Addi
Stock-based Compensation - Additional Information (Detail) - USD ($) | Jun. 09, 2015 | Jan. 09, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Mar. 02, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share price (dollars per share) | $ 49.92 | ||||||
Stock options, vested (shares) | 6,872 | 10,000 | |||||
Stock-based compensation costs capitalized as part of the cost of an asset | $ 0 | ||||||
Compensation cost related to stock-based compensation | $ 58,400,000 | ||||||
Weighted average period of stock-based compensation | 2 years 7 months 3 days | ||||||
Service-Based Options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Weighted average grant date fair value (dollars per share) | $ 42.39 | $ 52.87 | $ 52.82 | $ 48.94 | |||
Weighted average fair value of options granted (in dollars per share) | $ 9.94 | ||||||
Stock option awards, risk-free interest rate (percent) | 1.20% | ||||||
Stock option awards, expected term (years) | 5 years 1 month | ||||||
Stock option awards, expected volatility (percent) | 37.48% | ||||||
Stock option awards, dividend yield (percent) | 0.00% | ||||||
Performance-Based Options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Weighted average grant date fair value (dollars per share) | $ 35.34 | $ 38.15 | $ 39.10 | $ 31.82 | |||
Stock options, service period (years) | 1 year | ||||||
Weighted average fair value of options granted (in dollars per share) | $ 10.21 | ||||||
Stock option awards, risk-free interest rate (percent) | 1.60% | ||||||
Stock option awards, expected term (years) | 6 years 4 months 24 days | ||||||
Stock option awards, expected volatility (percent) | 36.50% | ||||||
Stock option awards, dividend yield (percent) | 0.00% | ||||||
Royall Inducement Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares authorized (in shares) | 1,906,666 | ||||||
Options, grant date fair value | $ 26,800,000 | ||||||
Royall Inducement Plan | Service-Based Options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares authorized (in shares) | 1,751,000 | ||||||
Award expiration period (in years) | 7 years | ||||||
Award vesting rights (percentage) | 50.00% | ||||||
Royall Inducement Plan | Restricted Stock Units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares authorized (in shares) | 145,867 | ||||||
Weighted average grant date fair value (dollars per share) | $ 49.92 | ||||||
Equity instrument other than options, grant date fair value | $ 7,300,000 | ||||||
Award vesting rights (percentage) | 50.00% | ||||||
Stock Incentive 2009 Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares authorized (in shares) | 10,535,000 | ||||||
Number of additional shares authorized (in shares) | 3,800,000 | ||||||
Stock Incentive 2009 Plan | Performance-Based Options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares authorized (in shares) | 319,900 | ||||||
Minimum | Royall Inducement Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Performance target (percent) | 70.00% | ||||||
Maximum | Royall Inducement Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Performance target (percent) | 99.00% |
Stock-based Compensation - Summ
Stock-based Compensation - Summary of Changes in Common Stock Options (Detail) - $ / shares | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Performance-Based Options | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Number of Options, Outstanding, beginning of period (in shares) | 2,013,325 | 994,605 |
Number of Options, Granted (in shares) | 319,900 | 1,774,820 |
Number of Options, Exercised (in shares) | 0 | 0 |
Number of Options, Forfeited (in shares) | (215,370) | (756,100) |
Number of Options, Expired (in shares) | 0 | |
Number of Options, Outstanding, end of period (in shares) | 2,117,855 | 2,013,325 |
Number of Options, Exercisable, end of period (in shares) | 26,872 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price (dollars per share) [Roll Forward] | ||
Weighted Average Exercise Price, Outstanding, beginning of period (dollars per share) | $ 50.42 | $ 50.96 |
Weighted Average Exercise Price, Granted (dollars per share) | 28.20 | 49.90 |
Weighted Average Exercise Price, Exercised (dollars per share) | 0 | 0 |
Weighted Average Exercise Price, Forfeited (dollars per share) | 49.92 | 49.92 |
Weighted Average Exercise Price, Expired (dollars per share) | 0 | |
Weighted Average Exercise Price, Outstanding, end of period (dollars per share) | 47.11 | $ 50.42 |
Weighted Average Exercise Price, Exercisable, end of period (dollars per share) | $ 34.91 | |
Service-Based Options | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Number of Options, Outstanding, beginning of period (in shares) | 1,843,110 | 1,746,692 |
Number of Options, Granted (in shares) | 1,025,100 | 328,096 |
Number of Options, Exercised (in shares) | (251,458) | (144,739) |
Number of Options, Forfeited (in shares) | (22,195) | (13,569) |
Number of Options, Expired (in shares) | (17,347) | |
Number of Options, Outstanding, end of period (in shares) | 2,577,210 | 1,916,480 |
Number of Options, Exercisable, end of period (in shares) | 1,069,703 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price (dollars per share) [Roll Forward] | ||
Weighted Average Exercise Price, Outstanding, beginning of period (dollars per share) | $ 41.73 | $ 37.19 |
Weighted Average Exercise Price, Granted (dollars per share) | 28.52 | 53.42 |
Weighted Average Exercise Price, Exercised (dollars per share) | 15.36 | 22.53 |
Weighted Average Exercise Price, Forfeited (dollars per share) | 53.38 | 60.27 |
Weighted Average Exercise Price, Expired (dollars per share) | 51.77 | |
Weighted Average Exercise Price, Outstanding, end of period (dollars per share) | 38.88 | $ 40.91 |
Weighted Average Exercise Price, Exercisable, end of period (dollars per share) | $ 42.10 |
Stock-based Compensation - Su56
Stock-based Compensation - Summary of Changes in RSUs (Detail) - $ / shares | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Performance-Based Options | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Number of RSUs, Non-vested, beginning of period (in shares) | 301,032 | 189,497 |
Number of RSUs, Granted (in shares) | 23,580 | 169,204 |
Number of RSUs, Forfeited (in shares) | (66,139) | (78,005) |
Number of RSUs, vested (in shares) | (893) | (2,200) |
Number of RSUs, Non-vested, end of period (in shares) | 257,580 | 278,496 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value (dollars per share) [Roll Forward] | ||
Weighted Average Grant Date Fair Value Non-vested, beginning of Period (dollars per share) | $ 39.10 | $ 31.82 |
Weighted Average Grant Date Fair Value, Granted (dollars per share) | 32.28 | 49.74 |
Weighted Average Grant Date Fair Value, Forfeited (dollars per share) | 51.15 | 48.16 |
Weighted Average Grant Date Fair Value, Vested (dollars per share) | 50.41 | 29.58 |
Weighted Average Grant Date Fair Value Non-vested, end of Period (dollars per share) | $ 35.34 | $ 38.15 |
Service-Based Options | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Number of RSUs, Non-vested, beginning of period (in shares) | 839,613 | 857,085 |
Number of RSUs, Granted (in shares) | 490,165 | 349,566 |
Number of RSUs, Forfeited (in shares) | (56,067) | (31,152) |
Number of RSUs, vested (in shares) | (314,553) | (360,454) |
Number of RSUs, Non-vested, end of period (in shares) | 959,158 | 815,045 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value (dollars per share) [Roll Forward] | ||
Weighted Average Grant Date Fair Value Non-vested, beginning of Period (dollars per share) | $ 52.82 | $ 48.94 |
Weighted Average Grant Date Fair Value, Granted (dollars per share) | 30.92 | 53.09 |
Weighted Average Grant Date Fair Value, Forfeited (dollars per share) | 47.36 | 55.75 |
Weighted Average Grant Date Fair Value, Vested (dollars per share) | 51.47 | 43.59 |
Weighted Average Grant Date Fair Value Non-vested, end of Period (dollars per share) | $ 42.39 | $ 52.87 |
Stock-based Compensation - Su57
Stock-based Compensation - Summary of Stock-based Compensation Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Stock Option and RSUs | ||||
Stock-based compensation expense included in Costs and expenses | ||||
Total costs and expenses | $ 7,967 | $ 7,094 | $ 22,914 | $ 22,130 |
Cost of Services | ||||
Stock-based compensation expense included in Costs and expenses | ||||
Total costs and expenses | 2,443 | 2,423 | 7,123 | 6,881 |
Member Relations and Marketing | ||||
Stock-based compensation expense included in Costs and expenses | ||||
Total costs and expenses | 1,342 | 1,306 | 3,843 | 3,907 |
General and Administrative | ||||
Stock-based compensation expense included in Costs and expenses | ||||
Total costs and expenses | $ 4,182 | $ 3,365 | $ 11,948 | $ 11,342 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Tax Examination [Line Items] | ||||
Effective income tax rate (as a percent) | 53.90% | 68.40% | 39.60% | (3058.60%) |
Interest and penalties on unrecognized tax benefits | $ 0.1 | $ 0.3 | ||
Washington DC | ||||
Income Tax Examination [Line Items] | ||||
Discrete tax benefit related to write off tax credits | $ 1.2 | $ (10.8) |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliation of Basic to Diluted Weighted Average Common Shares Outstanding (Detail) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Earnings Per Share [Abstract] | ||||
Basic weighted average common shares outstanding (in shares) | 40,102 | 42,320 | 40,651 | 41,900 |
Effect of dilutive outstanding stock-based awards (in shares | 390 | 468 | 326 | 0 |
Diluted weighted average common shares outstanding (in shares) | 40,492 | 42,788 | 40,977 | 41,900 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Incremental common shares attributable to dilutive effect of contingently issuable shares (in shares) | 42,585 | 11,532 | ||
Effect of dilutive outstanding stock-based awards (in shares | 390,000 | 468,000 | 326,000 | 0 |
Stock Compensation Plan | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Share-based compensation awards (in shares) | 1,600,000 | 700,000 | 1,700,000 | 2,700,000 |
Non-Qualified Stock Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Share-based compensation awards (in shares) | 1,800,000 | 2,000,000 | ||
Restricted Stock Units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Share-based compensation awards (in shares) | 200,000 | 300,000 | ||
Non-Qualified Stock Options and Restricted Stock Units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Effect of dilutive outstanding stock-based awards (in shares | 0 | 0 |
Supplemental cash flow (Details
Supplemental cash flow (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash paid (received) for: | ||
Income taxes | $ 10,324 | $ (8,363) |
Interest | 10,648 | 13,744 |
Non-cash activities: | ||
Clinovations earn-out liability share-based payment | 2,703 | 0 |
Increase in estimated cost of construction of a building under a build-to-suit lease | $ 30,486 | $ 0 |
Subsequent Events (Details)
Subsequent Events (Details) | Oct. 03, 2016 | Sep. 30, 2016 |
Evolent LLC | ||
Subsequent Event [Line Items] | ||
Equity interest (percent) | 8.60% | |
Evolent LLC | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Equity interest (percent) | 7.70% | |
Evolent Health Inc | ||
Subsequent Event [Line Items] | ||
Equity interest (percent) | 9.20% | |
Evolent Health Inc | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Equity interest (percent) | 7.90% |