Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Feb. 28, 2017 | Jun. 30, 2016 | |
Document Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | ABCO | ||
Entity Registrant Name | ADVISORY BOARD CO | ||
Entity Central Index Key | 1,157,377 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 40,235,820 | ||
Entity Public Float | $ 1,424,955,877 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 91,151 | $ 71,825 |
Membership fees receivable, net | 605,517 | 605,444 |
Prepaid expenses and other current assets | 18,965 | 22,543 |
Total current assets | 715,633 | 699,812 |
Construction in progress | 63,368 | 2,700 |
Property and equipment, net | 171,281 | 180,357 |
Intangible assets, net | 255,053 | 274,721 |
Deferred incentive compensation and other charges | 72,178 | 81,181 |
Goodwill | 739,507 | 738,200 |
Investments in and advances to unconsolidated entities | 19,858 | 706 |
Other non-current assets | 0 | 1,800 |
Total assets | 2,036,878 | 1,979,477 |
Current liabilities: | ||
Deferred revenue, current | 564,237 | 581,471 |
Accounts payable and accrued liabilities | 67,702 | 74,879 |
Accrued incentive compensation | 25,521 | 41,173 |
Debt, current | 49,347 | 27,743 |
Total current liabilities | 706,807 | 725,266 |
Deferred revenue, net of current portion | 170,357 | 173,953 |
Deferred income taxes | 89,013 | 93,893 |
Debt, net of current portion | 472,739 | 522,086 |
Financing obligation | 63,368 | 2,700 |
Other long-term liabilities | 17,550 | 12,488 |
Total liabilities | 1,519,834 | 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, 40,192,980 and 41,572,523 shares issued and outstanding as of December 31, 2016 and 2015, respectively | 402 | 416 |
Additional paid-in capital | 782,399 | 744,333 |
Accumulated deficit | (266,218) | (295,860) |
Accumulated other comprehensive income | 461 | 202 |
Total stockholders’ equity | 517,044 | 449,091 |
Total liabilities and stockholders’ equity | $ 2,036,878 | $ 1,979,477 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 135,000,000 | 135,000,000 |
Common stock, shares issued (in shares) | 40,192,980 | 41,572,523 |
Common stock, shares outstanding (in shares) | 40,192,980 | 41,572,523 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Statement [Abstract] | |||
Revenue | $ 434,002,000 | $ 803,424,000 | $ 768,348,000 |
Costs and expenses: | |||
Cost of services, excluding depreciation and amortization | 230,769,000 | 392,956,000 | 392,676,000 |
Member relations and marketing | 81,244,000 | 130,028,000 | 120,958,000 |
General and administrative | 75,483,000 | 126,634,000 | 128,669,000 |
Depreciation and amortization | 30,317,000 | 77,268,000 | 73,134,000 |
Impairment of capitalized software | 2,086,000 | 0 | 8,166,000 |
Goodwill impairment | 0 | 0 | 99,145,000 |
Operating income (loss) | 14,103,000 | 76,538,000 | (54,400,000) |
Interest expense | 0 | (18,137,000) | (21,121,000) |
Other (expense) income, net | (1,327,000) | (2,789,000) | (6,499,000) |
Loss on financing activities | 0 | 0 | (17,398,000) |
Total other (expense) income, net | (1,327,000) | (20,926,000) | (45,018,000) |
Income (loss) before provision for income taxes and gains (losses) from equity method investments | 12,776,000 | 55,612,000 | (99,418,000) |
Provision for income taxes | (3,530,000) | (11,040,000) | (15,200,000) |
Gains (losses) from equity method investments | (6,540,000) | 46,666,000 | (4,396,000) |
Net income (loss) before allocation to noncontrolling interest | 2,706,000 | 91,238,000 | (119,014,000) |
Net loss and accretion to redemption value attributable to noncontrolling interest | (6,253,000) | 0 | 0 |
Net income (loss) attributable to common stockholders | $ (3,547,000) | $ 91,238,000 | $ (119,014,000) |
Earnings per share: | |||
Net (loss) income attributable to common stockholders per share — basic (dollars per share) | $ (0.10) | $ 2.25 | $ (2.84) |
Net (loss) income attributable to common stockholders per share — diluted (dollars per share) | $ (0.10) | $ 2.23 | $ (2.84) |
Weighted average number of shares outstanding: | |||
Basic (shares) | 36,213 | 40,528 | 41,888 |
Diluted (shares) | 36,213 | 40,871 | 41,888 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) attributable to common stockholders | $ (3,547) | $ 91,238 | $ (119,014) |
Other comprehensive income: | |||
Net unrealized (losses) gains on marketable securities, net of tax | 1,623 | 0 | (81) |
Net unrealized gain on cash flow hedges, net of taxes | 0 | 259 | 201 |
Comprehensive income (loss) | $ (1,924) | $ 91,497 | $ (118,894) |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Elements of Other Comprehensive Income (Loss) | Treasury Stock | Noncontrolling Interest |
Beginning balance at Mar. 31, 2014 | $ 336,666 | $ 363 | $ 428,628 | $ (90,557) | $ (1,541) | $ 0 | $ (227) |
Beginning balance (in shares) at Mar. 31, 2014 | 36,321,825 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Proceeds from exercise of stock options | $ 4,297 | $ 3 | 4,294 | ||||
Proceeds from exercise of stock options (in shares) | 233,999 | 233,999 | |||||
Vesting of restricted stock units, net of shares withheld to satisfy minimum employee tax withholding | $ (7,608) | $ 3 | (7,611) | ||||
Vesting of restricted stock units, net of shares withheld to satisfy minimum employee tax withholding (in shares) | 254,248 | ||||||
Excess tax benefits from stock-based awards | 392 | 392 | |||||
Proceeds from issuance of common stock under employee stock purchase plan | $ 432 | 432 | |||||
Proceeds from issuance of common stock under employee stock purchase plan (in shares) | 9,241 | 9,241 | |||||
Stock-based compensation expense | $ 17,964 | 17,964 | |||||
Retirement of treasury stock | 0 | $ (8) | (36,006) | 36,014 | |||
Purchases of treasury stock | (36,014) | (36,014) | |||||
Purchase of treasury stock (in shares) | (731,559) | ||||||
Net activity related to noncontrolling interests | 3,605 | 3,378 | 227 | ||||
Change in net unrealized gains (losses) on available-for-sale marketable securities, net of income taxes of ($1,760 twelve months March 31, 2014, and $1,147 nine months December 31, 2014) | 1,623 | 1,623 | |||||
Net Income (Loss) | (3,547) | (6,253) | 2,706 | ||||
Ending balance at Dec. 31, 2014 | 317,810 | $ 361 | 441,224 | (123,857) | 82 | 0 | 0 |
Ending balance (in shares) at Dec. 31, 2014 | 36,087,754 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Proceeds from exercise of stock options | $ 4,747 | $ 3 | 4,744 | ||||
Proceeds from exercise of stock options (in shares) | 218,109 | 218,109 | |||||
Vesting of restricted stock units, net of shares withheld to satisfy minimum employee tax withholding | $ (6,058) | $ 2 | (6,060) | ||||
Vesting of restricted stock units, net of shares withheld to satisfy minimum employee tax withholding (in shares) | 247,157 | ||||||
Excess tax benefits from stock-based awards | 4,855 | $ 0 | 4,855 | ||||
Proceeds from issuance of common stock under employee stock purchase plan | $ 505 | 505 | |||||
Proceeds from issuance of common stock under employee stock purchase plan (in shares) | 10,496 | 10,496 | |||||
Stock-based compensation expense | $ 29,092 | 29,092 | |||||
Retirement of treasury stock | 0 | $ (11) | (52,989) | 53,000 | |||
Purchases of treasury stock | (53,000) | (53,000) | |||||
Purchase of treasury stock (in shares) | (1,069,357) | ||||||
Issuance of common stock to purchase Royall | 121,248 | $ 24 | 121,224 | ||||
Issuance of common stock to purchase Royall (in shares) | 2,428,364 | ||||||
Common stock offering | 148,786 | $ 37 | 148,749 | ||||
Common stock offering (in shares) | 3,650,000 | ||||||
Change in net unrealized gains (losses) on available-for-sale marketable securities, net of income taxes of ($1,760 twelve months March 31, 2014, and $1,147 nine months December 31, 2014) | (81) | (81) | |||||
Change in net unrealized gains (losses) on cash flow hedge, net of income taxes of $83 | 201 | 201 | |||||
Net Income (Loss) | (119,014) | (119,014) | |||||
Ending balance at Dec. 31, 2015 | 449,091 | $ 416 | 744,333 | (295,860) | 202 | 0 | 0 |
Ending balance (in shares) at Dec. 31, 2015 | 41,572,523 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Proceeds from exercise of stock options | $ 4,344 | $ 3 | 4,341 | ||||
Proceeds from exercise of stock options (in shares) | 303,490 | 284,843 | |||||
Vesting of restricted stock units, net of shares withheld to satisfy minimum employee tax withholding | $ (3,514) | $ 2 | (3,516) | ||||
Vesting of restricted stock units, net of shares withheld to satisfy minimum employee tax withholding (in shares) | 210,562 | ||||||
Excess tax benefits from stock-based awards | 4,628 | 4,628 | |||||
Proceeds from issuance of common stock under employee stock purchase plan | $ 476 | 476 | |||||
Proceeds from issuance of common stock under employee stock purchase plan (in shares) | 14,041 | 14,041 | |||||
Stock-based compensation expense | $ 29,435 | 29,435 | |||||
Retirement of treasury stock | 0 | $ (20) | (61,596) | 61,616 | |||
Purchases of treasury stock | (61,616) | (61,616) | |||||
Purchase of treasury stock (in shares) | (1,951,258) | ||||||
Issuance of common stock for contingent earnout | 2,703 | $ 1 | 2,702 | ||||
Release of Contingent Earnout shares (in shares) | 62,269 | ||||||
Change in net unrealized gains (losses) on available-for-sale marketable securities, net of income taxes of ($1,760 twelve months March 31, 2014, and $1,147 nine months December 31, 2014) | 0 | ||||||
Change in net unrealized gains (losses) on cash flow hedge, net of income taxes of $83 | 259 | 259 | |||||
Net Income (Loss) | 91,238 | 91,238 | |||||
Ending balance at Dec. 31, 2016 | $ 517,044 | $ 402 | $ 782,399 | $ (266,218) | $ 461 | $ 0 | $ 0 |
Ending balance (in shares) at Dec. 31, 2016 | 40,192,980 |
CONSOLIDATED STATEMENTS OF STO7
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | 21 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Stockholders' Equity [Abstract] | |||
Change in net unrealized gains (losses), tax | $ (143) | $ (1,147) | |
Change in net unrealized gains (losses) on cash flow hedge, tax | $ 83 | $ 354 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | |||
Net income (loss) before allocation to noncontrolling interest | $ 2,706,000 | $ 91,238,000 | $ (119,014,000) |
Adjustments to reconcile net income before allocation to noncontrolling interest to net cash provided by operating activities: | |||
Depreciation and amortization | 30,317,000 | 77,268,000 | 73,134,000 |
Impairment of capitalized software | 2,086,000 | 0 | 8,166,000 |
Goodwill impairment | 0 | 0 | 99,145,000 |
Loss on financing activities | 0 | 0 | 17,398,000 |
Amortization of debt issuance costs | 0 | 940,000 | 1,270,000 |
Deferred income taxes | (2,383,000) | (6,807,000) | 6,670,000 |
Excess tax benefits from stock-based awards | (392,000) | (1,285,000) | (4,855,000) |
Stock-based compensation expense | 17,964,000 | 29,435,000 | 29,093,000 |
Amortization of marketable securities premiums | 1,274,000 | 0 | 0 |
Loss on investment in common stock warrants | 180,000 | 0 | 370,000 |
Impairment of cost method investment | 0 | 1,800,000 | 3,200,000 |
(Gains) losses from equity method investments | 6,540,000 | (16,987,000) | 4,396,000 |
Gain on partial sale of equity method investment, net of taxes | 0 | (29,679,000) | 0 |
Changes in operating assets and liabilities: | |||
Membership fees receivable | (82,689,000) | (73,000) | (37,144,000) |
Prepaid expenses and other current assets | 4,936,000 | (10,500,000) | 13,276,000 |
Deferred incentive compensation and other charges | 102,000 | 9,915,000 | 5,937,000 |
Other non-current assets | 0 | 0 | (258,000) |
Deferred revenue | 80,386,000 | (20,830,000) | 64,381,000 |
Accounts payable and accrued liabilities | 5,107,000 | 380,000 | (6,678,000) |
Acquisition-related earn-out payments | (3,348,000) | (1,432,000) | (2,531,000) |
Accrued incentive compensation | 3,602,000 | (15,652,000) | 9,100,000 |
Other long-term liabilities | (1,815,000) | 4,828,000 | (3,122,000) |
Net cash provided by operating activities | 64,573,000 | 112,559,000 | 161,934,000 |
Cash flows from investing activities: | |||
Purchases of property and equipment | (47,535,000) | (45,392,000) | (52,941,000) |
Capitalized external use software development costs | (3,826,000) | (3,131,000) | (3,749,000) |
Cash paid for acquisition, net of cash acquired | (70,208,000) | (1,900,000) | (746,693,000) |
Investments in and advances to unconsolidated entities | 0 | 0 | (3,006,000) |
Redemptions of marketable securities | 151,420,000 | 0 | 14,714,000 |
Cash received from partial sale of equity method investment | 0 | 48,565,000 | 0 |
Net cash (used in) provided by investing activities | 29,851,000 | (1,858,000) | (791,675,000) |
Cash flows from financing activities: | |||
Payment for acquisition of noncontrolling interest | (6,110,000) | 0 | 0 |
Proceeds from debt, net | 0 | 17,000,000 | 1,840,734,000 |
Pay down of debt | 0 | (45,750,000) | (1,307,188,000) |
Debt issuance costs | 0 | 0 | (3,251,000) |
Equity offering | 0 | 0 | 148,786,000 |
Proceeds from issuance of common stock from exercise of stock options | 4,294,000 | 4,344,000 | 4,747,000 |
Withholding of shares to satisfy minimum employee tax withholding for vested restricted stock units | (7,611,000) | (3,514,000) | (6,058,000) |
Proceeds from issuance of common stock under employee stock purchase plan | 432,000 | 476,000 | 505,000 |
Excess tax benefits from stock-based awards | 392,000 | 1,285,000 | 4,855,000 |
Acquisition-related earn-out payments | 0 | (3,600,000) | (1,500,000) |
Purchases of treasury stock | (36,014,000) | (61,616,000) | (53,000,000) |
Net cash (used in) provided by financing activities | (44,617,000) | (91,375,000) | 628,630,000 |
Net increase (decrease) in cash and cash equivalents | 49,807,000 | 19,326,000 | (1,111,000) |
Cash and cash equivalents, beginning of period | 23,129,000 | 71,825,000 | 72,936,000 |
Cash and cash equivalents, end of period | $ 72,936,000 | $ 91,151,000 | $ 71,825,000 |
Business Description
Business Description | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Description | Business description The Advisory Board Company (individually and collectively with its subsidiaries, the “Company”) provides best practices research and insight, technology, data-enabled services, and consulting 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-enabled services, and consulting and management services. |
Summary of significant accounti
Summary of significant accounting policies | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of significant accounting policies | Summary of significant accounting policies Basis of presentation and consolidation The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, and a consolidated variable interest entity. The Company uses the equity method to account for equity investments in instances in which it owns common stock or securities deemed to be in-substance 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. Investments in which the Company holds securities that are not in-substance common stock, or holds common stock or in-substance common stock but has little or no influence over the investee are accounted for using the cost method. All significant intercompany transactions and balances have been eliminated. Fiscal year The Company changed its fiscal year to the calendar twelve months ending December 31, effective beginning with the period ended on December 31, 2014. As a result, the fiscal transition period was shortened from twelve months to a nine-month transition period ended on December 31, 2014. In these consolidated statements, including the notes thereto, the financial results ended December 31, 2014 are for a nine-month period. Audited results for the twelve months ended December 31, 2016 and 2015 are both for twelve-month periods. Use of estimates in preparation of consolidated financial statements The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These accounting principles require the Company to make certain estimates, judgments, and assumptions. For cases where the Company is required to make certain estimates, judgments, and assumptions, the Company believes that the estimates, judgments, and assumptions upon which it relies are reasonable based upon information available to the Company at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenue and expenses during the periods presented. To the extent there are material differences between these estimates, judgments, or assumptions and actual results, the Company’s financial statements will be affected. The Company’s estimates, judgments, and assumptions may include: estimates of bad debt reserves; estimates to establish employee bonus and commission accruals; estimates of the fair value of contingent earn-out liabilities; estimates of the useful lives of acquired or internally developed intangible assets; estimates of the fair value of goodwill and intangibles and evaluation of impairment; determination of when investment impairments are other-than-temporary; estimates of the recoverability of deferred tax assets; and estimates of the potential for future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Correction of prior period errors In connection with the preparation of the 2016 consolidated financial statements, the Company recorded corrections of certain out-of-period, immaterial misstatements that occurred in prior years. These corrections resulted in an increase to the provision for income taxes of $2.6 million primarily related to recording reserves for tax positions taken in prior periods offset by correcting an overstatement of deferred tax assets related to stock based compensation. These corrections also resulted in a decrease to income tax expense of $5.1 million included in gains (losses) from equity method related to recording a deferred tax asset for the outside basis difference in the Company's investment in Evolent, Inc. In addition, the Company recorded a balance sheet adjustment to increase deferred tax assets and additional paid-in capital by $3.4 million at December 31, 2016. Cash equivalents and marketable securities Marketable securities with original maturities of three months or less at purchase are considered cash equivalents. Investments with original maturities of more than three months are classified as marketable securities. Marketable securities, are classified as available-for-sale, and carried at fair value based on quoted market prices. The net unrealized gains and losses on available-for-sale marketable securities are excluded from net income attributable to common stockholders and are included within accumulated other comprehensive income, net of tax. The specific identification method is used to compute the realized gains and losses on the sale of marketable securities. The Company did not hold any marketable securities as of December 31, 2016 or 2015. Allowance for uncollectible revenue The Company’s ability to collect outstanding receivables from its members has an effect on the Company’s operating performance and cash flows. The Company records an allowance for uncollectible revenue as a reduction of revenue based on its ongoing monitoring of members’ credit and the aging of receivables. To determine the allowance for uncollectible revenue, the Company examines its collections history, the age of accounts receivable in question, any specific member collection issues that have been identified, general market conditions, and current economic trends. Membership fees receivable balances are not collateralized. 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 receive access to the software only during the term of their membership agreement. Software development costs that are incurred in the preliminary project stage for internal use software 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 it is placed into operation. Internally developed capitalized software is classified as software within property and equipment and is amortized using the straight-line method over its estimated useful life, which is generally five years . Replacements and upgrades and enhancements to existing systems that result in additional functionality are capitalized, while maintenance and repairs are charged to expense as incurred. Amortization expense for internally developed capitalized software for the years ended December 31, 2016 and 2015, recorded in depreciation and amortization on the consolidated statements of operations, was approximately $22.3 million and $18.9 million , respectively. Amortization expense for internally developed capitalized software for the nine months ended December 31, 2014, recorded in depreciation and amortization on the consolidated statements of operations, was approximately $10.1 million . Acquired developed software represents the fair value of software acquired through a business combination that resides on the Company’s or its service providers’ hardware and is made available to members though the memberships. Amortization for acquired developed software is included in depreciation and amortization on the consolidated statements of operations. Acquired developed software is amortized over a weighted average estimated useful life of eight years based on the cash flow estimate used to determine the value of the intangible asset at its acquisition. The amount of acquired developed software amortization included in depreciation and amortization for the years ended December 31, 2016 and 2015 was approximately $8.8 million and $9.4 million , respectively. The amount of acquired developed software amortization included in depreciation and amortization for the nine months ended December 31, 2014 was approximately $2.0 million . 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 capital leases included in property and equipment. The amount of depreciation expense recognized on furniture, fixtures, and equipment for the years ended December 31, 2016 and 2015 was approximately $22.2 million and $20.4 million , respectively. The amount of depreciation expense recognized on furniture, fixtures, and equipment for the nine months ended December 31, 2014 was approximately $10.9 million . The Company establishes assets and liabilities (financing obligations) for the estimated construction costs incurred under build-to-suit lease arrangements where the Company is considered the owner for accounting purposes only, to the extent the Company is involved in the design or construction of the asset or takes construction risk prior to commencement of a lease. The Company recognizes expense on a portion of future lease payments that are estimated to represent the underlying land lease. The Company records an asset for the amount of the total project costs in construction in progress and the related financing obligation, representative of the project costs incurred by the developer, in financing obligations on the consolidated balance sheet. Upon completion of the construction of facilities under build-to-suit leases, the Company evaluates whether these arrangements meet the criteria for sale-leaseback accounting treatment. If the lease does not meet sale-leaseback criteria, the Company will treat the build-to-suit as a financing obligation and lease payments will be attributed to (1) a reduction of the principal financing obligation, (2) imputed interest expense, and (3) land lease expense (which is considered an operating lease) representing an imputed cost to lease the underlying land of the facility. In addition, the underlying building asset will be depreciated over the building’s estimated useful life. At the conclusion of the lease term, the net book values of the asset and financing obligation would be derecognized. Business combinations The Company records acquisitions using the purchase method of accounting. All of the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration are recognized at their fair value on the acquisition date. All subsequent changes to the acquired assets or assumed liabilities of the acquired company at the acquisition date that occur both within the measurement period and as a result of facts and circumstances that existed at the acquisition date are recognized as an adjustment to goodwill. Any acquired in-process research and development is capitalized as an intangible asset and amortized over its estimated useful life. Acquisition-related costs are recorded as expenses in the consolidated financial statements. The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date. Goodwill and other intangible assets The excess cost of an acquisition over the fair value of the net assets acquired is recorded as goodwill. The primary factors that generate goodwill are the value of synergies between the acquired entities and the Company and the acquired assembled workforce, neither of which qualifies as an identifiable intangible asset. The Company’s goodwill and other intangible assets with indefinite lives are not amortized, but rather are tested for impairment on an annual basis on October 1, or more frequently if events or changes in circumstances indicate potential impairment. When testing goodwill for impairment, the Company has the option first to assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. If the Company elects to perform a qualitative assessment and determines that an impairment is more likely than not, the Company is then required to perform the two-step quantitative impairment test, otherwise no further analysis is required. The Company also may elect not to perform the qualitative assessment and, instead, proceed directly to the two-step quantitative impairment test. In the first step of the two-step quantitative impairment test, the fair value of a reporting unit is compared to its carrying value. If the carrying value of a reporting unit exceeds its fair value, the second step of the impairment test is performed for purposes of measuring the impairment. In the second step, the fair value of the reporting unit is allocated to all of the assets and liabilities of the reporting unit to determine an implied goodwill value. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to that excess. The Company estimates the fair value of its reporting units using both an income and market approach. The income approach is based on the present value of expected future cash flows, including terminal value, utilizing a market-based weighted average cost of capital (“WACC”) determined separately for each reporting unit. The determination of fair value using the income approach involves the use of significant estimates and assumptions, including revenue growth rates, operating margins, terminal growth rates, and discount rates. The market approach is based on revenue and earnings multiple data of peer companies. See Note 7, “Goodwill and intangibles,” for further detail, including the recognition of goodwill impairment charges of $99.1 million during the year ended December 31, 2015. Other intangible assets consist of capitalized software for sale and acquired intangibles. The Company capitalizes consulting costs and payroll and payroll-related costs for employees directly related to building a software product for sale once technological feasibility is established. The Company determines that technological feasibility is established by the completion of a detailed program design or, in its absence, completion of a working model. Once the software product is ready for general availability, the Company ceases capitalizing costs and begins amortizing the intangible asset on a straight-line basis over its estimated useful life. The weighted average estimated useful life of capitalized software for sale is five years. Other intangible assets include those assets that arise from business combinations and that consist of developed technology both for internal use and external sale, non-competition covenants, trademarks, contracts, and customer relationships that are amortized, on a straight-line basis, over two years to seventeen years . Finite-lived intangible assets are required to be amortized over their useful lives and are evaluated for possible impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recovery of long-lived assets (excluding goodwill) The Company records long-lived assets, such as property and equipment, at cost. The carrying value of long-lived assets is reviewed for possible impairment whenever events or changes in circumstances suggest the carrying value of a long-lived asset may not be fully recoverable. The test for recoverability is made using an estimate of the undiscounted expected future cash flows and, if required, the impairment loss is measured as the amount that the carrying value of the asset exceeds the asset’s fair value if the asset is not recoverable. The Company considers expected cash flows and estimated future operating results, trends, and other available information in assessing whether the carrying value of assets is impaired. If it is determined that an asset’s carrying value is impaired, a write-down of the carrying value of the identified asset will be recorded as an operating expense on the consolidated statements of operations in the period in which the determination is made. Fair value of financial instruments The Company’s short-term financial instruments include cash and cash equivalents, membership fees receivable, accrued expenses, and accounts payable. The carrying value of these financial instruments as of December 31, 2016 and 2015 approximates their fair value due to their short-term nature. Derivative instruments The Company holds warrants to purchase common stock in an entity that meet the definition of a derivative. Derivative instruments are carried at fair value on the consolidated balance sheets. Gains or losses from changes in the fair value of the warrants are recognized on the consolidated statements of operations in the period in which they occur. 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 Company has designated the interest rate swap as a cash flow hedge of the variability of interest payments under its senior secured term loan facility due to changes in the benchmark interest rate. 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 in the consolidated statements of operations for the applicable period. Revenue recognition Revenue is recognized when (1) there is persuasive evidence of an arrangement, (2) the fee is fixed or determinable, (3) services have been rendered and payment has been contractually earned, and (4) collectibility is reasonably assured. Fees are generally billable when a letter of agreement is signed by the member. Fees receivable during the subsequent twelve-month period and related deferred revenue are recorded on the balance sheet upon the commencement of the membership and are subsequently updated at the end of each reporting period. In many of the Company’s higher priced programs and membership agreements with terms that are greater than one year , fees may be billed on an installment basis. In certain multi-year arrangements, the member has the ability to cancel the arrangement within a defined notice period without penalty. The Company’s membership programs generally include more than one deliverable. Deliverables are determined based upon the availability and delivery method of the services and may include the following: best practices research; executive education curricula; cloud-based content, databases, and calculators; performance or benchmarking reports; diagnostic tools; interactive advisory support; and software. Access to such deliverables is generally available on an unlimited basis over the membership period. When an agreement contains multiple deliverables, the Company reviews the deliverables to determine if they qualify as separate units of accounting. In order for deliverables in a multiple-deliverable arrangement to be treated as separate units of accounting, the deliverables must have standalone value upon delivery, and delivery or performance of undelivered items in an arrangement with a general right of return must be probable. If the Company determines that there are separate units of accounting, arrangement consideration at the inception of the membership period is allocated to all deliverables based on the relative selling price method in accordance with the selling price hierarchy. Because of the unique nature of the Company’s products, neither vendor specific objective evidence nor third-party evidence is available. Therefore, the Company utilizes best estimate of selling price to allocate arrangement consideration in multiple-deliverable arrangements. In general, the deliverables in membership programs do not qualify as separate units of accounting. These deliverables are consistently available throughout the membership period, and, as a result, the consideration is recognized ratably over the membership period. When a service offering includes a combination of unlimited and limited service offerings, revenue is recognized over the appropriate service period, either ratably, if the service is consistently available, or, if the service is not consistently available, upon the earlier of the delivery of the service or the completion of the membership period, provided that all other criteria for recognition have been met. Certain membership programs incorporate hosted software. In many of these agreements, members are charged set-up fees in addition to subscription fees for access to the hosted cloud-based software and related membership services. Both set-up fees and subscription fees are recognized ratably over the term of the membership agreement, which is generally three years, and is consistent with the pattern of the delivery of services under these arrangements. Upon launch of a new program that incorporates software, all program revenue is deferred until the program is generally available for release to the Company’s membership, and then recognized ratably over the remainder of the contract term of each agreement. Certain arrangements include performance-based fees that are contingent upon the member realizing a benefit over a defined period. These performance-based fees are included in the arrangement consideration and recognized when the related services are provided to the member and the Company is reasonably assured that the amounts due are collectible. The Company has not recognized any revenue that is at risk due to future performance contingencies. The Company also performs professional services sold under separate agreements that include consulting and management services. These agreements are either fixed fee or time-and-materials arrangements. For fixed fee arrangements, the Company recognizes professional services revenues using the proportional performance method based on effort expended. The Company recognizes professional services revenues for time-and-materials arrangements as services are rendered based on contractual rates. For arrangements in which a customer purchases multiple membership programs or purchases a membership program together with consulting and management services, each program and professional services arrangement is generally considered a separate unit of accounting, and arrangement consideration is allocated based on the Company’s best estimate of selling price. The Company develops its best estimate of selling price by considering pricing practices, margin, competition, and geographies in which the Company offers its products and services. Deferred incentive compensation and other charges Incentive compensation to employees related to the negotiation of new and renewal memberships, license fees to third-party vendors for tools, data, and software incorporated in specific memberships that include software, and other direct and incremental costs associated with specific memberships are deferred and amortized over the term of the related memberships. Operating leases The Company recognizes rent expense under operating leases on a straight-line basis over the non-cancelable term of the lease, including free-rent periods. Lease incentives relating to allowances provided by landlords are amortized over the term of the lease as a reduction of rent expense. The Company recognizes sublease income on a straight-line basis over the term of the sublease, including free rent periods and escalations, as a reduction of rent expense. Costs associated with acquiring a subtenant, including broker commissions and tenant allowances, are amortized over the sublease term as a reduction of sublease income. Stock-based compensation The Company has several stock-based compensation plans which are described more fully in Note 12, “Stock-based compensation.” These plans provide for the granting of stock options and restricted stock units (“RSUs”) to employees, non-employee members of the Company’s Board of Directors and any other service providers who have been retained to provide consulting, advisory, or other services to the Company. Stock-based compensation cost is measured at the grant date of the stock-based awards based on their fair values, and is recognized as an expense in the consolidated statements of operations over the vesting periods of the awards. The fair value of RSUs, with the exception of RSUs issued with both performance and market-based conditions, is determined as the fair market value of the underlying shares on the date of grant. The fair value of RSUs issued with market-based conditions is calculated on the date of grant using a Monte Carlo option-pricing model. The Company calculates the fair value of all stock option awards, with the exception of the stock options issued with market-based conditions, on the date of grant using the Black-Scholes model. The fair value of stock options issued with market-based conditions is calculated on the date of grant using a Monte Carlo option-pricing model. Forfeitures are estimated based on historical experience at the time of grant and adjusted, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company bases its fair value estimates on assumptions it believes to be reasonable but that are inherently uncertain. For awards with performance conditions, the probability of achieving performance conditions and estimated time to achieve such performance conditions are measured at each reporting period and are used to determine when and in what amount to recognize stock-based awards with performance conditions. Other (expense) income, net Other expense, net for the year ended December 31, 2016 includes foreign exchange losses of $1.4 million , as a result of the effect of fluctuating currency rates on the Company's receivable balances denominated in foreign currencies, and a $1.8 million loss on the Company's investment in preferred stock and common stock warrants of a private company that were determined to be other than temporary. The Company paid $4.3 million to the private company, a related party, under its reseller agreement which is included in cost of services on the consolidated statement of operations for the year ended December 31, 2016. Other expense, net for the year ended December 31, 2015 includes a $3.6 million loss on the Company's investment in preferred stock and common stock warrants of a private company that were determined to be other than temporary and a foreign exchange rate loss of $2.9 million . Other income, net for the nine months ended December 31, 2014 includes $1.1 million of interest income earned from the Company’s marketable securities, a $1.7 million loss on foreign exchange rates, $0.5 million in credit facility fees, $0.1 million realized loss on sale of marketable securities, and a $0.2 million loss on the Company's investment in common stock warrants. The Company paid $4.2 million to the private company, a related party, under its reseller agreement which is included in cost of services on the consolidated statement of operations for the year ended December 31, 2015. Income taxes Deferred income taxes are determined using the asset and liability method. Under this method, temporary differences arise as a result of the difference between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or the entire deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax law and tax rates on the date of the enactment of the change. Construction in progress In December 2015, the Company entered into a lease for its new corporate headquarters, which is currently being constructed in Washington D.C. The lease has an anticipated start date of mid-2019 with a 16 -year initial term and $446.1 million of lease payments. The Company has concluded that it is the deemed owner of the building (for accounting purposes only) during the construction period and that the lease qualifies for build-to-suit accounting. Accordingly, the Company has recorded a construction-in-progress asset, net of $63.4 million and $2.7 million for which there is a corresponding construction financing obligation of $63.4 million and $2.7 million recorded in the consolidated balance sheet as of December 31, 2016 and 2015, respectively. The Company will continue to increase the construction-in-progress asset and corresponding long-term liability as additional building costs are incurred by the landlord during the construction period. Upon completion of the construction, the Company will evaluate whether or not this arrangement meets the criteria for sale-leaseback accounting treatment. Concentrations of risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of membership fees receivable, cash and cash equivalents, and marketable securities. The credit risk with respect to membership fees receivable is generally diversified due to the large number of entities constituting the Company’s membership base, and the Company establishes allowances for potential credit losses. No one member accounted for more than 1.5% of revenue for any period presented. The Company maintains cash and cash equivalents and, in prior periods, marketable securities with financial institutions, which may at times exceed federally insured limits. In the years ended December 31, 2016, 2015, and the nine months ended December 31, 2014 , the Company generated approximately 2.4% , 2.4% and 3.9% of revenue, respectively, from members outside the United States. The Company’s international operations subject the Company to risks related to currency exchange fluctuations. Prices for the Company’s services sold to members located outside the United States are sometimes denominated in local currencies. Increases or decreases in the value of the U.S. dollar against local currencies in countries where the Company has members may result in a foreign exchange gain or loss recognized by the Company. Such foreign exchange gains or losses are included in other (expenses) income, net in the consolidated statements of operations. Earnings per share Basic earnings per share is computed by dividing net income attributable to common stockholders by the number of weighted average common shares outstanding during the period. Diluted earnings per share (“diluted EPS”) is computed by dividing net income attributable to common stockholders by the number of weighted average common shares increased by the dilutive effects of potential 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): Year Ended December 31, Year Ended December 31, Nine Months Ended December 31, 2016 2015 2014 Basic weighted average common shares outstanding 40,528 41,888 36,213 Effect of dilutive outstanding stock-based awards 343 — — Diluted weighted average common shares outstanding 40,871 41,888 36,213 In the year ended December 31, 2016, the year ended December 31, 2015, and the nine months ended December 31, 2014, 1.6 million shares, 2.7 million shares, and 2.6 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. Recent accounting pronouncements Changes to GAAP are |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2016 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions Increasing service to members through the introduction and expansion of new programs 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 programs and services to its members, or that complement and enhance the value of existing programs through the addition of new capabilities. 2016 Acquisitions There were no material acquisitions for the year ended December 31, 2016. 2015 Acquisitions 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 (the “Seller”). Royall is a higher 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 credit facilities with various lenders. See Note 10, "Debt," for further details regarding these credit facilities. 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 on January 9, 2015 as reported on the NASDAQ Global Select Market. The 2,428,364 shares issued to the Seller was the minimum number of shares that could have been issued under the pricing collar set forth in the purchase agreement, since the volume-weighted average trading price of the Company’s common stock on the NASDAQ Global Select Market for the 15 consecutive trading days ended on (and including) January 7, 2015 was higher than the pricing collar ceiling price of $41.18 . 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 The goodwill is primarily attributable to the assembled workforce of Royall and synergies and economies of scale expected from combining the operations of the Company and Royall. Of the goodwill recognized, $61.4 million is deductible for tax purposes. Acquisition-related costs of $9.9 million were incurred and included in general and administrative costs in the Company’s consolidated statements of operations. Of this amount, $3.3 million was recognized in the transition period ended December 31, 2014, and $6.6 million was recognized in the year ended December 31, 2015. The year ended December 31, 2015 includes the operations of Royall for the period from January 9, 2015 through December 31, 2015. The condensed consolidated statements of operations for the year ended December 31, 2015 includes $102.8 million of revenues and $88.6 million of net loss (inclusive of a $99.1 million goodwill impairment charge), respectively, attributed to Royall. In addition, the Company recorded adjustments 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 year ended December 31, 2016. The impairment and related adjustment are described in Note 7, “Goodwill and intangibles.” The following table presents the Company’s pro forma consolidated revenues and net income (loss) attributable to common stockholders for the year ended December 31, 2015 and the nine months ended December 31, 2014. 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 April 1, 2014. As described below under “Transition Period Acquisitions,” the Company consummated certain other acquisitions during the year ended December 31, 2015 and the nine months ended December 31, 2014, but has not included the impact of these acquisitions in these pro forma results as their effect would not have been material. 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 Year Ended December 31, Nine Months Ended December 31, 2015 2014 Revenue $ 783,640 $ 502,319 Net income (loss) attributable to common stockholders (90,705 ) (29,962 ) For the year ended December 31, 2015 and the nine months ended December 31, 2014, 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 non-recurring transaction expenses of $9.9 million in the nine months ended December 31, 2014 to reflect the assumption that the Royall acquisition occurred on April 1, 2014; (ii) the elimination of $6.6 million of acquisition costs recorded in the year ended December 31, 2015 as these are now presented in the nine months ended December 31, 2014; (iii) an increase in amortization expense related to the fair value of the identifiable intangible assets of $0.4 million in the year ended December 31, 2015 and $11.6 million in the nine months ended December 31, 2014; (iv) a reduction in revenue of $12.5 million in the nine months ended December 31, 2014, representing the purchase accounting fair value effect to revenue the Company would have recognized during the year ended December 31, 2014 had the acquisition of Royall occurred on April 1, 2014 and an increase in revenue of $12.5 million in the year ended December 31, 2015, representing the purchase accounting fair value effect to revenue that was recognized in the year ended December 31, 2015; (v) an increase in revenue of $2.8 million and an increase in expense of $1.7 million for the year ended December 31, 2015 for Royall's activity from January 1, 2015 to the January 9, 2015 acquisition date; (vi) the elimination and replacement of the historical Royall interest expense with the interest expense from the Company's senior secured term credit facility totaling $19.9 million in the year ended December 31, 2015 and $13.6 million in the nine months ended December 31, 2014; (vii) an increase in compensation expense related to the inducement equity awards issued to certain Royall employees totaling $0.1 million in the year ended December 31, 2015 and $4.4 million in the nine months ended December 31, 2014; (viii) an increase in non-recurring loss on financing activities expenses of $17.4 million in the nine months ended December 31, 2014 to reflect the assumption that the Royall acquisition and related financings occurred during the nine months ended December 31, 2014; and (ix) the elimination of $17.4 million of loss on financing activities recorded in the year ended December 31, 2015 as this is now presented in the corresponding period of 2014. There were no other material acquisitions for the year ended December 31, 2015. Transition Period Acquisitions During the nine months ended December 31, 2014, the Company completed three acquisitions qualifying as business combinations in exchange for aggregate net cash consideration of $71.3 million . The total purchase price has been allocated to identifiable assets acquired and liabilities assumed, including $16.6 million to intangible assets with a weighted average amortization period of 8.3 years and $57.5 million to goodwill, of which $33.9 million is tax deductible. The completed acquisitions in the nine months ended December 31, 2014, both individually and in the aggregate, were not material to the Company's consolidated results of operations. |
Fair value measurements
Fair value measurements | 12 Months Ended |
Dec. 31, 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, interest rate swaps, and, in prior periods, marketable securities. 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 are valued on a recurring basis. Cash and cash equivalents . This class of financial liabilities 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. 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 receipts are based on observable market interest rate curves. 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. Contingent earn-out liabilities expected to be paid out within the next twelve months are included in accrued liabilities on the consolidated balance sheets. Contingent earn-out liabilities expected to be paid out after the next twelve months are included in other long-term liabilities on the consolidated balance sheets. 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) and the income approach (present value of future income or cash flow). As a basis for applying a market-based approach in fair value measurements, GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels are: • 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 year ended December 31, 2016 or December 31, 2015 . The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the necessary disclosures are as follows (in thousands): Fair value as of Fair value measurement as of December 31, 2016 using fair value hierarchy December 31, 2016 Level 1 Level 2 Level 3 Financial assets Cash and cash equivalents (1) $ 91,151 $ 91,151 $ — $ — Interest rate swaps (2) 1,044 — 1,044 — Financial liabilities Contingent earn-out liabilities (3) 1,164 — — 1,164 Fair value as of Fair value measurement as of December 31, 2015 December 31, 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 macro-economic 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 Southwind Health Partners, L.L.C. and Southwind Navigator, LLC (together, “Southwind”) in December 2009 was $5.6 million . The fair value of the Southwind earn-out liability was impacted 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 December 31, 2016 , $21.4 million had been earned and paid in cash and shares of Company common stock to the former owners of the Southwind business, which includes the final payment of $1.0 million that was paid during the year ended December 31, 2016 in satisfaction of its remaining obligation. The Company’s fair value estimate of the earn-out liability related to the Company’s acquisition of 360Fresh, Inc. (“360Fresh”) in November 2012 was $2.5 million . The Company paid $1.5 million in January 2015 in satisfaction of its remaining obligation. 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 . The fair value of the Clinovations earn-out liability will be impacted by changes in estimates regarding expected operating results through the evaluation period, which ends on December 31, 2017 with payments extending through April 2018. In September 2016, 62,269 shares of Company common stock were issued to pay a portion of the earn-out liability. The maximum payout of the earn-out is $9.5 million , while the minimum is zero . Based on Clinovations' operating results, the remaining contingent obligation for Clinovations as of December 31, 2016 was $0.6 million . The fair value of the Clinovations earn-out liability will be impacted by changes in estimates of discount rates for each evaluation period, which vary from 6.7% to 7.5% , and the volatility of the Company stock, which was 25% as of December 31, 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 . The fair value of the GradesFirst earn-out liability was impacted 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 as of December 31, 2016 in satisfaction of the Company’s remaining obligation. 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 year ended December 31, 2016 and the year ended December 31, 2015 (in thousands): Year Ended December 31, 2016 December 31, 2015 Beginning balance $ 7,250 $ 12,946 Fair value change in Southwind contingent earn-out liability (1) — 261 Fair value change in GradesFirst contingent earn-out liability (1) — 400 Fair value change in Clinovations contingent earn-out liability (1) 1,103 (2,326 ) Fair value change in other contingent earn-out liabilities (1) 546 Southwind earn-out payment (1,032 ) (2,531 ) 360 Fresh earn-out payment — (1,500 ) Clinovations earn-out payment (2,703 ) — Grade First earn-out payment (4,000 ) — Ending balance $ 1,164 $ 7,250 ————————————— (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 was $138.2 million as of December 31, 2016 based on the closing price of the common stock of Evolent Health, Inc. as reported on the New York Stock Exchange prior to any discount. For further information, see Note 8, "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. Senior secured term loan. The Company estimates that the fair value of its senior secured term loan was $527.3 million as of December 31, 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 senior secured term loan would be classified as Level 2 within the fair value hierarchy if it were measured at fair value. Non-recurring fair value measurements During the years ended December 31, 2016 and 2015, the Company determined that its cost method investment in convertible preferred stock and common stock warrants of a private company would not be recoverable and recorded impairment expense of $1.8 million and $3.2 million , respectively. The fair values estimated in connection with this impairment is considered a Level 3 fair value measure due to the significance of unobservable inputs to the valuation. The convertible preferred stock accrues dividends at an annual rate of 8% that are payable if and when declared by the investee’s board of directors. The carrying value of the Company’s investment was $0.0 million and $1.8 million as of December 31, 2016 and 2015, respectively, which is included in other non-current assets on the consolidated balance sheet. As of December 31, 2016, no dividends had been declared by the investee or recorded by the Company. Non-financial assets and liabilities Certain assets and liabilities are measured at fair value on a nonrecurring basis and are subject to fair value adjustments in certain circumstances (e.g., when there is evidence of impairment). During the year ended December 31, 2016, no fair value adjustments or material fair value measurements were required for non-financial assets or liabilities. During the year ended December 31, 2015 and the nine months ended December 31, 2014, the Company’s capitalized software for sale assets were measured and recorded at fair value due to circumstances that indicated that the carrying values of the assets were not fully recoverable. As a result, the Company recognized an impairment of approximately $8.2 million and $2.1 million in the fiscal periods ending December 31, 2015 and 2014, respectively, within the consolidated statements of operations. The Company utilized the discounted cash flow method to determine the fair value of the capitalized software assets. Cash flows were determined based on the Company’s estimates of future operating results and discounted using an internal rate of return consistent with that used by the Company to evaluate cash flows of other assets of a similar nature. Due to the significant unobservable inputs inherent in discounted cash flow methodologies, this method is classified as Level 3 in the fair value hierarchy. During the year ended December 31, 2015, the Company determined that there was evidence of impairment on its goodwill. See Note 7, “Goodwill and intangibles,” for further detail on the recognition of goodwill impairment charges. The fair values estimated in connection with this impairment are considered a Level 3 fair value measure due to the significance of unobservable inputs to the valuation. |
Membership fees receivable
Membership fees receivable | 12 Months Ended |
Dec. 31, 2016 | |
Receivables [Abstract] | |
Membership fees receivable | Membership fees receivable Membership fees receivable consist of the following (in thousands): As of December 31, 2016 2015 Billed fees receivable $ 149,117 $ 138,100 Unbilled fees receivable 462,780 473,053 Membership fees receivable, gross 611,897 611,153 Allowance for uncollectible revenue (6,380 ) (5,709 ) Membership fees receivable, net $ 605,517 $ 605,444 Included in membership fees receivable are billed and unbilled receivables. Billed fees receivable represent invoiced membership fees. Unbilled fees receivable represent fees due to be billed within the next twelve months to members, a portion of which relates to revenue to be recognized in excess of a year and is included in long term deferred revenue. The Company generates long term deferred revenue due to the majority of its invoicing being done in advance. |
Property and equipment
Property and equipment | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | Property and equipment Property and equipment consists of the following (in thousands): As of December 31, 2016 2015 Leasehold improvements $ 69,465 $ 63,608 Furniture, fixtures and equipment 70,362 62,790 Software 231,952 202,384 Property and equipment, gross 371,779 328,782 Accumulated depreciation and amortization (200,498 ) (148,425 ) Property and equipment, net $ 171,281 $ 180,357 The Company evaluates its long-lived assets for impairment when changes in circumstances exist that suggests 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 year ended December 31, 2015, the Company recognized an impairment loss of $2.7 million related to certain internally developed software that is no longer in use. The Company did not recognize any material impairment losses on any of its property and equipment during the year ended December 31, 2016 or the nine months ended December 31, 2014. As of December 31, 2016 and 2015 , the carrying value of internally developed capitalized software was $75.2 million and $73.2 million , respectively. |
Goodwill and intangibles
Goodwill and intangibles | 12 Months Ended |
Dec. 31, 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 and internally developed capitalized software for sale. Goodwill is not amortized as it has an estimated indefinite life. Goodwill is reviewed for impairment at least annually as of October 1, 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 is then 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 ("Core ABC"). Goodwill is assigned to the reporting unit or units that benefit from the synergies arising from each business combination. The determination of fair value of the reporting units used to perform the first step of the impairment test requires judgment and involves significant estimates and assumptions about the expected future cash flows and the impact of market conditions on those assumptions. Due to the inherent uncertainty associated with forming these estimates, actual results could differ from those estimates. Future events and changing market conditions may impact the Company’s assumptions as to future revenue growth rates, future operating margins, market-based WACC, and other factors that may result in changes in the estimates of the Company’s reporting units’ fair value. Although management believes the assumptions used in testing the Company’s reporting units’ goodwill for impairment are reasonable, it is possible that market and economic conditions could change from those expected. A decline in revenue or revenue and earnings multiple data of peer companies, among other factors, could significantly impact the impairment analysis and may result in future goodwill impairment charges that, if incurred, could have a material adverse effect on the Company’s financial condition and results of operations. The Company performed the annual goodwill impairment test at October 1, 2016. The fair value of both the Royall and Core ABC reporting units exceeded carrying value, resulting in no indicated impairment for the two reporting units. There were no indicators of impairment identified between October 1 and December 31, 2016. Accordingly, there was no impairment of goodwill recorded during the year ended December 31, 2016. The Royall reporting unit had goodwill of $648.3 million as of October 1, 2015. The estimated fair value of the reporting unit did not exceed its carrying value and, therefore, step two of the goodwill impairment was performed. The decrease in fair value of the reporting unit from the acquisition was attributable to reduced projected cash flow growth rates due in part to lower than expected first year performance and lower market derived multiples between the January 9, 2015 acquisition date and the October 1, 2015 goodwill impairment assessment date. As the Company completed its calendar year 2016 forecast in the three months ended December 31, 2015, it revised its outlook for the Royall business, reducing cash flow forecasts over the projection period. The projections incorporated the effect of current market conditions, including revenue growth, customer attrition, operating margins, capital expenditures, and working capital dynamics. The market-based WACC used in the income approach for Royall was 11% . The terminal growth rate used in the discounted cash flow model was 3.5% . As the Royall reporting unit failed the step one test, 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 result of the step two analysis resulted in a goodwill impairment of $99.1 million . The Company believed that no such impairment indicators existed during the nine months ended December 31, 2014. There was no impairment of goodwill recorded during the nine months ended December 31, 2014. Changes in the carrying amount of goodwill are as follows (in thousands): As of December 31, 2016 2015 Beginning of period $ 738,200 $ 186,895 Goodwill acquired 2,258 650,289 Goodwill impairment — (99,145 ) Purchase accounting adjustment (1) (951 ) 161 Ending balance $ 739,507 $ 738,200 (1) The 12/31/2016 adjustment 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 two years to seventeen years . As of December 31, 2016 , the weighted average remaining useful life of acquired intangibles was approximately 13.3 years. As of December 31, 2016 , the weighted average remaining useful life of internally developed intangibles was approximately 3.4 years. The gross and net carrying balances and accumulated amortization of intangibles are as follows (in thousands): As of December 31, 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 intangible for sale: Capitalized software 5.0 $ 20,034 $ (9,998 ) $ 10,036 $ 16,902 $ (6,796 ) $ 10,106 Acquired intangibles: Developed software 5.2 9,450 (8,575 ) 875 9,450 (8,075 ) 1,375 Customer relationships 16.2 277,710 (42,978 ) 234,732 277,710 (25,769 ) 251,941 Trademarks 8.6 14,900 (5,923 ) 8,977 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 (6,016 ) 433 6,449 (5,581 ) 868 Total other intangibles $ 329,943 $ (74,890 ) $ 255,053 $ 326,811 $ (52,090 ) $ 274,721 During the year ended December 31, 2015 and the nine months ended December 31, 2014, the Company concluded that certain acquired developed technology assets would no longer be in use. As a result, the Company recognized a $5.4 million and $2.1 million impairment, respectively, on the remaining unamortized costs. Amortization expense for intangible assets for the year ended December 31, 2016 , 2015, and the nine months ended December 31, 2014, recorded in depreciation and amortization on the consolidated statements of operations, was approximately $22.8 million , $24.4 million , and $7.3 million , respectively. The following approximates the aggregate amortization expense to be recorded in depreciation and amortization on the consolidated statements of operations for each of the following five fiscal years ending December 31, 2017 through 2021 : $22.5 million , $21.6 million , $19.9 million , $18.7 million , and $17.7 million , respectively, and $154.7 million thereafter. |
Equity method investments
Equity method investments | 12 Months Ended |
Dec. 31, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity method investments | Equity method investments As of December 31, 2016 , the Company held a 7.7% equity interest in Evolent Health LLC (“Evolent LLC”) and a 7.9% equity ownership interest in Evolent Health, Inc. (“Evolent Inc.”), which had no material operations outside of its 77.4% 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 December 31, 2016 . During the year ended December 31, 2016 , the Company sold a portion of its interest in Evolent Inc. Total cash received from the transaction was $48.6 million and resulted in the recognition of an after tax gain of $29.7 million . During the year ended December 31, 2016 , the Company recognized in the consolidated statements of operations its proportionate share of the losses of Evolent Inc. of $4.3 million . The Company’s share of the losses of Evolent Inc. that was applied to the carrying value of its investment in Evolent Inc. during the year ended December 31, 2015 was $3.0 million . The carrying balance of the Company’s investment in Evolent Inc. was $10.3 million and $0 as of December 31, 2016 and 2015. The Company had no unrecorded losses related to its investment in Evolent Inc. as of December 31, 2016 . The Company recognized in the consolidated statements of operations its proportionate share of the losses of Evolent LLC of $6.1 million , $8.6 million , and $6.3 million in the years ended December 31, 2016, 2015, and the nine months ended December 31, 2014, respectively. The carrying balance of the Company’s investment in Evolent LLC was $9.6 million and $0.7 million as of December 31, 2016 and 2015, respectively. The Company had no unrecorded losses related to its investment in Evolent LLC as of December 31, 2016 or 2015. In connection with the reorganization and initial public offering of Evolent Inc. in June 2015, the "Transaction," the Company carried over its basis in its investment resulting in a significant difference between its basis and its proportionate share in the equity of Evolent Inc. As of December 31, 2016 , the basis difference totaled $43.8 million and will decrease over time through amortization and upon any sale or dilutive transactions. Evolent Inc. gained control of Evolent LLC in the Transaction and applied purchase and push down accounting. The Company has excluded the effects of this 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 December 31, 2014, the Company did not recognize a tax benefit associated with equity method losses as there was a full valuation allowance recorded. During the year ended December 31, 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 $0.5 million was recorded in the year ended December 31, 2015 for tax benefits associated with current year losses received from Evolent LLC. For the year ended December 31, 2015, the income tax benefit from gains (losses) from equity method investments was $7.2 million , representing an effective tax rate of 62.2% . The provision for income taxes from gains (losses) from equity method investments for the year ended December 31, 2016 was $21.2 million , representing an effective tax rate of 31.3% . Tax expense of $18.9 million was recorded for the tax effect of the current period gain on sale of shares in Evolent, Inc. and $7.4 million of expense associated with current year dilution gains and the allocated share of losses from Evolent LLC and Evolent, Inc. The effective tax rate applied to the dilution gains, gain on partial sales, and the allocated share of losses is 38.8% . Additional tax benefit of $5.1 million was recorded for the tax effects of current year losses received from Evolent LLC and prior period adjustments. The gains (losses) from equity method investments on the consolidated statement of operations consisted of the following (in thousands): Year ended December 31, Year ended December 31, Nine Months Ended 2016 2015 2014 Allocated share of losses $ (10,366 ) $ (11,616 ) $ (6,540 ) Gain on partial sale of investment 48,565 — — Dilution gains 29,704 — — Tax (expense) benefits (21,237 ) 7,220 — Gains (losses) from equity method investments $ 46,666 $ (4,396 ) $ (6,540 ) In connection with the Transaction, 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 December 31, 2016, the Company has not received any payments pursuant to the terms of the tax receivables agreement. As the amount the Company will receive related to the tax receivables agreement is unknown, the Company will recognize payments, if any, associated with this agreement when received. The following is a summary of the consolidated financial position of Evolent, Inc. as of the date presented: As of December 31, 2016 2015 Assets: Current assets $ 264,966 $ 184,463 Non-current assets 934,873 831,051 Total assets $ 1,199,839 $ 1,015,514 Liabilities and shareholders' equity: Current liabilities $ 131,941 $ 59,506 Non-current liabilities 155,784 21,429 Total liabilities 287,725 80,935 Total shareholders’ equity attributable to Evolent Health, Inc. 702,526 649,341 Non-controlling interests 209,588 285,238 Total liabilities and shareholders’ equity $ 1,199,839 $ 1,015,514 The following is a summary of the consolidated operating results of Evolent, Inc. for the periods presented: Year Ended December 31, 2016 2015 Revenue $ 254,188 $ 96,878 Cost of revenue (exclusive of depreciation and amortization) 155,177 57,398 Gross profit 99,011 39,480 (Loss) income before income taxes and non-controlling interests (237,533 ) 343,289 Net (loss) income (226,778 ) 319,814 Net (loss) income attributable to Evolent Health, Inc. (159,742 ) 332,494 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 December 31, 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.” |
Noncontrolling interest
Noncontrolling interest | 12 Months Ended |
Dec. 31, 2016 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling interest | Noncontrolling interest In July 2012, the Company entered into an agreement with an entity created for the sole purpose of providing consulting services for the Company on an exclusive basis. The Company’s relationship with the entity was governed by a services agreement and other documents, as amended, that provided the entity’s owners the conditional right to require the Company to purchase their ownership interests (“Put Option”), for a price based on a formula set forth in the agreement, at any time after certain conditions were satisfied through June 30, 2015. These agreements also provided the Company a conditional right to require the entity’s owners to sell their ownership interests to the Company (“Call Option”) over the same period. The Company determined that this entity met the definition of a variable interest entity over which it had significant influence and, as a result, consolidated the results of this entity into its consolidated financial statements. The noncontrolling interest represents the entity’s owners’ claims on consolidated investments where the Company owns less than a 100% interest. Losses attributable to noncontrolling interest were $0 for the years ended December 31, 2016 and 2015, respectively, and $0.2 million for the nine months ended December 31, 2014. On December 5, 2014, the conditions required for the entity's owners to exercise the Put Option were satisfied and the entity's owners exercised the Put Option. The Company paid $6 million to acquire 100% of the ownership interests. The purchase price of $6.1 million is recorded as a reduction to net income attributable to common stockholders on the accompanying consolidated statements of operations. Prior to the exercise of the Put Option, the Company had a 0% interest in this entity. In conjunction with the exercise of the Put Option, the Company recorded a deferred tax asset of $3.4 million related to basis differences. As a result of the exercise of the Put Option, there was no noncontrolling interest for the year ended December 31, 2016 or 2015. As of December 31, 2016, the deferred tax asset had a balance of $2.9 million . |
Debt
Debt | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Debt | Debt Senior secured credit facilities obtained in January 2015 On January 9, 2015, in connection with the completion of the acquisition of Royall, the Company entered into a credit agreement with various lenders. Under the terms of the January 9, 2015 credit agreement, lenders provided the Company with $775 million of senior secured credit facilities for application to the acquisition of Royall and the Company’s corporate needs after the closing of the Royall acquisition. The credit facilities consisted of a term loan facility in the principal amount of $725 million , maturing on January 9, 2022, and a revolving credit facility under which up to $50 million principal amount of borrowings and other credit extensions could be outstanding at any time, maturing on January 9, 2020. Amounts drawn under the term facility generally bore 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 3.00% or (b) the applicable London interbank offered rate (subject to a 1.00% floor) plus an initial margin of 4.00% , subject in each case to margin reductions based on the Company's total leverage ratio from time to time. The annual interest rate for the term loan facility as of January 9, 2015 was 5.00% . The revolving facility was undrawn at the facility closing date. All $725 million of term loans available under the term loan facility were drawn at the closing of the acquisition to pay the majority of the cash purchase price for the Royall capital stock. Total original issue discount of $21.8 million and deferred financing fees of $2.8 million were recorded related to this credit agreement. The Company recognized a loss of $0.2 million on the modification of the July 2012 revolving credit facility. This loss was recorded in loss on financing activities within the consolidated statements of operations. Equity offering in January 2015 On January 21, 2015, the Company closed on a registered public offering of its common stock. The Company used the net proceeds from the offering plus available cash to repay approximately $149.9 million principal amount of loans outstanding under its $725 million senior secured term loan facility. This payment resulted in a loss on financing activities of $4.5 million related to original issue discount and $0.3 million related to deferred financing fees. The total $4.8 million loss was recognized in loss on financing activities within the consolidated statement of operations. Senior secured credit facilities obtained in February 2015 On February 6, 2015, the Company entered into a new credit agreement with various lenders. The new credit agreement consists of a five -year senior secured term loan facility in the original principal amount of $575 million and a five -year senior secured revolving credit facility under which up to $100 million principal amount of borrowings and other credit extensions may be outstanding at any time. The proceeds of the term loan were used to repay and retire all loans outstanding under the term loan facility obtained on January 9, 2015. The revolving credit facility was not drawn down on February 6, 2015. Amounts drawn under the term loan and revolving credit facilities bore 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 1.75% or (b) the applicable London interbank offered rate plus an initial margin of 2.75% , subject in each case to margin reductions based on the Company’s total leverage ratio from time to time. At the time of issuance, the stated annual interest rate on the borrowing was 3.01% . Amounts due under the new credit agreement are secured by substantially all of the Company's tangible and intangible assets. The lenders under the new credit agreement included the lenders from the January 9, 2015 agreement as well as new lenders. For those lenders to this agreement that also participated in the January 9, 2015 agreement, the Company concluded that the new credit agreement represented a modification of the debt. As a modification, the original issue discount and deferred financing fees associated with the original borrowings carried forward to the new borrowings. Any fees paid to or received from these lenders were recorded as an adjustment to the original issue discount. Any fees paid to third parties were recorded as expense. The Company received a net refund of $2.4 million from the original lenders under the January 9, 2015 agreement, which was treated as a reduction to the original issue discount and deferred financing fees. Further, because the level of participation in the borrowings by the lenders under the original credit agreement was significantly less under the new agreement than under the original agreement, the Company recognized a debt modification expense of $17.4 million related to a portion of the original issue discount and deferred financing fees from the old agreement. This $17.4 million expense was recorded as a loss on financing activities within the consolidated statement of operations. Amendment to the senior secured credit facilities On October 30, 2015, the Company amended its senior secured credit facilities. Prior to the amendment, the outstanding principal amount of the senior secured term loan was approximately $560.6 million and no amounts were outstanding under the revolving credit facility. Pursuant to this amendment, the amount available for borrowing under the revolving credit facility was increased from $100.0 million to $200.0 million . On October 30, 2015, the Company borrowed $100.0 million under the revolving credit facility and used all of the proceeds to repay a portion of the outstanding principal amount of the senior secured term loan. Upon consummation of this prepayment transaction, $460.6 million in aggregate principal amount remained outstanding under the senior secured term loan. In addition, the Company lowered the initial margin on the alternate base rate from 1.75% to 1.25% and on the London interbank offered rate from 2.75% to 2.25% . The Company recognized no loss on financing activities related to this amendment. As of December 31, 2016, based on the Company's leverage ratio, the interest rate margin was 2.00% and the stated annual interest rate on the senior secured term loan was 2.77% . As of December 31, 2016 and 2015, there was $100.0 million outstanding under the revolving credit facility and $80.9 million and $98.6 million , respectively, was available for borrowing. As of December 31, 2016 and 2015, $19.1 million and $1.4 million , respectively, of standby letters of credit had been issued and were outstanding under the revolving credit facility. As of December 31, 2016 and 2015, the stated annual interest rate on the amounts drawn on the revolving credit facility were 2.77% and 2.68% , respectively. The Company is obligated to pay a commitment fee at an annual rate of 0.3% subject to reduction based on the Company’s total leverage ratio from time to time, accruing on the average daily amount of available commitments under the revolving credit facility. In June 2016 the Company drew down $17.0 million of borrowings under its revolving credit facility, which was repaid as of December 31, 2016. Long-term debt is summarized as follows (in thousands): As of December 31, 2016 2.77% term facility due fiscal 2020 ($424,687 face value less unamortized discount of $2,601) $ 422,086 Revolving credit facility 100,000 Less: Amounts due in next twelve months ($50,312 face value less unamortized discount of $965) (49,347 ) Total $ 472,739 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 December 31, 2016 and 2015. Long-term debt maturing in each of the next five fiscal years, excluding the discount, is as follows (in thousands): Year Ending December 31, 2017 $ 50,312 2018 79,062 2019 86,250 2020 309,063 Total $ 524,687 Interest expense for the years ended December 31, 2016 and 2015 was $18.1 million and $21.1 million , respectively, inclusive of $1.4 million and $1.3 million , respectively, of amortization of debt issuance costs and $2.2 million and $2.0 million , respectively, of payments related to the interest rate swaps described below. Swap agreements Through its senior secured term loan and revolving facilities, the Company is exposed to interest rate risk. In April 2015, to minimize the impact of changes in interest rates on its interest payments, in April 2015, 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 sheet 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 loan. As of December 31, 2016 and 2015, the principal amount hedged was $262.3 million and $276.8 million , respectively. Consistent with the terms of the Company's senior secured term loan facility, the interest rate swap agreements mature in February 2020 and have periodic interest settlements. Under the agreements, the Company is entitled to receive a floating rate based on the one-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 senior secured term loan 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 December 31, 2016 and 2015, the fair value of the interest rate swaps was an asset of $1.0 million and $0.4 million , respectively, and was recorded in the Company's consolidated balance sheets within other non-current assets. For the year ended December 31, 2016 and 2015, the change in fair value of the swaps, net of tax, of $0.3 million and $0.2 million , respectively, were reported as a component of accumulated other comprehensive income. The Company does not expect any amount included in accumulated other comprehensive income to be reclassified into earnings during the next 12 months. For the years ended December 31, 2016 and 2015, there was $0.4 million and $0.0 , respectively, of hedge ineffectiveness, recorded within the consolidated statements of operations. Changes in fair value are reclassified from accumulated other comprehensive income 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 in the consolidated statements of operations for the applicable period. |
Stockholders' equity
Stockholders' equity | 12 Months Ended |
Dec. 31, 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 1,951,258 shares, 1,069,357 shares, and 731,559 shares of its common stock at a total cost of approximately $61.6 million , $53.0 million , and $36.0 million , in the year ended December 31, 2016 , the year ended December 31, 2015, and the nine months ended December 31, 2014, respectively, pursuant to its share repurchase program. The total amount of common stock purchased from inception under the program as of December 31, 2016 was 19,778,800 shares at a total cost of $513.5 million . All repurchases to date have been made in the open market and shares have been retired as of December 31, 2016 . No minimum number of shares subject to repurchase has been fixed and the share repurchase authorization has no expiration date. The Company has funded its share repurchases with cash on hand, proceeds from the sale of marketable securities, and cash generated from operations. As of December 31, 2016 , the remaining authorized repurchase amount was $36.5 million . During the year ended December 31, 2016 , the Company retired 1,951,258 shares of its treasury stock. Upon retirement, these shares resumed the status of authorized but unissued stock. The treasury stock retirement resulted in reductions to common stock of $19,513 , treasury stock of $61.6 million , and retained earnings of $61.6 million . During the year ended December 31, 2015, the Company retired 1,069,357 shares of its treasury stock. Upon retirement, these shares resumed the status of authorized but unissued stock. The treasury stock retirement resulted in reductions to common stock of $10,700 , treasury stock of $53.0 million , and retained earnings of $53.0 million . A total of 19,778,800 shares of treasury stock have been retired to date. There was no effect on the total stockholders’ equity position as a result of the retirement. During the nine months ended December 31, 2014, the Company retired 731,559 shares of its treasury stock. Upon retirement, these shares resumed the status of authorized but unissued stock. The treasury stock retirement resulted in reductions to common stock of $7,300 , treasury stock of $36.0 million , and retained earnings of $36.0 million . A total of 17,827,542 shares of treasury stock have been retired to date. There was no effect on the total stockholders’ equity position as a result of the retirement. Equity offering On January 21, 2015, the Company closed the registered public offering of 3,650,000 shares of common stock by the Company and, pursuant to registration rights granted by the Company to the Seller in connection with the acquisition of Royall, the public offering of 1,755,000 shares of common stock held by the Seller that were issued to the Seller as the equity component of the acquisition consideration. The shares in the registered public offering were sold at a price to the public of $43.00 per share, less an underwriting discount of $1.935 per share, for a net per share purchase price of $41.065 . The Company also incurred selling costs of $1.1 million directly related to this equity offering. The net proceeds received by the Company were approximately $148.8 million after deducting the underwriting discount and selling costs. As of December 31, 2016, the Seller held no shares of the common stock issued to it as acquisition consideration. |
Stock-based compensation
Stock-based compensation | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based compensation | Stock-based compensation Equity incentive plans The Company issues awards, including stock options and RSUs, under the Company’s 2009 Stock Incentive Plan (the “2009 Plan”). On June 9, 2015, the Company's stockholders approved an amendment to the 2009 Plan that increased the number of shares of common stock authorized for issuance under the plan by 3,800,000 shares. As of December 31, 2016 , there were 1,862,891 shares available for issuance under the 2009 Plan. On September 5, 2013, the Company's stockholders also approved an amendment to the 2009 Plan that increased the maximum term for stock option and freestanding stock appreciation rights awards granted under the plan from five years to seven years. The 2009 Plan is administered by the Compensation Committee of the Company’s board of directors, which has the authority to determine which officers, directors, employees, and other service providers are awarded options or share awards pursuant to the 2009 Plan and to determine the terms of the awards. Grants may consist of treasury shares or newly issued shares. Options are rights to purchase common stock of the Company at the fair market value on the date of grant. The exercise price of a stock option or other equity-based award is equal to the closing price of the Company’s common stock on the date of grant. The Company generally awards non-qualified options, but the 2009 Plan permits the issuance of options intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code. Holders of options do not participate in dividends, if any, until after the exercise of the award. RSUs are equity settled stock-based compensation arrangements of a number of shares of the Company’s common stock. RSU holders do not participate in dividends, if any, nor do they have voting rights until the restrictions lapse. On January 9, 2015, in conjunction with the Royall acquisition, the Company created The Advisory Board Company Inducement Stock Incentive Plan for Royall Employees 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 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, is estimated to be approximately $26.8 million . The aggregate grant date fair value of the performance-based RSUs, assuming all performance targets are met, is estimated at approximately $7.3 million . As of December 31, 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 following tables. The actual stock-based compensation expense the Company will recognize is dependent upon, but not limited to, 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. On June 23, 2014, the Compensation Committee of the board of directors approved a long-term incentive plan pursuant to which nonqualified stock options and RSUs would be granted under the 2009 Plan to certain executive officers of the Company. During the year ended December 31, 2014, 970,937 nonqualified stock options and 104,026 RSUs were granted to certain executive officers of the Company. The awards are subject to both performance-based and market-based conditions and will vest based upon the achievement of specified levels of both sustained contract value and sustained stock price during the performance period, which could extend to March 31, 2019. The vesting of the RSUs is also subject to a one -year service condition, which requires the recipient to remain employed with the Company for at least one year following the date on which the applicable performance and market conditions are achieved. The Company utilized the longer of the explicit, implicit, or derived service periods for the requisite service period, which includes the current estimate of the time to achieve the performance and market conditions and is four years for the stock options and six years for the RSUs, inclusive of the one -year service condition. The options and RSUs are included in the tables below. Stock option activity. During the year ended December 31, 2016 , the year ended December 31 2015 , and the nine months ended December 31, 2014, the Company granted 1,345,000 , 2,102,916 , and 1,144,973 , stock options, respectively, with a weighted average exercise price of $28.44 , $50.45 , and $52.28 , respectively. During the year ended December 31, 2016 , the year ended December 31 2015 , and the nine months ended December 31, 2014, participants exercised 303,490 , 218,109 , and 233,999 options for a total intrinsic value of $4.7 million , $6.6 million , and $7.3 million , respectively. Intrinsic value is calculated as the number of shares exercised times the Company’s stock price at exercise less the exercise price of the option. The following table summarizes the changes in common stock options during the year ended December 31, 2016 , the year ended December 31 2015 , and the nine months ended December 31, 2014 for all of the Company's stock incentive plans. Number of Performance-Based Options Weighted Number of Service-Based Weighted Outstanding as of March 31, 2014 20,000 $ 29.58 1,810,323 $ 32.86 Granted 974,605 51.40 170,368 57.31 Exercised — — (233,999 ) 18.36 Forfeited — — — — 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 — — (218,109 ) 21.76 Forfeited (756,100 ) 49.92 (13,569 ) 60.27 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 — — (303,490 ) 16.05 Forfeited (215,370 ) 49.92 (39,542 ) 52.68 Outstanding, as of December 31, 2016 2,117,855 $ 47.11 (1) 2,525,178 $ 39.28 (3) Exercisable, as of December 31, 2016 26,872 $ 34.91 (2) 1,021,192 $ 43.29 (4) ————————————— (1) The weighted average remaining contractual term for all performance-based options outstanding at December 31, 2016 is approximately five years and the aggregate intrinsic value is $1.7 million . (2) The weighted average remaining contractual term for all performance-based options exercisable as of December 31, 2016 is approximately two years and the aggregate intrinsic value is $0.1 million . (3) The weighted average remaining contractual term for all service-based options outstanding at December 31, 2016 is approximately four years and the aggregate intrinsic value is $7.4 million . (4) The weighted average remaining contractual term for all service-based options exercisable as of December 31, 2016 is approximately two years and the aggregate intrinsic value is $2.5 million . The aggregate intrinsic value shown in the footnotes of the table above is the sum of the amounts by which the quoted market price of the Company’s common stock on the NASDAQ Global Select Market exceeded the exercise price of the options as of December 31, 2016 , for those options for which the quoted market price was in excess of the exercise price. This amount changes over time based on changes in the fair market value of the Company’s common stock. During the year ended December 31, 2016 , the year ended December 31, 2015 , and the nine months ended December 31, 2014, 341,024 , 387,748 , and 411,259 options, respectively, vested with fair values of $0.1 million , $5.0 million , and $4.2 million , respectively. The following table summarizes the exercise prices and contractual lives of all options outstanding under the Company's stock incentive plans as of December 31, 2016 : Options Outstanding Range of Exercise Prices Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life - Years $ 0.00 – $ 9.99 — $ — 0.0 10.00 – 19.99 70,500 16.58 0.3 20.00 – 29.99 1,469,478 27.83 5.6 30.00 – 39.99 46,432 35.18 6.4 40.00 – 49.99 1,495,769 48.14 3.4 50.00 – 59.99 1,476,482 52.57 4.6 60.00 – 69.99 84,372 66.90 4.2 $ 0.00 – $ 69.99 4,643,033 $ 42.85 4.5 Restricted stock unit activity . During the year ended December 31, 2016 , the year ended December 31, 2015 , and the nine months ended December 31, 2014 , the Company granted 534,205 , 568,511 , and 336,113 RSUs, respectively, the majority of which vest in four equal annual installments on the anniversary of the grant date. The valuation of RSUs is determined as the fair market value of the underlying shares on the date of grant. The weighted average grant date fair value of RSUs granted without market conditions for the year ended December 31, 2016 , the year ended December 31, 2015 , and the nine months ended December 31, 2014 was $31.07 , $51.94 , and $42.92 , respectively. There were no RSUs granted with market conditions during the year ended December 31, 2016. The weighted average fair value of RSUs granted with market conditions during the year ended December 31, 2015 is estimated at $15.49 per share on the date of grant using the following weighted average assumptions: risk-free interest rate of 1.6% ; an expected life of approximately 5 years; volatility of 31.3% ; and dividend yield of 0.0% over the expected life of the RSUs. The weighted average fair value of RSUs granted with market conditions during the nine months ended December 31, 2014 is estimated at $15.75 per share on the date of grant using the following weighted average assumptions: risk-free interest rate of 1.7% ; an expected life of approximately 5 years; volatility of 30.0% ; and dividend yield of 0.0% over the expected life of the RSUs. During the year ended December 31, 2016 , the year ended December 31, 2015 , and the nine months ended December 31, 2014 , participants vested in 318,877 , 362,654 , and 387,377 RSUs, respectively, for a total intrinsic value of $10.5 million , $19.0 million , and $22.0 million , respectively. Intrinsic value is calculated as the number of shares vested times the Company’s closing stock price on the NASDAQ Global Select Market at the vesting date. Of the RSUs vested in the year ended December 31, 2016 , the year ended December 31, 2015, and the nine months ended December 31, 2014, 108,315 , 115,497 , and 133,129 shares, respectively, were withheld to satisfy minimum employee tax withholding. The following table summarizes the changes in RSUs during the year ended December 31, 2016 , the year ended December 31, 2015 , and the nine months ended December 31, 2014 for all of the stock incentive plans described above. Number of Weighted Average Grant Date Fair Value Number of Weighted Average Grant Date Fair Value Non-vested, March 31, 2014 42,880 $ 47.87 1,067,582 $ 41.81 Granted 152,957 28.43 183,156 55.02 Forfeited (8,540 ) 51.15 (4,076 ) 48.83 Vested — — (387,377 ) 32.27 Non-vested, December 31, 2014 187,297 $ 31.85 859,285 $ 48.89 Granted 191,740 $ 49.87 376,771 $ 52.99 Forfeited (78,005 ) 48.16 (33,789 ) 55.74 Vested — — (362,654 ) 43.43 Non-vested, December 31, 2015 301,032 $ 39.10 839,613 $ 52.82 Granted 23,580 $ 32.28 510,625 $ 31.01 Forfeited (66,139 ) 51.15 (64,170 ) 47.18 Vested (893 ) 50.41 (317,984 ) 51.48 Non-vested, December 31, 2016 257,580 $ 35.34 968,084 $ 42.13 Employee stock purchase plan The Company sponsors an employee stock purchase plan (“ESPP”) for all eligible employees. Under the ESPP, employees authorize payroll deductions from 1% to 15% of their eligible compensation to purchase shares of the Company’s common stock. Under the ESPP, shares of the Company’s common stock may be purchased at the end of each fiscal quarter at 95% of the closing price of the Company’s common stock. A total of 1,684,000 shares of the Company’s common stock are authorized under the ESPP. As of December 31, 2016 , a total of 1,453,429 shares were available for issuance under the ESPP. During the year ended December 31, 2016 , the year ended December 31, 2015 , and the nine months ended December 31, 2014 , the Company issued 14,041 , 10,496 , and 9,241 shares, respectively, under the ESPP at an average price of $34.00 , $48.11 , and $46.64 per share, respectively. The compensation expense related to the ESPP recorded in the year ended December 31, 2016 , the year ended December 31, 2015 , and the nine months ended December 31, 2014 was not material to the consolidated financial statements. Valuation assumptions and equity based award activity As discussed in Note 2, “Summary of significant accounting policies,” determining the estimated fair value of stock-based awards is judgmental in nature and involves the use of significant estimates and assumptions, including the term of the stock-based awards, risk-free interest rates over the vesting period, expected dividend rates, the price volatility of the Company’s shares, and forfeiture rates of the awards. Stock option valuation The Company calculates the fair value of all stock option awards, with the exception of the stock options issued with market-based conditions, on the date of grant using the Black-Scholes model. Those stock option awards that have market-based conditions are valued using a Monte Carlo model. The expected term for the Company's stock options is determined through analysis of historical data on employee exercises, vesting periods of awards, and post-vesting employment termination behavior. The risk-free interest rate is based on U.S. Treasury bonds issued with life terms similar to the expected life of the grant. Volatility is calculated based on historical volatility of the daily closing price of the Company’s common stock continuously compounded with a look-back period similar to the terms of the expected life of the grant. The Company has not declared or paid any cash dividends on its common stock since the closing of its initial public offering and does not currently anticipate declaring or paying any cash dividends. The timing and amount of future cash dividends, if any, is periodically evaluated by the Company’s board of directors and would depend upon, among other factors, the Company’s earnings, financial condition, cash requirements, and contractual restrictions. The following average key assumptions were used in the valuation of all stock options granted in each respective period: Year Ended December 31, Year Ended December 31, Nine Months Ended December 31, 2016 2015 2014 Stock option grants: Risk-free interest rate .95% – 1.64% 1.18% – 1.67% 1.53% – 1.75% Expected lives in years 5.04 – 5.54 4.00 – 5.45 5.00 – 5.47 Expected volatility 36.4% – 38.4% 31.2% – 33.0% 29.8% – 30.9% Dividend yield — % — % — % Weighted average exercise price of options granted 28.44 50.45 52.28 Weighted average grant date fair value of options granted 10.00 15.49 14.49 Number of options granted 1,345,000 2,102,916 1,144,973 Valuation for restricted stock units RSUs without market conditions are valued at the grant date closing price of the Company’s common stock as reported on the NASDAQ Global Select Market. Those RSU awards that have market-based conditions are valued using a Monte Carlo model. The expected term for those RSUs is based on the vesting periods of the awards. The risk-free interest rate is based on U.S. Treasury bonds issued with life terms similar to the expected life of the grant. Volatility is calculated based on historical volatility of the daily closing price of the Company’s common stock continuously compounded with a look-back period similar to the terms of the expected life of the grant. The dividend yield assumption is based on the fact that the Company has not declared or paid any cash dividends on its common stock since the closing of its initial public offering and does not currently anticipate declaring or paying any cash dividends. The timing and amount of future cash dividends, if any, is periodically evaluated by the Company’s board of directors and would depend upon, among other factors, the Company’s earnings, financial condition, cash requirements, and contractual restrictions. Valuation for employee stock purchase rights The value of employee stock purchase rights for shares of stock purchased under the ESPP is determined as the fair market value of the underlying shares on the date of purchase as determined by the closing price of the Company’s common stock as reported on the NASDAQ Global Select Market, less the purchase price, which is 95% of the closing price of the Company’s common stock. The ESPP enrollment begins on the first day of the quarter. Stock purchases occur on the last day of the quarter, with only eligible employee payroll deductions for the period used to calculate the shares purchased. There is no estimate of grant date fair value or estimated forfeitures, since actual compensation expense was recorded in the period on the purchase date. The fair value of employee stock purchase rights is equivalent to a 5% discount of the purchase date closing price. Forfeitures Forfeitures are estimated based on historical experience at the time of grant and adjusted, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Stock-based compensation expense is recognized on a straight-line basis, net of an estimated forfeiture rate, for only those shares expected to vest over the requisite service period of the award, which is generally the option vesting term, and can range from six months to six years. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of compensation expense to be recognized in future periods. The Company analyzes forfeiture rates using six separate groups; one group for members of the Company’s board of directors, three separate groups of executives based on seniority, and two groups for general employees. Two of these groups, the Royall executive group and the Royall general employee group, were created in the year ended December 31, 2015 in order to apply separate forfeiture rates to the Royall inducement plan awards. The Company uses an annualized forfeiture rate of 9.35% for the Royall executive team and 3.3% for the Royall general employees. During the year ended December 31, 2016, the Company also increased its estimated annualized forfeiture rate for one of its general employee groups from 4.6% to 5.5% . Annualized forfeiture rates for the remaining groups are 0% , 0.4% , and 1.0% for members of the Company's board of directors, and two groups of executives, respectively. Compensation expense The Company recognized stock-based compensation expense in the following consolidated statements of operations line items for stock options and RSUs and for shares issued under the Company’s ESPP, for the year ended December 31, 2016 , the year ended December 31, 2015 , and the nine months ended December 31, 2014 (in thousands, except per share amounts): Year Ended December 31, Year Ended December 31, Nine Months Ended December 31, 2016 2015 2014 Stock-based compensation expense included in: Costs and expenses: Cost of services $ 9,231 $ 9,211 $ 5,977 Member relations and marketing 5,028 5,176 3,348 General and administrative 15,176 14,706 8,640 Total costs and expenses 29,435 29,093 17,965 Operating income $ (29,435 ) $ (29,093 ) $ (17,965 ) There are no stock-based compensation costs capitalized as part of the cost of an asset. Stock-based compensation expense by award type is shown below (in thousands): Year Ended December 31, Year Ended December 31, Nine Months Ended December 31, 2016 2015 2014 Stock-based compensation expense by award type: Stock options $ 13,270 $ 10,908 $ 5,431 Restricted stock units 16,165 18,185 12,534 Total stock-based compensation $ 29,435 $ 29,093 $ 17,965 As of December 31, 2016 , $49.0 million of total unrecognized compensation cost related to stock-based awards was expected to be recognized over a weighted average period of 2.4 years. Tax benefits The benefits of tax deductions in excess of recognized book compensation expense are reported as a financing cash inflow with a corresponding operating cash outflow in the consolidated statements of cash flows. Approximately $1.3 million , $4.9 million , and $0.4 million of tax benefits associated with the exercise of employee stock options and RSUs were recorded as cash from financing activities in the year ended December 31, 2016 , the year ended December 31, 2015 , and the nine months ended December 31, 2014 , respectively. |
Income taxes
Income taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes The provision for income taxes, excluding the tax effect of equity method gains (losses), consists of the following (in thousands): Year Ended December 31, Year Ended December 31, Nine Months Ended December 31, 2016 2015 2014 Current tax expense Federal $ 13,527 $ 6,225 $ 3,613 State and local 3,694 1,781 1,680 Foreign 626 524 620 Total current tax expense $ 17,847 $ 8,530 $ 5,913 Deferred tax (benefit) expense Federal $ (7,279 ) $ (6,376 ) $ (297 ) State and local 472 13,046 (2,086 ) Foreign — — — Total deferred tax (benefit) expense $ (6,807 ) $ 6,670 $ (2,383 ) Provision for income taxes $ 11,040 $ 15,200 $ 3,530 The components of Income before provision for income taxes were as follows (in thousands): Year Ended December 31, Year Ended December 31, Nine Months Ended December 31, 2016 2015 2014 U.S. sources $ 53,433 $ (101,386 ) $ 10,445 Non-U.S. sources 2,179 1,968 2,331 Total $ 55,612 $ (99,418 ) $ 12,776 The provision for income taxes differs from the amount of income taxes determined by applying the applicable income tax statutory rates to income before provision for income taxes as follows : Year Ended December 31, Year Ended December 31, Nine Months Ended December 31, 2016 2015 2014 Statutory U.S. federal income tax rate 35.0 % 35.0 % 35.0 % Section 162(m) compensation 0.5 % (0.8 )% 11.7 % State income tax, net of U.S. federal income tax benefit 4.6 % 3.5 % 7.4 % Washington, D.C. QHTC income tax credits and D.C. law changes — % (13.4 )% (9.8 )% Uncertain tax position (0.3 )% 0.7 % 5.4 % Federal R&D credit (net of associated UTP) (22.7 )% 1.8 % (25.7 )% Return to provision adjustment 1.2 % (0.4 )% 3.2 % Goodwill impairment — % (38.3 )% — % Meals and entertainment 2.7 % (1.5 )% 5.5 % Stock-based compensation (2.8 )% — % — % Other permanent differences, net 1.7 % (1.9 )% (5.1 )% Effective tax rate 19.9 % (15.3 )% 27.6 % Deferred income taxes are provided for temporary differences between the tax bases of assets and liabilities and their reported amounts on the consolidated financial statements. The tax effect of these temporary differences is presented below (in thousands): As of December 31, 2016 2015 Deferred income tax assets (liabilities): Federal R&D credits $ 6,107 $ 420 Deferred compensation accrued for financial reporting purposes 7,139 13,284 Stock-based compensation 21,384 15,724 Acquired net operating loss carryforwards 2,794 5,421 Reserve for uncollectible revenue 2,508 2,119 Basis difference on investment in unconsolidated entities 962 7,208 Debt issuance costs 2,066 2,801 Deferred rent 3,248 1,466 Depreciation 1,057 — Tax credit carryforwards 1,094 332 Unrealized foreign exchange loss 667 — Outside basis difference on cost method investment 1,967 — Other 1,490 835 Total deferred tax assets 52,483 49,610 Valuation allowance — (49 ) Total deferred tax assets, net of valuation allowance 52,483 49,561 Capitalized software development costs (33,599 ) (31,042 ) Deferred incentive compensation and other deferred charges (11,211 ) (11,940 ) Acquired intangibles and goodwill; and acquisition related costs (94,947 ) (97,278 ) Depreciation — (3,031 ) Other (1,739 ) (163 ) Total deferred tax liabilities (141,496 ) (143,454 ) Net deferred income tax (liabilities) assets $ (89,013 ) $ (93,893 ) The Company has $2.8 million , tax effected, of U.S. federal and state net operating loss carryforwards available at December 31, 2016, some of which are a result of recent acquisitions. These carryforwards will be used to offset future income but maybe limited by the change in ownership rules in Section 382 of the Internal Revenue Code. These net operating loss carryforwards will expire between 2021 and 2035. The Company anticipates it will be able to use all of its acquired net operating loss carryforwards. In estimating future tax consequences, the Company generally considers all expected future events in the determination and evaluation of deferred tax assets and liabilities. The Company believes that its estimated future ordinary taxable income will be sufficient for the full realization of its deferred income tax assets. The effect of future changes in existing laws or rates is not considered in the determination and evaluation of deferred tax assets and liabilities until the new tax laws or rates are enacted. Deferred U.S. income taxes have not been provided for the portion of the difference between book and tax basis in non-U.S. subsidiaries, which is essentially permanent in duration. Determination of the amount of these taxes is not practicable. During the year ended December 31, 2016, the Company claimed $4.6 million in federal research and development credits and $14.1 million of additional benefit for the 2012, 2013, 2014, and 2015 tax years. For the year ended December 31, 2015, the Company claimed $1.8 million in federal research and development credits on its originally filed U.S. federal income tax return. Uncertain Tax Positions The following table summarizes the activity related to the Company's reserve for unrecognized tax positions (in thousands): Year Ended December 31, Year Ended December 31, Nine Months Ended December 31, 2016 2015 2014 Balance at beginning of the period $ 1,385 $ 828 $ — Additions based on tax positions related to the current periods 1,126 281 497 Additions for tax positions of prior periods 4,905 — 331 Positions assumed in acquisition — 276 — Balance at end of the period $ 7,416 $ 1,385 $ 828 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 currently anticipate that the total amounts of unrecognized tax benefits will significantly change within the next twelve months. The Company classifies interest and penalties on any unrecognized tax benefits as a component of the provision for income taxes. The amount accrued for interest and penalties for the twelve months ended December 31, 2016 and 2015, respectively was $0.1 million and $0.3 million , respectively. No interest or penalties were recognized in the consolidated statements of operations for the nine months ended December 31, 2014. The Company files income tax returns in U.S. federal and state and foreign jurisdictions. During 2016, the Company underwent a U.S. federal tax audit for tax years ended December 31, 2011 and December 31, 2013 and completed with no change. With limited exceptions, tax years 2014 and forward remain open. If the Company was able to recognize the uncertain tax positions of $7.4 million , the entire balance would affect the Company’s effective tax rate. A deferred tax liability has not been recognized because the Company indefinitely reinvests its local country earnings from foreign operations. |
Commitments and contingencies
Commitments and contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Commitments and contingencies Operating leases The Company leases its headquarters space under an operating lease that expires in May 2019. Leasehold improvements related to leases are depreciated over the shorter of the term of the lease or useful life and totaled approximately $33.3 million , net, and $37.0 million , net, as of December 31, 2016 and 2015, respectively. The terms of the lease contain provisions for rental escalation, and the Company is required to pay its portion of executory costs such as taxes, insurance, and operating expenses. The Company also entered into a build-to-suit lease arrangement for a new corporate headquarters in December 2015. See Note 6, “Property and equipment,” for further information regarding this arrangement. The Company also leases office space under operating leases in Birmingham, Alabama; San Francisco, California; Chicago, Illinois; Bloomington, Minnesota; Plymouth Meeting, Pennsylvania; Nashville, Tennessee; Austin, Texas; Houston, Texas; Richmond, Virginia; and London, England. The Company also leases office space in Chennai, India through its Indian subsidiary, ABCO Advisory Services India Private Ltd. The lease expiration dates are July 2018 for the Alabama lease, July 2017 for the California lease, June 2022 for the Illinois lease, July 2020 for the Minnesota lease, September 2019 for the Pennsylvania lease, April 2020 for the Tennessee leases, March 2021 for the Texas leases, March 2022 for the Virginia leases, April 2020 for the England lease, and June 2022 for the India lease. The Company recognized rental and executory expenses of $23.7 million , $23.1 million , and $13.2 million , in the year ended December 31, 2016 , the year ended December 31, 2015, and the nine months ended December 31, 2014, respectively, related to these leases. The Company subleases office space in Nashville, Tennessee. The following table details the future minimum lease payments under the Company’s current leases (in thousands): Year Ending December 31, Operating leases Build-to-suit lease obligation Total lease obligations 2017 $ 17,421 $ — $ 17,421 2018 16,255 — 16,255 2019 11,143 16,515 27,658 2020 6,741 25,018 31,759 2021 4,880 25,389 30,269 Thereafter 5,613 379,211 384,824 Total $ 62,053 $ 446,133 $ 508,186 Purchase obligation The Company has entered into a non-cancelable agreement for the purchase of data. As of December 31, 2016 , the Company’s minimum obligation in connection with this agreement extends through May 2019. The minimum purchases expected to be made under this agreement for each of the following two fiscal years ending December 31, 2017 and December 31, 2018 are $1.4 million and $1.0 million , respectively. Benefit plan The Company sponsors a defined contribution 401(k) plan (the “401(k) Plan”) for all employees who have reached the age of 21 . The Company provides discretionary matching contributions in the range of 0% to 100% , which percentage is determined by the Company after the end of the applicable plan year, of an employee’s contribution up to a maximum of 4% of base salary. The Company's contributions to the 401(k) Plan during the year ended December 31, 2016 , the year ended December 31, 2015, and the nine months ended December 31, 2014, were approximately $5.9 million , $4.9 million , and $0.0 million , respectively. Litigation From time to time, the Company is engaged in certain legal disputes arising in the ordinary course of business, such as employment-related claims. When the likelihood of a loss contingency becomes at least reasonably possible with respect to any of these disputes, or, as applicable in the future, if there is at least a reasonable possibility that a loss exceeding amounts already recognized may have been incurred, the Company will revise its disclosures in accordance with the relevant authoritative guidance and will accrue a liability for loss contingencies when the Company believes that it is both probable that a liability has been incurred and that the amount of the loss can be reasonably estimated. The Company will review these accruals and adjust them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel, and other relevant information. To the extent that new information is obtained, and the Company's views on the probable outcomes of claims, suits, assessments, investigations, or legal proceedings change, the Company will record changes in its accrued liabilities in the period in which such determination is made. As of December 31, 2016 , the Company was not a party to, and its property was not subject to, any material legal proceedings. Other As of December 31, 2016 , the Company had outstanding letters of credit totaling $19.1 million to provide security deposits for certain office space leases. The letters of credit expire annually but will automatically extend for another annual term from their expiration dates unless the Company terminates them. To date, no amounts have been drawn on the letters of credit. |
Segments and geographic areas
Segments and geographic areas | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Segments and geographic areas | Segment and geographic areas Operating segments are defined as components of an enterprise for which separate financial information is available and regularly evaluated by the chief operating decision maker, who is the chief executive officer, in deciding how to allocate resources and assessing performance. Under this definition, the Company has one operating segment as of December 31, 2016 . Over the past few years, the Company has completed several acquisitions. These acquisitions have allowed the Company to expand its existing offerings and enhance membership services. The Company’s business operates in one operating segment because the Company’s chief operating decision maker evaluates the Company’s financial information and resources and assesses the performance of these resources on a consolidated basis. Since the Company operates in one operating segment, all required financial segment information can be found in the consolidated financial statements. Substantially all of the Company’s identifiable assets are located in the United States. The following table sets forth revenue information for each geographic area for the year ended December 31, 2016 , the year ended December 31, 2015, and the nine months ended December 31, 2014 (in thousands): Year Ended December 31, Year Ended December 31, Nine Months Ended December 31, 2016 2015 2014 United States $ 784,447 $ 749,880 $ 417,194 Other countries 18,977 18,468 16,808 Total revenue $ 803,424 $ 768,348 $ 434,002 |
Quarterly financial data (unaud
Quarterly financial data (unaudited) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly financial data (unaudited) | Quarterly financial data (unaudited) Unaudited summarized financial data by quarter for the years ended December 31, 2016 and 2015 are as follows (in thousands, except per share amounts). Fiscal 2015 Quarter Ended March 31, June 30, September 30, December 31, Revenue $ 179,322 $ 183,583 $ 200,492 $ 204,951 Operating Income 4,158 12,320 19,151 (90,029 ) (Loss) income from continuing operations before provision for income taxes and and gains (losses) in equity method investments (19,971 ) 7,038 12,551 (99,036 ) Net (loss) income attributable to common stockholders (22,072 ) 7,666 672 (105,280 ) Earnings per share: Net (loss) income attributable to common stockholders per share — basic $ (0.54 ) $ 0.18 $ 0.02 $ (2.52 ) Net (loss) income attributable to common stockholders per share — diluted $ (0.54 ) $ 0.18 $ 0.02 $ (2.52 ) Fiscal 2016 Quarter Ended March 31, June 30, September 30, (1) December 31, Revenue $ 200,735 $ 198,382 $ 200,455 $ 203,852 Operating Income 20,796 18,088 12,134 25,520 Income from continuing operations before provision for income taxes and gains (losses) in equity method investments 16,036 12,776 6,088 20,712 Net income attributable to common stockholders 10,339 7,495 37,538 35,866 Earnings per share: Net income attributable to common stockholders per share — basic $ 0.25 $ 0.19 $ 0.94 $ 0.89 Net income attributable to common stockholders per share — diluted $ 0.25 $ 0.18 $ 0.93 $ 0.88 (1) 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 for the three months ended September 30, 2016 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 investments for the three 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 ended September 30, 2016 was not significant. |
Supplemental cash flow
Supplemental cash flow | 12 Months Ended |
Dec. 31, 2016 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental cash flow | Supplemental cash flow A summary of supplemental cash flow information for the year ended December 31, 2016, the year ended December 31, 2015, and the nine months ended December 31, 2014 is presented below (in thousands): Year Ended Nine Months Ended December 31, 2016 2015 2014 Cash paid (received) for: Income taxes $ 25,919 $ (4,695 ) $ 32 Interest $ 14,090 $ 17,646 $ — 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 $ 60,667 $ 2,700 $ — |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent events On January 3, 2017, the Company approved a restructuring plan which will result in a reduction-in-force of approximately 220 employees and is expected to be completed during fiscal year 2017. The Company expects to recognize approximately $7 to $9 million of pre-tax restructuring charges in fiscal year 2017 in connection with this reduction-in-force, consisting of severance and other employee termination benefits. |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2016 | |
Valuation and Qualifying Accounts [Abstract] | |
Schedule II - Valuation and Qualifying Accounts | THE ADVISORY BOARD COMPANY SCHEDULE II—Valuation and Qualifying Accounts (In thousands) Balance at Beginning of Year Additions Charged to Revenue Additions Charged to Other Accounts Deductions From Reserve Balance at End of Year Nine months ended December 31, 2014 Allowance for uncollectible revenue $ 6,850 $ 8,938 $ — $ 8,258 $ 7,530 Year ended December 31, 2015 Allowance for uncollectible revenue $ 7,530 $ 4,893 $ 310 $ 7,024 $ 5,709 Year ended December 31, 2016 Allowance for uncollectible revenue $ 5,709 $ 5,577 $ — $ 4,906 $ 6,380 |
Summary of significant accoun28
Summary of significant accounting policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of presentation and consolidation | Basis of presentation and consolidation The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, and a consolidated variable interest entity. The Company uses the equity method to account for equity investments in instances in which it owns common stock or securities deemed to be in-substance 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. Investments in which the Company holds securities that are not in-substance common stock, or holds common stock or in-substance common stock but has little or no influence over the investee are accounted for using the cost method. All significant intercompany transactions and balances have been eliminated. |
Fiscal year | Fiscal year The Company changed its fiscal year to the calendar twelve months ending December 31, effective beginning with the period ended on December 31, 2014. As a result, the fiscal transition period was shortened from twelve months to a nine-month transition period ended on December 31, 2014. In these consolidated statements, including the notes thereto, the financial results ended December 31, 2014 are for a nine-month period. Audited results for the twelve months ended December 31, 2016 and 2015 are both for twelve-month periods. |
Use of estimates in preparation of consolidated financial statements | Use of estimates in preparation of consolidated financial statements The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These accounting principles require the Company to make certain estimates, judgments, and assumptions. For cases where the Company is required to make certain estimates, judgments, and assumptions, the Company believes that the estimates, judgments, and assumptions upon which it relies are reasonable based upon information available to the Company at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenue and expenses during the periods presented. To the extent there are material differences between these estimates, judgments, or assumptions and actual results, the Company’s financial statements will be affected. The Company’s estimates, judgments, and assumptions may include: estimates of bad debt reserves; estimates to establish employee bonus and commission accruals; estimates of the fair value of contingent earn-out liabilities; estimates of the useful lives of acquired or internally developed intangible assets; estimates of the fair value of goodwill and intangibles and evaluation of impairment; determination of when investment impairments are other-than-temporary; estimates of the recoverability of deferred tax assets; and estimates of the potential for future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. |
Cash equivalents and marketable securities | Cash equivalents and marketable securities Marketable securities with original maturities of three months or less at purchase are considered cash equivalents. Investments with original maturities of more than three months are classified as marketable securities. Marketable securities, are classified as available-for-sale, and carried at fair value based on quoted market prices. The net unrealized gains and losses on available-for-sale marketable securities are excluded from net income attributable to common stockholders and are included within accumulated other comprehensive income, net of tax. The specific identification method is used to compute the realized gains and losses on the sale of marketable securities. |
Allowance for uncollectible revenue | Allowance for uncollectible revenue The Company’s ability to collect outstanding receivables from its members has an effect on the Company’s operating performance and cash flows. The Company records an allowance for uncollectible revenue as a reduction of revenue based on its ongoing monitoring of members’ credit and the aging of receivables. To determine the allowance for uncollectible revenue, the Company examines its collections history, the age of accounts receivable in question, any specific member collection issues that have been identified, general market conditions, and current economic trends. Membership fees receivable balances are not collateralized. |
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 receive access to the software only during the term of their membership agreement. Software development costs that are incurred in the preliminary project stage for internal use software 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 it is placed into operation. Internally developed capitalized software is classified as software within property and equipment and is amortized using the straight-line method over its estimated useful life, which is generally five years . Replacements and upgrades and enhancements to existing systems that result in additional functionality are capitalized, while maintenance and repairs are charged to expense as incurred. Amortization expense for internally developed capitalized software for the years ended December 31, 2016 and 2015, recorded in depreciation and amortization on the consolidated statements of operations, was approximately $22.3 million and $18.9 million , respectively. Amortization expense for internally developed capitalized software for the nine months ended December 31, 2014, recorded in depreciation and amortization on the consolidated statements of operations, was approximately $10.1 million . Acquired developed software represents the fair value of software acquired through a business combination that resides on the Company’s or its service providers’ hardware and is made available to members though the memberships. Amortization for acquired developed software is included in depreciation and amortization on the consolidated statements of operations. Acquired developed software is amortized over a weighted average estimated useful life of eight years based on the cash flow estimate used to determine the value of the intangible asset at its acquisition. The amount of acquired developed software amortization included in depreciation and amortization for the years ended December 31, 2016 and 2015 was approximately $8.8 million and $9.4 million , respectively. The amount of acquired developed software amortization included in depreciation and amortization for the nine months ended December 31, 2014 was approximately $2.0 million . 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 capital leases included in property and equipment. The amount of depreciation expense recognized on furniture, fixtures, and equipment for the years ended December 31, 2016 and 2015 was approximately $22.2 million and $20.4 million , respectively. The amount of depreciation expense recognized on furniture, fixtures, and equipment for the nine months ended December 31, 2014 was approximately $10.9 million . The Company establishes assets and liabilities (financing obligations) for the estimated construction costs incurred under build-to-suit lease arrangements where the Company is considered the owner for accounting purposes only, to the extent the Company is involved in the design or construction of the asset or takes construction risk prior to commencement of a lease. The Company recognizes expense on a portion of future lease payments that are estimated to represent the underlying land lease. The Company records an asset for the amount of the total project costs in construction in progress and the related financing obligation, representative of the project costs incurred by the developer, in financing obligations on the consolidated balance sheet. Upon completion of the construction of facilities under build-to-suit leases, the Company evaluates whether these arrangements meet the criteria for sale-leaseback accounting treatment. If the lease does not meet sale-leaseback criteria, the Company will treat the build-to-suit as a financing obligation and lease payments will be attributed to (1) a reduction of the principal financing obligation, (2) imputed interest expense, and (3) land lease expense (which is considered an operating lease) representing an imputed cost to lease the underlying land of the facility. In addition, the underlying building asset will be depreciated over the building’s estimated useful life. At the conclusion of the lease term, the net book values of the asset and financing obligation would be derecognized. |
Business combinations | Business combinations The Company records acquisitions using the purchase method of accounting. All of the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration are recognized at their fair value on the acquisition date. All subsequent changes to the acquired assets or assumed liabilities of the acquired company at the acquisition date that occur both within the measurement period and as a result of facts and circumstances that existed at the acquisition date are recognized as an adjustment to goodwill. Any acquired in-process research and development is capitalized as an intangible asset and amortized over its estimated useful life. Acquisition-related costs are recorded as expenses in the consolidated financial statements. The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date. |
Goodwill and other intangible assets | Goodwill and other intangible assets The excess cost of an acquisition over the fair value of the net assets acquired is recorded as goodwill. The primary factors that generate goodwill are the value of synergies between the acquired entities and the Company and the acquired assembled workforce, neither of which qualifies as an identifiable intangible asset. The Company’s goodwill and other intangible assets with indefinite lives are not amortized, but rather are tested for impairment on an annual basis on October 1, or more frequently if events or changes in circumstances indicate potential impairment. When testing goodwill for impairment, the Company has the option first to assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. If the Company elects to perform a qualitative assessment and determines that an impairment is more likely than not, the Company is then required to perform the two-step quantitative impairment test, otherwise no further analysis is required. The Company also may elect not to perform the qualitative assessment and, instead, proceed directly to the two-step quantitative impairment test. In the first step of the two-step quantitative impairment test, the fair value of a reporting unit is compared to its carrying value. If the carrying value of a reporting unit exceeds its fair value, the second step of the impairment test is performed for purposes of measuring the impairment. In the second step, the fair value of the reporting unit is allocated to all of the assets and liabilities of the reporting unit to determine an implied goodwill value. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to that excess. The Company estimates the fair value of its reporting units using both an income and market approach. The income approach is based on the present value of expected future cash flows, including terminal value, utilizing a market-based weighted average cost of capital (“WACC”) determined separately for each reporting unit. The determination of fair value using the income approach involves the use of significant estimates and assumptions, including revenue growth rates, operating margins, terminal growth rates, and discount rates. The market approach is based on revenue and earnings multiple data of peer companies. See Note 7, “Goodwill and intangibles,” for further detail, including the recognition of goodwill impairment charges of $99.1 million during the year ended December 31, 2015. Other intangible assets consist of capitalized software for sale and acquired intangibles. The Company capitalizes consulting costs and payroll and payroll-related costs for employees directly related to building a software product for sale once technological feasibility is established. The Company determines that technological feasibility is established by the completion of a detailed program design or, in its absence, completion of a working model. Once the software product is ready for general availability, the Company ceases capitalizing costs and begins amortizing the intangible asset on a straight-line basis over its estimated useful life. The weighted average estimated useful life of capitalized software for sale is five years. Other intangible assets include those assets that arise from business combinations and that consist of developed technology both for internal use and external sale, non-competition covenants, trademarks, contracts, and customer relationships that are amortized, on a straight-line basis, over two years to seventeen years . Finite-lived intangible assets are required to be amortized over their useful lives and are evaluated for possible impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. |
Recovery of long-lived assets (excluding goodwill) | Recovery of long-lived assets (excluding goodwill) The Company records long-lived assets, such as property and equipment, at cost. The carrying value of long-lived assets is reviewed for possible impairment whenever events or changes in circumstances suggest the carrying value of a long-lived asset may not be fully recoverable. The test for recoverability is made using an estimate of the undiscounted expected future cash flows and, if required, the impairment loss is measured as the amount that the carrying value of the asset exceeds the asset’s fair value if the asset is not recoverable. The Company considers expected cash flows and estimated future operating results, trends, and other available information in assessing whether the carrying value of assets is impaired. If it is determined that an asset’s carrying value is impaired, a write-down of the carrying value of the identified asset will be recorded as an operating expense on the consolidated statements of operations in the period in which the determination is made. |
Fair value of financial instruments | Fair value of financial instruments The Company’s short-term financial instruments include cash and cash equivalents, membership fees receivable, accrued expenses, and accounts payable. The carrying value of these financial instruments as of December 31, 2016 and 2015 approximates their fair value due to their short-term nature. |
Derivative instruments | Derivative instruments The Company holds warrants to purchase common stock in an entity that meet the definition of a derivative. Derivative instruments are carried at fair value on the consolidated balance sheets. Gains or losses from changes in the fair value of the warrants are recognized on the consolidated statements of operations in the period in which they occur. 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 Company has designated the interest rate swap as a cash flow hedge of the variability of interest payments under its senior secured term loan facility due to changes in the benchmark interest rate. 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 in the consolidated statements of operations for the applicable period. |
Revenue recognition | Revenue recognition Revenue is recognized when (1) there is persuasive evidence of an arrangement, (2) the fee is fixed or determinable, (3) services have been rendered and payment has been contractually earned, and (4) collectibility is reasonably assured. Fees are generally billable when a letter of agreement is signed by the member. Fees receivable during the subsequent twelve-month period and related deferred revenue are recorded on the balance sheet upon the commencement of the membership and are subsequently updated at the end of each reporting period. In many of the Company’s higher priced programs and membership agreements with terms that are greater than one year , fees may be billed on an installment basis. In certain multi-year arrangements, the member has the ability to cancel the arrangement within a defined notice period without penalty. The Company’s membership programs generally include more than one deliverable. Deliverables are determined based upon the availability and delivery method of the services and may include the following: best practices research; executive education curricula; cloud-based content, databases, and calculators; performance or benchmarking reports; diagnostic tools; interactive advisory support; and software. Access to such deliverables is generally available on an unlimited basis over the membership period. When an agreement contains multiple deliverables, the Company reviews the deliverables to determine if they qualify as separate units of accounting. In order for deliverables in a multiple-deliverable arrangement to be treated as separate units of accounting, the deliverables must have standalone value upon delivery, and delivery or performance of undelivered items in an arrangement with a general right of return must be probable. If the Company determines that there are separate units of accounting, arrangement consideration at the inception of the membership period is allocated to all deliverables based on the relative selling price method in accordance with the selling price hierarchy. Because of the unique nature of the Company’s products, neither vendor specific objective evidence nor third-party evidence is available. Therefore, the Company utilizes best estimate of selling price to allocate arrangement consideration in multiple-deliverable arrangements. In general, the deliverables in membership programs do not qualify as separate units of accounting. These deliverables are consistently available throughout the membership period, and, as a result, the consideration is recognized ratably over the membership period. When a service offering includes a combination of unlimited and limited service offerings, revenue is recognized over the appropriate service period, either ratably, if the service is consistently available, or, if the service is not consistently available, upon the earlier of the delivery of the service or the completion of the membership period, provided that all other criteria for recognition have been met. Certain membership programs incorporate hosted software. In many of these agreements, members are charged set-up fees in addition to subscription fees for access to the hosted cloud-based software and related membership services. Both set-up fees and subscription fees are recognized ratably over the term of the membership agreement, which is generally three years, and is consistent with the pattern of the delivery of services under these arrangements. Upon launch of a new program that incorporates software, all program revenue is deferred until the program is generally available for release to the Company’s membership, and then recognized ratably over the remainder of the contract term of each agreement. Certain arrangements include performance-based fees that are contingent upon the member realizing a benefit over a defined period. These performance-based fees are included in the arrangement consideration and recognized when the related services are provided to the member and the Company is reasonably assured that the amounts due are collectible. The Company has not recognized any revenue that is at risk due to future performance contingencies. The Company also performs professional services sold under separate agreements that include consulting and management services. These agreements are either fixed fee or time-and-materials arrangements. For fixed fee arrangements, the Company recognizes professional services revenues using the proportional performance method based on effort expended. The Company recognizes professional services revenues for time-and-materials arrangements as services are rendered based on contractual rates. For arrangements in which a customer purchases multiple membership programs or purchases a membership program together with consulting and management services, each program and professional services arrangement is generally considered a separate unit of accounting, and arrangement consideration is allocated based on the Company’s best estimate of selling price. The Company develops its best estimate of selling price by considering pricing practices, margin, competition, and geographies in which the Company offers its products and services. |
Deferred incentive compensation and other charges | Deferred incentive compensation and other charges Incentive compensation to employees related to the negotiation of new and renewal memberships, license fees to third-party vendors for tools, data, and software incorporated in specific memberships that include software, and other direct and incremental costs associated with specific memberships are deferred and amortized over the term of the related memberships. |
Operating leases | Operating leases The Company recognizes rent expense under operating leases on a straight-line basis over the non-cancelable term of the lease, including free-rent periods. Lease incentives relating to allowances provided by landlords are amortized over the term of the lease as a reduction of rent expense. The Company recognizes sublease income on a straight-line basis over the term of the sublease, including free rent periods and escalations, as a reduction of rent expense. Costs associated with acquiring a subtenant, including broker commissions and tenant allowances, are amortized over the sublease term as a reduction of sublease income. |
Stock-based compensation | Stock-based compensation The Company has several stock-based compensation plans which are described more fully in Note 12, “Stock-based compensation.” These plans provide for the granting of stock options and restricted stock units (“RSUs”) to employees, non-employee members of the Company’s Board of Directors and any other service providers who have been retained to provide consulting, advisory, or other services to the Company. Stock-based compensation cost is measured at the grant date of the stock-based awards based on their fair values, and is recognized as an expense in the consolidated statements of operations over the vesting periods of the awards. The fair value of RSUs, with the exception of RSUs issued with both performance and market-based conditions, is determined as the fair market value of the underlying shares on the date of grant. The fair value of RSUs issued with market-based conditions is calculated on the date of grant using a Monte Carlo option-pricing model. The Company calculates the fair value of all stock option awards, with the exception of the stock options issued with market-based conditions, on the date of grant using the Black-Scholes model. The fair value of stock options issued with market-based conditions is calculated on the date of grant using a Monte Carlo option-pricing model. Forfeitures are estimated based on historical experience at the time of grant and adjusted, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company bases its fair value estimates on assumptions it believes to be reasonable but that are inherently uncertain. For awards with performance conditions, the probability of achieving performance conditions and estimated time to achieve such performance conditions are measured at each reporting period and are used to determine when and in what amount to recognize stock-based awards with performance conditions. |
Other (expense) income, net | Other (expense) income, net Other expense, net for the year ended December 31, 2016 includes foreign exchange losses of $1.4 million , as a result of the effect of fluctuating currency rates on the Company's receivable balances denominated in foreign currencies, and a $1.8 million loss on the Company's investment in preferred stock and common stock warrants of a private company that were determined to be other than temporary. The Company paid $4.3 million to the private company, a related party, under its reseller agreement which is included in cost of services on the consolidated statement of operations for the year ended December 31, 2016. Other expense, net for the year ended December 31, 2015 includes a $3.6 million loss on the Company's investment in preferred stock and common stock warrants of a private company that were determined to be other than temporary and a foreign exchange rate loss of $2.9 million . Other income, net for the nine months ended December 31, 2014 includes $1.1 million of interest income earned from the Company’s marketable securities, a $1.7 million loss on foreign exchange rates, $0.5 million in credit facility fees, $0.1 million realized loss on sale of marketable securities, and a $0.2 million loss on the Company's investment in common stock warrants. The Company paid $4.2 million to the private company, a related party, under its reseller agreement which is included in cost of services on the consolidated statement of operations for the year ended December 31, 2015. |
Income taxes | Income taxes Deferred income taxes are determined using the asset and liability method. Under this method, temporary differences arise as a result of the difference between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or the entire deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax law and tax rates on the date of the enactment of the change |
Concentrations of risk | Concentrations of risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of membership fees receivable, cash and cash equivalents, and marketable securities. The credit risk with respect to membership fees receivable is generally diversified due to the large number of entities constituting the Company’s membership base, and the Company establishes allowances for potential credit losses. No one member accounted for more than 1.5% of revenue for any period presented. The Company maintains cash and cash equivalents and, in prior periods, marketable securities with financial institutions, which may at times exceed federally insured limits. In the years ended December 31, 2016, 2015, and the nine months ended December 31, 2014 , the Company generated approximately 2.4% , 2.4% and 3.9% of revenue, respectively, from members outside the United States. The Company’s international operations subject the Company to risks related to currency exchange fluctuations. Prices for the Company’s services sold to members located outside the United States are sometimes denominated in local currencies. Increases or decreases in the value of the U.S. dollar against local currencies in countries where the Company has members may result in a foreign exchange gain or loss recognized by the Company. Such foreign exchange gains or losses are included in other (expenses) income, net in the consolidated statements of operations. |
Earnings per share | Earnings per share Basic earnings per share is computed by dividing net income attributable to common stockholders by the number of weighted average common shares outstanding during the period. Diluted earnings per share (“diluted EPS”) is computed by dividing net income attributable to common stockholders by the number of weighted average common shares increased by the dilutive effects of potential 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. |
Recent accounting pronouncements | Recent accounting pronouncements Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all recent ASUs. ASUs not identified below were assessed and determined to be not applicable or are expected to have an immaterial impact on the Company’s consolidated financial position and results of operations. Recently adopted In April 2015, the 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 (in thousands). 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 In June 2014, the FASB issued accounting guidance related to share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. This guidance clarifies that entities should treat performance targets that can be met after the requisite service period of a share-based payment award as performance conditions that affect vesting. The Company adopted this guidance on January 1, 2016. The adoption did not have a material effect on the Company's consolidated financial position or results of operations. In February 2015, the FASB issued guidance on amendments to the consolidation analysis. The new guidance requires management to reevaluate all legal entities under a revised consolidation model that will (1) modify the evaluation of whether limited partnership and similar legal entities are variable interest entities (“VIEs”), (2) eliminate the presumption that a general partner should consolidate a limited partnership, (3) affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships, and (4) provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 under the Investment Company Act of 1940 for registered money market funds. The Company adopted this guidance on January 1, 2016. The adoption did not have a material effect on the Company's consolidated financial position or results of operations. In September 2015, the FASB issued new guidance that eliminates the requirement to restate prior period financial statements for measurement period adjustments following a business combination. The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The prior period impact of the adjustment should either be presented separately on the face of the income statement or disclosed in the notes to the financial statements. The Company adopted this guidance on January 1, 2016. The adoption did not have a material effect on the Company's consolidated financial position or results of operations. In August 2014, the FASB issued Accounting Standards Update 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40). This ASU requires management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. It requires an assessment for a period of one year after the date on which the financial statements are issued. Further, based on certain conditions and circumstances, additional disclosures may be required. This ASU is effective beginning with the first annual period ending after December 15, 2016, and for all annual and interim periods thereafter. The adoption did not have a material effect on the Company's consolidated financial position or results of operations. 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 will adopt the standard using the modified retrospective approach on January 1, 2018. While we are continuing to assess all potential impacts of the new standard, we currently believe the new standard will impact the Company's accounting for deferred costs and arrangements that include variable consideration. The Company is currently evaluating the effect that the standard will have on its remaining revenue. The Company continues to update its assessment of the impact of the standard and related updates to the consolidated financial statements, and will note material impacts when known. In January 2016, the FASB issued accounting guidance related to the recognition and measurement of financial assets and liabilities. The guidance requires, among other things, that entities measure equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) at fair value, with changes in fair value recognized in net income. Under this ASU, entities will no longer be able to recognize unrealized holding gains and losses on available-for-sale equity securities in other comprehensive income, and will no longer be able to use the cost method of accounting for equity securities that do not have readily determinable fair values. The guidance for classifying and measuring investments in debt securities and loans is not affected. The guidance eliminates certain disclosure requirements related to financial instruments measured at amortized cost and adds disclosures related to the measurement categories of financial assets and financial liabilities. The guidance is effective for annual periods beginning after December 15, 2017. Early adoption is permitted for only certain portions of the ASU. The adoption of this guidance by the Company is not expected to have a material impact on its consolidated financial statements. 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 will adopt the standard January 1, 2017 and 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. In January 2017, the FASB issued accounting guidance which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance is effective for annual reporting and interim periods beginning after December 15, 2017. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements. In January 2017, the FASB issued accounting guidance simplifying the test of goodwill impairment. The guidance eliminates Step 2 of the goodwill impairment test, which calculates the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., Step 1). The guidance is effective for annual and interim reporting periods beginning after December 15, 2019, with early adoption permitted. The adoption of this guidance by the Company is not expected to have a material impact on its consolidated financial statements. In February 2017, the FASB issued accounting guidance related to gains and losses from the derecognition of nonfinancial assets: clarifying the scope of asset derecognition guidance and accounting for partial sales of nonfinancial assets. The guidance is effective for annual and interim reporting 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. |
Summary of significant accoun29
Summary of significant accounting policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [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): Year Ended December 31, Year Ended December 31, Nine Months Ended December 31, 2016 2015 2014 Basic weighted average common shares outstanding 40,528 41,888 36,213 Effect of dilutive outstanding stock-based awards 343 — — Diluted weighted average common shares outstanding 40,871 41,888 36,213 |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | 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) | 12 Months Ended |
Dec. 31, 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 Year Ended December 31, Nine Months Ended December 31, 2015 2014 Revenue $ 783,640 $ 502,319 Net income (loss) attributable to common stockholders (90,705 ) (29,962 ) |
Fair value measurements (Tables
Fair value measurements (Tables) | 12 Months Ended |
Dec. 31, 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 necessary disclosures are as follows (in thousands): Fair value as of Fair value measurement as of December 31, 2016 using fair value hierarchy December 31, 2016 Level 1 Level 2 Level 3 Financial assets Cash and cash equivalents (1) $ 91,151 $ 91,151 $ — $ — Interest rate swaps (2) 1,044 — 1,044 — Financial liabilities Contingent earn-out liabilities (3) 1,164 — — 1,164 Fair value as of Fair value measurement as of December 31, 2015 December 31, 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 macro-economic 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 year ended December 31, 2016 and the year ended December 31, 2015 (in thousands): Year Ended December 31, 2016 December 31, 2015 Beginning balance $ 7,250 $ 12,946 Fair value change in Southwind contingent earn-out liability (1) — 261 Fair value change in GradesFirst contingent earn-out liability (1) — 400 Fair value change in Clinovations contingent earn-out liability (1) 1,103 (2,326 ) Fair value change in other contingent earn-out liabilities (1) 546 Southwind earn-out payment (1,032 ) (2,531 ) 360 Fresh earn-out payment — (1,500 ) Clinovations earn-out payment (2,703 ) — Grade First earn-out payment (4,000 ) — Ending balance $ 1,164 $ 7,250 ————————————— (1) Amounts were recognized in cost of services on the consolidated statements of operations. |
Membership fees receivable (Tab
Membership fees receivable (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Receivables [Abstract] | |
Membership Fees Receivable | Membership fees receivable consist of the following (in thousands): As of December 31, 2016 2015 Billed fees receivable $ 149,117 $ 138,100 Unbilled fees receivable 462,780 473,053 Membership fees receivable, gross 611,897 611,153 Allowance for uncollectible revenue (6,380 ) (5,709 ) Membership fees receivable, net $ 605,517 $ 605,444 |
Property and equipment (Tables)
Property and equipment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consists of the following (in thousands): As of December 31, 2016 2015 Leasehold improvements $ 69,465 $ 63,608 Furniture, fixtures and equipment 70,362 62,790 Software 231,952 202,384 Property and equipment, gross 371,779 328,782 Accumulated depreciation and amortization (200,498 ) (148,425 ) Property and equipment, net $ 171,281 $ 180,357 |
Goodwill and intangibles (Table
Goodwill and intangibles (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in Carrying Amount of Goodwill | Changes in the carrying amount of goodwill are as follows (in thousands): As of December 31, 2016 2015 Beginning of period $ 738,200 $ 186,895 Goodwill acquired 2,258 650,289 Goodwill impairment — (99,145 ) Purchase accounting adjustment (1) (951 ) 161 Ending balance $ 739,507 $ 738,200 (1) The 12/31/2016 adjustment 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 December 31, 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 intangible for sale: Capitalized software 5.0 $ 20,034 $ (9,998 ) $ 10,036 $ 16,902 $ (6,796 ) $ 10,106 Acquired intangibles: Developed software 5.2 9,450 (8,575 ) 875 9,450 (8,075 ) 1,375 Customer relationships 16.2 277,710 (42,978 ) 234,732 277,710 (25,769 ) 251,941 Trademarks 8.6 14,900 (5,923 ) 8,977 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 (6,016 ) 433 6,449 (5,581 ) 868 Total other intangibles $ 329,943 $ (74,890 ) $ 255,053 $ 326,811 $ (52,090 ) $ 274,721 |
Equity method investments (Tabl
Equity method investments (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | The gains (losses) from equity method investments on the consolidated statement of operations consisted of the following (in thousands): Year ended December 31, Year ended December 31, Nine Months Ended 2016 2015 2014 Allocated share of losses $ (10,366 ) $ (11,616 ) $ (6,540 ) Gain on partial sale of investment 48,565 — — Dilution gains 29,704 — — Tax (expense) benefits (21,237 ) 7,220 — Gains (losses) from equity method investments $ 46,666 $ (4,396 ) $ (6,540 ) |
Summary of Financial Position | The following is a summary of the consolidated financial position of Evolent, Inc. as of the date presented: As of December 31, 2016 2015 Assets: Current assets $ 264,966 $ 184,463 Non-current assets 934,873 831,051 Total assets $ 1,199,839 $ 1,015,514 Liabilities and shareholders' equity: Current liabilities $ 131,941 $ 59,506 Non-current liabilities 155,784 21,429 Total liabilities 287,725 80,935 Total shareholders’ equity attributable to Evolent Health, Inc. 702,526 649,341 Non-controlling interests 209,588 285,238 Total liabilities and shareholders’ equity $ 1,199,839 $ 1,015,514 |
Summary of Operating Results | The following is a summary of the consolidated operating results of Evolent, Inc. for the periods presented: Year Ended December 31, 2016 2015 Revenue $ 254,188 $ 96,878 Cost of revenue (exclusive of depreciation and amortization) 155,177 57,398 Gross profit 99,011 39,480 (Loss) income before income taxes and non-controlling interests (237,533 ) 343,289 Net (loss) income (226,778 ) 319,814 Net (loss) income attributable to Evolent Health, Inc. (159,742 ) 332,494 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Long-term debt is summarized as follows (in thousands): As of December 31, 2016 2.77% term facility due fiscal 2020 ($424,687 face value less unamortized discount of $2,601) $ 422,086 Revolving credit facility 100,000 Less: Amounts due in next twelve months ($50,312 face value less unamortized discount of $965) (49,347 ) Total $ 472,739 |
Schedule of Maturities of Long-term Debt | Long-term debt maturing in each of the next five fiscal years, excluding the discount, is as follows (in thousands): Year Ending December 31, 2017 $ 50,312 2018 79,062 2019 86,250 2020 309,063 Total $ 524,687 |
Stock-based compensation (Table
Stock-based compensation (Tables) | 12 Months Ended |
Dec. 31, 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 during the year ended December 31, 2016 , the year ended December 31 2015 , and the nine months ended December 31, 2014 for all of the Company's stock incentive plans. Number of Performance-Based Options Weighted Number of Service-Based Weighted Outstanding as of March 31, 2014 20,000 $ 29.58 1,810,323 $ 32.86 Granted 974,605 51.40 170,368 57.31 Exercised — — (233,999 ) 18.36 Forfeited — — — — 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 — — (218,109 ) 21.76 Forfeited (756,100 ) 49.92 (13,569 ) 60.27 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 — — (303,490 ) 16.05 Forfeited (215,370 ) 49.92 (39,542 ) 52.68 Outstanding, as of December 31, 2016 2,117,855 $ 47.11 (1) 2,525,178 $ 39.28 (3) Exercisable, as of December 31, 2016 26,872 $ 34.91 (2) 1,021,192 $ 43.29 (4) ————————————— (1) The weighted average remaining contractual term for all performance-based options outstanding at December 31, 2016 is approximately five years and the aggregate intrinsic value is $1.7 million . (2) The weighted average remaining contractual term for all performance-based options exercisable as of December 31, 2016 is approximately two years and the aggregate intrinsic value is $0.1 million . (3) The weighted average remaining contractual term for all service-based options outstanding at December 31, 2016 is approximately four years and the aggregate intrinsic value is $7.4 million . (4) The weighted average remaining contractual term for all service-based options exercisable as of December 31, 2016 is approximately two years and the aggregate intrinsic value is $2.5 million . |
Summary of Exercise Prices and Contractual Lives of Options Outstanding under Stock Incentive Plans | The following table summarizes the exercise prices and contractual lives of all options outstanding under the Company's stock incentive plans as of December 31, 2016 : Options Outstanding Range of Exercise Prices Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life - Years $ 0.00 – $ 9.99 — $ — 0.0 10.00 – 19.99 70,500 16.58 0.3 20.00 – 29.99 1,469,478 27.83 5.6 30.00 – 39.99 46,432 35.18 6.4 40.00 – 49.99 1,495,769 48.14 3.4 50.00 – 59.99 1,476,482 52.57 4.6 60.00 – 69.99 84,372 66.90 4.2 $ 0.00 – $ 69.99 4,643,033 $ 42.85 4.5 |
Summary of Changes in RSUs | The following table summarizes the changes in RSUs during the year ended December 31, 2016 , the year ended December 31, 2015 , and the nine months ended December 31, 2014 for all of the stock incentive plans described above. Number of Weighted Average Grant Date Fair Value Number of Weighted Average Grant Date Fair Value Non-vested, March 31, 2014 42,880 $ 47.87 1,067,582 $ 41.81 Granted 152,957 28.43 183,156 55.02 Forfeited (8,540 ) 51.15 (4,076 ) 48.83 Vested — — (387,377 ) 32.27 Non-vested, December 31, 2014 187,297 $ 31.85 859,285 $ 48.89 Granted 191,740 $ 49.87 376,771 $ 52.99 Forfeited (78,005 ) 48.16 (33,789 ) 55.74 Vested — — (362,654 ) 43.43 Non-vested, December 31, 2015 301,032 $ 39.10 839,613 $ 52.82 Granted 23,580 $ 32.28 510,625 $ 31.01 Forfeited (66,139 ) 51.15 (64,170 ) 47.18 Vested (893 ) 50.41 (317,984 ) 51.48 Non-vested, December 31, 2016 257,580 $ 35.34 968,084 $ 42.13 |
Valuation of Stock Options | The following average key assumptions were used in the valuation of all stock options granted in each respective period: Year Ended December 31, Year Ended December 31, Nine Months Ended December 31, 2016 2015 2014 Stock option grants: Risk-free interest rate .95% – 1.64% 1.18% – 1.67% 1.53% – 1.75% Expected lives in years 5.04 – 5.54 4.00 – 5.45 5.00 – 5.47 Expected volatility 36.4% – 38.4% 31.2% – 33.0% 29.8% – 30.9% Dividend yield — % — % — % Weighted average exercise price of options granted 28.44 50.45 52.28 Weighted average grant date fair value of options granted 10.00 15.49 14.49 Number of options granted 1,345,000 2,102,916 1,144,973 |
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 and for shares issued under the Company’s ESPP, for the year ended December 31, 2016 , the year ended December 31, 2015 , and the nine months ended December 31, 2014 (in thousands, except per share amounts): Year Ended December 31, Year Ended December 31, Nine Months Ended December 31, 2016 2015 2014 Stock-based compensation expense included in: Costs and expenses: Cost of services $ 9,231 $ 9,211 $ 5,977 Member relations and marketing 5,028 5,176 3,348 General and administrative 15,176 14,706 8,640 Total costs and expenses 29,435 29,093 17,965 Operating income $ (29,435 ) $ (29,093 ) $ (17,965 ) |
Summary of Stock-based Compensation Expense by Award | Stock-based compensation expense by award type is shown below (in thousands): Year Ended December 31, Year Ended December 31, Nine Months Ended December 31, 2016 2015 2014 Stock-based compensation expense by award type: Stock options $ 13,270 $ 10,908 $ 5,431 Restricted stock units 16,165 18,185 12,534 Total stock-based compensation $ 29,435 $ 29,093 $ 17,965 |
Income taxes (Tables)
Income taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Summary of Provision for Income Taxes | The provision for income taxes, excluding the tax effect of equity method gains (losses), consists of the following (in thousands): Year Ended December 31, Year Ended December 31, Nine Months Ended December 31, 2016 2015 2014 Current tax expense Federal $ 13,527 $ 6,225 $ 3,613 State and local 3,694 1,781 1,680 Foreign 626 524 620 Total current tax expense $ 17,847 $ 8,530 $ 5,913 Deferred tax (benefit) expense Federal $ (7,279 ) $ (6,376 ) $ (297 ) State and local 472 13,046 (2,086 ) Foreign — — — Total deferred tax (benefit) expense $ (6,807 ) $ 6,670 $ (2,383 ) Provision for income taxes $ 11,040 $ 15,200 $ 3,530 |
Schedule of Income before Income Tax, Domestic and Foreign | The components of Income before provision for income taxes were as follows (in thousands): Year Ended December 31, Year Ended December 31, Nine Months Ended December 31, 2016 2015 2014 U.S. sources $ 53,433 $ (101,386 ) $ 10,445 Non-U.S. sources 2,179 1,968 2,331 Total $ 55,612 $ (99,418 ) $ 12,776 |
Statutory Rates to Income before Provision for Income Taxes | The provision for income taxes differs from the amount of income taxes determined by applying the applicable income tax statutory rates to income before provision for income taxes as follows : Year Ended December 31, Year Ended December 31, Nine Months Ended December 31, 2016 2015 2014 Statutory U.S. federal income tax rate 35.0 % 35.0 % 35.0 % Section 162(m) compensation 0.5 % (0.8 )% 11.7 % State income tax, net of U.S. federal income tax benefit 4.6 % 3.5 % 7.4 % Washington, D.C. QHTC income tax credits and D.C. law changes — % (13.4 )% (9.8 )% Uncertain tax position (0.3 )% 0.7 % 5.4 % Federal R&D credit (net of associated UTP) (22.7 )% 1.8 % (25.7 )% Return to provision adjustment 1.2 % (0.4 )% 3.2 % Goodwill impairment — % (38.3 )% — % Meals and entertainment 2.7 % (1.5 )% 5.5 % Stock-based compensation (2.8 )% — % — % Other permanent differences, net 1.7 % (1.9 )% (5.1 )% Effective tax rate 19.9 % (15.3 )% 27.6 % |
Tax Effect of Differences between Tax Bases of Assets and Liabilities | The tax effect of these temporary differences is presented below (in thousands): As of December 31, 2016 2015 Deferred income tax assets (liabilities): Federal R&D credits $ 6,107 $ 420 Deferred compensation accrued for financial reporting purposes 7,139 13,284 Stock-based compensation 21,384 15,724 Acquired net operating loss carryforwards 2,794 5,421 Reserve for uncollectible revenue 2,508 2,119 Basis difference on investment in unconsolidated entities 962 7,208 Debt issuance costs 2,066 2,801 Deferred rent 3,248 1,466 Depreciation 1,057 — Tax credit carryforwards 1,094 332 Unrealized foreign exchange loss 667 — Outside basis difference on cost method investment 1,967 — Other 1,490 835 Total deferred tax assets 52,483 49,610 Valuation allowance — (49 ) Total deferred tax assets, net of valuation allowance 52,483 49,561 Capitalized software development costs (33,599 ) (31,042 ) Deferred incentive compensation and other deferred charges (11,211 ) (11,940 ) Acquired intangibles and goodwill; and acquisition related costs (94,947 ) (97,278 ) Depreciation — (3,031 ) Other (1,739 ) (163 ) Total deferred tax liabilities (141,496 ) (143,454 ) Net deferred income tax (liabilities) assets $ (89,013 ) $ (93,893 ) |
Schedule of Unrecognized Tax Benefits Roll Forward | The following table summarizes the activity related to the Company's reserve for unrecognized tax positions (in thousands): Year Ended December 31, Year Ended December 31, Nine Months Ended December 31, 2016 2015 2014 Balance at beginning of the period $ 1,385 $ 828 $ — Additions based on tax positions related to the current periods 1,126 281 497 Additions for tax positions of prior periods 4,905 — 331 Positions assumed in acquisition — 276 — Balance at end of the period $ 7,416 $ 1,385 $ 828 |
Commitments and contingencies (
Commitments and contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future Minimum Lease Payments | The following table details the future minimum lease payments under the Company’s current leases (in thousands): Year Ending December 31, Operating leases Build-to-suit lease obligation Total lease obligations 2017 $ 17,421 $ — $ 17,421 2018 16,255 — 16,255 2019 11,143 16,515 27,658 2020 6,741 25,018 31,759 2021 4,880 25,389 30,269 Thereafter 5,613 379,211 384,824 Total $ 62,053 $ 446,133 $ 508,186 |
Segments and geographic areas (
Segments and geographic areas (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Revenue Information | The following table sets forth revenue information for each geographic area for the year ended December 31, 2016 , the year ended December 31, 2015, and the nine months ended December 31, 2014 (in thousands): Year Ended December 31, Year Ended December 31, Nine Months Ended December 31, 2016 2015 2014 United States $ 784,447 $ 749,880 $ 417,194 Other countries 18,977 18,468 16,808 Total revenue $ 803,424 $ 768,348 $ 434,002 |
Quarterly financial data (una41
Quarterly financial data (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Summarized Financial Data | Unaudited summarized financial data by quarter for the years ended December 31, 2016 and 2015 are as follows (in thousands, except per share amounts). Fiscal 2015 Quarter Ended March 31, June 30, September 30, December 31, Revenue $ 179,322 $ 183,583 $ 200,492 $ 204,951 Operating Income 4,158 12,320 19,151 (90,029 ) (Loss) income from continuing operations before provision for income taxes and and gains (losses) in equity method investments (19,971 ) 7,038 12,551 (99,036 ) Net (loss) income attributable to common stockholders (22,072 ) 7,666 672 (105,280 ) Earnings per share: Net (loss) income attributable to common stockholders per share — basic $ (0.54 ) $ 0.18 $ 0.02 $ (2.52 ) Net (loss) income attributable to common stockholders per share — diluted $ (0.54 ) $ 0.18 $ 0.02 $ (2.52 ) Fiscal 2016 Quarter Ended March 31, June 30, September 30, (1) December 31, Revenue $ 200,735 $ 198,382 $ 200,455 $ 203,852 Operating Income 20,796 18,088 12,134 25,520 Income from continuing operations before provision for income taxes and gains (losses) in equity method investments 16,036 12,776 6,088 20,712 Net income attributable to common stockholders 10,339 7,495 37,538 35,866 Earnings per share: Net income attributable to common stockholders per share — basic $ 0.25 $ 0.19 $ 0.94 $ 0.89 Net income attributable to common stockholders per share — diluted $ 0.25 $ 0.18 $ 0.93 $ 0.88 (1) 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 for the three months ended September 30, 2016 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 investments for the three 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 ended September 30, 2016 was not significant. |
Supplemental cash flow (Tables)
Supplemental cash flow (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Cash Flow, Supplemental Disclosures | A summary of supplemental cash flow information for the year ended December 31, 2016, the year ended December 31, 2015, and the nine months ended December 31, 2014 is presented below (in thousands): Year Ended Nine Months Ended December 31, 2016 2015 2014 Cash paid (received) for: Income taxes $ 25,919 $ (4,695 ) $ 32 Interest $ 14,090 $ 17,646 $ — 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 $ 60,667 $ 2,700 $ — |
Summary of significant accoun43
Summary of significant accounting policies - Additional Information (Detail) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Significant Accounting Policies [Line Items] | ||||
Tax expense (benefit) | $ 3,530,000 | $ 11,040,000 | $ 15,200,000 | |
Increase in additional paid-in capital | $ 744,333,000 | 782,399,000 | 744,333,000 | |
Amortization expense for intangible assets | 7,300,000 | 22,800,000 | 24,400,000 | |
Depreciation and amortization | 10,900,000 | 22,200,000 | 20,400,000 | |
Capital leases included in PP&E | 0 | |||
Goodwill impairment | 0 | $ 0 | 99,145,000 | |
Estimated useful lives of intangible assets (years) | 3 years 5 months | |||
Membership program agreement term | 3 years | |||
Gain (loss) on foreign exchange rate | (1,700,000) | $ 1,400,000 | (2,900,000) | |
Impairment expense | 1,800,000 | 3,200,000 | ||
Cost of services paid | 230,769,000 | 392,956,000 | 392,676,000 | |
Gain (loss) on investment in common stock warrants | (200,000) | (3,600,000) | ||
Investment income, interest | 1,100,000 | |||
Collateral fees | 500,000 | |||
Marketable securities, realized gain (loss) | $ (100,000) | |||
Construction in progress | 2,700,000 | 63,368,000 | 2,700,000 | |
Financing obligation | $ 2,700,000 | $ 63,368,000 | $ 2,700,000 | |
Percentage of revenue generated from foreign country | 3.90% | 2.40% | 2.40% | |
Minimum | ||||
Significant Accounting Policies [Line Items] | ||||
Estimated useful lives of intangible assets (years) | 2 years | |||
Maximum | ||||
Significant Accounting Policies [Line Items] | ||||
Estimated useful lives of intangible assets (years) | 17 years | |||
Software development | ||||
Significant Accounting Policies [Line Items] | ||||
Estimated useful lives of property and equipment (years) | 5 years | |||
Amortization expense for intangible assets | $ 10,100,000 | $ 22,300,000 | $ 18,900,000 | |
Software and Software Development Costs | ||||
Significant Accounting Policies [Line Items] | ||||
Estimated useful lives of property and equipment (years) | 8 years | |||
Depreciation and amortization | $ 2,000,000 | $ 8,800,000 | 9,400,000 | |
Furniture, fixtures and equipment | Minimum | ||||
Significant Accounting Policies [Line Items] | ||||
Estimated useful lives of property and equipment (years) | 3 years | |||
Furniture, fixtures and equipment | Maximum | ||||
Significant Accounting Policies [Line Items] | ||||
Estimated useful lives of property and equipment (years) | 7 years | |||
Software, Intangible Asset | ||||
Significant Accounting Policies [Line Items] | ||||
Estimated useful lives of intangible assets (years) | 5 years | |||
Credit Concentration Risk | Revenue | ||||
Significant Accounting Policies [Line Items] | ||||
Concentration risk percentage | 1.50% | |||
Build-to-suit lease obligation | ||||
Significant Accounting Policies [Line Items] | ||||
Operating lease term of contract (years) | 16 years | |||
Rent expense | $ 446,100,000 | |||
Construction in progress | 2,700,000 | $ 63,400,000 | 2,700,000 | |
Financing obligation | $ 2,700,000 | 63,400,000 | 2,700,000 | |
Affiliated Entity | ||||
Significant Accounting Policies [Line Items] | ||||
Cost of services paid | 4,300,000 | $ 4,200,000 | ||
Adjustments | ||||
Significant Accounting Policies [Line Items] | ||||
Tax expense (benefit) | 2,600,000 | |||
Increase in deferred tax assets | 3,400,000 | |||
Increase in additional paid-in capital | 3,400,000 | |||
Adjustments | Evolent Health Inc | ||||
Significant Accounting Policies [Line Items] | ||||
Tax expense (benefit) | $ 5,100,000 |
Summary of significant accoun44
Summary of significant accounting policies - Reconciliation of Basic to Diluted Weighted Average Common Shares Outstanding (Detail) - shares shares in Thousands | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accounting Policies [Abstract] | |||
Basic weighted average common shares outstanding | 36,213 | 40,528 | 41,888 |
Effect of dilutive outstanding stock-based awards | 0 | 343 | 0 |
Diluted weighted average common shares outstanding | 36,213 | 40,871 | 41,888 |
Stock Compensation Plan | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Share based compensation awards excluded from calculation of earnings per share | 2,600 | 1,600 | 2,700 |
Summary of significant accoun45
Summary of significant accounting policies - Schedule of Recently Adopted Accounting Standards (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Prepaid expenses and other current assets | $ 18,965 | $ 22,543 |
Deferred incentive compensation and other charges | 72,178 | 81,181 |
Total assets | 2,036,878 | 1,979,477 |
Debt, current | 49,347 | 27,743 |
Debt, net of current portion | 472,739 | 522,086 |
Total liabilities | 1,519,834 | 1,530,386 |
Total liabilities and stockholders’ equity | 2,036,878 | 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 | |
As reported | Accounting Standards Update 2015-15 | ||
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 | |
Adjustments | Accounting Standards Update 2015-15 | ||
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 (Details) - USD ($) | Jan. 21, 2015 | Jan. 09, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 |
Business Acquisition [Line Items] | ||||||
Share price (dollars per share) | $ 49.92 | |||||
Goodwill impairment | $ 0 | $ 0 | $ 99,145,000 | |||
Depreciation and amortization | 30,317,000 | 77,268,000 | 73,134,000 | |||
Interest expense | 0 | 18,137,000 | 21,121,000 | |||
Stock-based compensation | 17,965,000 | 29,435,000 | 29,093,000 | |||
Loss on financing activities | 0 | 0 | (17,398,000) | |||
Royall Acquisition Co. | ||||||
Business Acquisition [Line Items] | ||||||
Fair value of equity issued | $ 121,224,000 | |||||
Business acquisition, equity interest issued, number of shares (in shares) | 1,755,000 | 2,428,364 | ||||
Share price (dollars per share) | $ 49.92 | |||||
Trading period (days) | 15 days | |||||
Common stock, pricing collar ceiling (dollars per share) | $ 41.18 | |||||
Goodwill tax deductible | $ 61,400,000 | |||||
Transaction costs | $ 9,900,000 | |||||
Acquisition-related costs | 3,300,000 | 6,600,000 | ||||
Revenue of acquiree since acquisition date, actual | 102,800,000 | |||||
Earnings (loss) of acquiree since acquisition date, actual | (88,600,000) | |||||
Goodwill impairment | 99,100,000 | |||||
Adjustment deferred tax asset | $ 1,000,000 | |||||
Revenue | $ 783,640,000 | 502,319,000 | 2,800,000 | |||
Pro forma operating expenses | 1,700,000 | |||||
Non-recurring Transaction Expense | Royall Acquisition Co. | ||||||
Business Acquisition [Line Items] | ||||||
Non-recurring transaction expense | 9,900,000 | |||||
Acquisition-related Costs | Royall Acquisition Co. | ||||||
Business Acquisition [Line Items] | ||||||
Acquisition-related costs | (6,600,000) | |||||
Amortization Expense | Royall Acquisition Co. | ||||||
Business Acquisition [Line Items] | ||||||
Depreciation and amortization | 11,600,000 | 400,000 | ||||
Revenue Expense | Royall Acquisition Co. | ||||||
Business Acquisition [Line Items] | ||||||
Reduction in revenue | 12,500,000 | |||||
Increase in revenue | 12,500,000 | |||||
Interest Expense Elimination | Royall Acquisition Co. | ||||||
Business Acquisition [Line Items] | ||||||
Interest expense | 13,600,000 | 19,900,000 | ||||
Compensation Expense | Royall Acquisition Co. | ||||||
Business Acquisition [Line Items] | ||||||
Stock-based compensation | 4,400,000 | 100,000 | ||||
Non-recurring Loss | Royall Acquisition Co. | ||||||
Business Acquisition [Line Items] | ||||||
Loss on financing activities | $ (17,400,000) | $ (17,400,000) |
Acquisitions - Consideration (D
Acquisitions - Consideration (Details) - USD ($) $ in Thousands | Jan. 09, 2015 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Business Acquisition [Line Items] | |||||
Net cash paid | $ 70,208 | $ 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 | ||||
Cash acquired from acquisition | 7,065 | ||||
Working capital adjustment | $ 1,278 | ||||
[1] | Net of cash acquired of $7,065 and a working capital adjustment payment of $1,278. |
Acquisitions - Recognized Ident
Acquisitions - Recognized Identifiable Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Jan. 09, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Business Acquisition [Line Items] | ||||
Allocation to goodwill | $ 739,507 | $ 738,200 | $ 186,895 | |
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 | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | |
Business Acquisition [Line Items] | |||
Revenue | $ 783,640 | $ 502,319 | $ 2,800 |
Net income (loss) attributable to common stockholders | $ (90,705) | $ (29,962) |
Acquisitions - Transition Perio
Acquisitions - Transition Period Acquisitions (Details) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2014USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($)acquisition | |
Business Acquisition [Line Items] | |||
Purchase price | $ 70,208 | $ 1,900 | $ 746,693 |
Weighted average useful life (years) | 13 years 3 months | ||
Goodwill | $ 186,895 | $ 739,507 | $ 738,200 |
Transition Period Acquisitions | |||
Business Acquisition [Line Items] | |||
Number of businesses acquired | acquisition | 3 | ||
Purchase price | $ 71,300 | ||
Intangible assets | $ 16,600 | ||
Weighted average useful life (years) | 8 years 3 months 18 days | ||
Goodwill | $ 57,500 | ||
Goodwill tax deductible | $ 33,900 |
Fair value measurements - Addit
Fair value measurements - Additional Information (Detail) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2016 | Jan. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Nov. 30, 2014 | Nov. 30, 2012 | Dec. 31, 2009 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Acquisition-related earn-out payments | $ 0 | $ 3,600,000 | $ 1,500,000 | |||||
Impairment expense | $ 1,800,000 | 3,200,000 | ||||||
Dividend rate, percentage | 8.00% | |||||||
Dividends per share, declared (in dollars per share) | $ 0 | |||||||
Impairment of capitalized software | 2,086,000 | $ 0 | 8,166,000 | |||||
Southwind | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Contingent earn-out liabilities | $ 5,600,000 | |||||||
Consideration transferred | 21,400,000 | |||||||
Contingent consideration paid | 1,000,000 | |||||||
360 Fresh | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Contingent earn-out liabilities | $ 2,500,000 | |||||||
Acquisition-related earn-out payments | $ 1,500,000 | |||||||
Clinovations LLC | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Contingent earn-out liabilities | 600,000 | $ 4,500,000 | ||||||
Business acquisition, equity interest issued, number of shares (in shares) | 62,269 | |||||||
Maximum payout of earn-out | 9,500,000 | |||||||
Minimum payment of the earn-out | $ 0 | |||||||
GradesFirst | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Contingent earn-out liabilities | $ 3,600,000 | |||||||
Maximum payout of earn-out | $ 4,000,000 | |||||||
Contingent Earn Out Liability | Clinovations LLC | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Expected volatility rate (percent) | 25.00% | |||||||
Contingent Earn Out Liability | 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 Liability | Maximum | Clinovations LLC | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Fair value estimate discount rate (percent) | 7.50% | |||||||
Evolent LLC | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Equity method investments, fair value disclosure | $ 138,200,000 | |||||||
Reported Value Measurement | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Debt instrument, fair value disclosure | 527,300,000 | |||||||
Other Noncurrent Assets | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
Investments | $ 0 | $ 1,800,000 |
Fair value measurements - Fair
Fair value measurements - Fair Value Measurements of Financial Assets and Liabilities on Recurring Basis (Detail) - Recurring - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | ||
Financial assets | ||||
Cash and cash equivalents | [1] | $ 91,151 | $ 71,825 | |
Financial liabilities | ||||
Contingent earn-out liabilities | 1,164 | 7,250 | [2] | |
Level 1 | ||||
Financial assets | ||||
Cash and cash equivalents | [1] | 91,151 | 71,825 | |
Financial liabilities | ||||
Contingent earn-out liabilities | 0 | 0 | [2] | |
Level 2 | ||||
Financial assets | ||||
Cash and cash equivalents | [1] | 0 | 0 | |
Financial liabilities | ||||
Contingent earn-out liabilities | 0 | 0 | [2] | |
Level 3 | ||||
Financial assets | ||||
Cash and cash equivalents | [1] | 0 | 0 | |
Financial liabilities | ||||
Contingent earn-out liabilities | 1,164 | 7,250 | [2] | |
Interest Rate Swap | ||||
Financial assets | ||||
Financial assets | [3] | 1,044 | 419 | |
Interest Rate Swap | Level 1 | ||||
Financial assets | ||||
Financial assets | [3] | 0 | 0 | |
Interest Rate Swap | Level 2 | ||||
Financial assets | ||||
Financial assets | [3] | 1,044 | 419 | |
Interest Rate Swap | Level 3 | ||||
Financial assets | ||||
Financial assets | [3] | $ 0 | $ 0 | |
[1] | Fair value is based on quoted market prices. | |||
[2] | 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 macro-economic environment and industry trends. | |||
[3] | Fair value is determined using market standard models with observable inputs. |
Fair value measurements - Recon
Fair value measurements - Reconciliation of Change in Contingent Earn-out Liabilities (Detail) - Contingent Earn Out Liability - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Beginning balance | $ 7,250 | $ 12,946 | |
Ending balance | 1,164 | 7,250 | |
Southwind | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Adjustments made to the fair value of contingent liability | [1] | 0 | 261 |
Earn out payments | (1,032) | (2,531) | |
GradesFirst | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Adjustments made to the fair value of contingent liability | [1] | 0 | 400 |
Earn out payments | (4,000) | 0 | |
Clinovations LLC | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Adjustments made to the fair value of contingent liability | [1] | 1,103 | (2,326) |
Earn out payments | (2,703) | 0 | |
Other | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Adjustments made to the fair value of contingent liability | [1] | 546 | |
360 Fresh | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Earn out payments | $ 0 | $ (1,500) | |
[1] | Amounts were recognized in cost of services on the consolidated statements of operations. |
Membership fees receivable - Me
Membership fees receivable - Membership Fees Receivable (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Membership fees receivable, gross | $ 611,897 | $ 611,153 |
Allowance for uncollectible revenue | (6,380) | (5,709) |
Membership fees receivable, net | 605,517 | 605,444 |
Billed fees receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Membership fees receivable, gross | 149,117 | 138,100 |
Unbilled fees receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Membership fees receivable, gross | $ 462,780 | $ 473,053 |
Membership fees receivable - Ad
Membership fees receivable - Additional Information (Detail) | 12 Months Ended |
Dec. 31, 2016 | |
Receivables [Abstract] | |
Unbilled fees expected to be billed | 12 months |
Property and equipment - Schedu
Property and equipment - Schedule of Property and Equipment (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Abstract] | ||
Leasehold improvements | $ 69,465 | $ 63,608 |
Furniture, fixtures and equipment | 70,362 | 62,790 |
Software | 231,952 | 202,384 |
Property and equipment, gross | 371,779 | 328,782 |
Accumulated depreciation and amortization | (200,498) | (148,425) |
Property and equipment, net | $ 171,281 | $ 180,357 |
Property and equipment - Additi
Property and equipment - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2016 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | $ 180,357 | $ 171,281 |
Internally Developed Software | ||
Property, Plant and Equipment [Line Items] | ||
Impairment of long-lived assets held-for-use | 2,700 | |
Property and equipment, net | $ 73,200 | $ 75,200 |
Goodwill and intangibles - Addi
Goodwill and intangibles - Additional Information (Detail) | Oct. 01, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2016USD ($)reporting_unitSegment | Dec. 31, 2015USD ($) |
Goodwill And Intangible Assets [Line Items] | ||||
Number of operating segments | Segment | 1 | |||
Number of reporting units | reporting_unit | 2 | |||
Goodwill | $ 186,895,000 | $ 739,507,000 | $ 738,200,000 | |
Impairment of goodwill | 0 | $ 0 | 99,145,000 | |
Estimated useful lives of intangible assets (years) | 3 years 5 months | |||
Weighted average useful life (years) | 13 years 3 months | |||
Impairment of intangible assets | 2,086,000 | $ 0 | 8,166,000 | |
Amortization expense for intangible assets | 7,300,000 | 22,800,000 | 24,400,000 | |
Future amortization expense to be recorded in 2017 | 22,500,000 | |||
Future amortization expense to be recorded in 2018 | 21,600,000 | |||
Future amortization expense to be recorded in 2019 | 19,900,000 | |||
Future amortization expense to be recorded in 2020 | 18,700,000 | |||
Future amortization expense to be recorded in 2021 | 17,700,000 | |||
Future amortization expense to be recorded thereafter | $ 154,700,000 | |||
Minimum | ||||
Goodwill And Intangible Assets [Line Items] | ||||
Estimated useful lives of intangible assets (years) | 2 years | |||
Maximum | ||||
Goodwill And Intangible Assets [Line Items] | ||||
Estimated useful lives of intangible assets (years) | 17 years | |||
Capitalized software | ||||
Goodwill And Intangible Assets [Line Items] | ||||
Estimated useful lives of intangible assets (years) | 5 years | |||
Impairment of intangible assets | $ 2,100,000 | $ 5,400,000 | ||
Royall | ||||
Goodwill And Intangible Assets [Line Items] | ||||
Goodwill | $ 648,300,000 | |||
Weighted average cost of capital (percent) | 11.00% | |||
Terminal growth rate (percent) | 3.50% | |||
Impairment of goodwill | $ 99,100,000 |
Goodwill and intangibles - Chan
Goodwill and intangibles - Changes in Carrying Amount of Goodwill (Detail) - USD ($) | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Goodwill [Roll Forward] | |||
Beginning of period | $ 738,200,000 | $ 186,895,000 | |
Goodwill acquired | 2,258,000 | 650,289,000 | |
Goodwill impairment | $ 0 | 0 | (99,145,000) |
Purchase accounting adjustment | (951,000) | 161,000 | |
Ending balance | $ 186,895,000 | $ 739,507,000 | $ 738,200,000 |
Goodwill and intangibles - Gros
Goodwill and intangibles - Gross and Net Carrying Balances and Accumulated Amortization of Intangibles (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average useful life (years) | 3 years 5 months | |
Gross carrying amount | $ 329,943 | $ 326,811 |
Accumulated amortization | (74,890) | (52,090) |
Net carrying amount | $ 255,053 | 274,721 |
Capitalized software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average useful life (years) | 5 years | |
Gross carrying amount | $ 20,034 | 16,902 |
Accumulated amortization | (9,998) | (6,796) |
Net carrying amount | $ 10,036 | 10,106 |
Developed software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average useful life (years) | 5 years 2 months | |
Gross carrying amount | $ 9,450 | 9,450 |
Accumulated amortization | (8,575) | (8,075) |
Net carrying amount | $ 875 | 1,375 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average useful life (years) | 16 years 2 months 6 days | |
Gross carrying amount | $ 277,710 | 277,710 |
Accumulated amortization | (42,978) | (25,769) |
Net carrying amount | $ 234,732 | 251,941 |
Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average useful life (years) | 8 years 7 months 12 days | |
Gross carrying amount | $ 14,900 | 14,900 |
Accumulated amortization | (5,923) | (4,490) |
Net carrying amount | $ 8,977 | 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 | (6,016) | (5,581) |
Net carrying amount | $ 433 | $ 868 |
Equity method investments - Nar
Equity method investments - Narrative (Details) | 9 Months Ended | 12 Months Ended | ||
Dec. 31, 2014USD ($) | Dec. 31, 2016USD ($)people | Dec. 31, 2015USD ($) | Mar. 31, 2014USD ($) | |
Schedule of Equity Method Investments [Line Items] | ||||
Cash received from partial sale of equity method investment | $ 0 | $ 48,565,000 | $ 0 | |
Gain on partial sale of equity method investment, net of taxes | 0 | 29,679,000 | 0 | |
Gains (losses) from equity method investments | (6,540,000) | 46,666,000 | (4,396,000) | |
Investments in and advances to unconsolidated entities | 19,858,000 | 706,000 | ||
Tax expense (benefit) | $ 3,530,000 | $ 11,040,000 | $ 15,200,000 | |
Effective Income Tax Rate Reconciliation, Percent | 27.60% | 19.90% | (15.30%) | |
Tax receivable percentage | 85.00% | |||
Tax receivable agreement period (up to) (in years) | 15 years | |||
Evolent LLC | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Equity interest (percent) | 7.70% | |||
Gains (losses) from equity method investments | $ (6,300,000) | $ (6,100,000) | $ (8,600,000) | |
Investments in and advances to unconsolidated entities | 9,600,000 | 700,000 | ||
Valuation Allowance | 6,700,000 | |||
Tax expense (benefit) | (5,100,000) | (500,000) | ||
Other than temporary impairments loss, investments | $ 0 | |||
Evolent Health Inc | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Equity interest (percent) | 7.90% | |||
Equity method investments, number of individuals designated to board of directors by company | people | 2 | |||
Cash received from partial sale of equity method investment | $ 48,600,000 | |||
Gain on partial sale of equity method investment, net of taxes | 29,700,000 | |||
Gains (losses) from equity method investments | (4,300,000) | (3,000,000) | ||
Investments in and advances to unconsolidated entities | 10,300,000 | 0 | ||
Equity method investment, discrepancy between company basis and carrying value | 43,800,000 | |||
Gain (loss) on sale, tax portion | 18,900,000 | |||
Evolent Inc and Evolent LLC | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Gain on partial sale of equity method investment, net of taxes | 48,565,000 | 0 | $ 0 | |
Gains (losses) from equity method investments | 46,666,000 | (4,396,000) | (6,540,000) | |
Income (loss) from equity method investments, tax expense (benefit) | $ 21,237,000 | $ (7,220,000) | $ 0 | |
Income (Loss) from Equity Method Investments, Tax Expense (Benefit), Percentage | 31.30% | 62.20% | ||
Gain (loss) on sale, tax portion | $ 7,400,000 | |||
Effective Income Tax Rate Reconciliation, Percent | 38.80% | |||
Evolent LLC | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Equity interest (percent) | 77.40% |
Equity method investments - Equ
Equity method investments - Equity in Loss of Consolidated Entities (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2014 | |
Schedule of Equity Method Investments [Line Items] | ||||
Gain on partial sale of investment | $ 0 | $ 29,679 | $ 0 | |
Gains (losses) from equity method investments | $ (6,540) | 46,666 | (4,396) | |
Evolent Inc and Evolent LLC | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Allocated share of losses | (10,366) | (11,616) | $ (6,540) | |
Gain on partial sale of investment | 48,565 | 0 | 0 | |
Dilution gains | 29,704 | 0 | 0 | |
Tax (expense) benefits | (21,237) | 7,220 | 0 | |
Gains (losses) from equity method investments | $ 46,666 | $ (4,396) | $ (6,540) |
Equity method investments - Sum
Equity method investments - Summary of Financial Position of Evolent (Detail) - Evolent Health Inc - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Assets: | ||
Current assets | $ 264,966 | $ 184,463 |
Non-current assets | 934,873 | 831,051 |
Total assets | 1,199,839 | 1,015,514 |
Liabilities, redeemable preferred units and members’/shareholders' equity: | ||
Current liabilities | 131,941 | 59,506 |
Non-current liabilities | 155,784 | 21,429 |
Total liabilities | 287,725 | 80,935 |
Total shareholders' equity/members’ equity | 702,526 | 649,341 |
Non-controlling interests | 209,588 | 285,238 |
Total liabilities and shareholders'/members’ equity | $ 1,199,839 | $ 1,015,514 |
Equity method investments - S64
Equity method investments - Summary of Operating Results of Evolent (Detail) - Evolent Health Inc - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract] | ||
Revenue | $ 254,188 | $ 96,878 |
Cost of revenue (exclusive of depreciation and amortization) | 155,177 | 57,398 |
Gross profit | 99,011 | 39,480 |
(Loss) income before income taxes and non-controlling interests | (237,533) | 343,289 |
Net (loss) income | (226,778) | 319,814 |
Net income (loss) | $ (159,742) | $ 332,494 |
Noncontrolling interest - Addit
Noncontrolling interest - Additional Information (Detail) - USD ($) | Dec. 05, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 04, 2014 |
Noncontrolling Interest [Abstract] | |||||
Net loss attributable to noncontrolling interest | $ 200,000 | $ 0 | $ 0 | ||
Payment for acquisition of noncontrolling interest | $ (6,000,000) | $ (6,110,000) | 0 | $ 0 | |
Ownership interest (percent) | 100.00% | 0.00% | |||
Noncontrolling interest, change in redemption value | $ 6,100,000 | ||||
Deferred tax assets related to tax basis | $ 3,400,000 | $ 2,900,000 |
Debt - Additional Information (
Debt - Additional Information (Detail) | Oct. 30, 2015USD ($) | Oct. 29, 2015USD ($) | Feb. 06, 2015USD ($) | Jan. 21, 2015USD ($) | Jan. 09, 2015USD ($) | Jun. 30, 2016USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2016USD ($)covenant | Dec. 31, 2015USD ($) | Apr. 30, 2015USD ($)swap_agreement |
Line of Credit Facility [Line Items] | ||||||||||
Loss on financing activities | $ 0 | $ 0 | $ 17,398,000 | |||||||
Debt instrument, number of financial covenants | covenant | 2 | |||||||||
Interest expense | $ 0 | $ 18,137,000 | 21,121,000 | |||||||
Amortization of debt issuance costs, excluding ineffectiveness of swap | 1,400,000 | 1,300,000 | ||||||||
Interest expense, interest rate swaps | 2,200,000 | 2,000,000 | ||||||||
Credit Facility $150 Million | Line of Credit | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Loss on financing activities | $ 200,000 | |||||||||
January 2015 Term Loan Facility | Term Loan Facility | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Amount of revolving credit facility | 725,000,000 | |||||||||
Loss on financing activities | $ 4,800,000 | |||||||||
Extinguishment of debt amount | 149,900,000 | |||||||||
Gains (losses) on extinguishment of debt, before write off of deferred debt issuance cost | (4,500,000) | |||||||||
Write off of deferred debt issuance cost | $ 300,000 | |||||||||
February 2015 Senior Secured Revolving Credit Facility | Secured Debt | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Amount of revolving credit facility | $ 575,000,000 | |||||||||
Debt instrument term (years) | 5 years | |||||||||
Stated interest rate percentage | 3.01% | |||||||||
February 2015 Senior Secured Revolving Credit Facility | Revolving Credit Facility | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Amount of revolving credit facility | $ 100,000,000 | |||||||||
Debt instrument term (years) | 5 years | |||||||||
October 2015 Senior Secured Revolving Credit Facility | Secured Debt | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Original issue discount | $ 2,601,000 | |||||||||
Stated interest rate percentage | 2.77% | |||||||||
Amounts outstanding on line of credit | $ 460,600,000 | $ 560,600,000 | ||||||||
October 2015 Senior Secured Revolving Credit Facility | Revolving Credit Facility | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Amount of revolving credit facility | 200,000,000 | $ 100,000,000 | ||||||||
Stated interest rate percentage | 2.77% | |||||||||
Amounts outstanding on line of credit | 0 | $ 100,000,000 | 100,000,000 | |||||||
Proceeds from long-term lines of credit | $ 100,000,000 | |||||||||
Amounts available for borrowing | 80,900,000 | 98,600,000 | ||||||||
October 2015 Senior Secured Revolving Credit Facility | Line of Credit | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Proceeds from long-term lines of credit | $ 17,000,000 | |||||||||
October 2015 Senior Secured Revolving Credit Facility | Standby Letters of Credit | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Amount of revolving credit facility | $ 19,100,000 | $ 1,400,000 | ||||||||
Stated interest rate percentage | 2.77% | 2.68% | ||||||||
Commitment fee (percentage) | 0.30% | |||||||||
Royall Acquisition Co. | January 2015 Term Loan and Revolving Credit Facility | Secured Debt | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Amount of revolving credit facility | 775,000,000 | |||||||||
Royall Acquisition Co. | January 2015 Term Loan Facility | Term Loan Facility | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Amount of revolving credit facility | 725,000,000 | |||||||||
Original issue discount | 21,800,000 | |||||||||
Deferred financing fees | $ 2,800,000 | |||||||||
Royall Acquisition Co. | January 2015 Term Loan Facility | Line of Credit | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Debt instrument, effective interest rate (percent) | 5.00% | |||||||||
Royall Acquisition Co. | January 2015 Revolving Credit Facility | Revolving Credit Facility | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Amount of revolving credit facility | $ 50,000,000 | |||||||||
Loss on financing activities | 17,400,000 | |||||||||
Debt instrument, unamortized discount, adjustment amount due to refund from original creditors | $ 2,400,000 | |||||||||
Base Rate | February 2015 Senior Secured Revolving Credit Facility | Secured Debt | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Basis spread on variable rate (percent) | 1.75% | |||||||||
Base Rate | October 2015 Senior Secured Revolving Credit Facility | Secured Debt | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Basis spread on variable rate (percent) | 1.25% | 1.75% | ||||||||
Base Rate | Royall Acquisition Co. | January 2015 Term Loan Facility | Line of Credit | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Basis spread on variable rate (percent) | 3.00% | |||||||||
LIBOR | February 2015 Senior Secured Revolving Credit Facility | Secured Debt | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Basis spread on variable rate (percent) | 2.75% | |||||||||
LIBOR | October 2015 Senior Secured Revolving Credit Facility | Secured Debt | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Basis spread on variable rate (percent) | 2.25% | 2.75% | 2.00% | |||||||
LIBOR | Royall Acquisition Co. | January 2015 Term Loan Facility | Line of Credit | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Basis spread on variable rate (percent) | 4.00% | |||||||||
Debt instrument, variable rate floor (percent) | 1.00% | |||||||||
Interest Rate Swap | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
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 | $ 262,300,000 | $ 276,800,000 | $ 287,500,000 | |||||||
Effective portion of loss, net of tax | 300,000 | 200,000 | ||||||||
Hedge ineffectiveness | $ 400,000 | 0 | ||||||||
Interest Rate Swap | Base Rate | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Average base rate paid by the Company (percent) | 1.282% | |||||||||
Other Noncurrent Liabilities | Interest Rate Swap | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Interest rate derivative assets at fair value | $ 1,000,000 | $ 400,000 |
Debt - Schedule of Long-term De
Debt - Schedule of Long-term Debt (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | ||
Less: Amounts due in next twelve months ($50,312 face value less unamortized discount of $965) | $ (49,347,000) | $ (27,743,000) |
Total | 472,739,000 | $ 522,086,000 |
Repayments of principal in next 12 months | 50,312,000 | |
Secured Debt | ||
Debt Instrument [Line Items] | ||
Long-term debt | 422,086,000 | |
Less: Amounts due in next twelve months ($50,312 face value less unamortized discount of $965) | (49,347,000) | |
Total | 472,739,000 | |
Repayments of principal in next 12 months | 50,312,000 | |
Amount expected to be amortized in next 12 months | $ 965,000 | |
Secured Debt | October 2015 Senior Secured Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Stated interest rate percentage | 2.77% | |
Debt instrument, face amount | $ 424,687,000 | |
Original issue discount | 2,601,000 | |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 100,000,000 | |
Revolving Credit Facility | October 2015 Senior Secured Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Stated interest rate percentage | 2.77% |
Debt- Schedule of Maturities of
Debt- Schedule of Maturities of Long-term Debt (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Debt Disclosure [Abstract] | |
2,016 | $ 50,312 |
Long-term Debt, Maturities, Repayments of Principal in Year Two | 79,062 |
2,018 | 86,250 |
2,019 | 309,063 |
Total | $ 524,687 |
Stockholders' equity - Addition
Stockholders' equity - Additional Information (Detail) - USD ($) | Jan. 21, 2015 | Jan. 09, 2015 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Nov. 30, 2015 |
Class of Stock [Line Items] | ||||||
Increased share repurchase program | $ 550,000,000 | |||||
Purchases of treasury stock | $ 36,014,000 | $ 61,616,000 | $ 53,000,000 | |||
Stock repurchased and retired during period (in shares) | 19,778,800 | |||||
Total cost of common stock repurchase | $ 513,500,000 | |||||
Number of shares subject to repurchase (in shares) | 0 | |||||
Remaining authorized repurchase amount | $ 36,500,000 | |||||
Number of shares repurchased under stock repurchase program (in shares) | 731,559 | 1,951,258 | ||||
Post-confirmation, preferred and common stock held in treasury | $ 7,300 | $ 19,513 | 10,700 | |||
Treasury stock retirement resulted in reductions to treasury stock | 36,000,000 | 61,600,000 | 53,000,000 | |||
Treasury stock retirement resulted in reductions to retained earnings | $ 36,000,000 | $ 61,600,000 | $ 53,000,000 | |||
Number of shares retired by the Company (in shares) | 17,827,542 | 1,069,357 | ||||
Shares issued | 3,650,000 | |||||
Shares issued (dollars per share) | $ 43 | |||||
Shares issued, underwriting discount (dollars per share) | 1.935 | |||||
Shares issued, net (dollars per share) | $ 41.065 | |||||
Payments of stock issuance costs | $ 1,100,000 | |||||
Proceeds from issuance of common stock | $ 148,800,000 | |||||
Common Stock | ||||||
Class of Stock [Line Items] | ||||||
Treasury stock, shares, acquired (in shares) | 731,559 | 1,951,258 | 1,069,357 | |||
Royall Acquisition Co. | ||||||
Class of Stock [Line Items] | ||||||
Business acquisition, equity interest issued, number of shares (in shares) | 1,755,000 | 2,428,364 |
Stock-based compensation - Addi
Stock-based compensation - Additional Information (Detail) | Dec. 31, 2015$ / shares | Dec. 30, 2015 | Jun. 09, 2015shares | Jan. 09, 2015USD ($)$ / sharesshares | Sep. 06, 2013 | Sep. 05, 2013 | Dec. 31, 2014USD ($)$ / sharesshares | Dec. 31, 2016USD ($)group$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Mar. 31, 2014$ / shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Shares authorized under ESPP | 1,684,000 | |||||||||
Share price (dollars per share) | $ / shares | $ 49.92 | |||||||||
Number of stock options granted (shares) | 1,144,973 | 1,345,000 | 2,102,916 | |||||||
Weighted average exercise price of options granted (dollars per share) | $ / shares | $ 52.28 | $ 28.44 | $ 50.45 | |||||||
Number of options exercised (shares) | 233,999 | 303,490 | 218,109 | |||||||
Intrinsic value of options exercised | $ | $ 7,300,000 | $ 4,700,000 | $ 6,600,000 | |||||||
Stock options vested | 411,259 | 341,024 | 387,748 | |||||||
Fair value of options vested | $ | $ 4,200,000 | $ 100,000 | $ 5,000,000 | |||||||
Restricted stock units granted (shares) | 336,113 | 534,205 | 568,511 | |||||||
Weighted average grant date fair value of options granted (dollars per share) | $ / shares | $ 14.49 | $ 10 | $ 15.49 | |||||||
Stock option awards, expected dividend yield (percent) | 0.00% | 0.00% | 0.00% | |||||||
Number of RSUs vested (shares) | 387,377 | 318,877 | 362,654 | |||||||
Total intrinsic value of RSUs vested in period | $ | $ 22,000,000 | $ 10,500,000 | $ 19,000,000 | |||||||
Shares withheld to satisfy minimum employee tax withholding | 133,129 | 108,315 | 115,497 | |||||||
Payroll deductions to purchase shares, minimum (percent) | 1.00% | |||||||||
Payroll deductions to purchase shares, maximum (percent) | 15.00% | |||||||||
Rate of purchase of ESPP shares (percent) | 95.00% | |||||||||
Proceeds from issuance of common stock under employee stock purchase plan (in shares) | 9,241 | 14,041 | 10,496 | |||||||
Average price per ESPP per share (dollars per share) | $ / shares | $ 48.11 | $ 46.64 | $ 34 | $ 48.11 | ||||||
Discount of the purchase date closing price (percent) | 5.00% | |||||||||
Number of groups analyzing forfeitures | group | 6 | |||||||||
Number of new groups analyzing forfeitures | group | 2 | |||||||||
Stock-based compensation costs capitalized as part of the cost of an asset | $ | $ 0 | |||||||||
Total unrecognized compensation cost related to stock-based compensation | $ | $ 49,000,000 | |||||||||
Weighted average period of stock-based compensation (years) | 2 years 5 months | |||||||||
Tax benefits associated with compensation expense | $ | $ 392,000 | $ 1,285,000 | $ 4,855,000 | |||||||
Executive Team | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of groups analyzing forfeitures | group | 3 | |||||||||
Forfeiture rate (percent) | 9.35% | |||||||||
General Employee | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of groups analyzing forfeitures | group | 2 | |||||||||
Forfeiture rate (percent) | 3.30% | |||||||||
Estimated forfeiture rate (percent) | 5.50% | 4.60% | ||||||||
Board Of Directors | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of groups analyzing forfeitures | group | 1 | |||||||||
Estimated forfeiture rate (percent) | 0.00% | |||||||||
Executive Group | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of groups analyzing forfeitures | group | 2 | |||||||||
Executive One | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Estimated forfeiture rate (percent) | 0.40% | |||||||||
Executive Two | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Estimated forfeiture rate (percent) | 1.00% | |||||||||
Stock options | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Weighted average exercise price of options granted (dollars per share) | $ / shares | $ 57.31 | $ 28.52 | $ 53.42 | |||||||
Number of options exercised (shares) | 233,999 | 303,490 | 218,109 | |||||||
Employee Stock | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Common stock available for issuance (shares) | 1,453,429 | |||||||||
Shares authorized under ESPP | 970,937 | |||||||||
Award requisite service period (years) | 4 years | |||||||||
Restricted stock units | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Shares authorized under ESPP | 104,026 | |||||||||
Weighted average grant date fair value, outstanding awards (dollars per share) | $ / shares | $ 52.82 | $ 48.89 | $ 42.13 | $ 52.82 | $ 41.81 | |||||
Award minimum requisite service period (years) | 1 year | 1 year | ||||||||
Award requisite service period (years) | 6 years | |||||||||
Restricted stock units granted (shares) | 183,156 | 510,625 | 376,771 | |||||||
Weighted average grant date fair value of RSU (dollars per share) | $ / shares | $ 55.02 | $ 31.01 | $ 52.99 | |||||||
Number of RSUs vested (shares) | 387,377 | 317,984 | 362,654 | |||||||
Option vesting term (years) | 4 years | |||||||||
Restricted Stock Units (RSUs) with No Market Conditions | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Weighted average grant date fair value of RSU (dollars per share) | $ / shares | $ 42.92 | $ 31.07 | $ 51.94 | |||||||
Restricted Stock Units, Performance and Market Condition Options | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Weighted average grant date fair value of options granted (dollars per share) | $ / shares | $ 15.75 | $ 15.49 | ||||||||
Stock option awards, risk-free interest rate (percent) | 1.70% | 1.60% | ||||||||
Stock option awards, expected lives in years | 5 years | 5 years | ||||||||
Stock option awards, expected volatility (percent) | 30.00% | 31.30% | ||||||||
Stock option awards, expected dividend yield (percent) | 0.00% | 0.00% | ||||||||
Number of RSUs vested (shares) | 0 | |||||||||
Minimum | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock option awards, expected lives in years | 5 years | 5 years 15 days | 4 years | |||||||
Option vesting term (years) | 6 months | |||||||||
Maximum | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock option awards, expected lives in years | 5 years 5 months 19 days | 5 years 6 months 15 days | 5 years 5 months 11 days | |||||||
Option vesting term (years) | 6 years | |||||||||
Stock Incentive 2009 Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of additional shares authorized | 3,800,000 | |||||||||
Common stock available for issuance (shares) | 1,862,891 | |||||||||
Maximum contractual term (years) | 7 years | 5 years | ||||||||
Royall Inducement Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Shares authorized under ESPP | 1,906,666 | |||||||||
Aggregate grant date fair value | $ | $ 26,800,000 | |||||||||
Royall Inducement Plan | Stock options | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Maximum contractual term (years) | 7 years | |||||||||
Shares authorized under ESPP | 1,751,000 | |||||||||
Award vesting rights (percent) | 50.00% | |||||||||
Royall Inducement Plan | Restricted stock units | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Shares authorized under ESPP | 145,867 | |||||||||
Weighted average grant date fair value, outstanding awards (dollars per share) | $ / shares | $ 49.92 | |||||||||
Grant date fair value | $ | $ 7,300,000 | |||||||||
Award vesting rights (percent) | 50.00% | |||||||||
Royall Inducement Plan | Minimum | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Performance target (percent) | 70.00% | |||||||||
Royall Inducement Plan | Maximum | ||||||||||
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) - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |||
Number of Options | |||||
Number of Options, Exercised (shares) | (233,999) | (303,490) | (218,109) | ||
Weighted Average Exercise Price | |||||
Weighted Average Exercise Price, Granted (dollars per share) | $ 52.28 | $ 28.44 | $ 50.45 | ||
Performance-Based Options | |||||
Number of Options | |||||
Number of Options, Outstanding, Beginning balance (shares) | 20,000 | 2,013,325 | 994,605 | ||
Number of Options, Granted (shares) | 974,605 | 319,900 | 1,774,820 | ||
Number of Options, Exercised (shares) | 0 | 0 | 0 | ||
Number of Options, Forfeited (shares) | 0 | (215,370) | (756,100) | ||
Number of Options, Outstanding, Ending balance (shares) | 994,605 | 2,117,855 | [1] | 2,013,325 | |
Number of Options, Exercisable, Ending balance (shares) | [2] | 26,872 | |||
Weighted Average Exercise Price | |||||
Weighted Average Exercise Price, Outstanding, Beginning balance (dollars per share) | $ 29.58 | $ 50.42 | $ 50.96 | ||
Weighted Average Exercise Price, Granted (dollars per share) | 51.40 | 28.20 | 49.90 | ||
Weighted Average Exercise Price, Exercised (dollars per share) | 0 | 0 | 0 | ||
Weighted Average Exercise Price, Forfeited (dollars per share) | 0 | 49.92 | 49.92 | ||
Weighted Average Exercise Price, Outstanding, Ending balance (dollars per share) | $ 50.96 | 47.11 | [1] | $ 50.42 | |
Weighted Average Exercise Price, Exercisable, Ending balance (dollars per share) | [2] | $ 34.91 | |||
Weighted average remaining contractual term in years, outstanding | 5 years | ||||
Aggregate intrinsic value, outstanding | $ 1.7 | ||||
Weighted average remaining contractual term in years, exercisable | 2 years | ||||
Aggregate intrinsic value, exercisable | $ 0.1 | ||||
Service-Based Options | |||||
Number of Options | |||||
Number of Options, Outstanding, Beginning balance (shares) | 1,810,323 | 1,843,110 | 1,746,692 | ||
Number of Options, Granted (shares) | 170,368 | 1,025,100 | 328,096 | ||
Number of Options, Exercised (shares) | (233,999) | (303,490) | (218,109) | ||
Number of Options, Forfeited (shares) | 0 | (39,542) | (13,569) | ||
Number of Options, Outstanding, Ending balance (shares) | 1,746,692 | 2,525,178 | [3] | 1,843,110 | |
Number of Options, Exercisable, Ending balance (shares) | [4] | 1,021,192 | |||
Weighted Average Exercise Price | |||||
Weighted Average Exercise Price, Outstanding, Beginning balance (dollars per share) | $ 32.86 | $ 41.73 | $ 37.19 | ||
Weighted Average Exercise Price, Granted (dollars per share) | 57.31 | 28.52 | 53.42 | ||
Weighted Average Exercise Price, Exercised (dollars per share) | 18.36 | 16.05 | 21.76 | ||
Weighted Average Exercise Price, Forfeited (dollars per share) | 0 | 52.68 | 60.27 | ||
Weighted Average Exercise Price, Outstanding, Ending balance (dollars per share) | $ 37.19 | 39.28 | [3] | $ 41.73 | |
Weighted Average Exercise Price, Exercisable, Ending balance (dollars per share) | [4] | $ 43.29 | |||
Weighted average remaining contractual term in years, outstanding | 4 years | ||||
Aggregate intrinsic value, outstanding | $ 7.4 | ||||
Weighted average remaining contractual term in years, exercisable | 2 years | ||||
Aggregate intrinsic value, exercisable | $ 2.5 | ||||
[1] | The weighted average remaining contractual term for all performance-based options outstanding at December 31, 2016 is approximately five years and the aggregate intrinsic value is $1.7 million. | ||||
[2] | The weighted average remaining contractual term for all performance-based options exercisable as of December 31, 2016 is approximately two years and the aggregate intrinsic value is $0.1 million. | ||||
[3] | The weighted average remaining contractual term for all service-based options outstanding at December 31, 2016 is approximately four years and the aggregate intrinsic value is $7.4 million. | ||||
[4] | The weighted average remaining contractual term for all service-based options exercisable as of December 31, 2016 is approximately two years and the aggregate intrinsic value is $2.5 million. |
Stock-based compensation - Su72
Stock-based compensation - Summary of Exercise Prices and Contractual Lives of Options Outstanding under Stock Incentive Plans (Detail) | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Shares | shares | 4,643,033 |
Weighted Average Exercise Price (dollars per share) | $ 42.85 |
Weighted Average Remaining Contractual Life - Years | 4 years 6 months |
$ 0.00 – $ 9.99 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of exercise prices, minimum (dollars per share) | $ 0 |
Range of exercise prices, maximum (dollars per share | $ 9.99 |
Shares | shares | 0 |
Weighted Average Exercise Price (dollars per share) | $ 0 |
Weighted Average Remaining Contractual Life - Years | 0 months |
10.00 – 19.99 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of exercise prices, minimum (dollars per share) | $ 10 |
Range of exercise prices, maximum (dollars per share | $ 19.99 |
Shares | shares | 70,500 |
Weighted Average Exercise Price (dollars per share) | $ 16.58 |
Weighted Average Remaining Contractual Life - Years | 3 months 18 days |
20.00 – 29.99 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of exercise prices, minimum (dollars per share) | $ 20 |
Range of exercise prices, maximum (dollars per share | $ 29.99 |
Shares | shares | 1,469,478 |
Weighted Average Exercise Price (dollars per share) | $ 27.83 |
Weighted Average Remaining Contractual Life - Years | 5 years 7 months 6 days |
30.00 – 39.99 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of exercise prices, minimum (dollars per share) | $ 30 |
Range of exercise prices, maximum (dollars per share | $ 39.99 |
Shares | shares | 46,432 |
Weighted Average Exercise Price (dollars per share) | $ 35.18 |
Weighted Average Remaining Contractual Life - Years | 6 years 5 months 6 days |
40.00 – 49.99 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of exercise prices, minimum (dollars per share) | $ 40 |
Range of exercise prices, maximum (dollars per share | $ 49.99 |
Shares | shares | 1,495,769 |
Weighted Average Exercise Price (dollars per share) | $ 48.14 |
Weighted Average Remaining Contractual Life - Years | 3 years 5 months 6 days |
50.00 – 59.99 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of exercise prices, minimum (dollars per share) | $ 50 |
Range of exercise prices, maximum (dollars per share | $ 59.99 |
Shares | shares | 1,476,482 |
Weighted Average Exercise Price (dollars per share) | $ 52.57 |
Weighted Average Remaining Contractual Life - Years | 4 years 7 months 6 days |
60.00 – 69.99 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of exercise prices, minimum (dollars per share) | $ 60 |
Range of exercise prices, maximum (dollars per share | $ 69.99 |
Shares | shares | 84,372 |
Weighted Average Exercise Price (dollars per share) | $ 66.90 |
Weighted Average Remaining Contractual Life - Years | 4 years 2 months 6 days |
Stock-based compensation - Su73
Stock-based compensation - Summary of Changes in RSUs and PSUs(Detail) - $ / shares | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Number of options RSUs | |||
Granted (shares) | 336,113 | 534,205 | 568,511 |
Vested (shares) | (387,377) | (318,877) | (362,654) |
Performance-Based Restricted Stock Units | |||
Number of options RSUs | |||
Non-vested beginning balance (shares) | 42,880 | 301,032 | 187,297 |
Granted (shares) | 152,957 | 23,580 | 191,740 |
Forfeited (shares) | (8,540) | (66,139) | (78,005) |
Vested (shares) | 0 | (893) | 0 |
Non-vested ending balance (shares) | 187,297 | 257,580 | 301,032 |
Weighted Average Grant Date Fair Value, RSU | |||
Weighted Average grant date fair value non-vested, balance (dollars per share) | $ 47.87 | $ 39.10 | $ 31.85 |
Weighted average grant date fair value, granted (dollars per share) | 28.43 | 32.28 | 49.87 |
Weighted average grant date fair value, forfeited (dollars per share) | 51.15 | 51.15 | 48.16 |
Weighted average grant date fair value, vested (dollars per share) | 0 | 50.41 | 0 |
Weighted average grant date Fair value non-vested, balance (dollars per share) | $ 31.85 | $ 35.34 | $ 39.10 |
Restricted stock units | |||
Number of options RSUs | |||
Non-vested beginning balance (shares) | 1,067,582 | 839,613 | 859,285 |
Granted (shares) | 183,156 | 510,625 | 376,771 |
Forfeited (shares) | (4,076) | (64,170) | (33,789) |
Vested (shares) | (387,377) | (317,984) | (362,654) |
Non-vested ending balance (shares) | 859,285 | 968,084 | 839,613 |
Weighted Average Grant Date Fair Value, RSU | |||
Weighted Average grant date fair value non-vested, balance (dollars per share) | $ 41.81 | $ 52.82 | $ 48.89 |
Weighted average grant date fair value, granted (dollars per share) | 55.02 | 31.01 | 52.99 |
Weighted average grant date fair value, forfeited (dollars per share) | 48.83 | 47.18 | 55.74 |
Weighted average grant date fair value, vested (dollars per share) | 32.27 | 51.48 | 43.43 |
Weighted average grant date Fair value non-vested, balance (dollars per share) | $ 48.89 | $ 42.13 | $ 52.82 |
Stock-based compensation - Valu
Stock-based compensation - Valuation of Stock Options (Detail) - $ / shares | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share Based Payment Award Stock Options Valuation Assumptions [Line Items] | |||
Risk-free interest rate, Minimum (percent) | 1.53% | 95.00% | 1.18% |
Risk-free interest rate, Maximum (percent) | 1.75% | 1.64% | 1.67% |
Expected volatility, Minimum (percent) | 29.80% | 36.40% | 31.20% |
Expected volatility, Maximum (percent) | 30.90% | 38.40% | 33.00% |
Dividend yield (percent) | 0.00% | 0.00% | 0.00% |
Weighted average exercise price of options granted (dollars per share) | $ 52.28 | $ 28.44 | $ 50.45 |
Weighted average grant date fair value of options granted (dollars per share) | $ 14.49 | $ 10 | $ 15.49 |
Number of stock options granted (shares) | 1,144,973 | 1,345,000 | 2,102,916 |
Minimum | |||
Share Based Payment Award Stock Options Valuation Assumptions [Line Items] | |||
Expected lives in years | 5 years | 5 years 15 days | 4 years |
Maximum | |||
Share Based Payment Award Stock Options Valuation Assumptions [Line Items] | |||
Expected lives in years | 5 years 5 months 19 days | 5 years 6 months 15 days | 5 years 5 months 11 days |
Stock-based compensation - Su75
Stock-based compensation - Summary of Stock-based Compensation Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stock-based compensation expense included in Costs and expenses | |||||||||||
Total costs and expenses | $ 17,965 | $ 29,435 | $ 29,093 | ||||||||
Operating income | $ 25,520 | $ 12,134 | $ 18,088 | $ 20,796 | $ (90,029) | $ 19,151 | $ 12,320 | $ 4,158 | 14,103 | 76,538 | (54,400) |
Employee Stock Purchase Plan | |||||||||||
Stock-based compensation expense included in Costs and expenses | |||||||||||
Total costs and expenses | 17,965 | 29,435 | 29,093 | ||||||||
Operating income | (17,965) | (29,435) | (29,093) | ||||||||
Cost of services | Employee Stock Purchase Plan | |||||||||||
Stock-based compensation expense included in Costs and expenses | |||||||||||
Total costs and expenses | 5,977 | 9,231 | 9,211 | ||||||||
Member relations and marketing | Employee Stock Purchase Plan | |||||||||||
Stock-based compensation expense included in Costs and expenses | |||||||||||
Total costs and expenses | 3,348 | 5,028 | 5,176 | ||||||||
General and administrative | Employee Stock Purchase Plan | |||||||||||
Stock-based compensation expense included in Costs and expenses | |||||||||||
Total costs and expenses | $ 8,640 | $ 15,176 | $ 14,706 |
Stock-based compensation - Su76
Stock-based compensation - Summary of Stock-based Compensation Expense by Award (Detail) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation | $ 17,965 | $ 29,435 | $ 29,093 |
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation | 5,431 | 13,270 | 10,908 |
Restricted stock units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation | $ 12,534 | $ 16,165 | $ 18,185 |
Income taxes - Summary of Provi
Income taxes - Summary of Provision for Income Taxes (Detail) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Current tax expense | |||
Federal | $ 3,613 | $ 13,527 | $ 6,225 |
State and local | 1,680 | 3,694 | 1,781 |
Foreign | 620 | 626 | 524 |
Total current tax expense | 5,913 | 17,847 | 8,530 |
Deferred tax (benefit) expense | |||
Federal | (297) | (7,279) | (6,376) |
State and local | (2,086) | 472 | 13,046 |
Foreign | 0 | 0 | 0 |
Total deferred tax (benefit) expense | (2,383) | (6,807) | 6,670 |
Provision for income taxes | $ 3,530 | $ 11,040 | $ 15,200 |
Income taxes- Income before Inc
Income taxes- Income before Income Tax (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||||||||||
U.S. sources | $ 10,445 | $ 53,433 | $ (101,386) | ||||||||
Non-U.S. sources | 2,331 | 2,179 | 1,968 | ||||||||
Income (loss) before provision for income taxes and gains (losses) from equity method investments | $ 20,712 | $ 6,088 | $ 12,776 | $ 16,036 | $ (99,036) | $ 12,551 | $ 7,038 | $ (19,971) | $ 12,776 | $ 55,612 | $ (99,418) |
Income taxes - Statutory Rates
Income taxes - Statutory Rates to Income before Provision for Income Taxes (Detail) | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Statutory U.S. federal income tax rate | 35.00% | 35.00% | 35.00% |
Section 162(m) compensation | 11.70% | 0.50% | (0.80%) |
State income tax, net of U.S. federal income tax benefit | 7.40% | 4.60% | 3.50% |
Washington, D.C. QHTC income tax credits and D.C. law changes | (9.80%) | (0.00%) | (13.40%) |
Uncertain tax position | 5.40% | (0.30%) | 0.70% |
Federal R&D credit (net of associated UTP) | (25.70%) | (22.70%) | 1.80% |
Return to provision adjustment | 3.20% | 1.20% | (0.40%) |
Goodwill impairment | 0.00% | 0.00% | (38.30%) |
Meals and entertainment | 5.50% | 2.70% | (1.50%) |
Stock-based compensation | 0.00% | (2.80%) | 0.00% |
Other permanent differences, net | (5.10%) | 1.70% | (1.90%) |
Effective tax rate | 27.60% | 19.90% | (15.30%) |
Income taxes - Tax Effect of Di
Income taxes - Tax Effect of Differences between Tax Bases of Assets and Liabilities (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred Tax Assets, Net, Classification [Abstract] | ||
Federal R&D credits | $ 6,107 | $ 420 |
Deferred compensation accrued for financial reporting purposes | 7,139 | 13,284 |
Stock-based compensation | 21,384 | 15,724 |
Acquired net operating loss carryforwards | 2,794 | 5,421 |
Reserve for uncollectible revenue | 2,508 | 2,119 |
Basis difference on investment in unconsolidated entities | 962 | 7,208 |
Debt issuance costs | 2,066 | 2,801 |
Deferred rent | 3,248 | 1,466 |
Depreciation | 1,057 | 0 |
Tax credit carryforwards | 1,094 | 332 |
Unrealized foreign exchange loss | 667 | 0 |
Outside basis difference on cost method investment | 1,967 | 0 |
Other | 1,490 | 835 |
Total deferred tax assets | 52,483 | 49,610 |
Valuation allowance | 0 | (49) |
Total deferred tax assets, net of valuation allowance | 52,483 | 49,561 |
Capitalized software development costs | (33,599) | (31,042) |
Deferred incentive compensation and other deferred charges | (11,211) | (11,940) |
Acquired intangibles and goodwill; and acquisition related costs | (94,947) | (97,278) |
Depreciation | 0 | (3,031) |
Other | (1,739) | (163) |
Total deferred tax liabilities | (141,496) | (143,454) |
Net deferred income tax liabilities | $ (89,013) | $ (93,893) |
Income taxes - Additional Infor
Income taxes - Additional Information (Detail) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2014 | |
Income Tax Examination [Line Items] | ||||
Operating loss carryforwards | $ 2,800,000 | |||
Tax credit carryforward, amount | 14,100,000 | |||
Interest or penalties on unrecognized tax benefits | $ 0 | 100,000 | $ 300,000 | |
Unrecognized tax benefits | $ 828,000 | 7,416,000 | 1,385,000 | $ 0 |
Domestic Tax Authority | Research Tax Credit Carryforward | ||||
Income Tax Examination [Line Items] | ||||
Tax credit carryforward, amount used | $ 4,600,000 | $ 1,800,000 |
Income Taxes - Schedule of Unre
Income Taxes - Schedule of Unrecognized Tax Benefits Roll Forward (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Balance at beginning of the period | $ 0 | $ 1,385 | $ 828 |
Additions based on tax positions related to the current periods | 497 | 1,126 | 281 |
Additions for tax positions of prior periods | 331 | 4,905 | 0 |
Positions assumed in acquisition | 0 | 0 | 276 |
Balance at end of the period | $ 828 | $ 7,416 | $ 1,385 |
Commitments and contingencies -
Commitments and contingencies - Additional Information (Detail) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Depreciated leases | $ 33.3 | $ 37 | |
Rental and executory expenses | $ 13.2 | 23.7 | 23.1 |
Purchase obligation, 2017 | 1.4 | ||
Purchase obligation, 2018 | $ 1 | ||
Minimum age of employees for defined contribution plan | 21 years | ||
Minimum discretionary matching contributions | 0.00% | ||
Maximum discretionary matching contributions | 100.00% | ||
Maximum percentage of employee contribution of base salary (up to) | 4.00% | ||
Discretionary contributions | $ 0 | $ 5.9 | $ 4.9 |
Amounts outstanding on line of credit | $ 19.1 |
Commitments and contingencies84
Commitments and contingencies - Future Minimum Lease Payments (Detail) $ in Thousands | Dec. 31, 2016USD ($) |
Operating Leased Assets [Line Items] | |
2,016 | $ 17,421 |
2,017 | 16,255 |
2,018 | 27,658 |
2,019 | 31,759 |
2,020 | 30,269 |
Thereafter | 384,824 |
Total | 508,186 |
Operating leases | |
Operating Leased Assets [Line Items] | |
2,016 | 17,421 |
2,017 | 16,255 |
2,018 | 11,143 |
2,019 | 6,741 |
2,020 | 4,880 |
Thereafter | 5,613 |
Total | 62,053 |
Build-to-suit lease obligation | |
Operating Leased Assets [Line Items] | |
2,016 | 0 |
2,017 | 0 |
2,018 | 16,515 |
2,019 | 25,018 |
2,020 | 25,389 |
Thereafter | 379,211 |
Total | $ 446,133 |
Segments and geographic areas -
Segments and geographic areas - Additional Information (Detail) | 12 Months Ended |
Dec. 31, 2016Segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
Segments and geographic areas86
Segments and geographic areas - Revenue Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenue | $ 203,852 | $ 200,455 | $ 198,382 | $ 200,735 | $ 204,951 | $ 200,492 | $ 183,583 | $ 179,322 | $ 434,002 | $ 803,424 | $ 768,348 |
United States | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenue | 417,194 | 784,447 | 749,880 | ||||||||
Other Countries | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenue | $ 16,808 | $ 18,977 | $ 18,468 |
Quarterly financial data (una87
Quarterly financial data (unaudited) - Summarized Financial Data (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenue | $ 203,852 | $ 200,455 | $ 198,382 | $ 200,735 | $ 204,951 | $ 200,492 | $ 183,583 | $ 179,322 | $ 434,002 | $ 803,424 | $ 768,348 |
Operating income | 25,520 | 12,134 | 18,088 | 20,796 | (90,029) | 19,151 | 12,320 | 4,158 | 14,103 | 76,538 | (54,400) |
(Loss) income from continuing operations before provision for income taxes and and gains (losses) in equity method investments | 20,712 | 6,088 | 12,776 | 16,036 | (99,036) | 12,551 | 7,038 | (19,971) | 12,776 | 55,612 | (99,418) |
Net (loss) income attributable to common stockholders | $ 35,866 | $ 37,538 | $ 7,495 | $ 10,339 | $ (105,280) | $ 672 | $ 7,666 | $ (22,072) | $ 2,706 | $ 91,238 | $ (119,014) |
Earnings Per Share [Abstract] | |||||||||||
Net (loss) income attributable to common stockholders per share — basic (dollars per share) | $ 0.89 | $ 0.94 | $ 0.19 | $ 0.25 | $ (2.52) | $ 0.02 | $ 0.18 | $ (0.54) | $ (0.10) | $ 2.25 | $ (2.84) |
Net (loss) income attributable to common stockholders per share — diluted (dollars per share) | $ 0.88 | $ 0.93 | $ 0.18 | $ 0.25 | $ (2.52) | $ 0.02 | $ 0.18 | $ (0.54) | $ (0.10) | $ 2.23 | $ (2.84) |
Supplemental cash flow (Details
Supplemental cash flow (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash paid (received) for: | |||
Income taxes | $ 32 | $ 25,919 | $ (4,695) |
Interest | 0 | 14,090 | 17,646 |
Non-cash activities: | |||
Clinovations earn-out liability share-based payment | 0 | 2,703 | 0 |
Increase in estimated cost of construction of a building under a build-to-suit lease | $ 0 | $ 60,667 | $ 2,700 |
Quarterly financial data (una89
Quarterly financial data (unaudited) - Narrative (Details) - Adjustments $ in Millions | 3 Months Ended |
Sep. 30, 2016USD ($) | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |
Period increase (decrease) for income taxes | $ 4.2 |
Evolent Health Inc | Gain (Loss) on Equity Method Investment | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |
Period increase (decrease) for income taxes | $ (5.1) |
Subsequent Events (Details)
Subsequent Events (Details) - Reduction in force - Scenario, Forecast $ in Millions | Jan. 03, 2017USD ($)employee |
Minimum | |
Subsequent Event [Line Items] | |
Restructuring and related cost, expected cost | $ 7 |
Maximum | |
Subsequent Event [Line Items] | |
Reduction in force | employee | 220 |
Restructuring and related cost, expected cost | $ 9 |
Schedule II - Valuation and Q91
Schedule II - Valuation and Qualifying Accounts (Detail) - Allowance for uncollectible revenue - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Year | $ 6,850 | $ 5,709 | $ 7,530 |
Additions Charged to Revenue | 8,938 | 5,577 | 4,893 |
Additions Charged to Other Accounts | 0 | 0 | 310 |
Deductions From Reserve | 8,258 | 4,906 | 7,024 |
Balance at End of Year | $ 7,530 | $ 6,380 | $ 5,709 |