Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 02, 2015 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | FDNH | |
Entity Registrant Name | FOUNDATION HEALTHCARE, INC. | |
Entity Central Index Key | 1,272,597 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 17,273,180 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
ASSETS | ||
Cash and cash equivalents | $ 4,751,278 | $ 2,860,025 |
Accounts receivable, net of allowance for doubtful accounts of $1,184,000 and $1,742,000, respectively | 21,321,016 | 18,971,435 |
Receivables from affiliates | 524,479 | 1,157,184 |
Supplies inventories | 1,912,887 | 1,863,175 |
Prepaid and other current assets | 3,187,300 | 4,487,873 |
Current assets from discontinued operations | 246,011 | 342,441 |
Total current assets | 31,942,971 | 29,682,133 |
Property and equipment, net | 11,962,955 | 13,465,190 |
Equity method investments in affiliates | 2,909,701 | 3,558,020 |
Intangible assets, net | 7,536,727 | 9,080,395 |
Goodwill | 973,927 | 973,927 |
Other assets | 535,704 | 437,809 |
Other assets from discontinued operations | 792,184 | 2,329,395 |
Total assets | 56,654,169 | 59,526,869 |
Liabilities: | ||
Accounts payable | 6,498,219 | 10,364,160 |
Accrued liabilities | 11,472,795 | 10,223,388 |
Preferred noncontrolling interests dividends payable | 177,623 | 195,212 |
Short-term debt | 398,207 | 456,784 |
Current portion of long-term debt | 4,828,974 | 5,023,048 |
Other current liabilities | 1,349,586 | 1,052,543 |
Current liabilities from discontinued operations | 1,394,521 | 839,791 |
Total current liabilities | 26,119,925 | 28,154,926 |
Long-term debt, net of current portion | 18,318,716 | 24,737,719 |
Deferred lease incentive | 7,908,895 | 8,608,716 |
Other liabilities | 6,380,263 | 5,424,313 |
Total liabilities | 58,727,799 | 66,925,674 |
Preferred noncontrolling interest | $ 7,830,000 | $ 8,700,000 |
Commitments and contingencies (Note 10) | ||
Foundation Healthcare shareholders’ deficit: | ||
Preferred stock $0.0001 par value, 10,000,000 authorized; no shares issued and outstanding | ||
Common stock $0.0001 par value, 500,000,000 shares authorized; 17,273,180 and 17,263,842 issued and outstanding, respectively | $ 1,727 | $ 1,726 |
Paid-in capital | 19,900,781 | 19,321,267 |
Accumulated deficit | (33,718,357) | (37,265,044) |
Total Foundation Healthcare shareholders’ deficit | (13,815,849) | (17,942,051) |
Noncontrolling interests | 3,912,219 | 1,843,246 |
Total deficit | (9,903,630) | (16,098,805) |
Total liabilities, preferred noncontrolling interest and shareholders’ deficit | $ 56,654,169 | $ 59,526,869 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Statement Of Financial Position [Abstract] | ||
Accounts receivable, allowances for doubtful accounts | $ 1,184,000 | $ 1,742,000 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 17,273,180 | 17,263,842 |
Common stock, shares outstanding | 17,273,180 | 17,263,842 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Net Revenues: | ||||
Patient services | $ 31,765,408 | $ 26,183,803 | $ 89,855,903 | $ 65,607,006 |
Provision for doubtful accounts | (1,402,684) | (1,562,147) | (4,001,230) | (2,799,237) |
Net patient services revenue | 30,362,724 | 24,621,656 | 85,854,673 | 62,807,769 |
Management fees from affiliates | 1,217,108 | 1,352,909 | 4,440,184 | 4,056,981 |
Other revenue | 1,017,134 | 1,450,021 | 3,707,213 | 4,271,194 |
Revenues | 32,596,966 | 27,424,586 | 94,002,070 | 71,135,944 |
Equity in earnings of affiliates | 247,223 | 581,171 | 978,295 | 1,752,284 |
Operating Expenses: | ||||
Salaries and benefits | 8,698,484 | 7,339,528 | 24,354,308 | 22,317,768 |
Supplies | 7,115,559 | 6,748,785 | 20,575,610 | 17,383,162 |
Other operating expenses | 12,445,063 | 10,655,907 | 39,927,517 | 28,810,032 |
Depreciation and amortization | 1,345,340 | 1,320,527 | 4,072,795 | 4,204,828 |
Total operating expenses | 29,604,446 | 26,064,747 | 88,930,230 | 72,715,790 |
Other Income (Expense): | ||||
Interest expense, net | (221,881) | (324,700) | (827,204) | (1,329,932) |
Other income | 80,043 | 30,000 | 65,161 | 30,840 |
Net other (expense) | (141,838) | (294,700) | (762,043) | (1,299,092) |
Income (loss) from continuing operations, before taxes | 3,097,905 | 1,646,310 | 5,288,092 | (1,126,654) |
Benefit for income taxes | 114,038 | 852,005 | ||
Income (loss) from continuing operations, net of taxes | 3,097,905 | 1,646,310 | 5,402,130 | (274,649) |
Income (loss) from discontinued operations, net of tax | 34,744 | (83,997) | 3,805,801 | (333,296) |
Net income (loss) | 3,132,649 | 1,562,313 | 9,207,931 | (607,945) |
Less: Net income attributable to noncontrolling interests | 2,617,821 | 1,208,648 | 5,112,737 | 2,054,872 |
Net income (loss) attributable to Foundation Healthcare | 514,828 | 353,665 | 4,095,194 | (2,662,817) |
Preferred noncontrolling interests dividends | (175,646) | (199,502) | (548,507) | (585,640) |
Net income (loss) attributable to Foundation Healthcare common stock | $ 339,182 | $ 154,163 | $ 3,546,687 | $ (3,248,457) |
Earnings per common share (basic and diluted): | ||||
Net income (loss) attributable to continuing operations attributable to Foundation Healthcare common stock | $ 0.02 | $ 0.01 | $ (0.02) | $ (0.17) |
Income (loss) from discontinued operations, net of tax | 0 | 0 | 0.22 | (0.02) |
Net income (loss) per share, attributable to Foundation Healthcare common stock | $ 0.02 | $ 0.01 | $ 0.20 | $ (0.19) |
Weighted average number of common and diluted shares outstanding | 17,271,513 | 17,182,473 | 17,258,727 | 17,016,318 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Operating activities: | ||
Net income (loss) | $ 9,207,931 | $ (607,945) |
Less: Income (loss) from discontinued operations, net of tax | 3,805,801 | (333,296) |
Income (loss) from continuing operations, net of tax | 5,402,130 | (274,649) |
Adjustments to reconcile net income (loss) from continuing operations, net of tax, to net cash provided by operating activities: | ||
Depreciation and amortization | 4,072,795 | 4,204,828 |
Stock-based compensation, net of cashless vesting | 579,515 | 876,851 |
Provision for doubtful accounts | 4,001,230 | 2,799,237 |
Equity in earnings of affiliates | (978,295) | (1,752,284) |
Changes in assets and liabilities: | ||
Accounts receivable, net of provision for doubtful accounts | (6,350,811) | (4,338,374) |
Receivables from affiliates | 632,705 | (175,698) |
Supplies inventories | (49,712) | (35,657) |
Prepaid and other current assets | 1,300,573 | (1,489,956) |
Other assets | (97,895) | (204,838) |
Accounts payable | (3,865,959) | (1,791,968) |
Accrued liabilities | 1,249,407 | 3,810,422 |
Other current liabilities | 297,043 | (2,330,737) |
Other liabilities | 256,129 | 3,087,988 |
Net cash provided by operating activities from continuing operations | 6,448,855 | 2,385,165 |
Net cash used in operating activities from discontinued operations | (2,394,061) | (454,338) |
Net cash provided by operating activities | 4,054,794 | 1,930,827 |
Investing activities: | ||
Purchase of property and equipment | (1,157,635) | (1,810,180) |
Disposal of property and equipment | 130,745 | |
Proceeds from sale of equity investment | 178,000 | |
Distributions from affiliates | 1,626,614 | 2,061,937 |
Net cash provided by investing activities from continuing operations | 599,724 | 429,757 |
Net cash provided by investing activities from discontinued operations | 8,388,233 | |
Net cash provided by investing activities | 8,987,957 | 429,757 |
Financing activities: | ||
Debt proceeds | 4,995,966 | 29,092,552 |
Debt payments | (11,667,620) | (24,560,683) |
Preferred noncontrolling interest dividends | (566,096) | (583,693) |
Preferred noncontrolling interest redemptions | (870,000) | |
Distributions to noncontrolling interests | (3,043,748) | (2,879,989) |
Net cash (used in) provided by financing activities from continuing operations | (11,151,498) | 1,068,187 |
Net cash used in financing activities from discontinued operations | (4,072,896) | |
Net cash used in financing activities | (11,151,498) | (3,004,709) |
Net change in cash and cash equivalents | 1,891,253 | (644,125) |
Cash and cash equivalents at beginning of period | 2,860,025 | 4,212,076 |
Cash and cash equivalents at end of period | 4,751,278 | 3,567,951 |
Cash Paid for Interest and Income Taxes: | ||
Interest expense | $ 1,280,000 | 1,604,256 |
Interest expense, discontinued operations | 168,733 | |
Income taxes, continuing operations | $ 3,255,623 |
Nature of Business
Nature of Business | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Nature of Business | Note 1 – Nature of Business Foundation Healthcare, Inc. (the “Company”) is organized under the laws of the state of Oklahoma and owns controlling and noncontrolling interests in surgical hospitals located in Oklahoma and Texas. The Company also owns noncontrolling interests in ambulatory surgery centers (“ASCs”) located in Texas, Pennsylvania, New Jersey, Ohio, and Maryland. The Company provides management services to a majority of the facilities that it has noncontrolling interests (referred to as “Affiliates”) under the terms of various management agreements. |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Note 2 – Basis of Presentation Elimination of Going Concern – As of March 31, 2015 and December 31, 2014, the Company concluded that based on the cash flows from operations during the three months ended March 31, 2015 and year ended December 31, 2014, respectively, and the due dates of certain liability and debt payments, it may not be able to meet all of its obligations as they became due in 2015. As of September 30, 2015, the Company had cash and cash equivalents of $4.8 million and working capital of $5.0 million (adjusted for redemption payments of $0.9 million payable to preferred noncontrolling interest holders in October 2015). During the nine months ended September 30, 2015, the Company generated income from continuing operations (before noncontrolling interests) of $5.3 million and generated $6.5 million in cash flow from operating activities from continuing operations. In addition to the Company’s improved cash flow from operations, it also generated $9.5 million, during the three months ended June 30, 2015, from the sale and redemption of certain equity investments. Based on the Company’s improved operating results during 2015, improved cash and working capital levels at September 30, 2015, and the Company’s expected borrowing capacity over the next twelve months, management concluded that the doubt about the Company’s ability to continue as a going concern has been eliminated. Reverse Stock Split – At the Company’s annual meeting of stockholders held on May 12, 2014, the Company’s stockholders approved an amendment to its amended and restated certificate of incorporation to effect a reverse split of its common stock at a ratio between 1-for-3 to 1-for-10 shares. The Company’s stockholders further authorized the board of directors to determine the ratio at which the reverse split would be effected by filing an appropriate amendment to its amended and restated certificate of incorporation. The Company’s board of directors authorized the ratio of the reverse split and corresponding reduction in authorized shares on December 29, 2014 and effective at the close of business on January 8, 2015, the Company amended its amended and restated certificate of incorporation to effect a 1-for-10 reverse split of its common stock. The board of directors considered a ratio that would allow the Company to have a number of outstanding shares to have a sufficient trading volume while considering stock price that would be consistent with the Company’s intention to eventually uplist its common stock from the OTC Markets QB Tier to a listing on the NYSE MKT exchange, though there can be no assurance that we will ultimately pursue or be successful in seeking to uplist the Company’s common stock on such exchange. The Board of Directors determined that a ratio of 1-for-10 was the best balance of these and other factors. The effect of the reverse split reduced the Company’s outstanding common stock shares from 172,638,414 to 17,263,842 shares as of the date of the reverse split. The accompanying consolidated financial statements give effect to the reverse split as of the first date reported. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 3 – Summary of Significant Accounting Policies For a complete list of the Company’s significant accounting policies, please see the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. Interim Financial Information – The condensed consolidated financial statements included herein are unaudited and have been prepared in accordance with generally accepted accounting principles for interim financial statements and in accordance with Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months and nine months ended September 30, 2015 are not necessarily indicative of results that may be expected for the year ended December 31, 2015. The consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2014. The December 31, 2014 consolidated balance sheet was derived from audited financial statements. Consolidation – The accompanying consolidated financial statements include the accounts of the Company and its wholly owned, majority owned and controlled subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. The Company accounts for its investments in Affiliates in which the Company exhibits significant influence, but does not control, in accordance with the equity method of accounting. The Company does not consolidate its equity method investments, but rather measures them at their initial costs and then subsequently adjusts their carrying values through income for their respective shares of the earnings or losses during the period. The Company monitors its investments for other-than-temporary impairment by considering factors such as current economic and market conditions and the operating performance of the companies and records reductions in carrying values when necessary. Use of estimates – The preparation of financial statements in conformity with generally accepted accounting principles requires management of the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Reclassifications – Certain amounts presented in prior years have been classified to conform to the current year’s presentation. Such reclassifications had no effect on net income. Revenue recognition and accounts receivable – The Company recognizes revenues in the period in which services are performed and billed. Accounts receivable primarily consist of amounts due from third-party payors and patients. The Company’s ability to collect outstanding receivables is critical to its results of operations and cash flows. Amounts the Company receives for treatment of patients covered by governmental programs such as Medicare and Medicaid and other third-party payors such as health maintenance organizations, preferred provider organizations and other private insurers are generally less than the Company’s established billing rates. Additionally, to provide for accounts receivable that could become uncollectible in the future, the Company establishes an allowance for doubtful accounts to reduce the carrying value of such receivables to their estimated net realizable value. Accordingly, the revenues and accounts receivable reported in the Company’s consolidated financial statements are recorded at the net amount expected to be received. Contractual Discounts and Cost Report Settlements – The Company derives a significant portion of its revenues from Medicare, Medicaid and other payors that receive discounts from its established billing rates. The Company must estimate the total amount of these discounts to prepare its consolidated financial statements. The Medicare and Medicaid regulations and various managed care contracts under which these discounts must be calculated are complex and are subject to interpretation and adjustment. The Company estimates the allowance for contractual discounts on a payor-specific basis given its interpretation of the applicable regulations or contract terms. These interpretations sometimes result in payments that differ from the Company’s estimates. Additionally, updated regulations and contract renegotiations occur frequently, necessitating regular review and assessment of the estimation process by management. Changes in estimates related to the allowance for contractual discounts affect revenues reported in the Company’s accompanying consolidated statements of operations. Cost report settlements under reimbursement agreements with Medicare, Medicaid and Tricare are estimated and recorded in the period the related services are rendered and are adjusted in future periods as final settlements are determined. There is a reasonable possibility that recorded estimates will change by a material amount in the near term. The estimated net cost report settlements due to the Company were $418,055 and $617,955 as of September 30, 2015 and December 31, 2014 respectively, and are included in prepaid and other current assets in the accompanying consolidated balance sheets. We decreased our cost report estimate by $199,900 during the nine months ended September 30, 2015 based on settlements from our final filed cost report for 2014 and an estimate of the 2015 cost report. The Company’s management believes that adequate provisions have been made for adjustments that may result from final determination of amounts earned under these programs. Laws and regulations governing Medicare and Medicaid programs are complex and subject to interpretation. The Company believes that it is in compliance with all applicable laws and regulations and is not aware of any pending or threatened investigations involving allegations of potential wrongdoing that would have a material effect on the Company’s financial statements. Compliance with such laws and regulations can be subject to future government review and interpretation as well as significant regulatory action including fines, penalties and exclusion from the Medicare and Medicaid programs. Provision and Allowance for Doubtful Accounts – To provide for accounts receivable that could become uncollectible in the future, the Company establishes an allowance for doubtful accounts to reduce the carrying value of such receivables to their estimated net realizable value. The primary uncertainty lies with uninsured patient receivables and deductibles, co-payments or other amounts due from individual patients. The Company has an established process to determine the adequacy of the allowance for doubtful accounts that relies on a number of analytical tools and benchmarks to arrive at a reasonable allowance. No single statistic or measurement determines the adequacy of the allowance for doubtful accounts. Some of the analytical tools that the Company utilizes include, but are not limited to, the aging of accounts receivable, historical cash collection experience, revenue trends by payor classification, revenue days in accounts receivable, the status of claims submitted to third party payors, reason codes for declined claims and an assessment of the Company’s ability to address the issue and resubmit the claim and whether a patient is on a payment plan and making payments consistent with that plan. Accounts receivable are written off after collection efforts have been followed in accordance with the Company’s policies. Due to the nature of the healthcare industry and the reimbursement environment in which the Company operates, certain estimates are required to record net revenues and accounts receivable at their net realizable values at the time products or services are provided. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available, which could have a material impact on the Company’s operating results and cash flows in subsequent periods. Specifically, the complexity of many third-party billing arrangements and the uncertainty of reimbursement amounts for certain services from certain payors may result in adjustments to amounts originally recorded. The patient and their third party insurance provider typically share in the payment for the Company’s products and services. The amount patients are responsible for includes co-payments, deductibles, and amounts not covered due to the provider being out-of-network. Due to uncertainties surrounding deductible levels and the number of out-of-network patients, the Company is not certain of the full amount of patient responsibility at the time of service. The Company estimates amounts due from patients prior to service and generally collects those amounts prior to service. Remaining amounts due from patients are then billed following completion of service. The activity in the allowance for doubtful accounts for the nine months ending September 30, 2015 follows: 2015 Balance at beginning of period $ 1,742,000 Provisions recognized as reduction in revenues 4,001,230 Write-offs, net of recoveries (4,559,230 ) Balance at end of period $ 1,184,000 Cash and cash equivalents – The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. Certificates of deposit with original maturities of more than three months are also considered cash equivalents if there are no restrictions on withdrawing funds from the account. Restricted Cash – As of September 30, 2015 and December 31, 2014, the Company had restricted cash of approximately $0.5 million and $0.7 million respectively, included in prepaid and other current assets in the accompanying consolidated balance sheets. The restricted cash is pledged as collateral against certain debt of the Company. Goodwill and Intangible Assets – The Company evaluates goodwill for impairment at least on an annual basis and more frequently if certain indicators are encountered. Goodwill is to be tested at the reporting unit level, defined as an ASC or hospital (referred to as a component), with the fair value of the reporting unit being compared to its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to be impaired. The Company will complete its annual impairment test in December 2015. Intangible assets other than goodwill which include physician membership interests, service contracts and covenants not to compete are amortized over their estimated useful lives using the straight line method. The remaining lives range from three to eight years. The Company evaluates the recoverability of identifiable intangible asset whenever events or changes in circumstances indicate that an intangible asset’s carrying amount may not be recoverable. Net income (loss) per share – Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted during the period. Dilutive securities having an anti-dilutive effect on diluted loss per share are excluded from the calculation. Recently Adopted and Recently Issued Accounting Guidance Adopted Guidance On January 1, 2015, the Company adopted changes issued by the Financial Accounting Standards Board (“FASB”) to the reporting of discontinued operations and disclosures of disposals of components of an entity. These changes require a disposal of a component to meet a higher threshold in order to be reported as a discontinued operation in an entity’s financial statements. The threshold is defined as a strategic shift that has, or will have, a major effect on an entity’s operations and financial results such as a disposal of a major geographical area or a major line of business. Additionally, the following two criteria have been removed from consideration of whether a component meets the requirements for discontinued operations presentation: (i) the operations and cash flows of a disposal component have been or will be eliminated from the ongoing operations of an entity as a result of the disposal transaction, and (ii) an entity will not have any significant continuing involvement in the operations of the disposal component after the disposal transaction. Furthermore, equity method investments now may qualify for discontinued operations presentation. These changes also require expanded disclosures for all disposals of components of an entity, whether or not the threshold for reporting as a discontinued operation is met, related to profit or loss information and/or asset and liability information of the component. The adoption of these changes had no impact on the Company’s consolidated financial statements. Issued Guidance In January 2015, the FASB issued changes to the presentation of extraordinary items. Such items are defined as transactions or events that are both unusual in nature and infrequent in occurrence, and, currently, are required to be presented separately in an entity’s income statement, net of income tax, after income from continuing operations. The changes eliminate the concept of an extraordinary item and, therefore, the presentation of such items will no longer be required. Notwithstanding this change, an entity will still be required to present and disclose a transaction or event that is both unusual in nature and infrequent in occurrence in the notes to the financial statements. These changes become effective for the Company on January 1, 2016. Management has determined that the adoption of these changes will not have an impact on the Company’s consolidated financial statements. In February 2015, the FASB issued changes to the analysis that an entity must perform to determine whether it should consolidate certain types of legal entities. These changes (i) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities, (ii) eliminate the presumption that a general partner should consolidate a limited partnership, (iii) affect the consolidation analysis of reporting entities that are involved with variable interest entities, particularly those that have fee arrangements and related party relationships, and (iv) 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 of the Investment Company Act of 1940 for registered money market funds. These changes become effective for us on January 1, 2016. Management is currently evaluating the potential impact of these changes on the Company’s consolidated financial statements. In April 2015, the FASB issued changes to the presentation of debt issuance costs. Currently, such costs are required to be presented as a noncurrent asset in an entity’s balance sheet and amortized into interest expense over the term of the related debt instrument. The changes require that debt issuance costs be presented in an entity’s balance sheet as a direct deduction from the carrying value of the related debt liability. The amortization of debt issuance costs remains unchanged. These changes become effective for the Company on January 1, 2016. Management has determined that the adoption of these changes will result in a decrease of approximately $226,000 to both other assets and long-term debt, less amount due within one year of the accompanying consolidated balance sheet. In July 2015, the FASB issued changes to the subsequent measurement of inventory. Currently, an entity is required to measure its inventory at the lower of cost or market, whereby market can be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. The changes require that inventory be measured at the lower of cost and net realizable value, thereby eliminating the use of the other two market methodologies. Net realizable value is defined as the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. These changes do not apply to inventories measured using LIFO (last-in, first-out) or the retail inventory method. Currently, the Company applies the net realizable value market option to measure its inventories at the lower of cost or market. These changes become effective for the Company on January 1, 2017. Management has determined that the adoption of these changes will not have an impact on the Company’s consolidated financial statements. In May 2014, the FASB issued changes to the recognition of revenue from contracts with customers. These changes created a comprehensive framework for all entities in all industries to apply in the determination of when to recognize revenue, and, therefore, supersede virtually all existing revenue recognition requirements and guidance. This framework is expected to result in less complex guidance in application while providing a consistent and comparable methodology for revenue recognition. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this principle, an entity should apply the following steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract(s), (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract(s), and (v) recognize revenue when, or as, the entity satisfies a performance obligation. These changes become effective for the Company on January 1, 2018. Management is currently evaluating the potential impact of these changes on the Company’s consolidated financial statements. In August 2014, the FASB issued changes to the disclosure of uncertainties about an entity’s ability to continue as a going concern. Under GAAP, continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity’s liquidation becomes imminent. Even if an entity’s liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. Because there is no guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related note disclosures, there is diversity in practice with respect to whether, when, and how an entity discloses the relevant conditions and events in its financial statements. As a result, these changes require an entity’s management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that financial statements are issued. Substantial doubt is defined as an indication that it is probable that an entity will be unable to meet its obligations as they become due within one year after the date that financial statements are issued. If management has concluded that substantial doubt exists, then the following disclosures should be made in the financial statements: (i) principal conditions or events that raised the substantial doubt, (ii) management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations, (iii) management’s plans that alleviated the initial substantial doubt or, if substantial doubt was not alleviated, management’s plans that are intended to at least mitigate the conditions or events that raise substantial doubt, and (iv) if the latter in (iii) is disclosed, an explicit statement that there is substantial doubt about the entity’s ability to continue as a going concern. These changes become effective for the Company for the 2016 annual period. Management has determined that the adoption of these changes will not have an impact on the Company’s consolidated financial statements. Subsequent to adoption, this guidance will need to be applied by management at the end of each annual period and interim period therein to determine what, if any, impact there will be on the consolidated financial statements in a given reporting period. |
Divestitures
Divestitures | 9 Months Ended |
Sep. 30, 2015 | |
Divestitures [Abstract] | |
Divestitures | Note 4 – Divestitures On July 15, 2015, we sold our 10% interest in the Kirby Glen Surgery, LLC, one of our Equity Owned ASCs located in Houston, Texas. We received $0.2 million in combined proceeds for the sale of the equity interest and termination of our management agreement. On June 12, 2015, the Company executed an agreement pursuant to which the Company sold a portion of its 20% equity investment in Grayson County Physician Property, LLC (“GCPP”) through a series of transactions. In conjunction with the sale, the management agreement under which the Company provided certain services including billing and collections, general management services, legal support, and accounting services was terminated. The Company’s decision to sell the assets of GCPP was part of the Company’s strategic plan to focus on the growth of its majority owned surgical hospital businesses. The company received $7.8 million of proceeds as a result of the sale and $0.5 million for the termination of the management agreement. The Company used $7.0 million of these proceeds to reduce the Company’s principal balance of the note held by Bank SNB (the Company’s senior lender). The remainder of the proceeds will be used for working capital needs and possible future acquisitions. See Note 5 – Discontinued Operations for additional information. On March 31, 2015, Houston Orthopedic Surgical Hospital, L.L.C. (“HOSH”), our Equity Owned hospital in Houston, Texas, sold substantially all of its assets under an asset purchase agreement. Given that we do not exhibit control with our 20% investment in HOSH, we account for our investment on a cost or cash basis. As a result of the HOSH sale, our equity ownership was redeemed on May 12, 2015 for $1.2 million. |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2015 | |
Discontinued Operations And Disposal Groups [Abstract] | |
Discontinued Operations | Note 5 – Discontinued Operations The partial sale of GCPP in June 2015 was part of the Company’s strategic plan to focus on majority owned investments. As a result, the proceeds from the sale, the remaining equity ownership, and the results of operations and cash flows related to the equity investment in GCPP for all periods presented have been classified as discontinued operations. Therefore, the Company reclassified $2.2 million from equity method investments in affiliates to other assets from discontinued operations as of December 31, 2014. In addition, the Company reclassified $0.1 million and $0.3 million from equity in earnings from affiliates to income from discontinued operations, net of tax, for the three and nine month periods ending September 30, 2014. In 2013, the Company committed to a plan to divest of or close certain sleep diagnostic and sleep therapy locations. The decision was based on a combination of the financial performance of the facilities and the shift in focus to surgical hospitals. As a result of the pending closure or sale of these locations, the related assets, liabilities, results of operations and cash flows were classified as discontinued operations which were acquired by the Company in the reverse acquisition. Under this plan, from July 2013 to October 2013, the Company closed or sold 24 sleep diagnostic locations including both stand alone and contracted locations in Georgia, Iowa, Kansas, Missouri, Nevada, Oklahoma and Texas and 5 sleep therapy locations in Iowa, Kansas, Nevada, Oklahoma and Texas. The operating results for the Company’s discontinued operations for the nine months ended September 30, 2015 and 2014 are summarized below: 2015 2014 Revenues: Equity in earnings of GCCP $ 25,033 $ 287,527 Sleep operations — 123,729 Total revenues $ 25,033 $ 411,256 Net income (loss) before taxes: GCCP $ 25,033 $ 287,527 Sleep operations (36,242 ) (812,247 ) Gain on sale of equity investment in GCCP 6,331,048 — Income tax (provision) benefit (2,514,038 ) 191,424 Net income (loss) from discontinued operations, net of tax $ 3,805,801 $ (333,296 ) The balance sheet items for the Company’s discontinued operations are summarized below: September 30, 2015 December 31, 2014 Cash and cash equivalents $ 4,197 $ 8,148 Other current assets 241,814 334,293 Total current assets 246,011 342,441 Equity method investments 691,709 2,164,110 Fixed assets, net 100,475 165,285 Total assets $ 1,038,195 $ 2,671,836 Payables and accrued liabilities 594,521 839,791 Income taxes payable 800,000 — Total liabilities $ 1,394,521 $ 839,791 |
Equity Investments in Affiliate
Equity Investments in Affiliates | 9 Months Ended |
Sep. 30, 2015 | |
Investments In And Advances To Affiliates Schedule Of Investments [Abstract] | |
Equity Investments in Affiliates | Note 6 – Equity Investments in Affiliates The Company invests in non-majority interests in its Affiliates. The Company’s equity investments and respective ownership interest as of September 30, 2015 and December 31, 2014 are as follows: Ownership % September December 31, Affiliate Location 2015 2014 Surgical Hospitals: Grayson County Physicians Property, LLC Sherman, TX 0% 20% Houston Orthopedic Hospital, LLC Houston, TX 0% 20% Summit Medical Center Edmond, OK 8% 0% ASCs: Foundation Surgery Affiliate of Nacogdoches, LLP Nacogdoches, TX 13% 13% Kirby Glenn Surgery Center Houston, TX 0% 10% Park Ten Surgery Center Houston, TX 10% 10% Foundation Surgery Affiliate of Middleburg Heights, LLC Middleburg Heights, OH 10% 10% Foundation Surgery Affiliate of Huntingdon Valley, LP Huntingdon Valley, PA 20% 20% New Jersey Surgery Center, LLC Mercerville, NJ 10% 10% Foundation Surgery Affiliate of Northwest Oklahoma City, LLC Oklahoma City, OK 0% 20% Cumberland Valley Surgery Center, LLC Hagerstown, MD 32% 32% Frederick Surgical Center, LLC Frederick, MD 20% 20% The results of operations for the nine months ended September 30, 2015 and 2014, of the Company’s equity investments in Affiliates are as follows: 2015 2014 Net operating revenues $ 35,389,891 $ 65,165,852 Net income $ 7,532,487 $ 25,171,091 The results of financial position as of September 30, 2015 and December 31, 2014, of the Company’s equity investments in Affiliates are as follows: September 30, December 31, 2015 2014 Current assets $ 10,254,448 $ 12,458,663 Noncurrent assets 6,207,667 8,116,883 Total assets $ 16,462,115 $ 20,575,546 Current liabilities $ 4,839,509 $ 4,254,254 Noncurrent liabilities 2,146,579 1,928,324 Total liabilities $ 6,986,088 $ 6,182,578 Members' equity $ 9,476,027 $ 14,392,968 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangibles | Note 7 – Goodwill and Other Intangibles Changes in the carrying amount of goodwill are as follows: Accumulated Net Gross Impairment Carrying Amount Loss Value December 31, 2014 $ 23,019,309 $ (22,045,382 ) $ 973,927 September 30, 2015 $ 23,019,309 $ (22,045,382 ) $ 973,927 Goodwill and intangible assets with indefinite lives must be tested for impairment at least once a year. Carrying values are compared with fair values, and when the carrying value exceeds the fair value, the carrying value of the impaired asset is reduced to its fair value. The Company tests goodwill for impairment on an annual basis in the fourth quarter or more frequently if management believes indicators of impairment exist. The performance of the test involves a two-step process. The first step of the impairment test involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. The Company generally determines the fair value of its reporting units using the income approach methodology of valuation that includes the discounted cash flow method as well as other generally accepted valuation methodologies. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, the Company performs the second step of the goodwill impairment test to determine the amount of impairment loss. The second step of the goodwill impairment test involves comparing the implied fair value of the affected reporting unit’s goodwill with the carrying value of that goodwill. Changes in the carrying amount of intangible assets during the nine months ended September 30, 2015 were as follows: Carrying Accumulated Amount Amortization Net December 31, 2014 $ 14,524,500 $ (5,444,105 ) $ 9,080,395 Amortization — (1,543,668 ) (1,543,668 ) September 30, 2015 $ 14,524,500 $ (6,987,773 ) $ 7,536,727 Intangible assets as of September 30, 2015 and December 31, 2014 include the following: September 30, 2015 December 31, Useful Carrying Accumulated 2014 Life (Years) Value Amortization Net Net Management fee contracts 6 - 8 $ 3,498,500 $ (2,496,059 ) $ 1,002,441 $ 1,328,593 Non-compete 5 2,027,000 (1,154,296 ) 872,704 1,177,333 Physician memberships 7 6,468,000 (2,695,000 ) 3,773,000 4,466,000 Trade Name 5 381,000 (169,205 ) 211,795 270,038 Service Contracts 10 2,150,000 (473,213 ) 1,676,787 1,838,431 $ 14,524,500 $ (6,987,773 ) $ 7,536,727 $ 9,080,395 Amortization expense for the three months ended September 30, 2015 and 2014 was $514,553 and $514,969, respectively. Amortization expense for the nine months ended September 30, 2015 and 2014 was $1,543,668 and $1,542,704, respectively. Amortization expense for the next five years related to these intangible assets is expected to be as follows: Twelve months ended September 30, 2016 $ 2,057,698 2017 2,057,698 2018 1,388,544 2019 1,139,000 2020 292,000 Thereafter 601,787 |
Borrowings and Capital Lease Ob
Borrowings and Capital Lease Obligations | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Borrowings and Capital Lease Obligations | Note 8 – Borrowings and Capital Lease Obligations The Company’s short-term debt obligations are as follows: Rate (1) September 30, 2015 December 31, 2014 Insurance premium financings 3.9 - 4.9% $ 398,207 $ 456,784 Line of credit - senior lender 3.0% — — Short-term debt $ 398,207 $ 456,784 (1) Effective rate as of September 30, 2015 The Company’s long-term debt and capital lease obligations are as follows: Rate (1) Maturity Date September 30, 2015 December 31, 2014 Senior Lender: Note payable 3.5% Jul. 2021 $ 16,874,395 $ 25,750,000 Line of credit 3.0% May 2017 2,485,170 — Capital Lease Obligations 5.5 - 10.7% Jan. 2017 - Dec. 2020 3,788,125 4,010,767 Total 23,147,690 29,760,767 Less: Current portion of long-term debt (4,828,974 ) (5,023,048 ) Long-term debt $ 18,318,716 $ 24,737,719 (1) Effective rate as of September 30, 2015 SNB Credit Facility Effective June 30, 2014, the Company entered into a Loan Agreement with Bank SNB, National Association, and Texas Capital Bank, together referred to as Lenders and collectively the agreement is referred to as the SNB Credit Facility. The SNB Credit Facility was used to consolidate substantially all of the Company’s and its subsidiaries’ debt in the principal amount of $27.5 million, which is referred to as the Term Loan, and provides for an additional revolving loan in the amount of $2.5 million, which is referred to as the Revolving Loan. As of September 30, 2015, the Company has drawn $2.5 million of funds from the Revolving Loan. The Company also entered into a number of ancillary agreements in connection with the SNB Credit Facility, including deposit account control agreements, subsidiary guarantees, security agreements and promissory notes. Maturity Dates. The Term Loan matures on June 30, 2021 and the Revolving Loan matures on May 31, 2017. Interest Rates. The interest rate for the Term Loan and Revolving Loan is 30-day LIBOR plus the Applicable Margins based on the Company’s Senior Debt Ratio, as defined. The Applicable Margins are as follows: Applicable Margin Senior Debt Ratio Revolving Loan Term Loan ≥ 2.5x 3.75% 4.25% < 2.5x, but ≥ 2.0x 3.25% 3.75% < 2.0 x 2.75% 3.25% The Applicable Margins are adjusted on a quarterly basis based on the Company’s senior debt ratio. The Senior Debt Ratio is calculated by dividing all of the Company’s indebtedness, including capital leases, which is secured by a lien or security interest in any of the Company’s assets by the Company’s EBITDA for the preceding four fiscal quarters. EBITDA is defined in the SNB Credit Facility as the Company’s net income calculated before interest expense, provision for income taxes, depreciation and amortization expenses, stock compensation, gains arising from the write-up of assets, extraordinary gains and any one-time expenses approved by Bank SNB. Interest and Principal Payments . The Company is required to make quarterly payments of principal and interest on the Term Loan. The first four quarterly payments on the Term Loan are $875,000 plus all accrued and unpaid interest. Each subsequent quarterly payment will be $1,000,000 plus all accrued and unpaid interest. The Company is required to make quarterly payments on the Revolving Loan equal to the accrued and unpaid interest. All unpaid principal and interest on the Term Loan and Revolving Loan must be paid on the respective maturity dates of June 30, 2021 and May 31, 2017. Permitted Acquisitions. The Company must obtain the Lenders approval for any acquisition, merger or consolidation in which the consideration paid for the acquisition, merger or consolidation is in excess of $1.0 million or for any acquisition, merger or consolidation in which the target entity’s operating income for the preceding 12 month period is less than zero. Mandatory Prepayments. If the Company sells any assets in excess of $100,000 or collectively sells any assets in a 12 month period in excess of $100,000, the Company must make a prepayment equal to the net proceeds of the asset sale(s). If the Company receives proceeds from a debt or equity offering that is not used for a permitted acquisition over a 12 month period following the offering or for repayment of the Company’s preferred noncontrolling interests, the Company must make a prepayment equal to the net proceeds of the debt or equity offering. Subsequent to the completion of the Company’s annual audited financial statements, the Company must make a prepayment equal to 30% of its Excess Cash Flow which is defined as the amount of EBITDA (as defined in the SNB Credit Facility) for the fiscal year that exceeds the sum of debt service payments plus capital expenditures plus cash payments for federal, state and local income taxes, plus distributions made by the hospitals that the Company holds a noncontrolling interest (“Equity Owned Hospitals”) to persons other than the Company. Waiver of Regular Payment and Mandatory Prepayment. The sale of the Company’s equity investment in GCPP in June 2015 triggered a mandatory payment under the Term Loan and the Company accordingly paid down the Term Loan by $7.0 million. As a result of the pay down, Bank SNB agreed to waive the Company’s regular quarterly payment due on June 30, 2015 of $1.2 million ($0.9 million principal plus interest of $0.3 million), and the mandatory prepayment due on June 30, 2015 of $0.5 million for the Excess Cash Flow related to the year ended December 31, 2014. Voluntary Prepayments. The Company may prepay amounts under the Term Loan at any time provided that the Company is required to pay a prepayment penalty of 2% of the amount prepaid if payment is made prior to the first anniversary, 1.5% if the prepayment is made after the first anniversary but prior to the second anniversary and 1% if the prepayment is made after the second anniversary but prior to the maturity date. The Company may prepay amounts under the Revolving Loan at any time without penalty. Guaranties. Each of the Company’s direct or indirect wholly-owned subsidiaries jointly and severally and unconditionally guaranty payment of the Company’s obligations owed to Lenders. Financial Covenants: Senior Debt Ratio. The Company must maintain a Senior Debt Ratio not in excess of 3.00 to 1.00 as of the end of each fiscal quarter beginning with the quarter ending June 30, 2014. As of September 30, 2015, the Senior Debt Ratio was 1.51. Senior Debt Service Coverage Ratio. The Company must maintain a Senior Debt Service Coverage Ratio of not less than 1.30 to 1.00 as of the end of each fiscal quarter beginning with the quarter ending September 30, 2014. The Senior Debt Service Coverage ratio is the ratio of EBITDA (as defined in the SNB Credit Facility) for the preceding four fiscal quarters minus cash payments for federal, state and local taxes, minus capital expenditures to the Company’s debt service payments for the same period. As of September 30, 2015, the Senior Debt Service Coverage Ratio was 2.02. Adjusted Senior Debt Service Coverage Ratio. The Company must maintain an Adjusted Senior Debt Service Coverage Ratio of not less than 1.05 to 1.00 as of the end of each fiscal quarter beginning with the quarter ending September 30, 2014. The Adjusted Senior Debt Service Coverage Ratio is the ratio of EBITDA (as defined in the SNB Credit Facility) for the preceding four fiscal quarters minus cash payments for federal, state and local taxes, minus capital expenditures, plus distributions made to the Company’s preferred noncontrolling interest holders, plus distributions made by the Company’s Equity Owned Hospitals to persons other than the Company to the Company’s debt service payments for the same period. As of September 30, 2015, the Adjusted Senior Debt Service Ratio was 1.16. As of September 30, 2015, the Company is in compliance with the financial covenants. Restrictions on Indebtedness. The Company and its Equity Owned Hospitals are not allowed to create any indebtedness other than indebtedness for the purchase of fixed assets not exceeding $500,000 in any fiscal year, trade payables incurred in the ordinary course of business and not past due, contingent obligations and unsecured indebtedness not exceeding $100,000 in the aggregate at any time outstanding. Use of Proceeds. All proceeds of the Term Loan were used solely for the refinancing of existing indebtedness. The proceeds of the Revolving Loan will be used for working capital. Collateral. Payment and performance of the Company’s obligations under the SNB Credit Facility are secured in general by all of the Company’s assets. Defaults and Remedies. In addition to the general defaults of failure to perform the Company’s obligations under the Loan Agreement, events of default also include the occurrence of a change in control, as defined, and the loss of the Company’s Medicare or Medicaid certification, collateral casualties, entry of a judgment of $150,000 or more, failure of first liens on collateral and the termination of any of the Company’s management agreements that represent more than 10% of the Company’s management fees for the preceding 18 month period. In the event of a monetary default, all of the Company’s obligations due under the SNB Credit Facility shall become immediately due and payable. In the event of a non-monetary default, the Company has 10 days or in some cases three days to cure before Bank SNB has the right to declare the Company’s obligations due under the SNB Credit Facility immediately due and payable. At September 30, 2015, future maturities of long-term debt were as follows: Twelve months ended September 30: 2016 $ 4,828,974 2017 7,216,540 2018 4,664,753 2019 3,323,575 2020 1,986,188 Thereafter 1,127,660 |
Preferred Noncontrolling Intere
Preferred Noncontrolling Interests | 9 Months Ended |
Sep. 30, 2015 | |
Noncontrolling Interest [Abstract] | |
Preferred Noncontrolling Interests | Note 9 – Preferred Noncontrolling Interests During 2013, the Company’s wholly-owned subsidiary, Foundation Health Enterprises, LLC (“FHE”) completed a private placement offering of $9,135,000. The offering was comprised of 87 units (“FHE Unit” or “preferred noncontrolling interest”). Each FHE Unit was offered at $105,000 and entitled the purchaser to one (1) Class B membership interest in FHE, valued at $100,000, and 1,000 shares of the Company’s common stock, valued at $5,000. The total consideration of $9,135,000 was comprised of $8,700,000 attributable to the preferred noncontrolling interest and $435,000 attributable to the 87,000 shares of the Company’s common stock. The FHE Units provide for a cumulative preferred annual return of 9% on the amount allocated to the Class B membership interests. The FHE Units will be redeemed by FHE in four annual installments beginning in July 2014. The FHE Unit holders agreed to defer the first installment payment until March 2015. The first installment was paid on April 1, 2015. The first three installments shall be in the amount of $10,000 per FHE Unit and the fourth installment will be in the amount of the unreturned capital contribution and any undistributed preferred distributions. The FHE Units are convertible at the election of the holder at any time prior to the complete redemption into restricted common shares of the Company at a conversion price of $20.00 per share. Since the FHE Units have a redemption feature and a conversion feature which the Company determined to be substantive, the preferred noncontrolling interests has been recorded at the mezzanine level in the accompanying consolidated balance sheets and the corresponding dividends are recorded as a reduction of accumulated deficit. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10 – Commitments and Contingencies Legal claims – The Company is exposed to asserted and unasserted legal claims encountered in the normal course of business, including claims for damages for personal injuries, medical malpractice, breach of contracts, wrongful restriction of or interference with physicians’ staff privileges and employment related claims. In certain of these actions, plaintiffs request payment for damages, including punitive damages that may not be covered by insurance. Management believes that the ultimate resolution of these matters will not have a material adverse effect on the operating results or the financial position of the Company. There were no settlement expenses during the three months ended September 30, 2015 and 2014 related to the Company’s ongoing unasserted legal claims. Self-insurance – Effective January 1, 2014, the Company began using a combination of insurance and self-insurance for employee-related healthcare benefits. The self-insurance liability is determined actuarially, based on the actual claims filed and an estimate of incurred but not reported claims. Self-insurance reserves as of September 30, 2015 and December 31, 2014 were $400,784 and $560,851, respectively, and are included in accrued liabilities in the accompanying consolidated balance sheets. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 11 – Fair Value Measurements Fair value is the price that would be received from the sale of an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market in an orderly transaction between market participants. In determining fair value, the accounting standards established a three-level hierarchy that distinguishes between (i) market data obtained or developed from independent sources (i.e., observable data inputs) and (ii) a reporting entity’s own data and assumptions that market participants would use in pricing an asset or liability (i.e., unobservable data inputs). Financial assets and financial liabilities measured and reported at fair value are classified in one of the following categories, in order of priority of observability and objectivity of pricing inputs: · Level 1 – Fair value based on quoted prices in active markets for identical assets or liabilities. · Level 2 – Fair value based on significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market data. · Level 3 – Fair value based on prices or valuation techniques that require significant unobservable data inputs. Inputs would normally be a reporting entity’s own data and judgments about assumptions that market participants would use in pricing the asset or liability. The fair value measurement level for an asset or liability is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques should maximize the use of observable inputs and minimize the use of unobservable inputs. Recurring Fair Value Measurements: The carrying value of the Company’s financial assets and financial liabilities is their cost, which may differ from fair value. The carrying value of cash held as demand deposits, money market and certificates of deposit, accounts receivable, short-term borrowings, accounts payable and accrued liabilities approximated their fair value. At June 30, 2015, the fair value of the Company’s long-term debt, including the current portion was determined to be approximately equal to its carrying value. Nonrecurring Fair Value Measurements: During the nine months ended September 30, 2015, the Company did not have any assets or liabilities recorded using nonrecurring fair value measurements. |
Real Estate Transaction
Real Estate Transaction | 9 Months Ended |
Sep. 30, 2015 | |
Real Estate [Abstract] | |
Real Estate Transaction | Note 12 – Real Estate Transaction On March 1, 2014, the Company executed a 15 year master lease on the building occupied by the Company’s hospital subsidiary in San Antonio, Texas (“FBH SA”) for an annual rent of $2.3 million with annual escalations of 3%. The current lease income on the underlying sub-lease is approximately $2.1 million per year which includes the rent paid by FBH SA. The master lease is an operating lease. In conjunction with the master lease and certain other agreements with the landlord, the Company received $4.1 million at the time of the lease. Given the disparity between the annual rent expense under the master lease and the rental income of the underlying sub-lease, the cash received at the execution of the lease was deferred and will be recorded on a straight-line basis as a reduction in the rent expense under the master lease. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 13 – Related Party Transactions Effective June 1, 2014, the Company’s hospital subsidiary located in El Paso, Texas entered into a sublease agreement with The New Sleep Lab International, Ltd., referred to as New Sleep. New Sleep is controlled by Dr. Robert Moreno, one of our Directors. The sublease with New Sleep calls for monthly rent payments of $8,767 and the sublease expires on November 30, 2018. The space subleased from New Sleep will be sublet to physician partners and casual uses of our hospital and is located in a building that also houses one of our imaging facilities. During the nine months ended September 30, 2015, the Company incurred approximately $81,400 in lease expense under the terms of the lease. As of September 30, 2015, the Company had $0.4 million on deposit at Valliance Bank. Valliance Bank is controlled by Mr. Roy T. Oliver, one of our greater than 5% shareholders. A noncontrolling interest in Valliance Bank is held by Mr. Joseph Harroz, Jr., a director of the Company. Mr. Stanton Nelson, the Company’s Chief Executive Officer and Mr. Harroz also serve as directors of Valliance Bank. The Company had office space subject to a lease agreement with City Place, LLC (“City Place”). Under the lease agreement, the Company paid monthly rent of $17,970 until June 30, 2014; $0 from July 1, 2014 to January 31, 2015 and $17,970 from February 1, 2015 to May 31, 2015 plus additional payments for allocable basic expenses of City Place; the lease was terminated early effective May 31, 2015, in which the Company agreed to pay $89,850 in five equal monthly installments of $17,970 ending October 31, 2015. A noncontrolling interest in City Place is held by Roy T. Oliver, one of the Company’s greater than 5% shareholders. During the nine months ended September 30, 2015 and 2014, the Company incurred approximately $53,900 and $70,000, respectively, in lease expense under the terms of the lease. As of September 30, 2015 and December 31, 2014, the Company has obligations of $1.3 million that are owed to the Company’s majority shareholder, Foundation Healthcare Affiliates, LLC (“FHA”) and certain real estate subsidiaries and affiliates of FHA related to transactions that occurred prior to the Foundation acquisition in July 2013. The amounts owed to FHA and FHA affiliates are included in other liabilities on the accompanying consolidated balance sheets. The Company has entered into agreements with certain of its Affiliate ASCs and hospitals to provide management services. As compensation for these services, the surgery centers and hospitals are charged management fees which are either fixed or are based on a percentage of the Affiliates cash collected or the Affiliates net revenue. The percentages range from 2.25% to 6.0%. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 14 – Subsequent Events Management evaluated all activity of the Company and concluded that no material subsequent events have occurred that would require recognition in the consolidated financial statements or disclosure in the notes to the consolidated financial statements. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Interim Financial Information | Interim Financial Information – The condensed consolidated financial statements included herein are unaudited and have been prepared in accordance with generally accepted accounting principles for interim financial statements and in accordance with Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months and nine months ended September 30, 2015 are not necessarily indicative of results that may be expected for the year ended December 31, 2015. The consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2014. The December 31, 2014 consolidated balance sheet was derived from audited financial statements. |
Consolidation | Consolidation – The accompanying consolidated financial statements include the accounts of the Company and its wholly owned, majority owned and controlled subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. The Company accounts for its investments in Affiliates in which the Company exhibits significant influence, but does not control, in accordance with the equity method of accounting. The Company does not consolidate its equity method investments, but rather measures them at their initial costs and then subsequently adjusts their carrying values through income for their respective shares of the earnings or losses during the period. The Company monitors its investments for other-than-temporary impairment by considering factors such as current economic and market conditions and the operating performance of the companies and records reductions in carrying values when necessary. |
Use of estimates | Use of estimates – The preparation of financial statements in conformity with generally accepted accounting principles requires management of the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Reclassifications | Reclassifications – Certain amounts presented in prior years have been classified to conform to the current year’s presentation. Such reclassifications had no effect on net income. |
Revenue recognition and accounts receivable | Revenue recognition and accounts receivable – The Company recognizes revenues in the period in which services are performed and billed. Accounts receivable primarily consist of amounts due from third-party payors and patients. The Company’s ability to collect outstanding receivables is critical to its results of operations and cash flows. Amounts the Company receives for treatment of patients covered by governmental programs such as Medicare and Medicaid and other third-party payors such as health maintenance organizations, preferred provider organizations and other private insurers are generally less than the Company’s established billing rates. Additionally, to provide for accounts receivable that could become uncollectible in the future, the Company establishes an allowance for doubtful accounts to reduce the carrying value of such receivables to their estimated net realizable value. Accordingly, the revenues and accounts receivable reported in the Company’s consolidated financial statements are recorded at the net amount expected to be received. |
Contractual Discounts and Cost Report Settlements | Contractual Discounts and Cost Report Settlements – The Company derives a significant portion of its revenues from Medicare, Medicaid and other payors that receive discounts from its established billing rates. The Company must estimate the total amount of these discounts to prepare its consolidated financial statements. The Medicare and Medicaid regulations and various managed care contracts under which these discounts must be calculated are complex and are subject to interpretation and adjustment. The Company estimates the allowance for contractual discounts on a payor-specific basis given its interpretation of the applicable regulations or contract terms. These interpretations sometimes result in payments that differ from the Company’s estimates. Additionally, updated regulations and contract renegotiations occur frequently, necessitating regular review and assessment of the estimation process by management. Changes in estimates related to the allowance for contractual discounts affect revenues reported in the Company’s accompanying consolidated statements of operations. Cost report settlements under reimbursement agreements with Medicare, Medicaid and Tricare are estimated and recorded in the period the related services are rendered and are adjusted in future periods as final settlements are determined. There is a reasonable possibility that recorded estimates will change by a material amount in the near term. The estimated net cost report settlements due to the Company were $418,055 and $617,955 as of September 30, 2015 and December 31, 2014 respectively, and are included in prepaid and other current assets in the accompanying consolidated balance sheets. We decreased our cost report estimate by $199,900 during the nine months ended September 30, 2015 based on settlements from our final filed cost report for 2014 and an estimate of the 2015 cost report. The Company’s management believes that adequate provisions have been made for adjustments that may result from final determination of amounts earned under these programs. Laws and regulations governing Medicare and Medicaid programs are complex and subject to interpretation. The Company believes that it is in compliance with all applicable laws and regulations and is not aware of any pending or threatened investigations involving allegations of potential wrongdoing that would have a material effect on the Company’s financial statements. Compliance with such laws and regulations can be subject to future government review and interpretation as well as significant regulatory action including fines, penalties and exclusion from the Medicare and Medicaid programs. |
Provision and Allowance for Doubtful Accounts | Provision and Allowance for Doubtful Accounts – To provide for accounts receivable that could become uncollectible in the future, the Company establishes an allowance for doubtful accounts to reduce the carrying value of such receivables to their estimated net realizable value. The primary uncertainty lies with uninsured patient receivables and deductibles, co-payments or other amounts due from individual patients. The Company has an established process to determine the adequacy of the allowance for doubtful accounts that relies on a number of analytical tools and benchmarks to arrive at a reasonable allowance. No single statistic or measurement determines the adequacy of the allowance for doubtful accounts. Some of the analytical tools that the Company utilizes include, but are not limited to, the aging of accounts receivable, historical cash collection experience, revenue trends by payor classification, revenue days in accounts receivable, the status of claims submitted to third party payors, reason codes for declined claims and an assessment of the Company’s ability to address the issue and resubmit the claim and whether a patient is on a payment plan and making payments consistent with that plan. Accounts receivable are written off after collection efforts have been followed in accordance with the Company’s policies. Due to the nature of the healthcare industry and the reimbursement environment in which the Company operates, certain estimates are required to record net revenues and accounts receivable at their net realizable values at the time products or services are provided. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available, which could have a material impact on the Company’s operating results and cash flows in subsequent periods. Specifically, the complexity of many third-party billing arrangements and the uncertainty of reimbursement amounts for certain services from certain payors may result in adjustments to amounts originally recorded. The patient and their third party insurance provider typically share in the payment for the Company’s products and services. The amount patients are responsible for includes co-payments, deductibles, and amounts not covered due to the provider being out-of-network. Due to uncertainties surrounding deductible levels and the number of out-of-network patients, the Company is not certain of the full amount of patient responsibility at the time of service. The Company estimates amounts due from patients prior to service and generally collects those amounts prior to service. Remaining amounts due from patients are then billed following completion of service. The activity in the allowance for doubtful accounts for the nine months ending September 30, 2015 follows: 2015 Balance at beginning of period $ 1,742,000 Provisions recognized as reduction in revenues 4,001,230 Write-offs, net of recoveries (4,559,230 ) Balance at end of period $ 1,184,000 |
Cash and cash equivalents | Cash and cash equivalents – The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. Certificates of deposit with original maturities of more than three months are also considered cash equivalents if there are no restrictions on withdrawing funds from the account. |
Restricted Cash | Restricted Cash – As of September 30, 2015 and December 31, 2014, the Company had restricted cash of approximately $0.5 million and $0.7 million respectively, included in prepaid and other current assets in the accompanying consolidated balance sheets. The restricted cash is pledged as collateral against certain debt of the Company. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets – The Company evaluates goodwill for impairment at least on an annual basis and more frequently if certain indicators are encountered. Goodwill is to be tested at the reporting unit level, defined as an ASC or hospital (referred to as a component), with the fair value of the reporting unit being compared to its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to be impaired. The Company will complete its annual impairment test in December 201 5. Intangible assets other than goodwill which include physician membership interests, service contracts and covenants not to compete are amortized over their estimated useful lives using the straight line method. The remaining lives range from three to eight years. The Company evaluates the recoverability of identifiable intangible asset whenever events or changes in circumstances indicate that an intangible asset’s carrying amount may not be recoverable. |
Net income (loss) per share | Net income (loss) per share – Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted during the period. Dilutive securities having an anti-dilutive effect on diluted loss per share are excluded from the calculation. |
Recently Adopted and Recently Issued Accounting Guidance | Recently Adopted and Recently Issued Accounting Guidance Adopted Guidance On January 1, 2015, the Company adopted changes issued by the Financial Accounting Standards Board (“FASB”) to the reporting of discontinued operations and disclosures of disposals of components of an entity. These changes require a disposal of a component to meet a higher threshold in order to be reported as a discontinued operation in an entity’s financial statements. The threshold is defined as a strategic shift that has, or will have, a major effect on an entity’s operations and financial results such as a disposal of a major geographical area or a major line of business. Additionally, the following two criteria have been removed from consideration of whether a component meets the requirements for discontinued operations presentation: (i) the operations and cash flows of a disposal component have been or will be eliminated from the ongoing operations of an entity as a result of the disposal transaction, and (ii) an entity will not have any significant continuing involvement in the operations of the disposal component after the disposal transaction. Furthermore, equity method investments now may qualify for discontinued operations presentation. These changes also require expanded disclosures for all disposals of components of an entity, whether or not the threshold for reporting as a discontinued operation is met, related to profit or loss information and/or asset and liability information of the component. The adoption of these changes had no impact on the Company’s consolidated financial statements. Issued Guidance In January 2015, the FASB issued changes to the presentation of extraordinary items. Such items are defined as transactions or events that are both unusual in nature and infrequent in occurrence, and, currently, are required to be presented separately in an entity’s income statement, net of income tax, after income from continuing operations. The changes eliminate the concept of an extraordinary item and, therefore, the presentation of such items will no longer be required. Notwithstanding this change, an entity will still be required to present and disclose a transaction or event that is both unusual in nature and infrequent in occurrence in the notes to the financial statements. These changes become effective for the Company on January 1, 2016. Management has determined that the adoption of these changes will not have an impact on the Company’s consolidated financial statements. In February 2015, the FASB issued changes to the analysis that an entity must perform to determine whether it should consolidate certain types of legal entities. These changes (i) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities, (ii) eliminate the presumption that a general partner should consolidate a limited partnership, (iii) affect the consolidation analysis of reporting entities that are involved with variable interest entities, particularly those that have fee arrangements and related party relationships, and (iv) 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 of the Investment Company Act of 1940 for registered money market funds. These changes become effective for us on January 1, 2016. Management is currently evaluating the potential impact of these changes on the Company’s consolidated financial statements. In April 2015, the FASB issued changes to the presentation of debt issuance costs. Currently, such costs are required to be presented as a noncurrent asset in an entity’s balance sheet and amortized into interest expense over the term of the related debt instrument. The changes require that debt issuance costs be presented in an entity’s balance sheet as a direct deduction from the carrying value of the related debt liability. The amortization of debt issuance costs remains unchanged. These changes become effective for the Company on January 1, 2016. Management has determined that the adoption of these changes will result in a decrease of approximately $226,000 to both other assets and long-term debt, less amount due within one year of the accompanying consolidated balance sheet. In July 2015, the FASB issued changes to the subsequent measurement of inventory. Currently, an entity is required to measure its inventory at the lower of cost or market, whereby market can be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. The changes require that inventory be measured at the lower of cost and net realizable value, thereby eliminating the use of the other two market methodologies. Net realizable value is defined as the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. These changes do not apply to inventories measured using LIFO (last-in, first-out) or the retail inventory method. Currently, the Company applies the net realizable value market option to measure its inventories at the lower of cost or market. These changes become effective for the Company on January 1, 2017. Management has determined that the adoption of these changes will not have an impact on the Company’s consolidated financial statements. In May 2014, the FASB issued changes to the recognition of revenue from contracts with customers. These changes created a comprehensive framework for all entities in all industries to apply in the determination of when to recognize revenue, and, therefore, supersede virtually all existing revenue recognition requirements and guidance. This framework is expected to result in less complex guidance in application while providing a consistent and comparable methodology for revenue recognition. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this principle, an entity should apply the following steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract(s), (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract(s), and (v) recognize revenue when, or as, the entity satisfies a performance obligation. These changes become effective for the Company on January 1, 2018. Management is currently evaluating the potential impact of these changes on the Company’s consolidated financial statements. In August 2014, the FASB issued changes to the disclosure of uncertainties about an entity’s ability to continue as a going concern. Under GAAP, continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity’s liquidation becomes imminent. Even if an entity’s liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. Because there is no guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related note disclosures, there is diversity in practice with respect to whether, when, and how an entity discloses the relevant conditions and events in its financial statements. As a result, these changes require an entity’s management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that financial statements are issued. Substantial doubt is defined as an indication that it is probable that an entity will be unable to meet its obligations as they become due within one year after the date that financial statements are issued. If management has concluded that substantial doubt exists, then the following disclosures should be made in the financial statements: (i) principal conditions or events that raised the substantial doubt, (ii) management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations, (iii) management’s plans that alleviated the initial substantial doubt or, if substantial doubt was not alleviated, management’s plans that are intended to at least mitigate the conditions or events that raise substantial doubt, and (iv) if the latter in (iii) is disclosed, an explicit statement that there is substantial doubt about the entity’s ability to continue as a going concern. These changes become effective for the Company for the 2016 annual period. Management has determined that the adoption of these changes will not have an impact on the Company’s consolidated financial statements. Subsequent to adoption, this guidance will need to be applied by management at the end of each annual period and interim period therein to determine what, if any, impact there will be on the consolidated financial statements in a given reporting period. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Allowance for Doubtful Accounts | The activity in the allowance for doubtful accounts for the nine months ending September 30, 2015 follows: 2015 Balance at beginning of period $ 1,742,000 Provisions recognized as reduction in revenues 4,001,230 Write-offs, net of recoveries (4,559,230 ) Balance at end of period $ 1,184,000 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Discontinued Operations And Disposal Groups [Abstract] | |
Operating Results and Balance Sheet Items of Discontinued Operations | The operating results for the Company’s discontinued operations for the nine months ended September 30, 2015 and 2014 are summarized below: 2015 2014 Revenues: Equity in earnings of GCCP $ 25,033 $ 287,527 Sleep operations — 123,729 Total revenues $ 25,033 $ 411,256 Net income (loss) before taxes: GCCP $ 25,033 $ 287,527 Sleep operations (36,242 ) (812,247 ) Gain on sale of equity investment in GCCP 6,331,048 — Income tax (provision) benefit (2,514,038 ) 191,424 Net income (loss) from discontinued operations, net of tax $ 3,805,801 $ (333,296 ) The balance sheet items for the Company’s discontinued operations are summarized below: September 30, 2015 December 31, 2014 Cash and cash equivalents $ 4,197 $ 8,148 Other current assets 241,814 334,293 Total current assets 246,011 342,441 Equity method investments 691,709 2,164,110 Fixed assets, net 100,475 165,285 Total assets $ 1,038,195 $ 2,671,836 Payables and accrued liabilities 594,521 839,791 Income taxes payable 800,000 — Total liabilities $ 1,394,521 $ 839,791 |
Equity Investments in Affilia23
Equity Investments in Affiliates (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Investments In And Advances To Affiliates Schedule Of Investments [Abstract] | |
Summary of Equity Investments and Ownership Interests | The Company invests in non-majority interests in its Affiliates. The Company’s equity investments and respective ownership interest as of September 30, 2015 and December 31, 2014 are as follows: Ownership % September December 31, Affiliate Location 2015 2014 Surgical Hospitals: Grayson County Physicians Property, LLC Sherman, TX 0% 20% Houston Orthopedic Hospital, LLC Houston, TX 0% 20% Summit Medical Center Edmond, OK 8% 0% ASCs: Foundation Surgery Affiliate of Nacogdoches, LLP Nacogdoches, TX 13% 13% Kirby Glenn Surgery Center Houston, TX 0% 10% Park Ten Surgery Center Houston, TX 10% 10% Foundation Surgery Affiliate of Middleburg Heights, LLC Middleburg Heights, OH 10% 10% Foundation Surgery Affiliate of Huntingdon Valley, LP Huntingdon Valley, PA 20% 20% New Jersey Surgery Center, LLC Mercerville, NJ 10% 10% Foundation Surgery Affiliate of Northwest Oklahoma City, LLC Oklahoma City, OK 0% 20% Cumberland Valley Surgery Center, LLC Hagerstown, MD 32% 32% Frederick Surgical Center, LLC Frederick, MD 20% 20% |
Summary of Unaudited Results of Operations and Financial Position of Equity Investments in Affiliates | The results of operations for the nine months ended September 30, 2015 and 2014, of the Company’s equity investments in Affiliates are as follows: 2015 2014 Net operating revenues $ 35,389,891 $ 65,165,852 Net income $ 7,532,487 $ 25,171,091 The results of financial position as of September 30, 2015 and December 31, 2014, of the Company’s equity investments in Affiliates are as follows: September 30, December 31, 2015 2014 Current assets $ 10,254,448 $ 12,458,663 Noncurrent assets 6,207,667 8,116,883 Total assets $ 16,462,115 $ 20,575,546 Current liabilities $ 4,839,509 $ 4,254,254 Noncurrent liabilities 2,146,579 1,928,324 Total liabilities $ 6,986,088 $ 6,182,578 Members' equity $ 9,476,027 $ 14,392,968 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Changes in Carrying Amount of Goodwill | Changes in the carrying amount of goodwill are as follows: Accumulated Net Gross Impairment Carrying Amount Loss Value December 31, 2014 $ 23,019,309 $ (22,045,382 ) $ 973,927 September 30, 2015 $ 23,019,309 $ (22,045,382 ) $ 973,927 |
Changes in Carrying Amount of Intangible Assets | Changes in the carrying amount of intangible assets during the nine months ended September 30, 2015 were as follows: Carrying Accumulated Amount Amortization Net December 31, 2014 $ 14,524,500 $ (5,444,105 ) $ 9,080,395 Amortization — (1,543,668 ) (1,543,668 ) September 30, 2015 $ 14,524,500 $ (6,987,773 ) $ 7,536,727 |
Intangible Assets | Intangible assets as of September 30, 2015 and December 31, 2014 include the following: September 30, 2015 December 31, Useful Carrying Accumulated 2014 Life (Years) Value Amortization Net Net Management fee contracts 6 - 8 $ 3,498,500 $ (2,496,059 ) $ 1,002,441 $ 1,328,593 Non-compete 5 2,027,000 (1,154,296 ) 872,704 1,177,333 Physician memberships 7 6,468,000 (2,695,000 ) 3,773,000 4,466,000 Trade Name 5 381,000 (169,205 ) 211,795 270,038 Service Contracts 10 2,150,000 (473,213 ) 1,676,787 1,838,431 $ 14,524,500 $ (6,987,773 ) $ 7,536,727 $ 9,080,395 |
Amortization Expense for Next Five Years Related to Intangible Assets | Amortization expense for the next five years related to these intangible assets is expected to be as follows: Twelve months ended September 30, 2016 $ 2,057,698 2017 2,057,698 2018 1,388,544 2019 1,139,000 2020 292,000 Thereafter 601,787 |
Borrowings and Capital Lease 25
Borrowings and Capital Lease Obligations (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Schedule of Short-Term Debt Obligations | The Company’s short-term debt obligations are as follows: Rate (1) September 30, 2015 December 31, 2014 Insurance premium financings 3.9 - 4.9% $ 398,207 $ 456,784 Line of credit - senior lender 3.0% — — Short-term debt $ 398,207 $ 456,784 (1) Effective rate as of September 30, 2015 |
Schedule of Applicable Margins Rate | The Applicable Margins are as follows: Applicable Margin Senior Debt Ratio Revolving Loan Term Loan ≥ 2.5x 3.75% 4.25% < 2.5x, but ≥ 2.0x 3.25% 3.75% < 2.0 x 2.75% 3.25% |
Future Maturities of Long-Term Debt | At September 30, 2015, future maturities of long-term debt were as follows: Twelve months ended September 30: 2016 $ 4,828,974 2017 7,216,540 2018 4,664,753 2019 3,323,575 2020 1,986,188 Thereafter 1,127,660 |
Continuing Operations | |
Schedule of Borrowings and Capital Lease Obligations | The Company’s long-term debt and capital lease obligations are as follows: Rate (1) Maturity Date September 30, 2015 December 31, 2014 Senior Lender: Note payable 3.5% Jul. 2021 $ 16,874,395 $ 25,750,000 Line of credit 3.0% May 2017 2,485,170 — Capital Lease Obligations 5.5 - 10.7% Jan. 2017 - Dec. 2020 3,788,125 4,010,767 Total 23,147,690 29,760,767 Less: Current portion of long-term debt (4,828,974 ) (5,023,048 ) Long-term debt $ 18,318,716 $ 24,737,719 (1) Effective rate as of September 30, 2015 |
Basis of Presentation - Additio
Basis of Presentation - Additional Information (Detail) | Jun. 12, 2015USD ($) | Jan. 08, 2015shares | May. 12, 2014 | Sep. 30, 2015USD ($)shares | Jun. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)shares | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($)shares | Dec. 29, 2014shares | Dec. 31, 2013USD ($) |
Basis of Presentation [Line Items] | |||||||||||
Cash and cash equivalents | $ 4,751,278 | $ 3,567,951 | $ 4,751,278 | $ 3,567,951 | $ 2,860,025 | $ 4,212,076 | |||||
Working capital, net of redemption payments | 5,000,000 | 5,000,000 | |||||||||
Redemption payments, payable to preferred noncontrolling interest holders | 900,000 | 900,000 | |||||||||
Income from continuing operations (before noncontrolling interests) | $ 3,097,905 | $ 1,646,310 | 5,288,092 | (1,126,654) | |||||||
Cash flow from operating activities from continuing operations | $ 6,448,855 | 2,385,165 | |||||||||
Cash flow from sale and redemption of certain equity investments | $ 7,800,000 | $ 9,500,000 | $ 178,000 | ||||||||
Common stock reverse split, conversion ratio | 0.1 | ||||||||||
Common stock, shares outstanding | shares | 17,263,842 | 17,273,180 | 17,273,180 | 17,263,842 | |||||||
Maximum | |||||||||||
Basis of Presentation [Line Items] | |||||||||||
Common stock reverse split, conversion ratio | 0.33 | ||||||||||
Minimum | |||||||||||
Basis of Presentation [Line Items] | |||||||||||
Common stock reverse split, conversion ratio | 0.1 | ||||||||||
Before Reverse Stock Split | |||||||||||
Basis of Presentation [Line Items] | |||||||||||
Common stock, shares outstanding | shares | 172,638,414 |
Summary of Significant Accoun27
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Summary Of Significant Accounting Policies [Line Items] | ||
Effect of reclassifications on net income | $ 0 | |
Decrease in cost report settlements | 199,900 | |
Estimated decrease in other assets and long-term debt due to adoption of new accounting pronouncement | $ 226,000 | |
Minimum | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Estimated useful lives | 3 years | |
Maximum | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Estimated useful lives | 8 years | |
Prepaid and Other Current Assets | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Cost settlements adjustment amount | $ 418,055 | $ 617,955 |
Restricted cash | $ 500,000 | $ 700,000 |
Allowance for Doubtful Accounts
Allowance for Doubtful Accounts (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Allowance For Doubtful Accounts Receivable Rollforward | ||||
Balance at beginning of period | $ 1,742,000 | |||
Provisions recognized as reduction in revenues | $ 1,402,684 | $ 1,562,147 | 4,001,230 | $ 2,799,237 |
Write-offs, net of recoveries | (4,559,230) | |||
Balance at end of period | $ 1,184,000 | $ 1,184,000 |
Divestitures - Additional Infor
Divestitures - Additional Information (Detail) - USD ($) | Jul. 15, 2015 | Jun. 12, 2015 | May. 12, 2015 | Jun. 30, 2015 | Sep. 30, 2014 |
Divestitures [Line Items] | |||||
Proceeds from sale of equity investment | $ 7,800,000 | $ 9,500,000 | $ 178,000 | ||
Proceeds from termination of management agreement | 500,000 | ||||
Bank SNB | |||||
Divestitures [Line Items] | |||||
Repayment of principal balance of notes | $ 7,000,000 | ||||
GCPP | |||||
Divestitures [Line Items] | |||||
Equity method investment percentage sold | 20.00% | ||||
Houston Texas | Kirby Glen Surgery, LLC | |||||
Divestitures [Line Items] | |||||
Equity method investment percentage sold | 10.00% | ||||
Proceeds from sale of equity investment | $ 200,000 | ||||
Houston Texas | Houston Orthopedic Surgical Hospital, L.L.C | |||||
Divestitures [Line Items] | |||||
Equity method investment percentage sold | 20.00% | ||||
Proceeds from sale of equity investment | $ 1,200,000 |
Discontinued Operations - Addit
Discontinued Operations - Additional Information (Detail) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014USD ($) | Oct. 31, 2013Location | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($) | |
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | ||||
Reclassification of equity method investments to other assets | $ | $ 2.2 | |||
Reclassification of earnings from affiliates to income | $ | $ 0.1 | $ 0.3 | ||
Sleep diagnostic locations | ||||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | ||||
Number of locations closed or sold | 24 | |||
Sleep Therapy Business | ||||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | ||||
Number of locations closed or sold | 5 |
Operating Results and Balance S
Operating Results and Balance Sheet Items of Discontinued Operations (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | |||||
Revenues | $ 25,033 | $ 411,256 | |||
Income tax (provision) benefit | (2,514,038) | 191,424 | |||
Income (loss) from discontinued operations, net of tax | $ 34,744 | $ (83,997) | 3,805,801 | (333,296) | |
Cash and cash equivalents | 4,197 | 4,197 | $ 8,148 | ||
Other current assets | 241,814 | 241,814 | 334,293 | ||
Total current assets | 246,011 | 246,011 | 342,441 | ||
Equity method investments | 691,709 | 691,709 | 2,164,110 | ||
Fixed assets, net | 100,475 | 100,475 | 165,285 | ||
Total assets | 1,038,195 | 1,038,195 | 2,671,836 | ||
Payables and accrued liabilities | 594,521 | 594,521 | 839,791 | ||
Income taxes payable | 800,000 | 800,000 | |||
Total liabilities | $ 1,394,521 | 1,394,521 | $ 839,791 | ||
GCPP | |||||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | |||||
Revenues | 25,033 | 287,527 | |||
Net income (loss) before taxes | 25,033 | 287,527 | |||
Gain on sale of equity investment in GCCP | 6,331,048 | ||||
Sleep Operations | |||||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | |||||
Revenues | 123,729 | ||||
Net income (loss) before taxes | $ (36,242) | $ (812,247) |
Summary of Equity Investments a
Summary of Equity Investments and Ownership Interests (Detail) | Sep. 30, 2015 | Dec. 31, 2014 |
Grayson County Physicians Property LLC | Sherman TX | ||
Investments In And Advances To Affiliates [Line Items] | ||
Equity investments, ownership interest | 0.00% | 20.00% |
Houston Orthopedic Hospital LLC | Houston TX | ||
Investments In And Advances To Affiliates [Line Items] | ||
Equity investments, ownership interest | 0.00% | 20.00% |
Summit Medical Center | Edmond OK | ||
Investments In And Advances To Affiliates [Line Items] | ||
Equity investments, ownership interest | 8.00% | 0.00% |
Foundation Surgery Affiliate of Nacogdoches LLP | Nacogdoches TX | ||
Investments In And Advances To Affiliates [Line Items] | ||
Equity investments, ownership interest | 13.00% | 13.00% |
Kirby Glen Surgery Center | Houston TX | ||
Investments In And Advances To Affiliates [Line Items] | ||
Equity investments, ownership interest | 0.00% | 10.00% |
Park Ten Surgery Center | Houston TX | ||
Investments In And Advances To Affiliates [Line Items] | ||
Equity investments, ownership interest | 10.00% | 10.00% |
Foundation Surgery Affiliate of Middleburg Heights LLC | Middleburg Heights OH | ||
Investments In And Advances To Affiliates [Line Items] | ||
Equity investments, ownership interest | 10.00% | 10.00% |
Foundation Surgery Affiliate of Huntingdon Valley LP | Huntingdon Valley PA | ||
Investments In And Advances To Affiliates [Line Items] | ||
Equity investments, ownership interest | 20.00% | 20.00% |
New Jersey Surgery Center LLC | Mercerville NJ | ||
Investments In And Advances To Affiliates [Line Items] | ||
Equity investments, ownership interest | 10.00% | 10.00% |
Foundation Surgery Affiliate of Northwest Oklahoma City LLC | Oklahoma City OK | ||
Investments In And Advances To Affiliates [Line Items] | ||
Equity investments, ownership interest | 0.00% | 20.00% |
Cumberland Valley Surgery Center LLC | Hagerstown MD | ||
Investments In And Advances To Affiliates [Line Items] | ||
Equity investments, ownership interest | 32.00% | 32.00% |
Frederick Surgical Center LLC | Frederick MD | ||
Investments In And Advances To Affiliates [Line Items] | ||
Equity investments, ownership interest | 20.00% | 20.00% |
Summary of Unaudited Results of
Summary of Unaudited Results of Operations and Financial Position of Equity Investments in Affiliates (Detail) - USD ($) | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Investments In And Advances To Affiliates Schedule Of Investments [Abstract] | |||
Net operating revenues | $ 35,389,891 | $ 65,165,852 | |
Net income | 7,532,487 | $ 25,171,091 | |
Current assets | 10,254,448 | $ 12,458,663 | |
Noncurrent assets | 6,207,667 | 8,116,883 | |
Total assets | 16,462,115 | 20,575,546 | |
Current liabilities | 4,839,509 | 4,254,254 | |
Noncurrent liabilities | 2,146,579 | 1,928,324 | |
Total liabilities | 6,986,088 | 6,182,578 | |
Members' equity | $ 9,476,027 | $ 14,392,968 |
Changes in Carrying Amount of G
Changes in Carrying Amount of Goodwill (Detail) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Goodwill Gross Amount | $ 23,019,309 | $ 23,019,309 |
Goodwill Accumulated Impairment Loss | (22,045,382) | (22,045,382) |
Goodwill | $ 973,927 | $ 973,927 |
Changes in Carrying Amount of I
Changes in Carrying Amount of Intangible Assets (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||||
Intangible asset carrying amount, beginning balance | $ 14,524,500 | |||
Intangible asset carrying amount, ending balance | $ 14,524,500 | 14,524,500 | ||
Intangible asset accumulated amortization, beginning balance | (5,444,105) | |||
Intangible asset, accumulated amortization | (1,543,668) | |||
Intangible asset accumulated amortization, ending balance | (6,987,773) | (6,987,773) | ||
Intangible asset beginning balance, net | 9,080,395 | |||
Amortization expense | (514,553) | $ (514,969) | (1,543,668) | $ (1,542,704) |
Intangible asset ending balance, net | $ 7,536,727 | $ 7,536,727 |
Intangible Assets (Detail)
Intangible Assets (Detail) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Finite Lived Intangible Assets [Line Items] | ||
Carrying Value | $ 14,524,500 | $ 14,524,500 |
Accumulated Amortization | (6,987,773) | (5,444,105) |
Intangible assets, net | $ 7,536,727 | 9,080,395 |
Minimum | ||
Finite Lived Intangible Assets [Line Items] | ||
Estimated useful lives | 3 years | |
Maximum | ||
Finite Lived Intangible Assets [Line Items] | ||
Estimated useful lives | 8 years | |
Management Fee Contracts | ||
Finite Lived Intangible Assets [Line Items] | ||
Carrying Value | $ 3,498,500 | |
Accumulated Amortization | (2,496,059) | |
Intangible assets, net | $ 1,002,441 | 1,328,593 |
Management Fee Contracts | Minimum | ||
Finite Lived Intangible Assets [Line Items] | ||
Estimated useful lives | 6 years | |
Management Fee Contracts | Maximum | ||
Finite Lived Intangible Assets [Line Items] | ||
Estimated useful lives | 8 years | |
Non-compete | ||
Finite Lived Intangible Assets [Line Items] | ||
Estimated useful lives | 5 years | |
Carrying Value | $ 2,027,000 | |
Accumulated Amortization | (1,154,296) | |
Intangible assets, net | $ 872,704 | 1,177,333 |
Physician memberships | ||
Finite Lived Intangible Assets [Line Items] | ||
Estimated useful lives | 7 years | |
Carrying Value | $ 6,468,000 | |
Accumulated Amortization | (2,695,000) | |
Intangible assets, net | $ 3,773,000 | 4,466,000 |
Trade Name | ||
Finite Lived Intangible Assets [Line Items] | ||
Estimated useful lives | 5 years | |
Carrying Value | $ 381,000 | |
Accumulated Amortization | (169,205) | |
Intangible assets, net | $ 211,795 | 270,038 |
Service Contracts | ||
Finite Lived Intangible Assets [Line Items] | ||
Estimated useful lives | 10 years | |
Carrying Value | $ 2,150,000 | |
Accumulated Amortization | (473,213) | |
Intangible assets, net | $ 1,676,787 | $ 1,838,431 |
Goodwill and Other Intangible37
Goodwill and Other Intangibles - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 514,553 | $ 514,969 | $ 1,543,668 | $ 1,542,704 |
Amortization Expense for Next F
Amortization Expense for Next Five Years Related to Intangible Assets (Detail) | Sep. 30, 2015USD ($) |
Finite Lived Intangible Assets Future Amortization Expense [Abstract] | |
2,016 | $ 2,057,698 |
2,017 | 2,057,698 |
2,018 | 1,388,544 |
2,019 | 1,139,000 |
2,020 | 292,000 |
Thereafter | $ 601,787 |
Schedule of Short-Term Debt Obl
Schedule of Short-Term Debt Obligations (Detail) - USD ($) | 9 Months Ended | ||
Sep. 30, 2015 | Dec. 31, 2014 | ||
Short-term Debt [Line Items] | |||
Short-term debt | $ 398,207 | $ 456,784 | |
Insurance premium financings | |||
Short-term Debt [Line Items] | |||
Short-term debt | $ 398,207 | $ 456,784 | |
Debt instrument, effective interest rate, minimum | [1] | 3.90% | |
Debt instrument, effective interest rate, maximum | [1] | 4.90% | |
Line of credit - senior lender | |||
Short-term Debt [Line Items] | |||
Debt instrument, effective interest rate | [1] | 3.00% | |
[1] | Effective rate as of September 30, 2015 |
Schedule of Long-Term Debt and
Schedule of Long-Term Debt and Capital Lease Obligations (Detail) - USD ($) | 9 Months Ended | ||
Sep. 30, 2015 | Dec. 31, 2014 | ||
Debt Instrument [Line Items] | |||
Capital Lease Obligations | $ 3,788,125 | $ 4,010,767 | |
Total | 23,147,690 | 29,760,767 | |
Less: Current portion of long-term debt | (4,828,974) | (5,023,048) | |
Long-term debt | $ 18,318,716 | 24,737,719 | |
Capital lease obligations | |||
Debt Instrument [Line Items] | |||
Debt instrument, effective interest rate, minimum | [1] | 5.50% | |
Debt instrument, effective interest rate, maximum | [1] | 10.70% | |
Capital lease obligations | Minimum | |||
Debt Instrument [Line Items] | |||
Debt instrument maturity date | 2017-01 | ||
Capital lease obligations | Maximum | |||
Debt Instrument [Line Items] | |||
Debt instrument maturity date | 2020-12 | ||
Senior Lender | |||
Debt Instrument [Line Items] | |||
Note payable | $ 16,874,395 | $ 25,750,000 | |
Line of credit | $ 2,485,170 | ||
Senior Lender | Note Payable | |||
Debt Instrument [Line Items] | |||
Debt instrument, effective interest rate | [1] | 3.50% | |
Debt instrument maturity date | 2021-07 | ||
Senior Lender | Line of credit | |||
Debt Instrument [Line Items] | |||
Debt instrument, effective interest rate | [1] | 3.00% | |
Debt instrument maturity date | 2017-05 | ||
[1] | Effective rate as of September 30, 2015 |
Borrowings and Capital Lease 41
Borrowings and Capital Lease Obligations - Additional Information (Detail) - USD ($) | Jun. 12, 2015 | Jun. 30, 2015 | Jun. 30, 2015 | Sep. 30, 2015 | Jun. 30, 2014 |
Debt Instrument [Line Items] | |||||
Permitted merger or acquisition consideration amount | $ 1,000,000 | ||||
Sale of assets, maximum limit | $ 100,000 | ||||
Percentage of prepayment on excess cash flow | 30.00% | ||||
Prepayment penalty percentage on term loan prior to first Anniversary | 2.00% | ||||
Prepayment penalty percentage on term loan after first anniversary | 1.50% | ||||
Prepayment penalty percentage on term loan after second anniversary | 1.00% | ||||
Senior debt ratio | 153.00% | ||||
Senior debt service coverage ratio | 202.00% | ||||
Adjusted senior debt service coverage ratio | 116.00% | ||||
Restriction on indebtedness in trade payable, maximum | $ 500,000 | ||||
Restriction on indebtedness in unsecured debt, maximum | 100,000 | ||||
Amount of judgment triggering default | $ 150,000 | ||||
Debt default, description | In addition to the general defaults of failure to perform the Company’s obligations under the Loan Agreement, events of default also include the occurrence of a change in control, as defined, and the loss of the Company’s Medicare or Medicaid certification, collateral casualties, entry of a judgment of $150,000 or more, failure of first liens on collateral and the termination of any of the Company’s management agreements that represent more than 10% of the Company’s management fees for the preceding 18 month period. In the event of a monetary default, all of the Company’s obligations due under the SNB Credit Facility shall become immediately due and payable. In the event of a non-monetary default, the Company has 10 days or in some cases three days to cure before Bank SNB has the right to declare the Company’s obligations due under the SNB Credit Facility immediately due and payable. | ||||
Maximum | |||||
Debt Instrument [Line Items] | |||||
Senior debt ratio | 300.00% | ||||
Minimum | |||||
Debt Instrument [Line Items] | |||||
Senior debt service coverage ratio | 130.00% | ||||
Adjusted senior debt service coverage ratio | 105.00% | ||||
Bank SNB | |||||
Debt Instrument [Line Items] | |||||
Quarterly principal payment | $ 900,000 | ||||
Repayment of principal balance of notes | $ 7,000,000 | ||||
Regular quarterly payment | 1,200,000 | ||||
Regular quarterly payment, interest | 300,000 | ||||
Mandatory prepayment on excess cash flow | $ 500,000 | $ 500,000 | |||
Term Loan | |||||
Debt Instrument [Line Items] | |||||
Long-term debt | $ 27,500,000 | ||||
Debt instrument maturity date | Jun. 30, 2021 | ||||
Repayment of principal balance of notes | $ 7,000,000 | ||||
Term Loan | First Four Quarterly Payments | |||||
Debt Instrument [Line Items] | |||||
Quarterly principal payment | $ 875,000 | ||||
Term Loan | Subsequent Quarterly Payments | |||||
Debt Instrument [Line Items] | |||||
Quarterly principal payment | 1,000,000 | ||||
Revolving Loan | |||||
Debt Instrument [Line Items] | |||||
Line of credit collateralized | $ 2,500,000 | $ 2,500,000 | |||
Debt instrument maturity date | May 31, 2017 |
Schedule of Applicable Margins
Schedule of Applicable Margins Rate (Detail) | 9 Months Ended |
Sep. 30, 2015 | |
Debt Instrument [Line Items] | |
Senior debt ratio | 153.00% |
Maximum | |
Debt Instrument [Line Items] | |
Senior debt ratio | 300.00% |
Senior Debt Ratio, ≥ 2.5x | Minimum | |
Debt Instrument [Line Items] | |
Senior debt ratio | 250.00% |
Senior Debt Ratio, ≥ 2.5x | Revolving Loan | |
Debt Instrument [Line Items] | |
Debt instrument applicable margin | 3.75% |
Senior Debt Ratio, ≥ 2.5x | Term Loan | |
Debt Instrument [Line Items] | |
Debt instrument applicable margin | 4.25% |
Senior Debt Ratio, 2.5x, but ≥ 2.0x | Minimum | |
Debt Instrument [Line Items] | |
Senior debt ratio | 200.00% |
Senior Debt Ratio, 2.5x, but ≥ 2.0x | Maximum | |
Debt Instrument [Line Items] | |
Senior debt ratio | 250.00% |
Senior Debt Ratio, 2.5x, but ≥ 2.0x | Revolving Loan | |
Debt Instrument [Line Items] | |
Debt instrument applicable margin | 3.25% |
Senior Debt Ratio, 2.5x, but ≥ 2.0x | Term Loan | |
Debt Instrument [Line Items] | |
Debt instrument applicable margin | 3.75% |
Senior Debt Ratio, 2.0x | Maximum | |
Debt Instrument [Line Items] | |
Senior debt ratio | 200.00% |
Senior Debt Ratio, 2.0x | Revolving Loan | |
Debt Instrument [Line Items] | |
Debt instrument applicable margin | 2.75% |
Senior Debt Ratio, 2.0x | Term Loan | |
Debt Instrument [Line Items] | |
Debt instrument applicable margin | 3.25% |
Future Maturities Long-Term Deb
Future Maturities Long-Term Debt (Detail) | Sep. 30, 2015USD ($) |
Maturities of Long-term Debt [Abstract] | |
2,016 | $ 4,828,974 |
2,017 | 7,216,540 |
2,018 | 4,664,753 |
2,019 | 3,323,575 |
2,020 | 1,986,188 |
Thereafter | $ 1,127,660 |
Preferred Noncontrolling Inte44
Preferred Noncontrolling Interests - Additional Information (Detail) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2013 | Dec. 31, 2014 | |
Schedule Of Equity Method Investments [Line Items] | |||
Common stock, shares issued | 17,273,180 | 17,263,842 | |
Common stock value | $ 1,727 | $ 1,726 | |
Amount of unreturned capital contribution and undistributed preferred distributions | $ 10,000 | ||
Conversion price per share | $ 20 | ||
Common Stock | |||
Schedule Of Equity Method Investments [Line Items] | |||
Total consideration | $ 435,000 | ||
Number of shares sold | 87,000 | ||
Foundation Health Enterprises LLC | |||
Schedule Of Equity Method Investments [Line Items] | |||
Offering cost | $ 100,000 | ||
Common stock, shares issued | 1,000 | ||
Common stock value | $ 5,000 | ||
Total consideration | 8,700,000 | ||
Cumulative preferred annual return | 9.00% | ||
Foundation Health Enterprises LLC | Class B member interests | |||
Schedule Of Equity Method Investments [Line Items] | |||
Offering cost | $ 105,000 | ||
Number offering units | 87 | ||
Foundation Health Enterprises LLC | Private placement | |||
Schedule Of Equity Method Investments [Line Items] | |||
Offering cost | $ 9,135,000 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - USD ($) | 3 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Commitments And Contingencies Disclosure [Abstract] | |||
Legal claims settlement expenses | $ 0 | $ 0 | |
Self Insurance Reserves | $ 400,784 | $ 560,851 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements, Valuation Techniques | The Company did not have any assets or liabilities recorded using nonrecurring fair value measurements. |
Real Estate Transaction - Addit
Real Estate Transaction - Additional Information (Detail) - San Antonio Texas $ in Millions | Mar. 01, 2014USD ($) |
Real Estate Properties [Line Items] | |
Operating Leases, Term of Contract | 15 years |
Annual rental payments | $ 2.3 |
Percentage of annual lease escalations | 3.00% |
Income on underlying sub-lease | $ 2.1 |
Cash received at the time of lease | $ 4.1 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) | Jun. 01, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | May. 31, 2015USD ($)Installment | Dec. 31, 2014USD ($) |
New Sleep Lab International, Ltd. | |||||
Related Party Transaction [Line Items] | |||||
Income on underlying sub-lease | $ 8,767 | ||||
Sublease expiration date | Nov. 30, 2018 | ||||
Lease expense | $ 81,400 | ||||
Valliance Bank | |||||
Related Party Transaction [Line Items] | |||||
Related party deposit | $ 400,000 | ||||
Roy T. Oliver | |||||
Related Party Transaction [Line Items] | |||||
Percentage of ownership in shareholders and affiliates | 5.00% | ||||
City Place | |||||
Related Party Transaction [Line Items] | |||||
Lease expense | $ 53,900 | $ 70,000 | |||
Lease agreement monthly rent description | The Company paid monthly rent of $17,970 until June?30, 2014; $0 from July?1, 2014 to January?31, 2015 and $17,970 from February?1, 2015 to May?31, 2015 plus additional payments for allocable basic expenses of City Place | ||||
Lease expiration date | Oct. 31, 2015 | ||||
Future lease payment | $ 89,850 | ||||
Number of equal monthly installments | Installment | 5 | ||||
Lease agreement, installment amount | $ 17,970 | ||||
FHA and Certain Real Estate Subsidiaries and Affiliates of FHA | |||||
Related Party Transaction [Line Items] | |||||
Obligations owed to FHA and other affiliates | $ 1,300,000 | $ 1,300,000 | |||
Affiliate ASCs And Hospitals | Minimum | |||||
Related Party Transaction [Line Items] | |||||
Management fee Percentages range | 2.25% | ||||
Affiliate ASCs And Hospitals | Maximum | |||||
Related Party Transaction [Line Items] | |||||
Management fee Percentages range | 6.00% |