Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 31, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | WELLCARE HEALTH PLANS, INC. | |
Entity Central Index Key | 1,279,363 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 44,292,873 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenues: | ||||
Premium | $ 3,578.8 | $ 3,437.3 | $ 10,705.4 | $ 10,381.9 |
Investment and other income | 5.2 | 3.7 | 13.5 | 11.5 |
Total revenues | 3,584 | 3,441 | 10,718.9 | 10,393.4 |
Expenses and other: | ||||
Medical benefits | 3,040.2 | 2,947.4 | 9,091 | 8,976.7 |
Selling, general and administrative | 268.5 | 279.6 | 815.4 | 792 |
ACA industry fee | 57.1 | 53.9 | 171 | 170.5 |
Medicaid premium taxes | 28.3 | 26.7 | 83.1 | 66.9 |
Depreciation and amortization | 22.4 | 18.2 | 64.9 | 53.1 |
Interest | 14.6 | 15.1 | 45 | 39 |
Gain on divestiture of business | 0 | (4.6) | 0 | (4.6) |
Total expenses, net | 3,431.1 | 3,336.3 | 10,270.4 | 10,093.6 |
Income before income taxes | 152.9 | 104.7 | 448.5 | 299.8 |
Income tax expense | 84.3 | 68.3 | 251.3 | 194.2 |
Net income | 68.6 | 36.4 | 197.2 | 105.6 |
Other comprehensive income, before tax: | ||||
Change in net unrealized gains and losses on available-for-sale securities | 0 | 0 | 0.1 | (0.8) |
Income tax expense related to other comprehensive income | 0 | 0.4 | 0 | 0.1 |
Other comprehensive income (loss), net of tax | 0 | (0.4) | 0.1 | (0.9) |
Comprehensive income | $ 68.6 | $ 36 | $ 197.3 | $ 104.7 |
Earnings per common share: | ||||
Basic (USD per share) | $ 1.55 | $ 0.83 | $ 4.46 | $ 2.40 |
Diluted (USD per share) | $ 1.54 | $ 0.82 | $ 4.43 | $ 2.38 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 44,276,035 | 44,084,004 | 44,234,001 | 44,040,253 |
Diluted (in shares) | 44,639,442 | 44,424,305 | 44,561,051 | 44,362,208 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Current Assets: | ||
Cash and cash equivalents | $ 3,878.4 | $ 2,407 |
Short-term investments | 203 | 204.4 |
Premiums receivable, net | 430.2 | 603.9 |
Pharmacy rebates receivable, net | 292.2 | 252.5 |
Funds receivable for the benefit of members | 555.5 | 577.6 |
Deferred ACA industry fee | 57.4 | 0 |
Income taxes receivable | 0 | 50.6 |
Prepaid expenses and other current assets, net | 198 | 133.6 |
Total current assets | 5,614.7 | 4,229.6 |
Property, equipment and capitalized software, net | 249.1 | 244.8 |
Goodwill | 289.8 | 263.2 |
Other intangible assets, net | 76.8 | 80 |
Long-term investments | 91.5 | 131.8 |
Restricted investments | 203.2 | 196 |
Other assets | 0.4 | 0.4 |
Total Assets | 6,525.5 | 5,145.8 |
Current Liabilities: | ||
Medical benefits payable | 1,625.5 | 1,536 |
Unearned premiums | 400.2 | 27.7 |
Accounts payable and accrued expenses | 486.6 | 405.2 |
Current portion of long-term debt, net | 0 | 299.5 |
Income taxes payable | 73.7 | 0 |
Funds payable for the benefit of members | 639.6 | 0 |
Other payables to government partners | 304.1 | 172.7 |
Total current liabilities | 3,529.7 | 2,441.1 |
Deferred income tax liability, net | 27.3 | 52.6 |
Long-term debt, net | 997.4 | 899.6 |
Other liabilities | 28.2 | 24.2 |
Total Liabilities | 4,582.6 | 3,417.5 |
Commitments and contingencies | ||
Stockholders' Equity: | ||
Preferred stock, $0.01 par value (20,000,000 authorized, no shares issued or outstanding) | 0 | 0 |
Common stock, $0.01 par value (100,000,000 authorized, 44,292,618 and 44,113,328 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively) | 0.4 | 0.4 |
Paid-in capital | 535.7 | 518.4 |
Retained earnings | 1,408.9 | 1,211.7 |
Accumulated other comprehensive loss | (2.1) | (2.2) |
Total Stockholders' Equity | 1,942.9 | 1,728.3 |
Total Liabilities and Stockholders' Equity | $ 6,525.5 | $ 5,145.8 |
CONDENSED CONSOLIDATED BALANCE4
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Stockholders' Equity: | ||
Preferred stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (shares) | 20,000,000 | 20,000,000 |
Preferred stock, issued (shares) | 0 | 0 |
Preferred stock, outstanding (shares) | 0 | 0 |
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (shares) | 100,000,000 | 100,000,000 |
Common stock, issued (shares) | 44,292,618 | 44,113,328 |
Common stock, outstanding (shares) | 44,292,618 | 44,113,328 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Millions | Total | Common Stock | Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Loss |
Balance, beginning of period at Dec. 31, 2014 | $ 1,595.9 | $ 0.4 | $ 503 | $ 1,093.1 | $ (0.6) |
Balance, beginning of period (shares) at Dec. 31, 2014 | 43,914,106 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock issued for exercised stock options | 0.3 | 0.3 | |||
Common stock issued for exercised stock options (shares) | 8,020 | ||||
Common stock issued for vested restricted stock units, performance stock units and market stock units (shares) | 261,886 | ||||
Repurchase and retirement of shares to satisfy tax withholding requirements | (7) | (7) | |||
Repurchase and retirement of shares to satisfy tax withholding requirements (shares) | (79,129) | ||||
Stock-based compensation expense, net of forfeitures | 13.5 | 13.5 | |||
Incremental tax benefit from stock-based compensation | 1.8 | 1.8 | |||
Comprehensive income | 104.7 | 105.6 | (0.9) | ||
Balance, end of period at Sep. 30, 2015 | 1,709.2 | $ 0.4 | 511.6 | 1,198.7 | (1.5) |
Balance, end of period (shares) at Sep. 30, 2015 | 44,104,883 | ||||
Balance, beginning of period at Dec. 31, 2015 | $ 1,728.3 | $ 0.4 | 518.4 | 1,211.7 | (2.2) |
Balance, beginning of period (shares) at Dec. 31, 2015 | 44,113,328 | 44,113,328 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock issued for vested restricted stock units, performance stock units and market stock units (shares) | 253,271 | ||||
Repurchase and retirement of shares to satisfy tax withholding requirements | $ (6.9) | (6.9) | |||
Repurchase and retirement of shares to satisfy tax withholding requirements (shares) | (73,981) | ||||
Stock-based compensation expense, net of forfeitures | 24.2 | 24.2 | |||
Comprehensive income | 197.3 | 197.2 | 0.1 | ||
Balance, end of period at Sep. 30, 2016 | $ 1,942.9 | $ 0.4 | $ 535.7 | $ 1,408.9 | $ (2.1) |
Balance, end of period (shares) at Sep. 30, 2016 | 44,292,618 | 44,292,618 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | ||
Net income | $ 197.2 | $ 105.6 |
Adjustments to reconcile net income to cash flows from operating activities: | ||
Depreciation and amortization | 64.9 | 53.1 |
Stock-based compensation expense | 24.2 | 13.5 |
Deferred taxes, net | (25.3) | 39.3 |
Provision for doubtful receivables | 6.7 | 12 |
Other, net | 5.8 | (6.4) |
Changes in operating accounts, net of effects from acquisitions and divestitures: | ||
Premiums receivable, net | 167 | (69.3) |
Pharmacy rebates receivable, net | (39.7) | 36.4 |
Medical benefits payable | 89.5 | (5) |
Unearned premiums | 372.5 | (67.9) |
Other payables to government partners | 131.4 | 112.1 |
Amount payable related to investigation resolution | 0 | (35.2) |
Accrued liabilities and other, net | 86.1 | 49.7 |
Net cash provided by operating activities | 1,080.3 | 237.9 |
Cash flows from investing activities: | ||
Acquisitions and acquisition-related settlements | (23.8) | (17.2) |
Purchases of investments | (338.6) | (100.8) |
Proceeds from sales and maturities of investments | 370.1 | 109.2 |
Additions to property, equipment and capitalized software, net | (61.5) | (94.6) |
Net cash used in investing activities | (53.8) | (103.4) |
Cash flows from financing activities: | ||
Proceeds from issuance of debt, net of financing costs paid | 196.9 | 308.9 |
Payments on debt | (400) | 0 |
Repurchase and retirement of shares to satisfy employee tax withholding requirements | (6.9) | (7) |
Funds received (paid) for the benefit of members, net | 661.7 | (328.8) |
Other, net | (6.8) | 2 |
Net cash provided by (used in) financing activities | 444.9 | (24.9) |
Increase in cash and cash equivalents | 1,471.4 | 109.6 |
Balance at beginning of period | 2,407 | 1,313.5 |
Balance at end of period | 3,878.4 | 1,423.1 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
Cash paid for taxes | 153.1 | 161.5 |
Cash paid for interest | 30.6 | 24 |
SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS: | ||
Non-cash additions to property, equipment, and capitalized software | $ 5.9 | $ 15.4 |
ORGANIZATION, BASIS OF PRESENTA
ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES WellCare Health Plans, Inc. (the "Company," "we," "us," or "our"), focuses exclusively on government-sponsored managed care services, primarily through Medicaid, Medicare Advantage ("MA") and Medicare Prescription Drug Plans ("PDPs") to families, children, seniors and individuals with complex medical needs. As of September 30, 2016 , we served approximately 3.8 million members. During the nine months ended September 30, 2016 , we operated Medicaid health plans in Florida, Georgia, Hawaii, Illinois, Kentucky, Missouri, New Jersey, New York and South Carolina. As of September 30, 2016 , we also operated MA coordinated care plans ("CCPs") in Arkansas, California, Connecticut, Florida, Georgia, Hawaii, Illinois, Kentucky, Louisiana, Mississippi, New Jersey, New York, South Carolina, Tennessee and Texas, as well as stand-alone Medicare prescription drug plans ("PDP") in all 50 states and the District of Columbia. Basis of Presentation and Use of Estimates The accompanying unaudited condensed consolidated balance sheets and statements of comprehensive income, changes in stockholders' equity, and cash flows include the accounts of the Company and all of its majority-owned subsidiaries. We eliminated all intercompany accounts and transactions. The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Accordingly, certain financial information and footnote disclosures normally included in financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, have been condensed or omitted. The accompanying unaudited condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto, for the fiscal year ended December 31, 2015 , included in our Annual Report on Form 10-K ("2015 Form 10-K"), which was filed with the U.S. Securities and Exchange Commission ("SEC") in February 2016. Results for the interim periods presented are not necessarily indicative of results that may be expected for the entire year or any other interim period. In the opinion of management, the interim financial statements reflect all normal recurring adjustments that we consider necessary for the fair presentation of our financial position, results of operations and cash flows for the interim periods presented. In accordance with GAAP, we make certain estimates and assumptions that affect the amounts reported in the condensed consolidated interim financial statements and accompanying notes. We base these estimates, including assumptions as to the annualized tax rate, on our knowledge of current events and anticipated future events and evaluate and update our assumptions and estimates on an ongoing basis; however, actual results may differ from our estimates. We evaluated all material events subsequent to the date of these condensed consolidated interim financial statements. Certain reclassifications were made to 2015 financial information to conform to the 2016 presentation. Significant Accounting Policies Medicare Part D Settlements We receive certain Part D prospective subsidy payments from the Centers for Medicare & Medicaid Services ("CMS") for our MA and PDP members as a fixed monthly per member amount, based on the estimated costs of providing prescription drug benefits over the plan year, as reflected in our bids. A discussion of the subsidy components under Part D is included in Note 2- Significant Accounting Policies to the Consolidated Financial Statements included in our 2015 Form 10-K. CMS will fully reimburse these subsidies as part of its annual settlement process that occurs in the fourth quarter of the subsequent year and, accordingly, there is no insurance risk to us. Therefore, amounts received for these subsidies are not considered premium revenue, and are reported, net of the subsidy benefits paid, as Funds receivable (payable) for the benefit of members in the condensed consolidated balance sheets. As of September 30, 2016, our condensed consolidated balance sheet includes a CMS Part D receivable for the 2015 plan year, which is reflected within current assets in Funds receivable for the benefit of members. We expect a reduction in our CMS receivable upon settling the 2015 plan year with CMS in the fourth quarter of 2016. Our condensed consolidated balance sheet as of September 30, 2016 also includes a CMS Part D payable for the 2016 plan year, which is reflected within current liabilities in Funds payable for the benefit of members. The 2016 plan year payable also includes a $304.8 million advance receipt of October 2016 CMS Medicare subsidy payments. As of December 31, 2015, our condensed consolidated balance sheet included a CMS Part D receivable primarily related to the 2015 plan year. Medical Benefits and Medical Benefits Payable We recognize the cost of medical benefits in the period in which services are provided, including an estimate of the cost of medical benefits incurred but not reported ("IBNR"). Medical benefits expense includes direct medical expenses and certain medically-related administrative costs. We evaluate our estimates of medical benefits payable as we obtain more complete claims information and medical expense trend data over time. We record differences between actual experience and estimates used to establish the liability, which we refer to as favorable and unfavorable prior year reserve developments, as increases or decreases to medical benefits expense in the period we identify the differences. Favorable prior year reserve development for the nine months ended September 30, 2016 was approximately $140.5 million , primarily related to the Medicaid Health Plans segment, compared with favorable prior year reserve development of $53.8 million recognized during the corresponding period in 2015. Such amounts are net of the development relating to refunds due to government customers associated with minimum medical loss ratio provisions. Recently Adopted Accounting Standards In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-09, " Compensation—Stock Compensation (Topic 718), " which changes the accounting for certain aspects of share-based payments to employees. The new guidance requires excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled. In addition, cash flows related to excess tax benefits will no longer be separately classified as a financing activity apart from other income tax cash flows. The standard also allows us to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting, clarifies that all cash payments made on an employee’s behalf for withheld shares should be presented as a financing activity on our cash flows statement, and provides an accounting policy election to account for forfeitures as they occur. The new standard would have been effective for us beginning January 1, 2017, with early adoption permitted. We elected to early adopt the new guidance in the second quarter of fiscal year 2016 which requires us to reflect any adjustments as of January 1, 2016, the beginning of the annual period that includes the interim period of adoption. The primary effect of adoption was the recognition of excess tax benefits in our provision for income taxes rather than paid-in capital for all periods in fiscal year 2016. The ASU amendments related to the minimum statutory withholding tax requirements had no effect to retained earnings as of January 1, 2016, where the cumulative effect of these changes is required to be recorded. We have elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. We elected to apply the presentation requirements for cash flows related to excess tax benefits prospectively as of January 1, 2016. The presentation requirements for cash flows related to employee taxes paid for withheld shares had no effect to any of the periods presented in our consolidated cash flows statements since such cash flows have historically been presented as a financing activity. Adoption of the new standard resulted in the recognition of excess tax benefits in our provision for income taxes rather than paid-in capital of $0.6 million and $2.1 million for the three and nine months ended September 30, 2016, respectively, and affected our previously reported first quarter of 2016 results as follows: For the Three Months Ended March 31, 2016 As reported As adjusted Income Statement: (in millions, except per share data) Income tax expense $ 51.8 $ 51.1 Net income $ 37.1 $ 37.8 Basic earnings per share $ 0.84 $ 0.86 Diluted earnings per share $ 0.83 $ 0.85 Cash Flow Statement: Net cash used in operating activities $ (112.1 ) $ (111.4 ) Net cash provided by financing activities $ 88.3 $ 87.6 March 31, 2016 As reported As adjusted Balance Sheet: (in millions) Paid-in capital $ 520.1 $ 519.4 Retained Earnings $ 1,248.8 $ 1,249.5 In November 2015, the FASB issued ASU 2015-17, " Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. " ASU 2015-17 requires an entity to classify all deferred tax assets and liabilities as noncurrent. We adopted this standard effective January 1, 2016 and applied it retrospectively to all prior periods. Accordingly, amounts for deferred income tax assets of $34.8 million previously recorded as current are reflected as a reduction to deferred income tax liabilities recorded as noncurrent in the accompanying condensed consolidated balance sheet as of December 31, 2015. These reclassifications have no effect on results of operations or stockholders' equity, as previously reported. In September 2015, the FASB issued ASU 2015-16, " Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. " ASU 2015-16 eliminates the requirement for an acquirer to retrospectively adjust provisional amounts recorded in a business combination to reflect new information about the facts and circumstances that existed as of the acquisition date and that, if known, would have affected measurement or recognition of amounts initially recognized. The amendment requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments require that the acquirer record, in the financial statements of the period in which adjustments to provisional amounts are determined, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. We adopted this standard effective January 1, 2016. The adoption of this guidance did not have a material effect on our consolidated results of operations, financial position or cash flows. In April 2015, the FASB issued ASU 2015-03, " Interest - Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs, " to simplify the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability. In August 2015, the FASB issued ASU 2015-15, " Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of Credit Arrangements. " ASU 2015-15 provides additional guidance to ASU 2015-03, which did not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. ASU 2015-15 noted that the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. We adopted these standards effective January 1, 2016 and applied it retrospectively to all prior periods. These reclassifications did not have a material effect on our consolidated results of operations, financial position or cash flows. Recently Issued Accounting Standards In August 2016, the FASB issued ASU 2016-15, " Statement of Cash Flows Classification of Certain Cash Receipts and Cash Payments (Topic 230) ." This update targets eight specific areas to clarify how these cash receipts and cash payments are presented and classified in the statement of cash flows. This guidance is effective for public entities for interim and annual periods beginning after December 15, 2017, with early adoption permitted. We are currently assessing the effect this guidance will have on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, " Financial Instruments – Credit Losses (Topic 326), " which requires entities to use a current expected credit loss model, which is a new impairment model based on expected losses rather than incurred losses. Under this model an entity would recognize an impairment allowance equal to its current estimate of all contractual cash flows that the entity does not expect to collect from financial assets measured at amortized cost. The entity's estimate would consider relevant information about past events, current conditions, and reasonable and supportable forecasts, which will result in recognition of lifetime expected credit losses upon loan origination. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted for annual reporting periods beginning after December 15, 2018. We are currently assessing the effect this guidance will have on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-07, " Simplifying the Transition to the Equity Method of Accounting, " which eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. Instead, the equity method of accounting should be applied prospectively from the date significant influence is obtained. Investors should add the cost of acquiring the additional interest in the investee (if any) to the current basis of their previously held interest. The new standard should be applied prospectively for investments that qualify for the equity method of accounting after the effective date. This guidance is effective for all entities for interim and annual periods beginning after December 15, 2016. Early adoption is permitted. We are currently assessing the effect this guidance will have on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, " Leases (Topic 842), " which for operating leases, requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments in its balance sheet. This standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. This guidance is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. We are currently assessing the effect this guidance will have on our consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, " Financial Instrument - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, " which requires entities to measure equity securities that are not consolidated or accounted for under the equity method at fair value through net income. This amendment also simplifies the impairment test of equity investments without readily determinable fair values. This guidance is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted in certain circumstances. We are currently assessing the effect this guidance will have on our consolidated financial statements. In May 2015, the FASB issued ASU 2015-09, " Financial Services - Insurance (Topic 944): Disclosures about Short-Duration Contracts, " which addresses enhanced disclosure requirements for short-duration insurance contracts. The disclosures required by this update are aimed at providing users of financial statements with more transparent information about an insurance entity’s initial claim estimates and subsequent adjustments to those estimates, methodologies and judgments in estimating claims, as well as the timing, frequency and severity of claims. For public business entities, this guidance will be effective for annual periods beginning after December 15, 2015 and interim periods within annual reporting periods beginning after December 15, 2016. We do not believe the adoption of this standard will have a material effect on our consolidated results of operations, financial position or cash flows. In May 2014, the FASB issued ASU 2014-09, " Revenue from Contracts with Customers (Topic 606). " ASU 2014-09 will supersede existing revenue recognition standards with a single model unless those contracts are within the scope of other standards (e.g., an insurance entity’s insurance contracts). The revenue recognition principle in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of 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. In addition, new and enhanced disclosures will be required. Companies can adopt the new standard either using the full retrospective approach, a modified retrospective approach with practical expedients, or a cumulative effect upon adoption approach. In August 2015, the FASB issued ASU 2015-14, " Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date " , which deferred the effective dates of ASU 2014-09 by one year. As such, the standard becomes effective for annual and interim reporting periods beginning after December 15, 2017. Early adoption at the original effective date, interim and annual periods beginning after December 15, 2016 will be permitted. We are currently evaluating the effect of the new revenue recognition principle. |
ACQUISITIONS AND DIVESTITURES
ACQUISITIONS AND DIVESTITURES | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
ACQUISITIONS AND DIVESTITURES | ACQUISITIONS AND DIVESTITURES Pending Acquisition In September 2016, we entered into an agreement with Care1st Health Plan, an affiliate of Blue Shield of California, to acquire its subsidiaries Care1st Health Plan Arizona, Inc. and One Care by Care1st Health Plan of Arizona, Inc. (together, “Care1st Arizona”), managed care companies that provide Medicaid and Medicare benefits to approximately 114,000 beneficiaries in Maricopa and Pima counties, Arizona’s largest geographic service areas. Under the terms of the agreement, WellCare will acquire Care1st Arizona from Care1st Health Plan for approximately $157.5 million , inclusive of statutory capital and subject to certain adjustments. The transaction is expected to be funded with available cash on hand and to close by the first quarter of 2017, pending regulatory approvals and satisfaction of other customary closing conditions. Advicare Acquisition On June 1, 2016, we completed the acquisition of certain assets of Advicare Corp. ("Advicare"), a managed care organization that provides Medicaid benefits in South Carolina. The acquired assets primarily relate to members who were transferred to our Medicaid plan in South Carolina, as well as certain provider agreements. Based on the preliminary purchase price allocation, we allocated $4.7 million of the purchase price to identified intangible assets and recorded the excess of purchase price over the aggregate fair value of net assets acquired of $26.6 million as goodwill. The recorded goodwill and other intangible assets related to the Advicare acquisition are deductible for income tax purposes. It is possible that further adjustments could be made to the purchase price and allocations depending on the resolution of certain matters related to the purchase price, although we are unable to estimate the effect at this time. Sterling Life Insurance Company Divestiture In March 2015, we entered into an agreement to divest Sterling Life Insurance Company ("Sterling"), our Medicare Supplement business that we acquired as part of the Windsor transaction in January 2014. The transaction closed on July 1, 2015 and did not have a material effect on our results of operations, financial position or cash flows. |
SEGMENT REPORTING
SEGMENT REPORTING | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | SEGMENT REPORTING On a regular basis, we evaluate discrete financial information and assess the performance of our three reportable segments, Medicaid Health Plans, Medicare Health Plans and Medicare PDPs, to determine the most appropriate use and allocation of Company resources. Medicaid Health Plans Our Medicaid Health Plans segment includes plans for beneficiaries of Temporary Assistance for Needy Families ("TANF"), Supplemental Security Income ("SSI"), Aged Blind and Disabled ("ABD") and other state-based programs that are not part of the Medicaid program, such as Children's Health Insurance Program ("CHIP") and Managed Long-Term Care ("MLTC") programs, including long-term services and supports. TANF generally provides assistance to low-income families with children. ABD and SSI generally provide assistance to low-income aged, blind or disabled individuals. CHIP provides assistance to qualifying families who are not eligible for Medicaid because their income exceeds the applicable income thresholds. The MLTC program is designed to help people with chronic illnesses or who have disabilities and need health and long-term care services, such as home care or adult day care, to enable them to stay in their homes and communities as long as possible. Our Medicaid operations in certain states individually account for 10% or more of our consolidated premium revenue. Those states and the respective Medicaid premium revenue as a percentage of total consolidated premium revenue are as follows: For the Three Months Ended For the Nine Months Ended 2016 2015 2016 2015 Kentucky 18% 19% 18% 19% Florida 18% 17% 17% 16% Georgia 12% 12% 12% 12% In 2016, the Georgia Department of Community Health (“Georgia DCH”) announced its intention to exercise its option (through two six -month renewal terms) to extend our current contract through June 30, 2017. We have entered a new contract with Georgia DCH and anticipate services under that contract would commence on July 1, 2017, with an initial one -year term and four additional one -year renewal options at Georgia DCH's discretion. The new contract is subject to approval by CMS. In May 2016, we entered into a contract amendment with the Kentucky Department of Medicaid Services that renewed our participation in the Kentucky Medicaid program through December 31, 2016, and included one additional six -month or three additional one -year renewal periods upon mutual agreement. Medicare Health Plans Medicare is a federal program that provides eligible persons age 65 and over and some disabled persons with a variety of hospital, medical and prescription drug benefits. MA is Medicare's managed care alternative to the original Medicare program, which provides individuals standard Medicare benefits directly through CMS. Our MA CCPs generally require members to seek health care services and select a primary care physician from a network of health care providers. In addition, we offer coverage of prescription drug benefits under the Medicare Part D program as a component of most of our MA plans. Prior to July 1, 2015, our Medicare Health Plans reportable segment included the combined operations of both the MA and Medicare Supplement operating segments. On July 1, 2015, we completed the sale of our Medicare Supplement business through the Sterling divestiture and as a result, the Medicare Health Plans reportable segment only reflects MA operations for the three months ended September 30, 2016 and 2015, and the nine months ended September 30, 2016. Medicare PDPs We offer stand-alone Medicare Part D coverage to Medicare-eligible beneficiaries in our Medicare PDPs segment. The Medicare Part D prescription drug benefit is supported by risk sharing with the federal government through risk corridors designed to limit the losses and gains of the participating drug plans and by reinsurance for catastrophic drug costs. The government subsidy is based on the national weighted average monthly bid for this coverage, adjusted for risk factor payments. Additional subsidies are provided for dually-eligible beneficiaries and specified low-income beneficiaries. The Part D program offers national in-network prescription drug coverage that is subject to limitations in certain circumstances. Summary of Financial Information We allocate goodwill and other intangible assets, as well as the ACA industry fee, to our reportable segments. We do not allocate to our reportable segments any other assets and liabilities, investment and other income, selling, general and administrative expenses, depreciation and amortization, or interest expense to our reportable segments. The Company's decision makers primarily use premium revenue, medical benefits expense and gross margin to evaluate the performance of our reportable segments. A summary of financial information for our reportable segments through the gross margin level and a reconciliation to income before income taxes is presented in the table below. For the Three Months Ended For the Nine Months Ended 2016 2015 2016 2015 (in millions) Premium revenue: Medicaid Health Plans $ 2,443.9 2,273.9 $ 7,134.0 $ 6,728.0 Medicare Health Plans 959.0 961.1 2,920.6 2,937.1 Medicare PDPs 175.9 202.3 650.8 716.8 Total premium revenue 3,578.8 3,437.3 10,705.4 10,381.9 Medical benefits expense: Medicaid Health Plans 2,134.8 1,991.3 6,124.8 5,842.2 Medicare Health Plans 802.1 834.8 2,458.2 2,548.8 Medicare PDPs 103.3 121.3 508.0 585.7 Total medical benefits expense 3,040.2 2,947.4 9,091.0 8,976.7 ACA industry fee expense: Medicaid Health Plans 37.3 33.0 110.6 102.2 Medicare Health Plans 15.9 14.9 48.2 50.7 Medicare PDPs 3.9 6.0 12.2 17.6 Total ACA industry fee expense 57.1 53.9 171.0 170.5 Gross margin Medicaid Health Plans 271.8 249.6 898.6 783.6 Medicare Health Plans 141.0 111.4 414.2 337.6 Medicare PDPs 68.7 75.0 130.6 113.5 Total gross margin 481.5 436.0 1,443.4 1,234.7 Investment and other income 5.2 3.7 13.5 11.5 Other expenses, net (1) (333.8 ) (335.0 ) (1,008.4 ) (946.4 ) Income before income taxes $ 152.9 $ 104.7 $ 448.5 $ 299.8 (1) Other expenses, net includes selling, general and administrative expenses, Medicaid premium taxes, depreciation and amortization, and interest. Other expenses, net for the three and nine months ended September 30, 2015 also includes the gain on the Sterling divestiture. |
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
EARNINGS PER COMMON SHARE | EARNINGS PER COMMON SHARE We compute basic earnings per common share on the basis of the weighted-average number of unrestricted common shares outstanding. We compute diluted earnings per common share on the basis of the weighted-average number of unrestricted common shares outstanding plus the dilutive effect of our stock-based compensation awards using the treasury stock method. The calculation of the weighted-average common shares outstanding — diluted is as follows: For the Three Months Ended For the Nine Months Ended 2016 2015 2016 2015 Weighted-average common shares outstanding — basic 44,276,035 44,084,004 44,234,001 44,040,253 Dilutive effect of outstanding stock-based compensation awards 363,407 340,301 327,050 321,955 Weighted-average common shares outstanding — diluted 44,639,442 44,424,305 44,561,051 44,362,208 Anti-dilutive stock-based compensation awards excluded from computation 535 59,263 19,595 67,432 |
INVESTMENTS
INVESTMENTS | 9 Months Ended |
Sep. 30, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
INVESTMENTS | INVESTMENTS The Company considers all of its investments as available-for-sale securities. Excluding Restricted Investments, the amortized cost, gross unrealized gains or losses and estimated fair value of short-term and long-term investments by security type are summarized in the following tables. Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value September 30, 2016 Auction rate securities $ 33.9 $ — $ (2.9 ) $ 31.0 Corporate debt and other securities 82.1 0.2 — 82.3 Money market funds 52.8 — — 52.8 Municipal securities 41.0 0.6 (0.1 ) 41.5 U.S. government securities 2.9 — — 2.9 Variable rate bond fund 85.1 — (1.1 ) 84.0 $ 297.8 $ 0.8 $ (4.1 ) $ 294.5 December 31, 2015 Auction rate securities $ 34.0 $ — $ (2.3 ) $ 31.7 Corporate debt and other securities 121.4 — (0.4 ) 121.0 Money market funds 45.9 — — 45.9 Municipal securities 46.0 0.4 (0.1 ) 46.3 U.S. government securities 7.1 — — 7.1 Variable rate bond fund 85.1 — (0.9 ) 84.2 $ 339.5 $ 0.4 $ (3.7 ) $ 336.2 Realized gains and losses on sales and redemptions of investments were not material for the three and nine months ended September 30, 2016 and 2015 . Contractual maturities of available-for-sale securities at September 30, 2016 are as follows: Total Within 1 Year 1 Through 5 Years 5 Through 10 Years Thereafter Auction rate securities $ 31.0 $ — $ — $ — $ 31.0 Corporate debt and other securities 82.3 50.5 31.8 — — Money market funds 52.8 52.8 — — — Municipal securities 41.5 13.4 21.7 6.4 — U.S. government securities 2.9 2.3 0.6 — — Variable rate bond fund 84.0 84.0 — — — $ 294.5 $ 203.0 $ 54.1 $ 6.4 $ 31.0 Actual maturities may differ from contractual maturities due to the exercise of pre-payment options. Excluding investments in U.S. government securities, we are not exposed to any significant concentration of credit risk in our fixed maturities portfolio. Our long-term investments include $31.0 million estimated fair value of municipal note securities with an auction reset feature ("auction rate securities"), which were issued by various state and local municipal entities for the purpose of financing student loans, public projects and other activities. These auction rate securities had an aggregate par value of $33.9 million at September 30, 2016 . Liquidity for these auction rate securities is typically provided by an auction process, which allows holders to sell their notes and resets the applicable interest rate at pre-determined intervals, usually every seven or 35 days. We consider our auction rate securities to be in an inactive market as auctions have continued to fail. Our auction rate securities have been in an unrealized loss position for more than twelve months. As of September 30, 2016, two auction rate securities with an aggregate par value of $22.3 million had investment grade security credit ratings and one auction rate security with a par value of $11.6 million had a credit rating below investment grade. In October 2016, $20.1 million of these auction rate securities, which had an estimated fair value of $18.5 million as of September 30, 2016, were redeemed by the issuer at par value. Our auction rate securities are covered by government guarantees or municipal bond insurance and we have the ability and intent to hold these securities until maturity or market stability is restored. Accordingly, although we do not believe our auction rate securities are impaired and we have not recorded an other-than-temporary impairment as of September 30, 2016 , it could take until the final maturity of the underlying securities to realize our investments' recorded value. The final maturity of the underlying securities could be as long as 21 years. As of September 30, 2016, the weighted-average remaining life of the underlying securities for our auction rate securities portfolio is 17 years. Redemptions and sales of our auction rate securities were not material during the nine months ended September 30, 2016 and 2015 . |
RESTRICTED INVESTMENTS
RESTRICTED INVESTMENTS | 9 Months Ended |
Sep. 30, 2016 | |
Restricted Investments Note [Abstract] | |
RESTRICTED INVESTMENTS | RESTRICTED INVESTMENTS As a condition for licensure, we are required to maintain certain funds on deposit or pledged to various state agencies. Certain of our state contracts require the issuance of surety bonds. We classify restricted investments as long-term regardless of the contractual maturity date of the securities held, due to the nature of the states' requirements. The amortized cost, gross unrealized gains, gross unrealized losses and fair value of our restricted investment securities are as follows: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value September 30, 2016 Cash $ 62.2 $ — $ — $ 62.2 Certificates of deposit 0.2 — — 0.2 Money market funds 67.3 — — 67.3 U.S. government securities 73.5 — — 73.5 $ 203.2 $ — $ — $ 203.2 December 31, 2015 Cash $ 3.2 $ — $ — $ 3.2 Certificates of deposit 1.1 — — 1.1 Money market funds 67.5 — — 67.5 U.S. government securities 124.3 — (0.1 ) 124.2 $ 196.1 $ — $ (0.1 ) $ 196.0 Realized gains and losses on restricted investments were not material for the three and nine months ended September 30, 2016 and 2015 . |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Compensation expense related to our stock-based compensation awards was $9.2 million and $ 4.8 million for the three months ended September 30, 2016 and 2015, respectively, and $24.2 million and $13.5 million for the nine months ended September 30, 2016 and 2015, respectively. As of September 30, 2016 , there was $47.7 million of unrecognized compensation cost related to non-vested stock-based compensation arrangements that is expected to be recognized over a weighted-average period of 2.0 years. The unrecognized compensation cost for certain of our performance stock units ("PSUs"), which are subject to variable accounting, was determined based on our closing common stock price of $117.09 as of September 30, 2016 and amounted to approximately $15.8 million of the total unrecognized compensation cost. Due to the nature of the accounting for these awards, future compensation cost will fluctuate based on changes in our common stock price. As discussed in our 2015 Form 10-K, the Compensation Committee awards certain equity-based compensation under our stock plans, including stock options, restricted stock units ("RSUs"), PSUs and market stock units ("MSUs"), each of which is described below: RSUs For each RSU granted employees receive one share of common stock, net of taxes withheld at the statutory minimum, at the end of the vesting period. RSUs typically vest one to three years from the date of grant. We estimate compensation cost for RSUs based on the grant date fair value and recognize the expense ratably over the vesting period of the award. For RSUs, the grant date fair value is based on the closing price of our common stock on the date of grant. PSUs The actual number of common stock shares earned upon vesting will range from zero shares up to 200% of the target award, depending on the award date, the target award amounts for the PSU awards and our achievement of certain targets set by the Compensation Committee at its sole discretion. PSUs generally cliff-vest 3 years from the grant date based on the achievement of the performance goals and conditioned on the employee's continued service through the vesting date. The number of shares earned by the participant is generally paid net of taxes withheld at the statutory minimum. The Compensation Committee has awarded two variations of PSUs, including: • Financial and Quality Performance Goals: Certain of our PSUs are subject to variable accounting as they do not have a grant date fair value for accounting purposes due to the subjective nature of the terms of the PSUs, which precludes a mutual understanding of the key terms and conditions. We recognize expense for PSUs ultimately expected to vest over the requisite service period based on our estimates of progress made towards the achievement of the predetermined performance measures and changes in the market price of our common stock. In March 2016, we issued certain PSUs whereby a mutual understanding of key terms and conditions exist; therefore, for these awards we estimate compensation cost based on the grant date fair value, as well as our estimate of the performance outcome, and recognize the expense ratably over the vesting period of the award. • Market Based Goals: Beginning in 2016, we issued certain PSUs which are subject to a market condition (total shareholder return relative to industry peer companies or prescribed stock price growth) and we estimate compensation cost based on the grant date fair value and recognize the expense ratably over the vesting period of the award. For these PSUs, the grant date fair value is measured using a Monte Carlo simulation approach, which estimates the fair value of awards based on randomly generated simulated stock-price paths through a lattice-type structure. PSUs expected to vest are recognized as expense either on a straight-line or accelerated basis, depending on the award structure, over the vesting period, which is generally three years. MSUs The number of shares of common stock earned upon vesting is determined based on the ratio of our average common stock price during the last 30 market trading days of the calendar year immediately preceding the vesting date to the comparable average common stock price in the year immediately preceding the grant date, applied to the base units granted. The performance ratio is capped at 200% . If our common stock price declines by more than 50% over the performance period, no shares are earned by the recipient. The number of shares earned by the participant is generally paid net of taxes withheld at the statutory minimum. We estimate compensation cost for MSUs based on the grant date fair value and recognize the expense ratably over the vesting period of the award. For MSUs, the grant date fair value is measured using a Monte Carlo simulation approach, which estimates the fair value of awards based on randomly generated simulated stock-price paths through a lattice-type structure. MSUs expected to vest are recognized as expense on a straight-line basis over the vesting period, which is generally three years. A summary of RSU, PSU and MSU award activity for the nine months ended September 30, 2016 at target is presented in the table below. RSUs PSUs MSUs Total Outstanding as of January 1, 2016 290,619 395,899 133,290 819,808 Granted 174,281 274,218 15,879 464,378 Vested (147,144 ) (63,729 ) (39,808 ) (250,681 ) Forfeited and expired (31,218 ) (106,538 ) (17,650 ) (155,406 ) Outstanding as of September 30, 2016 286,538 499,850 91,711 878,099 The weighted-average grant-date fair value of all equity awards granted during the nine months ended September 30, 2016 was $99.76 . |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT The following table summarizes our outstanding debt obligations and their classification in the accompanying Condensed Consolidated Balance Sheets (in millions): September 30, 2016 December 31, 2015 Current portion of long-term debt: Term loan $ — $ 300.0 Debt issuance costs — (0.5 ) Total current portion of long-term debt $ — $ 299.5 Long-term debt: 5.75% Senior Notes, net of unamortized debt premium $ 910.2 $ 912.1 2016 Revolving Credit Facility 100.0 — Debt issuance costs (12.8 ) (12.5 ) Total long-term debt $ 997.4 $ 899.6 Total debt $ 997.4 $ 1,199.1 Senior Notes On June 1, 2015, we completed the offering and sale of $300.0 million aggregate principal amount of our 5.75% unsecured senior notes due 2020 (the "Senior Notes") pursuant to a reopening of our existing series of such notes. The offering was completed at an issue price of 104.50% , plus accrued interest, and resulted in a debt premium of $13.5 million , which is being amortized over the remaining term of the Senior Notes. Interest is payable on May 15 and November 15 each year. As of September 30, 2016 , our outstanding Senior Notes totaled $910.2 million , including $10.2 million of unamortized debt premium, inclusive of our Senior Notes described above as well as $600.0 million issued in November 2013. The Senior Notes were classified as long-term debt in our condensed consolidated balance sheet based on their November 2020 maturity date. Credit Agreements On January 8, 2016, we entered into the 2016 Credit Agreement, which provides for a senior unsecured revolving loan facility (the "2016 Revolving Credit Facility"), with an initial aggregate principal amount at any time outstanding not to exceed $850.0 million . The 2016 Credit Agreement provides for the 2016 Revolving Credit Facility of up to $850.0 million (the loans thereunder, the “Revolving Credit Loans”), of which up to $150.0 million is available for letters of credit. The 2016 Credit Agreement also provides that we may, at our option, increase the aggregate amount of the 2016 Revolving Credit Facility and/or obtain incremental term loans in an amount up to $200.0 million without the consent of any lenders not participating in such increase, subject to certain customary conditions and lenders committing to provide the increase in funding. Unutilized commitments under the 2016 Credit Agreement are subject to a fee of 0.25% to 0.35% depending upon our ratio of total net debt to cash flow. At the closing of the 2016 Credit Agreement, $200.0 million of the 2016 Revolving Credit Facility was drawn upon and, along with $100.0 million in cash, used to repay our $300.0 million term loan under our prior credit agreement, which was terminated. Borrowings under the Revolving Credit Loans may be used for general corporate purposes, including, but not limited to, working capital, organic growth and acquisitions. In September 2016, we repaid $100.0 million of the original $200.0 million borrowed under the 2016 Revolving Credit Facility, and as a result, $100.0 million remained outstanding as a component of our long-term debt as of September 30, 2016 . Commitments under the 2016 Revolving Credit Facility expire on January 8, 2021 and any amounts outstanding under the 2016 Revolving Credit Facility will be payable in full at that time. The interest rate on the outstanding amount of the 2016 Credit Facility was 2.19% as of September 30, 2016 . Revolving Credit Loans designated by us at the time of borrowing as “ABR Loans” that are outstanding under the 2016 Credit Agreement bear interest at a rate per annum equal to (i) the greatest of (a) the Prime Rate (as defined in the 2016 Credit Agreement) in effect on such day; (b) the Federal Reserve Bank of New York Rate (as defined in the 2016 Credit Agreement) in effect on such day plus 1/2 of 1% ; and (c) the Adjusted LIBO Rate (as defined in the 2016 Credit Agreement) for a one month interest period on such day plus 1% ; plus (ii) the Applicable Rate. Revolving Credit Loans designated by us at the time of borrowing as “Eurodollar Loans” that are outstanding under the 2016 Credit Agreement bear interest at a rate per annum equal to the Adjusted LIBO Rate (as defined in the 2016 Credit Agreement) for the interest period in effect for such borrowing plus the Applicable Rate. The “Applicable Rate” means a percentage ranging from 0.50% to 1.00% per annum for ABR Loans and a percentage ranging from 1.50% to 2.00% per annum for Eurodollar Loans, depending upon our ratio of total debt to cash flow, as calculated in accordance with the 2016 Credit Agreement. The 2016 Credit Agreement includes negative and financial covenants that limit certain activities of us and our subsidiaries, including (i) restrictions on our ability and the ability of our subsidiaries to incur additional indebtedness; and (ii) financial covenants that require (a) the ratio of total net debt to cash flow not to exceed a maximum; and (b) a minimum interest expense and principal payment coverage ratio. The 2016 Credit Agreement also contains customary representations and warranties that must be accurate in order for us to borrow under the 2016 Revolving Credit Facility. In addition, the 2016 Credit Agreement contains customary events of default. If an event of default occurs and is continuing, we may be required immediately to repay all amounts outstanding under the 2016 Credit Agreement. Lenders holding at least 50% of the loans and commitments under the 2016 Credit Agreement may elect to accelerate the maturity of the loans and/or terminate the commitments under the 2016 Credit Agreement upon the occurrence and during the continuation of an event of default. As of September 30, 2016 and as of the date of this filing, we remain in compliance with all covenants under both the Senior Notes and the 2016 Credit Agreement. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Our condensed consolidated balance sheets include the following financial instruments: cash and cash equivalents, investments, receivables, accounts payable, medical benefits payable, long-term debt and other liabilities. We consider the carrying amounts of cash and cash equivalents, receivables, other current assets and current liabilities to approximate their fair value due to the short period of time between the origination of these instruments and the expected realization or payment. Certain assets and liabilities are measured at fair value on a recurring basis and are disclosed below. These assets and liabilities are classified into one of three levels of a hierarchy defined by GAAP. For a description of the methods and assumptions that are used to estimate the fair value and determine the fair value hierarchy classification of each class of financial instrument, see the consolidated financial statements and notes thereto included in our 2015 Form 10-K. Recurring Fair Value Measurements Assets and liabilities measured at fair value on a recurring basis at September 30, 2016 are as follows: Fair Value Measurements Using Carrying Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Investments: Asset backed securities $ 8.0 $ — $ 8.0 $ — Auction rate securities 31.0 — — 31.0 Corporate debt securities 74.3 — 74.3 — Money market funds 52.8 52.8 — — Municipal securities 41.5 — 41.5 — U.S. government and agency obligations 2.9 2.9 — — Variable rate bond fund 84.0 84.0 — — Total investments $ 294.5 $ 139.7 $ 123.8 $ 31.0 Restricted investments: Cash 62.2 62.2 — — Certificates of deposit 0.2 — 0.2 — Money market funds 67.3 67.3 — — U.S. government and agency obligations 73.5 73.5 — — Total restricted investments $ 203.2 $ 203.0 $ 0.2 $ — Assets and liabilities measured at fair value on a recurring basis at December 31, 2015 are as follows: Fair Value Measurements Using Carrying Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Investments: Asset backed securities $ 17.2 $ — $ 17.2 $ — Auction rate securities 31.7 — — 31.7 Corporate debt securities 103.8 — 103.8 — Money market funds 45.9 45.9 — — Municipal securities 46.3 — 46.3 — U.S. government securities 7.1 7.1 — — Variable rate bond fund 84.2 84.2 — — Total investments $ 336.2 $ 137.2 $ 167.3 $ 31.7 Restricted investments: Cash $ 3.2 $ 3.2 $ — $ — Certificates of deposit 1.1 — 1.1 — Money market funds 67.5 67.5 — — U.S. government securities 124.2 124.2 — — Total restricted investments $ 196.0 $ 194.9 $ 1.1 $ — The following table presents the carrying value and fair value of our long-term debt outstanding as of September 30, 2016 and December 31, 2015 : Fair Value Measurements Using Carrying Value Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Long-term debt - September 30, 2016 $ 997.4 $ 929.3 $ 97.2 $ — Long-term debt - December 31, 2015 899.6 931.5 — — The fair value of our Senior Notes was determined based on quoted market prices; therefore, would be classified within Level 1 of the fair value hierarchy. The fair value of obligations outstanding under our 2016 Revolving Credit Facility was determined based on a discounted cash flow analysis, utilizing current rates estimated to be available to us for debt of similar terms and remaining maturities; therefore, would be classified within Level 2 of the fair value hierarchy. The carrying value of our Term Loan outstanding at December 31, 2015 approximated the fair value; therefore, the carrying value and fair value were excluded from the table above. The following table presents the changes in the fair value of our Level 3 auction rate securities for the three and nine months ended September 30, 2016 and 2015. For the Three Months Ended For the Nine Months Ended 2016 2015 2016 2015 Balance at beginning of period $ 30.6 $ 31.7 $ 31.7 $ 32.3 Realized gains (losses) in earnings — — — — Unrealized gains (losses) in other comprehensive income 0.5 — (0.6 ) (0.5 ) Purchases, sales and redemptions (0.1 ) — (0.1 ) (0.1 ) Net transfers in or (out) of Level 3 — — — — Balance as of September 30, $ 31.0 $ 31.7 $ 31.0 $ 31.7 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Our effective income tax rate was 55.1% and 56.0% for the three and nine months ended September 30, 2016 , respectively, compared with 65.2% and 64.8% for the three and nine months ended September 30, 2015 , respectively. The rate decline was primarily driven by a higher level of income before income taxes in 2016 and the adoption of ASU 2016-09 " Compensation—Stock Compensation (Topic 718) ," which was reflected as of January 1, 2016. Our effective tax rate for the nine months ended September 30, 2016 also includes the favorable effect of the recognition of certain previously unrecognized tax benefits, discussed below. In September 2014, the IRS issued final regulations on the ACA's $0.5 million limit on the deduction for compensation for health insurance providers under Internal Revenue Code ("IRC") section 162(m)(6). As a result, we no longer believe the deduction limitations apply to WellCare, and we took deductions totaling $2.2 million and $6.6 million , gross before the effect of taxes, for such compensation during the three and nine months ended September 30, 2016 , respectively. However, we are not able to conclude at this time that our tax position is more-likely-than-not to be sustained upon IRS review for periods other than the 2014 tax year, as discussed below. Therefore, we recognized cumulative liabilities for unrecognized tax benefits amounting to $13.9 million and $14.0 million at September 30, 2016 and December 31, 2015 , respectively. During June 2016, the IRS completed its audit of our 2014 consolidated income tax return, which effectively settled the 2014 tax year. Accordingly, we recognized $2.6 million of previously unrecognized tax benefits resulting from our IRC section 162(m)(6) tax position during the nine months ended September 30, 2016, which had the effect of reducing our income tax expense and effective tax rate. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Government Investigations Under the terms of settlement agreements entered into on April 26, 2011, and finalized on March 23, 2012, to resolve matters under investigation by the Civil Division of the U.S. Department of Justice ("Civil Division") and certain other federal and state enforcement agencies (the "Settlement"), we agreed to pay the Civil Division a total of $137.5 million in four annual installments of $34.4 million over 36 months, plus interest accrued at 3.125% . The final payment of $35.4 million , which included accrued interest, was remitted to the Civil Division in March 2015. As of March 31, 2015, no amounts remained outstanding related to this obligation. Securities Class Action Complaint In December 2010, we entered into a Stipulation and Agreement of Settlement (the "Stipulation Agreement") with the lead plaintiffs in the consolidated securities class action Eastwood Enterprises, L.L.C. v. Farha, et al. , Case No. 8:07-cv-1940-VMC-EAJ. The Stipulation Agreement requires us to pay to the class 25% of any sums we recover from Todd Farha, Paul Behrens and/or Thaddeus Bereday related to the same facts and circumstances that gave rise to the consolidated securities class action. Messrs. Farha, Behrens and Bereday are three former executives that were implicated in the government investigations of the Company that commenced in 2007. Corporate Integrity Agreement We operated under a Corporate Integrity Agreement (the "Corporate Integrity Agreement") with the Office of Inspector General of the United States Department of Health and Human Services ("OIG-HHS"). The Corporate Integrity Agreement had a term of five years from its effective date of April 26, 2011 with certain OIG-HHS rights and company obligations extending for an additional 120 days following the submission of the fifth annual report. The Corporate Integrity Agreement mandates various ethics and compliance programs designed to help ensure our ongoing compliance with federal health care program requirements. The terms of the Corporate Integrity Agreement include certain organizational structure requirements, internal monitoring requirements, compliance training, screening processes for associates, requirements related to reporting to OIG-HHS, and the engagement of an independent review organization to review and prepare written reports regarding, among other things, WellCare's reporting practices and bid submissions to federal health care programs. Following the completion of the fifth reporting period on April 26, 2016, WellCare submitted to the OIG-HHS for its review and acceptance the fifth annual report, on August 5, 2016. Upon acceptance of our final annual report, the OIG-HHS, at its discretion, may release us from the Corporate Integrity Agreement. If we do not comply with the terms of the Corporate Integrity Agreement, we may be subject to penalties or exclusion from participation in federal health care programs. Indemnification Obligations Under Delaware law, our charter and bylaws and certain indemnification agreements to which we are a party, we are obligated to indemnify, or we have otherwise agreed to indemnify, certain of our current and former directors, officers and associates with respect to current and future investigations and litigation, including the matters discussed in this note. The indemnification agreements for our directors and executive officers with respect to events occurring prior to May 2009 require us to indemnify an indemnitee to the fullest extent permitted by law if the indemnitee was or is or becomes a party to or a witness or other participant in any proceeding by reason of any event or occurrence related to the indemnitee's status as a director, officer, associate, agent or fiduciary of the Company or any of our subsidiaries. The indemnification agreements require us to indemnify an indemnitee against all expenses, including attorney's fees, judgments, fines, settlement amounts and interest and other charges, and any taxes as a result of the receipt of payments under the indemnification agreement. We will not indemnify the indemnitee if not permitted under applicable law. We are required to advance all expenses incurred by the indemnitee. We are entitled to reimbursement by an indemnitee of expenses advanced if the indemnitee is not permitted to be reimbursed under applicable law after a final judicial determination is made and all rights of appeal have been exhausted or lapsed. We amended and restated our indemnification agreements in May 2009. The revised agreements apply to our officers and directors with respect to events occurring after that time. Pursuant to the 2009 indemnification agreements, we will indemnify the indemnitee against all expenses, including attorney's fees, judgments, penalties, fines, settlement amounts and any taxes imposed as a result of payments made under the indemnification agreement incurred in connection with any proceedings that relate to the indemnitee's status as a director, officer or associate of the Company or any of our subsidiaries or any other enterprise that the indemnitee was serving at our request. We will also indemnify for expenses incurred by an indemnitee if the indemnitee, by reason of his or her corporate status, is a witness in any proceeding. Further, we are required to indemnify for expenses incurred by an indemnitee in defense of a proceeding to the extent the indemnitee has been successful on the merits or otherwise. Finally, if the indemnitee is involved in certain proceedings as a result of the indemnitee's corporate status, we are required to advance the indemnitee's reasonable expenses incurred in connection with such proceeding, subject to the requirement that the indemnitee repay the expenses if it is ultimately determined that the indemnitee is not entitled to be indemnified. We are not obligated to indemnify an indemnitee for losses incurred in connection with any proceeding if a determination has not been made by the Board of Directors, a committee of disinterested directors or independent legal counsel in the specific case that the indemnitee has satisfied any standards of conduct required as a condition to indemnification under Section 145 of the Delaware General Corporation Law. Pursuant to our obligations, we have advanced, and will continue to advance, legal fees and related expenses to three former officers and two additional associates who were criminally indicted in connection with the government investigations of the Company that commenced in 2007 related to federal criminal health care fraud charges including conspiracy to defraud the United States, false statements relating to health care matters, and health care fraud in connection with their defense of criminal charges. In June 2013, the jury in the criminal trial reached guilty verdicts on multiple charges for the four individuals that were tried in 2013. In May 2014, the individuals were sentenced and our request for restitution was denied. All four individuals filed notices of appeal and the government filed notices of cross appeal on three of the four individuals, which the government has subsequently voluntarily dismissed. The appellate court affirmed the convictions in August 2016. The fifth individual is scheduled to be tried in January 2017, but a postponement request is pending. We have also previously advanced legal fees and related expenses to these five individuals regarding: disputes in Delaware Chancery Court related to whether we were legally obligated to advance fees or indemnify certain of these individuals; the class actions titled Eastwood Enterprises, L.L.C. v. Farha, et al . and Hutton v. WellCare Health Plans, Inc. et al . filed in federal court; six stockholder derivative actions filed in federal and state courts between October 2007 and January 2008; an investigation by the United States Securities & Exchange Commission (the "Commission"); and an action by the Commission filed in January 2012 against three of the five individuals, Messrs. Farha, Behrens and Bereday. We settled the class actions in May 2011. In 2010, we settled the stockholder derivative actions and we were realigned as the plaintiff to pursue our claims against Messrs. Farha, Behrens and Bereday. We and Mr. Farha filed stipulations of dismissal in the derivative actions, as to Mr. Farha only, pursuant to the settlement agreement described below, and Mr. Farha has been dismissed from the federal court derivative action. These actions, as well as the action by the Commission, are currently stayed with respect to the remaining parties. In addition, we have advanced and will continue to advance a portion of the legal fees and related expenses to Mr. Farha in connection with lawsuits he filed in Delaware and Florida state court to have certain restrictions lifted on WellCare stock purportedly awarded to him during his employment with WellCare. The Delaware matter was dismissed by the court. We and Mr. Farha have filed a stipulation of dismissal in the Florida matter pursuant to the settlement agreement described below. In September 2016, we entered into a settlement agreement with Mr. Farha pursuant to which he agreed to pay us $7.5 million and we agreed to lift certain restrictions on WellCare stock purportedly awarded to him during his employment with WellCare, and we agreed that we would not seek to recover additional legal fees previously advanced related to these matters, and that our obligation to continue advancing fees would be limited to no more than an additional $7.5 million . We also have advanced and will continue to advance legal fees and related expenses to Mr. Behrens in connection with his lawsuit in Delaware state court to have certain restrictions lifted on WellCare stock purportedly awarded to him during his employment with WellCare, which the court dismissed. In October 2016, we also entered into a settlement agreement with Mr. Behrens pursuant to which he agreed to pay us $1.5 million and we agreed to lift certain restrictions on WellCare stock purportedly awarded to him during his employment with WellCare, and we agreed that we would not seek to recover additional legal fees previously advanced in connection with these matters, and that our obligation to continue advancing fees would be limited to no more than an additional $1.5 million . In connection with these matters, we have advanced to the five individuals cumulative legal fees and related expenses of approximately $227.3 million from the inception of the investigations through September 30, 2016 . We incurred $6.5 million and $16.2 million of these fees and related expenses during the three and nine months ended September 30, 2016 , respectively, compared with $7.0 million and $19.9 million for the three and nine months ended September 30, 2015 , respectively. These fees are not inclusive of the amounts recovered from Mr. Farha and Mr. Behrens discussed above. We expense these costs as incurred and classify the costs as selling, general and administrative expense incurred in connection with the investigations and related matters. We expect the continuing cost of our obligations to the remaining three individuals, with whom we have not entered into settlement agreements in connection with their defense and appeal of criminal charges and related litigation, to be significant and to continue for a number of years. We have exhausted our insurance policies related to reimbursement of our advancement of fees related to these matters. We are unable to estimate the total amount of these costs or a range of possible loss. Accordingly, we continue to expense these costs as incurred. Even if it is eventually determined that we are entitled to reimbursement of the advanced expenses from the three individuals with whom we did not entered into a settlement agreement, it is possible that we may not be able to recover all or any portion of our damages or advances. Our indemnification obligations and requirements to advance legal fees and expenses may continue to have a material adverse effect on our financial condition, results of operations and cash flows. Other Lawsuits and Claims Based on the nature of our business, we are subject to regulatory reviews or other investigations by various state insurance and health care regulatory authorities and other state and federal regulatory authorities. These authorities regularly scrutinize the business practices of health insurance and benefits companies and their reviews focus on numerous facets of our business, including claims payment practices, provider contracting, competitive practices, commission payments, privacy issues and utilization management practices, among others. Some of these reviews have historically resulted in fines imposed on us and some have required changes to our business practices. We continue to be subject to such reviews, which may result in additional fines and/or sanctions being imposed, premium refunds or additional changes in our business practices. Separate and apart from the legal matters described above, we are also involved in other legal actions in the normal course of our business, including, without limitation, protests and appeals related to Medicaid procurement awards, wage and hour claims and other employment claims, vendor disputes and provider disputes regarding payment of claims. Some of these actions seek monetary damages including claims for liquidated or punitive damages, which are not covered by insurance. We review relevant information with respect to these litigation matters and we update our estimates of reasonably possible losses and related disclosures. We accrue an estimate for contingent liabilities, including attorney's fees related to these matters, if a loss is probable and estimable. Currently, we do not expect that the resolution of any of these currently pending actions, either individually or in the aggregate, will differ materially from our current estimates or have a material adverse effect on our results of operations, financial condition and cash flows. However, the outcome of any legal actions cannot be predicted, and therefore, actual results may differ from those estimates. |
ORGANIZATION, BASIS OF PRESEN18
ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying unaudited condensed consolidated balance sheets and statements of comprehensive income, changes in stockholders' equity, and cash flows include the accounts of the Company and all of its majority-owned subsidiaries. We eliminated all intercompany accounts and transactions. The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Accordingly, certain financial information and footnote disclosures normally included in financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, have been condensed or omitted. The accompanying unaudited condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto, for the fiscal year ended December 31, 2015 , included in our Annual Report on Form 10-K ("2015 Form 10-K"), which was filed with the U.S. Securities and Exchange Commission ("SEC") in February 2016. Results for the interim periods presented are not necessarily indicative of results that may be expected for the entire year or any other interim period. |
Use of Estimates | In the opinion of management, the interim financial statements reflect all normal recurring adjustments that we consider necessary for the fair presentation of our financial position, results of operations and cash flows for the interim periods presented. In accordance with GAAP, we make certain estimates and assumptions that affect the amounts reported in the condensed consolidated interim financial statements and accompanying notes. We base these estimates, including assumptions as to the annualized tax rate, on our knowledge of current events and anticipated future events and evaluate and update our assumptions and estimates on an ongoing basis; however, actual results may differ from our estimates. We evaluated all material events subsequent to the date of these condensed consolidated interim financial statements. |
Reclassifications | Certain reclassifications were made to 2015 financial information to conform to the 2016 presentation. |
Medicare Part D Settlements | We receive certain Part D prospective subsidy payments from the Centers for Medicare & Medicaid Services ("CMS") for our MA and PDP members as a fixed monthly per member amount, based on the estimated costs of providing prescription drug benefits over the plan year, as reflected in our bids. A discussion of the subsidy components under Part D is included in Note 2- Significant Accounting Policies to the Consolidated Financial Statements included in our 2015 Form 10-K. CMS will fully reimburse these subsidies as part of its annual settlement process that occurs in the fourth quarter of the subsequent year and, accordingly, there is no insurance risk to us. Therefore, amounts received for these subsidies are not considered premium revenue, and are reported, net of the subsidy benefits paid, as Funds receivable (payable) for the benefit of members in the condensed consolidated balance sheets. As of September 30, 2016, our condensed consolidated balance sheet includes a CMS Part D receivable for the 2015 plan year, which is reflected within current assets in Funds receivable for the benefit of members. We expect a reduction in our CMS receivable upon settling the 2015 plan year with CMS in the fourth quarter of 2016. Our condensed consolidated balance sheet as of September 30, 2016 also includes a CMS Part D payable for the 2016 plan year, which is reflected within current liabilities in Funds payable for the benefit of members. The 2016 plan year payable also includes a $304.8 million advance receipt of October 2016 CMS Medicare subsidy payments. As of December 31, 2015, our condensed consolidated balance sheet included a CMS Part D receivable primarily related to the 2015 plan year. |
Medical Benefits and Medical Benefits Payable | We recognize the cost of medical benefits in the period in which services are provided, including an estimate of the cost of medical benefits incurred but not reported ("IBNR"). Medical benefits expense includes direct medical expenses and certain medically-related administrative costs. We evaluate our estimates of medical benefits payable as we obtain more complete claims information and medical expense trend data over time. We record differences between actual experience and estimates used to establish the liability, which we refer to as favorable and unfavorable prior year reserve developments, as increases or decreases to medical benefits expense in the period we identify the differences. |
Recently Issued and Adopted Accounting Standards | Recently Adopted Accounting Standards In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-09, " Compensation—Stock Compensation (Topic 718), " which changes the accounting for certain aspects of share-based payments to employees. The new guidance requires excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled. In addition, cash flows related to excess tax benefits will no longer be separately classified as a financing activity apart from other income tax cash flows. The standard also allows us to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting, clarifies that all cash payments made on an employee’s behalf for withheld shares should be presented as a financing activity on our cash flows statement, and provides an accounting policy election to account for forfeitures as they occur. The new standard would have been effective for us beginning January 1, 2017, with early adoption permitted. We elected to early adopt the new guidance in the second quarter of fiscal year 2016 which requires us to reflect any adjustments as of January 1, 2016, the beginning of the annual period that includes the interim period of adoption. The primary effect of adoption was the recognition of excess tax benefits in our provision for income taxes rather than paid-in capital for all periods in fiscal year 2016. The ASU amendments related to the minimum statutory withholding tax requirements had no effect to retained earnings as of January 1, 2016, where the cumulative effect of these changes is required to be recorded. We have elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. We elected to apply the presentation requirements for cash flows related to excess tax benefits prospectively as of January 1, 2016. The presentation requirements for cash flows related to employee taxes paid for withheld shares had no effect to any of the periods presented in our consolidated cash flows statements since such cash flows have historically been presented as a financing activity. Adoption of the new standard resulted in the recognition of excess tax benefits in our provision for income taxes rather than paid-in capital of $0.6 million and $2.1 million for the three and nine months ended September 30, 2016, respectively, and affected our previously reported first quarter of 2016 results as follows: For the Three Months Ended March 31, 2016 As reported As adjusted Income Statement: (in millions, except per share data) Income tax expense $ 51.8 $ 51.1 Net income $ 37.1 $ 37.8 Basic earnings per share $ 0.84 $ 0.86 Diluted earnings per share $ 0.83 $ 0.85 Cash Flow Statement: Net cash used in operating activities $ (112.1 ) $ (111.4 ) Net cash provided by financing activities $ 88.3 $ 87.6 March 31, 2016 As reported As adjusted Balance Sheet: (in millions) Paid-in capital $ 520.1 $ 519.4 Retained Earnings $ 1,248.8 $ 1,249.5 In November 2015, the FASB issued ASU 2015-17, " Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. " ASU 2015-17 requires an entity to classify all deferred tax assets and liabilities as noncurrent. We adopted this standard effective January 1, 2016 and applied it retrospectively to all prior periods. Accordingly, amounts for deferred income tax assets of $34.8 million previously recorded as current are reflected as a reduction to deferred income tax liabilities recorded as noncurrent in the accompanying condensed consolidated balance sheet as of December 31, 2015. These reclassifications have no effect on results of operations or stockholders' equity, as previously reported. In September 2015, the FASB issued ASU 2015-16, " Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. " ASU 2015-16 eliminates the requirement for an acquirer to retrospectively adjust provisional amounts recorded in a business combination to reflect new information about the facts and circumstances that existed as of the acquisition date and that, if known, would have affected measurement or recognition of amounts initially recognized. The amendment requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments require that the acquirer record, in the financial statements of the period in which adjustments to provisional amounts are determined, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. We adopted this standard effective January 1, 2016. The adoption of this guidance did not have a material effect on our consolidated results of operations, financial position or cash flows. In April 2015, the FASB issued ASU 2015-03, " Interest - Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs, " to simplify the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability. In August 2015, the FASB issued ASU 2015-15, " Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of Credit Arrangements. " ASU 2015-15 provides additional guidance to ASU 2015-03, which did not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. ASU 2015-15 noted that the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. We adopted these standards effective January 1, 2016 and applied it retrospectively to all prior periods. These reclassifications did not have a material effect on our consolidated results of operations, financial position or cash flows. Recently Issued Accounting Standards In August 2016, the FASB issued ASU 2016-15, " Statement of Cash Flows Classification of Certain Cash Receipts and Cash Payments (Topic 230) ." This update targets eight specific areas to clarify how these cash receipts and cash payments are presented and classified in the statement of cash flows. This guidance is effective for public entities for interim and annual periods beginning after December 15, 2017, with early adoption permitted. We are currently assessing the effect this guidance will have on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, " Financial Instruments – Credit Losses (Topic 326), " which requires entities to use a current expected credit loss model, which is a new impairment model based on expected losses rather than incurred losses. Under this model an entity would recognize an impairment allowance equal to its current estimate of all contractual cash flows that the entity does not expect to collect from financial assets measured at amortized cost. The entity's estimate would consider relevant information about past events, current conditions, and reasonable and supportable forecasts, which will result in recognition of lifetime expected credit losses upon loan origination. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted for annual reporting periods beginning after December 15, 2018. We are currently assessing the effect this guidance will have on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-07, " Simplifying the Transition to the Equity Method of Accounting, " which eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. Instead, the equity method of accounting should be applied prospectively from the date significant influence is obtained. Investors should add the cost of acquiring the additional interest in the investee (if any) to the current basis of their previously held interest. The new standard should be applied prospectively for investments that qualify for the equity method of accounting after the effective date. This guidance is effective for all entities for interim and annual periods beginning after December 15, 2016. Early adoption is permitted. We are currently assessing the effect this guidance will have on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, " Leases (Topic 842), " which for operating leases, requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments in its balance sheet. This standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. This guidance is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. We are currently assessing the effect this guidance will have on our consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, " Financial Instrument - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, " which requires entities to measure equity securities that are not consolidated or accounted for under the equity method at fair value through net income. This amendment also simplifies the impairment test of equity investments without readily determinable fair values. This guidance is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted in certain circumstances. We are currently assessing the effect this guidance will have on our consolidated financial statements. In May 2015, the FASB issued ASU 2015-09, " Financial Services - Insurance (Topic 944): Disclosures about Short-Duration Contracts, " which addresses enhanced disclosure requirements for short-duration insurance contracts. The disclosures required by this update are aimed at providing users of financial statements with more transparent information about an insurance entity’s initial claim estimates and subsequent adjustments to those estimates, methodologies and judgments in estimating claims, as well as the timing, frequency and severity of claims. For public business entities, this guidance will be effective for annual periods beginning after December 15, 2015 and interim periods within annual reporting periods beginning after December 15, 2016. We do not believe the adoption of this standard will have a material effect on our consolidated results of operations, financial position or cash flows. In May 2014, the FASB issued ASU 2014-09, " Revenue from Contracts with Customers (Topic 606). " ASU 2014-09 will supersede existing revenue recognition standards with a single model unless those contracts are within the scope of other standards (e.g., an insurance entity’s insurance contracts). The revenue recognition principle in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of 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. In addition, new and enhanced disclosures will be required. Companies can adopt the new standard either using the full retrospective approach, a modified retrospective approach with practical expedients, or a cumulative effect upon adoption approach. In August 2015, the FASB issued ASU 2015-14, " Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date " , which deferred the effective dates of ASU 2014-09 by one year. As such, the standard becomes effective for annual and interim reporting periods beginning after December 15, 2017. Early adoption at the original effective date, interim and annual periods beginning after December 15, 2016 will be permitted. We are currently evaluating the effect of the new revenue recognition principle. |
ORGANIZATION, BASIS OF PRESEN19
ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Adjustments to Previously Reported Amounts | Adoption of the new standard resulted in the recognition of excess tax benefits in our provision for income taxes rather than paid-in capital of $0.6 million and $2.1 million for the three and nine months ended September 30, 2016, respectively, and affected our previously reported first quarter of 2016 results as follows: For the Three Months Ended March 31, 2016 As reported As adjusted Income Statement: (in millions, except per share data) Income tax expense $ 51.8 $ 51.1 Net income $ 37.1 $ 37.8 Basic earnings per share $ 0.84 $ 0.86 Diluted earnings per share $ 0.83 $ 0.85 Cash Flow Statement: Net cash used in operating activities $ (112.1 ) $ (111.4 ) Net cash provided by financing activities $ 88.3 $ 87.6 March 31, 2016 As reported As adjusted Balance Sheet: (in millions) Paid-in capital $ 520.1 $ 519.4 Retained Earnings $ 1,248.8 $ 1,249.5 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Revenue by Geographic Location | Those states and the respective Medicaid premium revenue as a percentage of total consolidated premium revenue are as follows: For the Three Months Ended For the Nine Months Ended 2016 2015 2016 2015 Kentucky 18% 19% 18% 19% Florida 18% 17% 17% 16% Georgia 12% 12% 12% 12% |
Segment Results | A summary of financial information for our reportable segments through the gross margin level and a reconciliation to income before income taxes is presented in the table below. For the Three Months Ended For the Nine Months Ended 2016 2015 2016 2015 (in millions) Premium revenue: Medicaid Health Plans $ 2,443.9 2,273.9 $ 7,134.0 $ 6,728.0 Medicare Health Plans 959.0 961.1 2,920.6 2,937.1 Medicare PDPs 175.9 202.3 650.8 716.8 Total premium revenue 3,578.8 3,437.3 10,705.4 10,381.9 Medical benefits expense: Medicaid Health Plans 2,134.8 1,991.3 6,124.8 5,842.2 Medicare Health Plans 802.1 834.8 2,458.2 2,548.8 Medicare PDPs 103.3 121.3 508.0 585.7 Total medical benefits expense 3,040.2 2,947.4 9,091.0 8,976.7 ACA industry fee expense: Medicaid Health Plans 37.3 33.0 110.6 102.2 Medicare Health Plans 15.9 14.9 48.2 50.7 Medicare PDPs 3.9 6.0 12.2 17.6 Total ACA industry fee expense 57.1 53.9 171.0 170.5 Gross margin Medicaid Health Plans 271.8 249.6 898.6 783.6 Medicare Health Plans 141.0 111.4 414.2 337.6 Medicare PDPs 68.7 75.0 130.6 113.5 Total gross margin 481.5 436.0 1,443.4 1,234.7 Investment and other income 5.2 3.7 13.5 11.5 Other expenses, net (1) (333.8 ) (335.0 ) (1,008.4 ) (946.4 ) Income before income taxes $ 152.9 $ 104.7 $ 448.5 $ 299.8 (1) Other expenses, net includes selling, general and administrative expenses, Medicaid premium taxes, depreciation and amortization, and interest. Other expenses, net for the three and nine months ended September 30, 2015 also includes the gain on the Sterling divestiture. |
EARNINGS PER COMMON SHARE (Tabl
EARNINGS PER COMMON SHARE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Calculation of the Weighted-average Common Shares Outstanding - Diluted | The calculation of the weighted-average common shares outstanding — diluted is as follows: For the Three Months Ended For the Nine Months Ended 2016 2015 2016 2015 Weighted-average common shares outstanding — basic 44,276,035 44,084,004 44,234,001 44,040,253 Dilutive effect of outstanding stock-based compensation awards 363,407 340,301 327,050 321,955 Weighted-average common shares outstanding — diluted 44,639,442 44,424,305 44,561,051 44,362,208 Anti-dilutive stock-based compensation awards excluded from computation 535 59,263 19,595 67,432 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
Available-for-sale Securities | Excluding Restricted Investments, the amortized cost, gross unrealized gains or losses and estimated fair value of short-term and long-term investments by security type are summarized in the following tables. Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value September 30, 2016 Auction rate securities $ 33.9 $ — $ (2.9 ) $ 31.0 Corporate debt and other securities 82.1 0.2 — 82.3 Money market funds 52.8 — — 52.8 Municipal securities 41.0 0.6 (0.1 ) 41.5 U.S. government securities 2.9 — — 2.9 Variable rate bond fund 85.1 — (1.1 ) 84.0 $ 297.8 $ 0.8 $ (4.1 ) $ 294.5 December 31, 2015 Auction rate securities $ 34.0 $ — $ (2.3 ) $ 31.7 Corporate debt and other securities 121.4 — (0.4 ) 121.0 Money market funds 45.9 — — 45.9 Municipal securities 46.0 0.4 (0.1 ) 46.3 U.S. government securities 7.1 — — 7.1 Variable rate bond fund 85.1 — (0.9 ) 84.2 $ 339.5 $ 0.4 $ (3.7 ) $ 336.2 |
Contractual Maturities of Available-for-sale Securities | Contractual maturities of available-for-sale securities at September 30, 2016 are as follows: Total Within 1 Year 1 Through 5 Years 5 Through 10 Years Thereafter Auction rate securities $ 31.0 $ — $ — $ — $ 31.0 Corporate debt and other securities 82.3 50.5 31.8 — — Money market funds 52.8 52.8 — — — Municipal securities 41.5 13.4 21.7 6.4 — U.S. government securities 2.9 2.3 0.6 — — Variable rate bond fund 84.0 84.0 — — — $ 294.5 $ 203.0 $ 54.1 $ 6.4 $ 31.0 |
RESTRICTED INVESTMENTS (Tables)
RESTRICTED INVESTMENTS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Restricted Investments Note [Abstract] | |
Schedule of Restricted Investments | The amortized cost, gross unrealized gains, gross unrealized losses and fair value of our restricted investment securities are as follows: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value September 30, 2016 Cash $ 62.2 $ — $ — $ 62.2 Certificates of deposit 0.2 — — 0.2 Money market funds 67.3 — — 67.3 U.S. government securities 73.5 — — 73.5 $ 203.2 $ — $ — $ 203.2 December 31, 2015 Cash $ 3.2 $ — $ — $ 3.2 Certificates of deposit 1.1 — — 1.1 Money market funds 67.5 — — 67.5 U.S. government securities 124.3 — (0.1 ) 124.2 $ 196.1 $ — $ (0.1 ) $ 196.0 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Stock Unit Award Activity | A summary of RSU, PSU and MSU award activity for the nine months ended September 30, 2016 at target is presented in the table below. RSUs PSUs MSUs Total Outstanding as of January 1, 2016 290,619 395,899 133,290 819,808 Granted 174,281 274,218 15,879 464,378 Vested (147,144 ) (63,729 ) (39,808 ) (250,681 ) Forfeited and expired (31,218 ) (106,538 ) (17,650 ) (155,406 ) Outstanding as of September 30, 2016 286,538 499,850 91,711 878,099 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Debt Obligations | The following table summarizes our outstanding debt obligations and their classification in the accompanying Condensed Consolidated Balance Sheets (in millions): September 30, 2016 December 31, 2015 Current portion of long-term debt: Term loan $ — $ 300.0 Debt issuance costs — (0.5 ) Total current portion of long-term debt $ — $ 299.5 Long-term debt: 5.75% Senior Notes, net of unamortized debt premium $ 910.2 $ 912.1 2016 Revolving Credit Facility 100.0 — Debt issuance costs (12.8 ) (12.5 ) Total long-term debt $ 997.4 $ 899.6 Total debt $ 997.4 $ 1,199.1 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Assets and liabilities measured at fair value on a recurring basis at September 30, 2016 are as follows: Fair Value Measurements Using Carrying Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Investments: Asset backed securities $ 8.0 $ — $ 8.0 $ — Auction rate securities 31.0 — — 31.0 Corporate debt securities 74.3 — 74.3 — Money market funds 52.8 52.8 — — Municipal securities 41.5 — 41.5 — U.S. government and agency obligations 2.9 2.9 — — Variable rate bond fund 84.0 84.0 — — Total investments $ 294.5 $ 139.7 $ 123.8 $ 31.0 Restricted investments: Cash 62.2 62.2 — — Certificates of deposit 0.2 — 0.2 — Money market funds 67.3 67.3 — — U.S. government and agency obligations 73.5 73.5 — — Total restricted investments $ 203.2 $ 203.0 $ 0.2 $ — Assets and liabilities measured at fair value on a recurring basis at December 31, 2015 are as follows: Fair Value Measurements Using Carrying Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Investments: Asset backed securities $ 17.2 $ — $ 17.2 $ — Auction rate securities 31.7 — — 31.7 Corporate debt securities 103.8 — 103.8 — Money market funds 45.9 45.9 — — Municipal securities 46.3 — 46.3 — U.S. government securities 7.1 7.1 — — Variable rate bond fund 84.2 84.2 — — Total investments $ 336.2 $ 137.2 $ 167.3 $ 31.7 Restricted investments: Cash $ 3.2 $ 3.2 $ — $ — Certificates of deposit 1.1 — 1.1 — Money market funds 67.5 67.5 — — U.S. government securities 124.2 124.2 — — Total restricted investments $ 196.0 $ 194.9 $ 1.1 $ — |
Schedule of Carrying Value and Fair Value of Long-term Debt | The following table presents the carrying value and fair value of our long-term debt outstanding as of September 30, 2016 and December 31, 2015 : Fair Value Measurements Using Carrying Value Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Long-term debt - September 30, 2016 $ 997.4 $ 929.3 $ 97.2 $ — Long-term debt - December 31, 2015 899.6 931.5 — — |
Changes in the Fair Value of Auction Rate Securities | The following table presents the changes in the fair value of our Level 3 auction rate securities for the three and nine months ended September 30, 2016 and 2015. For the Three Months Ended For the Nine Months Ended 2016 2015 2016 2015 Balance at beginning of period $ 30.6 $ 31.7 $ 31.7 $ 32.3 Realized gains (losses) in earnings — — — — Unrealized gains (losses) in other comprehensive income 0.5 — (0.6 ) (0.5 ) Purchases, sales and redemptions (0.1 ) — (0.1 ) (0.1 ) Net transfers in or (out) of Level 3 — — — — Balance as of September 30, $ 31.0 $ 31.7 $ 31.0 $ 31.7 |
ORGANIZATION, BASIS OF PRESEN27
ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) Members in Millions, $ in Millions | 9 Months Ended | ||
Sep. 30, 2016USD ($)MembersState | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Number of members | Members | 3.8 | ||
Number of states | State | 50 | ||
Favorable prior year reserve development | $ 140.5 | $ 53.8 | |
New Accounting Pronouncement, Early Adoption, Effect | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Reclassification from current deferred tax assets | $ 34.8 |
ORGANIZATION, BASIS OF PRESEN28
ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Details of Significance related to the Composition of Reported Balances (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Funds Receivable/Payable for the Benefit of Members [Line Items] | ||
Funds payable for the benefit of members | $ 639.6 | $ 0 |
Advance Payment CMS | ||
Funds Receivable/Payable for the Benefit of Members [Line Items] | ||
Funds payable for the benefit of members | $ 304.8 |
ORGANIZATION, BASIS OF PRESEN29
ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Adjustments to Previously Reported Amounts (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Income Statement [Abstract] | ||||||
Income tax expense | $ 84.3 | $ 68.3 | $ 251.3 | $ 194.2 | ||
Net income | $ 68.6 | $ 36.4 | $ 197.2 | $ 105.6 | ||
Basic earnings per share (USD per share) | $ 1.55 | $ 0.83 | $ 4.46 | $ 2.40 | ||
Diluted earnings per share (USD per share) | $ 1.54 | $ 0.82 | $ 4.43 | $ 2.38 | ||
Cash Flow Statement: | ||||||
Net cash used in operating activities | $ 1,080.3 | $ 237.9 | ||||
Net cash provided by financing activities | 444.9 | $ (24.9) | ||||
Balance Sheet: | ||||||
Paid-in capital | $ 535.7 | 535.7 | $ 518.4 | |||
Retained earnings | 1,408.9 | 1,408.9 | $ 1,211.7 | |||
Accounting Standards Update 2016-09 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Recognition of excess tax benefits | $ 0.6 | $ 2.1 | ||||
Income Statement [Abstract] | ||||||
Income tax expense | $ 51.1 | |||||
Net income | $ 37.8 | |||||
Basic earnings per share (USD per share) | $ 0.86 | |||||
Diluted earnings per share (USD per share) | $ 0.85 | |||||
Cash Flow Statement: | ||||||
Net cash used in operating activities | $ (111.4) | |||||
Net cash provided by financing activities | 87.6 | |||||
Balance Sheet: | ||||||
Paid-in capital | 519.4 | |||||
Retained earnings | 1,249.5 | |||||
Accounting Standards Update 2016-09 | Scenario, Previously Reported | ||||||
Income Statement [Abstract] | ||||||
Income tax expense | 51.8 | |||||
Net income | $ 37.1 | |||||
Basic earnings per share (USD per share) | $ 0.84 | |||||
Diluted earnings per share (USD per share) | $ 0.83 | |||||
Cash Flow Statement: | ||||||
Net cash used in operating activities | $ (112.1) | |||||
Net cash provided by financing activities | 88.3 | |||||
Balance Sheet: | ||||||
Paid-in capital | 520.1 | |||||
Retained earnings | $ 1,248.8 |
ACQUISITIONS AND DIVESTITURES (
ACQUISITIONS AND DIVESTITURES (Details) beneficiary in Thousands, $ in Millions | 1 Months Ended | ||
Sep. 30, 2016USD ($)beneficiary | Jun. 01, 2016USD ($) | Dec. 31, 2015USD ($) | |
Business Acquisition [Line Items] | |||
Goodwill | $ 289.8 | $ 263.2 | |
Care 1st Arizona | |||
Business Acquisition [Line Items] | |||
Number of beneficiaries acquired | beneficiary | 114 | ||
Acquisition consideration transferred | $ 157.5 | ||
Advicare | |||
Business Acquisition [Line Items] | |||
Identified intangible assets | $ 4.7 | ||
Goodwill | $ 26.6 |
SEGMENT REPORTING - Revenue by
SEGMENT REPORTING - Revenue by Geographic Location (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Kentucky | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Premium revenue | 18.00% | 19.00% | 18.00% | 19.00% |
Florida | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Premium revenue | 18.00% | 17.00% | 17.00% | 16.00% |
Georgia | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Premium revenue | 12.00% | 12.00% | 12.00% | 12.00% |
SEGMENT REPORTING - Segment Res
SEGMENT REPORTING - Segment Results (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Reporting Information [Line Items] | ||||
Premium revenue | $ 3,578.8 | $ 3,437.3 | $ 10,705.4 | $ 10,381.9 |
Medical benefits expense | 3,040.2 | 2,947.4 | 9,091 | 8,976.7 |
ACA industry fee expense | 57.1 | 53.9 | 171 | 170.5 |
Gross margin | 481.5 | 436 | 1,443.4 | 1,234.7 |
Investment and other income | 5.2 | 3.7 | 13.5 | 11.5 |
Other expenses, net | (333.8) | (335) | (1,008.4) | (946.4) |
Income before income taxes | 152.9 | 104.7 | 448.5 | 299.8 |
Medicaid Health Plans | ||||
Segment Reporting Information [Line Items] | ||||
Premium revenue | 2,443.9 | 2,273.9 | 7,134 | 6,728 |
Medical benefits expense | 2,134.8 | 1,991.3 | 6,124.8 | 5,842.2 |
ACA industry fee expense | 37.3 | 33 | 110.6 | 102.2 |
Gross margin | 271.8 | 249.6 | 898.6 | 783.6 |
Medicare Health Plans | ||||
Segment Reporting Information [Line Items] | ||||
Premium revenue | 959 | 961.1 | 2,920.6 | 2,937.1 |
Medical benefits expense | 802.1 | 834.8 | 2,458.2 | 2,548.8 |
ACA industry fee expense | 15.9 | 14.9 | 48.2 | 50.7 |
Gross margin | 141 | 111.4 | 414.2 | 337.6 |
Medicare PDPs | ||||
Segment Reporting Information [Line Items] | ||||
Premium revenue | 175.9 | 202.3 | 650.8 | 716.8 |
Medical benefits expense | 103.3 | 121.3 | 508 | 585.7 |
ACA industry fee expense | 3.9 | 6 | 12.2 | 17.6 |
Gross margin | $ 68.7 | $ 75 | $ 130.6 | $ 113.5 |
SEGMENT REPORTING - Narrative (
SEGMENT REPORTING - Narrative (Details) | 1 Months Ended | 9 Months Ended |
May 31, 2016renewal_option | Sep. 30, 2016Segmentrenewal_option | |
Segment Reporting Information [Line Items] | ||
Number of reportable segments | Segment | 3 | |
Current Georgia Medicaid Plan | ||
Segment Reporting Information [Line Items] | ||
Number of renewal options | 2 | |
Renewal term | 6 months | |
Georgia Medicaid Plan Commencing July 1, 2017 | ||
Segment Reporting Information [Line Items] | ||
Number of renewal options | 4 | |
Renewal term | 1 year | |
Initial term | 1 year | |
Kentucky Medicaid Plan | ||
Segment Reporting Information [Line Items] | ||
Number of renewal options, option one | 1 | |
Renewal term, option one | 6 months | |
Number of renewal options, option two | 3 | |
Renewal term, option two | 1 year |
EARNINGS PER COMMON SHARE (Deta
EARNINGS PER COMMON SHARE (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Earnings Per Share [Abstract] | ||||
Weighted-average common shares outstanding — basic | 44,276,035 | 44,084,004 | 44,234,001 | 44,040,253 |
Dilutive effect of outstanding stock-based compensation awards | 363,407 | 340,301 | 327,050 | 321,955 |
Weighted-average common shares outstanding — diluted | 44,639,442 | 44,424,305 | 44,561,051 | 44,362,208 |
Anti-dilutive stock-based compensation awards excluded from computation | 535 | 59,263 | 19,595 | 67,432 |
INVESTMENTS (Details)
INVESTMENTS (Details) $ in Millions | Sep. 30, 2016USD ($)Security | Oct. 31, 2016USD ($) | Sep. 30, 2016USD ($)Security | Dec. 31, 2015USD ($) |
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | $ 297.8 | $ 297.8 | $ 339.5 | |
Gross Unrealized Gains | 0.8 | 0.8 | 0.4 | |
Gross Unrealized Losses | (4.1) | (4.1) | (3.7) | |
Estimated Fair Value | 294.5 | 294.5 | 336.2 | |
Available-for-sale securities, failed auction, value | 33.9 | 33.9 | ||
Within 1 Year | 203 | 203 | ||
1 Through 5 Years | 54.1 | 54.1 | ||
5 Through 10 Years | 6.4 | 6.4 | ||
Thereafter | 31 | $ 31 | ||
Available-for-sale securities, failed auction, maximum maturity period | 21 years | |||
Available-for-sale securities, failed auction, weighted-average remaining life | 17 years | |||
Auction rate securities | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | 33.9 | $ 33.9 | 34 | |
Gross Unrealized Gains | 0 | 0 | 0 | |
Gross Unrealized Losses | (2.9) | (2.9) | (2.3) | |
Estimated Fair Value | 31 | 31 | 31.7 | |
Within 1 Year | 0 | 0 | ||
1 Through 5 Years | 0 | 0 | ||
5 Through 10 Years | 0 | 0 | ||
Thereafter | 31 | 31 | ||
Corporate debt and other securities | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | 82.1 | 82.1 | 121.4 | |
Gross Unrealized Gains | 0.2 | 0.2 | 0 | |
Gross Unrealized Losses | 0 | 0 | (0.4) | |
Estimated Fair Value | 82.3 | 82.3 | 121 | |
Within 1 Year | 50.5 | 50.5 | ||
1 Through 5 Years | 31.8 | 31.8 | ||
5 Through 10 Years | 0 | 0 | ||
Thereafter | 0 | 0 | ||
Money market funds | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | 52.8 | 52.8 | 45.9 | |
Gross Unrealized Gains | 0 | 0 | 0 | |
Gross Unrealized Losses | 0 | 0 | 0 | |
Estimated Fair Value | 52.8 | 52.8 | 45.9 | |
Within 1 Year | 52.8 | 52.8 | ||
1 Through 5 Years | 0 | 0 | ||
5 Through 10 Years | 0 | 0 | ||
Thereafter | 0 | 0 | ||
Municipal securities | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | 41 | 41 | 46 | |
Gross Unrealized Gains | 0.6 | 0.6 | 0.4 | |
Gross Unrealized Losses | (0.1) | (0.1) | (0.1) | |
Estimated Fair Value | 41.5 | 41.5 | 46.3 | |
Within 1 Year | 13.4 | 13.4 | ||
1 Through 5 Years | 21.7 | 21.7 | ||
5 Through 10 Years | 6.4 | 6.4 | ||
Thereafter | 0 | 0 | ||
U.S. government securities | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | 2.9 | 2.9 | 7.1 | |
Gross Unrealized Gains | 0 | 0 | 0 | |
Gross Unrealized Losses | 0 | 0 | 0 | |
Estimated Fair Value | 2.9 | 2.9 | 7.1 | |
Within 1 Year | 2.3 | 2.3 | ||
1 Through 5 Years | 0.6 | 0.6 | ||
5 Through 10 Years | 0 | 0 | ||
Thereafter | 0 | 0 | ||
Variable rate bond fund | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | 85.1 | 85.1 | 85.1 | |
Gross Unrealized Gains | 0 | 0 | 0 | |
Gross Unrealized Losses | (1.1) | (1.1) | (0.9) | |
Estimated Fair Value | 84 | 84 | $ 84.2 | |
Within 1 Year | 84 | 84 | ||
1 Through 5 Years | 0 | 0 | ||
5 Through 10 Years | 0 | 0 | ||
Thereafter | 0 | 0 | ||
External Credit Rating, Investment Grade | Auction rate securities | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | $ 22.3 | $ 22.3 | ||
Number of securities | Security | 2 | 2 | ||
External Credit Rating, Non Investment Grade | Auction rate securities | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost | $ 11.6 | $ 11.6 | ||
Number of securities | Security | 1 | 1 | ||
Minimum | Auction rate securities | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Rate setting interval for sale | 7 days | |||
Maximum | Auction rate securities | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Rate setting interval for sale | 35 days | |||
Subsequent Event | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Available-for-sale securities, sold at par | $ 20.1 | |||
Estimate of Fair Value Measurement | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Available-for-sale securities, sold at par | $ 18.5 |
RESTRICTED INVESTMENTS (Details
RESTRICTED INVESTMENTS (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Restricted Cash and Cash Equivalents Items [Line Items] | ||
Amortized Cost | $ 203.2 | $ 196.1 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | (0.1) |
Estimated Fair Value | 203.2 | 196 |
Cash | ||
Restricted Cash and Cash Equivalents Items [Line Items] | ||
Amortized Cost | 62.2 | 3.2 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 62.2 | 3.2 |
Certificates of deposit | ||
Restricted Cash and Cash Equivalents Items [Line Items] | ||
Amortized Cost | 0.2 | 1.1 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 0.2 | 1.1 |
Money market funds | ||
Restricted Cash and Cash Equivalents Items [Line Items] | ||
Amortized Cost | 67.3 | 67.5 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 67.3 | 67.5 |
U.S. government securities | ||
Restricted Cash and Cash Equivalents Items [Line Items] | ||
Amortized Cost | 73.5 | 124.3 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | (0.1) |
Estimated Fair Value | $ 73.5 | $ 124.2 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($)$ / sharesshares | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)compensation_arrangement$ / sharesshares | Sep. 30, 2015USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense | $ | $ 9.2 | $ 4.8 | $ 24.2 | $ 13.5 |
Unrecognized compensation cost | $ | $ 47.7 | $ 47.7 | ||
Weighted-average period over which compensation costs are expected to be recognized (in years) | 2 years | |||
Closing common stock price (in USD per share) | $ / shares | $ 117.09 | $ 117.09 | ||
Equity Instruments Other than Options [Roll Forward] | ||||
Outstanding as of beginning of period (in shares) | 819,808 | |||
Granted (in shares) | 464,378 | |||
Vested (in shares) | (250,681) | |||
Forfeited and expired (in shares) | (155,406) | |||
Outstanding at end of period (in shares) | 878,099 | 878,099 | ||
Grants in period, weighted average grant date fair value (in USD per share) | $ / shares | $ 99.76 | |||
RSUs | ||||
Equity Instruments Other than Options [Roll Forward] | ||||
Outstanding as of beginning of period (in shares) | 290,619 | |||
Granted (in shares) | 174,281 | |||
Vested (in shares) | (147,144) | |||
Forfeited and expired (in shares) | (31,218) | |||
Outstanding at end of period (in shares) | 286,538 | 286,538 | ||
PSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation cost | $ | $ 15.8 | $ 15.8 | ||
Vesting period | 3 years | |||
Equity Instruments Other than Options [Roll Forward] | ||||
Outstanding as of beginning of period (in shares) | 395,899 | |||
Granted (in shares) | 274,218 | |||
Vested (in shares) | (63,729) | |||
Forfeited and expired (in shares) | (106,538) | |||
Outstanding at end of period (in shares) | 499,850 | 499,850 | ||
MSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Last trading days of the year used to calculate earned common stock | 30 months | |||
Performance ratio maximum | 200.00% | |||
Maximum decline in share price | 50.00% | |||
Shares earned upon exceeding maximum stock decline | 0 | |||
Equity Instruments Other than Options [Roll Forward] | ||||
Outstanding as of beginning of period (in shares) | 133,290 | |||
Granted (in shares) | 15,879 | |||
Vested (in shares) | (39,808) | |||
Forfeited and expired (in shares) | (17,650) | |||
Outstanding at end of period (in shares) | 91,711 | 91,711 | ||
Minimum | RSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 1 year | |||
Minimum | PSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares earned upon vesting, number | 0 | |||
Number of variations of share-based compensation arrangements | compensation_arrangement | 2 | |||
Maximum | RSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Maximum | PSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares earned upon vesting, percent of target award | 200.00% |
DEBT - Long-term Debt Instrumen
DEBT - Long-term Debt Instruments (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 | Jun. 01, 2015 |
Long-term Debt, Current Maturities [Abstract] | |||
Term loan | $ 0 | $ 300 | |
Debt issuance costs | 0 | (0.5) | |
Total current portion of long-term debt | 0 | 299.5 | |
Long-term debt: | |||
5.75% Senior Notes, net of unamortized debt premium | 910.2 | 912.1 | |
2016 Revolving Credit Facility | 100 | 0 | |
Debt issuance costs | (12.8) | (12.5) | |
Total long-term debt | 997.4 | 899.6 | |
Total debt | $ 997.4 | $ 1,199.1 | |
Senior Notes | 5.75 Percent Senior Notes Due 2020, Issued 2015 | |||
Long-term debt: | |||
Interest rate | 5.75% | 5.75% | 5.75% |
DEBT - Narrative (Details)
DEBT - Narrative (Details) - USD ($) | Sep. 30, 2016 | Jan. 08, 2016 | Jun. 01, 2015 | Sep. 30, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | |||||
Senior notes | $ 910,200,000 | $ 910,200,000 | $ 912,100,000 | ||
Cash used to repay debt | $ 100,000,000 | 100,000,000 | |||
Balance drawn on credit facility | 100,000,000 | 100,000,000 | $ 0 | ||
Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Debt premium | $ 10,200,000 | $ 10,200,000 | |||
5.75 Percent Senior Notes Due 2020, Issued 2015 | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount | $ 300,000,000 | ||||
Interest rate | 5.75% | 5.75% | 5.75% | 5.75% | |
Issue price | 104.50% | ||||
Debt premium | $ 13,500,000 | ||||
5.75 Percent Senior Notes Due 2020, Issued 2013 | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount | $ 600,000,000 | $ 600,000,000 | |||
2016 Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Credit facility, maximum borrowing capacity | 850,000,000 | ||||
Proceeds from credit facility used to repay debt | $ 200,000,000 | ||||
Balance drawn on credit facility | $ 100,000,000 | $ 100,000,000 | |||
Credit facility interest rate | 2.19% | ||||
2016 Revolving Credit Facility | Minimum | |||||
Debt Instrument [Line Items] | |||||
Unutilized commitments fee | 0.25% | ||||
2016 Revolving Credit Facility | Maximum | |||||
Debt Instrument [Line Items] | |||||
Unutilized commitments fee | 0.35% | ||||
Prior Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Term loan repaid | $ 300,000,000 | ||||
Federal Reserve Bank of New York Rate | 2016 Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 0.50% | ||||
London Interbank Offered Rate (LIBOR) | 2016 Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 1.00% | ||||
London Interbank Offered Rate (LIBOR) | 2016 Revolving Credit Facility | ABR Loans | Minimum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 0.50% | ||||
London Interbank Offered Rate (LIBOR) | 2016 Revolving Credit Facility | ABR Loans | Maximum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 1.00% | ||||
London Interbank Offered Rate (LIBOR) | 2016 Revolving Credit Facility | Eurodollar Loans | Minimum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 1.50% | ||||
London Interbank Offered Rate (LIBOR) | 2016 Revolving Credit Facility | Eurodollar Loans | Maximum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 2.00% | ||||
Letter of Credit | 2016 Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Available letters of credit | $ 150,000,000 | ||||
Term Loan | 2016 Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Credit facility, maximum borrowing capacity | $ 200,000,000 | ||||
Lender Concentration Risk | 2016 Revolving Credit Facility | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Minimum lender holding for accelerated maturity rights | 50.00% |
FAIR VALUE MEASUREMENTS - Asset
FAIR VALUE MEASUREMENTS - Assets and Liabilities Measured at Fair Value (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | $ 139.7 | $ 137.2 |
Restricted investments | 203 | 194.9 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Asset backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Auction rate securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 52.8 | 45.9 |
Restricted investments | 67.3 | 67.5 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. government and agency obligations | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 2.9 | 7.1 |
Restricted investments | 73.5 | 124.2 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Variable rate bond fund | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 84 | 84.2 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Cash | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Restricted investments | 62.2 | 3.2 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Restricted investments | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 123.8 | 167.3 |
Restricted investments | 0.2 | 1.1 |
Significant Other Observable Inputs (Level 2) | Asset backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 8 | 17.2 |
Significant Other Observable Inputs (Level 2) | Auction rate securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Significant Other Observable Inputs (Level 2) | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 74.3 | 103.8 |
Significant Other Observable Inputs (Level 2) | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Restricted investments | 0 | 0 |
Significant Other Observable Inputs (Level 2) | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 41.5 | 46.3 |
Significant Other Observable Inputs (Level 2) | U.S. government and agency obligations | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Restricted investments | 0 | 0 |
Significant Other Observable Inputs (Level 2) | Variable rate bond fund | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Significant Other Observable Inputs (Level 2) | Cash | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Restricted investments | 0 | 0 |
Significant Other Observable Inputs (Level 2) | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Restricted investments | 0.2 | 1.1 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 31 | 31.7 |
Restricted investments | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Asset backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Auction rate securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 31 | 31.7 |
Significant Unobservable Inputs (Level 3) | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Restricted investments | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Significant Unobservable Inputs (Level 3) | U.S. government and agency obligations | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Restricted investments | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Variable rate bond fund | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Cash | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Restricted investments | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Restricted investments | 0 | 0 |
Reported Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 294.5 | 336.2 |
Restricted investments | 203.2 | 196 |
Reported Value Measurement | Asset backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 8 | 17.2 |
Reported Value Measurement | Auction rate securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 31 | 31.7 |
Reported Value Measurement | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 74.3 | 103.8 |
Reported Value Measurement | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 52.8 | 45.9 |
Restricted investments | 67.3 | 67.5 |
Reported Value Measurement | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 41.5 | 46.3 |
Reported Value Measurement | U.S. government and agency obligations | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 2.9 | 7.1 |
Restricted investments | 73.5 | 124.2 |
Reported Value Measurement | Variable rate bond fund | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 84 | 84.2 |
Reported Value Measurement | Cash | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Restricted investments | 62.2 | 3.2 |
Reported Value Measurement | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Restricted investments | $ 0.2 | $ 1.1 |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair Value of Debt (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Debt Instrument [Line Items] | ||
Long-term debt, fair value | $ 929.3 | $ 931.5 |
Significant Other Observable Inputs (Level 2) | ||
Debt Instrument [Line Items] | ||
Long-term debt, fair value | 97.2 | 0 |
Significant Unobservable Inputs (Level 3) | ||
Debt Instrument [Line Items] | ||
Long-term debt, fair value | 0 | 0 |
Reported Value Measurement | ||
Debt Instrument [Line Items] | ||
Long-term debt, fair value | $ 997.4 | $ 899.6 |
FAIR VALUE MEASUREMENTS - Chang
FAIR VALUE MEASUREMENTS - Changes in the Fair Value of Auction Rate Securities (Details) - Significant Unobservable Inputs (Level 3) - Fair Value, Measurements, Recurring - Auction rate securities - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | $ 30.6 | $ 31.7 | $ 31.7 | $ 32.3 |
Realized gains (losses) in earnings | 0 | 0 | 0 | 0 |
Unrealized gains (losses) in other comprehensive income | 0.5 | 0 | (0.6) | (0.5) |
Purchases, sales and redemptions | (0.1) | 0 | (0.1) | (0.1) |
Net transfers in or (out) of Level 3 | 0 | 0 | 0 | 0 |
Ending balance | $ 31 | $ 31.7 | $ 31 | $ 31.7 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2016 | Jun. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||||||
Effective income tax rate | 55.10% | 65.20% | 56.00% | 64.80% | ||
Compensation deduction | $ 2.2 | $ 6.6 | ||||
Unrecognized tax benefits | $ 13.9 | 13.9 | $ 14 | |||
Previously unrecognized tax benefits recognized | $ 2.6 | $ 2.6 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | Mar. 23, 2012USD ($)Installment | Oct. 31, 2016USD ($) | Sep. 30, 2016USD ($)associateformer_officerEmployee | Mar. 31, 2015USD ($) | Sep. 30, 2016USD ($)associateformer_officerEmployee | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)associateformer_officerEmployee | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)associateformer_officerEmployee | Jun. 30, 2016former_officerperson | Jun. 30, 2013Employee | Jan. 31, 2012Employee | Dec. 31, 2010 | Jan. 31, 2008Action |
Loss Contingencies [Line Items] | ||||||||||||||
Obligation period following submission of final report | 120 days | |||||||||||||
Civil Inquiry | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Settlement agreement, amount | $ 137,500,000 | |||||||||||||
Settlement agreement, number of installment payments | Installment | 4 | |||||||||||||
Settlement agreement, amount of installment payments | $ 34,400,000 | |||||||||||||
Term of agreement | 36 months | |||||||||||||
Settlement agreement, interest rate | 3.125% | |||||||||||||
Final payment under settlement agreement | $ 35,400,000 | |||||||||||||
Amount payable related to investigation resolution | $ 0 | |||||||||||||
Class Action Complaints | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Portion of sums recovered from former officers to be paid to class members | 25.00% | |||||||||||||
Number of former executives being pursued in action filed by entity | former_officer | 3 | |||||||||||||
Corporate Integrity Agreement | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Term of agreement | 5 years | |||||||||||||
Derivative Lawsuits | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Number of former executives being pursued in action filed by entity | Employee | 3 | |||||||||||||
Number of former employees receiving notices of cross appeal | Employee | 3 | 3 | 3 | 3 | ||||||||||
Number of former associates being pursued in action filed by entity | associate | 2 | 2 | 2 | 2 | ||||||||||
Number of former employees found guilty and appealing | Employee | 4 | |||||||||||||
Number of former employees being pursued in action filed by entity | 5 | 5 | 5 | 5 | 3 | |||||||||
Number of actions filed in the federal and state courts between October 2007 and January 2008 | Action | 6 | |||||||||||||
Legal fees | $ 6,500,000 | $ 7,000,000 | $ 16,200,000 | $ 19,900,000 | $ 227,300,000 | |||||||||
Mr. Farha Case | Derivative Lawsuits | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Settlement agreement, amount | $ 7,500,000 | |||||||||||||
Maximum legal fee obligation | $ 7,500,000 | |||||||||||||
Subsequent Event | Mr. Behrens Case | Derivative Lawsuits | ||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||
Settlement agreement, amount | $ 1,500,000 | |||||||||||||
Maximum legal fee obligation | $ 1,500,000 |