Document and Entity Information
Document and Entity Information Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 13, 2018 | Jun. 30, 2017 | |
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 Public Float | $ 8 | ||
Entity Common Stock, Shares Outstanding (in shares) | 44,529,151 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2017 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues: | |||
Premium | $ 16,960.3 | $ 14,220.9 | $ 13,874.8 |
Investment and other income | 46.9 | 16.2 | 15.4 |
Total revenues | 17,007.2 | 14,237.1 | 13,890.2 |
Expenses and other: | |||
Medical benefits | 14,744.8 | 12,089.4 | 11,978.5 |
Selling, general and administrative | 1,484.7 | 1,133.1 | 1,132.9 |
ACA industry fee | 0 | 228.4 | 227.3 |
Medicaid premium taxes | 119.8 | 110 | 94.7 |
Depreciation and amortization | 120.4 | 87.6 | 72.6 |
Interest | 68.5 | 59.1 | 54.2 |
Gain on divestiture of business | 0 | 0 | (6.1) |
Total expenses, net | 16,538.2 | 13,707.6 | 13,554.1 |
Income (loss) from operations | 469 | 529.5 | 336.1 |
Loss on extinguishment of debt | 26.1 | 0 | 0 |
Income before income taxes and equity in earnings of unconsolidated subsidiaries | 442.9 | 529.5 | 336.1 |
Equity in earnings of unconsolidated subsidiaries | 18.7 | 0 | 0 |
Income before income taxes | 461.6 | 529.5 | 336.1 |
Income tax expense | 87.9 | 287.4 | 217.5 |
Net income | 373.7 | 242.1 | 118.6 |
Other comprehensive income, before tax: | |||
Change in net unrealized gains and losses on available-for-sale securities | (2.2) | 1.8 | (1.9) |
Income tax benefit related to other comprehensive income (loss) | (0.5) | 0.6 | (0.3) |
Other comprehensive income (loss), net of tax | (1.7) | 1.2 | (1.6) |
Comprehensive income | $ 372 | $ 243.3 | $ 117 |
Earnings per common share: | |||
Basic (in dollars per share) | $ 8.40 | $ 5.47 | $ 2.69 |
Diluted (in dollars per share) | $ 8.31 | $ 5.43 | $ 2.67 |
Weighted average common shares outstanding: | |||
Basic (in shares) | 44,474,016 | 44,248,778 | 44,057,579 |
Diluted (in shares) | 44,967,061 | 44,619,589 | 44,391,032 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash and cash equivalents | $ 4,198.6 | $ 3,961.4 |
Short-term investments | 469.5 | 124.2 |
Premiums receivable, net | 453.4 | 498.6 |
Pharmacy rebates receivable, net | 335 | 278 |
Receivables from government partners | 44.2 | 6.5 |
Funds receivable for the benefit of members | 27.5 | 32.6 |
Prepaid expenses and other current assets, net | 291 | 218.3 |
Total current assets | 5,819.2 | 5,119.6 |
Property, equipment and capitalized software, net | 319.5 | 274.5 |
Goodwill | 660.7 | 392.5 |
Other intangible assets, net | 367.9 | 74.1 |
Long-term investments | 766.2 | 57.3 |
Restricted investments | 211 | 234.3 |
Other assets | 4.9 | 0.5 |
Assets of discontinued operations | 215.2 | 0 |
Total Assets | 8,364.6 | 6,152.8 |
Current Liabilities: | ||
Medical benefits payable | 2,146.3 | 1,690.5 |
Unearned premiums | 65.9 | 3.3 |
Accounts payable and accrued expenses | 788.1 | 668.5 |
Funds payable for the benefit of members | 1,075.9 | 390.3 |
Other payables to government partners | 367 | 303.2 |
Total current liabilities | 4,443.2 | 3,055.8 |
Deferred income tax liability | 93.4 | 63.4 |
Long-term debt, net | 1,182.4 | 997.6 |
Other liabilities | 13.7 | 35.9 |
Liabilities of discontinued operations | 215.2 | 0 |
Total Liabilities | 5,947.9 | 4,152.7 |
Commitments and contingencies | 0 | 0 |
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, 44,522,988 and 44,293,881 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively) | 0.4 | 0.4 |
Paid-in capital | 591.5 | 546.9 |
Retained earnings | 1,827.5 | 1,453.8 |
Accumulated other comprehensive loss | (2.7) | (1) |
Total Stockholders' Equity | 2,416.7 | 2,000.1 |
Total Liabilities and Stockholders' Equity | $ 8,364.6 | $ 6,152.8 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Stockholders' Equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 20,000,000 | 20,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, issued (in shares) | 44,522,988 | 44,293,881 |
Common stock, outstanding (in shares) | 44,522,988 | 44,293,881 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Millions | Total | Common Stock | Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Loss |
Balance, beginning of period (in shares) at Dec. 31, 2014 | 43,914,106 | ||||
Balance, beginning of period at Dec. 31, 2014 | $ 1,595.9 | $ 0.4 | $ 503 | $ 1,093.1 | $ (0.6) |
Increase (Decrease) in Stockholders' Equity | |||||
Common stock issued for exercised stock options (in shares) | 8,020 | ||||
Common stock issued for exercised stock options | 0.3 | 0.3 | |||
Common stock issued for vested stock-based compensation awards (in shares) | 270,723 | ||||
Common stock issued for vested stock-based compensation awards | 0 | ||||
Repurchase and retirement of shares to satisfy tax withholding requirements (in shares) | (79,521) | ||||
Repurchase and retirement of shares to satisfy tax withholding requirements | (7) | (7) | |||
Stock-based compensation expense, net of forfeitures | 20.2 | 20.2 | |||
Incremental tax benefit from stock-based compensation | 1.9 | 1.9 | |||
Comprehensive income (loss) | 117 | 118.6 | (1.6) | ||
Balance, end of period (in shares) at Dec. 31, 2015 | 44,113,328 | ||||
Balance, end of period at Dec. 31, 2015 | 1,728.3 | $ 0.4 | 518.4 | 1,211.7 | (2.2) |
Increase (Decrease) in Stockholders' Equity | |||||
Common stock issued for vested stock-based compensation awards (in shares) | 255,143 | ||||
Common stock issued for vested stock-based compensation awards | 0 | ||||
Repurchase and retirement of shares to satisfy tax withholding requirements (in shares) | (74,590) | ||||
Repurchase and retirement of shares to satisfy tax withholding requirements | (7) | (7) | |||
Stock-based compensation expense, net of forfeitures | 35.5 | 35.5 | |||
Comprehensive income (loss) | $ 243.3 | 242.1 | 1.2 | ||
Balance, end of period (in shares) at Dec. 31, 2016 | 44,293,881 | 44,293,881 | |||
Balance, end of period at Dec. 31, 2016 | $ 2,000.1 | $ 0.4 | 546.9 | 1,453.8 | (1) |
Increase (Decrease) in Stockholders' Equity | |||||
Common stock issued for vested stock-based compensation awards (in shares) | 332,508 | ||||
Common stock issued for vested stock-based compensation awards | 0 | ||||
Repurchase and retirement of shares to satisfy tax withholding requirements (in shares) | (103,401) | ||||
Repurchase and retirement of shares to satisfy tax withholding requirements | (15.2) | (15.2) | |||
Stock-based compensation expense, net of forfeitures | 59.8 | 59.8 | |||
Comprehensive income (loss) | $ 372 | 373.7 | (1.7) | ||
Balance, end of period (in shares) at Dec. 31, 2017 | 44,522,988 | 44,522,988 | |||
Balance, end of period at Dec. 31, 2017 | $ 2,416.7 | $ 0.4 | $ 591.5 | $ 1,827.5 | $ (2.7) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | |||
Net income | $ 373.7 | $ 242.1 | $ 118.6 |
Adjustments to reconcile net income to cash flows from operating activities: | |||
Depreciation and amortization | 120.4 | 87.6 | 72.6 |
Loss on extinguishment of debt | 26.1 | 0 | 0 |
Stock-based compensation expense | 59.8 | 35.5 | 20.2 |
Deferred taxes, net | (47.1) | 11.6 | 44.6 |
Other, net | 18.2 | 16.8 | 26.1 |
Changes in operating accounts, net of effects from acquisitions and divestitures: | |||
Premiums receivable, net | 136.4 | 95.2 | (8.5) |
Pharmacy rebates receivable, net | (44.1) | (25.5) | 106.4 |
Medical benefits payable | 328.3 | 117.2 | 68.6 |
Unearned premiums | 63.9 | (26.6) | (55.6) |
Other receivables/payables to government partners | 8 | 69.8 | 241.7 |
Amount payable related to investigation resolution | 0 | 0 | (35.2) |
Accrued liabilities and other, net | 6.4 | 124.6 | 113.1 |
Net cash provided by operating activities | 1,050 | 748.3 | 712.6 |
Cash flows from investing activities: | |||
Acquisitions and acquisition-related settlements, net of cash acquired | (728.3) | (68.9) | (17.2) |
Purchases of investments | (1,463.7) | (346.5) | (165.7) |
Proceeds from sales and maturities of investments | 679.4 | 493.7 | 195.7 |
Additions to property, equipment and capitalized software, net | (128.4) | (105.3) | (137) |
Net cash used in investing activities | (1,641) | (27) | (124.2) |
Cash flows from financing activities: | |||
Proceeds from debt, net of financing costs paid | 1,182.2 | 196.9 | 308.9 |
Payments on debt | (1,026.1) | (400) | 0 |
Repurchase and retirement of shares to satisfy tax withholding requirements | (15.2) | (7) | (7) |
Funds received for the benefit of members, net | 671.6 | 1,031.1 | 201.1 |
Other, net | 15.7 | 12.1 | 2.1 |
Net cash provided by (used in) financing activities | 828.2 | 833.1 | 505.1 |
Increase (decrease) in cash and cash equivalents | 237.2 | 1,554.4 | 1,093.5 |
Balance at beginning of period | 3,961.4 | 2,407 | 1,313.5 |
Balance at end of period | 4,198.6 | 3,961.4 | 2,407 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||
Cash paid for taxes | 167.2 | 222.3 | 217.9 |
Cash paid for interest | 57 | 57.3 | 51.9 |
SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS: | |||
Non-cash additions to property, equipment, and capitalized software | $ 3.5 | $ 6.2 | $ 6.1 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BASIS OF PRESENTATION | ORGANIZATION AND BASIS OF PRESENTATION We are a leading managed care company, headquartered in Tampa, Florida, focusing exclusively on providing 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 December 31, 2017, we served approximately 4.4 million members in 50 states and the District of Columbia. We estimate that we are among the largest managed care organizations providing Medicaid managed care services plans, MA plans and PDPs, as measured by membership. Our broad range of experience and government focus allows us to effectively serve our members, partner with our providers, government clients and communities we serve, and efficiently manage our ongoing operations. We were formed as a Delaware limited liability company in May 2002 and began our operations in Florida, New York, and Connecticut through two concurrent health plan acquisitions completed in July 2002. In July 2004, immediately prior to the closing of our initial public offering, we merged the limited liability company into a Delaware corporation and changed our name to WellCare Health Plans, Inc. As of December 31, 2017, we operated Medicaid health plans in Arizona, Florida, Georgia, Hawaii, Illinois, Kentucky, Missouri, Nebraska, New Jersey, New York, South Carolina and Texas. We began serving Medicaid and Medicare members in Arizona, effective December 31, 2016, in connection with the acquisition of Care1st Health Plan Arizona, Inc. and One Care by Care1st Health Plan of Arizona, Inc. (together, "Care1st Arizona"). Effective January 1, 2017, we began serving Medicaid members statewide in Nebraska. In addition, as of December 31, 2017, we offered MA coordinated care plans ("CCPs") in certain counties in Arizona, Arkansas, California, Connecticut, Florida, Georgia, Hawaii, Illinois, Kentucky, Louisiana, Maine, Mississippi, New Jersey, New York, South Carolina, Tennessee and Texas. We also offered stand-alone Medicare PDPs in 50 states and the District of Columbia. Effective January 1, 2018, we expanded our MA service area into the state of North Carolina. Basis of Presentation and Use of Estimates The consolidated balance sheets and statements of comprehensive income, changes in stockholders' equity, and cash flows include our accounts and the accounts of our subsidiaries over which we have control or are the primary beneficiary. We eliminated all intercompany accounts and transactions. The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), which requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base these estimates 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 consolidated financial statements. Certain reclassifications were made to 2015 and 2016 financial information to conform with 2017 presentation. Unconsolidated Subsidiaries As discussed in Note 3- Acquisitions , in connection with the acquisition of Universal American Corp. (“Universal American”), we acquired a wholly-owned subsidiary which works with physicians and other health care professionals to operate Accountable Care Organizations (“ACOs”) under the Medicare Shared Saving Program ("MSSP") and Next Generation ACO Models. ACOs were established by the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the "ACA") to reward integrated, efficient care and allow providers to share in any savings they achieve as a result of improved quality and operational efficiency. These ACOs were generally formed as limited liability companies. The ACOs are considered variable interest entities ("VIEs"), under GAAP, as these entities do not have sufficient equity to finance their own operations without additional financial support. We own a majority interest in our ACOs; however, we share the power to direct the activities that most significantly affect the ACOs with health care providers as minority owners in the ACOs. This power is shared pursuant to the structure of the management committee of each of the ACOs. Accordingly, we have determined that we are not the primary beneficiary of the ACOs, and therefore we cannot consolidate their results. We perform an ongoing qualitative assessment of our variable interests in VIEs to determine whether we have a controlling financial interest and would therefore be considered the primary beneficiary of the VIE. We account for our participation in the ACOs using the equity method. Gains and losses are reported as equity in earnings of unconsolidated subsidiaries in our consolidated statements of comprehensive income. We recognized equity in earnings of our unconsolidated ACOs of $18.7 million in 2017, primarily the result of net gains associated with the 2016 MSSP program year. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Recently Adopted Accounting Standards In May 2017, the FASB issued ASU 2017-09, " Compensation-Stock Compensation (Topic 718) - Scope of Modification Accounting ". This guidance addresses which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting pursuant to Topic 718. An entity should account for the effects of a modification unless (a) the fair value of the modified award is the same as the fair value of the original award, (b) the vesting conditions of the modified award are the same as the vesting conditions of the original award and (c) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments in this guidance should be applied prospectively for public business entities effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. We adopted this guidance prospectively on January 1, 2018. We do not anticipate the adoption of this guidance to have a material effect on our consolidated results of operations, financial condition or cash flows. In January 2017, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2017-04, " Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ". This update eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. As a result, an entity should perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. We adopted this guidance prospectively on January 1, 2018. We do not anticipate the adoption of this guidance to have a material effect on our consolidated results of operations, financial condition or cash flows. In January 2017, the FASB issued ASU 2017-01, “ Business Combinations (Topic 805): Clarifying the Definition of a Business .” The amendments in this update provide guidance to assist entities with evaluating when a group of transferred assets and activities (collectively referred to as a "set") is a business. This new guidance provides for a "screen", which requires a determination that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. If the screen's threshold is not met, a set cannot be considered a business unless it includes an input and a substantive process that together significantly contribute to the ability to create output, eliminating the evaluation of whether a market participant could replace missing elements. This guidance is effective for prospective business combinations for public entities for interim and annual periods beginning after December 15, 2017. We adopted this guidance prospectively on January 1, 2018. We do not anticipate the adoption of this guidance to have a material effect on our consolidated results of operations, financial condition or cash flows. In November 2016, the FASB issued ASU 2016-18, “ Statement of Cash Flows (Topic 230) Restricted Cash; a consensus of the FASB Emerging Issues Task Force. ” This update requires entities to reconcile, on the statement of cash flows, changes in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. This guidance is effective for public entities for interim and annual periods beginning after December 15, 2017, and will be applied retrospectively. We adopted this guidance on January 1, 2018. We do not anticipate the adoption of this guidance to have a material effect on our consolidated results of operations, financial condition or cash flows. In October 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-17, “ Consolidation (Topic 810). ” This update changes how a reporting entity evaluates consolidation, including whether an entity is considered a variable interest entity, determination of the primary beneficiary and how related parties are considered in the analysis. We adopted this guidance effective January 1, 2017. We do not anticipate the adoption of this guidance to have a material effect on our consolidated results of operations, financial condition or cash flows. 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 adopted this guidance on January 1, 2018. We do not anticipate the adoption of this guidance to have a material effect on our consolidated results of operations, financial condition or cash flows. 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. We adopted this guidance effective January 1, 2017. We do not anticipate the adoption of this guidance to have a material effect on our consolidated results of operations, financial condition or cash flows. 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. We adopted this guidance prospectively on January 1, 2018. We do not anticipate the adoption of this guidance to have a material effect on our consolidated results of operations, financial condition 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. Given that substantially all of our revenues are derived from insurance contracts accounted for in accordance with ASC 944, Financial Services-Insurance , which are specifically excluded from the scope of ASU 2014-09, we do not anticipate the adoption of this guidance to have a material effect on our consolidated results of operations, financial condition or cash flows. Recently Issued Accounting Standards In March 2017, the FASB issued ASU No. 2017-08, " Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities ". This update shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. Currently, entities generally amortize the premium as a yield adjustment over the contractual life of the security. The new guidance does not change the accounting for purchased callable debt securities held at a discount. This guidance is effective for interim and annual periods beginning after December 15, 2018. Early adoption is 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 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 do not expect the adoption of this guidance to have a material effect on our results of operations or cash flows. The effect of ASU 2016-02 on our consolidated financial position will be based on leases outstanding at the time of adoption. Premium Revenue Recognition and Premiums Receivable We earn premium revenue through our participation in Medicaid, Medicaid-related and Medicare programs. Our Medicaid contracts with state agencies generally are multi-year contracts subject to annual renewal provisions, while our Medicare contracts with CMS renew annually. Our Medicare and Medicaid contracts establish fixed, monthly premium rates per member ("PMPM"), which are generally determined at the beginning of each new contract renewal period; however, premiums may be adjusted by CMS and state agencies throughout the term of the contracts in certain cases. Premium rate changes are recognized in the period the change becomes effective, when the effect of the change in the rate is reasonably estimable and collection is assured. We recognize premium revenue in the period in which we are obligated to provide services to our members. We are generally paid by CMS and state agencies in the month in which we provide services. On a monthly basis, we bill members for any premiums for which they are responsible according to their respective plan. We record premiums earned but not received as premiums receivable and record premiums received in advance of the period of service as unearned premiums in the consolidated balance sheets. Unearned premiums are recognized as revenue when we provide the related services. Member premiums are recognized as revenue in the period of service. We estimate, on an on-going basis, the amount of members' billings that may not be collectible based on our evaluation of historical trends. An allowance is established for the estimated amount that may not be collectible. In addition, we routinely monitor the collectability of specific premiums receivable from CMS and state agencies, including Medicaid receivables for obstetric deliveries and newborns, and net receivables for member retroactivity. We reduce revenue and premiums receivable by the amount we estimate may not be collectible. We reported premiums receivable net of an allowance for uncollectible premiums receivable of $16.3 million and $22.7 million at December 31, 2017 and 2016 , respectively. Historically, the provision for uncollectible premiums for member premiums receivable has not been material relative to consolidated premium revenue. Premium payments are based upon eligibility lists produced by CMS and state agencies. We verify these lists to determine whether we have been paid for the correct premium category and program. From time to time, CMS and state agencies require us to reimburse them for premiums that we received for individuals who were subsequently determined to be ineligible for any government-sponsored program or belong to a plan other than ours. Additionally, the verification of membership may result in additional premiums due to us from CMS and state agencies for individuals who were subsequently determined to belong to our plan for periods in which we received no premium for those members. We estimate the amount of outstanding retroactivity adjustments and adjust premium revenue based on historical trends, premiums billed, the volume of member and contract renewal activity and other information. We record amounts receivable in premiums receivable, net and amounts payable in accounts payable and accrued expenses in the consolidated balance sheets. Supplemental Medicaid Premiums We earn supplemental premium payments for eligible obstetric deliveries and newborns for our Medicaid members in Arizona, Florida, Georgia, Illinois (through December 31, 2017), Missouri, Nebraska, New Jersey, New York and South Carolina. Each state Medicaid contract specifies how and when these supplemental payments are earned and paid. We also earn supplemental Medicaid premium payments in some states for high cost drugs and other eligible services. We recognize supplemental premium revenue in the period we provide related services to our members. For the years ended December 31, 2017 , 2016 , and 2015 we recognized approximately $478.9 million , $238.7 million and $269.1 million , respectively, of supplemental Medicaid premium revenue. The increase in 2017 resulted from our new Nebraska Medicaid plan and our acquisition of Care1st Arizona on December 31, 2016. Medicaid ACA Industry Fee Reimbursement The ACA imposed certain new taxes and fees, including an annual premium-based health insurance industry assessment (the "ACA industry fee") on health insurers, which began in 2014. For 2015 and 2016, we received amendments, written agreements or other documentation from all of our state Medicaid customers, that commit them to reimburse us for the portion of the ACA industry fee attributable to our Medicaid plans, including its non-deductibility for income tax purposes. In December 2016, President Obama signed the Consolidated Appropriations Act, 2016 which, among other provisions, included a one-year moratorium on the ACA industry fee for 2017. As a result, the associated Medicaid ACA industry fee reimbursements from our state government partners were eliminated for 2017. Accordingly, we did not recognize any Medicaid ACA industry fee reimbursement revenue for the year ended December 31, 2017, compared with $244.9 million and $219.2 million recognized for the years ended December 31, 2016 and 2015, respectively. Medicaid Risk-Adjusted Premiums and Retroactive Rate Changes As previously discussed, Medicaid premium rate changes are recognized in the period the change becomes effective, when the effect of the change in the rate is reasonably estimable and collection is assured. In some instances, our Medicaid premiums are subject to risk score adjustments based on the health profile of our membership. Generally, the risk score is determined by the state agency's analysis of encounter submissions of processed claims data to determine the acuity of our membership relative to the entire state's Medicaid membership. The frequency of when states adjust premiums varies, but is usually done quarterly or semi-annually on a retrospective basis. We recognize periodic changes to risk-adjusted premiums as revenue when the amounts are determinable and collection is reasonably assured. Historically, we have not experienced significant differences between our estimates and amounts ultimately paid or received. Medicare Risk-Adjusted Premiums CMS provides risk-adjusted payments for MA Plans and PDPs based on the demographics and health severity of enrollees. The risk-adjusted premiums we receive are based on claims and encounter data that we submit to CMS within prescribed deadlines. We develop our estimates for risk-adjusted premiums utilizing historical experience, or other data, and predictive models as sufficient member risk score data becomes available over the course of each CMS plan year. We recognize periodic changes to risk-adjusted premiums as revenue when the amounts are determinable and collection is reasonably assured, which is possible as additional diagnosis code information is reported to CMS, when the ultimate adjustment settlements are received from CMS, or we receive notification of such settlement amounts. CMS adjusts premiums on two separate occasions on a retrospective basis. The first retrospective adjustment for a given plan year generally occurs during the third quarter of that year. This initial settlement represents the update of risk scores for the current plan year based on the severity of claims incurred in the prior plan year. CMS then issues a final retrospective risk adjusted premium settlement for that plan year in the following year. Historically, we have not experienced significant differences between our estimates and amounts ultimately received. The data provided to CMS to determine members' risk scores is subject to audit by CMS even after the annual settlements occur. An audit may result in the refund of premiums to CMS. While our experience to date has not resulted in a material refund, future refunds could materially reduce premium revenue in the year in which CMS determines a refund is required and could be material to our results of operations, financial position and cash flows. Premiums receivable in the accompanying consolidated balance sheets include risk-adjusted premiums receivable of $190.3 million and $99.0 million as of December 31, 2017 and 2016 , respectively. Minimum Medical Expense and Risk Corridor Provisions We may be required to refund certain premium revenue to state agencies and CMS under various contractual and plan arrangements. We estimate the effect of the following arrangements on a monthly basis and reflect any adjustments to premium revenues in current operations. We report the estimated net amounts due to state agencies and CMS in other payables to government partners in the consolidated balance sheets. Certain of our Medicaid contracts require us to expend a minimum percentage of premiums on eligible medical benefits expense. To the extent that we expend less than the minimum percentage of the premiums on eligible medical benefits, we are required to refund to the state all or some portion of the difference between the minimum and our actual allowable medical benefits expense. Additionally, certain of our Medicaid contracts include other types of risk sharing arrangements (e.g., profit sharing arrangements) that require return of revenue to the state or receipt of revenue from the state, based on certain pre-tax earnings, net earnings or other results of operations -based calculations. In all arrangements, we estimate the amounts due from or to the state agencies based on the terms of our contracts with the applicable state agency and record the amounts as a change in premium. Historically, we have not experienced material differences between our recorded estimates and the subsequent state agencies settlement amounts. Our MA and PDP premiums are subject to risk sharing through the CMS Medicare Part D risk corridor provisions. The risk corridor calculation compares our actual experience to the target amount of prescription drug costs, limited to costs under the standard coverage as defined by CMS, less rebates included in our submitted plan year bid. We receive additional premium from CMS if our actual experience is more than 5% above the target amount. We refund premiums to CMS if our actual experience is more than 5% below the target amount. Based on the risk corridor provision and PDP activity-to-date, an estimated risk-sharing receivable or payable is recorded as an adjustment to premium revenue. After the close of the annual plan year, CMS performs the risk corridor calculation and any differences are settled between CMS and our plans. Historically, we have not experienced material differences between the subsequent CMS settlement amount and our recorded estimates. Beginning in 2014, the ACA required the establishment of a minimum medical loss ratio (“MLR”) for MA plans and Part D plans, requiring them to spend not less than 85% of premiums on medical benefits. The rules implementing the minimum MLR impose financial and other penalties for failing to achieve the minimum MLR, including requirements to refund to CMS shortfalls in amounts spent on medical benefits and termination of a plan’s MA contract for prolonged failure to achieve the minimum MLR. MLR is determined by adding a plan’s spending for clinical services, prescription drugs and other direct patient benefits, plus its total spending on quality improvement activities and dividing the total by earned premiums (after subtracting specific identified taxes and other fees). These provisions did not have a material effect on our results of operations in 2017, 2016 or 2015. A summary of other net payables to government partners is as follows (in millions): As of December 31, 2017 2016 Liability to states under Medicaid risk sharing provisions $ (142.5 ) $ (105.9 ) Liability to CMS under risk corridor provision (179.1 ) (190.5 ) Liability to CMS under MA/PDP minimum MLR provisions of the ACA (1.2 ) (0.3 ) Net payables to government partners (1) $ (322.8 ) $ (296.7 ) (1) The components of net payables to government partners are classified in the consolidated balance sheets as $44.2 million and $367.0 million in current assets and current liabilities, respectively, as of December 31, 2017, and $6.5 million and $303.2 million in current assets and current liabilities, respectively, as of December 31, 2016. Medicare Part D Subsidies For qualifying low income PDP members, CMS pays for some, or all, of the member's monthly premium. We receive certain Part D prospective subsidy payments from 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. Approximately nine to ten months subsequent to the end of the plan year, or later in the case of the coverage gap discount subsidy, a settlement payment is made between CMS and our plans based on the difference between the prospective payments and actual claims experience. The subsidy components under Part D are described below. Low-Income Cost Sharing Subsidy ("LICS") -For qualifying low income members, CMS reimburses us for all or a portion of the low income member's deductible, coinsurance and co-payment amounts above the out-of-pocket threshold. Catastrophic Reinsurance Subsidy -CMS reimburses plans for 80% of the drug costs after a member reaches his or her out-of-pocket catastrophic threshold through a catastrophic reinsurance subsidy. Coverage Gap Discount Subsidy ("CGDS") -CMS provides monthly prospective payments for pharmaceutical manufacturer discounts made available to members. Catastrophic reinsurance subsidies and the LICS represent cost reimbursements under the Medicare Part D program. We are fully reimbursed by CMS for costs incurred for these contract elements 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/held for the benefit of members in the consolidated balance sheets. The receipts and payments between us and CMS are presented on a net basis as financing activity in our consolidated statements of cash flows because we are essentially administering and paying the benefit subsidies on behalf of CMS. Historically, the settlement payments between us and CMS have not been materially different from our estimates. CGDS advance payments are recorded within Funds receivable/held for the benefit of members in the consolidated balance sheets. Receivables are set up for manufacturer-invoiced amounts. Manufacturer payments reduce the receivable as payments are received. After the end of the contract year, during the Medicare Part D Payment reconciliation process for the CGD, CMS will perform a cost-based reconciliation to ensure the Medicare Part D sponsor is paid for gap discounts advanced at the point of sale, based on accepted prescription drug event data. Funds payable for the benefit of members, net consisted of the following (in millions): As of December 31, 2017 2016 Low-income cost sharing subsidy $ (47.7 ) $ 47.8 Catastrophic reinsurance subsidy (987.1 ) (418.1 ) Coverage gap discount subsidy (13.6 ) 12.6 Funds payable for the benefit of members, net (1) $ (1,048.4 ) $ (357.7 ) (1) The components of net funds payable for the benefit of members, net are classified in the consolidated balance sheets as $27.5 million and $1,075.9 million in current assets and current liabilities, respectively, as of December 31, 2017, and as $32.6 million and $390.3 million in current assets and current liabilities, respectively, as of December 31, 2016. Based on our historical experience and trends, our 2017 PDP and MA bids reflected higher estimates for cash outflows for the government's responsibility of the Part D benefit plan design as compared with our 2016 bids, particularly for the catastrophic reinsurance subsidy; however, the level of subsidy payments we made on behalf of CMS compared with the level of subsidies we received in 2017 were significantly lower than our 2017 bids due to the composition of the 2017 PDP membership. As a result, the net funds payable for the benefit of members increased from $357.7 million as of December 31, 2016 to $1,048.4 million as of December 31, 2017. Additionally, as of December 31, 2017, our consolidated balance sheet included a $284.1 million net payable for the 2016 Part D plan year, primarily relating to certain contracts terminated effective January 1, 2017. This net payable is expected to be settled within the next 18 to 24 months. Medical Benefits Expense 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. Direct medical expenses include amounts paid or payable to hospitals, physicians, pharmacy benefit managers and providers of ancillary services. Recorded direct medical expenses are reduced by the amount of pharmacy rebates earned, which are estimated based on historical utilization of specific pharmaceuticals, current utilization and contract terms. Pharmacy rebates earned but not yet received from pharmaceutical manufacturers are included in pharmacy rebates receivable in the accompanying consolidated balance sheets. Direct medical expenses may also include reserves for estimated referral claims related to health care providers under contract with us who are financially troubled or insolvent and who may not be able to honor their obligations for the costs of medical services provided by other providers. In these instances, we may be required to honor these obligations for legal or business reasons. Based on our current assessment of providers under contract with us, such losses have not been and are not expected to be significant. Also included in direct medical expense are our estimates for provider settlements due to clarification of contract terms, out-of-network reimbursement, claims payment differences and amounts due to contracted providers under risk-sharing and/or value-based arrangements. Consistent with the criteria specified and defined in guidance issued by the Department of Health and Human Services ("HHS") for costs that qualify to be reported as medical benefits under the minimum MLR provision of the ACA, we record certain medically related administrative costs such as preventive health and wellness, care management, and other quality improvement costs, as medical benefits expense. All other medically related administrative costs, such as utilization review services, network and provider credentialing and claims handling costs, are recorded in selling, general, and administrative expense. Medical benefits payable represents amounts for claims fully adjudicated but not yet paid and estimates for IBNR. Our estimate of IBNR is the most significant estimate included in our consolidated financial statements. We determine our best estimate of the base liability for IBNR utilizing consistent standard actuarial methodologies based upon key assumptions, which vary by business segment. Our assumptions include current payment experience, trend factors, and completion factors. Trend factors in our standard actuarial methodologies include contractual requirements, historic utilization trends, the interval between the date services are rendered and the date claims are paid, denied claims activity, disputed claims activity, benefit changes, expected health care cost inflation, seasonality patterns, maturity of lines of business, changes in membership and other factors. After determining an estimate of the base liability for IBNR, we make an additional estimate, also using standard actuarial techniques, to account for adverse conditions that may cause actual claims to be higher than the estimated base reserve. We refer to this additional liability as the provision for moderately adverse conditions. Our estimate of the provision for moderately adverse conditions captures the potential adverse development from factors such as: • our entry into new geographical markets; • our provision of services to new populations such as the aged, blind and disabled; • variations in utilization of benefits and increasing medical costs, including higher drug costs; • changes in provider reimbursement arrangements; • variations in claims processing speed and patterns, claims payment and the severity of claims; and • health epidemics or outbreaks of disease such as the flu or enterovirus. 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. Premium Deficiency Reserves We evaluate our contracts to determine if it is probable that a loss will be incurred. We establish a premium deficiency reserve ("PDR") when it is probable that expected future medical benef |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
ACQUISITIONS | ACQUISITIONS Phoenix Health Plan Assets Acquisition On May 1, 2017, we completed our acquisition of certain assets from Phoenix Health Plan ("PHP"), including Arizona Medicaid membership and certain provider contracts. The transaction included the transfer of approximately 42,000 Medicaid members to Care1st Arizona Health Plan, Inc. ("Care1st Arizona"), a wholly owned subsidiary of the Company. The transaction was funded with available cash on hand. Universal American Acquisition On April 28, 2017 (the "Effective Date"), we acquired all of the issued and outstanding shares of Universal American. The transaction was valued at approximately $770.0 million , including the cash purchase price of $10.00 per outstanding share ("Per Share Merger Consideration") of Universal American's common stock, the assumption of $145.3 million fair value of Universal American's convertible debt, the cash settlement of Universal American's $40.0 million par value of Series A Mandatorily Redeemable Preferred Shares (the "Preferred Shares") and the cash settlement of outstanding vested and unvested stock-based compensation awards. The acquisition of Universal American, with approximately 119,000 MA members in Texas, New York and Maine, strengthens our business by increasing our MA membership by one-third, deepening our presence in two key markets, Texas and New York, and diversifying our business portfolio. In addition, Universal American has joined with provider groups to operate ACOs, under the MSSP and Next Generation ACO models. As a result of the acquisition, we operated 16 MSSP ACOs and two Next Generation ACOs as of December 31, 2017. The fair value at the Effective Date of the consideration transferred in the Universal American acquisition consisted of the following: (in millions) Number of shares of Universal American common stock outstanding on April 28, 2017 (57.1 million) multiplied by the Per Share Merger Consideration $ 570.8 Assumed debt (a) 145.3 Repurchase of Preferred Shares (b) 41.0 Stock-based award cash consideration (c) 12.9 Total consideration transferred $ 770.0 (a) Following the consummation of the Universal American transaction, all of the holders of Universal American's 4.00% convertible senior notes (the "Convertible Notes") elected to convert their notes into the right to receive cash equal to the par value of the notes plus a make whole premium. We paid the noteholders the amounts due and all of the Convertible Notes were redeemed in the second quarter of 2017. Universal American Convertible Notes below for further discussion of the repurchase of the Convertible Notes. (b) On the Effective Date, we redeemed an aggregate of $40.0 million of Universal American's Preferred Shares, which became redeemable by the holders on April 28, 2017 due to certain change in control provisions for the Preferred Shares. We redeemed the Preferred Shares for $41.0 million, which includes the $40.0 million par value of the Preferred Shares and $1.0 million of accrued dividends. See Universal American Mandatorily Redeemable Preferred Shares below for further discussion of the redemption of the Preferred Shares. (c) Pursuant to the terms of the Universal American acquisition, outstanding vested and unvested stock-based compensation awards as of the Effective Date converted to the right to receive cash. We estimated the fair value of these awards at the Effective Date and attributed that fair value to pre-acquisition and post-acquisition services in accordance with GAAP. Accordingly, $12.9 million of the fair value of these awards was attributed to pre-acquisition services and is included in the estimated consideration transferred, and approximately $20.0 million has been, or will be, included in our post-acquisition financial statements as compensation costs and reflected as a selling, general and administrative expense in our consolidated statements of comprehensive income. The following table summarizes the estimated fair values of major classes of assets acquired and liabilities assumed at the Effective Date, based on our preliminary valuation assumptions, reconciled to the total consideration transferred. Assets (in millions) Cash and cash equivalents $ 66.4 Investments, including restricted investments 254.4 Premiums receivable, net 90.7 Pharmacy rebates receivable, net, and other current assets 56.2 Property, equipment and capitalized software, net 7.5 Goodwill 275.6 Other intangible assets, net 298.2 Assets of discontinued operations 219.6 Estimated fair value of total assets acquired $ 1,268.6 Liabilities Medical benefits payable $ 128.1 Deferred tax liabilities, net 68.0 Other liabilities 83.8 Liabilities of discontinued operations 218.7 Estimated fair value of liabilities assumed 498.6 Estimated fair value of net assets acquired $ 770.0 The estimate of fair value results from judgments about future events, which reflect certain uncertainties and relies on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as intangible asset lives, can materially affect our operating results. We will finalize the Universal American purchase accounting for the various preliminary items as soon as reasonably possible during the measurement period. Measurement period adjustments will be recorded in the period in which they are determined, as if they had been completed at the acquisition date. The finalization of our purchase accounting assessment could result in changes in the valuation of assets acquired and liabilities assumed, which could be material. As of the Effective Date, the expected fair value of all current assets and liabilities, as well as assets and liabilities of discontinued operations (refer to Note 19- Discontinued Operations for further discussion), approximated their historical cost. For certain noncurrent assets and liabilities, we have made preliminary fair value adjustments based on information reviewed through December 31, 2017. Significant fair value adjustments are noted as follows. Identifiable intangible assets acquired The following table summarizes the preliminary fair values and weighted average useful lives for identifiable intangible assets acquired in the Universal American acquisition which are subject to change as we finalize our purchase accounting. Gross Fair Value (in millions) Weighted Average Useful Life (in years) Membership $ 240.0 10.0 Tradenames 36.0 13.9 Provider network 9.5 15.0 Other 12.7 6.2 Total $ 298.2 10.5 We valued the acquired membership and tradename intangible assets using an income approach (discounted future cash flow analysis) based on our consideration of historical financial results and expected industry and market trends. We discounted the future cash flows by a weighted-average cost of capital based on an analysis of the cost of capital for comparable companies within our industry. We valued the acquired provider network using a cost approach, which utilizes cost assumptions applicable at the valuation date to determine the cost of constructing a similar asset. Our other intangible assets include acquired operating licenses, certain non-compete agreements and acquired technology, which were valued using a combination of income and cost approaches. We amortize the intangible assets over the period we expect these assets to contribute directly or indirectly to our future cash flows on a straight-line basis, which approximates the pattern of economic consumption over their estimated useful lives. Deferred taxes The purchase price allocation includes net deferred tax liabilities of $68.0 million , primarily relating to deferred tax liabilities established on the identifiable acquired intangible assets, partially offset by deferred tax assets acquired in the Universal American transaction. Goodwill We recorded $275.6 million for the preliminary valuation of goodwill, assigned to our Medicare Health Plans reportable segment, for the excess of the purchase price over the estimated fair value of the net assets acquired. The recorded goodwill and other intangible assets related to the acquisition are not deductible for tax purposes. Universal American Convertible Notes In 2016, Universal American completed the offering of $115.0 million of their 4.00% Convertible Notes due 2021. The acquisition by WellCare constituted a “Make-Whole Fundamental Change” under the indenture for the convertible notes. During the three months ended June 30, 2017, all of the holders of the Convertible Notes elected to convert their notes into the right to receive cash equal to the par value of the notes plus a make whole premium. We paid the noteholders the amounts due and all of the notes were redeemed during the second quarter of 2017. The fair value of the Convertible Notes was $145.3 million on the Effective Date and was included in the purchase consideration for the Universal American acquisition. Universal American Mandatorily Redeemable Preferred Shares In April 2011, Universal American issued an aggregate of $40.0 million of its Preferred Shares, representing 1,600,000 shares with a par value of $0.01 per share and a liquidation preference of $25.00 per share. During the three months ended June 30, 2017, the Preferred Shares were redeemed for $41.0 million , which includes the $40.0 million par value of the Preferred Shares and $1.0 million of accrued dividends. The $41.0 million redemption amount was included in purchase consideration for the Universal American acquisition. Consolidated Statement of Comprehensive Income We included the results of Universal American's operations after the Effective Date in our consolidated financial statements. The amount of premium revenue attributable to Universal American included in our consolidated statement of comprehensive income for the year ended December 31, 2017 was $936.5 million . Additionally, our consolidated statement of comprehensive income for the year ended December 31, 2017 included a pretax net loss of $24.6 million attributable to Universal American's operations, which includes transaction and integration-related costs of $37.5 million related to the transaction. These costs include severance payments to former executives, advisory, legal and other professional fees that are reflected in selling, general and administrative ("SG&A") expense in our consolidated statement of comprehensive income. Care1st Arizona Acquisition On December 31, 2016, we completed the acquisition of Care1st Arizona. The purchase price was approximately $163.8 million , inclusive of statutory capital and subject to certain adjustments. We included the results of Care1st Arizona's operations from the date of acquisition in our consolidated financial statements. As of December 31, 2017, Care1st Arizona served approximately 153,000 Medicaid members in Arizona, including the previously noted membership acquired from PHP. Based on the final purchase price allocation, we allocated $169.9 million of the purchase price to identified tangible assets, primarily comprised of cash and cash equivalents, and total liabilities of $116.9 million . In addition, we recorded $24.0 million for the valuation of identified intangible assets, including acquired membership, provider networks and the Care1st tradename. We valued the acquired membership and tradename intangible assets using an income approach (discounted future cash flow analysis) based on our consideration of historical financial results and expected industry and market trends. We discounted the future cash flows by a weighted-average cost of capital based on an analysis of the cost of capital for comparable companies within our industry. We valued the acquired provider network using a cost approach, which utilizes cost assumptions applicable at the valuation date to determine the cost of constructing a similar asset. We amortize the intangible assets on a straight-line basis over the period we expect these assets to contribute directly or indirectly to our future cash flows. The weighted average amortization period for these intangible assets is 11.2 years. We recorded $86.9 million of goodwill for the excess of the purchase price over the estimated fair value of the net assets and identifiable intangible assets acquired and assigned the goodwill to our Medicaid segment. The recorded goodwill and other intangible assets related to the Care1st Arizona acquisition are not deductible for tax purposes. Unaudited Pro Forma Financial Information The results of operations and financial condition for our 2017 and 2016 acquisitions have been included in our consolidated financial statements since the respective acquisition dates. The unaudited pro forma financial information presented below reflects all of our 2017 and 2016 acquisitions, including PHP, Universal American, Care1st Arizona and our June 2016 acquisition of certain assets of Advicare Corp; assuming in each case the acquisitions occurred as of January 1, 2016. These pro forma results are based on estimates and assumptions, and do not reflect any anticipated synergies, efficiencies or other cost savings that we expect to realize from the acquisitions. The following unaudited pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the results of operations that would have occurred had the acquisitions actually consummated at January 1, 2016, or project the future results of the combined company. For the years ended December 31, (in millions, except per share data) 2017 2016 Total revenues $ 17,163.1 $ 16,211.4 Net income $ 384.1 $ 239.0 Earnings per common share: Basic $ 8.64 $ 5.40 Diluted $ 8.54 $ 5.36 The pro forma results presented in the schedule above include adjustments related to the following purchase accounting and other acquisition-related costs: • Elimination of historical intangible asset amortization expense and addition of amortization expense based on the current preliminary values of identified intangible assets; • Elimination of interest expense associated with retired Universal American obligations; • Elimination of transaction and integration-related costs; • Elimination of Universal American discontinued operations; • Adjustments to align the acquisitions to our accounting policies; and • Tax effects of the adjustments noted above. |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Dec. 31, 2017 | |
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. We allocate premium revenue, medical benefits expense, the ACA industry fee incurred in 2016 and 2015, and goodwill 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. The Company's decision makers primarily use premium revenue, medical benefits expense and gross margin to evaluate the performance of our reportable segments. 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 Long-Term Services and Supports ("LTSS"). 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 LTSS 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. These states and the respective Medicaid premium revenue as a percentage of total consolidated premium revenue are as follows: For the Years Ended December 31, 2017 2016 2015 Kentucky 15% 18% 19% Florida 15% 18% 17% Georgia * 11% 12% * Effective July 1, 2017, we commenced services under a new Medicaid contract with the State of Georgia serving TANF and CHIP beneficiaries. Due to the addition of a fourth managed care organization to the Georgia state program, our membership declined approximately 58,000 members as of December 31, 2017 compared with December 31, 2016 . As a result of the decline in membership and overall growth in the Medicaid Health Plans segment, premium revenue attributable to our Georgia Medicaid health plan accounted for less than 10% of our consolidated premium revenue for the year ended December 31, 2017. In December 2017, we entered into a contract amendment with the Kentucky Department of Medicaid Services that renewed our participation in the Kentucky Medicaid program through June 30, 2018, and included one additional one -year renewal period upon mutual agreement. In February 2014, we executed a contract with the Florida Agency for Health Care Administration ("AHCA") pursuant to which our Staywell Health Plan participates in eight out of the state's 11 regions under the Managed Medical Assistance Program ("MMA"), which was fully implemented as of August 2014. The contract expires on December 31, 2018. 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. 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 An operating segment engages in business activities from which it may earn revenue and incur expenses, has discrete financial information and whose results are regularly reviewed by the chief operating decision makers for performance assessment and resource allocation decisions. Factors used to determine our reportable segments include the nature of operating activities, economic characteristics, existence of separate senior management teams and the type of information used by our chief operating decision makers. Reportable segments with similar economic characteristics, products and services, customers, distribution methods and operational processes that operate in a similar regulatory environment are combined. Accordingly, we have three reportable segments: Medicaid Health Plans, Medicare Health Plans and Medicare PDPs. A summary of financial information for our reportable segments through the gross margin level and a reconciliation to income from operations is presented in the tables below. For the Years Ended December 31, 2017 2016 2015 Premium revenue: Medicaid Health Plans $ 10,726.3 9,499.3 $ 9,074.3 Medicare Health Plans 5,320.2 3,876.6 3,898.8 Medicare PDPs 913.8 845.0 901.7 Total premium revenue 16,960.3 14,220.9 13,874.8 Medical benefits expense: Medicaid Health Plans 9,414.1 8,188.5 7,866.8 Medicare Health Plans 4,577.3 3,278.5 3,401.7 Medicare PDPs 753.4 622.4 710.0 Total medical benefits expense 14,744.8 12,089.4 11,978.5 ACA industry fee expense: Medicaid Health Plans — 148.0 135.1 Medicare Health Plans — 64.2 68.7 Medicare PDPs — 16.2 23.5 Total ACA industry fee expense — 228.4 227.3 Gross margin: Medicaid Health Plans 1,312.2 1,162.8 1,072.4 Medicare Health Plans 742.9 533.9 428.4 Medicare PDPs 160.4 206.4 168.2 Total gross margin 2,215.5 1,903.1 1,669.0 Investment and other income 46.9 16.2 15.4 Other expenses (1) (1,793.4 ) (1,389.8 ) (1,348.3 ) Income from operations $ 469.0 529.5 $ 336.1 (1) Other expenses includes selling, general and administrative expenses, Medicaid Premium taxes, depreciation and amortization, interest and impairment and other charges. Other expenses, net for 2015 also includes the immaterial gain on a business divestiture. |
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE | 12 Months Ended |
Dec. 31, 2017 | |
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. We calculated weighted-average common shares outstanding — diluted as follows: For the Years Ended December 31, 2017 2016 2015 Weighted-average common shares outstanding — basic 44,474,016 44,248,778 44,057,579 Dilutive effect of outstanding stock-based compensation awards 493,045 370,811 333,453 Weighted-average common shares outstanding — diluted 44,967,061 44,619,589 44,391,032 Anti-dilutive stock-based compensation awards excluded from computation 76,446 14,867 65,839 |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
INVESTMENTS | INVESTMENTS As of December 31, 2017 and 2016, all of our investments were classified as available-for-sale securities. 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 Gross Gross Estimated December 31, 2017 Asset-backed securities $ 88.9 $ — $ (0.2 ) $ 88.7 Corporate debt securities 400.6 0.7 (1.2 ) 400.1 Municipal securities 223.7 1.0 (1.9 ) 222.8 Residential mortgage-backed securities 11.2 — — 11.2 Short-term time deposits 300.4 — — 300.4 Government and agency obligations 148.7 — (1.2 ) 147.5 Other securities 65.2 — (0.2 ) 65.0 Total $ 1,238.7 $ 1.7 $ (4.7 ) $ 1,235.7 December 31, 2016 Asset backed securities $ 3.3 $ — $ — $ 3.3 Corporate debt securities 67.2 — — 67.2 Municipal securities 53.7 0.1 (1.5 ) 52.3 Government and agency obligations 1.0 — — 1.0 Other securities 57.8 — (0.1 ) 57.7 Total $ 183.0 $ 0.1 $ (1.6 ) $ 181.5 Contractual maturities of our available-for-sale investments at December 31, 2017 are as follows: Total Within 1 Through 5 5 Through 10 Thereafter Asset backed securities $ 88.7 $ 12.6 $ 71.7 $ 2.4 $ 2.0 Corporate debt securities 400.1 81.0 206.2 102.2 10.7 Municipal securities 222.8 17.6 112.6 75.1 17.5 Residential mortgage-backed securities 11.2 — — — 11.2 Short term time deposits 300.4 300.4 — — — Government and agency obligations 147.5 5.1 135.4 6.8 0.2 Other securities 65.0 52.8 2.2 3.0 7.0 Total $ 1,235.7 $ 469.5 $ 528.1 $ 189.5 $ 48.6 Actual maturities may differ from contractual maturities due to the exercise of pre-payment options. During the years ended December 31, 2017 , 2016 , and 2015 , we sold available-for-sale investments totaling $348.2 million , $142.2 million and $64.6 million , respectively. Realized gains and losses resulting from these sales were not material for any of these years. Additionally, we did not realize any other-than-temporary impairment for any of these years. |
RESTRICTED INVESTMENTS
RESTRICTED INVESTMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Restricted Investments Note [Abstract] | |
RESTRICTED INVESTMENTS | RESTRICTED INVESTMENTS The amortized cost, gross unrealized gains, gross unrealized losses and fair value of our restricted cash and investment securities are as follows: Amortized Gross Gross Estimated December 31, 2017 Cash $ 5.7 $ — $ — $ 5.7 Money market funds 58.7 — — 58.7 U.S. government securities and other 147.4 — (0.8 ) 146.6 Total $ 211.8 $ — $ (0.8 ) $ 211.0 December 31, 2016 Cash $ 92.1 $ — $ — $ 92.1 Money market funds 67.8 — — 67.8 U.S. government securities and other 74.5 — (0.1 ) 74.4 Total $ 234.4 $ — $ (0.1 ) $ 234.3 Realized gains or losses related to sales and redemptions of restricted investments were not material for the years ended December 31, 2017 , 2016 , or 2015 . |
PROPERTY, EQUIPMENT AND CAPITAL
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE | PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE Property, equipment and capitalized software and related accumulated depreciation are as follows: December 31, 2017 2016 Leasehold improvements $ 36.9 $ 30.1 Computer equipment 128.3 110.6 Capitalized software 526.2 425.2 Furniture and equipment 39.2 32.7 730.6 598.6 Less accumulated depreciation (411.1 ) (324.1 ) Total property and equipment, net $ 319.5 $ 274.5 We recognized depreciation expense on property, equipment and capitalized software of $87.7 million , $77.2 million , and $62.0 million for the years ended December 31, 2017 , 2016 , and 2015 , respectively, including depreciation expense on capitalized software of $65.2 million , $57.6 million , and $43.7 million for the years ended December 31, 2017 , 2016 , and 2015 , respectively. The increase in expense reflects continued additions to capitalized software and computer equipment resulting from investments in our information technology infrastructure. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS, NET | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET | GOODWILL AND OTHER INTANGIBLE ASSETS, NET A summary of changes in our goodwill by reportable segment is as follows for 2017 and 2016 : Medicaid Health Plans Medicare Health Plans Total Balance as of December 31, 2015 $ 152.8 $ 110.4 $ 263.2 Acquired goodwill 129.3 — 129.3 Balance as of December 31, 2016 (1) (2) 282.1 110.4 392.5 Acquired goodwill (3) 8.3 275.6 283.9 Measurement period adjustments (2) (15.7 ) — (15.7 ) Balance as of December 31, 2017 (1) (3) $ 274.7 $ 386.0 $ 660.7 (1) Cumulative impairment charges relating to goodwill were $78.3 million as of December 31, 2017 and 2016, which related to goodwill assigned to our Medicare Health Plans reporting unit which we impaired during 2008. (2) Medicaid Health Plans goodwill as of December 31, 2016, includes approximately $102.7 million of goodwill resulting from our acquisition of Care1st Arizona effective on December 31, 2016. During 2017, we reallocated $24.0 million of this goodwill to identifiable intangible assets, net of a $9.0 million corresponding deferred tax liability, based on our valuation of these assets. Refer to Note 3 – Acquisitions for additional discussion of the Care1st Arizona acquisition. (3) Goodwill related to our 2017 acquisitions is considered preliminary, pending the final allocation of the applicable purchase price. Refer to Note 3 – Acquisitions for additional discussion of our 2017 acquisitions. Other intangible assets as of December 31, 2017 and 2016 , and the related weighted-average amortization periods as of December 31, 2017 , are as follows: As of December 31, 2017 2016 Weighted Average Amortization Period (In Years) Gross Carrying Amount Accumulated Amortization Other Intangibles, Net Gross Carrying Amount Accumulated Amortization Other Intangibles, Net Membership and state contracts 10.4 $ 344.4 $ (52.6 ) $ 291.8 $ 94.3 $ (29.8 ) $ 64.5 Trademarks and tradenames 13.7 53.3 (12.9 ) 40.4 11.4 (9.8 ) 1.6 Provider networks 15.0 27.3 (5.1 ) 22.2 8.4 (3.7 ) 4.7 Licenses and permits 13.6 7.1 $ (4.1 ) 3.0 5.1 (3.6 ) 1.5 Other 5.7 14.9 (4.4 ) 10.5 4.2 (2.4 ) 1.8 Total other intangible assets 11.0 $ 447.0 $ (79.1 ) $ 367.9 $ 123.4 $ (49.3 ) $ 74.1 We recorded amortization expense of $32.7 million , $10.4 million , and $10.6 million for the years ended December 31, 2017 , 2016 and 2015 , respectively. The increase is primarily driven by the previously noted 2017 and 2016 acquisitions, discussed in Note 3 – Acquisitions . Amortization expense expected to be recognized during fiscal years subsequent to December 31, 2017 is as follows: Expected Amortization Expense 2018 $ 41.9 2019 41.7 2020 41.6 2021 41.5 2022 37.6 2023 and thereafter 163.6 Total $ 367.9 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT The following table summarizes our outstanding debt obligations and their classification in the accompanying consolidated balance sheets (in millions): December 31, 2017 December 31, 2016 Long-term debt, net: 5.25% Senior Notes, due April 1, 2025 $ 1,200.0 $ — 5.75% Senior Notes, due November 15, 2020 (1) — 909.6 Revolving Credit Facility — 100.0 Debt issuance costs (17.6 ) (12.0 ) Total long-term debt, net $ 1,182.4 $ 997.6 (1) Inclusive of $9.6 million of unamortized debt premium at December 31, 2016. 5.25% Senior Notes due 2025 On March 22, 2017, we completed the offering and sale of 5.25% senior notes due 2025 in the aggregate principal amount of $1,200.0 million (the “2025 Notes”). The aggregate net proceeds from the issuance of the 2025 Notes were $1,182.2 million , with a portion of the net proceeds from the offering being used to repay the $100.0 million outstanding under our credit agreement dated January 8, 2016 (the "Credit Agreement", discussed further below) and to redeem the full $900.0 million aggregate principal amount of our 5.75% Senior Notes due 2020 (the "2020 Notes") on April 7, 2017, which is discussed further below. The remaining net proceeds from the offering of the 2025 Notes are being used for general corporate purposes, including organic growth and working capital. The 2025 Notes will mature on April 1, 2025, and bear interest at a rate of 5.25% per annum, payable semi-annually on April 1 and October 1 of each year, commencing on October 1, 2017. The 2025 Notes were issued under an indenture, dated as of March 22, 2017 (the "Base Indenture"), as supplemented by the First Supplemental Indenture, dated as of March 22, 2017 (the "First Supplemental Indenture" and, together with the Base Indenture, the "Indenture"), each between the Company and The Bank of New York Mellon Trust Company, N.A. (“BNY Mellon”), as trustee. The Indenture under which the notes were issued contains covenants that, among other things, limit our ability and the ability of our subsidiaries under certain circumstances to: • incur additional indebtedness and issue preferred stock; • pay dividends or make distributions; • make other restricted payments and investments; • sell assets, including capital stock of restricted subsidiaries; • create certain liens; • incur restrictions on the ability of restricted subsidiaries to pay dividends or make other payments, and in the case of our subsidiaries, guarantee indebtedness; • engage in transactions with affiliates; and • create unrestricted subsidiaries. In addition, the Indenture requires that for the company to merge, consolidate or sell all or substantially all of its assets, (i) either the company must be the surviving entity, or the surviving entity or purchaser must be a U.S. entity; (ii) the surviving entity or purchaser must assume all the obligations of the company under the notes and the Indenture; (iii) no default or event of default (as defined under the Indenture) exists and (iv) the surviving entity, after giving pro forma effect to the transaction, (x) may incur at least $1.00 of additional indebtedness pursuant to the fixed charge coverage ratio or (y) have a fixed charge coverage ratio that is no worse than the fixed charge coverage ratio of the Company without giving pro forma effect to the transactions. Ranking and Optional Redemption The 2025 Notes are senior obligations of our company and rank equally in right of payment with all of our other existing and future unsecured and unsubordinated indebtedness. In addition, the 2025 Notes are structurally subordinated to all indebtedness and other liabilities of our subsidiaries (unless our subsidiaries become guarantors of the 2025 Notes). At any time prior to April 1, 2020, we may, on any one or more occasions, redeem up to 40% of the aggregate principal amount of 2025 Notes at a redemption price equal to 105.250% of the principal amount of the 2025 Notes redeemed, plus accrued and unpaid interest, if any, with the net cash proceeds of an equity offering by the Company; provided that: (1) at least 60% of the aggregate principal amount of 2025 Notes issued under the Indenture (including any additional Senior Notes, but excluding Senior Notes held by the Company or its subsidiaries) remains outstanding immediately after the occurrence of such redemption; and (2) the redemption occurs within 90 days of the date of the closing of such equity offering. At any time prior to April 1, 2020, we may on any one or more occasions redeem all or a part of the 2025 Notes, at a redemption price equal to 100% of the principal amount of the 2025 Notes redeemed, plus the Applicable Premium. The Applicable Premium means the greater of (i) 1.0% of the then outstanding principal amount of the note or (ii) the excess of the present value at such redemption date of the redemption price set forth in the optional redemption table below plus all required interest payments on the notes due through April 1, 2020 over the then outstanding principal amount of the notes, using the yield-to-maturity treasury rate most nearly equal to the period from the redemption date to April 1, 2020, as further set forth in the Indenture. Except pursuant to the preceding two paragraphs, the 2025 Notes will not be redeemable at our option prior to April 1, 2020. On or after April 1, 2020, we may on any one or more occasions redeem all or a part of the 2025 Notes, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest, if any, on the 2025 Notes redeemed, to, but not including, the applicable date of redemption, if redeemed during the twelve-month period beginning on November 15 of the years indicated below, subject to the rights of holders of 2025 Notes on the relevant record date to receive interest due on the relevant interest payment date: Period Redemption Price 2020 103.938 % 2021 102.625 % 2022 101.313 % 2023 and thereafter 100.000 % The 2025 Notes are classified as long-term debt in our consolidated balance sheet at December 31, 2017, based on their April 2025 maturity date. 5.75% Senior Notes due 2020 In November 2013, we issued $600.0 million in aggregate principal amount of our 5.75% unsecured Senior Notes due 2020. In June 2015, we completed the offering and sale of an additional $300.0 million aggregate principal amount of our 2020 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 to be amortized over the remaining term. On April 7, 2017, we redeemed the full $900.0 million in aggregate principal amount outstanding of our 2020 Notes at a redemption price of 102.875% of the principal amount, plus accrued and unpaid interest. Our obligations under the related base indenture, each dated as of November 14, 2013, by and among us and BNY Mellon, as trustee, were satisfied and discharged on April 7, 2017. In connection with the redemption of the 2020 Notes, we incurred a one-time loss on extinguishment of debt related to the redemption premium, the write-off of associated deferred financing costs and the write-off of the unamortized portion of associated premiums paid on the 2020 Notes. The loss on extinguishment of debt is reflected in our results of operations for 2017. Credit Agreement In January 2016, we entered into the Credit Agreement, which provides for a senior unsecured revolving loan facility (the "Revolving Credit Facility"), which had an initial aggregate principal amount at any time outstanding not to exceed $850.0 million . On March 22, 2017, we increased the aggregate principal amount available under our Credit Agreement from $850.0 million to $1.0 billion . Additionally, in March 2017, we repaid the $100.0 million outstanding under our Revolving Credit Facility, and as a result, there were no borrowings outstanding under the Revolving Credit Facility as of December 31, 2017. The Credit Agreement provides for the Revolving Credit Facility of up to $1.0 billion (the loans thereunder, the “Revolving Credit Loans”), of which up to $150.0 million is available for letters of credit. The Credit Agreement also provides that we may, at our option, increase the aggregate amount of the Revolving Credit Facility and/or obtain incremental term loans in an amount up to $50.0 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 Credit Agreement are subject to a fee of 0.25% to 0.35% depending upon our ratio of total net debt to cash flow. Revolving Credit Loans designated by us at the time of borrowing as “ABR Loans” that are outstanding under the Credit Agreement bear interest at a rate per annum equal to (i) the greatest of (a) the Prime Rate (as defined in the Credit Agreement) in effect on such day; (b) the Federal Reserve Bank of New York Rate (as defined in the Credit Agreement) in effect on such day plus 1/2 of 1% ; and (c) the Adjusted LIBO Rate (as defined in the 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 Credit Agreement bear interest at a rate per annum equal to the Adjusted LIBO Rate (as defined in the 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 Credit Agreement. The 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 Credit Agreement also contains customary representations and warranties that must be accurate in order for us to borrow under the Revolving Credit Facility. In addition, the 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 Credit Agreement. Lenders holding at least 50% of the loans and commitments under the Credit Agreement may elect to accelerate the maturity of the loans and/or terminate the commitments under the Credit Agreement upon the occurrence and during the continuation of an event of default. As of December 31, 2017, and as of the date of this filing, we were in compliance with all covenants under both the 2025 Notes and the Credit Agreement. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Our 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. For other financial instruments, including short- and long-term investments, restricted investments, and long-term debt, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date. Level 1 — Quoted (unadjusted) prices for identical assets or liabilities in active markets : We include investments in cash, money market funds, U.S. government securities and the variable rate bond fund in Level 1. The carrying amounts of money market funds and cash approximate fair value because of the short-term nature of these instruments. We base fair values of the other investments included in Level 1 on unadjusted quoted market prices for identical securities in active markets. Level 2 — Inputs other than quoted prices in active markets : We include in Level 2 investments in certain certificates of deposit, commercial paper, corporate debt, asset-backed and other municipal securities for which fair market valuations are based on quoted prices for identical securities in markets that are not active, quoted prices for similar securities in active markets, broker or dealer quotations, or alternative pricing sources or for which all significant inputs are observable, either directly or indirectly, including interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks and default rates. In addition to using market data, we make assumptions when valuing our assets and liabilities, including assumptions about risks inherent in the inputs to the valuation technique. When there is not an observable market price for an identical or similar asset or liability, we use an income approach reflecting our best assumptions regarding expected cash flows, discounted using a commensurate risk-adjusted discount rate. We estimated the fair value of the future payments related to investigation resolution using a discounted cash flow analysis and recorded these amounts at fair value in the short- and long-term portions of amounts accrued related to investigation resolution line items in our consolidated balance sheets. Level 3 — Unobservable inputs that cannot be corroborated by observable market data: We hold investments in auction rate securities designated as available for sale and reported at fair value. At both December 31, 2017 and 2016, the auction rate securities had combined par values of $13.8 million . As these securities are believed to be in an inactive market, we have estimated the fair value of these securities using a discounted cash flow model and update these estimates on a quarterly basis. Significant unobservable inputs used in the discounted cash flow model include the projected average market coupon rate based on the indenture for each security, as well as individual security credit risk. The fair values of auction rate securities are based on an approach that relies heavily on management assumptions and qualitative observations and therefore fall within Level 3 of the fair value hierarchy. We include our auction rate security investments in Municipal securities below. We determine transfers between levels at the end of the reporting period. No transfers between levels occurred during the years ended December 31, 2017 and 2016 . Recurring Fair Value Measurements Assets and liabilities measured at fair value on a recurring basis at December 31, 2017 are as follows: Fair Value Measurements Using Carrying Value Quoted Prices in Significant Other Significant Investments: Asset-backed securities $ 88.7 $ — $ 88.7 $ — Corporate debt securities 400.1 — 400.1 — Municipal securities 222.8 — 210.5 12.3 Residential mortgage-backed securities 11.2 — 11.2 — Short-term time deposits 300.4 — 300.4 — Government and agency obligations 147.5 147.5 — — Other securities 65.0 52.8 12.2 — Total investments $ 1,235.7 $ 200.3 $ 1,023.1 $ 12.3 Restricted investments: Cash $ 58.7 $ 58.7 $ — $ — Money market funds 5.7 5.7 — — U.S. government securities and other 146.6 146.4 0.2 — Total restricted investments $ 211.0 $ 210.8 $ 0.2 $ — Assets and liabilities measured at fair value on a recurring basis at December 31, 2016 are as follows: Fair Value Measurements Using Carrying Value Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Investments: Asset-backed securities $ 3.3 $ — $ 3.3 $ — Corporate debt securities 67.2 — 67.2 — Municipal securities 52.3 — 39.9 12.4 Government and agency obligations 1.0 1.0 — — Other securities 57.7 57.7 — — Total investments $ 181.5 $ 58.7 $ 110.4 $ 12.4 Restricted investments: Money market funds $ 67.8 $ 67.8 $ — $ — Cash 92.1 92.1 — — U.S. government securities and other 74.4 74.2 0.2 — Total restricted investments $ 234.3 $ 234.1 $ 0.2 $ — The following table presents the changes in the fair value of our Level 3 auction rate securities for the years ended December 31, 2017, 2016 and 2015: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) December 31, 2017 December 31, 2016 December 31, 2015 Balance as of January 1 $ 12.4 $ 31.7 $ 32.3 Realized gains (losses) in earnings — — — Changes in net unrealized gains and losses in other comprehensive income — 0.9 (0.5 ) Purchases, sales and redemptions (0.1 ) (20.2 ) (0.1 ) Net transfers in or (out) of Level 3 — — — Balance as of December 31 $ 12.3 $ 12.4 $ 31.7 Debt The following table presents the carrying value and fair value of our long-term debt outstanding as of December 31, 2017 and December 31, 2016 : Fair Value Measurements Using Carrying Value Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Long-term debt - December 31, 2017 $ 1,182.4 $ 1,274.3 $ — $ — Long-term debt - December 31, 2016 997.6 927.0 96.2 — The fair value of both our 2025 Notes and 2020 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 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, these would be classified within Level 2 of the fair value hierarchy. There were no borrowings outstanding under our Revolving Credit Facility as of December 31, 2017. |
MEDICAL BENEFITS PAYABLE
MEDICAL BENEFITS PAYABLE | 12 Months Ended |
Dec. 31, 2017 | |
MEDICAL BENEFITS PAYABLE [Abstract] | |
MEDICAL BENEFITS PAYABLE | MEDICAL BENEFITS PAYABLE Medical benefits payable consists of: (in millions) As of December 31, 2017 % of As of December 31, 2016 % of IBNR $ 1,412.3 66% $ 1,141.9 68% Other medical benefits payable 734.0 34% 548.6 32% Total medical benefits payable $ 2,146.3 100% $ 1,690.5 100% A reconciliation of the beginning and ending balances of our consolidated medical benefits payable is as follows: For the years ended December 31, 2017 2016 2015 (in millions) Beginning balance $ 1,690.5 $ 1,536.0 $ 1,483.8 Acquisitions (divestitures) 128.1 37.3 (9.5 ) Medical benefits incurred related to: Current year (1) 15,112.4 12,374.1 12,189.5 Prior years (367.6 ) (284.7 ) (211.0 ) Total 14,744.8 12,089.4 11,978.5 Medical benefits paid related to: Current year (13,355.9 ) (10,925.0 ) (10,763.0 ) Prior years (1,061.2 ) (1,047.2 ) (1,153.8 ) Total (14,417.1 ) (11,972.2 ) (11,916.8 ) Ending balance $ 2,146.3 $ 1,690.5 $ 1,536.0 (1)-Incurred amounts for 2017 include the $45.6 million Illinois PDR discussed further in Note 2 - Summary of Significant Accounting Policies . Medical benefits payable recorded developed favorably by approximately $367.6 million , $284.7 million , and $211.0 million in 2017 , 2016 and 2015 , respectively. The release of the provision for moderately adverse conditions included in our prior year estimates was substantially offset by the provision for moderately adverse conditions established for claims incurred in the current year. Accordingly, the favorable development in our estimate of medical benefits payable related to claims incurred in prior years does not directly correspond to a decrease in medical benefits expense recognized during the period in which the favorable development is recognized. Excluding the prior year development related to the release of the provision for moderately adverse conditions, our estimates of consolidated medical benefits expense recorded developed favorably by approximately $224.6 million , $154.3 million , and $78.1 million in 2017, 2016, and 2015 , respectively. Such amounts are net of the development relating to refunds due to government customers in connection with minimum loss ratio provisions. The net favorable development recognized in both 2017 and 2016 was primarily in our Medicaid Health Plans segment and, to a lesser extent, in our Medicare Health Plans segment. The net favorable development resulted primarily due to a number of operational and clinical initiatives planned and executed, throughout both 2015 and 2016, that contributed to lower than expected pharmacy and medical trends, and actual claim submission time being faster than we originally assumed (i.e. our completion factors were higher than we originally assumed) in establishing our medical benefits payable in the prior years. This development does not directly correspond to an increase in our current year operating results as these reductions were offset by estimated current period medical benefits expense when we established our estimate of the current year medical benefits payable. Both completion factor and medical trend assumptions are influenced by utilization levels, unit costs, mix of business, provider reimbursement levels, processing system conversions and changes, claim inventory levels, claim processing patterns, our ability and practices to manage medical and pharmaceutical costs, claim submission patterns and operational changes resulting from business combinations, among others. Our actual costs were ultimately less than expected. The favorable development recognized in 2015 was primarily due to lower than expected utilization in our Medicaid Health Plans segment. Our Universal American acquisition, in 2017, and our Care1st Arizona acquisition, in 2016, resulted in increases to medical benefits payable as of the effective date of each acquisition. A business divestiture in 2015 resulted in an immaterial decrease to medical benefits expense as of the effective date of the divestiture. See Note 3 - Acquisitions , for additional discussion of our 2016 and 2017 acquisitions. Incurred and paid claims development The following is information about incurred and paid claims development, by segment and consolidated, as of December 31, 2017, 2016 and 2015, net of reinsurance, as well as cumulative claim frequency and the total of incurred-but-not-reported liabilities plus expected development on reported claims included within the net incurred claims amounts. The reported cumulative claims below represent billed services rendered to health plan members that are submitted for payment according to industry standards. Medicaid Health Plans A reconciliation of the beginning and ending balances of our Medicaid Health Plans medical benefits payable is as follows: For the years ended December 31, 2017 2016 2015 (in millions) Beginning balance $ 1,135.8 $ 1,040.2 $ 957.8 Acquisitions — 37.3 — Medical benefits incurred related to: Current year (1) 9,612.2 8,404.2 8,012.4 Prior years (198.1 ) (215.7 ) (145.6 ) Total 9,414.1 8,188.5 7,866.8 Medical benefits paid related to: Current year (8,417.4 ) (7,431.4 ) (7,042.0 ) Prior years (759.3 ) (698.8 ) (742.4 ) Total (9,176.7 ) (8,130.2 ) (7,784.4 ) Ending balance $ 1,373.2 $ 1,135.8 $ 1,040.2 (1)-Incurred amounts for 2017 include the $45.6 million Illinois PDR discussed further in Note 2 - Summary of Significant Accounting Policies . The following tables provide information about incurred and paid claims development for our Medicaid Health Plans segment as of December 31, 2017, net of reinsurance. Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance As of December 31, 2017 Incurred amount Total of IBNR Liabilities Plus Expected Development on Reported Claims Cumulative Number of Reported Claims Incurred Year 2016 2017 2016 (1) $ 8,437.4 $ 8,258.2 $ 93.2 61.6 2017 (2) 9,607.8 1,190.4 67.5 Total $ 17,866.0 (1) - Incurred amounts for 2016 include $37.3 million of medical benefits payable liabilities, net of a $4.1 million reinsurance receivable, acquired from Care1st Arizona. Refer to Note 3 – Acquisitions for additional discussion of the Care1st Arizona acquisition. (2) - Incurred amounts for 2017 are net of a $4.6 million reinsurance receivable. Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Incurred Year 2016 2017 2016 $ (7,431.4 ) $ (8,165.0 ) 2017 (8,417.4 ) Total $ (16,582.4 ) All outstanding liabilities before 2016, net of reinsurance 85.0 Liabilities for claims and claim adjustment expenses, net of reinsurance $ 1,368.6 Medicare Health Plans A reconciliation of the beginning and ending balances of our Medicare Health Plans medical benefits payable is as follows: For the years ended December 31, 2017 2016 2015 (in millions) Beginning balance $ 510.0 $ 473.9 $ 461.3 Acquisitions (divestitures) 128.1 — (9.5 ) Medical benefits incurred related to: Current year 4,676.8 3,332.9 3,445.2 Prior years (99.5 ) (54.4 ) (43.5 ) Total 4,577.3 3,278.5 3,401.7 Medical benefits paid related to: Current year (4,164.6 ) (2,901.3 ) (3,011.0 ) Prior years (328.3 ) (341.1 ) (368.6 ) Total (4,492.9 ) (3,242.4 ) (3,379.6 ) Ending balance $ 722.5 $ 510.0 $ 473.9 The following tables provide information about incurred and paid claims development for our Medicare Health Plans segment as of December 31, 2017, net of reinsurance. Incurred and paid claims development for the years ended December 31, 2017 and 2016 have been retrospectively adjusted for the 2017 acquisition of Universal American. Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance As of December 31, 2017 Incurred amount Total of IBNR Liabilities Plus Expected Development on Reported Claims Cumulative Number of Reported Claims Incurred Year 2016 2017 2016 $ 4,487.4 $ 4,402.2 $ 19.4 25.1 2017 (1) 5,405.5 639.8 30.4 Total $ 9,807.7 (1) Incurred amounts for 2017 are net of a $0.9 million reinsurance receivable acquired from Universal American. Refer to Note 3 – Acquisitions for additional discussion of the Universal American acquisition. Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Incurred Year 2016 2017 2016 $ (3,998.6 ) $ (4,382.8 ) 2017 (4,765.7 ) Total $ (9,148.5 ) All outstanding liabilities before 2016, net of reinsurance 62.4 Liabilities for claims and claim adjustment expenses, net of reinsurance $ 721.6 Medicare PDPs A reconciliation of the beginning and ending balances of our Medicare PDPs medical benefits payable is as follows: For the years ended December 31, 2017 2016 2015 (in millions) Beginning balance $ 44.7 $ 21.9 $ 64.7 Acquisitions (divestitures) — — — Medical benefits incurred related to: Current year 823.4 637.0 731.9 Prior years (70.0 ) (14.6 ) (21.9 ) Total 753.4 622.4 710.0 Medical benefits paid related to: Current year (773.9 ) (592.3 ) (710.0 ) Prior years 26.4 (7.3 ) (42.8 ) Total (747.5 ) (599.6 ) (752.8 ) Ending balance $ 50.6 $ 44.7 $ 21.9 The following tables provide information about incurred and paid claims development for our Medicare PDPs segment as of December 31, 2017, net of reinsurance. Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance As of December 31, 2017 Incurred amount Total of IBNR Liabilities Plus Expected Development on Reported Claims Cumulative Number of Reported Claims Incurred Year 2016 2017 2016 $ 637.0 $ 566.7 $ — 47.8 2017 823.4 49.5 51.3 Total $ 1,390.1 Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Incurred Year 2016 2017 2016 $ (592.3 ) $ (566.7 ) 2017 (773.9 ) Total $ (1,340.6 ) All outstanding liabilities before 2016, net of reinsurance 1.1 Liabilities for claims and claim adjustment expenses, net of reinsurance $ 50.6 Consolidated The following tables provide information about the consolidated company incurred and paid claims development as of December 31, 2017, net of reinsurance. The information for 2017 and 2016 has been retrospectively adjusted for our Universal American acquisition. Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance As of December 31, 2017 Incurred amount Total of IBNR Liabilities Plus Expected Development on Reported Claims Cumulative Number of Reported Claims Incurred Year 2016 2017 2016 (1) $ 13,561.8 $ 13,227.1 $ 112.6 134.5 2017 (2) 15,836.7 1,879.7 149.2 Total $ 29,063.8 (1) - Incurred amounts for 2016 include $37.3 million of medical benefits payable liabilities, net of a $4.1 million reinsurance receivable, acquired from Care1st Arizona. Refer to Note 3 – Acquisitions for additional discussion of the Care1st Arizona acquisition. (2) - Incurred amounts for 2017 include the $45.6 million Illinois PDR discussed further in Note 2 - Summary of Significant Accounting Policies . Additionally, incurred amounts for 2017 are net of a $5.5 million reinsurance recoverable. Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Incurred Year 2016 2017 2016 $ (12,022.3 ) $ (13,114.5 ) 2017 (13,957.0 ) Total $ (27,071.5 ) All outstanding liabilities before 2016, net of reinsurance 148.5 Liabilities for claims and claim adjustment expenses, net of reinsurance $ 2,140.8 The reconciliation of the net incurred and paid claims development tables, by segment, to the liability for claims and claim adjustment expenses in the consolidated balance sheets is as follows. Reconciliation of the Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid Claims and Claim Adjustment Expenses December 31, 2017 Net Outstanding Liabilities Medicaid Health Plans $ 1,368.6 Medicare Health Plans 721.6 Medicare PDPs 50.6 Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance $ 2,140.8 Reinsurance Recoverable 5.5 Total gross liability for unpaid claims and claim adjustment expense $ 2,146.3 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES 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 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 federal 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. Mr. Farha filed a petition for a writ of certiorari to the United States Supreme Court in January 2017. In April 2017, the United States Supreme Court declined to hear the appeal by Mr. Farha. The fifth individual, Mr. Bereday, entered a guilty plea in June 2017 in connection with the federal criminal charges, which was accepted by the court in July 2017. Mr. Bereday was sentenced in November 2017. We have also previously advanced legal fees and related expenses to these five individuals regarding a dispute 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 and a qui tam action against Messrs. Farha, Behrens and Bereday in federal court. 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. Pursuant to the settlement agreements described below, Messrs. Farha, Behrens and Bereday were dismissed from the federal court and state derivative actions. Pursuant to the settlement agreement with Mr. Bereday described below, Mr. Bereday was dismissed from the fee advancement case in Delaware Chancery Court. The Commission action and the qui tam action are currently stayed. The terms of the stay in the qui tam action provide that it will be lifted on February 20, 2018. In April 2017, the Commission and Mr. Farha entered into a consent judgment to pay $12.5 million to the Commission and $7.5 million to us. In April 2017, the Commission and Mr. Behrens also entered into a consent judgment to pay $4.5 million to the Commission and $1.5 million to us. In December 2017, the Commission and Mr. Bereday filed a proposed consent judgment for Mr. Bereday to pay $4.5 million to the Commission. The Court has not yet ruled on the proposed judgment. In addition, we have advanced 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 us. The Delaware and Florida state court matters have been dismissed. In September 2016, we entered into a settlement agreement with Mr. Farha pursuant to which he paid us $7.5 million as referenced in the April 2017 consent judgment with the Commission, 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 a portion of the 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 paid us $1.5 million as referenced in the April 2017 consent judgment with the Commission, 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 June 2017, we entered into a settlement agreement with Mr. Bereday that became effective in July 2017, pursuant to which we agreed that we would not seek to recover 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 $2.5 million . In connection with these matters, we have advanced to the five individuals, cumulative legal fees and related expenses of approximately $236.2 million from the inception of the investigations through December 31, 2017. We incurred $6.4 million , $18.7 million and $25.2 million of these legal fees and related expenses during the years ended December 31, 2017, 2016 and 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 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. 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, claims for indemnification under purchase agreements, 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. Operating Leases We recorded rental expense of $35.1 million , $30.7 million , and $30.0 million for the years ended December 31, 2017 , 2016 and 2015 , respectively, related to our operating leases for office space. Future minimum lease payments under non-cancelable operating leases with initial or remaining lease terms in excess of one year at December 31, 2017 are as follows: Minimum Lease Payments 2018 $ 31.1 2019 26.2 2020 24.1 2021 21.3 2022 17.7 2023 and thereafter 50.1 Total $ 170.5 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company and subsidiaries file a consolidated federal income tax return, combined state income tax returns, and separate state franchise, income and premium tax returns, as applicable. The following table provides components of income tax expense (benefit): For the Years Ended December 31, 2017 2016 2015 Current: Federal $ 120.8 $ 251.6 $ 161.2 State 14.2 24.2 11.3 135.0 275.8 172.5 Deferred: Federal (48.3 ) 12.8 42.9 State 1.2 (1.2 ) 2.1 (47.1 ) 11.6 45.0 Total income tax expense $ 87.9 $ 287.4 $ 217.5 A reconciliation of income tax at the statutory federal rate (currently 35% for the tax years presented) to income tax at the effective rate is as follows: For the Years Ended December 31, 2017 2016 2015 Income tax expense at statutory federal rate $ 161.6 $ 185.3 $ 117.6 Adjustments resulting from: State income tax, net of federal benefit 11.7 14.4 9.5 Unrecognized tax benefits (23.5 ) 9.5 3.5 Tax rate change (56.1 ) — — Non-deductible ACA industry fees — 79.9 79.6 Other, net (5.8 ) (1.7 ) 7.3 Total income tax expense $ 87.9 $ 287.4 $ 217.5 Our effective income tax rate on pre-tax income was 19.0% for the year ended December 31, 2017 , compared with 54.3% and 64.7% for the years ended December 31, 2016 and 2015, respectively. The rate decline during 2017 was primarily driven by the tax rate change resulting from the enactment of the Tax Cuts and Jobs Act of 2017 (the "TCJA”) during 2017, discussed below; the one-year moratorium on the non-deductible ACA industry fee for 2017; higher excess tax benefits resulting from the settlement of stock-compensation awards in 2017; and the favorable effect of the recognition of certain previously unrecognized tax benefits during 2017. On December 22, 2017, President Trump signed the TCJA into legislation which, among other things, reduced the federal income tax rate for corporations from 35% to 21% effective on January 1, 2018. We are required to recognize the effect on deferred tax assets and liabilities of a change in tax rates in the period the tax rate change was enacted. We currently expect the enacted reduction in the U.S. corporate income tax rate, as well as other aspects of the new law, to result in a one-time, non-cash decrease to income tax expense of $56.1 million for the year ended December 31, 2017. The SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the TCJA. SAB 118 provides a measurement period that should not extend beyond one year from the TCJA enactment date for companies to complete the accounting relating to the TCJA under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the TCJA for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the TCJA is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in its financial statements. If a company cannot determine a provisional estimate to be included in its financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the TCJA. In connection with our initial analysis of the impact of the TCJA, we have recorded a provisional amount of net tax benefit of $56.1 million in the year ended December 31, 2017, related to the remeasurement of our deferred tax assets and liabilities and other effects. For various reasons including those discussed below, we have not fully completed our accounting for the income tax effects of the TCJA. As we were able to make reasonable estimates of the effects of the TCJA, we recorded provisional amounts. In connection with the adoption of the TCJA, we: • Remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally at a federal rate of 21%. However, we are still analyzing certain aspects of the TCJA and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. Our financial statements include provisional amounts for the effects of deferred tax revaluation. • Evaluated the future deductibility of executive compensation due to the elimination of the performance-based exception as well as the modification of who is treated as a covered person in connection with limiting the deduction. As part of the TCJA, there is a transition rule for written, binding contracts in place prior to November 2, 2017 related to executive compensation, that have not been modified in any material respect. Further guidance is needed to determine the entire effect of these provisions. Our financial statements include provisional amounts for the effects of the changes to the deductibility of executive compensation. Once we finalize certain tax positions, we will be able to conclude whether any further adjustments are required to the net deferred tax liability balance. Any adjustments to these provisional amounts will be reported as a component of tax expense (benefit) in the reporting period in which any such adjustments are determined, which should be no later than the fourth quarter of 2018. Significant components of our deferred tax assets and liabilities are: As of December 31, Deferred tax assets: 2017 2016 Net operating losses $ 24.7 $ 11.2 Foreign tax credits 22.0 — Medical and other benefits discounting 18.7 15.2 Allowance for doubtful accounts 14.8 19.2 Stock-based compensation 14.1 15.5 Unearned premium discounting 3.1 0.2 Capital losses 9.9 — Premium deficiency reserve 10.7 — Accrued expenses and other 5.6 11.3 Total deferred tax assets 123.6 72.6 Valuation allowance (48.5 ) (8.8 ) Net deferred tax assets 75.1 63.8 Deferred tax liabilities: Goodwill and other intangible assets (101.1 ) (47.3 ) Software development costs and property and equipment (56.7 ) (68.0 ) Prepaid assets (10.7 ) (11.9 ) Total deferred tax liabilities (168.5 ) (127.2 ) Net deferred tax liability $ (93.4 ) $ (63.4 ) The net deferred tax liability is calculated at 23.4% and 37% at December 31, 2017 and 2016, respectively, as the result of the TCJA. Valuation allowances are provided when it is considered more-likely-than-not that deferred tax assets will not be realized. The valuation allowances relate to future benefits on certain state net operating loss carryforwards, capital loss carryforwards, and foreign tax credits which expire beginning with the 2018 tax year through 2037. As we were within the initial measurement period for the acquisition of Universal American, approximately $39.3 million of the valuation allowances recorded in 2017 were recorded as an adjustment to the opening balance sheet. These valuation allowances were subsequently revalued as a result of the TCJA to approximately $34.9 million . A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Years Ended December 31, 2017 2016 Unrecognized tax benefits, beginning of period $ 23.5 $ 14.0 Increases: Prior year tax positions — 0.7 Current year tax positions 3.5 11.4 Decreases: Prior year tax positions (23.5 ) (2.6 ) Unrecognized tax benefits, end of period $ 3.5 $ 23.5 During April 2017, the IRS completed its audit of our 2015 consolidated income tax return, which effectively settled the 2015 tax year resulting in reversals of prior liabilities for unrecognized tax benefits in the amount of $4.9 million . In August 2017, the IRS approved our prior year refund claim with respect to this Internal Revenue Code section 162(m)(6) uncertain tax position. Based on our ongoing assessments of more-likely-than-not outcomes, this position was effectively settled for all years. The effect of the settlement regarding the current and prior year positions was recognized as a further reduction of income tax expense in the amount of $18.6 million . We do not believe it is reasonably possible that our liability for unrecognized tax benefits will decrease in the next 12 months as a result of audit settlements. We file our income tax returns in the U.S. federal jurisdiction and various states. We currently participate in the Compliance Assurance Program ("CAP") with the IRS, excluding the 2017 tax year. Under CAP, the IRS undertakes audit procedures during the tax year and as the return is prepared for filing. The IRS has concluded its CAP review of our 2015 tax return as well as all the prior years. We are no longer subject to state and local tax examinations prior to 2012. As of December 31, 2017, we are not aware of any material proposed adjustments. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION We recorded stock-based compensation expense of $59.8 million , $35.5 million and $20.2 million for the years ended December 31, 2017 , 2016 , and 2015 , respectively. The increase in 2017 was primarily driven by the increase in our closing stock price from $137.08 as of December 31, 2016 to $201.11 as of December 31, 2017, which had the effect of increasing cumulative compensation expense recognized for our PSUs subject to variable accounting. As of December 31, 2017 , we expect $63.1 million of unrecognized compensation cost related to non-vested stock-based compensation arrangements, net of estimated forfeitures, to be recognized over a weighted-average period of 1.8 years . The unrecognized compensation cost for our PSUs subject to variable accounting was determined based on the closing common stock price as of December 31, 2017 and amounted to approximately $19.9 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. The weighted-average grant-date fair values of shares granted during the years ended December 31, 2017 , 2016 and 2015 were $139.49 , $100.07 and $97.69 , respectively. The total fair value of all shares vested during the year ended December 31, 2017 was $49.0 million . We generally repurchase vested shares from our employees to satisfy our tax withholding requirements at the statutory minimum, and then retire the repurchased shares. Restricted Stock Units A summary of the activity for our RSU awards for the year ended December 31, 2017 is presented in the table below. RSUs Weighted Outstanding as of January 1, 2017 275,926 $ 90.08 Granted 147,884 144.25 Vested (134,641 ) 85.14 Forfeited (14,526 ) 107.16 Outstanding as of December 31, 2017 274,643 $ 120.73 Performance Stock Units A summary of the activity for our PSU awards for the year ended December 31, 2017 is presented in the table below. PSUs Weighted Outstanding as of January 1, 2017 471,852 $ 89.68 Granted 234,609 146.98 Vested (126,505 ) 63.93 Forfeited and expired (27,338 ) 109.84 Outstanding as of December 31, 2017 552,618 $ 118.64 Market Stock Units A summary of the activity for our MSU awards for the year ended December 31, 2017 is presented in the table below. MSUs Weighted Outstanding as of January 1, 2017 85,910 $ 103.83 Granted 36,009 71.50 Vested (74,471 ) 71.90 Forfeited and expired (2,218 ) 130.74 Outstanding as of December 31, 2017 45,230 $ 130.01 |
RELATED-PARTY TRANSACTIONS
RELATED-PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
RELATED-PARTY TRANSACTIONS | RELATED-PARTY TRANSACTIONS The Graham Companies Until February 2016, we leased office space from The Graham Companies, in which a former member of the board of directors and his immediate family have an ownership interest. We paid $0.2 million in rental expense to The Graham Companies in the year ended December 31, 2015. This director's term on our board of directors expired in May 2016 and payments made in 2016 to the affiliated company prior to his departure were immaterial. |
REGULATORY CAPITAL AND DIVIDEND
REGULATORY CAPITAL AND DIVIDEND RESTRICTIONS | 12 Months Ended |
Dec. 31, 2017 | |
REGULATORY CAPITAL AND DIVIDEND RESTRICTIONS [Abstract] | |
REGULATORY CAPITAL AND DIVIDEND RESTRICTIONS | REGULATORY CAPITAL AND DIVIDEND RESTRICTIONS Each of our health maintenance organizations ("HMO") and insurance subsidiaries must maintain a minimum amount of statutory capital determined by statute or regulation. The minimum statutory capital requirements differ by state and are generally based on a percentage of annualized premium revenue, a percentage of annualized health care costs, a percentage of certain liabilities, a statutory minimum, risk-based capital ("RBC") requirements or other financial ratios. Failure to maintain these requirements would trigger regulatory action by the state. Such statues, regulations and capital requirements also restrict the timing, payment and amount of dividends and other distributions that may be paid to us as the sole stockholder. Based upon current statutes and regulations, the minimum capital and surplus requirement, or net assets, for these subsidiaries that may not be transferable to us in the form of loans, advances or cash dividends was approximately $1.2 billion at December 31, 2017 and $871.8 million at December 31, 2016 . The combined statutory capital and surplus of our HMO and insurance subsidiaries was $2.0 billion and $1.7 billion at December 31, 2017 and 2016 , respectively, which was in compliance with the minimum capital requirements as of those dates. These increases resulted from the Universal American acquisition in 2017. Our HMO and insurance subsidiaries were in compliance with and in excess of the minimum capital requirements as of both December 31, 2017 and 2016. Dividend restrictions vary by state, but the maximum amount of dividends which can be paid without prior approval from the applicable state is subject to restrictions relating to statutory capital, surplus and net income for the previous year. Some states require prior approval of all dividends, regardless of amount. States may disapprove any dividend that, together with other dividends paid by a subsidiary in the prior 12 months, exceeds the regulatory maximum as computed for the subsidiary based on its statutory surplus and net income. We received $335.0 million , $241.0 million and $152.0 million in dividends from our regulated subsidiaries during the years ended December 31, 2017 , 2016 and 2015 , respectively. The 2017 amount included $150.0 million not requiring prior regulatory approval, and $185.0 million paid after obtaining prior regulatory approval. Under applicable regulatory requirements at December 31, 2017 , the amount of dividends that may be paid through the end of 2018 by our HMO and insurance subsidiaries without prior approval by regulatory authorities is approximately $201.7 million in the aggregate. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS 401(k) Plan We offer a defined contribution retirement savings plan ("401(k) plan"). Eligible employees of the Company and its subsidiaries may elect to participate in this plan. Participants may contribute a certain percentage of their compensation, subject to maximum Federal and plan limits. We incurred matching contribution expense of $13.9 million , $10.8 million and $9.6 million during the years ended December 31, 2017 , 2016 and 2015 , respectively. The matching contributions are made in cash and invested according to the plan participant's investment elections, and there are no shares of our common stock reserved for issuance under the 401(k) plan. |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 12 Months Ended |
Dec. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS | DISCONTINUED OPERATIONS On August 3, 2016, our subsidiary, Universal American, completed the sale of its Traditional Insurance business prior to our acquisition of Universal American. This was accomplished by selling two life insurance subsidiaries, while retaining ownership of a third life insurance subsidiary, American Progressive Life & Health Insurance Company of New York ("Progressive"). The sale of the Traditional Insurance business underwritten by Progressive was accomplished through a 100% quota-share reinsurance treaty with a wholly-owned subsidiary of Nassau Re, that, when considered in combination with other reinsurance transactions previously entered into, resulted in the reinsurance of all of the Traditional Insurance policies that were underwritten by Progressive. Accordingly, the discontinued Traditional Insurance business did not materially affect our consolidated statements of comprehensive income for the year ended December 31, 2017. In accordance with ASC 360-10, Property, Plant and Equipment and ASC 205-20, Presentation of Financial Statements — Discontinued Operations , the Traditional Insurance business has been reported in discontinued operations in this 2017 Form 10-K. The following table summarizes the total assets and liabilities of our discontinued operations: December 31, 2017 April 28, 2017 (in millions) Assets Cash and cash equivalents $ 1.3 $ 0.8 Investments 46.5 47.7 Reinsurance recoverables 166.9 170.4 Other assets 0.5 0.7 Total Assets $ 215.2 $ 219.6 Liabilities Reserves and other policy liabilities $ 148.6 $ 153.3 Other liabilities 66.6 65.4 Total liabilities $ 215.2 $ 218.7 Progressive's traditional insurance products are reinsured under quota share coinsurance treaties with unaffiliated insurers, while the life insurance risks are reinsured under either quota share coinsurance or yearly-renewable term treaties with unaffiliated insurers. Under quota share coinsurance treaties, we pay the reinsurer an agreed upon percentage of all premiums and the reinsurer reimburses us that same percentage of any losses. In addition, the reinsurer pays us certain allowances to cover commissions, the cost of administering the policies and premium taxes. Under yearly-renewable term treaties, the reinsurer receives premiums at an agreed upon rate for its share of the risk on a yearly-renewable term basis. We also use excess of loss reinsurance agreements for certain policies whereby we limit our loss in excess of specified thresholds. We evaluate the financial condition of our Traditional Insurance reinsurers and monitor concentrations of credit risk to minimize our exposure to significant losses from reinsurer insolvencies. We are obligated to pay claims in the event that a reinsurer to whom we have ceded an insured claim fails to meet its obligations under the reinsurance agreement. We are not aware of any instances where any of our reinsurers have been unable to pay any policy claims on any reinsured business. |
QUARTERLY FINANCIAL INFORMATION
QUARTERLY FINANCIAL INFORMATION | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
QUARTERLY FINANCIAL INFORMATION | QUARTERLY FINANCIAL INFORMATION Selected unaudited quarterly financial data is as follows (in millions, except membership and per share data): For the Three Month Periods Ended March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017 Total revenues $ 3,954.2 $ 4,305.0 $ 4,402.9 $ 4,345.1 Gross margin 468.4 574.6 650.2 522.3 Income from operations 103.2 141.9 211.9 12.0 Income before income taxes 103.2 114.7 235.1 8.6 Net income 67.3 74.1 171.6 60.7 Net income per share - basic (1) $ 1.52 $ 1.67 $ 3.86 $ 1.36 Net income per share - diluted (1) 1.50 1.65 3.82 1.34 Period end membership 4,078,000 4,428,000 4,349,000 4,371,000 For the Three Month Periods Ended March 31, 2016 (2) June 30, 2016 September 30, 2016 December 31, 2016 Total revenues $ 3,540.5 $ 3,594.4 $ 3,584.0 $ 3,518.2 Gross margin 417.1 544.8 481.5 459.7 Income before income taxes 88.9 206.7 152.9 81.0 Net income 37.8 90.8 68.6 44.9 Net income per share - basic (1) $ 0.86 $ 2.05 $ 1.55 $ 1.01 Net income per share - diluted (1) 0.85 2.04 1.54 1.00 Period end membership 3,730,000 3,769,000 3,776,000 3,898,000 (1) The calculation of net income per share is based on weighted average shares outstanding during each quarter and, accordingly, the sum may not equal the total for the year. (2) During the six months ended June 30, 2016, net income and per share amounts for the three months ended March 31, 2016 were recasted to reflect the early adoption of ASU 2016-09 " Compensation-Stock Compensation (Topic 718)." |
Schedule I CONDENSED FINANCIAL
Schedule I CONDENSED FINANCIAL INFORMATION OF REGISTRANT | 12 Months Ended |
Dec. 31, 2017 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Schedule I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT | CONDENSED FINANCIAL INFORMATION OF REGISTRANT WELLCARE HEALTH PLANS, INC. (Parent Company Only) STATEMENTS OF COMPREHENSIVE INCOME (In millions) For the Years Ended December 31, 2017 2016 2015 Revenues: Investment and other income $ 0.3 $ 0.1 $ 0.5 Total revenues 0.3 0.1 0.5 Expenses: Selling, general and administrative 63.4 37.5 22.1 Interest expense 68.5 59.1 54.2 Total expenses 131.9 96.6 76.3 Loss from operations (131.6 ) (96.5 ) (75.8 ) Loss on extinguishment of debt 26.1 — — Loss before income taxes (157.7 ) (96.5 ) (75.8 ) Income tax benefit 69.7 30.8 23.9 Loss before equity in subsidiaries (88.0 ) (65.7 ) (51.9 ) Equity in earnings of subsidiaries 461.7 307.8 170.5 Net income 373.7 242.1 118.6 Other comprehensive (loss) income, before tax: Change in net unrealized gains and losses on available-for-sale securities (2.2 ) 1.8 (1.9 ) Income tax (benefit) expense related to other comprehensive income (0.5 ) 0.6 (0.3 ) Other comprehensive (loss) income, net of tax (1.7 ) 1.2 (1.6 ) Comprehensive income $ 372.0 $ 243.3 $ 117.0 See notes to consolidated financial statements. CONDENSED FINANCIAL INFORMATION OF REGISTRANT WELLCARE HEALTH PLANS, INC. (Parent Company Only) BALANCE SHEETS (In millions, except share data) As of December 31, 2017 2016 Assets Current assets: Cash and cash equivalents $ 31.8 $ 1.8 Short-term investments 2.1 2.2 Taxes receivable 16.4 2.5 Affiliate receivables and other current assets 1,050.3 950.1 Total current assets 1,100.6 956.6 Deferred tax asset 5.4 15.5 Investment in subsidiaries 2,509.6 2,048.4 Total Assets $ 3,615.6 $ 3,020.5 Liabilities and Stockholders' Equity Current liabilities: Accrued expenses and other current liabilities $ 16.5 $ 6.7 Total current liabilities 16.5 6.7 Long-term debt 1,182.4 997.6 Other liabilities — 16.1 Total liabilities 1,198.9 1,020.4 Commitments and contingencies (see Note 13) — — Stockholders' Equity: Preferred stock, $0.01 par value (20,000,000 authorized, no shares issued or outstanding) — — Common stock, $0.01 par value (100,000,000 authorized, 44,522,988 and 44,293,881 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively) 0.4 0.4 Paid-in capital 591.5 546.9 Retained earnings 1,827.5 1,453.8 Accumulated other comprehensive loss (2.7 ) (1.0 ) Total stockholders' equity 2,416.7 2,000.1 Total Liabilities and Stockholders' Equity $ 3,615.6 $ 3,020.5 See notes to consolidated financial statements. CONDENSED FINANCIAL INFORMATION OF REGISTRANT WELLCARE HEALTH PLANS, INC. (Parent Company Only) STATEMENTS OF CASH FLOWS (In millions) For the Years Ended December 31, 2017 2016 2015 Net cash (used in) provided by operating activities $ (9.6 ) $ 155.8 $ 146.5 Cash used in investing activities: Net proceeds (payments) from purchases and sales and maturities of investments (1.6 ) 1.2 33.1 Payments to subsidiaries, net (99.7 ) (53.7 ) (376.5 ) Net cash used in investing activities (101.3 ) (52.5 ) (343.4 ) Cash provided by financing activities: Proceeds from debt, net of financing costs paid 1,182.2 196.9 308.9 Repurchase and retirement of shares to satisfy tax withholding requirements (15.2 ) (7.0 ) (7.0 ) Payments on debt (1,026.1 ) (400.0 ) — Other, net — — 2.2 Net cash provided by (used in) financing activities 140.9 (210.1 ) 304.1 Cash and cash equivalents: Increase (decrease) in cash and cash equivalents 30.0 (106.8 ) 107.2 Balance at beginning of period 1.8 108.6 1.4 Balance at end of period $ 31.8 $ 1.8 $ 108.6 See notes to consolidated financial statements. |
Schedule II Valuation and Quali
Schedule II Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2017 | |
Valuation and Qualifying Accounts [Abstract] | |
Schedule II - Valuation and Qualifying Accounts | Balance at Charged to Write Offs Balance at Year Ended December 31, 2017 Deducted from assets: Allowance for uncollectible accounts: Premiums receivable $ 22.7 $ 8.5 $ 14.9 $ 16.3 Medical advances 3.5 — — 3.5 Total $ 26.2 $ 8.5 $ 14.9 $ 19.8 Year Ended December 31, 2016 Deducted from assets: Allowance for uncollectible accounts: Premiums receivable $ 19.9 $ 10.0 $ 7.2 $ 22.7 Medical advances 3.4 0.1 — 3.5 Total $ 23.3 $ 10.1 $ 7.2 $ 26.2 Year Ended December 31, 2015 Deducted from assets: Allowance for uncollectible accounts: Premiums receivable $ 21.1 $ 12.6 $ 13.8 $ 19.9 Medical advances 1.4 2.0 — 3.4 Total $ 22.5 $ 14.6 $ 13.8 $ 23.3 |
SUMMARY OF SIGNIFICANT ACCOUN29
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The consolidated balance sheets and statements of comprehensive income, changes in stockholders' equity, and cash flows include our accounts and the accounts of our subsidiaries over which we have control or are the primary beneficiary. We eliminated all intercompany accounts and transactions. |
Use of Estimates | The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), which requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base these estimates 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 consolidated financial statements. |
Reclassifications | Certain reclassifications were made to 2015 and 2016 financial information to conform with 2017 presentation. |
Recently Adopted and Issued Accounting Standards | In May 2017, the FASB issued ASU 2017-09, " Compensation-Stock Compensation (Topic 718) - Scope of Modification Accounting ". This guidance addresses which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting pursuant to Topic 718. An entity should account for the effects of a modification unless (a) the fair value of the modified award is the same as the fair value of the original award, (b) the vesting conditions of the modified award are the same as the vesting conditions of the original award and (c) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments in this guidance should be applied prospectively for public business entities effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. We adopted this guidance prospectively on January 1, 2018. We do not anticipate the adoption of this guidance to have a material effect on our consolidated results of operations, financial condition or cash flows. In January 2017, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2017-04, " Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ". This update eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. As a result, an entity should perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. We adopted this guidance prospectively on January 1, 2018. We do not anticipate the adoption of this guidance to have a material effect on our consolidated results of operations, financial condition or cash flows. In January 2017, the FASB issued ASU 2017-01, “ Business Combinations (Topic 805): Clarifying the Definition of a Business .” The amendments in this update provide guidance to assist entities with evaluating when a group of transferred assets and activities (collectively referred to as a "set") is a business. This new guidance provides for a "screen", which requires a determination that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. If the screen's threshold is not met, a set cannot be considered a business unless it includes an input and a substantive process that together significantly contribute to the ability to create output, eliminating the evaluation of whether a market participant could replace missing elements. This guidance is effective for prospective business combinations for public entities for interim and annual periods beginning after December 15, 2017. We adopted this guidance prospectively on January 1, 2018. We do not anticipate the adoption of this guidance to have a material effect on our consolidated results of operations, financial condition or cash flows. In November 2016, the FASB issued ASU 2016-18, “ Statement of Cash Flows (Topic 230) Restricted Cash; a consensus of the FASB Emerging Issues Task Force. ” This update requires entities to reconcile, on the statement of cash flows, changes in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. This guidance is effective for public entities for interim and annual periods beginning after December 15, 2017, and will be applied retrospectively. We adopted this guidance on January 1, 2018. We do not anticipate the adoption of this guidance to have a material effect on our consolidated results of operations, financial condition or cash flows. In October 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-17, “ Consolidation (Topic 810). ” This update changes how a reporting entity evaluates consolidation, including whether an entity is considered a variable interest entity, determination of the primary beneficiary and how related parties are considered in the analysis. We adopted this guidance effective January 1, 2017. We do not anticipate the adoption of this guidance to have a material effect on our consolidated results of operations, financial condition or cash flows. 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 adopted this guidance on January 1, 2018. We do not anticipate the adoption of this guidance to have a material effect on our consolidated results of operations, financial condition or cash flows. 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. We adopted this guidance effective January 1, 2017. We do not anticipate the adoption of this guidance to have a material effect on our consolidated results of operations, financial condition or cash flows. 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. We adopted this guidance prospectively on January 1, 2018. We do not anticipate the adoption of this guidance to have a material effect on our consolidated results of operations, financial condition 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. Given that substantially all of our revenues are derived from insurance contracts accounted for in accordance with ASC 944, Financial Services-Insurance , which are specifically excluded from the scope of ASU 2014-09, we do not anticipate the adoption of this guidance to have a material effect on our consolidated results of operations, financial condition or cash flows. Recently Issued Accounting Standards In March 2017, the FASB issued ASU No. 2017-08, " Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities ". This update shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. Currently, entities generally amortize the premium as a yield adjustment over the contractual life of the security. The new guidance does not change the accounting for purchased callable debt securities held at a discount. This guidance is effective for interim and annual periods beginning after December 15, 2018. Early adoption is 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 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 do not expect the adoption of this guidance to have a material effect on our results of operations or cash flows. The effect of ASU 2016-02 on our consolidated financial position will be based on leases outstanding at the time of adoption. |
Premium Revenue Recognition and Premiums Receivable | We earn premium revenue through our participation in Medicaid, Medicaid-related and Medicare programs. Our Medicaid contracts with state agencies generally are multi-year contracts subject to annual renewal provisions, while our Medicare contracts with CMS renew annually. Our Medicare and Medicaid contracts establish fixed, monthly premium rates per member ("PMPM"), which are generally determined at the beginning of each new contract renewal period; however, premiums may be adjusted by CMS and state agencies throughout the term of the contracts in certain cases. Premium rate changes are recognized in the period the change becomes effective, when the effect of the change in the rate is reasonably estimable and collection is assured. We recognize premium revenue in the period in which we are obligated to provide services to our members. We are generally paid by CMS and state agencies in the month in which we provide services. On a monthly basis, we bill members for any premiums for which they are responsible according to their respective plan. We record premiums earned but not received as premiums receivable and record premiums received in advance of the period of service as unearned premiums in the consolidated balance sheets. Unearned premiums are recognized as revenue when we provide the related services. Member premiums are recognized as revenue in the period of service. We estimate, on an on-going basis, the amount of members' billings that may not be collectible based on our evaluation of historical trends. An allowance is established for the estimated amount that may not be collectible. In addition, we routinely monitor the collectability of specific premiums receivable from CMS and state agencies, including Medicaid receivables for obstetric deliveries and newborns, and net receivables for member retroactivity. We reduce revenue and premiums receivable by the amount we estimate may not be collectible. We reported premiums receivable net of an allowance for uncollectible premiums receivable of $16.3 million and $22.7 million at December 31, 2017 and 2016 , respectively. Historically, the provision for uncollectible premiums for member premiums receivable has not been material relative to consolidated premium revenue. Premium payments are based upon eligibility lists produced by CMS and state agencies. We verify these lists to determine whether we have been paid for the correct premium category and program. From time to time, CMS and state agencies require us to reimburse them for premiums that we received for individuals who were subsequently determined to be ineligible for any government-sponsored program or belong to a plan other than ours. Additionally, the verification of membership may result in additional premiums due to us from CMS and state agencies for individuals who were subsequently determined to belong to our plan for periods in which we received no premium for those members. We estimate the amount of outstanding retroactivity adjustments and adjust premium revenue based on historical trends, premiums billed, the volume of member and contract renewal activity and other information. We record amounts receivable in premiums receivable, net and amounts payable in accounts payable and accrued expenses in the consolidated balance sheets. Supplemental Medicaid Premiums We earn supplemental premium payments for eligible obstetric deliveries and newborns for our Medicaid members in Arizona, Florida, Georgia, Illinois (through December 31, 2017), Missouri, Nebraska, New Jersey, New York and South Carolina. Each state Medicaid contract specifies how and when these supplemental payments are earned and paid. We also earn supplemental Medicaid premium payments in some states for high cost drugs and other eligible services. We recognize supplemental premium revenue in the period we provide related services to our members. For the years ended December 31, 2017 , 2016 , and 2015 we recognized approximately $478.9 million , $238.7 million and $269.1 million , respectively, of supplemental Medicaid premium revenue. The increase in 2017 resulted from our new Nebraska Medicaid plan and our acquisition of Care1st Arizona on December 31, 2016. Medicaid ACA Industry Fee Reimbursement The ACA imposed certain new taxes and fees, including an annual premium-based health insurance industry assessment (the "ACA industry fee") on health insurers, which began in 2014. For 2015 and 2016, we received amendments, written agreements or other documentation from all of our state Medicaid customers, that commit them to reimburse us for the portion of the ACA industry fee attributable to our Medicaid plans, including its non-deductibility for income tax purposes. In December 2016, President Obama signed the Consolidated Appropriations Act, 2016 which, among other provisions, included a one-year moratorium on the ACA industry fee for 2017. As a result, the associated Medicaid ACA industry fee reimbursements from our state government partners were eliminated for 2017. Accordingly, we did not recognize any Medicaid ACA industry fee reimbursement revenue for the year ended December 31, 2017, compared with $244.9 million and $219.2 million recognized for the years ended December 31, 2016 and 2015, respectively. Medicaid Risk-Adjusted Premiums and Retroactive Rate Changes As previously discussed, Medicaid premium rate changes are recognized in the period the change becomes effective, when the effect of the change in the rate is reasonably estimable and collection is assured. In some instances, our Medicaid premiums are subject to risk score adjustments based on the health profile of our membership. Generally, the risk score is determined by the state agency's analysis of encounter submissions of processed claims data to determine the acuity of our membership relative to the entire state's Medicaid membership. The frequency of when states adjust premiums varies, but is usually done quarterly or semi-annually on a retrospective basis. We recognize periodic changes to risk-adjusted premiums as revenue when the amounts are determinable and collection is reasonably assured. Historically, we have not experienced significant differences between our estimates and amounts ultimately paid or received. Medicare Risk-Adjusted Premiums CMS provides risk-adjusted payments for MA Plans and PDPs based on the demographics and health severity of enrollees. The risk-adjusted premiums we receive are based on claims and encounter data that we submit to CMS within prescribed deadlines. We develop our estimates for risk-adjusted premiums utilizing historical experience, or other data, and predictive models as sufficient member risk score data becomes available over the course of each CMS plan year. We recognize periodic changes to risk-adjusted premiums as revenue when the amounts are determinable and collection is reasonably assured, which is possible as additional diagnosis code information is reported to CMS, when the ultimate adjustment settlements are received from CMS, or we receive notification of such settlement amounts. CMS adjusts premiums on two separate occasions on a retrospective basis. The first retrospective adjustment for a given plan year generally occurs during the third quarter of that year. This initial settlement represents the update of risk scores for the current plan year based on the severity of claims incurred in the prior plan year. CMS then issues a final retrospective risk adjusted premium settlement for that plan year in the following year. Historically, we have not experienced significant differences between our estimates and amounts ultimately received. The data provided to CMS to determine members' risk scores is subject to audit by CMS even after the annual settlements occur. An audit may result in the refund of premiums to CMS. While our experience to date has not resulted in a material refund, future refunds could materially reduce premium revenue in the year in which CMS determines a refund is required and could be material to our results of operations, financial position and cash flows. |
Minimum Medical Expense and Risk Corridor Provisions | We may be required to refund certain premium revenue to state agencies and CMS under various contractual and plan arrangements. We estimate the effect of the following arrangements on a monthly basis and reflect any adjustments to premium revenues in current operations. We report the estimated net amounts due to state agencies and CMS in other payables to government partners in the consolidated balance sheets. Certain of our Medicaid contracts require us to expend a minimum percentage of premiums on eligible medical benefits expense. To the extent that we expend less than the minimum percentage of the premiums on eligible medical benefits, we are required to refund to the state all or some portion of the difference between the minimum and our actual allowable medical benefits expense. Additionally, certain of our Medicaid contracts include other types of risk sharing arrangements (e.g., profit sharing arrangements) that require return of revenue to the state or receipt of revenue from the state, based on certain pre-tax earnings, net earnings or other results of operations -based calculations. In all arrangements, we estimate the amounts due from or to the state agencies based on the terms of our contracts with the applicable state agency and record the amounts as a change in premium. Historically, we have not experienced material differences between our recorded estimates and the subsequent state agencies settlement amounts. Our MA and PDP premiums are subject to risk sharing through the CMS Medicare Part D risk corridor provisions. The risk corridor calculation compares our actual experience to the target amount of prescription drug costs, limited to costs under the standard coverage as defined by CMS, less rebates included in our submitted plan year bid. We receive additional premium from CMS if our actual experience is more than 5% above the target amount. We refund premiums to CMS if our actual experience is more than 5% below the target amount. Based on the risk corridor provision and PDP activity-to-date, an estimated risk-sharing receivable or payable is recorded as an adjustment to premium revenue. After the close of the annual plan year, CMS performs the risk corridor calculation and any differences are settled between CMS and our plans. Historically, we have not experienced material differences between the subsequent CMS settlement amount and our recorded estimates. Beginning in 2014, the ACA required the establishment of a minimum medical loss ratio (“MLR”) for MA plans and Part D plans, requiring them to spend not less than 85% of premiums on medical benefits. The rules implementing the minimum MLR impose financial and other penalties for failing to achieve the minimum MLR, including requirements to refund to CMS shortfalls in amounts spent on medical benefits and termination of a plan’s MA contract for prolonged failure to achieve the minimum MLR. MLR is determined by adding a plan’s spending for clinical services, prescription drugs and other direct patient benefits, plus its total spending on quality improvement activities and dividing the total by earned premiums (after subtracting specific identified taxes and other fees). |
Medicare Part D Settlements | For qualifying low income PDP members, CMS pays for some, or all, of the member's monthly premium. We receive certain Part D prospective subsidy payments from 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. Approximately nine to ten months subsequent to the end of the plan year, or later in the case of the coverage gap discount subsidy, a settlement payment is made between CMS and our plans based on the difference between the prospective payments and actual claims experience. The subsidy components under Part D are described below. Low-Income Cost Sharing Subsidy ("LICS") -For qualifying low income members, CMS reimburses us for all or a portion of the low income member's deductible, coinsurance and co-payment amounts above the out-of-pocket threshold. Catastrophic Reinsurance Subsidy -CMS reimburses plans for 80% of the drug costs after a member reaches his or her out-of-pocket catastrophic threshold through a catastrophic reinsurance subsidy. Coverage Gap Discount Subsidy ("CGDS") -CMS provides monthly prospective payments for pharmaceutical manufacturer discounts made available to members. Catastrophic reinsurance subsidies and the LICS represent cost reimbursements under the Medicare Part D program. We are fully reimbursed by CMS for costs incurred for these contract elements 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/held for the benefit of members in the consolidated balance sheets. The receipts and payments between us and CMS are presented on a net basis as financing activity in our consolidated statements of cash flows because we are essentially administering and paying the benefit subsidies on behalf of CMS. Historically, the settlement payments between us and CMS have not been materially different from our estimates. CGDS advance payments are recorded within Funds receivable/held for the benefit of members in the consolidated balance sheets. Receivables are set up for manufacturer-invoiced amounts. Manufacturer payments reduce the receivable as payments are received. After the end of the contract year, during the Medicare Part D Payment reconciliation process for the CGD, CMS will perform a cost-based reconciliation to ensure the Medicare Part D sponsor is paid for gap discounts advanced at the point of sale, based on accepted prescription drug event data. |
Medical Benefits Expense 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. Direct medical expenses include amounts paid or payable to hospitals, physicians, pharmacy benefit managers and providers of ancillary services. Recorded direct medical expenses are reduced by the amount of pharmacy rebates earned, which are estimated based on historical utilization of specific pharmaceuticals, current utilization and contract terms. Pharmacy rebates earned but not yet received from pharmaceutical manufacturers are included in pharmacy rebates receivable in the accompanying consolidated balance sheets. Direct medical expenses may also include reserves for estimated referral claims related to health care providers under contract with us who are financially troubled or insolvent and who may not be able to honor their obligations for the costs of medical services provided by other providers. In these instances, we may be required to honor these obligations for legal or business reasons. Based on our current assessment of providers under contract with us, such losses have not been and are not expected to be significant. Also included in direct medical expense are our estimates for provider settlements due to clarification of contract terms, out-of-network reimbursement, claims payment differences and amounts due to contracted providers under risk-sharing and/or value-based arrangements. Consistent with the criteria specified and defined in guidance issued by the Department of Health and Human Services ("HHS") for costs that qualify to be reported as medical benefits under the minimum MLR provision of the ACA, we record certain medically related administrative costs such as preventive health and wellness, care management, and other quality improvement costs, as medical benefits expense. All other medically related administrative costs, such as utilization review services, network and provider credentialing and claims handling costs, are recorded in selling, general, and administrative expense. Medical benefits payable represents amounts for claims fully adjudicated but not yet paid and estimates for IBNR. Our estimate of IBNR is the most significant estimate included in our consolidated financial statements. We determine our best estimate of the base liability for IBNR utilizing consistent standard actuarial methodologies based upon key assumptions, which vary by business segment. Our assumptions include current payment experience, trend factors, and completion factors. Trend factors in our standard actuarial methodologies include contractual requirements, historic utilization trends, the interval between the date services are rendered and the date claims are paid, denied claims activity, disputed claims activity, benefit changes, expected health care cost inflation, seasonality patterns, maturity of lines of business, changes in membership and other factors. After determining an estimate of the base liability for IBNR, we make an additional estimate, also using standard actuarial techniques, to account for adverse conditions that may cause actual claims to be higher than the estimated base reserve. We refer to this additional liability as the provision for moderately adverse conditions. Our estimate of the provision for moderately adverse conditions captures the potential adverse development from factors such as: • our entry into new geographical markets; • our provision of services to new populations such as the aged, blind and disabled; • variations in utilization of benefits and increasing medical costs, including higher drug costs; • changes in provider reimbursement arrangements; • variations in claims processing speed and patterns, claims payment and the severity of claims; and • health epidemics or outbreaks of disease such as the flu or enterovirus. 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. Premium Deficiency Reserves We evaluate our contracts to determine if it is probable that a loss will be incurred. We establish a premium deficiency reserve ("PDR") when it is probable that expected future medical benefits and administrative expenses will exceed future premiums and reinsurance recoveries for the remainder of a contract period. For purposes of determining a PDR, we do not consider investment income and contracts are grouped in a manner consistent with our method of acquiring, servicing and measuring the profitability of such contracts. A PDR is recorded as medical benefits expense and in medical benefits payable. Once established, a PDR is reduced over the contract period as an offset to actual losses. We re-evaluate our PDR estimates each reporting period and, if estimated future losses differ from those in the current PDR estimate, we adjust the liability through medical benefits expense, as necessary. |
ACA Industry Fee | The total ACA industry fee levied on the health insurance industry was $11.3 billion in both 2015 and 2016, increasing to $14.3 billion in 2018. After 2018, the industry fee increases according to an index based on net premium growth. The assessment is being levied on certain health insurers that provide insurance in the assessment year and is allocated to health insurers based on each health insurer's share of net premiums for all U.S health insurers in the year preceding the assessment. The initial estimated liability for each year is accrued as of January 1, with a corresponding deferred expense asset that is amortized over 12 months to expense on a straight line basis. The fee is payable by September 30 of each year. The ACA industry fee is not deductible for income tax purposes, which significantly increased our effective income tax rate during 2014, 2015 and 2016 compared to prior periods. As previously discussed, the Consolidated Appropriations Act, 2016, included a one-year moratorium on the ACA industry fee for 2017, among other provisions. Accordingly, we did not incur ACA industry fee expense for the year ended December 31, 2017, compared with $228.4 million and $227.3 million incurred in 2016 and 2015, respectively. |
Equity-Based Employee Compensation | Certain of our employees, including executive officers, are eligible for long-term incentive awards ("LTI Program"), consisting of equity awards granted pursuant to the 2013 Plan. We designed the LTI Program to motivate and promote the achievement of our long-term financial and operating goals and improve retention. Under the LTI Program, we grant multi-year performance period awards that are not realized by employees and officers until subsequent years. We base award amounts on each participant's pre-established long-term incentive target and allocate the awards to various types of equity and performance-based cash awards, depending on job level. The Compensation Committee of our board of directors (the "Compensation Committee") has sole discretion of the ultimate funding and payout of certain performance awards under the LTI program. The Compensation Committee awards certain equity-based compensation under our stock plans, including stock options, restricted stock units ("RSUs"), performance stock units ("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, which is based on the closing price of our common stock on the date of grant, and recognize the expense ratably over the vesting period of the award. 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 financial, market-based and quality-based performance goals 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 are 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 with cumulative changes in expense recognized in periods in which performance conditions change or are ultimately met. • 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. 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 days 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 are generally paid net of taxes withheld at the statutory minimum. 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. The last of our MSU awards are expected to vest in March 2018. We estimate equity-based compensation expense based on awards ultimately expected to vest. We make assumptions of forfeiture rates at the time of grant and continuously reassess our assumptions based on actual forfeiture experience. |
Medicaid Premium Taxes | Premiums related to our Medicaid contracts with Arizona, Georgia, Hawaii, Kentucky, New Jersey and New York are subject to an assessment or tax on Medicaid premiums. The premium revenues we receive from these states include a reimbursement for this premium assessment. We have reported premium taxes on a gross basis, as premium revenue and as premium tax expense in the consolidated statements of income. We recognize the premium tax assessment as expense in the period we earn the related premium revenue and remit the taxes back to the state agencies on a periodic basis. |
Income Tax Expense | We record income tax expense as incurred based on enacted tax rates, estimates of book-to-tax differences in income, and projections of income that will be earned in each taxing jurisdiction. We recognize deferred tax assets and liabilities for the estimated future tax consequences of differences between the carrying amounts of existing assets and liabilities and their respective tax basis. We measure deferred tax assets and liabilities using tax rates, as enacted by law and applicable to taxable income in the years in which we expect to recover or settle those temporary differences. We record a valuation allowance on deferred taxes if we determine it is more likely than not that we will not fully realize the future benefit of deferred tax assets. We file tax returns after the close of our fiscal year end and adjust our estimated tax receivable or liability to the actual tax receivable or due per the filed state and federal tax returns. Historically, we have not experienced significant differences between our estimates of income tax expense and actual amounts incurred. State and federal taxing authorities may challenge the positions we take on our filed tax returns. We evaluate our tax positions and only recognize a tax benefit if it is more likely than not that a tax audit will sustain our conclusion. Based on our evaluation of tax positions, we believe that potential tax exposures have been recorded appropriately. State and federal taxing authorities may propose additional tax assessments based on periodic audits of our tax returns. We believe our tax positions comply with applicable tax law in all material aspects and we will vigorously defend our positions on audit. The ultimate resolution of these audits may materially affect our financial position, results of operations or cash flows. |
Cash and Cash Equivalents | We classify unrestricted cash and short-term investments with original maturities of three months or less as cash and cash equivalents in the consolidated balance sheets. We record cash and cash equivalents at cost, which approximates fair value. |
Investments | We classify our fixed maturity securities, including short-term, long-term, and restricted investments, as available-for-sale and report them at fair value. We record unrealized gains and losses on securities, net of deferred income taxes, as a separate component of accumulated other comprehensive loss in the consolidated balance sheets. We record investment income when earned and classify investment income earned but not received in prepaid expenses and other current assets in the consolidated balance sheets. We may purchase fixed maturity securities at a premium or discount. We amortize these premiums and discounts as adjustments to investment income over the estimated remaining term of the securities. We determine realized gains and losses on sales of securities on a specific identification basis. We determine the fair value of fixed maturity securities based on quoted prices in active markets or market prices provided by a third-party pricing service. The third-party pricing service determines market prices using inputs such as reported trades, benchmark yields, issuer spreads, bids, offers, estimated cash flows and prepayment spreads. Based on the typical trading volumes and the lack of quoted market prices for fixed maturities, third party pricing services will normally derive the security prices through recent reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information. If there are no recent reported trades, the pricing services may use matrix or model processes to develop a security price using future cash flow expectations based upon collateral performance and discount this at an estimated market rate. We regularly compare the fair value of our investments to the amortized cost of those investments. The evaluation of impairment is a quantitative and qualitative process, which is subject to risk and uncertainties. Our fixed maturity investments are exposed to four primary sources of investment risk: credit, interest rate, liquidity and market valuation. The financial statement risks are those associated with the recognition of impairments and income, as well as the determination of fair values. We perform a case-by-case evaluation of the underlying reasons for the decline in fair value and consider a wide range of factors about the security issuer, including assumptions and estimates about the operations of the issuer and its future earnings potential. We use our best judgment in evaluating the cause of the decline in the estimated fair value of the security and in assessing the prospects for near-term recovery. Our evaluation of impairment includes, but is not limited to: • the length of time and the extent to which the market value has been below cost; • the potential for impairments of securities when the issuer is experiencing significant financial difficulties; • the potential for impairments in an entire industry sector or sub-sector; • the potential for impairments in certain economically depressed geographic locations; • the potential for impairments of securities where the issuer, series of issuers or industry has suffered a catastrophic type of loss or has exhausted natural resources; • unfavorable changes in forecasted cash flows on asset-backed securities; and • other subjective factors, including concentrations and information obtained from regulators and rating agencies. We recognize impairments of securities when we consider a decline in fair value below the amortized cost basis to be other-than-temporary. If we intend to sell a security, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis, we recognize an other-than-temporary impairment ("OTTI") in earnings equal to the entire difference between the security's amortized cost basis and its fair value. If we do not intend to sell the security and it is more likely than not that we will not be required to sell the security before recovery of its amortized cost basis, but the present value of the cash flows expected to be collected is less than the amortized cost basis of the security (referred to as the credit loss), we conclude an OTTI has occurred. In this instance, we bifurcate the total OTTI into the amount related to the credit loss, which we recognize in earnings as investment income, net, with the remaining amount of the total OTTI attributed to other factors (referred to as the noncredit portion) recognized as a separate component in other comprehensive income. After the recognition of an OTTI, we account for the security as if it had been purchased on the measurement date of the OTTI, with an amortized cost basis equal to the previous amortized cost basis less than the OTTI recognized in earnings. |
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 record our restricted investments, which include cash, cash equivalents, and other short-term investments, at fair value. 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. |
Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets, net, are comprised of receivables relating to advances to providers, prepaid premium taxes, pharmaceutical coverage gap discounts receivable and other prepaid expenses and current assets. Beginning in 2016, the balance also includes utilization performance guarantee program receivables from our new pharmacy benefit manager. |
Property, Equipment and Capitalized Software, net | Property, equipment and capitalized software are stated at historical cost, net of accumulated depreciation. We capitalize certain costs incurred in the development of internal-use software, including external direct costs of materials and services and payroll costs of employees devoted to specific software development. We expense other software development costs, such as training and data conversion costs, as incurred. We capitalize the costs of improvements that extend the useful lives of the related assets. We record depreciation expense using the straight-line method over the estimated useful lives of the related assets, which ranges from three to ten years for leasehold improvements, five years for furniture and equipment, and three to seven years for computer equipment and software. We record maintenance and repair costs as selling, general and administrative expense when incurred. On an ongoing basis, we review events or changes in circumstances that may indicate that the carrying value of an asset may not be recoverable. If the carrying value of an asset exceeds the sum of estimated undiscounted future cash flows, we recognize an impairment loss in the current period for the difference between estimated fair value and carrying value. If assets are determined to be recoverable but the useful lives are shorter than we originally estimated, we depreciate the remaining net book value of the asset over the newly determined remaining useful lives. |
Goodwill and Other Intangible Assets | We test goodwill for impairment at the reporting unit level at least annually, or more frequently if events or circumstances indicate that it would be more likely than not that the fair value of a reporting unit is below its carrying value. Such events or circumstances could include a significant adverse change in business climate, an adverse action or assessment by a regulator, unanticipated competition and the testing for recoverability of a significant asset group within a reporting unit, among others. To determine whether goodwill is impaired, we compare an estimate of the fair value of the applicable reporting unit to its carrying value, including goodwill. If the carrying value exceeds the estimated fair value, we compare the implied fair value of the applicable goodwill to its carrying value to measure the amount of goodwill impairment, if any. We perform our annual goodwill impairment test based on our financial position and results of operations as of June 30 of each year, which generally coincides with the finalization of federal and state contract negotiations and our initial budgeting and planning process. The annual impairment tests are based on an evaluation of estimated future discounted cash flows. The estimated discounted cash flows are based on the best information available to us at the time, including supportable assumptions and projections we believe are reasonable. Our discounted cash flow estimates use discount rates that correspond to a weighted-average cost of capital consistent with a market-participant view. The discount rates are consistent with those used for investment decisions and take into account the operating plans and strategies of our operating segments. Certain other key assumptions utilized, including changes in membership, premium, health care costs, operating expenses, fees, assessments and taxes and effective tax rates, are based on estimates consistent with those utilized in our annual budgeting and planning process that we believe are reasonable. However, if we do not achieve the results reflected in the assumptions and estimates, our goodwill impairment evaluations could be adversely affected, and we may impair a portion of our goodwill, which would adversely affect our operating results in the period of impairment. Impairments, if any, would be classified as an operating expense. Based on the results of our annual impairment testing in 2017, we determined that the fair value of each reporting unit substantially exceeded its carrying value and no further goodwill impairment assessment was necessary. Other intangible assets resulting from our acquisitions include provider networks, broker networks, trademarks, state contracts, non-compete agreements, licenses and permits. We amortize other intangible assets over their estimated useful lives ranging from approximately one to 15 years . These assets are allocated to reporting units for impairment testing purposes. We review our other intangible assets for impairment when events or changes in circumstances occur, which may potentially affect the estimated useful life or recoverability of the remaining balances of our intangible assets. Such events and changes in circumstances would include significant changes in membership, state funding, federal and state government contracts and provider networks. Upon such an occurrence, recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to current forecasts of undiscounted future net cash flows expected to be generated by the assets. Identifiable cash flows are measured at the lowest level for which they are largely independent of the cash flows of other groups of assets and liabilities. If these assets are determined to be impaired, the amount of impairment recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. During 2017, 2016, and 2015, no events or circumstances have occurred, which may potentially affect the estimated useful life or recoverability of the remaining balances of our other intangible assets. Accordingly, there were no impairment losses recognized during these periods. |
Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses are primarily comprised of liabilities relating to pharmacy benefit administration, accrued salaries and incentive compensation, consulting contract obligations, and other miscellaneous current liabilities. |
SUMMARY OF SIGNIFICANT ACCOUN30
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Other Net Payables to Government Partners | A summary of other net payables to government partners is as follows (in millions): As of December 31, 2017 2016 Liability to states under Medicaid risk sharing provisions $ (142.5 ) $ (105.9 ) Liability to CMS under risk corridor provision (179.1 ) (190.5 ) Liability to CMS under MA/PDP minimum MLR provisions of the ACA (1.2 ) (0.3 ) Net payables to government partners (1) $ (322.8 ) $ (296.7 ) (1) The components of net payables to government partners are classified in the consolidated balance sheets as $44.2 million and $367.0 million in current assets and current liabilities, respectively, as of December 31, 2017, and $6.5 million and $303.2 million in current assets and current liabilities, respectively, as of December 31, 2016. |
Funds (Payable) Receivable for the Benefit of Members, Net | Funds payable for the benefit of members, net consisted of the following (in millions): As of December 31, 2017 2016 Low-income cost sharing subsidy $ (47.7 ) $ 47.8 Catastrophic reinsurance subsidy (987.1 ) (418.1 ) Coverage gap discount subsidy (13.6 ) 12.6 Funds payable for the benefit of members, net (1) $ (1,048.4 ) $ (357.7 ) (1) The components of net funds payable for the benefit of members, net are classified in the consolidated balance sheets as $27.5 million and $1,075.9 million in current assets and current liabilities, respectively, as of December 31, 2017, and as $32.6 million and $390.3 million in current assets and current liabilities, respectively, as of December 31, 2016. |
AQUISITIONS (Tables)
AQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Fair Value of Consideration Transferred in Acquisition | The fair value at the Effective Date of the consideration transferred in the Universal American acquisition consisted of the following: (in millions) Number of shares of Universal American common stock outstanding on April 28, 2017 (57.1 million) multiplied by the Per Share Merger Consideration $ 570.8 Assumed debt (a) 145.3 Repurchase of Preferred Shares (b) 41.0 Stock-based award cash consideration (c) 12.9 Total consideration transferred $ 770.0 (a) Following the consummation of the Universal American transaction, all of the holders of Universal American's 4.00% convertible senior notes (the "Convertible Notes") elected to convert their notes into the right to receive cash equal to the par value of the notes plus a make whole premium. We paid the noteholders the amounts due and all of the Convertible Notes were redeemed in the second quarter of 2017. Universal American Convertible Notes below for further discussion of the repurchase of the Convertible Notes. (b) On the Effective Date, we redeemed an aggregate of $40.0 million of Universal American's Preferred Shares, which became redeemable by the holders on April 28, 2017 due to certain change in control provisions for the Preferred Shares. We redeemed the Preferred Shares for $41.0 million, which includes the $40.0 million par value of the Preferred Shares and $1.0 million of accrued dividends. See Universal American Mandatorily Redeemable Preferred Shares below for further discussion of the redemption of the Preferred Shares. (c) Pursuant to the terms of the Universal American acquisition, outstanding vested and unvested stock-based compensation awards as of the Effective Date converted to the right to receive cash. We estimated the fair value of these awards at the Effective Date and attributed that fair value to pre-acquisition and post-acquisition services in accordance with GAAP. Accordingly, $12.9 million of the fair value of these awards was attributed to pre-acquisition services and is included in the estimated consideration transferred, and approximately $20.0 million has been, or will be, included in our post-acquisition financial statements as compensation costs and reflected as a selling, general and administrative expense in our consolidated statements of comprehensive income. |
Fair Value of Assets Acquired and Liabilities Assumed | The following table summarizes the estimated fair values of major classes of assets acquired and liabilities assumed at the Effective Date, based on our preliminary valuation assumptions, reconciled to the total consideration transferred. Assets (in millions) Cash and cash equivalents $ 66.4 Investments, including restricted investments 254.4 Premiums receivable, net 90.7 Pharmacy rebates receivable, net, and other current assets 56.2 Property, equipment and capitalized software, net 7.5 Goodwill 275.6 Other intangible assets, net 298.2 Assets of discontinued operations 219.6 Estimated fair value of total assets acquired $ 1,268.6 Liabilities Medical benefits payable $ 128.1 Deferred tax liabilities, net 68.0 Other liabilities 83.8 Liabilities of discontinued operations 218.7 Estimated fair value of liabilities assumed 498.6 Estimated fair value of net assets acquired $ 770.0 |
Preliminary Fair Values and Weighted Average Useful Lives for Identifiable Intangible Assets Acquired for Identifiable Intangible Assets | The following table summarizes the preliminary fair values and weighted average useful lives for identifiable intangible assets acquired in the Universal American acquisition which are subject to change as we finalize our purchase accounting. Gross Fair Value (in millions) Weighted Average Useful Life (in years) Membership $ 240.0 10.0 Tradenames 36.0 13.9 Provider network 9.5 15.0 Other 12.7 6.2 Total $ 298.2 10.5 |
Unaudited Pro Forma Results | The following unaudited pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the results of operations that would have occurred had the acquisitions actually consummated at January 1, 2016, or project the future results of the combined company. For the years ended December 31, (in millions, except per share data) 2017 2016 Total revenues $ 17,163.1 $ 16,211.4 Net income $ 384.1 $ 239.0 Earnings per common share: Basic $ 8.64 $ 5.40 Diluted $ 8.54 $ 5.36 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Premium Revenue by Geographic Location | Our Medicaid operations in certain states individually account for 10% or more of our consolidated premium revenue. These states and the respective Medicaid premium revenue as a percentage of total consolidated premium revenue are as follows: For the Years Ended December 31, 2017 2016 2015 Kentucky 15% 18% 19% Florida 15% 18% 17% Georgia * 11% 12% * Effective July 1, 2017, we commenced services under a new Medicaid contract with the State of Georgia serving TANF and CHIP beneficiaries. Due to the addition of a fourth managed care organization to the Georgia state program, our membership declined approximately 58,000 members as of December 31, 2017 compared with December 31, 2016 . As a result of the decline in membership and overall growth in the Medicaid Health Plans segment, premium revenue attributable to our Georgia Medicaid health plan accounted for less than 10% of our consolidated premium revenue for the year ended December 31, 2017. |
Financial Information by Reportable Operating Segments | A summary of financial information for our reportable segments through the gross margin level and a reconciliation to income from operations is presented in the tables below. For the Years Ended December 31, 2017 2016 2015 Premium revenue: Medicaid Health Plans $ 10,726.3 9,499.3 $ 9,074.3 Medicare Health Plans 5,320.2 3,876.6 3,898.8 Medicare PDPs 913.8 845.0 901.7 Total premium revenue 16,960.3 14,220.9 13,874.8 Medical benefits expense: Medicaid Health Plans 9,414.1 8,188.5 7,866.8 Medicare Health Plans 4,577.3 3,278.5 3,401.7 Medicare PDPs 753.4 622.4 710.0 Total medical benefits expense 14,744.8 12,089.4 11,978.5 ACA industry fee expense: Medicaid Health Plans — 148.0 135.1 Medicare Health Plans — 64.2 68.7 Medicare PDPs — 16.2 23.5 Total ACA industry fee expense — 228.4 227.3 Gross margin: Medicaid Health Plans 1,312.2 1,162.8 1,072.4 Medicare Health Plans 742.9 533.9 428.4 Medicare PDPs 160.4 206.4 168.2 Total gross margin 2,215.5 1,903.1 1,669.0 Investment and other income 46.9 16.2 15.4 Other expenses (1) (1,793.4 ) (1,389.8 ) (1,348.3 ) Income from operations $ 469.0 529.5 $ 336.1 (1) Other expenses includes selling, general and administrative expenses, Medicaid Premium taxes, depreciation and amortization, interest and impairment and other charges. Other expenses, net for 2015 also includes the immaterial gain on a business divestiture. |
EARNINGS PER COMMON SHARE (Tabl
EARNINGS PER COMMON SHARE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Calculated Weighted-Average Common Shares Outstanding | We calculated weighted-average common shares outstanding — diluted as follows: For the Years Ended December 31, 2017 2016 2015 Weighted-average common shares outstanding — basic 44,474,016 44,248,778 44,057,579 Dilutive effect of outstanding stock-based compensation awards 493,045 370,811 333,453 Weighted-average common shares outstanding — diluted 44,967,061 44,619,589 44,391,032 Anti-dilutive stock-based compensation awards excluded from computation 76,446 14,867 65,839 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments by Security Type | 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 Gross Gross Estimated December 31, 2017 Asset-backed securities $ 88.9 $ — $ (0.2 ) $ 88.7 Corporate debt securities 400.6 0.7 (1.2 ) 400.1 Municipal securities 223.7 1.0 (1.9 ) 222.8 Residential mortgage-backed securities 11.2 — — 11.2 Short-term time deposits 300.4 — — 300.4 Government and agency obligations 148.7 — (1.2 ) 147.5 Other securities 65.2 — (0.2 ) 65.0 Total $ 1,238.7 $ 1.7 $ (4.7 ) $ 1,235.7 December 31, 2016 Asset backed securities $ 3.3 $ — $ — $ 3.3 Corporate debt securities 67.2 — — 67.2 Municipal securities 53.7 0.1 (1.5 ) 52.3 Government and agency obligations 1.0 — — 1.0 Other securities 57.8 — (0.1 ) 57.7 Total $ 183.0 $ 0.1 $ (1.6 ) $ 181.5 |
Contractual Maturities of Long-term Available-for-sale Investments | Contractual maturities of our available-for-sale investments at December 31, 2017 are as follows: Total Within 1 Through 5 5 Through 10 Thereafter Asset backed securities $ 88.7 $ 12.6 $ 71.7 $ 2.4 $ 2.0 Corporate debt securities 400.1 81.0 206.2 102.2 10.7 Municipal securities 222.8 17.6 112.6 75.1 17.5 Residential mortgage-backed securities 11.2 — — — 11.2 Short term time deposits 300.4 300.4 — — — Government and agency obligations 147.5 5.1 135.4 6.8 0.2 Other securities 65.0 52.8 2.2 3.0 7.0 Total $ 1,235.7 $ 469.5 $ 528.1 $ 189.5 $ 48.6 |
RESTRICTED INVESTMENTS (Tables)
RESTRICTED INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Restricted Investments Note [Abstract] | |
Summary of Restricted Cash and Investment Securities | The amortized cost, gross unrealized gains, gross unrealized losses and fair value of our restricted cash and investment securities are as follows: Amortized Gross Gross Estimated December 31, 2017 Cash $ 5.7 $ — $ — $ 5.7 Money market funds 58.7 — — 58.7 U.S. government securities and other 147.4 — (0.8 ) 146.6 Total $ 211.8 $ — $ (0.8 ) $ 211.0 December 31, 2016 Cash $ 92.1 $ — $ — $ 92.1 Money market funds 67.8 — — 67.8 U.S. government securities and other 74.5 — (0.1 ) 74.4 Total $ 234.4 $ — $ (0.1 ) $ 234.3 |
PROPERTY, EQUIPMENT AND CAPIT36
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property, Equipment and Capitalized Software | Property, equipment and capitalized software and related accumulated depreciation are as follows: December 31, 2017 2016 Leasehold improvements $ 36.9 $ 30.1 Computer equipment 128.3 110.6 Capitalized software 526.2 425.2 Furniture and equipment 39.2 32.7 730.6 598.6 Less accumulated depreciation (411.1 ) (324.1 ) Total property and equipment, net $ 319.5 $ 274.5 |
GOODWILL AND OTHER INTANGIBLE37
GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in Goodwill by Reportable Segment | A summary of changes in our goodwill by reportable segment is as follows for 2017 and 2016 : Medicaid Health Plans Medicare Health Plans Total Balance as of December 31, 2015 $ 152.8 $ 110.4 $ 263.2 Acquired goodwill 129.3 — 129.3 Balance as of December 31, 2016 (1) (2) 282.1 110.4 392.5 Acquired goodwill (3) 8.3 275.6 283.9 Measurement period adjustments (2) (15.7 ) — (15.7 ) Balance as of December 31, 2017 (1) (3) $ 274.7 $ 386.0 $ 660.7 (1) Cumulative impairment charges relating to goodwill were $78.3 million as of December 31, 2017 and 2016, which related to goodwill assigned to our Medicare Health Plans reporting unit which we impaired during 2008. (2) Medicaid Health Plans goodwill as of December 31, 2016, includes approximately $102.7 million of goodwill resulting from our acquisition of Care1st Arizona effective on December 31, 2016. During 2017, we reallocated $24.0 million of this goodwill to identifiable intangible assets, net of a $9.0 million corresponding deferred tax liability, based on our valuation of these assets. Refer to Note 3 – Acquisitions for additional discussion of the Care1st Arizona acquisition. (3) Goodwill related to our 2017 acquisitions is considered preliminary, pending the final allocation of the applicable purchase price. Refer to Note 3 – Acquisitions for additional discussion of our 2017 acquisitions. |
Other Intangible Assets | Other intangible assets as of December 31, 2017 and 2016 , and the related weighted-average amortization periods as of December 31, 2017 , are as follows: As of December 31, 2017 2016 Weighted Average Amortization Period (In Years) Gross Carrying Amount Accumulated Amortization Other Intangibles, Net Gross Carrying Amount Accumulated Amortization Other Intangibles, Net Membership and state contracts 10.4 $ 344.4 $ (52.6 ) $ 291.8 $ 94.3 $ (29.8 ) $ 64.5 Trademarks and tradenames 13.7 53.3 (12.9 ) 40.4 11.4 (9.8 ) 1.6 Provider networks 15.0 27.3 (5.1 ) 22.2 8.4 (3.7 ) 4.7 Licenses and permits 13.6 7.1 $ (4.1 ) 3.0 5.1 (3.6 ) 1.5 Other 5.7 14.9 (4.4 ) 10.5 4.2 (2.4 ) 1.8 Total other intangible assets 11.0 $ 447.0 $ (79.1 ) $ 367.9 $ 123.4 $ (49.3 ) $ 74.1 |
Expected Amortization Expense | Amortization expense expected to be recognized during fiscal years subsequent to December 31, 2017 is as follows: Expected Amortization Expense 2018 $ 41.9 2019 41.7 2020 41.6 2021 41.5 2022 37.6 2023 and thereafter 163.6 Total $ 367.9 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Outstanding Debt Obligations | The following table summarizes our outstanding debt obligations and their classification in the accompanying consolidated balance sheets (in millions): December 31, 2017 December 31, 2016 Long-term debt, net: 5.25% Senior Notes, due April 1, 2025 $ 1,200.0 $ — 5.75% Senior Notes, due November 15, 2020 (1) — 909.6 Revolving Credit Facility — 100.0 Debt issuance costs (17.6 ) (12.0 ) Total long-term debt, net $ 1,182.4 $ 997.6 (1) Inclusive of $9.6 million of unamortized debt premium at December 31, 2016. |
Redemption Prices as Percentage of Principal Amount | On or after April 1, 2020, we may on any one or more occasions redeem all or a part of the 2025 Notes, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest, if any, on the 2025 Notes redeemed, to, but not including, the applicable date of redemption, if redeemed during the twelve-month period beginning on November 15 of the years indicated below, subject to the rights of holders of 2025 Notes on the relevant record date to receive interest due on the relevant interest payment date: Period Redemption Price 2020 103.938 % 2021 102.625 % 2022 101.313 % 2023 and thereafter 100.000 % |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Measured at Fair Value | Assets and liabilities measured at fair value on a recurring basis at December 31, 2017 are as follows: Fair Value Measurements Using Carrying Value Quoted Prices in Significant Other Significant Investments: Asset-backed securities $ 88.7 $ — $ 88.7 $ — Corporate debt securities 400.1 — 400.1 — Municipal securities 222.8 — 210.5 12.3 Residential mortgage-backed securities 11.2 — 11.2 — Short-term time deposits 300.4 — 300.4 — Government and agency obligations 147.5 147.5 — — Other securities 65.0 52.8 12.2 — Total investments $ 1,235.7 $ 200.3 $ 1,023.1 $ 12.3 Restricted investments: Cash $ 58.7 $ 58.7 $ — $ — Money market funds 5.7 5.7 — — U.S. government securities and other 146.6 146.4 0.2 — Total restricted investments $ 211.0 $ 210.8 $ 0.2 $ — Assets and liabilities measured at fair value on a recurring basis at December 31, 2016 are as follows: Fair Value Measurements Using Carrying Value Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Investments: Asset-backed securities $ 3.3 $ — $ 3.3 $ — Corporate debt securities 67.2 — 67.2 — Municipal securities 52.3 — 39.9 12.4 Government and agency obligations 1.0 1.0 — — Other securities 57.7 57.7 — — Total investments $ 181.5 $ 58.7 $ 110.4 $ 12.4 Restricted investments: Money market funds $ 67.8 $ 67.8 $ — $ — Cash 92.1 92.1 — — U.S. government securities and other 74.4 74.2 0.2 — Total restricted investments $ 234.3 $ 234.1 $ 0.2 $ — |
Changes in Fair Value of Level 3 Investments | The following table presents the changes in the fair value of our Level 3 auction rate securities for the years ended December 31, 2017, 2016 and 2015: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) December 31, 2017 December 31, 2016 December 31, 2015 Balance as of January 1 $ 12.4 $ 31.7 $ 32.3 Realized gains (losses) in earnings — — — Changes in net unrealized gains and losses in other comprehensive income — 0.9 (0.5 ) Purchases, sales and redemptions (0.1 ) (20.2 ) (0.1 ) Net transfers in or (out) of Level 3 — — — Balance as of December 31 $ 12.3 $ 12.4 $ 31.7 |
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 December 31, 2017 and December 31, 2016 : Fair Value Measurements Using Carrying Value Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Long-term debt - December 31, 2017 $ 1,182.4 $ 1,274.3 $ — $ — Long-term debt - December 31, 2016 997.6 927.0 96.2 — |
MEDICAL BENEFITS PAYABLE (Table
MEDICAL BENEFITS PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
MEDICAL BENEFITS PAYABLE [Abstract] | |
Medical Benefits Payable | Medical benefits payable consists of: (in millions) As of December 31, 2017 % of As of December 31, 2016 % of IBNR $ 1,412.3 66% $ 1,141.9 68% Other medical benefits payable 734.0 34% 548.6 32% Total medical benefits payable $ 2,146.3 100% $ 1,690.5 100% |
Reconciliation of the Beginning and Ending Balances of Medical Benefits Payable | A reconciliation of the beginning and ending balances of our Medicaid Health Plans medical benefits payable is as follows: For the years ended December 31, 2017 2016 2015 (in millions) Beginning balance $ 1,135.8 $ 1,040.2 $ 957.8 Acquisitions — 37.3 — Medical benefits incurred related to: Current year (1) 9,612.2 8,404.2 8,012.4 Prior years (198.1 ) (215.7 ) (145.6 ) Total 9,414.1 8,188.5 7,866.8 Medical benefits paid related to: Current year (8,417.4 ) (7,431.4 ) (7,042.0 ) Prior years (759.3 ) (698.8 ) (742.4 ) Total (9,176.7 ) (8,130.2 ) (7,784.4 ) Ending balance $ 1,373.2 $ 1,135.8 $ 1,040.2 (1)-Incurred amounts for 2017 include the $45.6 million Illinois PDR discussed further in Note 2 - Summary of Significant Accounting Policies . A reconciliation of the beginning and ending balances of our Medicare PDPs medical benefits payable is as follows: For the years ended December 31, 2017 2016 2015 (in millions) Beginning balance $ 44.7 $ 21.9 $ 64.7 Acquisitions (divestitures) — — — Medical benefits incurred related to: Current year 823.4 637.0 731.9 Prior years (70.0 ) (14.6 ) (21.9 ) Total 753.4 622.4 710.0 Medical benefits paid related to: Current year (773.9 ) (592.3 ) (710.0 ) Prior years 26.4 (7.3 ) (42.8 ) Total (747.5 ) (599.6 ) (752.8 ) Ending balance $ 50.6 $ 44.7 $ 21.9 A reconciliation of the beginning and ending balances of our consolidated medical benefits payable is as follows: For the years ended December 31, 2017 2016 2015 (in millions) Beginning balance $ 1,690.5 $ 1,536.0 $ 1,483.8 Acquisitions (divestitures) 128.1 37.3 (9.5 ) Medical benefits incurred related to: Current year (1) 15,112.4 12,374.1 12,189.5 Prior years (367.6 ) (284.7 ) (211.0 ) Total 14,744.8 12,089.4 11,978.5 Medical benefits paid related to: Current year (13,355.9 ) (10,925.0 ) (10,763.0 ) Prior years (1,061.2 ) (1,047.2 ) (1,153.8 ) Total (14,417.1 ) (11,972.2 ) (11,916.8 ) Ending balance $ 2,146.3 $ 1,690.5 $ 1,536.0 (1)-Incurred amounts for 2017 include the $45.6 million Illinois PDR discussed further in Note 2 - Summary of Significant Accounting Policies . A reconciliation of the beginning and ending balances of our Medicare Health Plans medical benefits payable is as follows: For the years ended December 31, 2017 2016 2015 (in millions) Beginning balance $ 510.0 $ 473.9 $ 461.3 Acquisitions (divestitures) 128.1 — (9.5 ) Medical benefits incurred related to: Current year 4,676.8 3,332.9 3,445.2 Prior years (99.5 ) (54.4 ) (43.5 ) Total 4,577.3 3,278.5 3,401.7 Medical benefits paid related to: Current year (4,164.6 ) (2,901.3 ) (3,011.0 ) Prior years (328.3 ) (341.1 ) (368.6 ) Total (4,492.9 ) (3,242.4 ) (3,379.6 ) Ending balance $ 722.5 $ 510.0 $ 473.9 |
Incurred and Paid Claims Development Information | The following tables provide information about incurred and paid claims development for our Medicare PDPs segment as of December 31, 2017, net of reinsurance. Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance As of December 31, 2017 Incurred amount Total of IBNR Liabilities Plus Expected Development on Reported Claims Cumulative Number of Reported Claims Incurred Year 2016 2017 2016 $ 637.0 $ 566.7 $ — 47.8 2017 823.4 49.5 51.3 Total $ 1,390.1 Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Incurred Year 2016 2017 2016 $ (592.3 ) $ (566.7 ) 2017 (773.9 ) Total $ (1,340.6 ) All outstanding liabilities before 2016, net of reinsurance 1.1 Liabilities for claims and claim adjustment expenses, net of reinsurance $ 50.6 The following tables provide information about incurred and paid claims development for our Medicare Health Plans segment as of December 31, 2017, net of reinsurance. Incurred and paid claims development for the years ended December 31, 2017 and 2016 have been retrospectively adjusted for the 2017 acquisition of Universal American. Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance As of December 31, 2017 Incurred amount Total of IBNR Liabilities Plus Expected Development on Reported Claims Cumulative Number of Reported Claims Incurred Year 2016 2017 2016 $ 4,487.4 $ 4,402.2 $ 19.4 25.1 2017 (1) 5,405.5 639.8 30.4 Total $ 9,807.7 (1) Incurred amounts for 2017 are net of a $0.9 million reinsurance receivable acquired from Universal American. Refer to Note 3 – Acquisitions for additional discussion of the Universal American acquisition. Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Incurred Year 2016 2017 2016 $ (3,998.6 ) $ (4,382.8 ) 2017 (4,765.7 ) Total $ (9,148.5 ) All outstanding liabilities before 2016, net of reinsurance 62.4 Liabilities for claims and claim adjustment expenses, net of reinsurance $ 721.6 The following tables provide information about the consolidated company incurred and paid claims development as of December 31, 2017, net of reinsurance. The information for 2017 and 2016 has been retrospectively adjusted for our Universal American acquisition. Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance As of December 31, 2017 Incurred amount Total of IBNR Liabilities Plus Expected Development on Reported Claims Cumulative Number of Reported Claims Incurred Year 2016 2017 2016 (1) $ 13,561.8 $ 13,227.1 $ 112.6 134.5 2017 (2) 15,836.7 1,879.7 149.2 Total $ 29,063.8 (1) - Incurred amounts for 2016 include $37.3 million of medical benefits payable liabilities, net of a $4.1 million reinsurance receivable, acquired from Care1st Arizona. Refer to Note 3 – Acquisitions for additional discussion of the Care1st Arizona acquisition. (2) - Incurred amounts for 2017 include the $45.6 million Illinois PDR discussed further in Note 2 - Summary of Significant Accounting Policies . Additionally, incurred amounts for 2017 are net of a $5.5 million reinsurance recoverable. Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Incurred Year 2016 2017 2016 $ (12,022.3 ) $ (13,114.5 ) 2017 (13,957.0 ) Total $ (27,071.5 ) All outstanding liabilities before 2016, net of reinsurance 148.5 Liabilities for claims and claim adjustment expenses, net of reinsurance $ 2,140.8 The following tables provide information about incurred and paid claims development for our Medicaid Health Plans segment as of December 31, 2017, net of reinsurance. Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance As of December 31, 2017 Incurred amount Total of IBNR Liabilities Plus Expected Development on Reported Claims Cumulative Number of Reported Claims Incurred Year 2016 2017 2016 (1) $ 8,437.4 $ 8,258.2 $ 93.2 61.6 2017 (2) 9,607.8 1,190.4 67.5 Total $ 17,866.0 (1) - Incurred amounts for 2016 include $37.3 million of medical benefits payable liabilities, net of a $4.1 million reinsurance receivable, acquired from Care1st Arizona. Refer to Note 3 – Acquisitions for additional discussion of the Care1st Arizona acquisition. (2) - Incurred amounts for 2017 are net of a $4.6 million reinsurance receivable. Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Incurred Year 2016 2017 2016 $ (7,431.4 ) $ (8,165.0 ) 2017 (8,417.4 ) Total $ (16,582.4 ) All outstanding liabilities before 2016, net of reinsurance 85.0 Liabilities for claims and claim adjustment expenses, net of reinsurance $ 1,368.6 |
Reconciliation of Net Incurred and Paid Claims Development to the Liability for Claims and Claim Adjustment Expenses | The reconciliation of the net incurred and paid claims development tables, by segment, to the liability for claims and claim adjustment expenses in the consolidated balance sheets is as follows. Reconciliation of the Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid Claims and Claim Adjustment Expenses December 31, 2017 Net Outstanding Liabilities Medicaid Health Plans $ 1,368.6 Medicare Health Plans 721.6 Medicare PDPs 50.6 Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance $ 2,140.8 Reinsurance Recoverable 5.5 Total gross liability for unpaid claims and claim adjustment expense $ 2,146.3 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future Minimum Lease Payments | Future minimum lease payments under non-cancelable operating leases with initial or remaining lease terms in excess of one year at December 31, 2017 are as follows: Minimum Lease Payments 2018 $ 31.1 2019 26.2 2020 24.1 2021 21.3 2022 17.7 2023 and thereafter 50.1 Total $ 170.5 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Components of Income Tax Expense | The following table provides components of income tax expense (benefit): For the Years Ended December 31, 2017 2016 2015 Current: Federal $ 120.8 $ 251.6 $ 161.2 State 14.2 24.2 11.3 135.0 275.8 172.5 Deferred: Federal (48.3 ) 12.8 42.9 State 1.2 (1.2 ) 2.1 (47.1 ) 11.6 45.0 Total income tax expense $ 87.9 $ 287.4 $ 217.5 |
Reconciliation of Income Tax Statutory Rate to Effective Rate | A reconciliation of income tax at the statutory federal rate (currently 35% for the tax years presented) to income tax at the effective rate is as follows: For the Years Ended December 31, 2017 2016 2015 Income tax expense at statutory federal rate $ 161.6 $ 185.3 $ 117.6 Adjustments resulting from: State income tax, net of federal benefit 11.7 14.4 9.5 Unrecognized tax benefits (23.5 ) 9.5 3.5 Tax rate change (56.1 ) — — Non-deductible ACA industry fees — 79.9 79.6 Other, net (5.8 ) (1.7 ) 7.3 Total income tax expense $ 87.9 $ 287.4 $ 217.5 |
Significant Components of Deferred Tax Assets and Liabilities | Significant components of our deferred tax assets and liabilities are: As of December 31, Deferred tax assets: 2017 2016 Net operating losses $ 24.7 $ 11.2 Foreign tax credits 22.0 — Medical and other benefits discounting 18.7 15.2 Allowance for doubtful accounts 14.8 19.2 Stock-based compensation 14.1 15.5 Unearned premium discounting 3.1 0.2 Capital losses 9.9 — Premium deficiency reserve 10.7 — Accrued expenses and other 5.6 11.3 Total deferred tax assets 123.6 72.6 Valuation allowance (48.5 ) (8.8 ) Net deferred tax assets 75.1 63.8 Deferred tax liabilities: Goodwill and other intangible assets (101.1 ) (47.3 ) Software development costs and property and equipment (56.7 ) (68.0 ) Prepaid assets (10.7 ) (11.9 ) Total deferred tax liabilities (168.5 ) (127.2 ) Net deferred tax liability $ (93.4 ) $ (63.4 ) |
Reconciliation of Beginning and Ending Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Years Ended December 31, 2017 2016 Unrecognized tax benefits, beginning of period $ 23.5 $ 14.0 Increases: Prior year tax positions — 0.7 Current year tax positions 3.5 11.4 Decreases: Prior year tax positions (23.5 ) (2.6 ) Unrecognized tax benefits, end of period $ 3.5 $ 23.5 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of Activity for RSU Awards | A summary of the activity for our RSU awards for the year ended December 31, 2017 is presented in the table below. RSUs Weighted Outstanding as of January 1, 2017 275,926 $ 90.08 Granted 147,884 144.25 Vested (134,641 ) 85.14 Forfeited (14,526 ) 107.16 Outstanding as of December 31, 2017 274,643 $ 120.73 |
Performance Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of Activity for Nonvested Awards | A summary of the activity for our PSU awards for the year ended December 31, 2017 is presented in the table below. PSUs Weighted Outstanding as of January 1, 2017 471,852 $ 89.68 Granted 234,609 146.98 Vested (126,505 ) 63.93 Forfeited and expired (27,338 ) 109.84 Outstanding as of December 31, 2017 552,618 $ 118.64 |
Market Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of Activity for Nonvested Awards | A summary of the activity for our MSU awards for the year ended December 31, 2017 is presented in the table below. MSUs Weighted Outstanding as of January 1, 2017 85,910 $ 103.83 Granted 36,009 71.50 Vested (74,471 ) 71.90 Forfeited and expired (2,218 ) 130.74 Outstanding as of December 31, 2017 45,230 $ 130.01 |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Summary of Assets and Liabilities of Discontinued Operations | The following table summarizes the total assets and liabilities of our discontinued operations: December 31, 2017 April 28, 2017 (in millions) Assets Cash and cash equivalents $ 1.3 $ 0.8 Investments 46.5 47.7 Reinsurance recoverables 166.9 170.4 Other assets 0.5 0.7 Total Assets $ 215.2 $ 219.6 Liabilities Reserves and other policy liabilities $ 148.6 $ 153.3 Other liabilities 66.6 65.4 Total liabilities $ 215.2 $ 218.7 |
QUARTERLY FINANCIAL INFORMATI45
QUARTERLY FINANCIAL INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Selected Unaudited Quarterly Financial Data | Selected unaudited quarterly financial data is as follows (in millions, except membership and per share data): For the Three Month Periods Ended March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017 Total revenues $ 3,954.2 $ 4,305.0 $ 4,402.9 $ 4,345.1 Gross margin 468.4 574.6 650.2 522.3 Income from operations 103.2 141.9 211.9 12.0 Income before income taxes 103.2 114.7 235.1 8.6 Net income 67.3 74.1 171.6 60.7 Net income per share - basic (1) $ 1.52 $ 1.67 $ 3.86 $ 1.36 Net income per share - diluted (1) 1.50 1.65 3.82 1.34 Period end membership 4,078,000 4,428,000 4,349,000 4,371,000 For the Three Month Periods Ended March 31, 2016 (2) June 30, 2016 September 30, 2016 December 31, 2016 Total revenues $ 3,540.5 $ 3,594.4 $ 3,584.0 $ 3,518.2 Gross margin 417.1 544.8 481.5 459.7 Income before income taxes 88.9 206.7 152.9 81.0 Net income 37.8 90.8 68.6 44.9 Net income per share - basic (1) $ 0.86 $ 2.05 $ 1.55 $ 1.01 Net income per share - diluted (1) 0.85 2.04 1.54 1.00 Period end membership 3,730,000 3,769,000 3,776,000 3,898,000 (1) The calculation of net income per share is based on weighted average shares outstanding during each quarter and, accordingly, the sum may not equal the total for the year. (2) During the six months ended June 30, 2016, net income and per share amounts for the three months ended March 31, 2016 were recasted to reflect the early adoption of ASU 2016-09 " Compensation-Stock Compensation (Topic 718)." |
ORGANIZATION AND BASIS OF PRE46
ORGANIZATION AND BASIS OF PRESENTATION (Details) member in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | ||
Jul. 31, 2002transaction | Dec. 31, 2017USD ($)memberstate | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Number of members served | member | 4.4 | |||
Number of states offered Medicare prescription drug plans | state | 50 | |||
Number of transactions for acquisition | transaction | 2 | |||
Equity in earnings of unconsolidated subsidiaries | $ | $ 18.7 | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN47
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Premium Revenue Recognition and Premiums Receivable (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net Receivables and Payables from Government Partners [Line Items] | |||
Allowance for uncollectible premiums receivable | $ 16.3 | $ 22.7 | |
Supplemental Medicaid premium revenue | 478.9 | 238.7 | $ 269.1 |
Fee reimbursement | 244.9 | $ 219.2 | |
Risk adjusted premiums receivable | $ 190.3 | 99 | |
Variance above target amount before additional premiums are received | 5.00% | ||
Minimum medical loss ratio | 85.00% | ||
Drug costs reimbursed | 80.00% | ||
Net payable for the benefit of members | $ 1,048.4 | $ 357.7 | |
2016 Part D Plan | |||
Net Receivables and Payables from Government Partners [Line Items] | |||
Net payable for the benefit of members | $ 284.1 | ||
Minimum | |||
Net Receivables and Payables from Government Partners [Line Items] | |||
Insurance settlement period subsequent to plan year | 9 months | ||
Minimum | 2016 Part D Plan | |||
Net Receivables and Payables from Government Partners [Line Items] | |||
Net payable for the benefit of members, settlement period | 18 months | ||
Maximum | |||
Net Receivables and Payables from Government Partners [Line Items] | |||
Insurance settlement period subsequent to plan year | 10 months | ||
Maximum | 2016 Part D Plan | |||
Net Receivables and Payables from Government Partners [Line Items] | |||
Net payable for the benefit of members, settlement period | 24 months |
SUMMARY OF SIGNIFICANT ACCOUN48
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Other Net Payables to Government Partners (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Net Receivables and Payables from Government Partners [Line Items] | ||
Liability to states under Medicaid risk sharing provisions | $ (142.5) | $ (105.9) |
Liability to CMS under risk corridor provision | (179.1) | (190.5) |
Liability to CMS under MA/PDP minimum MLR provisions of the ACA | (1.2) | (0.3) |
Net payables to government partners | (322.8) | (296.7) |
Receivables from government partners | 44.2 | 6.5 |
Other payables to government partners | 367 | 303.2 |
Current Assets | ||
Net Receivables and Payables from Government Partners [Line Items] | ||
Receivables from government partners | 44.2 | 6.5 |
Current Liabilities | ||
Net Receivables and Payables from Government Partners [Line Items] | ||
Other payables to government partners | $ 367 | $ 303.2 |
SUMMARY OF SIGNIFICANT ACCOUN49
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Funds Payable for the Benefit of Members, Net (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Net Receivables and Payables from Government Partners [Line Items] | ||
Low-income cost sharing subsidy | $ (47.7) | $ 47.8 |
Catastrophic reinsurance subsidy | (987.1) | (418.1) |
Coverage gap discount subsidy | (13.6) | 12.6 |
Funds payable for the benefit of members | (1,048.4) | (357.7) |
Funds receivable for the benefit of members | 27.5 | 32.6 |
Funds payable for the benefit of members | 1,075.9 | 390.3 |
Current Assets | ||
Net Receivables and Payables from Government Partners [Line Items] | ||
Funds receivable for the benefit of members | 27.5 | 32.6 |
Current Liabilities | ||
Net Receivables and Payables from Government Partners [Line Items] | ||
Funds payable for the benefit of members | $ 1,075.9 | $ 390.3 |
SUMMARY OF SIGNIFICANT ACCOUN50
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Medical Benefits Expense and Medical Benefits Payable (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2015 |
Accounting Policies [Abstract] | ||
Premium deficiency reserve | $ 45,600,000 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN51
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - ACA Industry Fee (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accounting Policies [Abstract] | |||
ACA levied on health insurance industry fees | $ 11,300 | $ 11,300 | |
ACA levied on health insurance industry in 2018 | $ 14,300 | ||
ACA levied on health insurance industry, amortization period | 12 months | ||
ACA industry fee expense | $ 0 | $ 228.4 | $ 227.3 |
SUMMARY OF SIGNIFICANT ACCOUN52
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Equity Based Employee Compensation (Details) | 12 Months Ended | |
Dec. 31, 2017planshares | Jun. 30, 2013shares | |
Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock units, conversion ratio | 1 | |
Number of plan variations | plan | 2 | |
Restricted Stock Units | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 1 year | |
Restricted Stock Units | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 3 years | |
Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Cliff vesting number of shares earned, minimum (in shares) | 0 | |
Vesting period of certain equity-based compensation | 3 years | |
Performance Shares | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Cliff vesting target range percentage, maximum | 200.00% | |
Market Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period of certain equity-based compensation | 3 years | |
Number of calendar days preceding the vesting date to the comparable average common stock price in the year immediately preceding the grant date | 30 days | |
Maximum common stock decline before no shares are earned | 50.00% | |
Market Stock Units | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Cliff vesting target range percentage, maximum | 200.00% | |
2013 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized (in shares) | 2,500,000 |
SUMMARY OF SIGNIFICANT ACCOUN53
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Medicaid Premium Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accounting Policies [Abstract] | |||
Medicaid premium taxes incurred | $ 119.8 | $ 110 | $ 94.7 |
SUMMARY OF SIGNIFICANT ACCOUN54
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Investments (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accounting Policies [Abstract] | |||
Other than temporary impairment losses, investments | $ 0 | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN55
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Equipment and Capitalized Software, net (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Leasehold improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Leasehold improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 10 years |
Furniture and equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 5 years |
Computer equipment and software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Computer equipment and software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 7 years |
SUMMARY OF SIGNIFICANT ACCOUN56
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Goodwill and Other Intangible Assets (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Goodwill [Line Items] | |||
Goodwill | $ 660,700,000 | $ 392,500,000 | $ 263,200,000 |
Impairment of intangible assets | $ 0 | 0 | 0 |
Minimum | |||
Goodwill [Line Items] | |||
Estimated useful life | 1 year | ||
Maximum | |||
Goodwill [Line Items] | |||
Estimated useful life | 15 years | ||
Medicaid Health Plans | |||
Goodwill [Line Items] | |||
Goodwill | $ 274,700,000 | 282,100,000 | 152,800,000 |
Medicare Health Plans | |||
Goodwill [Line Items] | |||
Goodwill | $ 386,000,000 | $ 110,400,000 | $ 110,400,000 |
ACQUISITIONS - Phoenix Health P
ACQUISITIONS - Phoenix Health Plan Assets Acquisition (Details) member in Thousands | May 01, 2017member |
Phoenix Health Plan | |
Business Acquisition [Line Items] | |
Number of members acquired | 42 |
ACQUISITIONS - Universal Americ
ACQUISITIONS - Universal American Acquisition (Details) $ / shares in Units, member in Thousands, $ in Millions | Apr. 28, 2017USD ($)member$ / shares | Apr. 30, 2011USD ($)$ / sharesshares | Dec. 31, 2017USD ($)organization$ / shares | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($)$ / shares | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2017USD ($)organization$ / shares | Dec. 31, 2016USD ($)$ / shares | Dec. 31, 2015USD ($) |
Business Acquisition [Line Items] | |||||||||||||
Number of MSSP ACOs | organization | 16 | 16 | |||||||||||
Number of Next Generation ACOs | organization | 2 | 2 | |||||||||||
Deferred tax liabilities, net | $ 9 | $ 9 | |||||||||||
Goodwill | $ 660.7 | $ 392.5 | $ 660.7 | $ 392.5 | $ 263.2 | ||||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | |||||||||
Preferred shares redeemed | $ 41 | ||||||||||||
Total revenues | $ 4,345.1 | $ 4,402.9 | 4,305 | $ 3,954.2 | $ 3,518.2 | $ 3,584 | $ 3,594.4 | $ 3,540.5 | $ 17,007.2 | $ 14,237.1 | 13,890.2 | ||
Income before income taxes | $ 8.6 | $ 235.1 | 114.7 | $ 103.2 | $ 81 | $ 152.9 | $ 206.7 | $ 88.9 | 461.6 | 529.5 | $ 336.1 | ||
Universal American | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Preferred shares issued | $ 40 | ||||||||||||
Preferred shares issued (in shares) | shares | 1,600,000 | ||||||||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.01 | ||||||||||||
Liquidation preference (in dollars per share) | $ / shares | $ 25 | ||||||||||||
Preferred shares accrued dividends | 1 | ||||||||||||
Total revenues | 936.5 | ||||||||||||
Income before income taxes | 24.6 | ||||||||||||
Transaction and integration-related costs | $ (37.5) | ||||||||||||
Universal American | Convertible Senior Notes Due 2021 | Unsecured Debt | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Proceeds from convertible debt | $ 115 | ||||||||||||
Interest rate | 4.00% | 4.00% | |||||||||||
Universal American | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Purchase price | $ 770 | ||||||||||||
Cash purchase price (in dollars per share) | $ / shares | $ 10 | ||||||||||||
Assumption of convertible debt | $ 145.3 | ||||||||||||
Cash settlement of preferred shares | $ 40 | $ 40 | |||||||||||
Number of members acquired | member | 119 | ||||||||||||
Deferred tax liabilities, net | $ 68 | ||||||||||||
Goodwill | 275.6 | ||||||||||||
Universal American | Preferred Stock | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Consideration transferred, preferred shares redemption amount | $ 41 |
ACQUISITIONS - Fair Value of Co
ACQUISITIONS - Fair Value of Consideration Transferred in Acquisition (Details) - USD ($) $ in Millions | Apr. 28, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Business Combination, Consideration Transferred [Abstract] | |||
Common stock, outstanding (in shares) | 44,522,988 | 44,293,881 | |
Payments of accrued dividends | $ 1 | ||
Unrecognized stock compensation cost | $ 20 | ||
Senior Notes | 4.00% Convertible Senior Notes | |||
Business Combination, Consideration Transferred [Abstract] | |||
Interest rate | 4.00% | ||
Universal American | |||
Business Combination, Consideration Transferred [Abstract] | |||
Common stock, outstanding (in shares) | 57,100,000 | ||
Universal American | |||
Business Combination, Consideration Transferred [Abstract] | |||
Cash consideration transferred | $ 570.8 | ||
Assumed debt | 145.3 | ||
Total consideration transferred | 770 | ||
Payments for repurchase of preferred shares (in shares) | 40 | ||
Universal American | Preferred Stock | |||
Business Combination, Consideration Transferred [Abstract] | |||
Equity interests issued | 41 | ||
Payments for repurchase of preferred shares and accrued dividends | 41 | ||
Universal American | Stock Compensation Plan | |||
Business Combination, Consideration Transferred [Abstract] | |||
Equity interests issued | $ 12.9 |
ACQUISITIONS - Fair Value of As
ACQUISITIONS - Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Apr. 28, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Assets | ||||
Goodwill | $ 660.7 | $ 392.5 | $ 263.2 | |
Liabilities | ||||
Deferred tax liabilities, net | $ 9 | |||
Universal American | ||||
Assets | ||||
Cash and cash equivalents | $ 66.4 | |||
Investments, including restricted investments | 254.4 | |||
Premiums receivable, net | 90.7 | |||
Pharmacy rebates receivable, net, and other current assets | 56.2 | |||
Property, equipment and capitalized software, net | 7.5 | |||
Goodwill | 275.6 | |||
Other intangible assets, net | 298.2 | |||
Assets of discontinued operations | 219.6 | |||
Estimated fair value of total assets acquired | 1,268.6 | |||
Liabilities | ||||
Medical benefits payable | 128.1 | |||
Deferred tax liabilities, net | 68 | |||
Other liabilities | 83.8 | |||
Liabilities of discontinued operations | 218.7 | |||
Estimated fair value of liabilities assumed | 498.6 | |||
Estimated fair value of net assets acquired | $ 770 |
ACQUISITIONS - Preliminary Fair
ACQUISITIONS - Preliminary Fair Values and Weighted Average Useful Lives for Identifiable Intangible Assets Acquired (Details) - USD ($) $ in Millions | Apr. 28, 2017 | Dec. 31, 2017 |
Business Acquisition [Line Items] | ||
Weighted average useful life | 11 years | |
Universal American | ||
Business Acquisition [Line Items] | ||
Gross fair value | $ 298.2 | |
Weighted average useful life | 10 years 6 months | |
Membership | Universal American | ||
Business Acquisition [Line Items] | ||
Gross fair value | $ 240 | |
Weighted average useful life | 10 years | |
Tradenames | Universal American | ||
Business Acquisition [Line Items] | ||
Gross fair value | $ 36 | |
Weighted average useful life | 13 years 11 months | |
Provider networks | ||
Business Acquisition [Line Items] | ||
Weighted average useful life | 15 years | |
Provider networks | Universal American | ||
Business Acquisition [Line Items] | ||
Gross fair value | $ 9.5 | |
Weighted average useful life | 15 years | |
Other | ||
Business Acquisition [Line Items] | ||
Weighted average useful life | 5 years 8 months | |
Other | Universal American | ||
Business Acquisition [Line Items] | ||
Gross fair value | $ 12.7 | |
Weighted average useful life | 6 years 2 months |
ACQUISITIONS - Care1st Arizona
ACQUISITIONS - Care1st Arizona Acquisition (Details) member in Thousands, $ in Millions | Dec. 31, 2016USD ($) | Dec. 31, 2017USD ($)member | Dec. 31, 2015USD ($) |
Business Acquisition [Line Items] | |||
Weighted average useful life | 11 years | ||
Goodwill | $ 392.5 | $ 660.7 | $ 263.2 |
Care1st Arizona | |||
Business Acquisition [Line Items] | |||
Purchase price | 163.8 | ||
Number of members acquired | member | 153 | ||
Tangible assets acquired | 169.9 | ||
Estimated fair value of liabilities assumed | 116.9 | ||
Identified intangible assets acquired | $ 24 | ||
Weighted average useful life | 11 years 2 months 12 days | ||
Goodwill | $ 102.7 | $ 86.9 |
ACQUISITIONS - Unaudited Pro Fo
ACQUISITIONS - Unaudited Pro Forma Results (Details) - PHP, Universal American, Care 1st Arizona, Advicare Corp. - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Business Acquisition [Line Items] | ||
Total revenues | $ 17,163.1 | $ 16,211.4 |
Net income | $ 384.1 | $ 239 |
Earnings per common share | ||
Basic (in dollars per share) | $ 8.64 | $ 5.40 |
Diluted (in dollars per share) | $ 8.54 | $ 5.36 |
SEGMENT REPORTING - Narrative (
SEGMENT REPORTING - Narrative (Details) | 1 Months Ended | 12 Months Ended |
Feb. 28, 2014region | Dec. 31, 2017segmentrenewal_option | |
Segment Reporting Information [Line Items] | ||
Number of renewal options | renewal_option | 1 | |
Health plan contract, renewal term | 1 year | |
Number of reportable segments | segment | 3 | |
Florida | ||
Segment Reporting Information [Line Items] | ||
Number of regions executed contracts | 8 | |
Florida | Managed Medical Assistance Program (MMA) | ||
Segment Reporting Information [Line Items] | ||
Total number of regions | 11 |
SEGMENT REPORTING - Premium Rev
SEGMENT REPORTING - Premium Revenue by Geographic Location (Details) - member member in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | |||
Number of members | 4,400 | ||
Kentucky | |||
Segment Reporting Information [Line Items] | |||
Premium revenue as a percentage of consolidated premium revenue | 15.00% | 18.00% | 19.00% |
Florida | |||
Segment Reporting Information [Line Items] | |||
Premium revenue as a percentage of consolidated premium revenue | 15.00% | 18.00% | 17.00% |
Georgia | |||
Segment Reporting Information [Line Items] | |||
Premium revenue as a percentage of consolidated premium revenue | 11.00% | 12.00% | |
Number of members | 58 |
SEGMENT REPORTING - Financial I
SEGMENT REPORTING - Financial Information for Reportable Operating Segments (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | |||||||||||
Premium revenue | $ 16,960.3 | $ 14,220.9 | $ 13,874.8 | ||||||||
Medical benefits expense | 14,744.8 | 12,089.4 | 11,978.5 | ||||||||
ACA industry fee expense | 0 | 228.4 | 227.3 | ||||||||
Gross margin | $ 522.3 | $ 650.2 | $ 574.6 | $ 468.4 | $ 459.7 | $ 481.5 | $ 544.8 | $ 417.1 | |||
Investment and other income | 46.9 | 16.2 | 15.4 | ||||||||
Income (loss) from operations | $ 12 | $ 211.9 | $ 141.9 | $ 103.2 | 469 | 529.5 | 336.1 | ||||
Operating Segments | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Gross margin | 2,215.5 | 1,903.1 | 1,669 | ||||||||
Operating Segments | Medicaid Health Plans | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Premium revenue | 10,726.3 | 9,499.3 | 9,074.3 | ||||||||
Medical benefits expense | 9,414.1 | 8,188.5 | 7,866.8 | ||||||||
ACA industry fee expense | 0 | 148 | 135.1 | ||||||||
Gross margin | 1,312.2 | 1,162.8 | 1,072.4 | ||||||||
Operating Segments | Medicare Health Plans | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Premium revenue | 5,320.2 | 3,876.6 | 3,898.8 | ||||||||
Medical benefits expense | 4,577.3 | 3,278.5 | 3,401.7 | ||||||||
ACA industry fee expense | 0 | 64.2 | 68.7 | ||||||||
Gross margin | 742.9 | 533.9 | 428.4 | ||||||||
Operating Segments | Medicare PDPs | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Premium revenue | 913.8 | 845 | 901.7 | ||||||||
Medical benefits expense | 753.4 | 622.4 | 710 | ||||||||
ACA industry fee expense | 0 | 16.2 | 23.5 | ||||||||
Gross margin | 160.4 | 206.4 | 168.2 | ||||||||
Segment Reconciling Items | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Investment and other income | 46.9 | 16.2 | 15.4 | ||||||||
Other expenses | $ (1,793.4) | $ (1,389.8) | $ (1,348.3) |
EARNINGS PER COMMON SHARE - Sch
EARNINGS PER COMMON SHARE - Schedule of Weighted-Average Shares Outstanding - Diluted (Details) - shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |||
Weighted-average common shares outstanding — basic (in shares) | 44,474,016 | 44,248,778 | 44,057,579 |
Dilutive effect of outstanding stock-based compensation awards (in shares) | 493,045 | 370,811 | 333,453 |
Weighted-average common shares outstanding — diluted (in shares) | 44,967,061 | 44,619,589 | 44,391,032 |
Anti-dilutive stock-based compensation awards excluded from computation (in shares) | 76,446 | 14,867 | 65,839 |
INVESTMENTS - Investments by Se
INVESTMENTS - Investments by Security Type (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | $ 1,238.7 | $ 183 |
Gross Unrealized Gains | 1.7 | 0.1 |
Gross Unrealized Losses | (4.7) | (1.6) |
Estimated Fair Value | 1,235.7 | 181.5 |
Asset-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 88.9 | 3.3 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (0.2) | 0 |
Estimated Fair Value | 88.7 | 3.3 |
Corporate debt securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 400.6 | 67.2 |
Gross Unrealized Gains | 0.7 | 0 |
Gross Unrealized Losses | (1.2) | 0 |
Estimated Fair Value | 400.1 | 67.2 |
Municipal securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 223.7 | 53.7 |
Gross Unrealized Gains | 1 | 0.1 |
Gross Unrealized Losses | (1.9) | (1.5) |
Estimated Fair Value | 222.8 | 52.3 |
Residential mortgage-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 11.2 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized Losses | 0 | |
Estimated Fair Value | 11.2 | |
Short-term time deposits | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 300.4 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized Losses | 0 | |
Estimated Fair Value | 300.4 | |
Government and agency obligations | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 148.7 | 1 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (1.2) | 0 |
Estimated Fair Value | 147.5 | 1 |
Other securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 65.2 | 57.8 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (0.2) | (0.1) |
Estimated Fair Value | $ 65 | $ 57.7 |
INVESTMENTS - Contractual Matur
INVESTMENTS - Contractual Maturities of Long-term Available-for-sale Investments (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Schedule of Available-for-sale Securities [Line Items] | ||
Total | $ 1,235.7 | $ 181.5 |
Within 1 Year | 469.5 | |
1 Through 5 Years | 528.1 | |
5 Through 10 Years | 189.5 | |
Thereafter | 48.6 | |
Asset-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Total | 88.7 | 3.3 |
Within 1 Year | 12.6 | |
1 Through 5 Years | 71.7 | |
5 Through 10 Years | 2.4 | |
Thereafter | 2 | |
Corporate debt securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Total | 400.1 | 67.2 |
Within 1 Year | 81 | |
1 Through 5 Years | 206.2 | |
5 Through 10 Years | 102.2 | |
Thereafter | 10.7 | |
Municipal securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Total | 222.8 | 52.3 |
Within 1 Year | 17.6 | |
1 Through 5 Years | 112.6 | |
5 Through 10 Years | 75.1 | |
Thereafter | 17.5 | |
Residential mortgage-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Total | 11.2 | |
Within 1 Year | 0 | |
1 Through 5 Years | 0 | |
5 Through 10 Years | 0 | |
Thereafter | 11.2 | |
Short-term time deposits | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Total | 300.4 | |
Within 1 Year | 300.4 | |
1 Through 5 Years | 0 | |
5 Through 10 Years | 0 | |
Thereafter | 0 | |
Government and agency obligations | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Total | 147.5 | 1 |
Within 1 Year | 5.1 | |
1 Through 5 Years | 135.4 | |
5 Through 10 Years | 6.8 | |
Thereafter | 0.2 | |
Other securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Total | 65 | $ 57.7 |
Within 1 Year | 52.8 | |
1 Through 5 Years | 2.2 | |
5 Through 10 Years | 3 | |
Thereafter | $ 7 |
INVESTMENTS - Narrative (Detail
INVESTMENTS - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Investments, Debt and Equity Securities [Abstract] | |||
Total available-for-sale investments sold | $ 348,200,000 | $ 142,200,000 | $ 64,600,000 |
Realized gains and losses | 0 | 0 | 0 |
Other than temporary impairment losses | $ 0 | $ 0 | $ 0 |
RESTRICTED INVESTMENTS - Summar
RESTRICTED INVESTMENTS - Summary of Restricted Investment Assets (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Restricted Investments | |||
Amortized Cost | $ 211.8 | $ 234.4 | |
Gross Unrealized Gains | 0 | 0 | |
Gross Unrealized Losses | (0.8) | (0.1) | |
Estimated Fair Value | 211 | 234.3 | |
Realized gains (losses) | 0 | 0 | $ 0 |
Cash | |||
Restricted Investments | |||
Amortized Cost | 5.7 | 92.1 | |
Gross Unrealized Gains | 0 | 0 | |
Gross Unrealized Losses | 0 | 0 | |
Estimated Fair Value | 5.7 | 92.1 | |
Money market funds | |||
Restricted Investments | |||
Amortized Cost | 58.7 | 67.8 | |
Gross Unrealized Gains | 0 | 0 | |
Gross Unrealized Losses | 0 | 0 | |
Estimated Fair Value | 58.7 | 67.8 | |
U.S. government securities and other | |||
Restricted Investments | |||
Amortized Cost | 147.4 | 74.5 | |
Gross Unrealized Gains | 0 | 0 | |
Gross Unrealized Losses | (0.8) | (0.1) | |
Estimated Fair Value | $ 146.6 | $ 74.4 |
PROPERTY, EQUIPMENT AND CAPIT72
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE - Summary of Property, Equipment and Capitalized Software (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Property, equipment and capitalized software, gross | $ 730.6 | $ 598.6 |
Less accumulated depreciation | (411.1) | (324.1) |
Total property and equipment, net | 319.5 | 274.5 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and capitalized software, gross | 36.9 | 30.1 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and capitalized software, gross | 128.3 | 110.6 |
Capitalized software | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and capitalized software, gross | 526.2 | 425.2 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and capitalized software, gross | $ 39.2 | $ 32.7 |
PROPERTY, EQUIPMENT AND CAPIT73
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation expense | $ 87.7 | $ 77.2 | $ 62 |
Depreciation expense on capitalized software | $ 65.2 | $ 57.6 | $ 43.7 |
GOODWILL AND OTHER INTANGIBLE74
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Changes in Goodwill by Reportable Segment (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill [Line Items] | ||
Goodwill, Impaired, Accumulated Impairment Loss | $ 78.3 | $ 78.3 |
Goodwill [Roll Forward] | ||
Beginning balance | 392.5 | 263.2 |
Acquired goodwill, preliminary allocation | 283.9 | 129.3 |
Measurement period adjustments | (15.7) | |
Ending balance | 660.7 | 392.5 |
Subsequent recognition of deferred tax liability | 9 | |
Medicaid Health Plans | ||
Goodwill [Roll Forward] | ||
Beginning balance | 282.1 | 152.8 |
Acquired goodwill, preliminary allocation | 8.3 | 129.3 |
Measurement period adjustments | (15.7) | |
Ending balance | 274.7 | 282.1 |
Medicare Health Plans | ||
Goodwill [Roll Forward] | ||
Beginning balance | 110.4 | 110.4 |
Acquired goodwill, preliminary allocation | 275.6 | 0 |
Measurement period adjustments | 0 | |
Ending balance | 386 | 110.4 |
Care1st Arizona | ||
Goodwill [Roll Forward] | ||
Beginning balance | 102.7 | |
Ending balance | 86.9 | $ 102.7 |
Identified intangible assets acquired | $ 24 |
GOODWILL AND OTHER INTANGIBLE75
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Other Intangible Assets (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Amortization Period (In Years) | 11 years | |
Finite-Lived Intangible Assets | ||
Gross Carrying Amount | $ 447 | $ 123.4 |
Accumulated Amortization | (79.1) | (49.3) |
Other Intangibles, Net | $ 367.9 | 74.1 |
Membership and state contracts | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Amortization Period (In Years) | 10 years 5 months | |
Finite-Lived Intangible Assets | ||
Gross Carrying Amount | $ 344.4 | 94.3 |
Accumulated Amortization | (52.6) | (29.8) |
Other Intangibles, Net | $ 291.8 | 64.5 |
Trademarks and tradenames | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Amortization Period (In Years) | 13 years 8 months | |
Finite-Lived Intangible Assets | ||
Gross Carrying Amount | $ 53.3 | 11.4 |
Accumulated Amortization | (12.9) | (9.8) |
Other Intangibles, Net | $ 40.4 | 1.6 |
Provider networks | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Amortization Period (In Years) | 15 years | |
Finite-Lived Intangible Assets | ||
Gross Carrying Amount | $ 27.3 | 8.4 |
Accumulated Amortization | (5.1) | (3.7) |
Other Intangibles, Net | $ 22.2 | 4.7 |
Licenses and permits | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Amortization Period (In Years) | 13 years 7 months | |
Finite-Lived Intangible Assets | ||
Gross Carrying Amount | $ 7.1 | 5.1 |
Accumulated Amortization | (4.1) | (3.6) |
Other Intangibles, Net | $ 3 | 1.5 |
Other | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Amortization Period (In Years) | 5 years 8 months | |
Finite-Lived Intangible Assets | ||
Gross Carrying Amount | $ 14.9 | 4.2 |
Accumulated Amortization | (4.4) | (2.4) |
Other Intangibles, Net | $ 10.5 | $ 1.8 |
GOODWILL AND OTHER INTANGIBLE76
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Expected Amortization Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization expense | $ 32.7 | $ 10.4 | $ 10.6 |
Expected Amortization Expense | |||
2,018 | 41.9 | ||
2,019 | 41.7 | ||
2,020 | 41.6 | ||
2,021 | 41.5 | ||
2,022 | 37.6 | ||
2023 and thereafter | 163.6 | ||
Total | $ 367.9 |
DEBT - Outstanding Debt Obligat
DEBT - Outstanding Debt Obligations (Details) - USD ($) | Dec. 31, 2017 | Apr. 07, 2017 | Mar. 22, 2017 | Dec. 31, 2016 |
Long-term debt, net | ||||
Debt issuance costs | $ (17,600,000) | $ (12,000,000) | ||
Total long-term debt, net | 1,182,400,000 | 997,600,000 | ||
Revolving Credit Facility | ||||
Long-term debt, net | ||||
Revolving Credit Facility | 0 | $ 100,000,000 | 100,000,000 | |
Senior Notes | 5.25% Senior Notes, due April 1, 2025 | ||||
Long-term debt, net | ||||
Senior notes, noncurrent | $ 1,200,000,000 | 0 | ||
Interest rate | 5.25% | 5.25% | ||
Senior Notes | 5.75% Senior Notes, due November 15, 2020 | ||||
Long-term debt, net | ||||
Senior notes, noncurrent | $ 0 | 909,600,000 | ||
Interest rate | 5.75% | 5.75% | ||
Unamortized debt premium | $ 9,600,000 |
DEBT - Senior Notes Narrative (
DEBT - Senior Notes Narrative (Details) - USD ($) | Apr. 07, 2017 | Mar. 22, 2017 | Jun. 30, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Nov. 30, 2013 |
Debt Instrument [Line Items] | |||||||
Loss on extinguishment of debt | $ 26,100,000 | $ 0 | $ 0 | ||||
Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Borrowings outstanding | $ 100,000,000 | $ 0 | 100,000,000 | ||||
Senior Notes | 5.25% Senior Notes, due April 1, 2025 | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate | 5.25% | 5.25% | |||||
Aggregate principal amount | $ 1,200,000,000 | ||||||
Aggregate net proceeds from the issuance of debt | $ 1,182,200,000 | ||||||
Minimum additional indebtedness pursuant to the fixed charge coverage ratio | 1 | ||||||
Redemption price | 100.00% | ||||||
Redemption premium, percentage of principal amount redeemed | 1.00% | ||||||
Senior Notes | 5.25% Senior Notes, due April 1, 2025 | 2016 | |||||||
Debt Instrument [Line Items] | |||||||
Percentage of principal amount redeemed | 40.00% | ||||||
Redemption price | 105.25% | ||||||
Percentage of principal amount outstanding | 60.00% | ||||||
Days within closing of equity offering | 90 days | ||||||
Senior Notes | 5.75% Senior Notes, due November 15, 2020 | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate | 5.75% | 5.75% | |||||
Aggregate principal amount | $ 600,000,000 | ||||||
Debt repurchase amount | $ 900,000,000 | ||||||
Redemption price | 102.875% | ||||||
Unamortized debt premium | $ 9,600,000 | ||||||
Senior Notes | 5.75% Senior Notes due 2020 | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate principal amount | $ 300,000,000 | ||||||
Issue price | 104.50% | ||||||
Unamortized debt premium | $ 13,500,000 |
DEBT - Redemption Prices as Per
DEBT - Redemption Prices as Percentage of Principal Amount (Details) - 5.25% Senior Notes, due April 1, 2025 - Senior Notes | 12 Months Ended |
Dec. 31, 2017 | |
Debt Instrument, Redemption [Line Items] | |
Redemption price | 100.00% |
2,020 | |
Debt Instrument, Redemption [Line Items] | |
Redemption price | 103.938% |
2,021 | |
Debt Instrument, Redemption [Line Items] | |
Redemption price | 102.625% |
2,022 | |
Debt Instrument, Redemption [Line Items] | |
Redemption price | 101.313% |
2023 and thereafter | |
Debt Instrument, Redemption [Line Items] | |
Redemption price | 100.00% |
DEBT - Credit Agreement Narrati
DEBT - Credit Agreement Narrative (Details) - USD ($) | 1 Months Ended | ||
Mar. 31, 2017 | Jan. 31, 2016 | Mar. 22, 2017 | |
2016 Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 850,000,000 | $ 1,000,000,000 | |
2016 Revolving Credit Facility | Minimum | |||
Debt Instrument [Line Items] | |||
Unutilized commitment fee percentage | 0.25% | ||
2016 Revolving Credit Facility | Maximum | |||
Debt Instrument [Line Items] | |||
Unutilized commitment fee percentage | 0.35% | ||
2016 Revolving Credit Facility | Federal Reserve Bank of New York Rate | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 0.50% | ||
2016 Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.00% | ||
Revolving Credit Facility | 2016 Revolving Credit Facility | Lender Concentration Risk | |||
Debt Instrument [Line Items] | |||
Minimum lender holding for accelerated maturity rights | 50.00% | ||
ABR Loans | 2016 Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | Minimum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 0.50% | ||
ABR Loans | 2016 Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | Maximum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.00% | ||
Eurodollar | 2016 Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | Minimum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.50% | ||
Eurodollar | 2016 Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | Maximum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 2.00% | ||
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 850,000,000 | $ 1,000,000,000 | |
Repayments of debt | $ 100,000,000 | ||
Letter of Credit | 2016 Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Borrowing capacity available for letters of credit | 150,000,000 | ||
Term Loan | 2016 Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 50,000,000 |
FAIR VALUE MEASUREMENTS FAIR VA
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS - Additional Information (Details) - USD ($) | Dec. 31, 2017 | Mar. 22, 2017 | Dec. 31, 2016 |
Revolving Credit Facility | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Borrowings outstanding | $ 0 | $ 100,000,000 | $ 100,000,000 |
Auction Rate Securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Auction rate securities, par value | $ 13,800,000 | $ 13,800,000 |
FAIR VALUE MEASUREMENTS - Asset
FAIR VALUE MEASUREMENTS - Assets and Liabilities Measured at Fair Value (Details) - Fair Value Measurements, Recurring - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | $ 88.7 | $ 3.3 |
Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 400.1 | 67.2 |
Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 222.8 | 52.3 |
Residential mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 11.2 | |
Short-term time deposits | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 300.4 | |
Government and agency obligations | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 147.5 | 1 |
Other securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 65 | 57.7 |
Cash | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Restricted investment | 58.7 | 92.1 |
Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Restricted investment | 5.7 | 67.8 |
U.S. government securities and other | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Restricted investment | 146.6 | 74.4 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 200.3 | 58.7 |
Restricted investment | 210.8 | 234.1 |
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) | 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) | 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) | Residential mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Short-term time deposits | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Government and agency obligations | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 147.5 | 1 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 52.8 | 57.7 |
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 investment | 58.7 | 92.1 |
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] | ||
Restricted investment | 5.7 | 67.8 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. government securities and other | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Restricted investment | 146.4 | 74.2 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 1,023.1 | 110.4 |
Restricted investment | 0.2 | 0.2 |
Significant Other Observable Inputs (Level 2) | Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 88.7 | 3.3 |
Significant Other Observable Inputs (Level 2) | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 400.1 | 67.2 |
Significant Other Observable Inputs (Level 2) | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 210.5 | 39.9 |
Significant Other Observable Inputs (Level 2) | Residential mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 11.2 | |
Significant Other Observable Inputs (Level 2) | Short-term time deposits | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 300.4 | |
Significant Other Observable Inputs (Level 2) | Government and agency obligations | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Significant Other Observable Inputs (Level 2) | Other securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 12.2 | 0 |
Significant Other Observable Inputs (Level 2) | Cash | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Restricted investment | 0 | 0 |
Significant Other Observable Inputs (Level 2) | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Restricted investment | 0 | 0 |
Significant Other Observable Inputs (Level 2) | U.S. government securities and other | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Restricted investment | 0.2 | 0.2 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 12.3 | 12.4 |
Restricted investment | 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) | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 12.3 | 12.4 |
Significant Unobservable Inputs (Level 3) | Residential mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | |
Significant Unobservable Inputs (Level 3) | Short-term time deposits | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | |
Significant Unobservable Inputs (Level 3) | Government and agency obligations | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Other securities | ||
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 investment | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Restricted investment | 0 | 0 |
Significant Unobservable Inputs (Level 3) | U.S. government securities and other | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Restricted investment | 0 | 0 |
Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 1,235.7 | 181.5 |
Restricted investment | $ 211 | $ 234.3 |
FAIR VALUE MEASUREMENTS - Chang
FAIR VALUE MEASUREMENTS - Changes in Fair Value of Level 3 Investments (Details) - Significant Unobservable Inputs (Level 3) - Fair Value Measurements, Recurring - Auction Rate Securities - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | |||
Balance at beginning of period | $ 12.4 | $ 31.7 | $ 32.3 |
Realized gains (losses) in earnings | 0 | 0 | 0 |
Changes in net unrealized gains and losses in other comprehensive income | 0 | 0.9 | (0.5) |
Purchases, sales and redemptions | (0.1) | (20.2) | (0.1) |
Net transfers in or (out) of Level 3 | 0 | 0 | 0 |
Balance at end of period | $ 12.3 | $ 12.4 | $ 31.7 |
FAIR VALUE MEASUREMENTS - Carry
FAIR VALUE MEASUREMENTS - Carrying Value and Fair Value of Long-term Debt (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt outstanding | $ 1,182.4 | $ 997.6 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt outstanding | 1,274.3 | 927 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt outstanding | 0 | 96.2 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt outstanding | $ 0 | $ 0 |
MEDICAL BENEFITS PAYABLE - Comp
MEDICAL BENEFITS PAYABLE - Components (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
MEDICAL BENEFITS PAYABLE [Abstract] | ||||
IBNR | $ 1,412.3 | $ 1,141.9 | ||
Other medical benefits payable | 734 | 548.6 | ||
Total medical benefits payable | $ 2,146.3 | $ 1,690.5 | $ 1,536 | $ 1,483.8 |
IBNR, percentage | 66.00% | 68.00% | ||
Other medical benefits payable, percentage | 34.00% | 32.00% | ||
Total medical benefits payable, percentage | 100.00% | 100.00% |
MEDICAL BENEFITS PAYABLE - Reco
MEDICAL BENEFITS PAYABLE - Reconciliation of Beginning and Ending Balances (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of the beginning and ending balance of medical benefits payable [Roll Forward] | |||
Beginning balance | $ 1,690,500,000 | $ 1,536,000,000 | $ 1,483,800,000 |
Acquisitions (divestitures) | 128,100,000 | 37,300,000 | (9,500,000) |
Medical benefits incurred related to: | |||
Current year (1) | 15,112,400,000 | 12,374,100,000 | 12,189,500,000 |
Prior years | (367,600,000) | (284,700,000) | (211,000,000) |
Total | 14,744,800,000 | 12,089,400,000 | 11,978,500,000 |
Medical benefits paid related to: | |||
Current year | (13,355,900,000) | (10,925,000,000) | (10,763,000,000) |
Prior years | (1,061,200,000) | (1,047,200,000) | (1,153,800,000) |
Total | (14,417,100,000) | (11,972,200,000) | (11,916,800,000) |
Ending balance | 2,146,300,000 | 1,690,500,000 | 1,536,000,000 |
Premium deficiency reserve | 45,600,000 | 0 | |
Medicaid Health Plans | |||
Reconciliation of the beginning and ending balance of medical benefits payable [Roll Forward] | |||
Beginning balance | 1,135,800,000 | 1,040,200,000 | 957,800,000 |
Acquisitions (divestitures) | 0 | 37,300,000 | 0 |
Medical benefits incurred related to: | |||
Current year (1) | 9,612,200,000 | 8,404,200,000 | 8,012,400,000 |
Prior years | (198,100,000) | (215,700,000) | (145,600,000) |
Total | 9,414,100,000 | 8,188,500,000 | 7,866,800,000 |
Medical benefits paid related to: | |||
Current year | (8,417,400,000) | (7,431,400,000) | (7,042,000,000) |
Prior years | (759,300,000) | (698,800,000) | (742,400,000) |
Total | (9,176,700,000) | (8,130,200,000) | (7,784,400,000) |
Ending balance | 1,373,200,000 | 1,135,800,000 | 1,040,200,000 |
Medicare Health Plans | |||
Reconciliation of the beginning and ending balance of medical benefits payable [Roll Forward] | |||
Beginning balance | 510,000,000 | 473,900,000 | 461,300,000 |
Acquisitions (divestitures) | 128,100,000 | 0 | (9,500,000) |
Medical benefits incurred related to: | |||
Current year (1) | 4,676,800,000 | 3,332,900,000 | 3,445,200,000 |
Prior years | (99,500,000) | (54,400,000) | (43,500,000) |
Total | 4,577,300,000 | 3,278,500,000 | 3,401,700,000 |
Medical benefits paid related to: | |||
Current year | (4,164,600,000) | (2,901,300,000) | (3,011,000,000) |
Prior years | (328,300,000) | (341,100,000) | (368,600,000) |
Total | (4,492,900,000) | (3,242,400,000) | (3,379,600,000) |
Ending balance | 722,500,000 | 510,000,000 | 473,900,000 |
Medicare PDPs | |||
Reconciliation of the beginning and ending balance of medical benefits payable [Roll Forward] | |||
Beginning balance | 44,700,000 | 21,900,000 | 64,700,000 |
Acquisitions (divestitures) | 0 | 0 | 0 |
Medical benefits incurred related to: | |||
Current year (1) | 823,400,000 | 637,000,000 | 731,900,000 |
Prior years | (70,000,000) | (14,600,000) | (21,900,000) |
Total | 753,400,000 | 622,400,000 | 710,000,000 |
Medical benefits paid related to: | |||
Current year | (773,900,000) | (592,300,000) | (710,000,000) |
Prior years | 26,400,000 | (7,300,000) | (42,800,000) |
Total | (747,500,000) | (599,600,000) | (752,800,000) |
Ending balance | $ 50,600,000 | $ 44,700,000 | $ 21,900,000 |
MEDICAL BENEFITS PAYABLE - Narr
MEDICAL BENEFITS PAYABLE - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
MEDICAL BENEFITS PAYABLE [Abstract] | |||
Favorable development of medical benefits payable | $ 367.6 | $ 284.7 | $ 211 |
Favorable development of medical benefits payable excluding the release of the provision for moderately adverse conditions | $ 224.6 | $ 154.3 | $ 78.1 |
MEDICAL BENEFITS PAYABLE - Incu
MEDICAL BENEFITS PAYABLE - Incurred and Paid Claims Development Information (Details) claim in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017USD ($)claim | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Claims Development [Line Items] | |||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 29,063.8 | ||
Acquired medical benefits payable liabilities | 128.1 | $ 37.3 | $ (9.5) |
Acquired reinsurance receivable | 5.5 | ||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | (27,071.5) | ||
All outstanding liabilities before 2016, net of reinsurance | 148.5 | ||
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 2,140.8 | ||
Medicaid Health Plans | |||
Claims Development [Line Items] | |||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 17,866 | ||
Acquired medical benefits payable liabilities | 0 | 37.3 | 0 |
Acquired reinsurance receivable | 4.6 | ||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | (16,582.4) | ||
All outstanding liabilities before 2016, net of reinsurance | 85 | ||
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 1,368.6 | ||
Medicare Health Plans | |||
Claims Development [Line Items] | |||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 9,807.7 | ||
Acquired medical benefits payable liabilities | 128.1 | 0 | (9.5) |
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | (9,148.5) | ||
All outstanding liabilities before 2016, net of reinsurance | 62.4 | ||
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 721.6 | ||
Medicare PDPs | |||
Claims Development [Line Items] | |||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 1,390.1 | ||
Acquired medical benefits payable liabilities | 0 | 0 | $ 0 |
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | (1,340.6) | ||
All outstanding liabilities before 2016, net of reinsurance | 1.1 | ||
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 50.6 | ||
2,016 | |||
Claims Development [Line Items] | |||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 13,227.1 | 13,561.8 | |
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 112.6 | ||
Cumulative Number of Reported Claims | claim | 134.5 | ||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ (13,114.5) | (12,022.3) | |
2016 | Medicaid Health Plans | |||
Claims Development [Line Items] | |||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 8,258.2 | 8,437.4 | |
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 93.2 | ||
Cumulative Number of Reported Claims | claim | 61.6 | ||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ (8,165) | 7,431.4 | |
2016 | Medicare Health Plans | |||
Claims Development [Line Items] | |||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 4,402.2 | 4,487.4 | |
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 19.4 | ||
Cumulative Number of Reported Claims | claim | 25.1 | ||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ (4,382.8) | 3,998.6 | |
2016 | Medicare PDPs | |||
Claims Development [Line Items] | |||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 566.7 | 637 | |
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 0 | ||
Cumulative Number of Reported Claims | claim | 47.8 | ||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ (566.7) | 592.3 | |
2,017 | |||
Claims Development [Line Items] | |||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 15,836.7 | ||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 1,879.7 | ||
Cumulative Number of Reported Claims | claim | 149.2 | ||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ (13,957) | ||
2017 | Medicaid Health Plans | |||
Claims Development [Line Items] | |||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 9,607.8 | ||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 1,190.4 | ||
Cumulative Number of Reported Claims | claim | 67.5 | ||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 8,417.4 | ||
2017 | Medicare Health Plans | |||
Claims Development [Line Items] | |||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 5,405.5 | ||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 639.8 | ||
Cumulative Number of Reported Claims | claim | 30.4 | ||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 4,765.7 | ||
2017 | Medicare PDPs | |||
Claims Development [Line Items] | |||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 823.4 | ||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 49.5 | ||
Cumulative Number of Reported Claims | claim | 51.3 | ||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 773.9 | ||
Care1st Arizona | |||
Claims Development [Line Items] | |||
Acquired reinsurance receivable | 4.1 | ||
Care1st Arizona | Medicaid Health Plans | |||
Claims Development [Line Items] | |||
Acquired medical benefits payable liabilities | 37.3 | ||
Acquired reinsurance receivable | $ 4.1 | ||
Universal American | Medicare Health Plans | |||
Claims Development [Line Items] | |||
Acquired reinsurance receivable | $ 0.9 |
MEDICAL BENEFITS PAYABLE - Re89
MEDICAL BENEFITS PAYABLE - Reconciliation of Net Incurred and Paid Claims Development to the Liability for Claims and Claim Adjustment Expenses (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | $ 2,140.8 | |||
Reinsurance Recoverable | 5.5 | |||
Total gross liability for unpaid claims and claim adjustment expense | 2,146.3 | $ 1,690.5 | $ 1,536 | $ 1,483.8 |
Medicaid Health Plans | ||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 1,368.6 | |||
Reinsurance Recoverable | 4.6 | |||
Total gross liability for unpaid claims and claim adjustment expense | 1,373.2 | 1,135.8 | 1,040.2 | 957.8 |
Medicare Health Plans | ||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 721.6 | |||
Total gross liability for unpaid claims and claim adjustment expense | 722.5 | 510 | 473.9 | 461.3 |
Medicare PDPs | ||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 50.6 | |||
Total gross liability for unpaid claims and claim adjustment expense | $ 50.6 | $ 44.7 | $ 21.9 | $ 64.7 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Narrative (Details) - Derivative Lawsuits $ in Millions | 1 Months Ended | 12 Months Ended | 132 Months Ended | ||||||||||
Dec. 31, 2017USD ($)action | Jun. 30, 2017USD ($)employee | Apr. 30, 2017USD ($) | Oct. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2017USD ($)action | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2017USD ($)action | Dec. 31, 2017associate | Dec. 31, 2017former_officer | Dec. 31, 2017employee | Jun. 30, 2013employee | |
Loss Contingencies [Line Items] | |||||||||||||
Number of former officers being pursued in an action filed by the entity | 3 | 3 | |||||||||||
Number of former associates being pursued in action filed by entity | associate | 2 | ||||||||||||
Number of former employees found guilty | employee | 4 | 4 | |||||||||||
Number of former employees receiving notices of cross appeal | employee | 3 | ||||||||||||
Number of former employees being pursued in action filed by entity | employee | 5 | ||||||||||||
Number of actions filed in the federal and state courts between October 2007 and January 2008 | action | 6 | 6 | 6 | ||||||||||
Legal fees | $ 6.4 | $ 18.7 | $ 25.2 | $ 236.2 | |||||||||
Mr. Farha Case | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Settlement payment received | $ 7.5 | $ 7.5 | |||||||||||
Maximum legal fee obligation | $ 7.5 | ||||||||||||
Mr. Behrens Case | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Settlement payment received | 1.5 | $ 1.5 | |||||||||||
Maximum legal fee obligation | $ 1.5 | ||||||||||||
Mr. Bereday Case | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Settlement payment received | $ 4.5 | ||||||||||||
Maximum legal fee obligation | $ 2.5 | ||||||||||||
United States Securities And Exchange Commission | Mr. Farha Case | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Settlement payment received | 12.5 | ||||||||||||
United States Securities And Exchange Commission | Mr. Behrens Case | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Settlement payment received | $ 4.5 |
COMMITMENTS AND CONTINGENCIES91
COMMITMENTS AND CONTINGENCIES - Schedule of Future Minimum Lease Payments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Rental expense | $ 35.1 | $ 30.7 | $ 30 |
Minimum Lease Payments | |||
2,018 | 31.1 | ||
2,019 | 26.2 | ||
2,020 | 24.1 | ||
2,021 | 21.3 | ||
2,022 | 17.7 | ||
2023 and thereafter | 50.1 | ||
Total | $ 170.5 |
INCOME TAXES - Components of In
INCOME TAXES - Components of Income Tax Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Current: | |||
Federal | $ 120.8 | $ 251.6 | $ 161.2 |
State | 14.2 | 24.2 | 11.3 |
Total current | 135 | 275.8 | 172.5 |
Deferred: | |||
Federal | (48.3) | 12.8 | 42.9 |
State | 1.2 | (1.2) | 2.1 |
Total deferred | (47.1) | 11.6 | 45 |
Total income tax expense | $ 87.9 | $ 287.4 | $ 217.5 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of Income Tax Effective Rate to Statutory Rate (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of income tax at the effective rate to income tax at the statutory federal rate | |||
Income tax expense at statutory federal rate | $ 161.6 | $ 185.3 | $ 117.6 |
Adjustments resulting from: | |||
State income tax, net of federal benefit | 11.7 | 14.4 | 9.5 |
Unrecognized tax benefits | (23.5) | 9.5 | 3.5 |
Tax rate change | (56.1) | 0 | 0 |
Non-deductible ACA industry fees | 0 | 79.9 | 79.6 |
Other, net | (5.8) | (1.7) | 7.3 |
Total income tax expense | $ 87.9 | $ 287.4 | $ 217.5 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Apr. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||||
Statutory federal income tax rate | 35.00% | |||
Effective income tax rate | 19.00% | 54.30% | 64.70% | |
One-time, non-cash decrease to income tax expense | $ 56.1 | |||
Effective tax rate as a result of the Tax Cuts and Jobs Act 2017 | 23.40% | 37.00% | ||
Valuation allowance adjustments resulting from the Tax Cuts and Jobs Act of 2017 | $ 34.9 | $ 39.3 | ||
Previously unrecognized tax benefits recognized | $ 4.9 | 23.5 | $ 2.6 | |
Previously unrecognized tax benefits recognized, tax settlement | $ 18.6 |
INCOME TAXES - Deferred Tax Ass
INCOME TAXES - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets | ||
Net operating losses | $ 24.7 | $ 11.2 |
Foreign tax credits | 22 | 0 |
Medical and other benefits discounting | 18.7 | 15.2 |
Medical and other benefits discounting | 14.8 | 19.2 |
Allowance for doubtful accounts | 14.1 | 15.5 |
Unearned premium discounting | 3.1 | 0.2 |
Capital losses | 9.9 | 0 |
Premium deficiency reserve | 10.7 | 0 |
Accrued expenses and other | 5.6 | 11.3 |
Total deferred tax assets | 123.6 | 72.6 |
Valuation allowance | (48.5) | (8.8) |
Total deferred tax assets | 75.1 | 63.8 |
Deferred tax liabilities | ||
Goodwill and other intangible assets | (101.1) | (47.3) |
Software development costs and property and equipment | (56.7) | (68) |
Prepaid assets | (10.7) | (11.9) |
Total deferred tax liabilities | (168.5) | (127.2) |
Net deferred tax liability | $ (93.4) | $ (63.4) |
INCOME TAXES - Reconciliation96
INCOME TAXES - Reconciliation of Beginning and Ending Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |
Apr. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of the beginning and ending amount of unrecognized tax benefits | |||
Unrecognized tax benefits, beginning of period | $ 23.5 | $ 14 | |
Increases: | |||
Prior year tax positions | 0 | 0.7 | |
Current year tax positions | 3.5 | 11.4 | |
Decreases: | |||
Prior year tax positions | $ (4.9) | (23.5) | (2.6) |
Unrecognized tax benefits, end of period | $ 3.5 | $ 23.5 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 59.8 | $ 35.5 | $ 20.2 |
Common stock price (in dollars per share) | $ 201.11 | $ 137.08 | |
Unrecognized compensation cost | $ 63.1 | ||
Weighted-average period over which compensation costs are expected to be recognized | 1 year 9 months 18 days | ||
Weighted-average grant-date fair value of shares granted (in dollars per share) | $ 139.49 | $ 100.07 | $ 97.69 |
Total fair value of shares vested | $ 49 | ||
Performance Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized compensation cost | $ 19.9 | ||
Weighted-average grant-date fair value of shares granted (in dollars per share) | $ 146.98 |
STOCK-BASED COMPENSATION - Awar
STOCK-BASED COMPENSATION - Award Activity (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Weighted Average Grant-Date Fair Value | |||
Granted (in dollars per share) | $ 139.49 | $ 100.07 | $ 97.69 |
Restricted Stock Units | |||
Equity Instruments | |||
Outstanding at beginning of period (in shares) | 275,926 | ||
Granted (in shares) | 147,884 | ||
Vested (in shares) | (134,641) | ||
Forfeited and expired (in shares) | (14,526) | ||
Outstanding at end of period (in shares) | 274,643 | 275,926 | |
Weighted Average Grant-Date Fair Value | |||
Outstanding as of beginning of period (in dollars per share) | $ 90.08 | ||
Granted (in dollars per share) | 144.25 | ||
Vested (in dollars per share) | 85.14 | ||
Forfeited and expired (in dollars per share) | 107.16 | ||
Outstanding at end of period (in dollars per share) | $ 120.73 | $ 90.08 | |
Performance Stock Units | |||
Equity Instruments | |||
Outstanding at beginning of period (in shares) | 471,852 | ||
Granted (in shares) | 234,609 | ||
Vested (in shares) | (126,505) | ||
Forfeited and expired (in shares) | (27,338) | ||
Outstanding at end of period (in shares) | 552,618 | 471,852 | |
Weighted Average Grant-Date Fair Value | |||
Outstanding as of beginning of period (in dollars per share) | $ 89.68 | ||
Granted (in dollars per share) | 146.98 | ||
Vested (in dollars per share) | 63.93 | ||
Forfeited and expired (in dollars per share) | 109.84 | ||
Outstanding at end of period (in dollars per share) | $ 118.64 | $ 89.68 | |
Market Stock Units | |||
Equity Instruments | |||
Outstanding at beginning of period (in shares) | 85,910 | ||
Granted (in shares) | 36,009 | ||
Vested (in shares) | (74,471) | ||
Forfeited and expired (in shares) | (2,218) | ||
Outstanding at end of period (in shares) | 45,230 | 85,910 | |
Weighted Average Grant-Date Fair Value | |||
Outstanding as of beginning of period (in dollars per share) | $ 103.83 | ||
Granted (in dollars per share) | 71.50 | ||
Vested (in dollars per share) | 71.90 | ||
Forfeited and expired (in dollars per share) | 130.74 | ||
Outstanding at end of period (in dollars per share) | $ 130.01 | $ 103.83 |
RELATED-PARTY TRANSACTIONS (Det
RELATED-PARTY TRANSACTIONS (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($) | |
The Graham Companies | |
Related Party Transaction [Line Items] | |
Rental expenses, related parties | $ 0.2 |
REGULATORY CAPITAL AND DIVID100
REGULATORY CAPITAL AND DIVIDEND RESTRICTIONS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Minimum capital and surplus requirement | $ 1,200 | $ 871.8 | |
Combined statutory capital and surplus | 2,000 | 1,700 | |
Dividends received from regulated subsidiaries | 335 | $ 241 | $ 152 |
Subsidiaries | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Dividends paid without regulatory approval | 150 | ||
Dividends paid with regulatory approval | 185 | ||
Amount of dividends that may be paid through the end of 2018 without prior approval by regulatory authorities | $ 201.7 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Retirement Benefits [Abstract] | |||
Matching contribution expense | $ 13.9 | $ 10.8 | $ 9.6 |
DISCONTINUED OPERATIONS (Detail
DISCONTINUED OPERATIONS (Details) - Traditional Insurance Business - Discontinued Operations, Held-for-sale $ in Millions | Aug. 03, 2016subsidiary | Dec. 31, 2017USD ($) | Apr. 28, 2017USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Life insurance subsidiaries disposed by sale | subsidiary | 2 | ||
Assets | |||
Cash and cash equivalents | $ 1.3 | $ 0.8 | |
Investments | 46.5 | 47.7 | |
Reinsurance recoverables | 166.9 | 170.4 | |
Other assets | 0.5 | 0.7 | |
Total Assets | 215.2 | 219.6 | |
Liabilities | |||
Reserves and other policy liabilities | 148.6 | 153.3 | |
Other liabilities | 66.6 | 65.4 | |
Total liabilities | $ 215.2 | $ 218.7 |
QUARTERLY FINANCIAL INFORMAT103
QUARTERLY FINANCIAL INFORMATION (Details) $ / shares in Units, member in Thousands, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017USD ($)member$ / shares | Sep. 30, 2017USD ($)member$ / shares | Jun. 30, 2017USD ($)member$ / shares | Mar. 31, 2017USD ($)member$ / shares | Dec. 31, 2016USD ($)member$ / shares | Sep. 30, 2016USD ($)member$ / shares | Jun. 30, 2016USD ($)member$ / shares | Mar. 31, 2016USD ($)member$ / shares | Dec. 31, 2017USD ($)member$ / shares | Dec. 31, 2016USD ($)member$ / shares | Dec. 31, 2015USD ($)$ / shares | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Total revenues | $ 4,345.1 | $ 4,402.9 | $ 4,305 | $ 3,954.2 | $ 3,518.2 | $ 3,584 | $ 3,594.4 | $ 3,540.5 | $ 17,007.2 | $ 14,237.1 | $ 13,890.2 |
Gross margin | 522.3 | 650.2 | 574.6 | 468.4 | 459.7 | 481.5 | 544.8 | 417.1 | |||
Income from operations | 12 | 211.9 | 141.9 | 103.2 | 469 | 529.5 | 336.1 | ||||
Income before income taxes | 8.6 | 235.1 | 114.7 | 103.2 | 81 | 152.9 | 206.7 | 88.9 | 461.6 | 529.5 | 336.1 |
Net income | $ 60.7 | $ 171.6 | $ 74.1 | $ 67.3 | $ 44.9 | $ 68.6 | $ 90.8 | $ 37.8 | $ 373.7 | $ 242.1 | $ 118.6 |
Net income per share - basic (in dollars per share) | $ / shares | $ 1.36 | $ 3.86 | $ 1.67 | $ 1.52 | $ 1.01 | $ 1.55 | $ 2.05 | $ 0.86 | $ 8.40 | $ 5.47 | $ 2.69 |
Net income per share - diluted (in dollars per share) | $ / shares | $ 1.34 | $ 3.82 | $ 1.65 | $ 1.50 | $ 1 | $ 1.54 | $ 2.04 | $ 0.85 | $ 8.31 | $ 5.43 | $ 2.67 |
Period end membership | member | 4,371 | 4,349 | 4,428 | 4,078 | 3,898 | 3,776 | 3,769 | 3,730 | 4,371 | 3,898 |
Schedule I CONDENSED FINANCI104
Schedule I CONDENSED FINANCIAL INFORMATION OF REGISTRANT - Statements of Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues: | |||||||||||
Investment and other income | $ 46.9 | $ 16.2 | $ 15.4 | ||||||||
Total revenues | $ 4,345.1 | $ 4,402.9 | $ 4,305 | $ 3,954.2 | $ 3,518.2 | $ 3,584 | $ 3,594.4 | $ 3,540.5 | 17,007.2 | 14,237.1 | 13,890.2 |
Expenses: | |||||||||||
Selling, general and administrative | 1,484.7 | 1,133.1 | 1,132.9 | ||||||||
Interest expense | 68.5 | 59.1 | 54.2 | ||||||||
Total expenses, net | 16,538.2 | 13,707.6 | 13,554.1 | ||||||||
Income (loss) from operations | 12 | 211.9 | 141.9 | 103.2 | 469 | 529.5 | 336.1 | ||||
Loss on extinguishment of debt | 26.1 | 0 | 0 | ||||||||
Income before income taxes and equity in earnings of unconsolidated subsidiaries | 442.9 | 529.5 | 336.1 | ||||||||
Income before income taxes | 8.6 | 235.1 | 114.7 | 103.2 | 81 | 152.9 | 206.7 | 88.9 | 461.6 | 529.5 | 336.1 |
Income tax benefit | (87.9) | (287.4) | (217.5) | ||||||||
Net income | $ 60.7 | $ 171.6 | $ 74.1 | $ 67.3 | $ 44.9 | $ 68.6 | $ 90.8 | $ 37.8 | 373.7 | 242.1 | 118.6 |
Other comprehensive (loss) income, before tax: | |||||||||||
Change in net unrealized gains and losses on available-for-sale securities | (2.2) | 1.8 | (1.9) | ||||||||
Income tax (benefit) expense related to other comprehensive income | (0.5) | 0.6 | (0.3) | ||||||||
Other comprehensive income (loss), net of tax | (1.7) | 1.2 | (1.6) | ||||||||
Comprehensive income | 372 | 243.3 | 117 | ||||||||
Parent Company | |||||||||||
Revenues: | |||||||||||
Investment and other income | 0.3 | 0.1 | 0.5 | ||||||||
Total revenues | 0.3 | 0.1 | 0.5 | ||||||||
Expenses: | |||||||||||
Selling, general and administrative | 63.4 | 37.5 | 22.1 | ||||||||
Interest expense | 68.5 | 59.1 | 54.2 | ||||||||
Total expenses, net | 131.9 | 96.6 | 76.3 | ||||||||
Income (loss) from operations | (131.6) | (96.5) | (75.8) | ||||||||
Loss on extinguishment of debt | 26.1 | 0 | 0 | ||||||||
Income before income taxes and equity in earnings of unconsolidated subsidiaries | (157.7) | (96.5) | (75.8) | ||||||||
Income tax benefit | 69.7 | 30.8 | 23.9 | ||||||||
Loss before equity in subsidiaries | (88) | (65.7) | (51.9) | ||||||||
Equity in earnings of subsidiaries | 461.7 | 307.8 | 170.5 | ||||||||
Net income | 373.7 | 242.1 | 118.6 | ||||||||
Other comprehensive (loss) income, before tax: | |||||||||||
Change in net unrealized gains and losses on available-for-sale securities | (2.2) | 1.8 | (1.9) | ||||||||
Income tax (benefit) expense related to other comprehensive income | (0.5) | 0.6 | (0.3) | ||||||||
Other comprehensive income (loss), net of tax | (1.7) | 1.2 | (1.6) | ||||||||
Comprehensive income | $ 372 | $ 243.3 | $ 117 |
Schedule I CONDENSED FINANCI105
Schedule I CONDENSED FINANCIAL INFORMATION OF REGISTRANT - Balance Sheets (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Current Assets: | |||||
Cash and cash equivalents | $ 4,198.6 | $ 3,961.4 | $ 2,407 | $ 1,313.5 | |
Short-term investments | 469.5 | 124.2 | |||
Total current assets | 5,819.2 | 5,119.6 | |||
Total Assets | 8,364.6 | 6,152.8 | |||
Current Liabilities: | |||||
Total current liabilities | 4,443.2 | 3,055.8 | |||
Long-term debt | 1,182.4 | 997.6 | |||
Other liabilities | 13.7 | 35.9 | |||
Total Liabilities | 5,947.9 | 4,152.7 | |||
Commitments and contingencies | 0 | 0 | |||
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, 44,522,988 and 44,293,881 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively) | 0.4 | 0.4 | |||
Paid-in capital | 591.5 | 546.9 | |||
Retained earnings | 1,827.5 | 1,453.8 | |||
Accumulated other comprehensive loss | (2.7) | (1) | |||
Total Stockholders' Equity | 2,416.7 | 2,000.1 | 1,728.3 | 1,595.9 | |
Total Liabilities and Stockholders' Equity | 8,364.6 | 6,152.8 | |||
Parent Company | |||||
Current Assets: | |||||
Cash and cash equivalents | $ 31.8 | $ 31.8 | 1.8 | $ 108.6 | $ 1.4 |
Short-term investments | 2.1 | 2.2 | |||
Taxes receivable | 16.4 | 2.5 | |||
Affiliate receivables and other current assets | 1,050.3 | 950.1 | |||
Total current assets | 1,100.6 | 956.6 | |||
Deferred tax asset | 5.4 | 15.5 | |||
Investment in subsidiaries | 2,509.6 | 2,048.4 | |||
Total Assets | 3,615.6 | 3,020.5 | |||
Current Liabilities: | |||||
Accrued expenses and other current liabilities | 16.5 | 6.7 | |||
Total current liabilities | 16.5 | 6.7 | |||
Long-term debt | 1,182.4 | 997.6 | |||
Other liabilities | 0 | 16.1 | |||
Total Liabilities | 1,198.9 | 1,020.4 | |||
Commitments and contingencies | 0 | 0 | |||
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, 44,522,988 and 44,293,881 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively) | 0.4 | 0.4 | |||
Paid-in capital | 591.5 | 546.9 | |||
Retained earnings | 1,827.5 | 1,453.8 | |||
Accumulated other comprehensive loss | (2.7) | (1) | |||
Total Stockholders' Equity | 2,416.7 | 2,000.1 | |||
Total Liabilities and Stockholders' Equity | $ 3,615.6 | $ 3,020.5 |
Schedule I CONDENSED FINANCI106
Schedule I CONDENSED FINANCIAL INFORMATION OF REGISTRANT - Balance Sheets (Parenthetical) (Details) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Condensed Financial Statements, Captions [Line Items] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 20,000,000 | 20,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, issued (in shares) | 44,522,988 | 44,293,881 |
Common stock, outstanding (in shares) | 44,522,988 | 44,293,881 |
Parent Company | ||
Condensed Financial Statements, Captions [Line Items] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 20,000,000 | 20,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, issued (in shares) | 44,512,477 | 44,293,881 |
Common stock, outstanding (in shares) | 44,512,477 | 44,293,881 |
Schedule I CONDENSED FINANCI107
Schedule I CONDENSED FINANCIAL INFORMATION OF REGISTRANT - Statements of Cash Flows (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Condensed Financial Statements, Captions [Line Items] | |||
Net cash (used in) provided by operating activities | $ 1,050 | $ 748.3 | $ 712.6 |
Cash used in investing activities: | |||
Net cash used in investing activities | (1,641) | (27) | (124.2) |
Cash provided by financing activities: | |||
Proceeds from debt, net of financing costs paid | 1,182.2 | 196.9 | 308.9 |
Repurchase and retirement of shares to satisfy tax withholding requirements | (15.2) | (7) | (7) |
Payments on debt | (1,026.1) | (400) | 0 |
Other, net | 15.7 | 12.1 | 2.1 |
Net cash provided by (used in) financing activities | 828.2 | 833.1 | 505.1 |
Cash and cash equivalents: | |||
Increase (decrease) in cash and cash equivalents | 237.2 | 1,554.4 | 1,093.5 |
Balance at beginning of period | 3,961.4 | 2,407 | 1,313.5 |
Balance at end of period | 4,198.6 | 3,961.4 | 2,407 |
Parent Company | |||
Condensed Financial Statements, Captions [Line Items] | |||
Net cash (used in) provided by operating activities | (9.6) | 155.8 | 146.5 |
Cash used in investing activities: | |||
Net proceeds (payments) from purchases and sales and maturities of investments | (1.6) | 1.2 | 33.1 |
Payments to subsidiaries, net | (99.7) | (53.7) | (376.5) |
Net cash used in investing activities | (101.3) | (52.5) | (343.4) |
Cash provided by financing activities: | |||
Proceeds from debt, net of financing costs paid | 1,182.2 | 196.9 | 308.9 |
Repurchase and retirement of shares to satisfy tax withholding requirements | (15.2) | (7) | (7) |
Payments on debt | (1,026.1) | (400) | 0 |
Other, net | 0 | 0 | 2.2 |
Net cash provided by (used in) financing activities | 140.9 | (210.1) | 304.1 |
Cash and cash equivalents: | |||
Increase (decrease) in cash and cash equivalents | 30 | (106.8) | 107.2 |
Balance at beginning of period | 1.8 | 108.6 | 1.4 |
Balance at end of period | $ 31.8 | $ 1.8 | $ 108.6 |
Schedule II Valuation and Qu108
Schedule II Valuation and Qualifying Accounts (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Allowance for uncollectible accounts: | |||
Balance at Beginning of Period | $ 26.2 | $ 23.3 | $ 22.5 |
Charged to Costs and Expenses | 8.5 | 10.1 | 14.6 |
Write Offs | 14.9 | 7.2 | 13.8 |
Balance at End of Period | 19.8 | 26.2 | 23.3 |
Premiums receivable | |||
Allowance for uncollectible accounts: | |||
Balance at Beginning of Period | 22.7 | 19.9 | 21.1 |
Charged to Costs and Expenses | 8.5 | 10 | 12.6 |
Write Offs | 14.9 | 7.2 | 13.8 |
Balance at End of Period | 16.3 | 22.7 | 19.9 |
Medical advances | |||
Allowance for uncollectible accounts: | |||
Balance at Beginning of Period | 3.5 | 3.4 | 1.4 |
Charged to Costs and Expenses | 0 | 0.1 | 2 |
Write Offs | 0 | 0 | 0 |
Balance at End of Period | $ 3.5 | $ 3.5 | $ 3.4 |