Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 10, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | Change Healthcare Holdings, Inc. | |
Entity Central Index Key | 1,444,598 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 100 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 47,893 | $ 66,655 |
Accounts receivable, net of allowance for doubtful accounts of $4,512 and $3,379 at March 31, 2016 and December 31, 2015, respectively | 315,351 | 280,858 |
Prepaid expenses and other current assets | 46,963 | 35,413 |
Total current assets | 410,207 | 382,926 |
Property and equipment, net | 238,152 | 244,145 |
Goodwill | 2,230,410 | 2,230,100 |
Intangible assets, net | 1,673,028 | 1,707,863 |
Other assets, net | 8,190 | 8,500 |
Total assets | 4,559,987 | 4,573,534 |
Current liabilities: | ||
Accounts payable | 33,352 | 27,950 |
Accrued expenses | 173,779 | 167,169 |
Deferred revenues | 17,756 | 12,943 |
Current portion of long-term debt | 27,601 | 32,775 |
Total current liabilities | 252,488 | 240,837 |
Long-term debt, excluding current portion | 2,739,626 | 2,741,178 |
Deferred income tax liabilities | 415,556 | 430,383 |
Tax receivable agreement obligations to related parties | 176,728 | 173,493 |
Other long-term liabilities | $ 13,312 | $ 11,954 |
Commitments and contingencies | ||
Equity: | ||
Common stock (par value, $.01), 100 shares authorized and outstanding at March 31, 2016 and December 31, 2015, respectively | ||
Additional paid-in capital | $ 1,322,409 | $ 1,319,754 |
Accumulated other comprehensive income (loss) | (3,267) | (2,656) |
Accumulated deficit | (356,865) | (341,409) |
Total equity | 962,277 | 975,689 |
Total liabilities and equity | $ 4,559,987 | $ 4,573,534 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Condensed Consolidated Balance Sheets [Abstract] | ||
Allowance for doubtful accounts | $ 4,512 | $ 3,379 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100 | 100 |
Common stock, shares outstanding | 100 | 100 |
Condensed Consolidated Statemen
Condensed Consolidated Statements Of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenue: | ||
Solutions revenue | $ 311,497 | $ 258,412 |
Postage revenue | 82,711 | 87,283 |
Total revenue | 394,208 | 345,695 |
Costs and expenses: | ||
Cost of operations (exclusive of depreciation and amortization below) | 146,488 | 121,187 |
Development and engineering | 14,792 | 10,825 |
Sales, marketing, general and administrative | 67,628 | 48,262 |
Customer postage | 82,711 | 87,283 |
Depreciation and amortization | 61,127 | 48,114 |
Accretion | 3,235 | 4,979 |
Impairment of long-lived assets | 66 | 839 |
Operating income (loss) | 18,161 | 24,206 |
Interest expense, net | 46,622 | 38,008 |
Contingent consideration | (2,015) | |
Income (loss) before income tax provision (benefit) | (28,461) | (11,787) |
Income tax provision (benefit) | (13,005) | (6,040) |
Net income (loss) | $ (15,456) | $ (5,747) |
Condensed Consolidated Stateme5
Condensed Consolidated Statements Of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Condensed Consolidated Statements Of Comprehensive Income (Loss) [Abstract] | ||
Net income (loss) | $ (15,456) | $ (5,747) |
Other comprehensive income (loss): | ||
Changes in fair value of interest rate swap, net of taxes | (929) | (560) |
Foreign currency translation adjustment | 318 | (275) |
Other comprehensive income (loss) | (611) | (835) |
Total comprehensive income (loss) | $ (16,067) | $ (6,582) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements Of Equity - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Total |
Balance at Dec. 31, 2014 | $ 1,149,360 | $ (245,340) | $ (1,955) | $ 902,065 | |
Balance, shares at Dec. 31, 2014 | 100 | ||||
Equity compensation expense | 2,186 | 2,186 | |||
Issuance of shares in connection with equity compensation plans, net of taxes | 304 | 304 | |||
Repurchase of Parent common stock | (2,471) | (2,471) | |||
Capital contribution from Parent | 500 | 500 | |||
Net income (loss) | (5,747) | (5,747) | |||
Foreign currency translation adjustment | (275) | (275) | |||
Change in fair value of interest rate swap, net of taxes | (560) | (560) | |||
Balance at Mar. 31, 2015 | 1,149,879 | (251,087) | (2,790) | 896,002 | |
Balance, shares at Mar. 31, 2015 | 100 | ||||
Balance at Dec. 31, 2015 | 1,319,754 | (341,409) | (2,656) | 975,689 | |
Balance, shares at Dec. 31, 2015 | 100 | ||||
Equity compensation expense | 2,690 | 2,690 | |||
Repurchase of Parent common stock | (35) | (35) | |||
Net income (loss) | (15,456) | (15,456) | |||
Foreign currency translation adjustment | 318 | 318 | |||
Change in fair value of interest rate swap, net of taxes | (929) | (929) | |||
Balance at Mar. 31, 2016 | $ 1,322,409 | $ (356,865) | $ (3,267) | $ 962,277 | |
Balance, shares at Mar. 31, 2016 | 100 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Operating activities | ||
Net income (loss) | $ (15,456) | $ (5,747) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 61,127 | 48,114 |
Accretion | 3,235 | 4,979 |
Equity compensation | 2,690 | 2,186 |
Deferred income tax expense (benefit) | (14,112) | (7,149) |
Amortization of debt discount and issuance costs | 3,358 | 2,270 |
Contingent consideration | (2,015) | |
Impairment of long-lived assets | 66 | 839 |
Other | 44 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (34,959) | 5,254 |
Prepaid expenses and other | (11,132) | (5,845) |
Accounts payable | 2,674 | (3,653) |
Accrued expenses, deferred revenue and other liabilities | 14,629 | (5,535) |
Net cash provided by (used in) operating activities | 12,164 | 33,698 |
Investing activities | ||
Purchases of property and equipment | (14,204) | (12,727) |
Payments for acquisitions, net of cash acquired | (20) | |
Purchases of technology-based intangible assets | (6,761) | (35) |
Net cash provided by (used in) investing activities | (20,965) | (12,782) |
Financing activities | ||
Payments on Term Loan Facility | (4,630) | (3,620) |
Payments of deferred financing obligations | (5,296) | (4,680) |
Repurchase of Parent common stock | (35) | (2,438) |
Capital contribution from Investor Group and management | 804 | |
Payment of contingent consideration | (5,553) | |
Net cash provided by (used in) financing activities | (9,961) | (15,487) |
Net increase (decrease) in cash and cash equivalents | (18,762) | 5,429 |
Cash and cash equivalents at beginning of period | 66,655 | 82,306 |
Cash and cash equivalents at end of period | $ 47,893 | $ 87,735 |
Nature Of Business And Organiza
Nature Of Business And Organization | 3 Months Ended |
Mar. 31, 2016 | |
Nature Of Business And Organization [Abstract] | |
Nature Of Business And Organization | 1. Nature of Business and Organization Nature of Business Change Healthcare Holdings, Inc. (the “Company”), through its subsidiaries, is a provider of software and analytics, network solutions and technology-enabled services that optimize communications, payments and actionable insights designed to enable smarter healthcare. The Company’s integrated capabilities enable its customers to exchange mission critical information, optimize revenue opportunities, control costs, increase cash flows and efficiently manage complex work flows. Organization The Company was formed as a Delaware limited liability company in September 2006 and converted into a Delaware corporation in September 2008 in anticipation of the Company’s August 2009 initial public offering (the “IPO”). On November 2, 2011, pursuant to an Agreement and Plan of Merger among the Company, Change Healthcare, Inc. (“Parent”) and Beagle Acquisition Corp. (“Merger Sub”), Merger Sub merged with and into the Company with the Company surviving the merger (the “2011 Merger”). Subsequent to the 2011 Merger, the Company became an indirect wholly-owned subsidiary of Parent, which is controlled by affiliates of The Blackstone Group L.P. (“Blackstone”) . |
Basis Of Presentation
Basis Of Presentation | 3 Months Ended |
Mar. 31, 2016 | |
Basis Of Presentation [Abstract] | |
Basis Of Presentation | 2. Basis of Presentation Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (“SEC”) Guidelines, Rules and Regulations (“Regulation S-X”) and, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of results for the unaudited interim periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. The results of operations for the interim period are not necessarily indicative of the results to be obtained for the full fiscal year. All material intercompany accounts and transactions have been eliminated in the unaudited condensed consolidated financial statements. Reclassifications Certain reclassifications have been made to the prior period financial statements to conform to t he current period presentation. Accounting Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company bases its estimates on historical experience, current business factors and various other assumptions that the Company believes are necessary to consider in order to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses and disclosure of contingent assets and liabilities. The Company is subject to uncertainties such as the impact of future events, economic, environmental and political factors and changes in the Company’s business environment; therefore, actual results could differ materially from these estimates. Accordingly, the accounting estimates used in the preparation of the Company’s financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in the reported results of operations; and if material, the effects of changes in estimates are disclosed in the notes to the consolidated financial statements. Estimates and assumptions by management affect: the allowance for doubtful accounts; the fair value assigned to assets acquired and liabilities assumed in business combinations; tax receivable agreement obligations; the fair value of interest rate swap obligations; contingent consideration; loss accruals; the carrying value of long-lived assets (including goodwill and intangible assets); the amortization period of long-lived assets (excluding goodwill); the carrying value, capitalization and amortization of software development costs; the provision and benefit for income taxes and related deferred tax accounts; certain accrued expenses; revenue recognition; contingencies; and the value attributed to equity awards. Business Combinations The preliminary values of the consideration transferred, assets acquired and liabilities assumed in the Altegra Health , Inc. (“Altegra Health”) acquisition, including the related tax effects, are subject to change upon the resolution of pre-acquisition contingencies and working capital settlement. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, which replaces most prior general and industry specific revenue recognition guidance with a principles-based comprehensive revenue recognition framework. Under this revised framework, a company will recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. This update is effective for fiscal years and interim periods beginning in those years after December 15, 2017. Early adoption is permitted in years beginning after December 15, 2016. Upon adoption, a company may elect to either retrospectively restate each prior reporting period or reflect the cumulative effect of initially applying the update with an adjustment to retained earnings at the date of adoption . While the Company cannot yet determine the transition method or the effect the adoption of this update will have on its financial statements, the Company believes that significant changes to its accounting policies, estimation processes, internal controls and information systems will be necessary to comply with this update. Such changes are expected to be necessary to accumulate information and data required to estimate the transaction prices in our contracts, and to allocate such transaction prices to the specific performance obligations in our contracts, as a result of variability from volume-based pricing, price increases, contingent fees, service level agreements and other arrangements. In January 2016 , the Company adopted FASB ASU No. 2014-12, which clarifies, in the context of share-based payment awards, that a performance target that affects vesting and could be achieved after the requisite service period has been rendered should be treated as a performance condition. Prior to this update, because there was no explicit guidance, there was diversity in practice among companies. The Company does not expect the adoption of this update to have a material effect on its consolidated financial statements . In February 2016, the FASB issued ASU No. 2016-02, which generally requires that all lease obligations be recognized on the balance sheet at the present value of the remaining lease payments with a corresponding lease asset. This update is scheduled to be effective for fiscal years and interim periods beginning in those years after December 15, 2018. The Company is currently assessing the potential effects this update may have on its consolidated financial statements. In March 2016 , the FASB issued ASU No. 2016-09 , which generally requires that all income tax effects of share-based payment awards be recognized in the statement of operations when the awards vest or are settled . It also will allow an employer to repurchase more of an employee’s shares than it can today for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur. This update is scheduled to be effective for fiscal years and interim periods beginning in those years after December 15, 2017, with early adoption permitted. The Company is currently assessing the potential effects this update may have on its consolidated financial statements . |
Concentration Of Credit Risk
Concentration Of Credit Risk | 3 Months Ended |
Mar. 31, 2016 | |
Concentration Of Credit Risk [Abstract] | |
Concentration Of Credit Risk | 3. Concentration of Credit Risk The Company’s revenue is primarily generated in the United States. Changes in economic conditions, government regulations or demographic trends, among other matters, in the United States could adversely affect the Company’s revenue and results of operations. The Company maintains its cash and cash equivalent balances in either insured depository accounts or money market mutual funds. The money market mutual funds are limited to investments in low-risk securities such as United States or government agency obligations, or repurchase agreements secured by such securities. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2016 | |
Long-Term Debt [Abstract] | |
Long-Term Debt | ; 4 . Long-Term Debt T he Company ’s long-term indebtedness is comprised of a senior secured term loan facility ( as amended, the “Term Loan Facility”), a revolving credit facility (the “Revolving Facility”; together with the Term Loan Facility, the “Senior Credit Facilities”), 11% senior n otes due 2019 (the “2019 Notes”), 11.25% senior notes due 2020 (the “2020 Notes”) and 6% senior notes due 2021 (the “2021 Notes” ; together with the 2019 Notes and 2020 Notes , the “Senior Notes”). Long-term debt as of March 31, 2016 and Dec ember 31, 2015 , consisted of the following: March 31, December 31, 2016 2015 Senior Credit Facilities $1,696 million Senior Secured Term Loan facility, due November 2, 2018 , net of unamortized discount of $21,528 and $23,511 at March 31, 2016 and December 31, 2015, respectively (effective interest rate of 4.29% ) $ 1,619,734 $ 1,621,981 $160 million Senior Secured Term Loan facility, due November 2, 2018 , net of unamortized discount of $3,054 and $3,334 at March 31, 2016 and December 31, 2015, respectively (effective interest rate of 4.54% ) 154,546 154,666 $125 million Senior Secured Revolving Credit facility, expiring on November 2, 2016 and bearing interest at a variable base rate plus a spread rate — — Senior Notes $375 million 11% Senior Notes due December 31, 2019 , net of unamortized discount of $5,984 and $6,299 at March 31, 2016 and December 31, 2015, respectively (effective interest rate of 11.53% ) 369,016 368,701 $375 million 11.25% Senior Notes due December 31, 2020 , net of unamortized discount of $8,156 and $8,471 at March 31, 2016 and December 31, 2015, respectively (effective interest rate of 11.85% ) 366,844 366,529 $250 million 6% Senior Notes due February 15, 2021 , net of unamortized discount of $5,906 and $6,161 at March 31, 2016 and December 31, 2015, respectively (effective interest rate of 6.57% ) 244,094 243,839 Obligation under data sublicense agreement 10,810 10,810 Other 2,183 7,427 Less current portion (27,601) (32,775) Long-term debt $ 2,739,626 $ 2,741,178 Senior Credit Facilities The credit agreement governing the Senior Credit Facilities (the “Senior Credit Agreement”) provides that, subject to certain conditions, the Company may request additional tranches of term loans, increase commitments under the Revolving Facility or the Term Loan Facility or add one or more incremental revolving credit facility tranches (provided that the revolving credit commitments outstanding at any time have no more than three different maturity dates) in an aggregate amount not to exceed (a) $300,000 plus (b) an unlimited amount at any time, subject to compliance on a pro forma basis with a first lien net leverage ratio of no greater than 4.00 to 1 .00. Availability of such additional tranches of term loans or revolving credit facilities and/or increased commitments is subject to, among other conditions, the absence of any default under the Senior Credit Agreement and the receipt of commitments by existing or additional financial institutions. Proceeds of the Revolving Facility, including up to $30,000 in the form of borrowings on same-day notice, referred to as swingline loans, and up to $50,000 in the form of letters of credits ( $6,745 outstanding as of March 31, 2016) , are available to provide financing for working capital and general corporate purposes. Borrowings under the Senior Credit Facilities bear interest at an annual rate equal to an applicable margin plus, at the Company’s option, either (a) a base rate determined by reference to the highest of (i) the applicable prime rate, (ii) the federal funds rate plus 0.50% and (iii) a LIBOR rate determined by reference to the costs of funds for United States dollar deposits for an interest period of one month, adjusted for certain additional costs, plus 1.00% , which base rate, in the case of the Term Loan Facility only, shall be no less than 2.25% , or (b) a LIBOR rate determined by reference to the costs of funds for United States dollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs, which, in the case of the Term Loan Facility only, shall be no less than 1.25% . T he interest rate on both the Term Loan Facility and Revolving Facility is LIBOR plus 2.50% . The Term Loan Facility is subject to a LIBOR floor of 1.25% , and there is no LIBOR floor on the Revolving Facility. In August 2015, through an amendment to the Senior Credit Agreement, the Company borrowed an additional $395,000 under incremental term loan facilities on identical terms and having the same rights and obligations as the existing term loans under the Senior Credit Agreement. In addition to paying interest on outstanding principal under the Senior Credit Facilities, the Company is required to pay customary agency fees, letter of credit fees and a 0.50% commitment fee in respect of the unutilized commitments under the Revolving Facility. The Senior Credit Agreement requires that the Company prepay outstanding loans under the Term Loan Facility, subject to certain exceptions, with (a) 100% of the net cash proceeds of any incurrence of debt other than debt permitted under the Senior Credit Agreement, (b) 50% (which percentage will be reduced to 25% and 0% based on the Company’s first lien net leverage ratio) of the Company’s annual excess cash flow and (c) 100% of the net cash proceeds of certain asset sales and casualty and condemnation events, subject to reinvestment rights and certain other exceptions. The Company generally may voluntarily prepay outstanding loans under the Senior Credit Facilities at any time without premium or penalty other than breakage costs with respect to LIBOR loans . The Company is required to make quarterly payments equal to 0.25% of the aggregate principal amount of the loans under the Term Loan Facility, with the balance due and payable on November 2, 2018 . Any principal amount outstanding under the Revolving Facility is due and payable on November 2, 2016 . Certain of the Company’s United States wholly-owned restricted subsidiaries, together with the Company, are co-borrowers and jointly and severally liable for all obligations under the Senior Credit Facilities. Such obligations of the co-borrowers are unconditionally guaranteed by Change Healthcare Intermediate Holdings, Inc. (a direct wholly-owned subsidiary of Parent), the Company and each of its existing and future United States wholly-owned restricted subsidiaries (with certain exceptions including immaterial subsidiaries). These obligations are secured by a perfected security interest in substantially all of the assets of the co-borrowers and guarantors now owned or later acquired, including a pledge of all of the capital stock of the Company and its United States wholly-owned restricted subsidiaries and 65% of the capital stock of its foreign restricted subsidiaries, subject in each case to the exclusion of certain assets and additional exceptions. The Senior Credit Agreement requires the Company to comply with a maximum first lien net leverage ratio financial maintenance covenant at 5.35 to 1.00 for the remaining term of the Senior Credit Facilities, to be tested on the last day of each fiscal quarter . A breach of the first lien net leverage ratio covenant is subject to certain equity cure rights. In addition, the Senior Credit Facilities contain a number of negative covenants that, among other things and subject to certain exceptions, restrict the Company’s ability and the ability of its subsidiaries to: · incur additional indebtedness or guarantees; · incur liens; · make investments, loans and acquisitions; · consolidate or merge; · sell assets, including capital stock of subsidiaries; · pay dividends on capital stock or redeem, repurchase or retire capital stock of the Company or any restricted subsidiary; · alter the business of the Company; · amend, prepay, redeem or purchase subordinated debt; · engage in transactions with affiliates; and · enter into agreements limiting dividends and distributions of certain subsidiaries. The Senior Credit Agreement also contains certain customary representations and warranties, affirmative covenants and provisions relating to events of default (including upon change of control). As of March 31, 2016 , the Company believes it was in compliance with all of the applicable debt covenants under the Senior Credit Agreement. Senior Notes The 2019 Notes bear interest at an annual rate of 11.00% with interest payable semi-annually on June 30 and December 31 of each year. The 2019 Notes mature on December 31, 2019 . The 2020 Notes bear interest at an annual rate of 11.25% with interest payable quarterly on March 31, June 30, September 30 and December 31 of each year. The 2020 Notes mature on December 31, 2020 . The 2021 Notes bear interest at an annual rate of 6.00% with interest payable semi-annually on April 15 and October 15 of each year. The 2021 Notes mature on February 15, 2021 . The Company may redeem the 2019 Notes, the 2020 Notes or both, in whole or in part, at any time on or after December 31, 2015 at the applicable redemption price, plus accrued and unpaid interest. The Company may redeem the 2021 Notes, in whole or in part, at any time on or after August 15, 2017 at the applicable redemption price, plus accrued and unpaid interest. At any time prior to August 15, 2017 , the Company may, at its option and on one or more occasions, redeem up to 40% of the aggregate principal amount of the 2021 Notes at a redemption price equal to 100% of the aggregate principal amount, plus a premium and accrued and unpaid interest with the net cash proceeds of certain equity offerings. At any time prior to August 15, 2017, the Company may redeem the 2021 Notes, in whole or in part, at its option and on one or more occasions, at a redemption price equal to 100% of the principal amount, plus a “make-whole premium” and accrued and unpaid interest. If the Company experiences specific kinds of changes in control, it must offer to purchase the Senior Notes at a purchase price equal to 101% of the principal amount, plus accrued and unpaid interest. The Senior Notes are senior unsecured obligations and rank equally in right of payment with all of the Company’s existing and future indebtedness and senior in right of payment to all of its existing and future subordinated indebtedness. The Company’s obligations under the Senior Notes are guaranteed on a senior basis by all of its existing and subsequently acquired or organized wholly-owned United States restricted subsidiaries that guarantee the Senior Credit Facilities or its other indebtedness or indebtedness of any affiliate guarantor. The Senior Notes and the related guarantees are effectively subordinated to the Company’s existing and future secured obligations and that of its affiliate guarantors to the extent of the value of the collateral securing such obligations, and are structurally subordinated to all existing and future indebtedness and other liabilities of any of the Company’s subsidiaries that do not guarantee the Senior Notes. The indentures governing the Senior Notes (the “Indentures”) contain customary covenants that restrict the ability of the Company and its restricted subsidiaries to: · pay dividends on capital stock or redeem, repurchase or retire capital stock of the Company , subject to customary exceptions , including compliance with a fixed charge coverage ratio and subject to limitation based on net income generated during the term of the Indentures; · incur additional indebtedness or issue certain capital stock; · incur certain liens; · make investments, loans, advances and acquisitions; · consolidate, merge or transfer all or substantially all of their assets and the assets of their subsidiaries; · prepay subordinated debt; · engage in certain transactions with affiliates; and · enter into agreements restricting the subsidiaries’ ability to pay dividends. The Indentures also contain certain customary affirmative covenants and events of default. As of March 31, 2016 , the Company believes it was in compliance with all of the applicable debt covenants under the Senior Notes. Obligation Under Data Sublicense Agreement In 2009 and 2010, the Company acquired certain additional rights to specified uses of its data from the former owner of the Company’s business in order to broaden the Company’s ability to pursue business intelligence and data analytics solutions for payers and providers. The Company previously licensed exclusive rights to this data to the former owner of the Company’s business. In connection with these data rights acquisitions, the Company recorded amortizable intangible assets and corresponding obligations at inception based on the present value of the scheduled annual payments through 2018, which totaled $65,000 in the aggregate (approximately $12,700 remained payable at March 31, 2016 ). In connection with the 2011 Merger, the Company was required to adjust this obligation to its fair value. Other From time to time , the Company enters into deferred financing arrangements with certain vendors. The obligations under such arrangements are generally recorded at the present value of the scheduled payments. Such future payments totaled approximately $2,200 at March 31, 2016 . |
Interest Rate Swap
Interest Rate Swap | 3 Months Ended |
Mar. 31, 2016 | |
Interest Rate Swap [Abstract] | |
Interest Rate Swap | 5 . Interest Rate Swap Risk Management Objective of Using Derivative Financial Instrument s The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings. Cash Flow Hedges of Interest Rate Risk The Company’s objectives in using interest rate derivative financial instruments are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company pr imarily uses interest rate swap and cap agreements as part of its interest rate risk manag ement strategy. During the three months ended March 31, 2016 , such derivative financial instrument s were used to hedge the variable cash flows associated with existing variable-rate debt pursuant to the Term Loan Facility. In January 2012, the Company executed three interest rate swap agreements with an aggregate notional amount of $640,000 to reduce the variability of interest payments associated with the Term Loan Facility. The interest rate swap agreements expire in February 2017 . In March 2016, the Company executed two annuitized interest rate cap agreements with a combined notional amount of $650,000 to limit the exposure of the variable component of interest rates under the Term Loan Facility or future variable rate indebtedness to a maximum of 1.25% , beginning in March 2017 and expiring in March 2020 . A s of March 31, 2016 , the Company ’s outst anding interest rate swap agreements and interest rate cap agreements were designated as cash flow hedges of interest rate risk and determined to be highly effective . The effective portion of changes in the fair value of derivative financial instruments designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivative financial instrument s is recognized directly in earnings. Amounts reported in accumulated other comprehensive income related to derivative financial instrument s will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next twelve months, the Company estimates that an additional $2,136 will be reclassified as an increase to interest expense. The following table summarizes the fair value of the Company’s derivative financial instruments at March 31, 2016 and December 31, 201 5 : Fair Values of Derivative Financial Instruments Asset (Liability) Derivative financial instruments designated as hedging instruments: Balance Sheet Location March 31, 2016 December 31, 2015 Interest rate swap and cap agreements Accrued expenses $ (2,116) $ (1,870) Interest rate swap and cap agreements Other long-term liabilities (2,027) (556) $ (4,143) $ (2,426) Tabular Disclosure of the Effect of Derivative Financial Instruments on the Statement of Operations The effect of the derivative financial instruments on the accompanying unaudited condensed consolidated statements of operations for the three months ended March 31, 2016 and 2015 , respectively, is summarized in the following table: Three Months Ended March 31, Three Months Ended March 31, 2016 2015 Derivative financial instruments in cash flow hedging relationships: Gain/ (loss) related to effective portion of derivative financial instruments recognized in other comprehensive loss $ (2,288) $ (1,591) Gain/ (loss) related to effective portion of derivative financial instruments reclassified from accumulated other comprehensive loss to interest expense $ (645) $ (638) Gain/ (loss) related to ineffective portion of derivative financial instruments recognized in interest expense $ (37) $ — Credit Risk-related Contingent Features The Company has agreements with each of its derivative financial instrument counterparties that contain a provision where if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company also could be declared in default on its derivative financial instrument obligations. As of March 31, 2016 , the termination value of the Company’s derivative financial instrument s in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $4,954 . If the Company had breached any of these provisions at March 31, 2016 , the Company could have been required to settle its obligations under the agreements at this termination value. The Company does not offset any derivative financial instruments and the derivative financial instruments are not subject to collateral posting requirements. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | 6 . Fair Value Measurements Assets and Liabilities Measured at Fair Value on a Recurring Basis The Company’s assets and liabilities that are measured at fair value on a recurring basis consist of the Company’s derivative financial instruments and contingent consideration associated with business combinations. The table below summarizes these items as of March 31, 2016 , aggregated by the level in the fair value hierarchy within which those measurements fall. Quoted in Significant Balance at Markets Significant Other Unobservable March 31, Identical Observable Inputs Inputs Description 2016 (Level 1) (Level 2) (Level 3) Interest rate swap and cap agreements $ (4,143) $ — $ (4,143) $ — Contingent consideration obligations — — — — Total $ (4,143) $ — $ (4,143) $ — The valuation of the Company’s derivative financial instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivative financial instrument , including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair value of the interest rate swap and cap agreements are determined using the market standard methodology of netting the discounted future fixed cash payments (or receipts) and the discounted expected variable cash receipts (or payments) using the overnight index swap rate as the discount rate. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative financial instrument contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements and measures the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. Although the Company has determined that the majority of the inputs used to value its derivative financial instrument s fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivative financial instrument s utilize Level 3 inputs to evaluate the likelihood of default by itself and by its counterparties. As of March 31, 2016 , the Company determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company determined that its derivative financial instrument valuations in their entirety are classified in Level 2 of the fair value hierarchy . The valuation of the Company’s contingent consideration obligations is estimated as the present value of total expected contingent consideration payments which are determined using a Monte Carlo simulation. This analysis reflects the contractual terms of the purchase agreements and utilizes assumptions with regard to future sales, probabilities of achieving such future sales, the likelihood and timing of expected payments and a discount rate. Significant increases with respect to assumptions as to future sales and probabilities of achieving such future sales would result in a higher fair value measurement, while an increase in the discount rate would result in a lower fair value measurement . The table below presents a reconciliation of the fair value of the liabilities that use significant unobservable inputs (Level 3). Three Months Ended March 31, 2016 2015 Balance at beginning of period $ (4,650) $ (17,486) Adjustment of provisional amounts — (50) Settlement of contingent consideration — 8,061 Gain/ (loss) included in contingent consideration — 2,015 Transfers out of Level 3 fair value measurements 4,650 — Balance at end of period $ — $ (7,460) During April 2015, the Company exercised its option to terminate all future obligations under the Vieosoft, Inc. (“Vieosoft”) stock purchase agreement in exchange for a cash payment of $4,650 to the former stockholders of Vieosoft. This termination payment was not accepted and the former stockholders of Vieosoft have filed a lawsuit against the Company. Because this amount no longer represents a fair value measurement, the Company has transferred this obligation out of fair value measurements . The Company currently does not believe this lawsuit will result in additional liability that will have a material adverse effect on its business, financial condition or results of operations. Assets and Liabilities Measured at Fair Value upon Initial Recognition The carrying amount and the estimated fair value of financial instruments held by the Company as of March 31, 2016 were: Carrying Amount Fair Value Cash and cash equivalents $ 47,893 $ 47,893 Accounts receivable $ 315,351 $ 315,351 Senior Credit Facilities (Level 1) $ 1,774,280 $ 1,789,671 Senior Notes (Level 2) $ 979,954 $ 1,040,469 The carrying amounts of cash equivalents and accounts receivable approximate fair value because of their short-term maturities. The fair value of long-term debt is based upon market quotes and trades by investors in partial interests of these instruments. |
Legal Proceedings
Legal Proceedings | 3 Months Ended |
Mar. 31, 2016 | |
Legal Proceedings [Abstract] | |
Legal Proceedings | 7 . Legal Proceedings I n the normal course of business, the Company is involved in various claims and legal proceedings. While the ultimate resolution of these matters has yet to be determined, the Company does not believe that their outcomes will have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2016 | |
Income Taxes [Abstract] | |
Income Taxes | 8 . Income Taxes In May 2015, the state of Tennessee enacted the Tennessee Revenue Modernization Act, which changed the manner in which the Company’s Tennessee apportionment is determined. This change in the Company’s Tennessee apportionment , along with routine changes in apportionment that arose following the filing of the Company’s annual tax returns, resulted in a change in the Company’s effective state income tax rate. In December 2015, the Company simplified its legal organizational structure for which the primary economic effect was to enable it to realize deferred tax assets for state income tax purposes that it previously had concluded were not likely to be realized. This legal organization simplification resulted in a decrease to the Company’s effective state income tax rate. After giving effect to the changes in the Company’s Tennessee apportionment and other items, income taxes for the three months ended March 31, 2016 amounted to an income tax benefit of $13,005 and an effective tax rate of 45.7% . The income tax benefit for the three months ended March 31, 2015 was $6,040 and resulted in an effective tax rate of 51.2% . |
Tax Receivable Agreement Obliga
Tax Receivable Agreement Obligations To Related Parties | 3 Months Ended |
Mar. 31, 2016 | |
Tax Receivable Agreement Obligation To Related Parties [Abstract] | |
Tax Receivable Agreement Obligations To Related Parties | 9 . Tax Receivable Agreement Obligation to Related Parties The Company is a party to tax receivable agreements which obligate it to make payments to certain of its current and former owners, including affiliates of Blackstone, Hellman & Friedman and certain members of management (collectively, the “TRA Members”), equal to 85% of the applicable cash savings that the Company realizes as a result of tax attributes arising from certain previous transactions, including the 2011 Merger . The Company will retain the benefit of the remaining 15% of these tax savings. T he Company expects cumulative remaining payments under the tax receivable agreements of approximately $357,830 . $177,714 of this amount, which reflected the initial fair value of the tax receivable agreement obligations plus recognized accretion, was reflected as an obligation on the accompanying unaudited condensed consolidated balance sheet at March 31, 2016. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Segment Reporting | 10 . Segment Reporting Management views the Company’s operating results in three reportable segments: (a) software and analytics , (b) network solutions and (c) technology-enabled services. Listed below are the results of operations for each of the reportable segments. This information is reflected in the manner utilized by management to make operating decisions, assess performance and allocate resources. Such amounts include allocations of corporate shared services functions that are essential to the core operations of the reportable segments such as information technology, operations and product development functions. Segment assets and related depreciation expenses are not presented to management for purposes of operational decision making, and therefore are not included in the accompanying tables. The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies in the notes to the Company’s audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2015 as filed with the SEC. Software and Analytics The software and analytics segment provides revenue cycle technology, revenue optimization, payment integrity, electronic payment, risk adjustment, quality reporting, data and analytics and engagement solutions. Network Solutions The network solutions segment provides financial and administrative information exchange solutions for medical, pharmacy and dental claims management and other standardized healthcare transactions, including clinical information exchange capabilities . Technology-enabled Services The technology-enabled services segment provides payment and communication, eligibility and enrollment, healthcare consulting, payment automation and pharmacy benefits administration solutions. Corporate and Eliminations Inter-segment revenue and expenses primarily represent claims management and payment and communication solutions provided between segments. Corporate and eliminations includes pass-through postage costs, management, administrative and certain other shared corporate services functions such as legal, finance, human resources and marketing, as well as eliminations to remove inter-segment revenue and expenses. These administrative costs are excluded from the adjusted EBITDA measure for each respective operating segment. The revenue and adjusted EBITDA for the operating segments are as follows: Three Months Ended March 31, 2016 Technology- Software and Network enabled Corporate and Analytics Solutions Services Eliminations Consolidated Revenue from external customers: Solutions revenue $ 124,841 $ 94,954 $ 99,037 $ (7,335) $ 311,497 Postage revenue — — — 82,711 82,711 Inter-segment revenue 306 152 1,424 (1,882) — Net revenue $ 125,147 $ 95,106 $ 100,461 $ 73,494 $ 394,208 Income (loss) before income taxes $ 33,228 $ 49,197 $ 30,770 $ (141,656) $ (28,461) Interest expense — — — 46,622 46,622 Depreciation and amortization — — — 61,127 61,127 EBITDA 33,228 49,197 30,770 (33,907) 79,288 Equity compensation 538 172 213 1,767 2,690 Acquisition accounting adjustments 199 — 120 — 319 Acquisition-related costs 1,073 24 19 492 1,608 Transaction-related costs and advisory fees — — — 1,613 1,613 Strategic initiatives, duplicative and transition costs 1,330 162 219 1,797 3,508 Severance costs 590 706 1,033 (24) 2,305 Accretion — — — 3,235 3,235 Impairment of long-lived assets 17 62 48 (61) 66 Other non-routine, net 268 96 281 989 1,634 EBITDA Adjustments 4,015 1,222 1,933 9,808 16,978 Adjusted EBITDA $ 37,243 $ 50,419 $ 32,703 $ (24,099) $ 96,266 Three Months Ended March 31, 2015 Technology- Software and Network enabled Corporate and Analytics Solutions Services Eliminations Consolidated Revenue from external customers: Solutions revenue $ 65,946 $ 90,209 $ 108,672 $ (6,415) $ 258,412 Postage revenue — — — 87,283 87,283 Inter-segment revenue 178 52 933 (1,163) — Net revenue $ 66,124 $ 90,261 $ 109,605 $ 79,705 $ 345,695 Income (loss) before income taxes $ 18,859 $ 46,721 $ 36,447 $ (113,814) $ (11,787) Interest expense — — — 38,008 38,008 Depreciation and amortization — — — 48,114 48,114 EBITDA 18,859 46,721 36,447 (27,692) 74,335 Equity compensation 359 108 149 1,570 2,186 Acquisition accounting adjustments 283 — 228 (68) 443 Acquisition-related costs 17 20 492 308 837 Transaction-related costs and advisory fees — — — 1,517 1,517 Strategic initiatives, duplicative and transition costs 60 55 35 807 957 Severance costs 225 (141) 2,006 14 2,104 Accretion — — — 4,979 4,979 Impairment of long-lived assets 106 514 153 66 839 Contingent consideration — (1,530) (655) 170 (2,015) Other non-routine, net 152 374 314 539 1,379 EBITDA Adjustments 1,202 (600) 2,722 9,902 13,226 Adjusted EBITDA $ 20,061 $ 46,121 $ 39,169 $ (17,790) $ 87,561 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Mar. 31, 2016 | |
Accumulated Other Comprehensive Income (Loss) [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | 11 . Accumulated Other Comprehensive Income (Loss) The following is a summary of the accumulated other comprehensive income (loss) balances, net of taxes, as of and for the three months ended March 31, 2016 . Foreign Accumulated Currency Other Translation Cash Flow Comprehensive Adjustment Hedge Income (Loss) Balance at January 1, 2016 $ (1,136) $ (1,520) $ (2,656) Change associated with foreign currency translation 318 — 318 Change associated with current period hedging — (284) (284) Reclassification into earnings — (645) (645) Balance at March 31, 2016 $ (818) $ (2,449) $ (3,267) |
Supplemental Condensed Consolid
Supplemental Condensed Consolidating Financial Information | 3 Months Ended |
Mar. 31, 2016 | |
Supplemental Condensed Consolidating Financial Information [Abstract] | |
Supplemental Condensed Consolidating Financial Information | 1 2 . Supplemental Condensed Consolidating Financial Information In lieu of providing separate annual and interim financial statements for each guarantor of the Senior Notes, Regulation S-X provides companies, if certain criteria are satisfied, with the option to instead provide condensed consolidating financial information for its issuers, guarantors and non-guarantors. In the case of the Company, the applicable criteria include the following: (i) the Senior Notes are fully and unconditionally guaranteed on a joint and several basis (subject to customary release provisions) , (ii) each of the guarantors of the Senior Notes is a direct or indirect 100% owned subsidiary of the Company and (iii) any non-guarantors are considered minor as that term is defined in Regulation S-X. Because each of these criteria has been satisfied by the Company, condensed consolidating balance sheets as of March 31, 2016 and December 31, 2015 , condensed consolidating statements of operations and comprehensive income (loss) for the three months ended March 31, 2016 and 2015, respectively, and condensed conso lidating statements of cash flows for the three months ended March 31, 2016 and 2015 , respectively, for the Company, segregating the issuer, the subsidiary guarantors and consolidating adjustments, are reflected below. Prior period amounts have been reclassified to conform to the current year presentation. Condensed Consolidating Balance Sheet As of March 31, 2016 Change Healthcare Guarantor Consolidating Holdings, Inc. Subsidiaries Adjustments Consolidated ASSETS Current assets: Cash and cash equivalents $ 709 $ 47,184 $ — $ 47,893 Accounts receivable, net of allowance for doubtful accounts — 315,351 — 315,351 Prepaid expenses and other current assets 5,978 40,985 — 46,963 Total current assets 6,687 403,520 — 410,207 Property and equipment, net 2 238,150 — 238,152 Due from affiliates 203,603 — (203,603) — Investment in consolidated subsidiaries 1,714,409 — (1,714,409) — Goodwill — 2,230,410 — 2,230,410 Intangible assets, net 700 1,672,328 — 1,673,028 Other assets, net 266,652 7,753 (266,215) 8,190 Total assets $ 2,192,053 $ 4,552,161 $ (2,184,227) $ 4,559,987 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 656 $ 32,696 $ — $ 33,352 Accrued expenses 25,321 148,458 — 173,779 Deferred revenues — 17,756 — 17,756 Current portion of long-term debt 8,099 19,502 — 27,601 Total current liabilities 34,076 218,412 — 252,488 Due to affiliates — 203,603 (203,603) — Long-term debt, excluding current portion 1,016,195 1,723,431 — 2,739,626 Deferred income tax liabilities — 681,771 (266,215) 415,556 Tax receivable agreement obligations to related parties 176,728 — — 176,728 Other long-term liabilities 2,777 10,535 — 13,312 Commitments and contingencies Equity 962,277 1,714,409 (1,714,409) 962,277 Total liabilities and equity $ 2,192,053 $ 4,552,161 $ (2,184,227) $ 4,559,987 Condensed Consolidating Balance Sheet As of December 31, 2015 Change Healthcare Guarantor Consolidating Holdings, Inc. Subsidiaries Adjustments Consolidated ASSETS Current assets: Cash and cash equivalents $ 738 $ 65,917 $ — $ 66,655 Accounts receivable, net of allowance for doubtful accounts — 280,858 — 280,858 Prepaid expenses and other current assets 2,234 33,179 — 35,413 Total current assets 2,972 379,954 — 382,926 Property and equipment, net 3 244,142 — 244,145 Due from affiliates 135,406 — (135,406) — Investment in consolidated subsidiaries 1,790,964 — (1,790,964) — Goodwill — 2,230,100 — 2,230,100 Intangible assets, net 1,000 1,706,863 — 1,707,863 Other assets, net 253,960 8,050 (253,510) 8,500 Total assets $ 2,184,305 $ 4,569,109 $ (2,179,880) $ 4,573,534 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ — $ 27,950 $ — $ 27,950 Accrued expenses 10,689 156,480 — 167,169 Deferred revenues — 12,943 — 12,943 Current portion of long-term debt 8,099 24,676 — 32,775 Total current liabilities 18,788 222,049 — 240,837 Due to affiliates — 135,406 (135,406) — Long-term debt, excluding current portion 1,015,243 1,725,935 — 2,741,178 Deferred income tax liabilities — 683,893 (253,510) 430,383 Tax receivable agreement obligations to related parties 173,493 — — 173,493 Other long-term liabilities 1,092 10,862 — 11,954 Commitments and contingencies Equity 975,689 1,790,964 (1,790,964) 975,689 Total liabilities and equity $ 2,184,305 $ 4,569,109 $ (2,179,880) $ 4,573,534 Condensed Consolidating Statement of Operations Three Months Ended March 31, 2016 Change Healthcare Guarantor Consolidating Holdings, Inc. Subsidiaries Adjustments Consolidated Revenue: Solutions revenue $ — $ 311,497 $ — $ 311,497 Postage revenue — 82,711 — 82,711 Total revenue — 394,208 — 394,208 Costs and expenses: Cost of operations (exclusive of depreciation and amortization below) — 146,488 — 146,488 Development and engineering — 14,792 — 14,792 Sales, marketing, general and administrative 3,267 64,361 — 67,628 Customer postage — 82,711 — 82,711 Depreciation and amortization 301 60,826 — 61,127 Accretion 3,235 — — 3,235 Impairment of long-lived assets — 66 — 66 Operating income (loss) (6,803) 24,964 — 18,161 Equity in earnings of consolidated subsidiaries (182) — 182 — Interest expense, net 20,826 25,796 — 46,622 Income (loss) before income tax provision (benefit) (27,447) (832) (182) (28,461) Income tax provision (benefit) (11,991) (1,014) — (13,005) Net income (loss) $ (15,456) $ 182 $ (182) $ (15,456) Condensed Consolidating Statement of Operations Three Months Ended March 31, 2015 Change Healthcare Guarantor Consolidating Holdings, Inc. Subsidiaries Adjustments Consolidated Revenue: Solutions revenue $ — $ 258,412 $ — $ 258,412 Postage revenue — 87,283 — 87,283 Total revenue — 345,695 — 345,695 Costs and expenses: Cost of operations (exclusive of depreciation and amortization below) — 121,187 — 121,187 Development and engineering — 10,825 — 10,825 Sales, marketing, general and administrative 3,052 45,210 — 48,262 Customer postage — 87,283 87,283 Depreciation and amortization 2,251 45,863 — 48,114 Accretion 4,979 — — 4,979 Impairment of long-lived assets — 839 — 839 Operating income (loss) (10,282) 34,488 — 24,206 Equity in earnings of consolidated subsidiaries (14,172) — 14,172 — Interest expense, net 23,282 14,726 — 38,008 Contingent consideration — (2,015) — (2,015) Income (loss) before income tax provision (benefit) (19,392) 21,777 (14,172) (11,787) Income tax provision (benefit) (13,645) 7,605 — (6,040) Net income (loss) $ (5,747) $ 14,172 $ (14,172) $ (5,747) Condensed Consolidating Statement of Comprehensive Income (Loss) Three Months Ended March 31, 2016 Change Healthcare Guarantor Consolidating Holdings, Inc. Subsidiaries Adjustments Consolidated Net income (loss) $ (15,456) $ 182 $ (182) $ (15,456) Other comprehensive income (loss): Changes in fair value of interest rate swap, net of taxes (929) — — (929) Foreign currency translation adjustment — 318 — 318 Equity in other comprehensive earnings 318 — (318) — Other comprehensive income (loss) (611) 318 (318) (611) Total comprehensive income (loss) $ (16,067) $ 500 $ (500) $ (16,067) Condensed Consolidating Statement of Comprehensive Income (Loss) Three Months Ended March 31, 2015 Change Healthcare Guarantor Consolidating Holdings, Inc. Subsidiaries Adjustments Consolidated Net income (loss) $ (5,747) $ 14,172 $ (14,172) $ (5,747) Other comprehensive income (loss): Changes in fair value of interest rate swap, net of taxes (560) — — (560) Foreign currency translation adjustment — (275) — (275) Equity in other comprehensive earnings (275) — 275 — Other comprehensive income (loss) (835) (275) 275 (835) Total comprehensive income (loss) $ (6,582) $ 13,897 $ (13,897) $ (6,582) Condensed Consolidating Statement of Cash Flows Three Months Ended March 31, 2016 Change Healthcare Guarantor Consolidating Holdings, Inc. Subsidiaries Adjustments Consolidated Operating activities Net income (loss) $ (15,456) $ 182 $ (182) $ (15,456) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 301 60,826 - 61,127 Accretion 3,235 - - 3,235 Equity compensation 97 2,593 - 2,690 Deferred income tax expense (benefit) (11,749) (2,363) - (14,112) Amortization of debt discount and issuance costs 1,059 2,299 - 3,358 Impairment of long-lived assets - 66 - 66 Equity in earnings of consolidated subsidiaries (182) - 182 - Other - 44 - 44 Changes in operating assets and liabilities: Accounts receivable - (34,959) - (34,959) Prepaid expenses and other (4,668) (6,464) - (11,132) Accounts payable 656 2,018 - 2,674 Accrued expenses, deferred revenue and other liabilities 12,995 1,634 - 14,629 Due to/from affiliates (68,198) 68,198 - - Net cash provided (used in) by operating activities (81,910) 94,074 - 12,164 Investing activities Purchases of property and equipment - (14,204) - (14,204) Purchases of technology-based intangible assets - (6,761) - (6,761) Investment in subsidiaries, net 82,236 - (82,236) - Net cash provided by (used in) investing activities 82,236 (20,965) (82,236) (20,965) Financing activities Distributions from (to) Change Healthcare Holdings, Inc., net - (82,236) 82,236 - Payments on Term Loan Facility (320) (4,310) - (4,630) Payments of deferred financing obligations - (5,296) - (5,296) Repurchase of Parent common stock (35) - - (35) Net cash provided by (used in) financing activities (355) (91,842) 82,236 (9,961) Net increase (decrease) in cash and cash equivalents (29) (18,733) - (18,762) Cash and cash equivalents at beginning of period 738 65,917 - 66,655 Cash and cash equivalents at end of period $ 709 $ 47,184 $ - $ 47,893 Condensed Consolidating Statement of Cash Flows Three Months Ended March 31, 2015 Change Healthcare Guarantor Consolidating Holdings, Inc. Subsidiaries Adjustments Consolidated Operating activities Net income (loss) $ (5,747) $ 14,172 $ (14,172) $ (5,747) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 2,251 45,863 - 48,114 Accretion 4,979 - - 4,979 Equity compensation 87 2,099 - 2,186 Deferred income tax expense (benefit) (13,796) 6,647 - (7,149) Amortization of debt discount and issuance costs 717 1,553 - 2,270 Contingent consideration - (2,015) - (2,015) Impairment of long-lived assets - 839 - 839 Equity in earnings of consolidated subsidiaries (14,172) - 14,172 - Changes in operating assets and liabilities: Accounts receivable - 5,254 - 5,254 Prepaid expenses and other (3,542) (2,303) - (5,845) Accounts payable - (3,653) - (3,653) Accrued expenses, deferred revenue and other liabilities 10,718 (16,253) - (5,535) Due to/from affiliates 19,919 (19,919) - - Net cash provided by (used in) operating activities 1,414 32,284 - 33,698 Investing activities Purchases of property and equipment - (12,727) - (12,727) Payments for acquisitions, net of cash acquired - (20) - (20) Purchased of technology-based intangible assets - (35) - (35) Investment in subsidiaries, net 294 - (294) - Net cash provided by (used in) investing activities 294 (12,782) (294) (12,782) Financing activities Distributions from (to) Change Healthcare Holdings, Inc., net - (294) 294 - Payments on Term Loan Facility (69) (3,551) - (3,620) Payments of deferred financing obligations - (4,680) - (4,680) Repurchase of Parent common stock (2,438) - - (2,438) Capital contribution from Investor Group and management 804 - - 804 Payment of contingent consideration - (5,553) - (5,553) Net cash provided by (used in) financing activities (1,703) (14,078) 294 (15,487) Net increase (decrease) in cash and cash equivalents 5 5,424 - 5,429 Cash and cash equivalents at beginning of period 796 81,510 - 82,306 Cash and cash equivalents at end of period $ 801 $ 86,934 $ - $ 87,735 |
Basis Of Presentation (Policy)
Basis Of Presentation (Policy) | 3 Months Ended |
Mar. 31, 2016 | |
Basis Of Presentation [Abstract] | |
Principles Of Consolidation | Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (“SEC”) Guidelines, Rules and Regulations (“Regulation S-X”) and, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of results for the unaudited interim periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. The results of operations for the interim period are not necessarily indicative of the results to be obtained for the full fiscal year. All material intercompany accounts and transactions have been eliminated in the unaudited condensed consolidated financial statements. |
Reclassifications | Reclassifications Certain reclassifications have been made to the prior period financial statements to conform to t he current period presentation. |
Accounting Estimates | Accounting Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company bases its estimates on historical experience, current business factors and various other assumptions that the Company believes are necessary to consider in order to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses and disclosure of contingent assets and liabilities. The Company is subject to uncertainties such as the impact of future events, economic, environmental and political factors and changes in the Company’s business environment; therefore, actual results could differ materially from these estimates. Accordingly, the accounting estimates used in the preparation of the Company’s financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in the reported results of operations; and if material, the effects of changes in estimates are disclosed in the notes to the consolidated financial statements. Estimates and assumptions by management affect: the allowance for doubtful accounts; the fair value assigned to assets acquired and liabilities assumed in business combinations; tax receivable agreement obligations; the fair value of interest rate swap obligations; contingent consideration; loss accruals; the carrying value of long-lived assets (including goodwill and intangible assets); the amortization period of long-lived assets (excluding goodwill); the carrying value, capitalization and amortization of software development costs; the provision and benefit for income taxes and related deferred tax accounts; certain accrued expenses; revenue recognition; contingencies; and the value attributed to equity awards. |
Business Combinations | Business Combinations The preliminary values of the consideration transferred, assets acquired and liabilities assumed in the Altegra Health , Inc. (“Altegra Health”) acquisition, including the related tax effects, are subject to change upon the resolution of pre-acquisition contingencies and working capital settlement. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, which replaces most prior general and industry specific revenue recognition guidance with a principles-based comprehensive revenue recognition framework. Under this revised framework, a company will recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. This update is effective for fiscal years and interim periods beginning in those years after December 15, 2017. Early adoption is permitted in years beginning after December 15, 2016. Upon adoption, a company may elect to either retrospectively restate each prior reporting period or reflect the cumulative effect of initially applying the update with an adjustment to retained earnings at the date of adoption . While the Company cannot yet determine the transition method or the effect the adoption of this update will have on its financial statements, the Company believes that significant changes to its accounting policies, estimation processes, internal controls and information systems will be necessary to comply with this update. Such changes are expected to be necessary to accumulate information and data required to estimate the transaction prices in our contracts, and to allocate such transaction prices to the specific performance obligations in our contracts, as a result of variability from volume-based pricing, price increases, contingent fees, service level agreements and other arrangements. In January 2016 , the Company adopted FASB ASU No. 2014-12, which clarifies, in the context of share-based payment awards, that a performance target that affects vesting and could be achieved after the requisite service period has been rendered should be treated as a performance condition. Prior to this update, because there was no explicit guidance, there was diversity in practice among companies. The Company does not expect the adoption of this update to have a material effect on its consolidated financial statements . In February 2016, the FASB issued ASU No. 2016-02, which generally requires that all lease obligations be recognized on the balance sheet at the present value of the remaining lease payments with a corresponding lease asset. This update is scheduled to be effective for fiscal years and interim periods beginning in those years after December 15, 2018. The Company is currently assessing the potential effects this update may have on its consolidated financial statements. In March 2016 , the FASB issued ASU No. 2016-09 , which generally requires that all income tax effects of share-based payment awards be recognized in the statement of operations when the awards vest or are settled . It also will allow an employer to repurchase more of an employee’s shares than it can today for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur. This update is scheduled to be effective for fiscal years and interim periods beginning in those years after December 15, 2017, with early adoption permitted. The Company is currently assessing the potential effects this update may have on its consolidated financial statements . |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Long-Term Debt [Abstract] | |
Schedule Of Long-Term Debt | March 31, December 31, 2016 2015 Senior Credit Facilities $1,696 million Senior Secured Term Loan facility, due November 2, 2018 , net of unamortized discount of $21,528 and $23,511 at March 31, 2016 and December 31, 2015, respectively (effective interest rate of 4.29% ) $ 1,619,734 $ 1,621,981 $160 million Senior Secured Term Loan facility, due November 2, 2018 , net of unamortized discount of $3,054 and $3,334 at March 31, 2016 and December 31, 2015, respectively (effective interest rate of 4.54% ) 154,546 154,666 $125 million Senior Secured Revolving Credit facility, expiring on November 2, 2016 and bearing interest at a variable base rate plus a spread rate — — Senior Notes $375 million 11% Senior Notes due December 31, 2019 , net of unamortized discount of $5,984 and $6,299 at March 31, 2016 and December 31, 2015, respectively (effective interest rate of 11.53% ) 369,016 368,701 $375 million 11.25% Senior Notes due December 31, 2020 , net of unamortized discount of $8,156 and $8,471 at March 31, 2016 and December 31, 2015, respectively (effective interest rate of 11.85% ) 366,844 366,529 $250 million 6% Senior Notes due February 15, 2021 , net of unamortized discount of $5,906 and $6,161 at March 31, 2016 and December 31, 2015, respectively (effective interest rate of 6.57% ) 244,094 243,839 Obligation under data sublicense agreement 10,810 10,810 Other 2,183 7,427 Less current portion (27,601) (32,775) Long-term debt $ 2,739,626 $ 2,741,178 |
Interest Rate Swap (Tables)
Interest Rate Swap (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Interest Rate Swap [Abstract] | |
Fair Value Of Derivative Instrument | Fair Values of Derivative Financial Instruments Asset (Liability) Derivative financial instruments designated as hedging instruments: Balance Sheet Location March 31, 2016 December 31, 2015 Interest rate swap and cap agreements Accrued expenses $ (2,116) $ (1,870) Interest rate swap and cap agreements Other long-term liabilities (2,027) (556) $ (4,143) $ (2,426) |
Effect Of Derivative Instrument On The Accompanying Consolidated Statements Of Operations | Three Months Ended March 31, Three Months Ended March 31, 2016 2015 Derivative financial instruments in cash flow hedging relationships: Gain/ (loss) related to effective portion of derivative financial instruments recognized in other comprehensive loss $ (2,288) $ (1,591) Gain/ (loss) related to effective portion of derivative financial instruments reclassified from accumulated other comprehensive loss to interest expense $ (645) $ (638) Gain/ (loss) related to ineffective portion of derivative financial instruments recognized in interest expense $ (37) $ — |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Measurements [Abstract] | |
Fair Value Of Financial Instruments Measured On A Recurring Basis | Quoted in Significant Balance at Markets Significant Other Unobservable March 31, Identical Observable Inputs Inputs Description 2016 (Level 1) (Level 2) (Level 3) Interest rate swap and cap agreements $ (4,143) $ — $ (4,143) $ — Contingent consideration obligations — — — — Total $ (4,143) $ — $ (4,143) $ — |
Reconciliation Of The Fair Value Of The Liabilities That Use Significant Unobservable Inputs (Level 3) | Three Months Ended March 31, 2016 2015 Balance at beginning of period $ (4,650) $ (17,486) Adjustment of provisional amounts — (50) Settlement of contingent consideration — 8,061 Gain/ (loss) included in contingent consideration — 2,015 Transfers out of Level 3 fair value measurements 4,650 — Balance at end of period $ — $ (7,460) |
Carrying Amount And The Estimated Fair Value Of Financial Instruments | Carrying Amount Fair Value Cash and cash equivalents $ 47,893 $ 47,893 Accounts receivable $ 315,351 $ 315,351 Senior Credit Facilities (Level 1) $ 1,774,280 $ 1,789,671 Senior Notes (Level 2) $ 979,954 $ 1,040,469 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Revenue And Total Segment Contribution For The Reportable Segments | Three Months Ended March 31, 2016 Technology- Software and Network enabled Corporate and Analytics Solutions Services Eliminations Consolidated Revenue from external customers: Solutions revenue $ 124,841 $ 94,954 $ 99,037 $ (7,335) $ 311,497 Postage revenue — — — 82,711 82,711 Inter-segment revenue 306 152 1,424 (1,882) — Net revenue $ 125,147 $ 95,106 $ 100,461 $ 73,494 $ 394,208 Income (loss) before income taxes $ 33,228 $ 49,197 $ 30,770 $ (141,656) $ (28,461) Interest expense — — — 46,622 46,622 Depreciation and amortization — — — 61,127 61,127 EBITDA 33,228 49,197 30,770 (33,907) 79,288 Equity compensation 538 172 213 1,767 2,690 Acquisition accounting adjustments 199 — 120 — 319 Acquisition-related costs 1,073 24 19 492 1,608 Transaction-related costs and advisory fees — — — 1,613 1,613 Strategic initiatives, duplicative and transition costs 1,330 162 219 1,797 3,508 Severance costs 590 706 1,033 (24) 2,305 Accretion — — — 3,235 3,235 Impairment of long-lived assets 17 62 48 (61) 66 Other non-routine, net 268 96 281 989 1,634 EBITDA Adjustments 4,015 1,222 1,933 9,808 16,978 Adjusted EBITDA $ 37,243 $ 50,419 $ 32,703 $ (24,099) $ 96,266 Three Months Ended March 31, 2015 Technology- Software and Network enabled Corporate and Analytics Solutions Services Eliminations Consolidated Revenue from external customers: Solutions revenue $ 65,946 $ 90,209 $ 108,672 $ (6,415) $ 258,412 Postage revenue — — — 87,283 87,283 Inter-segment revenue 178 52 933 (1,163) — Net revenue $ 66,124 $ 90,261 $ 109,605 $ 79,705 $ 345,695 Income (loss) before income taxes $ 18,859 $ 46,721 $ 36,447 $ (113,814) $ (11,787) Interest expense — — — 38,008 38,008 Depreciation and amortization — — — 48,114 48,114 EBITDA 18,859 46,721 36,447 (27,692) 74,335 Equity compensation 359 108 149 1,570 2,186 Acquisition accounting adjustments 283 — 228 (68) 443 Acquisition-related costs 17 20 492 308 837 Transaction-related costs and advisory fees — — — 1,517 1,517 Strategic initiatives, duplicative and transition costs 60 55 35 807 957 Severance costs 225 (141) 2,006 14 2,104 Accretion — — — 4,979 4,979 Impairment of long-lived assets 106 514 153 66 839 Contingent consideration — (1,530) (655) 170 (2,015) Other non-routine, net 152 374 314 539 1,379 EBITDA Adjustments 1,202 (600) 2,722 9,902 13,226 Adjusted EBITDA $ 20,061 $ 46,121 $ 39,169 $ (17,790) $ 87,561 |
Accumulated Other Comprehensi25
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Accumulated Other Comprehensive Income (Loss) [Abstract] | |
Summary Of Accumulated Other Comprehensive Income (Loss) | Foreign Accumulated Currency Other Translation Cash Flow Comprehensive Adjustment Hedge Income (Loss) Balance at January 1, 2016 $ (1,136) $ (1,520) $ (2,656) Change associated with foreign currency translation 318 — 318 Change associated with current period hedging — (284) (284) Reclassification into earnings — (645) (645) Balance at March 31, 2016 $ (818) $ (2,449) $ (3,267) |
Supplemental Condensed Consol26
Supplemental Condensed Consolidating Financial Information (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Supplemental Condensed Consolidating Financial Information [Abstract] | |
Condensed Consolidating Balance Sheet | Condensed Consolidating Balance Sheet As of March 31, 2016 Change Healthcare Guarantor Consolidating Holdings, Inc. Subsidiaries Adjustments Consolidated ASSETS Current assets: Cash and cash equivalents $ 709 $ 47,184 $ — $ 47,893 Accounts receivable, net of allowance for doubtful accounts — 315,351 — 315,351 Prepaid expenses and other current assets 5,978 40,985 — 46,963 Total current assets 6,687 403,520 — 410,207 Property and equipment, net 2 238,150 — 238,152 Due from affiliates 203,603 — (203,603) — Investment in consolidated subsidiaries 1,714,409 — (1,714,409) — Goodwill — 2,230,410 — 2,230,410 Intangible assets, net 700 1,672,328 — 1,673,028 Other assets, net 266,652 7,753 (266,215) 8,190 Total assets $ 2,192,053 $ 4,552,161 $ (2,184,227) $ 4,559,987 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 656 $ 32,696 $ — $ 33,352 Accrued expenses 25,321 148,458 — 173,779 Deferred revenues — 17,756 — 17,756 Current portion of long-term debt 8,099 19,502 — 27,601 Total current liabilities 34,076 218,412 — 252,488 Due to affiliates — 203,603 (203,603) — Long-term debt, excluding current portion 1,016,195 1,723,431 — 2,739,626 Deferred income tax liabilities — 681,771 (266,215) 415,556 Tax receivable agreement obligations to related parties 176,728 — — 176,728 Other long-term liabilities 2,777 10,535 — 13,312 Commitments and contingencies Equity 962,277 1,714,409 (1,714,409) 962,277 Total liabilities and equity $ 2,192,053 $ 4,552,161 $ (2,184,227) $ 4,559,987 Condensed Consolidating Balance Sheet As of December 31, 2015 Change Healthcare Guarantor Consolidating Holdings, Inc. Subsidiaries Adjustments Consolidated ASSETS Current assets: Cash and cash equivalents $ 738 $ 65,917 $ — $ 66,655 Accounts receivable, net of allowance for doubtful accounts — 280,858 — 280,858 Prepaid expenses and other current assets 2,234 33,179 — 35,413 Total current assets 2,972 379,954 — 382,926 Property and equipment, net 3 244,142 — 244,145 Due from affiliates 135,406 — (135,406) — Investment in consolidated subsidiaries 1,790,964 — (1,790,964) — Goodwill — 2,230,100 — 2,230,100 Intangible assets, net 1,000 1,706,863 — 1,707,863 Other assets, net 253,960 8,050 (253,510) 8,500 Total assets $ 2,184,305 $ 4,569,109 $ (2,179,880) $ 4,573,534 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ — $ 27,950 $ — $ 27,950 Accrued expenses 10,689 156,480 — 167,169 Deferred revenues — 12,943 — 12,943 Current portion of long-term debt 8,099 24,676 — 32,775 Total current liabilities 18,788 222,049 — 240,837 Due to affiliates — 135,406 (135,406) — Long-term debt, excluding current portion 1,015,243 1,725,935 — 2,741,178 Deferred income tax liabilities — 683,893 (253,510) 430,383 Tax receivable agreement obligations to related parties 173,493 — — 173,493 Other long-term liabilities 1,092 10,862 — 11,954 Commitments and contingencies Equity 975,689 1,790,964 (1,790,964) 975,689 Total liabilities and equity $ 2,184,305 $ 4,569,109 $ (2,179,880) $ 4,573,534 |
Condensed Consolidating Statement Of Operations | Condensed Consolidating Statement of Operations Three Months Ended March 31, 2016 Change Healthcare Guarantor Consolidating Holdings, Inc. Subsidiaries Adjustments Consolidated Revenue: Solutions revenue $ — $ 311,497 $ — $ 311,497 Postage revenue — 82,711 — 82,711 Total revenue — 394,208 — 394,208 Costs and expenses: Cost of operations (exclusive of depreciation and amortization below) — 146,488 — 146,488 Development and engineering — 14,792 — 14,792 Sales, marketing, general and administrative 3,267 64,361 — 67,628 Customer postage — 82,711 — 82,711 Depreciation and amortization 301 60,826 — 61,127 Accretion 3,235 — — 3,235 Impairment of long-lived assets — 66 — 66 Operating income (loss) (6,803) 24,964 — 18,161 Equity in earnings of consolidated subsidiaries (182) — 182 — Interest expense, net 20,826 25,796 — 46,622 Income (loss) before income tax provision (benefit) (27,447) (832) (182) (28,461) Income tax provision (benefit) (11,991) (1,014) — (13,005) Net income (loss) $ (15,456) $ 182 $ (182) $ (15,456) Condensed Consolidating Statement of Operations Three Months Ended March 31, 2015 Change Healthcare Guarantor Consolidating Holdings, Inc. Subsidiaries Adjustments Consolidated Revenue: Solutions revenue $ — $ 258,412 $ — $ 258,412 Postage revenue — 87,283 — 87,283 Total revenue — 345,695 — 345,695 Costs and expenses: Cost of operations (exclusive of depreciation and amortization below) — 121,187 — 121,187 Development and engineering — 10,825 — 10,825 Sales, marketing, general and administrative 3,052 45,210 — 48,262 Customer postage — 87,283 87,283 Depreciation and amortization 2,251 45,863 — 48,114 Accretion 4,979 — — 4,979 Impairment of long-lived assets — 839 — 839 Operating income (loss) (10,282) 34,488 — 24,206 Equity in earnings of consolidated subsidiaries (14,172) — 14,172 — Interest expense, net 23,282 14,726 — 38,008 Contingent consideration — (2,015) — (2,015) Income (loss) before income tax provision (benefit) (19,392) 21,777 (14,172) (11,787) Income tax provision (benefit) (13,645) 7,605 — (6,040) Net income (loss) $ (5,747) $ 14,172 $ (14,172) $ (5,747) |
Condensed Consolidating Statement Of Comprehensive Income (Loss) | Condensed Consolidating Statement of Comprehensive Income (Loss) Three Months Ended March 31, 2016 Change Healthcare Guarantor Consolidating Holdings, Inc. Subsidiaries Adjustments Consolidated Net income (loss) $ (15,456) $ 182 $ (182) $ (15,456) Other comprehensive income (loss): Changes in fair value of interest rate swap, net of taxes (929) — — (929) Foreign currency translation adjustment — 318 — 318 Equity in other comprehensive earnings 318 — (318) — Other comprehensive income (loss) (611) 318 (318) (611) Total comprehensive income (loss) $ (16,067) $ 500 $ (500) $ (16,067) Condensed Consolidating Statement of Comprehensive Income (Loss) Three Months Ended March 31, 2015 Change Healthcare Guarantor Consolidating Holdings, Inc. Subsidiaries Adjustments Consolidated Net income (loss) $ (5,747) $ 14,172 $ (14,172) $ (5,747) Other comprehensive income (loss): Changes in fair value of interest rate swap, net of taxes (560) — — (560) Foreign currency translation adjustment — (275) — (275) Equity in other comprehensive earnings (275) — 275 — Other comprehensive income (loss) (835) (275) 275 (835) Total comprehensive income (loss) $ (6,582) $ 13,897 $ (13,897) $ (6,582) |
Condensed Consolidating Statement Of Cash Flows | Condensed Consolidating Statement of Cash Flows Three Months Ended March 31, 2016 Change Healthcare Guarantor Consolidating Holdings, Inc. Subsidiaries Adjustments Consolidated Operating activities Net income (loss) $ (15,456) $ 182 $ (182) $ (15,456) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 301 60,826 - 61,127 Accretion 3,235 - - 3,235 Equity compensation 97 2,593 - 2,690 Deferred income tax expense (benefit) (11,749) (2,363) - (14,112) Amortization of debt discount and issuance costs 1,059 2,299 - 3,358 Impairment of long-lived assets - 66 - 66 Equity in earnings of consolidated subsidiaries (182) - 182 - Other - 44 - 44 Changes in operating assets and liabilities: Accounts receivable - (34,959) - (34,959) Prepaid expenses and other (4,668) (6,464) - (11,132) Accounts payable 656 2,018 - 2,674 Accrued expenses, deferred revenue and other liabilities 12,995 1,634 - 14,629 Due to/from affiliates (68,198) 68,198 - - Net cash provided (used in) by operating activities (81,910) 94,074 - 12,164 Investing activities Purchases of property and equipment - (14,204) - (14,204) Purchases of technology-based intangible assets - (6,761) - (6,761) Investment in subsidiaries, net 82,236 - (82,236) - Net cash provided by (used in) investing activities 82,236 (20,965) (82,236) (20,965) Financing activities Distributions from (to) Change Healthcare Holdings, Inc., net - (82,236) 82,236 - Payments on Term Loan Facility (320) (4,310) - (4,630) Payments of deferred financing obligations - (5,296) - (5,296) Repurchase of Parent common stock (35) - - (35) Net cash provided by (used in) financing activities (355) (91,842) 82,236 (9,961) Net increase (decrease) in cash and cash equivalents (29) (18,733) - (18,762) Cash and cash equivalents at beginning of period 738 65,917 - 66,655 Cash and cash equivalents at end of period $ 709 $ 47,184 $ - $ 47,893 Condensed Consolidating Statement of Cash Flows Three Months Ended March 31, 2015 Change Healthcare Guarantor Consolidating Holdings, Inc. Subsidiaries Adjustments Consolidated Operating activities Net income (loss) $ (5,747) $ 14,172 $ (14,172) $ (5,747) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 2,251 45,863 - 48,114 Accretion 4,979 - - 4,979 Equity compensation 87 2,099 - 2,186 Deferred income tax expense (benefit) (13,796) 6,647 - (7,149) Amortization of debt discount and issuance costs 717 1,553 - 2,270 Contingent consideration - (2,015) - (2,015) Impairment of long-lived assets - 839 - 839 Equity in earnings of consolidated subsidiaries (14,172) - 14,172 - Changes in operating assets and liabilities: Accounts receivable - 5,254 - 5,254 Prepaid expenses and other (3,542) (2,303) - (5,845) Accounts payable - (3,653) - (3,653) Accrued expenses, deferred revenue and other liabilities 10,718 (16,253) - (5,535) Due to/from affiliates 19,919 (19,919) - - Net cash provided by (used in) operating activities 1,414 32,284 - 33,698 Investing activities Purchases of property and equipment - (12,727) - (12,727) Payments for acquisitions, net of cash acquired - (20) - (20) Purchased of technology-based intangible assets - (35) - (35) Investment in subsidiaries, net 294 - (294) - Net cash provided by (used in) investing activities 294 (12,782) (294) (12,782) Financing activities Distributions from (to) Change Healthcare Holdings, Inc., net - (294) 294 - Payments on Term Loan Facility (69) (3,551) - (3,620) Payments of deferred financing obligations - (4,680) - (4,680) Repurchase of Parent common stock (2,438) - - (2,438) Capital contribution from Investor Group and management 804 - - 804 Payment of contingent consideration - (5,553) - (5,553) Net cash provided by (used in) financing activities (1,703) (14,078) 294 (15,487) Net increase (decrease) in cash and cash equivalents 5 5,424 - 5,429 Cash and cash equivalents at beginning of period 796 81,510 - 82,306 Cash and cash equivalents at end of period $ 801 $ 86,934 $ - $ 87,735 |
Long-Term Debt (Narrative) (Det
Long-Term Debt (Narrative) (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Aug. 31, 2015 | Mar. 31, 2016 | Dec. 31, 2010 | |
Senior Credit Facilities [Member] | |||
Debt Instrument [Line Items] | |||
Accordion credit | $ 300,000 | ||
Net leverage ratio | 5.35 | ||
Proceeds from issuance of debt | $ 395,000 | ||
Commitment fee percentage | 0.50% | ||
Percentage of capital stock of foreign restricted subsidiaries | 65.00% | ||
Senior Credit Facilities [Member] | Federal Funds Rate [Member] | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 0.50% | ||
Senior Credit Facilities [Member] | LIBOR [Member] | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.00% | ||
Senior Notes [Member] | |||
Debt Instrument [Line Items] | |||
Repurchase price percent equal of the principal amount, plus accrued and unpaid interest | 101.00% | ||
Deferred Financing [Member] | |||
Debt Instrument [Line Items] | |||
Deferred financing obligations recorded at the present value of the scheduled payments | $ 2,200 | ||
11% Senior Notes Due December 31, 2019 [Member] | Senior Notes [Member] | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 11.00% | ||
Maturity date | Dec. 31, 2019 | ||
11.25% Senior Notes Due December 31, 2020 [Member] | Senior Notes [Member] | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 11.25% | ||
Maturity date | Dec. 31, 2020 | ||
6% Senior Notes Due February 15, 2021 [Member] | Senior Notes [Member] | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 6.00% | ||
Maturity date | Feb. 15, 2021 | ||
Redemption period end date | Aug. 15, 2017 | ||
Percentage of aggregate principal amount, plus a premium and accrued and unpaid interest that can be redeemed | 100.00% | ||
Redemption price percentage | 100.00% | ||
Data Sublicense Agreement [Member] | |||
Debt Instrument [Line Items] | |||
Payments due related to an asset acquired | $ 12,700 | $ 65,000 | |
Maximum [Member] | Senior Credit Facilities [Member] | |||
Debt Instrument [Line Items] | |||
Net leverage ratio | 4 | ||
Maximum [Member] | 6% Senior Notes Due February 15, 2021 [Member] | Senior Notes [Member] | |||
Debt Instrument [Line Items] | |||
Percentage of amount outstanding that can be redeemed | 40.00% | ||
Revolving Credit Facility, Swingline Loans [Member] | Senior Credit Facilities [Member] | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 30,000 | ||
Revolving Credit Facility, Letters Of Credit [Member] | Senior Credit Facilities [Member] | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 50,000 | ||
Revolving Credit Facility [Member] | Senior Credit Facilities [Member] | |||
Debt Instrument [Line Items] | |||
Maturity date | Nov. 2, 2016 | ||
Line of credt, amount borrowed | $ 6,745 | ||
Revolving Credit Facility [Member] | Senior Credit Facilities [Member] | LIBOR [Member] | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 2.50% | ||
LIBOR floor rate | 0.00% | ||
Term Loan Facility [Member] | Senior Credit Facilities [Member] | |||
Debt Instrument [Line Items] | |||
Maturity date | Nov. 2, 2018 | ||
Net cash proceeds of incurrence of debt, percentage | 100.00% | ||
Percentage of annual excess cash flow | 50.00% | ||
Percentage of annual excess cash flow based on first lien net leverage ratio | 25.00% | ||
Reduced percentage of annual excess cash flow based on first lien net leverage ratio | 0.00% | ||
Net cash proceeds of asset sales and casualty and condemnation events | 100.00% | ||
Quarterly payment on original principal amount of loans | 0.25% | ||
Term Loan Facility [Member] | Senior Credit Facilities [Member] | LIBOR [Member] | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 2.50% | ||
Effective interest rate minimum | 1.25% | ||
LIBOR floor rate | 1.25% | ||
Term Loan Facility [Member] | Senior Credit Facilities [Member] | Base Rate [Member] | |||
Debt Instrument [Line Items] | |||
Effective interest rate minimum | 2.25% |
Long-Term Debt (Schedule Of Lon
Long-Term Debt (Schedule Of Long-Term Debt) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | ||
Other | $ 2,183,000 | $ 7,427,000 |
Less current portion | (27,601,000) | (32,775,000) |
Long-term debt | 2,739,626,000 | 2,741,178,000 |
Data Sublicense Agreement [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 10,810,000 | 10,810,000 |
Senior Secured Term Loan Facility, Effective Interest Of 4.29% [Member] | Senior Credit Facilities [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 1,619,734,000 | 1,621,981,000 |
Long-term debt, face amount | $ 1,696,000,000 | |
Maturity date | Nov. 2, 2018 | |
Long-term debt, unamortized discount | $ 21,528,000 | 23,511,000 |
Long-term debt, effective interest rate | 4.29% | |
Senior Secured Term Loan Facility, Effective Interest Of 4.54% [Member] | Senior Credit Facilities [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 154,546,000 | 154,666,000 |
Long-term debt, face amount | $ 160,000,000 | |
Maturity date | Nov. 2, 2018 | |
Long-term debt, unamortized discount | $ 3,054,000 | 3,334,000 |
Long-term debt, effective interest rate | 4.54% | |
Senior Secured Revolving Credit Facility, Expiring On November 2, 2016 [Member] | Senior Credit Facilities [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt, face amount | $ 125,000,000 | |
Maturity date | Nov. 2, 2016 | |
11% Senior Notes Due December 31, 2019 [Member] | Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 369,016,000 | 368,701,000 |
Long-term debt, face amount | $ 375,000,000 | |
Long-term debt, stated interest rate | 11.00% | |
Maturity date | Dec. 31, 2019 | |
Long-term debt, unamortized discount | $ 5,984,000 | 6,299,000 |
Long-term debt, effective interest rate | 11.53% | |
11.25% Senior Notes Due December 31, 2020 [Member] | Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 366,844,000 | 366,529,000 |
Long-term debt, face amount | $ 375,000,000 | |
Long-term debt, stated interest rate | 11.25% | |
Maturity date | Dec. 31, 2020 | |
Long-term debt, unamortized discount | $ 8,156,000 | 8,471,000 |
Long-term debt, effective interest rate | 11.85% | |
6% Senior Notes Due February 15, 2021 [Member] | Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 244,094,000 | 243,839,000 |
Long-term debt, face amount | $ 250,000,000 | |
Long-term debt, stated interest rate | 6.00% | |
Maturity date | Feb. 15, 2021 | |
Long-term debt, unamortized discount | $ 5,906,000 | $ 6,161,000 |
Long-term debt, effective interest rate | 6.57% |
Interest Rate Swap (Narrative)
Interest Rate Swap (Narrative) (Details) $ in Thousands | 1 Months Ended | 3 Months Ended |
Jan. 31, 2012USD ($)agreement | Mar. 31, 2016USD ($)agreement | |
Number of derivatives outstanding | agreement | 3 | 2 |
Interest rate derivatives designated as cash flow hedges, notional amount | $ 640,000 | $ 650,000 |
Agreement expiration | Feb. 1, 2017 | |
Estimated reclassification as increase to interest expense | 2,136 | |
Termination value of derivatives | $ 4,954 | |
Minimum [Member] | ||
Agreement expiration | Mar. 1, 2017 | |
Maximum [Member] | ||
Agreement expiration | Mar. 1, 2020 | |
Derivative, variable interest rate | 1.25% |
Interest Rate Swap (Fair Value
Interest Rate Swap (Fair Value Of Derivative Instrument) (Details) - Designated as Hedging Instrument [Member] - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Derivatives designated as hedging instruments: | ||
Fair Values of Derivative Instruments Asset (Liability) Derivatives | $ (4,143) | $ (2,426) |
Accrued expenses [Member] | Interest Rate Swap And Cap Agreements [Member] | ||
Derivatives designated as hedging instruments: | ||
Fair Values of Derivative Instruments (Liability) Derivatives | (2,116) | (1,870) |
Other long-term liabilities [Member] | Interest Rate Swap And Cap Agreements [Member] | ||
Derivatives designated as hedging instruments: | ||
Fair Values of Derivative Instruments (Liability) Derivatives | $ (2,027) | $ (556) |
Interest Rate Swap (Effect Of D
Interest Rate Swap (Effect Of Derivative Instrument On The Accompanying Consolidated Statements Of Operations) (Details) - Designated as Hedging Instrument [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Derivatives in Cash Flow Hedging Relationships | ||
Gain/ (loss) related to effective portion of derivative financial instruments recognized in other comprehensive loss | $ (2,288) | $ (1,591) |
Gain/ (loss) related to effective portion of derivative financial instruments reclassified from accumulated other comprehensive loss to interest expense | (645) | $ (638) |
Gain/ (loss) related to ineffective portion of derivative financial instruments recognized in interest expense | $ (37) |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended |
Apr. 30, 2015 | Mar. 31, 2015 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Settlement of contingent consideration | $ 8,061 | |
Vieosoft [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Payment to terminate all future obligations related to stock purchase agreement | $ 4,650 |
Fair Value Measurements (Fair V
Fair Value Measurements (Fair Value Of Financial Instruments Measured On A Recurring Basis) (Details) $ in Thousands | Mar. 31, 2016USD ($) |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Interest rate swap and cap agreements | $ (4,143) |
Contingent consideration obligations | |
Total | $ (4,143) |
Quoted in Markets Identical (Level 1) [Member] | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Interest rate swap and cap agreements | |
Contingent consideration obligations | |
Total | |
Significant Other Observable Inputs (Level 2) [Member] | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Interest rate swap and cap agreements | $ (4,143) |
Contingent consideration obligations | |
Total | $ (4,143) |
Significant Unobservable Inputs (Level 3) [Member] | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Interest rate swap and cap agreements | |
Contingent consideration obligations | |
Total |
Fair Value Measurements (Reconc
Fair Value Measurements (Reconciliation Of The Fair Value Of The Liabilities That Use Significant Unobservable Inputs (Level 3)) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Fair Value Measurements [Abstract] | ||
Balance at beginning of period | $ (4,650) | $ (17,486) |
Adjustment of provisional amounts | (50) | |
Settlement of contingent consideration | 8,061 | |
Gain/ (loss) included in contingent consideration | 2,015 | |
Transfers out of Level 3 fair value measurements | $ 4,650 | |
Balance at end of period | $ (7,460) |
Fair Value Measurements (Carryi
Fair Value Measurements (Carrying Amount And The Estimated Fair Value Of Financial Instruments) (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2015 | Dec. 31, 2014 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Cash and cash equivalents, Carrying Amount | $ 47,893 | $ 66,655 | $ 87,735 | $ 82,306 |
Accounts receivable, Carrying Amount | 315,351 | $ 280,858 | ||
Cash and cash equivalents, Fair Value | 47,893 | |||
Accounts receivable, Fair Value | 315,351 | |||
Quoted in Markets Identical (Level 1) [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Senior Credit Facilities, Carrying Amount (Level 1) | 1,774,280 | |||
Senior Credit Facilities, Fair Value (Level 1) | 1,789,671 | |||
Significant Other Observable Inputs (Level 2) [Member] | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Senior Notes, Carrying Amount (Level 2) | 979,954 | |||
Senior Notes, Fair Value (Level 2) | $ 1,040,469 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Taxes [Abstract] | ||
Income tax benefit | $ 13,005 | $ 6,040 |
Effective Income Tax Rate Continuing Operations | 45.70% | 51.20% |
Tax Receivable Agreement Obli37
Tax Receivable Agreement Obligations To Related Parties (Narrative) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Tax Receivable Agreement Obligation To Related Parties [Abstract] | |
Percentage of cash savings | 85.00% |
Retained ratio of tax savings | 15.00% |
Cumulative payments under tax receivable agreement | $ 357,830 |
Initial fair value of tax receivable agreement | $ 177,714 |
Segment Reporting (Details)
Segment Reporting (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016USD ($)segment | Mar. 31, 2015USD ($) | |
Segment Reporting Information [Line Items] | ||
Number of operating segments | segment | 3 | |
Solution revenue | $ 311,497 | $ 258,412 |
Postage revenue | 82,711 | 87,283 |
Total revenue | 394,208 | 345,695 |
Income (loss) before income tax provision (benefit) | (28,461) | (11,787) |
Interest expense | 46,622 | 38,008 |
Depreciation and amortization | 61,127 | 48,114 |
EBITDA | 79,288 | 74,335 |
Equity compensation | 2,690 | 2,186 |
Acquisition accounting adjustments | 319 | 443 |
Acquisition-related costs | 1,608 | 837 |
Transaction-related costs and advisory fees | 1,613 | 1,517 |
Strategic initiatives, duplicative and transition costs | 3,508 | 957 |
Severance costs | 2,305 | 2,104 |
Accretion | 3,235 | 4,979 |
Impairment of long-lived assets | 66 | 839 |
Contingent consideration | (2,015) | |
Other non-routine, net | 1,634 | 1,379 |
EBITDA Adjustments | 16,978 | 13,226 |
Adjusted EBITDA | 96,266 | 87,561 |
Corporate And Eliminations [Member] | ||
Segment Reporting Information [Line Items] | ||
Solution revenue | (7,335) | (6,415) |
Postage revenue | 82,711 | 87,283 |
Total revenue | 73,494 | 79,705 |
Income (loss) before income tax provision (benefit) | (141,656) | (113,814) |
Interest expense | 46,622 | 38,008 |
Depreciation and amortization | 61,127 | 48,114 |
EBITDA | (33,907) | (27,692) |
Equity compensation | 1,767 | 1,570 |
Acquisition accounting adjustments | (68) | |
Acquisition-related costs | 492 | 308 |
Transaction-related costs and advisory fees | 1,613 | 1,517 |
Strategic initiatives, duplicative and transition costs | 1,797 | 807 |
Severance costs | (24) | 14 |
Accretion | 3,235 | 4,979 |
Impairment of long-lived assets | (61) | 66 |
Contingent consideration | 170 | |
Other non-routine, net | 989 | 539 |
EBITDA Adjustments | 9,808 | 9,902 |
Adjusted EBITDA | (24,099) | (17,790) |
Intersegment Eliminations [Member] | ||
Segment Reporting Information [Line Items] | ||
Total revenue | (1,882) | (1,163) |
Software And Analytics [Member] | Operating Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Solution revenue | 124,841 | 65,946 |
Total revenue | 125,147 | 66,124 |
Income (loss) before income tax provision (benefit) | 33,228 | 18,859 |
EBITDA | 33,228 | 18,859 |
Equity compensation | 538 | 359 |
Acquisition accounting adjustments | 199 | 283 |
Acquisition-related costs | 1,073 | 17 |
Strategic initiatives, duplicative and transition costs | 1,330 | 60 |
Severance costs | 590 | 225 |
Impairment of long-lived assets | 17 | 106 |
Other non-routine, net | 268 | 152 |
EBITDA Adjustments | 4,015 | 1,202 |
Adjusted EBITDA | 37,243 | 20,061 |
Software And Analytics [Member] | Intersegment Eliminations [Member] | ||
Segment Reporting Information [Line Items] | ||
Total revenue | (306) | (178) |
Network Solutions [Member] | Operating Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Solution revenue | 94,954 | 90,209 |
Total revenue | 95,106 | 90,261 |
Income (loss) before income tax provision (benefit) | 49,197 | 46,721 |
EBITDA | 49,197 | 46,721 |
Equity compensation | 172 | 108 |
Acquisition-related costs | 24 | 20 |
Strategic initiatives, duplicative and transition costs | 162 | 55 |
Severance costs | 706 | (141) |
Impairment of long-lived assets | 62 | 514 |
Contingent consideration | (1,530) | |
Other non-routine, net | 96 | 374 |
EBITDA Adjustments | 1,222 | (600) |
Adjusted EBITDA | 50,419 | 46,121 |
Network Solutions [Member] | Intersegment Eliminations [Member] | ||
Segment Reporting Information [Line Items] | ||
Total revenue | (152) | (52) |
Technology-Enabled Services [Member] | Operating Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Solution revenue | 99,037 | 108,672 |
Total revenue | 100,461 | 109,605 |
Income (loss) before income tax provision (benefit) | 30,770 | 36,447 |
EBITDA | 30,770 | 36,447 |
Equity compensation | 213 | 149 |
Acquisition accounting adjustments | 120 | 228 |
Acquisition-related costs | 19 | 492 |
Strategic initiatives, duplicative and transition costs | 219 | 35 |
Severance costs | 1,033 | 2,006 |
Impairment of long-lived assets | 48 | 153 |
Contingent consideration | (655) | |
Other non-routine, net | 281 | 314 |
EBITDA Adjustments | 1,933 | 2,722 |
Adjusted EBITDA | 32,703 | 39,169 |
Technology-Enabled Services [Member] | Intersegment Eliminations [Member] | ||
Segment Reporting Information [Line Items] | ||
Total revenue | $ (1,424) | $ (933) |
Accumulated Other Comprehensi39
Accumulated Other Comprehensive Income (Loss) (Summary Of Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Balance | $ 975,689 | $ 902,065 |
Change associated with foreign currency translation | 318 | (275) |
Balance | 962,277 | 896,002 |
Foreign Currency Translation Adjustment [Member] | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Balance | (1,136) | |
Change associated with foreign currency translation | 318 | |
Balance | (818) | |
Cash Flow Hedge [Member] | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Balance | (1,520) | |
Change associated with current period hedging | (284) | |
Reclassification into earnings | (645) | |
Balance | (2,449) | |
Accumulated Other Comprehensive Income (Loss) [Member] | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Balance | (2,656) | (1,955) |
Change associated with foreign currency translation | 318 | (275) |
Change associated with current period hedging | (284) | |
Reclassification into earnings | (645) | |
Balance | (3,267) | $ (2,790) |
Change Healthcare Holdings, Inc. [Member] | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Balance | 975,689 | |
Balance | $ 962,277 |
Supplemental Condensed Consol40
Supplemental Condensed Consolidating Financial Information (Condensed Consolidating Balance Sheet) (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||||
Cash and cash equivalents | $ 47,893 | $ 66,655 | $ 87,735 | $ 82,306 |
Accounts receivable, net of allowance for doubtful accounts | 315,351 | 280,858 | ||
Prepaid expenses and other current assets | 46,963 | 35,413 | ||
Total current assets | 410,207 | 382,926 | ||
Property and equipment, net | 238,152 | 244,145 | ||
Goodwill | 2,230,410 | 2,230,100 | ||
Intangible assets, net | 1,673,028 | 1,707,863 | ||
Other assets, net | 8,190 | 8,500 | ||
Total assets | 4,559,987 | 4,573,534 | ||
Current liabilities: | ||||
Accounts payable | 33,352 | 27,950 | ||
Accrued expenses | 173,779 | 167,169 | ||
Deferred revenues | 17,756 | 12,943 | ||
Current portion of long-term debt | 27,601 | 32,775 | ||
Total current liabilities | 252,488 | 240,837 | ||
Long-term debt, excluding current portion | 2,739,626 | 2,741,178 | ||
Deferred income tax liabilities | 415,556 | 430,383 | ||
Tax receivable agreement obligations to related parties | 176,728 | 173,493 | ||
Other long-term liabilities | $ 13,312 | 11,954 | ||
Commitments and contingencies | ||||
Equity | $ 962,277 | 975,689 | 896,002 | 902,065 |
Total liabilities and equity | 4,559,987 | 4,573,534 | ||
Consolidating Adjustments [Member] | ||||
Current assets: | ||||
Due from affiliates | (203,603) | (135,406) | ||
Investment in consolidated subsidiaries | (1,714,409) | (1,790,964) | ||
Other assets, net | (266,215) | (253,510) | ||
Total assets | (2,184,227) | (2,179,880) | ||
Current liabilities: | ||||
Due to affiliates | (203,603) | (135,406) | ||
Deferred income tax liabilities | $ (266,215) | (253,510) | ||
Commitments and contingencies | ||||
Equity | $ (1,714,409) | (1,790,964) | ||
Total liabilities and equity | (2,184,227) | (2,179,880) | ||
Change Healthcare Holdings, Inc. [Member] | ||||
Current assets: | ||||
Cash and cash equivalents | 709 | 738 | 801 | 796 |
Prepaid expenses and other current assets | 5,978 | 2,234 | ||
Total current assets | 6,687 | 2,972 | ||
Property and equipment, net | 2 | 3 | ||
Due from affiliates | 203,603 | 135,406 | ||
Investment in consolidated subsidiaries | 1,714,409 | 1,790,964 | ||
Intangible assets, net | 700 | 1,000 | ||
Other assets, net | 266,652 | 253,960 | ||
Total assets | 2,192,053 | 2,184,305 | ||
Current liabilities: | ||||
Accounts payable | 656 | |||
Accrued expenses | 25,321 | 10,689 | ||
Current portion of long-term debt | 8,099 | 8,099 | ||
Total current liabilities | 34,076 | 18,788 | ||
Long-term debt, excluding current portion | 1,016,195 | 1,015,243 | ||
Tax receivable agreement obligations to related parties | 176,728 | 173,493 | ||
Other long-term liabilities | $ 2,777 | 1,092 | ||
Commitments and contingencies | ||||
Equity | $ 962,277 | 975,689 | ||
Total liabilities and equity | 2,192,053 | 2,184,305 | ||
Guarantor Subsidiaries [Member] | ||||
Current assets: | ||||
Cash and cash equivalents | 47,184 | 65,917 | $ 86,934 | $ 81,510 |
Accounts receivable, net of allowance for doubtful accounts | 315,351 | 280,858 | ||
Prepaid expenses and other current assets | 40,985 | 33,179 | ||
Total current assets | 403,520 | 379,954 | ||
Property and equipment, net | 238,150 | 244,142 | ||
Goodwill | 2,230,410 | 2,230,100 | ||
Intangible assets, net | 1,672,328 | 1,706,863 | ||
Other assets, net | 7,753 | 8,050 | ||
Total assets | 4,552,161 | 4,569,109 | ||
Current liabilities: | ||||
Accounts payable | 32,696 | 27,950 | ||
Accrued expenses | 148,458 | 156,480 | ||
Deferred revenues | 17,756 | 12,943 | ||
Current portion of long-term debt | 19,502 | 24,676 | ||
Total current liabilities | 218,412 | 222,049 | ||
Due to affiliates | 203,603 | 135,406 | ||
Long-term debt, excluding current portion | 1,723,431 | 1,725,935 | ||
Deferred income tax liabilities | 681,771 | 683,893 | ||
Other long-term liabilities | $ 10,535 | 10,862 | ||
Commitments and contingencies | ||||
Equity | $ 1,714,409 | 1,790,964 | ||
Total liabilities and equity | $ 4,552,161 | $ 4,569,109 |
Supplemental Condensed Consol41
Supplemental Condensed Consolidating Financial Information (Condensed Consolidating Statement Of Operations) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Condensed Income Statements [Line Items] | ||
Solutions revenue | $ 311,497 | $ 258,412 |
Postage revenue | 82,711 | 87,283 |
Total revenue | 394,208 | 345,695 |
Costs and expenses: | ||
Cost of operations (exclusive of depreciation and amortization below) | 146,488 | 121,187 |
Development and engineering | 14,792 | 10,825 |
Sales, marketing, general and administrative | 67,628 | 48,262 |
Customer postage | 82,711 | 87,283 |
Depreciation and amortization | 61,127 | 48,114 |
Accretion | 3,235 | 4,979 |
Impairment of long-lived assets | 66 | 839 |
Operating income (loss) | 18,161 | 24,206 |
Interest expense, net | 46,622 | 38,008 |
Contingent consideration | (2,015) | |
Income (loss) before income tax provision (benefit) | (28,461) | (11,787) |
Income tax provision (benefit) | (13,005) | (6,040) |
Net income (loss) | (15,456) | (5,747) |
Consolidating Adjustments [Member] | ||
Costs and expenses: | ||
Equity in earnings of consolidated subsidiaries | 182 | 14,172 |
Income (loss) before income tax provision (benefit) | (182) | (14,172) |
Net income (loss) | (182) | (14,172) |
Change Healthcare Holdings, Inc. [Member] | ||
Costs and expenses: | ||
Sales, marketing, general and administrative | 3,267 | 3,052 |
Depreciation and amortization | 301 | 2,251 |
Accretion | 3,235 | 4,979 |
Operating income (loss) | (6,803) | (10,282) |
Equity in earnings of consolidated subsidiaries | (182) | (14,172) |
Interest expense, net | 20,826 | 23,282 |
Income (loss) before income tax provision (benefit) | (27,447) | (19,392) |
Income tax provision (benefit) | (11,991) | (13,645) |
Net income (loss) | (15,456) | (5,747) |
Guarantor Subsidiaries [Member] | ||
Condensed Income Statements [Line Items] | ||
Solutions revenue | 311,497 | 258,412 |
Postage revenue | 82,711 | 87,283 |
Total revenue | 394,208 | 345,695 |
Costs and expenses: | ||
Cost of operations (exclusive of depreciation and amortization below) | 146,488 | 121,187 |
Development and engineering | 14,792 | 10,825 |
Sales, marketing, general and administrative | 64,361 | 45,210 |
Customer postage | 82,711 | 87,283 |
Depreciation and amortization | 60,826 | 45,863 |
Impairment of long-lived assets | 66 | 839 |
Operating income (loss) | 24,964 | 34,488 |
Interest expense, net | 25,796 | 14,726 |
Contingent consideration | (2,015) | |
Income (loss) before income tax provision (benefit) | (832) | 21,777 |
Income tax provision (benefit) | (1,014) | 7,605 |
Net income (loss) | $ 182 | $ 14,172 |
Supplemental Condensed Consol42
Supplemental Condensed Consolidating Financial Information (Condensed Consolidating Statement Of Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Condensed Statement of Comprehensive Income (Loss) [Line Items] | ||
Net income (loss) | $ (15,456) | $ (5,747) |
Other comprehensive income (loss): | ||
Changes in fair value of interest rate swap, net of taxes | (929) | (560) |
Foreign currency translation adjustment | 318 | (275) |
Other comprehensive income (loss) | (611) | (835) |
Total comprehensive income (loss) | (16,067) | (6,582) |
Consolidating Adjustments [Member] | ||
Condensed Statement of Comprehensive Income (Loss) [Line Items] | ||
Net income (loss) | (182) | (14,172) |
Other comprehensive income (loss): | ||
Equity in other comprehensive earnings | (318) | 275 |
Other comprehensive income (loss) | (318) | 275 |
Total comprehensive income (loss) | (500) | (13,897) |
Change Healthcare Holdings, Inc. [Member] | ||
Condensed Statement of Comprehensive Income (Loss) [Line Items] | ||
Net income (loss) | (15,456) | (5,747) |
Other comprehensive income (loss): | ||
Changes in fair value of interest rate swap, net of taxes | (929) | (560) |
Equity in other comprehensive earnings | 318 | (275) |
Other comprehensive income (loss) | (611) | (835) |
Total comprehensive income (loss) | (16,067) | (6,582) |
Guarantor Subsidiaries [Member] | ||
Condensed Statement of Comprehensive Income (Loss) [Line Items] | ||
Net income (loss) | 182 | 14,172 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustment | 318 | (275) |
Other comprehensive income (loss) | 318 | (275) |
Total comprehensive income (loss) | $ 500 | $ 13,897 |
Supplemental Condensed Consol43
Supplemental Condensed Consolidating Financial Information (Condensed Consolidating Statement Of Cash Flows) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Operating activities | ||
Net income (loss) | $ (15,456) | $ (5,747) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 61,127 | 48,114 |
Accretion | 3,235 | 4,979 |
Equity compensation expense | 2,690 | 2,186 |
Deferred income tax expense (benefit) | (14,112) | (7,149) |
Amortization of debt discount and issuance costs | 3,358 | 2,270 |
Contingent consideration | (2,015) | |
Impairment of long-lived assets | 66 | 839 |
Other | 44 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (34,959) | 5,254 |
Prepaid expenses and other | (11,132) | (5,845) |
Accounts payable | 2,674 | (3,653) |
Accrued expenses, deferred revenue, and other liabilities | 14,629 | (5,535) |
Net cash provided by (used in) operating activities | 12,164 | 33,698 |
Investing activities | ||
Purchases of property and equipment | (14,204) | (12,727) |
Payments for acquisitions, net of cash acquired | (20) | |
Purchases of technology-based intangible assets | (6,761) | (35) |
Net cash provided by (used in) investing activities | (20,965) | (12,782) |
Financing activities | ||
Payments on Term Loan Facility | (4,630) | (3,620) |
Payments of deferred financing obligations | (5,296) | (4,680) |
Repurchase of Parent common stock | (35) | (2,438) |
Capital contribution from Investor Group and management | 804 | |
Payment of contingent consideration | (5,553) | |
Net cash provided by (used in) financing activities | (9,961) | (15,487) |
Net increase (decrease) in cash and cash equivalents | (18,762) | 5,429 |
Cash and cash equivalents at beginning of period | 66,655 | 82,306 |
Cash and cash equivalents at end of period | 47,893 | 87,735 |
Consolidating Adjustments [Member] | ||
Operating activities | ||
Net income (loss) | (182) | (14,172) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Equity in earnings of consolidated subsidiaries | 182 | 14,172 |
Investing activities | ||
Investment in subsidiaries, net | (82,236) | (294) |
Net cash provided by (used in) investing activities | (82,236) | (294) |
Financing activities | ||
Distributions from (to) Change Healthcare Holdings, Inc., net | 82,236 | 294 |
Net cash provided by (used in) financing activities | 82,236 | 294 |
Change Healthcare Holdings, Inc. [Member] | ||
Operating activities | ||
Net income (loss) | (15,456) | (5,747) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 301 | 2,251 |
Accretion | 3,235 | 4,979 |
Equity compensation expense | 97 | 87 |
Deferred income tax expense (benefit) | (11,749) | (13,796) |
Amortization of debt discount and issuance costs | 1,059 | 717 |
Equity in earnings of consolidated subsidiaries | (182) | (14,172) |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other | (4,668) | (3,542) |
Accounts payable | 656 | |
Accrued expenses, deferred revenue, and other liabilities | 12,995 | 10,718 |
Due to/from affiliates | (68,198) | 19,919 |
Net cash provided by (used in) operating activities | (81,910) | 1,414 |
Investing activities | ||
Investment in subsidiaries, net | 82,236 | 294 |
Net cash provided by (used in) investing activities | 82,236 | 294 |
Financing activities | ||
Payments on Term Loan Facility | (320) | (69) |
Repurchase of Parent common stock | (35) | (2,438) |
Capital contribution from Investor Group and management | 804 | |
Net cash provided by (used in) financing activities | (355) | (1,703) |
Net increase (decrease) in cash and cash equivalents | (29) | 5 |
Cash and cash equivalents at beginning of period | 738 | 796 |
Cash and cash equivalents at end of period | 709 | 801 |
Guarantor Subsidiaries [Member] | ||
Operating activities | ||
Net income (loss) | 182 | 14,172 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 60,826 | 45,863 |
Equity compensation expense | 2,593 | 2,099 |
Deferred income tax expense (benefit) | (2,363) | 6,647 |
Amortization of debt discount and issuance costs | 2,299 | 1,553 |
Contingent consideration | (2,015) | |
Impairment of long-lived assets | 66 | 839 |
Other | 44 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (34,959) | 5,254 |
Prepaid expenses and other | (6,464) | (2,303) |
Accounts payable | 2,018 | (3,653) |
Accrued expenses, deferred revenue, and other liabilities | 1,634 | (16,253) |
Due to/from affiliates | 68,198 | (19,919) |
Net cash provided by (used in) operating activities | 94,074 | 32,284 |
Investing activities | ||
Purchases of property and equipment | (14,204) | (12,727) |
Payments for acquisitions, net of cash acquired | (20) | |
Purchases of technology-based intangible assets | (6,761) | (35) |
Net cash provided by (used in) investing activities | (20,965) | (12,782) |
Financing activities | ||
Distributions from (to) Change Healthcare Holdings, Inc., net | (82,236) | (294) |
Payments on Term Loan Facility | (4,310) | (3,551) |
Payments of deferred financing obligations | (5,296) | (4,680) |
Payment of contingent consideration | (5,553) | |
Net cash provided by (used in) financing activities | (91,842) | (14,078) |
Net increase (decrease) in cash and cash equivalents | (18,733) | 5,424 |
Cash and cash equivalents at beginning of period | 65,917 | 81,510 |
Cash and cash equivalents at end of period | $ 47,184 | $ 86,934 |