Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 30, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | Envision Healthcare Holdings, Inc. | |
Entity Central Index Key | 1,578,318 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 186,730,276 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 129,890 | $ 318,895 |
Insurance collateral | 27,808 | 32,828 |
Trade and other accounts receivable, net | 1,133,615 | 950,115 |
Parts and supplies inventory | 25,220 | 24,484 |
Prepaids and other current assets | 57,084 | 36,917 |
Total current assets | 1,373,617 | 1,363,239 |
Non-current assets: | ||
Property, plant and equipment, net | 231,873 | 211,276 |
Intangible assets, net | 783,766 | 524,482 |
Insurance collateral | 9,455 | 10,568 |
Goodwill | 2,808,187 | 2,538,633 |
Other long-term assets | 90,042 | 55,555 |
Total assets | 5,296,940 | 4,703,753 |
Current liabilities: | ||
Accounts payable | 68,625 | 47,584 |
Accrued liabilities | 498,243 | 412,657 |
Current deferred tax liabilities | 108,031 | 104,278 |
Current portion of long-term debt and capital lease obligations | 12,374 | 12,349 |
Total current liabilities | 687,273 | 576,868 |
Long-term debt and capital lease obligations | 2,226,210 | 2,025,877 |
Long-term deferred tax liabilities | 193,535 | 130,963 |
Insurance reserves | 222,387 | 180,639 |
Other long-term liabilities | 23,351 | 20,365 |
Total liabilities | $ 3,352,756 | $ 2,934,712 |
Commitments and contingencies | ||
Equity: | ||
Common stock ($0.01 par value; 2,000,000,000 shares authorized, 185,695,421 and 183,679,113 issued and outstanding as of June 30, 2015 and December 31, 2014, respectively) | $ 1,863 | $ 1,837 |
Additional paid-in capital | 1,667,325 | 1,616,747 |
Retained earnings | 246,876 | 143,849 |
Accumulated other comprehensive income (loss) | (1,915) | (1,856) |
Total Envision Healthcare Holdings, Inc. equity | 1,914,149 | 1,760,577 |
Noncontrolling interest | 30,035 | 8,464 |
Total equity | 1,944,184 | 1,769,041 |
Total liabilities and equity | $ 5,296,940 | $ 4,703,753 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 |
CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 2,000,000,000 | 2,000,000,000 |
Common stock, shares issued | 186,337,930 | 183,679,113 |
Common stock, shares outstanding | 186,337,930 | 183,679,113 |
Preferred stock, par value (in dollars per share) | $ (0.01) | $ (0.01) |
Preferred stock, shares authorized | 200,000,000 | 200,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | ||||
Revenue, net of contractual discounts | $ 2,478,177 | $ 1,989,957 | $ 7,147,906 | $ 5,802,153 |
Provision for uncompensated care | (1,110,807) | (839,628) | (3,181,776) | (2,562,286) |
Net revenue | 1,367,370 | 1,150,329 | 3,966,130 | 3,239,867 |
Compensation and benefits | 997,213 | 819,353 | 2,874,328 | 2,330,021 |
Operating expenses | 165,099 | 129,535 | 472,954 | 364,885 |
Insurance expense | 41,091 | 27,527 | 114,783 | 90,091 |
Selling, general and administrative expenses | 29,463 | 22,851 | 87,161 | 65,820 |
Depreciation and amortization expense | 44,547 | 36,796 | 129,364 | 108,786 |
Restructuring charges | 30,000 | 366 | 30,000 | 4,906 |
Income from operations | 59,957 | 113,901 | 257,540 | 275,358 |
Interest income from restricted assets | 149 | 175 | 442 | 507 |
Interest expense, net | (27,579) | (25,742) | (82,360) | (84,793) |
Realized gains (losses) on investments | (466) | (34) | 648 | |
Other income (expense), net | (221) | (660) | (593) | (3,432) |
Loss on early debt extinguishment | (66,397) | |||
Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary | 32,306 | 87,208 | 174,995 | 121,891 |
Income tax benefit (expense) | (13,795) | (34,437) | (69,009) | (49,700) |
Income (loss) before equity in earnings of unconsolidated subsidiary | 18,511 | 52,771 | 105,986 | 72,191 |
Equity in earnings of unconsolidated subsidiary | 59 | 72 | 202 | 185 |
Net income (loss) | 18,570 | 52,843 | 106,188 | 72,376 |
Less: Net (income) loss attributable to noncontrolling interest | (1,334) | (67) | (3,161) | 3,233 |
Net income (loss) attributable to Envision Healthcare Holdings, Inc. | $ 17,236 | $ 52,776 | $ 103,027 | $ 75,609 |
Net income (loss) per share attributable to Envision Healthcare Holdings, Inc.: | ||||
Basic (in dollars per share) | $ 0.09 | $ 0.29 | $ 0.56 | $ 0.42 |
Diluted (in dollars per share) | $ 0.09 | $ 0.28 | $ 0.54 | $ 0.40 |
Weighted-average common shares outstanding: | ||||
Basic (in shares) | 185,969,475 | 182,564,837 | 185,214,021 | 181,502,232 |
Diluted (in shares) | 191,769,107 | 190,184,323 | 191,373,606 | 189,707,609 |
Comprehensive income (loss): | ||||
Net income (loss) | $ 18,570 | $ 52,843 | $ 106,188 | $ 72,376 |
Other comprehensive income (loss), net of tax: | ||||
Unrealized holding gains (losses) during the period | (378) | (310) | (480) | (1,012) |
Unrealized gains (losses) on derivative financial instruments | (348) | (74) | 421 | 240 |
Total other comprehensive income (loss), net of tax | (726) | (384) | (59) | (772) |
Comprehensive income (loss) | 17,844 | 52,459 | 106,129 | 71,604 |
Less: Comprehensive (income) loss attributable to noncontrolling interest | (1,334) | (67) | (3,161) | 3,233 |
Comprehensive income (loss) attributable to Envision Healthcare Holdings, Inc. | $ 16,510 | $ 52,392 | $ 102,968 | $ 74,837 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash Flows from Operating Activities | ||
Net income (loss) | $ 106,188 | $ 72,376 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization expense | 135,716 | 116,133 |
(Gain) loss on disposal of property, plant and equipment | 250 | (2,094) |
Equity-based compensation expense | 4,786 | 3,612 |
Excess tax benefits from equity-based compensation | (34,051) | (38,520) |
Loss on early debt extinguishment | 66,397 | |
Equity in earnings of unconsolidated subsidiary | (202) | (185) |
Dividends received | 370 | 430 |
Deferred income taxes | 3,503 | 1,456 |
Changes in operating assets/liabilities, net of acquisitions: | ||
Trade and other accounts receivable, net | (83,065) | (92,537) |
Parts and supplies inventory | (485) | (574) |
Prepaids and other current assets | (3,548) | (10,959) |
Accounts payable and accrued liabilities | 67,740 | 85,008 |
Insurance reserves | (2,257) | (6,539) |
Net cash provided by (used in) operating activities | 194,945 | 194,004 |
Cash Flows from Investing Activities | ||
Purchases of available-for-sale securities | (2,507) | (52,654) |
Sales and maturities of available-for-sale securities | 9,409 | 40,425 |
Purchases of property, plant and equipment | (65,687) | (55,659) |
Proceeds from sale of property, plant and equipment | 377 | 2,299 |
Acquisition of businesses, net of cash received | (568,570) | (199,261) |
Net change in insurance collateral | (1,250) | 2,021 |
Other investing activities | (1,226) | (1,774) |
Net cash provided by (used in) investing activities | (629,454) | (264,603) |
Cash Flows from Financing Activities | ||
Borrowings under the ABL Facility | 365,000 | 50,000 |
Proceeds from issuance of senior notes | 740,625 | |
Repayments of the Term Loan | (10,029) | (6,686) |
Repayments of the ABL Facility | (155,000) | (50,000) |
Repayments of senior notes | (607,750) | |
Payment for debt extinguishment premiums | (37,630) | |
Debt issuance costs | (27) | (2,221) |
Proceeds from stock options exercised | 11,767 | 7,405 |
Excess tax benefits from equity-based compensation | 34,051 | 38,520 |
Shares repurchased for tax withholdings | (14,430) | |
Contributions from (distributions to) noncontrolling interest, net | 100 | 250 |
Other financing activities | (358) | (5,026) |
Net cash provided by (used in) financing activities | 245,504 | 113,057 |
Change in cash and cash equivalents | (189,005) | 42,458 |
Cash and cash equivalents, beginning of period | 318,895 | 204,712 |
Cash and cash equivalents, end of period | $ 129,890 | $ 247,170 |
General
General | 9 Months Ended |
Sep. 30, 2015 | |
General | |
General | 1. General Basis of Presentation of Financial Statements Envision Healthcare Holdings, Inc. is organized as a holding company that operates through various subsidiaries. Envision Healthcare Corporation is a wholly-owned subsidiary of the Company. The accompanying interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) to reflect the consolidated financial position, results of operations and cash flows of the Company for interim reporting, and accordingly, do not include all of the disclosures required for annual financial statements. In the opinion of management, the consolidated financial statements of the Company include all normal recurring adjustments necessary for a fair presentation of the periods presented. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year ending December 31, 2015. For further information on the Company’s significant accounting policies and other information, see the Company’s consolidated financial statements, including the accounting policies and notes thereto for the year ended December 31, 2014, which includes all disclosures required by GAAP, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The Company’s business is conducted primarily through two operating subsidiaries, EmCare Holdings, Inc. (“EmCare”), its facility-based and post-acute care physician services segment, and American Medical Response, Inc. (“AMR”), its healthcare transportation services segment. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Consolidation The consolidated financial statements of the Company include all of its wholly-owned subsidiaries, including Corporation, EmCare and AMR and their respective subsidiaries and affiliated physician groups. All significant intercompany transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of financial statements requires management to make estimates and assumptions relating to the reporting of results of operations, financial condition and related disclosure of contingent assets and liabilities at the date of the financial statements including, but not limited to, estimates and assumptions for accounts receivable and insurance related reserves. Actual results may differ from those estimates under different assumptions or conditions. Insurance Collateral Insurance collateral is comprised of investments in U.S. Treasuries and marketable equity and debt securities held by the Company’s captive insurance subsidiary that supports the Company’s insurance program and reserves, as well as cash deposits with third parties. Certain of these investments, if sold or otherwise liquidated, would have to be replaced by other suitable financial assurances and are, therefore, considered restricted. These investments are designated as available-for-sale and reported at fair value with the related temporary unrealized gains and losses reported as a separate component of accumulated other comprehensive income (loss), net of deferred income tax. Declines in the fair value of a marketable investment security which are determined to be other-than-temporary are recognized in the statements of operations, thus establishing a new cost basis for such investment. Investment income earned on these investments is reported as interest income from restricted assets in the statements of operations. Realized gains and losses are determined based on an average cost basis. Insurance collateral also includes a receivable from insurers of $0.5 million and $1.5 million as of September 30, 2015 and December 31, 2014, respectively, for liabilities in excess of the Company’s self-insured retention. Trade and Other Accounts Receivable, net The Company estimates its allowances based on payor reimbursement schedules, historical collections and write-off experience and other economic data. The Company’s billing systems do not provide contractual allowances or uncompensated care reserves on outstanding patient accounts. The allowance for uncompensated care is related principally to receivables recorded for self-pay patients and is not recorded on specific accounts due to the volume and variability of individual patient receivable collections. While the billing systems do not specifically record the allowance for doubtful accounts to individual accounts owed or specific payor classifications, the portion of the allowance for uncompensated care associated with fee-for-service charges as of December 31, 2014 was equal to approximately 86% and 82% of outstanding self-pay receivables for EmCare and AMR, respectively, consistent with the Company’s collection history. Account balances are charged off against the uncompensated care allowance when it is probable the receivable will not be recovered and to the contractual allowance when payment is received. The Company’s accounts receivable and allowances as of September 30, 2015 and December 31, 2014 were as follows (in thousands): September 30, December 31, 2015 2014 Gross trade accounts receivable $ $ Allowance for contractual discounts Allowance for uncompensated care Trade accounts receivable, net Other receivables, net Trade and other accounts receivable, net $ $ Other receivables primarily represent employee advances and other miscellaneous receivables. Accounts receivable allowances at EmCare are estimated based on cash collection and write-off experience at a facility level contract and facility specific payor mix. These allowances are reviewed and adjusted monthly through revenue provisions. The Company continuously compares actual cash collected on a date of service basis to the revenue recorded for that period and records any adjustment necessary for an overage or deficit in these allowances based on actual collections. AMR contractual allowances are determined primarily on payor reimbursement schedules that are included and regularly updated in the billing systems, and by historical collection experience. The billing systems calculate the difference between payor specific gross billings and contractually agreed to, or governmentally driven, reimbursement rates. The allowance for uncompensated care at AMR is related principally to receivables recorded for self-pay patients. AMR’s allowances on self-pay accounts receivable are estimated based on historical write-off experience. Business Combinations Assets and liabilities of an acquired business are recorded at their fair values at the date of acquisition. The excess of the acquisition consideration over the estimated fair values is recorded as goodwill. All acquisition costs are expensed as incurred. While the Company uses its best estimates and assumptions as a part of the acquisition consideration allocation process to accurately value assets acquired and liabilities assumed at the acquisition date, the estimates are inherently uncertain and subject to refinement. As a result, during the measurement period the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period any subsequent adjustments are recorded as income or expense. Insurance Reserves Insurance reserves are established for automobile, workers compensation, general liability and professional liability claims utilizing policies with both fully-insured and self-insured components. This includes the use of an off-shore captive insurance program through a wholly-owned subsidiary for certain liability programs for both EmCare and AMR. In those instances where the Company has obtained third-party insurance coverage, the Company normally retains liability for the first $1 to $3 million of the loss. Insurance reserves cover known claims and incidents within the level of Company retention that may result in the assertion of additional claims, as well as claims from unknown incidents that may be asserted arising from activities through the balance sheet date. The Company establishes reserves for claims based upon an assessment of actual claims and claims incurred but not reported. The reserves are established based on quarterly consultation with third-party independent actuaries using actuarial principles and assumptions that consider a number of factors, including historical claim payment patterns and legal costs, changes in case reserves and the assumed rate of inflation in healthcare costs and property damage repairs. Claims are discounted at a rate of 1.5 % which is commensurate with the risk free rate. The Company’s most recent actuarial valuation was completed in September 2015. As a result of this and previous actuarial valuations, the Company recorded increases in its provision for insurance liabilities of $ 5.1 million and $ 9.1 million for the three and nine months ended September 30, 2015, respectively, as compared to a decrease of $0.7 million and an increase of $6.6 million for the three and nine months ended September 30, 2014, respectively, related to reserves for losses in prior years. Public Offerings On each of February 5, 2014 and July 10, 2014, the Company registered the offering and sale of 27,500,000 shares of common stock, and an additional 4,125,000 shares of common stock, upon the underwriters’ exercise of their overallotment option in each offering, which were sold by certain stockholders of the Company, including investment funds sponsored by, or affiliated with Clayton, Dubilier & Rice, LLC (“CD&R Affiliates”), to the underwriters at $30.50 per share and $34.00 per share, respectively, less an underwriting discount. On September 30, 2014, the Company registered the offering and sale of 17,500,000 shares of common stock by certain stockholders of the Company, including the CD&R Affiliates, to the underwriter at $34.97 per share. Additionally, on March 5, 2015, the Company registered the offering and sale of 50,857,145 shares of common stock by CD&R Affiliates, which constituted the remaining shares beneficially owned by them, to the underwriter at $36.25 per share, less an underwriting discount. The underwriters in these selling stockholder transactions offered the shares to the public from time to time at prevailing market prices or at negotiated prices. The Company did not receive any of the proceeds from the sale of the shares sold by the selling stockholders in these transactions, including any shares sold pursuant to any exercise of the underwriters’ overallotment option. Financial Instruments and Concentration of Credit Risk The Company’s cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, insurance collateral, long-term debt and other long-term liabilities constitute financial instruments. Based on management’s estimates, the carrying value of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximates fair value as of September 30, 2015 and December 31, 2014. Concentration of credit risks in accounts receivable is limited, due to the large number of customers comprising the Company’s customer base throughout the United States. A significant component of the Company’s revenue is derived from Medicare and Medicaid. Given that these are government programs, the credit risk for these customers is considered low. The Company performs ongoing credit evaluations of its other customers, but does not require collateral to support customer accounts receivable. The Company establishes an allowance for uncompensated care based on the credit risk applicable to particular customers, historical trends and other relevant information. For the nine months ended September 30, 2015 and 2014, the Company derived approximately 35% and 33% , respectively, of its revenue from Medicare and Medicaid, 62% and 64% , respectively, from insurance providers and contracted payors, and 3% and 3% , respectively, directly from patients. The Company estimates the fair value of its fixed rate senior notes based on an analysis in which the Company evaluates market conditions, related securities, various public and private offerings, and other publicly available information (Level 2, as defined below). The estimated fair value of the senior notes as of September 30, 2015 and December 31, 2014 was approximately $744.4 million, with a carrying amount of $750.0 million. Fair Value Measurement The Company classifies its financial instruments that are reported at fair value based on a hierarchal framework which ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is impacted by a number of factors, including the type of instrument and the characteristics specific to the instrument. Instruments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. Financial instruments measured and reported at fair value are classified and disclosed in one of the following categories: Level 1—Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. The Company does not adjust the quoted price for these assets or liabilities, which include investments held in connection with the Company’s captive insurance program. Level 2—Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Balances in this category include derivatives and corporate bonds. Level 3—Pricing inputs are unobservable as of the reporting date and reflect the Company’s own assumptions about the fair value of the asset or liability. Balances in this category include the Company’s estimate, using a combination of internal and external fair value analyses, of contingent consideration for acquisitions described in Note 4. The following table summarizes the valuation of the Company’s financial instruments by the above fair value hierarchy levels as of September 30, 2015 and December 31, 2014 (in thousands): September 30, 2015 Description Level 1 Level 2 Level 3 Total Assets: Available-for-sale securities (insurance collateral) $ $ $ — $ Liabilities: Contingent consideration — — Fuel hedge — — December 31, 2014 Description Level 1 Level 2 Level 3 Total Assets: Available-for-sale securities (insurance collateral) $ $ — $ — $ Liabilities: Contingent consideration — — Fuel hedge — — Interest rate swap — — The contingent consideration balance classified as a Level 3 liability has increased $2.1 million since December 31, 2014 as a result of acquisitions completed during the nine months ended September 30, 2015. During the nine months ended September 30, 2015, the Company had transfers of $5.1 million out of Level 1 and into Level 2 due to limited quoted market prices at the measurement date for certain available-for-sale securities . During the nine months ended September 30 2014, the Company had no transfers between Level 1 and Level 2 fair value measurements. Revenue Recognition Fee-for-service revenue is recognized at the time of service and is recorded net of provisions for contractual discounts and estimated uncompensated care. Fee-for-service revenue represents billings for services provided to patients, for which the Company receives payment from the patient or their third-party payor. Provisions for contractual discounts are related to differences between gross charges and specific payor, including governmental, reimbursement schedules. The Company records fee-for-service revenue, net of the contractual discounts based on the information entered into the Company’s billing systems from received medical charts. An estimate for unprocessed medical charts for a given service period is made and adjusted in future periods based on actual medical charts processed. Information entered into the billing systems is subject to change, e.g. change in payor status, and may impact recorded fee-for-service revenue, net of the contractual discounts. Such changes are recognized in the period the change is known. Revenue from home health services, net of revenue adjustments and provisions for contractual discounts, is earned and billed either on an episode of care basis (“episodic-based revenue”), on a per visit basis, or on a daily basis depending upon the payment terms and conditions established with each payor for services provided. Revenue recognized on a non-episodic basis is recorded in a similar manner to the Company’s fee-for-service revenue. Home health service revenue under the Medicare prospective payment system is based on a 60 -day episode payment rate that is subject to adjustment based on certain variables including, but not limited to: (a) a low utilization payment adjustment if the number of visits was fewer than five; (b) a partial payment if the patient transferred to another provider or the Company received a patient from another provider before completing the episode; (c) an outlier payment if the patient’s care was unusually costly (capped at 10% of total reimbursement per provider number); (d) a payment adjustment based upon the level of therapy services required; (e) acceleration if an episode concludes satisfactorily before the end of the 60-day episode period. Adjustments are made to reflect differences between estimated and actual payment amounts, the inability to obtain appropriate billing documentation or authorizations and other reasons unrelated to credit risk. These adjustments are estimated based on historical experience and are recorded in the period in which services are rendered as an estimated revenue adjustment and a corresponding reduction to patient accounts receivable. In addition to revenue recognized on completed episodes, a portion of revenue is recognized on episodes in progress. Episodes in progress are 60-day episodes of care that are active during the reporting period, but were not completed as of the end of the period. Revenue is estimated on a monthly basis based upon historical trends. The primary factors underlying this estimate are the number of episodes in progress at the end of the reporting period, expected Medicare revenue per episode and the calculation of the number of days episodes were active in the period based on the 60-day estimate from the episode start date. Non-Medicare episodic-based revenue is recognized in a similar manner as the Medicare episodic-based revenue; however, rates paid by other insurance carriers can vary based upon the negotiated terms. Revenue from contract staffing assignments, net of sales adjustments and discounts, are recognized when earned, based on the hours worked by the Company’s contract professionals. Conversion and direct hire fees are recognized when the employment candidate accepts permanent employment and all obligations are satisfied. The Company includes reimbursed expenses in revenue, net of contractual discounts and the associated amount of reimbursement expense in compensation and benefits. Subsidy and fee revenue primarily represent hospital subsidies and fees at EmCare and fees for stand-by, special event and community subsidies at AMR. Provisions for estimated uncompensated care, or bad debts, are related principally to the number of self-pay patients treated in the period. The Company has historically reported Medicare and Medicaid managed care in the line “Commercial insurance and managed care”. During 2014, the Company determined that Medicare and Medicaid managed care programs would be better categorized in the Medicare and Medicaid payor class and has reclassified those encounters in the presentation below and conformed prior periods to current period presentation. Net revenue for the three and nine months ended September 30, 2015 and 2014 consisted of the following (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenue, net of contractual discounts, excluding subsidies and fees: Medicare $ $ $ $ Medicaid Commercial insurance and managed care (excluding Medicare and Medicaid managed care) Self-pay Sub-total Subsidies and fees Revenue, net of contractual discounts Provision for uncompensated care Net revenue $ $ $ $ Healthcare reimbursement is complex and may involve lengthy delays. Third-party payors are continuing their efforts to control expenditures for healthcare, including proposals to revise reimbursement policies. The Company has from time to time experienced delays in reimbursement from third-party payors. In addition, third-party payors may disallow, in whole or in part, claims for payment based on determinations that certain amounts are not reimbursable under plan coverage, determinations of medical necessity, or the need for additional information. Laws and regulations governing the Medicare and Medicaid programs are very complex and subject to interpretation. Revenue is recognized on an estimated basis in the period in which related services are rendered. As a result, there is a reasonable possibility that recorded estimates will change materially in the short-term. Such amounts, including adjustments between provisions for contractual discounts and uncompensated care, are adjusted in future periods, as adjustments become known. These adjustments in the aggregate decreased the contractual discount and uncompensated care provisions (and correspondingly increased net revenue) by approximately $4.2 million and $11.6 million for the three and nine months ended September 30, 2015, respectively, and by approximately $1.1 million for the three months ended September 30, 2014 and increased the contractual discount and uncompensated care provisions (and correspondingly decreased net revenue) by approximately $2.7 million for the nine months ended September 30, 2014. The Company provides services to patients who have no insurance or other third-party payor coverage. In certain circumstances, federal law requires providers to render services to any patient who requires care regardless of their ability to pay. Services to these patients are not considered to be charity care and provisions for uncompensated care for these services are estimated accordingly. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”) to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards. The guidance will be effective for public companies for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with early adoption for annual reporting periods beginning after December 15, 2016, permitted. The Company has not yet determined the effects, if any, that adoption of ASU 2014-09 may have on its consolidated financial position or results of operations or the method of adoption. In February 2015, the FASB issued ASU No. 2015-02, Amendments to the Consolidation Analysis (“ASU 2015-02”), which amends existing accounting standards for consolidation under the variable interest entity and voting interest entity models. The new guidance changes the analysis for determining whether a fee paid to a decision maker or service provider is a variable interest. ASU 2015-02 is effective for interim and annual periods beginning after December 15, 2015. Early adoption is permitted. Entities may choose to adopt the standard using either a full retrospective approach or a modified retrospective approach. The Company has not yet determined the effects, if any, that adoption of ASU 2015-02 may have on its consolidated financial position or results of operations or the method of adoption. In April 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”) which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. ASU 2015-03 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. The Company expects to adopt this guidance when effective, and does not expect this guidance to have a significant impact on its financial statements. |
Basic and Diluted Net Income (L
Basic and Diluted Net Income (Loss) Per Share | 9 Months Ended |
Sep. 30, 2015 | |
Basic and Diluted Net Income (Loss) Per Share | |
Basic and Diluted Net Income (Loss) Per Share | 3. Basic and Diluted Net Income (Loss) Per Share The Company presents both basic earnings per share (“EPS”) and diluted EPS. Basic EPS excludes potential dilution and is computed by dividing “Net income (loss) attributable to Envision Healthcare Holdings, Inc.” by the “Weighted-average common shares outstanding” for the period. Diluted EPS reflects the potential dilution that could occur if stock awards were exercised. The potential dilution from stock awards was computed using the treasury stock method based on the average market value of the Company’s common stock. The following table presents EPS amounts for all periods and the basic and diluted weighted-average shares outstanding used in the calculation (in thousands, except share and per share amounts). Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Net income (loss) attributable to Envision Healthcare Holdings, Inc. $ $ $ $ Weighted-average common shares outstanding — common stock: Basic Dilutive impact of stock awards outstanding Diluted Net income (loss) per share attributable to Envision Healthcare Holdings, Inc.: Basic $ $ $ $ Diluted $ $ $ $ For the three and nine months ended September 30, 2015 , there were stock awards to acquire 57,087 shares and 63,654 shares of common stock outstanding, respectively, not included in the weighted-average common shares outstanding above, as their effect is anti-dilutive. For the three and nine months ended September 30, 2014 , there were no stock awards of common stock outstanding excluded from the weighted-average common shares outstanding above. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2015 | |
Acquisitions | |
Acquisitions | 4. Acquisitions 2015 Acquisitions Scottsdale Emergency Associates, LTD (“SEA”). On January 30, 2015, the Company acquired the stock of SEA for total purchase consideration of $104.8 million paid in cash. SEA is an emergency physician group serving the greater Phoenix market, with 40 physicians and more than a dozen mid-level providers. The Company acquired SEA to achieve certain operational and strategic benefits. The goodwill recognized in connection with the SEA acquisition is assigned to the EmCare segment and is primarily attributable to synergies that are expected to be achieved through the integration of SEA into the existing operations of EmCare. Of the goodwill recorded, none is tax deductible. The allocation of the purchase price is in the table below, which is subject to adjustment based upon the completion of purchase price allocations (in thousands): Cash and cash equivalents $ Accounts receivable Prepaid and other current assets Acquired intangible assets Goodwill Accounts payable Accrued liabilities Long-term deferred tax liabilities Total purchase price $ During the nine months ended September 30, 2015 , the Company made purchase price allocation adjustments including a reclassification from goodwill to intangible assets of $49.2 million, an increase in the long-term deferred tax liabilities of $19.0 million, an increase in accrued liabilities of $10.1 million to record the fully funded retirement plan with a corresponding increase in prepaid and other current assets, and other adjustments to opening balances for assets and liabilities. VISTA Staffing Solutions (“VISTA”). On February 1, 2015, the Company acquired the stock of VISTA, a leading provider of locum tenens staffing and permanent placement services for physicians, nurse practitioners and physician assistants for total purchase consideration of $123.8 million , subject to a working capital adjustment of $0.5 million, paid in cash. VISTA operates throughout the United States as well as in Australia and New Zealand. The Company acquired VISTA to expand into locum tenens staffing. The goodwill recognized in connection with the VISTA acquisition is assigned to the EmCare segment and is primarily attributable to synergies that are expected to be achieved through the integration of VISTA into the existing operations of EmCare. Of the goodwill recorded, $13.8 million is tax deductible. The allocation of the purchase price is in the table below, which is subject to adjustment based upon the completion of purchase price allocations (in thousands): Cash and cash equivalents $ Accounts receivable Prepaid and other current assets Property, plant and equipment Acquired intangible assets Goodwill Other long-term assets Accounts payable Accrued liabilities Long-term deferred tax liabilities Insurance reserves Other long-term liabilities Total purchase price $ During the nine months ended September 30, 2015 , the Company made purchase price allocation adjustments including a reclassification from goodwill to intangible assets of $8.4 million, an increase in the long-term deferred tax liabilities of $6.2 million, and other adjustments to opening balances for assets and liabilities. Emergency Medical Associates. On February 27, 2015, the Company acquired the stock of Emergency Medical Associates of New Jersey, P.A. and assets of Alpha Physician Resources, LLC (collectively “EMA”) for total purchase consideration of $271.8 million, subject to working capital adjustments, paid in cash. EMA provides emergency department, hospitalist and urgent care services at 47 facilities in New Jersey, New York, Rhode Island, and North Carolina. The Company acquired EMA to achieve certain operational and strategic benefits. The goodwill recognized in connection with the EMA acquisition is assigned to the EmCare segment and is primarily attributable to synergies that are expected to be achieved through the integration of EMA into the existing operations of EmCare. Of the goodwill recorded, $9 8.1 million is tax deductible. The allocation of the purchase price is in the table below, which is subject to adjustment based upon the completion of purchase price allocations (in thousands): Cash and cash equivalents $ Accounts receivable Prepaid and other current assets Property, plant, and equipment Acquired intangible assets Goodwill Other long-term assets Accounts payable Accrued liabilities Long-term deferred tax liabilities Insurance reserves Total purchase price $ During the nine months ended September 30, 2015 , the Company made purchase price allocation adjustments including a reclassification from goodwill to intangible assets of $52.3 million, an increase in long-term deferred liabilities of $0.6 million and other adjustments to opening balances for assets and liabilities. The Company has accounted for the acquisitions of SEA, VISTA, and EMA using the acquisition method of accounting, whereby the total purchase price was allocated to the acquired identifiable net assets based on assessments of their respective fair values, and the excess of the purchase price over the fair values of these identifiable net assets was allocated to goodwill. The Company’s statements of operations for the three and nine months ended September 30, 2015 include net revenue of $120.2 million and $288.3 million for SEA, VISTA, and EMA, respectively. Other 2015 Acquisitions. On February 23, 2015 the Company acquired the stock of CareFirst, Inc., a provider of home health services in Birmingham, Alabama and surrounding areas for total purchase consideration of $7.3 million, subject to a working capital adjustment of $0.7 million, paid in cash. On July 10, 2015, the Company completed the acquisition of Vital Enterprises, Inc., Emergency Medical Transportation, Inc., and Marlboro Hudson Ambulance & Wheelchair Service, Inc. (together the “Vital/ Marlboro Entities”), providers of ambulance service operations located in the northeastern United States for total purchase consideration of $42.5 million, subject to working capital adjustments, paid in cash. The goodwill recognized in connection with the Vital/ Marlboro Entities is assigned to the AMR segment and is primarily attributable to synergies that are expected to be achieved through the integration of Vital/ Marlboro Entities into the existing operations of AMR. Of the goodwill recorded, $8.5 million is tax deductible. On September 30, 2015, the Company completed the acquisition of Northwest Tucson Emergency Physicians (“NTEP”), an emergency physician group serving the greater Tucson market, with 27 physicians and five mid-level providers for total purchase consideration of $25.0 million, subject to working capital adjustments , paid in cash , including an estimate of $2.0 million of additional payments to be made in future periods as contingent consideration. The goodwill recognized in connection with the NTEP acquisition is assigned to the EmCare segment and is primarily attributable to synergies that are expected to be achieved through the integration of NTEP into the existing operations of EmCare. Of the goodwill recorded, none is tax deductible. The Company has accounted for these acquisitions using the acquisition method of accounting, whereby the total purchase price was allocated to the acquired identifiable net assets based on assessments of their respective fair values, and the excess of the purchase price over the fair values of these identifiable net assets was allocated to goodwill. The total purchase price for these acquisitions was allocated to goodwill of $23.3 million, other acquired intangible assets of $47.1 million, net assets of $3.4 million and long-term deferred tax liabilities of $6.3 million. These allocations are subject to adjustment based upon the completion of purchase price allocations . 2014 Acquisitions Phoenix Physicians, LLC (“Phoenix Physicians”) . On June 17, 2014, the Company acquired the stock of Phoenix Physicians for a total purchase price of $169.5 million paid in cash (the “Phoenix Physicians Acquisition”). Phoenix Physicians, in part through management services agreements with professional entities, is engaged in providing medical practices support and emergency department management and staffing services to hospitals, physicians and healthcare facilities in Florida. The Company has accounted for the acquisition of Phoenix Physicians using the acquisition method of accounting, whereby the total purchase price was allocated to the acquired identifiable net assets based on assessments of their respective fair values, and the excess of the purchase price over the fair values of these identifiable net assets was allocated to goodwill. All of the goodwill is tax deductible and assigned to the EmCare segment. The final allocation of the purchase price is in the table below (in thousands): Cash and cash equivalents $ Accounts receivable Prepaid and other current assets Property, plant, and equipment Acquired intangible assets Goodwill Accounts payable Accrued liabilities Long-term deferred tax liabilities Insurance reserves Total purchase price $ During the nine months ended September 30, 2015, the Company made a purchase price allocation adjustment that increased goodwill by $1.2 million with a corresponding increase to accrued liabilities to record an adjustment to accrued wages and benefits. Other 2014 Acquisitions . The Company completed the acquisitions of Life Line Ambulance Service, Inc., an emergency medical transportation service provider with operations in Arizona, on February 6, 2014, MedStat EMS, Inc., an emergency and non-emergency medical ground transportation service provider with operations in Mississippi, on March 7, 2014, and Streamlined Medical Solutions, LLC, a healthcare technology company which has developed proprietary software to enhance patient direct admission and referral management processes, on May 21, 2014 for total aggregate purchase consideration of approximately $38.0 million paid in cash. The Company has accounted for these acquisitions using the acquisition method of accounting, whereby the total purchase price was allocated to the acquired identifiable net assets based on assessments of their respective fair values, and the excess of the purchase price over the fair values of these identifiable net assets was allocated to goodwill. During the nine months ended September 30, 2015, the Company made purchase price allocation adjustments including a reclassification from goodwill to intangible assets of $1.3 million. The total purchase price for these acquisitions was allocated to goodwill of $9.5 million, $4.9 million of which is tax deductible goodwill, other acquired intangible assets of $28.7 million, net current assets of $3.5 million and long-term deferred tax liabilities of $3.7 million. Pro Forma Information The following unaudited pro forma operating results give effect to the Phoenix Physicians, SEA, VISTA and EMA acquisitions, as if they had been completed as of January 1, 2014. These pro forma amounts are not necessarily indicative of the operating results that would have occurred if these transactions had occurred on such date. The pro forma adjustments are based on certain assumptions that the Company believes are reasonable. Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2015 2014 2015 2014 Net revenue $ $ $ $ Net income (loss) |
Insurance Collateral
Insurance Collateral | 9 Months Ended |
Sep. 30, 2015 | |
Insurance Collateral | |
Insurance Collateral | 5. Insurance Collateral Insurance collateral consisted of the following as of September 30, 2015 and December 31, 2014 (in thousands): September 30, December 31, 2015 2014 Available-for-sale securities: U.S. Treasuries $ $ Corporate bonds/ Fixed income Corporate equity Total available-for-sale securities Insurance receivable Cash deposits and other Total insurance collateral $ $ Amortized cost basis and aggregate fair value of the Company’s available-for-sale securities as of September 30, 2015 and December 31, 2014 were as follows (in thousands): September 30, 2015 Gross Gross Unrealized Unrealized Fair Description Cost Basis Gains Losses Value U.S. Treasuries $ $ $ $ Corporate bonds/ Fixed income Corporate equity — Total available-for-sale securities $ $ $ $ December 31, 2014 Gross Gross Unrealized Unrealized Fair Description Cost Basis Gains Losses Value U.S. Treasuries $ $ $ $ Corporate bonds/ Fixed income Corporate equity Total available-for-sale securities $ $ $ $ As of September 30, 2015, available-for-sale securities included U.S. Treasuries and corporate bonds/ fixed income securities of $5.1 million with contractual maturities within one year and $9.3 million with contractual maturities extending longer than one year through five years. Actual maturities may differ from contractual maturities as a result of the Company’s ability to sell these securities prior to maturity. The Company’s temporarily impaired investment securities available-for-sale as of September 30, 2015 and December 31, 2014 were as follows (in thousands): September 30, 2015 December 31, 2014 Unrealized Unrealized Fair Value Loss Fair Value Loss U.S. Treasuries: Less than 12 months $ — $ — $ — $ — 12 months or more Corporate bonds/ Fixed income: Less than 12 months — 12 months or more — Corporate equity: Less than 12 months 12 months or more — — — — Total $ $ $ $ The Company evaluates the investment securities available-for-sale on a quarterly basis to determine whether declines in the fair value of these securities are other-than-temporary. This quarterly evaluation consists of reviewing the fair value of the security compared to the carrying amount, the historical volatility of the price of each security, and any industry and company specific factors related to each security. The Company is not aware of any specific factors indicating that the underlying issuers of the U.S. Treasuries and corporate bonds/ fixed income securities would not be able to pay interest as it becomes due or repay the principal amount at maturity. Therefore, the Company believes that the changes in the estimated fair values of these debt securities are related to temporary market fluctuations. Additionally, the Company is not aware of any specific factors which indicate the unrealized losses on the investments in corporate equity securities are due to anything other than temporary market fluctuations. The Company realized net losses of less than $0.1 million on the sale and maturities of available-for-sale securities for the three and nine months ended September 30, 2015, and net losses of $0.5 million and net gains of $0.6 million on the sale and maturities of available-for-sale securities for the three and nine months ended September 30, 2014, respectively. |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2015 | |
Accrued Liabilities | |
Accrued Liabilities | 6. Accrued Liabilities Accrued liabilities were as follows as of September 30, 2015 and December 31, 2014 (in thousands): September 30, December 31, 2015 2014 Accrued wages and benefits $ $ Accrued paid time-off Current portion of self-insurance reserve Accrued severance and related costs Current portion of compliance and legal Accrued billing and collection fees Accrued incentive compensation Accrued interest Other Total accrued liabilities $ $ |
Debt and Capital Lease Obligati
Debt and Capital Lease Obligations | 9 Months Ended |
Sep. 30, 2015 | |
Debt and Capital Lease Obligations | |
Debt and Capital Lease Obligations | 7. Debt and Capital Lease Obligations Senior Unsecured Notes due 2019 On May 25, 2011, Corporation issued $950 million of senior unsecured notes due 2019 (“2019 Notes”). During the second quarter of 2012, the Company’s captive insurance subsidiary purchased $15.0 million of the 2019 Notes through an open market transaction and currently holds none of the 2019 Notes subsequent to the redemption of the 2019 Notes on December 30, 2013 and June 18, 2014. On December 30, 2013, Corporation redeemed $332.5 million in aggregate principal amount of the 2019 Notes , of which $5.2 million was held by the Company’s captive insurance subsidiary , at a redemption price of 108.125% , plus accrued and unpaid interest of $2.2 million. During the year ended December 31, 2013, the Company recorded a loss on early debt extinguishment of $38.7 million related to premiums and unamortized debt issuance costs from the partial redemption of the 2019 Notes. On June 18, 2014, Corporation redeemed the remaining $617.5 million in aggregate principal amount of the 2019 Notes , of which $9.8 million was held by the Company’s captive insurance subsidiary , at a redemption price of 106.094% , plus accrued and unpaid interest of $2.4 million. During the year ended December 31, 2014, the Company recorded a loss on early debt extinguishment of $66.4 million related to premiums, financing fees paid to the creditors of the unsecured senior notes due 2022, and unamortized debt issuance costs from the redemption of the 2019 Notes. Senior Secured Credit Facilities On May 25, 2011, Corporation entered into $1.8 billion of senior secured credit facilities (“Senior Secured Credit Facilities”) that consisted of a $1.44 billion senior secured term loan facility due 2018 (the “Term Loan Facility”) and a $350 million asset-backed revolving credit facility due 2016 (the “ABL Facility”). The Senior Secured Credit Facilities are secured by substantially all of the assets of the Company. Term Loan Facility On February 7, 2013, Corporation, the borrower under the Term Loan Facility, entered into a First Amendment (the “Term Loan Amendment”) to the credit agreement governing the Term Loan Facility (as amended, the “Term Loan Credit Agreement”). Under the Term Loan Amendment, the Company incurred an additional $150 million in incremental borrowings under the Term Loan Facility, the proceeds of which were used to pay down the ABL Facility. In addition, the rate at which the loans under the Term Loan Credit Agreement bear interest was amended to equal (i) the higher of (x) the rate for deposits in U.S. dollars in the London Interbank Market (adjusted for maximum reserves) for the applicable interest period (“ LIBOR ”) and (y) 1.00% , plus, in each case, 3.00% (with a step-down to 2.75% in the event that the Company meets a consolidated first lien net leverage ratio of 2.50:1 .00), or (ii) the alternate base rate, which will be the highest of (w) the corporate base rate established by the administrative agent from time to time, (x) 0.50% in excess of the overnight federal funds rate, (y) the one -month LIBOR (adjusted for maximum reserves) plus 1.00% and (z) 2.00% , plus, in each case, 2.00% (with a step-down to 1.75% in the event that the Company meets a consolidated first lien net leverage ratio of 2.50 :1.00). The Company recorded a loss on early debt extinguishment of $0.1 million related to unamortized debt issuance costs as a result of this modification. If the effective yield applicable to any new incremental term loans issued under the Term Loan Facility (the “Incremental Term Loans”) exceeds the effective yield on the term loans outstanding prior to the incremental borrowing (the “Initial Term Loans”) by more than 50 basis points, giving effect to original issue discount, if any, the interest rate on the Initial Term Loans will increase to within 50 basis points of the interest rate on the Incremental Term Loans. The credit agreement governing the Term Loan Facility contains customary representations and warranties and customary affirmative and negative covenants. The negative covenants are limited to the following: limitations on the incurrence of debt, liens, fundamental changes, restrictions on subsidiary distributions, transactions with affiliates, further negative pledge, asset sales, restricted payments, investments and acquisitions, repayment of certain junior debt (including the senior notes) or amendments of junior debt documents related thereto and line of business. The negative covenants are subject to customary exceptions. ABL Facility On February 27, 2013, Corporation entered into a First Amendment (the “ABL Amendment”) to the credit agreement governing the ABL Facility (as amended, the “ABL Credit Agreement”), under which the Company increased its commitments under the ABL Facility to $450 million and extended the term to 2018. In addition, the rate at which the loans under the ABL Credit Agreement bear interest was amended to equal (i) LIBOR plus, (x) 2.00% in the event that average daily excess availability is less than or equal to 33% of availability, (y) 1.75% in the event that average daily excess availability is greater than 33% but less than or equal to 66% of availability and (z) 1.50% in the event that average daily excess availability is greater than 66% of availability, or (ii) the alternate base rate, which will be the highest of (x) the corporate base rate established by the administrative agent from time to time, (y) 0.50% in excess of the overnight federal funds rate and (z) the one -month LIBOR (adjusted for maximum reserves) plus 1.00% plus, in each case, (A) 1.00% in the event that average daily excess availability is less than or equal to 33% of availability, (B) 0.75% in the event that average daily excess availability is greater than 33% but less than or equal to 66% of availability and (C) 0.50% in the event that average daily excess availability is greater than 66% of availability. On February 5, 2015, Corporation entered into a Second Amendment to the ABL Credit Agreement, under which certain lenders under the ABL Facility increased the commitments available to Corporation under the ABL Facility to $550 million. The ABL Facility bears a commitment fee that ranges from 0.500% to 0.375% , payable quarterly in arrears, based on the utilization of the ABL Facility. The ABL Facility also bears customary letter of credit fees. As of September 30, 2015, letters of credit outstanding , which impact the available credit under the ABL Facility were $134.1 million and the maximum amount available under the ABL Facility was $205.9 million. These letters of credit primarily secure the Company’s obligations under its captive insurance program. The credit agreement governing the ABL Facility contains customary representations and warranties and customary affirmative and negative covenants. The negative covenants are limited to the following: limitations on indebtedness, dividends and distributions, investments, acquisitions, prepayments or redemptions of junior indebtedness, amendments of junior indebtedness, transactions with affiliates, asset sales, mergers, consolidations and sales of all or substantially all assets, liens, negative pledge clauses, changes in fiscal periods, changes in line of business and hedging transactions. The negative covenants are subject to the customary exceptions and also permit the payment of dividends and distributions, investments, permitted acquisitions and payments or redemptions of junior indebtedness upon satisfaction of a “payment condition.” The payment condition is deemed satisfied upon 30 -day average excess availability exceeding agreed upon thresholds and, in certain cases, the absence of specified events of default and compliance with a fixed charge coverage ratio of 1.0 to 1.0. Senior Unsecured Notes due 2022 On June 18, 2014, Corporation issued $750.0 million of senior unsecured notes due 2022 (“2022 Notes”) the proceeds of which were used to redeem the remaining 2019 Notes and for general corporate purposes. The Company paid $9.4 million in financing fees to the creditors of the 2022 Notes which was recorded to loss on early debt extinguishment in the second quarter of 2014. The 2022 Notes have a fixed interest rate of 5.125% , payable semi-annually on January 1 and July 1 with the principal due at maturity on July 1, 2022. The 2022 Notes are general unsecured obligations of the Company and are guaranteed by each of the Company’s domestic subsidiaries, except for any of the Company’s subsidiaries subject to regulation as an insurance company, including the Company’s captive insurance subsidiary. The Company may redeem the 2022 Notes, in whole or in part, at any time prior to July 1, 2017, at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, plus the applicable make-whole premium. The Company may redeem the 2022 Notes, in whole or in part, at any time (i) on and after July 1, 2017 and prior to July 1, 2018, at a price equal to 103.844% of the principal amount of the 2022 Notes, (ii) on or after July 1, 2018 and prior to July 1, 2019, at a price equal to 102.563% of the principal amount of the 2022 Notes, (iii) on or after July 1, 2019 and prior to July 1, 2020, at a price equal to 101.281% of the principal amount of the 2022 Notes, and (iv) on or after July 1, 2020, at a price equal to 100.000% of the principal amount of the 2022 Notes, in each case, plus accrued and unpaid interest, if any, to the redemption date. In addition, at any time prior to July 1, 2017, the Company at its option may redeem up to 40% of the aggregate principal amount of the 2022 Notes with the proceeds of certain equity offerings at a redemption price of 105.125% , plus accrued and unpaid interest, if any, to the applicable redemption date. The indenture governing the 2022 Notes contains covenants that, among other things, limit Corporation’s ability and the ability of its restricted subsidiaries to: incur additional indebtedness or issue certain preferred shares; pay dividends on, redeem or repurchase stock or make other distributions in respect of its capital stock; repurchase, prepay or redeem subordinated indebtedness; make investments; create restrictions on the ability of Corporation’s restricted subsidiaries to pay dividends to Corporation or make other intercompany transfers; create liens; transfer or sell assets; consolidate, merge or sell or otherwise dispose of all or substantially all of its assets; enter into certain transactions with affiliates; and designate subsidiaries as unrestricted subsidiaries. Upon the occurrence of certain events constituting a change of control, Corporation is required to make an offer to repurchase all of the 2022 Notes (unless otherwise redeemed) at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any to the repurchase date. If Corporation sells assets under certain circumstances, it must use the proceeds to make an offer to purchase the 2022 Notes at a price equal to 100% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase. Debt and capital lease obligations consisted of the following as of September 30, 2015 and December 31, 2014 (in thousands): September 30, December 31, 2015 2014 Senior unsecured notes due 2022 $ $ Senior secured term loan due 2018 (4.00% as of September 30, 2015 and December 30, 2014) Discount on senior secured term loan ABL Facility — Notes due at various dates from 2015 to 2022 with interest rates from 6% to 10% Capital lease obligations due at various dates from 2015 to 2018 Total Less current portion Total long-term debt and capital lease obligations $ $ |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Instruments and Hedging Activities | |
Derivative Instruments and Hedging Activities | 8. Derivative Instruments and Hedging Activities The Company manages its exposure to changes in fuel prices and interest rates and, from time to time, uses highly effective derivative instruments to manage well-defined risk exposures. The Company monitors its positions and the credit ratings of its counterparties and does not anticipate non-performance by the counterparties. The Company does not use derivative instruments for speculative purposes. At September 30, 2015, the Company was party to a series of fuel hedge transactions with a major financial institution under one master agreement. Each of the transactions effectively fixes the cost of diesel fuel at prices ranging from $3.16 to $3.58 per gallon. The Company purchases the diesel fuel at the market rate and periodically settles with its counterparty for the difference between the national average price for the period published by the Department of Energy and the agreed upon fixed price. The transactions fix the price for a total of 3.1 million gallons, which represents approximately 18% of the Company’s total estimated usage during the periods hedged, through December 2016. The Company recorded, as a component of other comprehensive income (loss) before applicable tax impacts, a liability associated with the fair value of the fuel hedge in the amount $2.3 million and $1.4 million, respectively, as of September 30, 2015 and December 31, 2014, respectively. Over the next 12 months, the Company expects to reclassify $1.1 million of deferred loss from accumulated other comprehensive income (loss) as the related fuel hedge transactions mature. Settlement of hedge agreements are included in operating expenses and resulted in net payments to the counterparty of $0.3 million and $0.7 million for the three and nine months ended September 30, 2015, respectively, and net receipts of $0.1 million and $0.4 million for the three and nine months ended September 30, 2014, respectively. In October 2011, the Company entered into interest rate swap agreements which matured on August 31, 2015. The swap agreements were with major financial institutions and effectively converted a total of $400 million in variable rate debt to fixed rate debt with an effective rate of 4.49% . The Company will continue to make interest payments based on the variable rate associated with the debt (based on LIBOR, but not less than 1.0%) . There will be no further periodic settlements with its counterparties for the difference between the rate paid and the fixed rate. The Company recorded, as a component of other comprehensive income (loss) before applicable tax impacts, a liability associated with the fair value of the interest rate swap in the amount of $1.5 million as of December 31, 2014. Settlement of interest rate swap agreements are included in interest expense and resulted in net payments to the counterparties of $0.5 million for each of the three months ended September 30, 2015 and 2014, respectively, and $1.5 million for each of the nine months ended September 30, 2015 and 2014, respectively. |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Income (Loss) by Component | 9 Months Ended |
Sep. 30, 2015 | |
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |
Changes in Accumulated Other Comprehensive Income (Loss) by Component | 9. Changes in Accumulated Other Comprehensive Income (Loss) by Component The following table summarizes the changes in the Company’s accumulated other comprehensive income (loss) (“AOCI”) by component as of September 30, 2015 and December 31, 2014 (in thousands). All amounts are after tax. Unrealized holding gains (losses) on Interest rate available-for-sale Fuel hedge swap securities Total Balance as of January 1, 2014 $ $ $ $ Other comprehensive income (loss) before reclassifications Amounts reclassified from accumulated other comprehensive income (loss) Net current-period other comprehensive income (loss) Balance as of December 31, 2014 Other comprehensive income (loss) before reclassifications Amounts reclassified from accumulated other comprehensive income (loss) Net current-period other comprehensive income (loss) Balance as of September 30, 2015 $ $ — $ $ The following table shows the line on the statements of operations affected by reclassifications out of AOCI (in thousands): Amount reclassified from AOCI Three Months Ended September 30, Nine Months Ended September 30, Details about AOCI components 2015 2014 2015 2014 Statements of Operations Gains and losses on cash flow hedges: Fuel hedge $ $ $ $ Operating expenses Interest rate swap Interest expense, net Total before tax Tax benefit (expense) $ $ $ $ Net of tax Unrealized holding gains (losses) on available-for-sale securities $ — $ $ $ Realized gains (losses) on investments — Total before tax — Tax benefit (expense) $ — $ $ $ Net of tax |
Equity Based Compensation
Equity Based Compensation | 9 Months Ended |
Sep. 30, 2015 | |
Equity Based Compensation | |
Equity Based Compensation | 10. Equity Based Compensation Upon completion of the Company’s initial public offering in August 2013, the then-existing stock compensation plan (“Stock Compensation Plan”) terminated and the Envision Healthcare Holdings, Inc. 2013 Omnibus Incentive Plan (“Omnibus Incentive Plan”) was adopted pursuant to which options and awards with respect to a total of 16,708,289 shares of common stock are available for grant. As of September 30, 2015, a total of 16,406,238 shares remained available for grant under the Omnibus Incentive Plan. Awards under the Omnibus Incentive Plan include both performance and non-performance based awards. As of September 30, 2015, no grants of performance based awards under the Omnibus Incentive Plan had been made. Options are granted with exercise prices equal to the fair value of the Company’s common stock at the date of grant. No participant may be granted in any calendar year awards covering more than 2.5 million shares of common stock or 1.5 million performance awards up to a maximum dollar value of $5.0 million. Non-performance based awards have time-based vesting and performance-based awards vest upon achievement of certain company-wide objectives. All options have 10 year terms. Awards previously granted under the Stock Compensation Plan were unaffected by the termination of the Stock Compensation Plan; however no future grants will be made under the Stock Compensation Plan. A compensation charge of $1.8 million and $1.1 million was recorded for the three months ended September 30, 2015 and 2014, respectively, and $4.8 million and $3.6 million was recorded for the nine months ended September 30, 2015 and 2014, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies | |
Commitments and Contingencies | 11. Commitments and Contingencies Lease Commitments The Company leases various facilities and equipment under operating lease agreements. Rental expense incurred under these leases was $13. 7 million and $11.3 million for the three months ended September 30, 2015 and 2014, respectively, and $40.4 million and $34.0 million for the nine months ended September 30, 2015 and 2014, respectively. The Company also records certain leasehold improvements and vehicles under capital leases. Assets under capital leases are capitalized using inherent interest rates at the inception of each lease. Capital leases are collateralized by the underlying assets. Letters of Credit As of September 30, 2015 and December 31, 2014, the Company had $134.1 million and $112.3 million, respectively, in outstanding letters of credit. Services The Company is subject to the Medicare and Medicaid fraud and abuse laws which prohibit, among other things, any false claims, or any bribe, kickback or rebate in return for the referral of Medicare and Medicaid patients. Violation of these prohibitions may result in civil and criminal penalties and exclusion from participation in the Medicare and Medicaid programs. Management has implemented policies and procedures that management believes will assure that the Company is in substantial compliance with these laws and regulations but there can be no assurance the Company will not be found to have violated certain of these laws and regulations. From time to time, the Company receives requests for information from government agencies pursuant to their regulatory or investigational authority. Such requests can include subpoenas or demand letters for documents to assist the government agencies in audits or investigations. The Company is cooperating with the government agencies conducting these investigations and is providing requested information to the government agencies. Other than the proceedings described below, management believes that the outcome of any of these investigations would not have a material adverse effect on the Company. Other Legal Matters In December 2006, AMR received a subpoena from the U.S. Department of Justice (“DOJ”). The subpoena requested copies of documents for the period from January 2000 through the present. The subpoena required AMR to produce a broad range of documents relating to the operations of certain AMR affiliates in New York. The Company produced documents responsive to the subpoena. The government identified claims for reimbursement that the government believes lack support for the level billed, and invited the Company to respond to the identified areas of concern. The Company reviewed the information provided by the government and provided its response. On May 20, 2011, AMR entered into a settlement agreement with the DOJ and a Corporate Integrity Agreement (“CIA”) with the Office of Inspector General of the Department of Health and Human Services (“OIG”) in connection with this matter. Under the terms of the settlement, AMR paid $2.7 million to the federal government. In connection with the settlement, the Company entered into a CIA with a five -year period beginning May 20, 2011. Pursuant to this CIA, the Company is required to maintain a compliance program, which includes, among other elements, the appointment of a compliance officer and committee, training of employees nationwide, safeguards for its billing operations as they relate to services provided in New York, including specific training for operations and billing personnel providing services in New York, review by an independent review organization and reporting of certain reportable events. The Company entered into the settlement in order to avoid the uncertainties of litigation, and has not admitted any wrongdoing. In May 2013, a subsidiary of the Company entered into an agreement to divest substantially all the assets underlying AMR’s services in New York, although the obligations of the Company’s compliance program will remain in effect following the expected divestiture. The divesture was completed on July 1, 2013. Four different putative class action lawsuits were filed against AMR and certain subsidiaries in California alleging violations of California wage and hour laws. On April 16, 2008, Laura Bartoni commenced a suit in the Superior Court for the State of California, County of Alameda; on July 8, 2008, Vaughn Banta filed suit in the Superior Court of the State of California, County of Los Angeles; on January 22, 2009, Laura Karapetian filed suit in the Superior Court of the State of California, County of Los Angeles; and on March 11, 2010, Melanie Aguilar filed suit in Superior Court of the State of California, County of Los Angeles. The Banta, Aguilar and Karapetian cases have been coordinated in the Superior Court for the State of California, County of Los Angeles, and the Aguilar and Karapetian cases have subsequently been consolidated into a single action. In these cases, the plaintiffs allege principally that the AMR entities failed to pay wages, including overtime wages, in compliance with California law, and failed to provide required meal breaks, rest breaks or pay premium compensation for missed breaks. The plaintiffs are seeking to certify classes on these claims and are seeking lost wages, various penalties, and attorneys’ fees under California law. While it denied certification of the rest period claims in the consolidated Karapetian/ Aguilar case , the Court certified classes on claims alleging that AMR has not provided meal periods in compliance with the law as to dispatchers and call takers, that AMR has an unlawful time rounding policy, and that AMR has an unlawful practice of se tting rates for those employees. On October 13, 2015, the Court decertified all classes in the Karapetian/ Aguilar case . In the Banta case, the Court denied certification of the meal and rest period claims as to EMTs and paramedics, a decision that is being appealed; the Court indicated that it would certify a class on overtime claims, but plaintiff’s counsel has indicated that they intend to dismiss that claim as AMR’s policy complies with a recent Court of Appeals decision. In the Bartoni case, the Court denied certification on the meal and rest period claims of all unionized employees in Northern California, a de cision that is being appealed; while the Court certified a class on the overtime claims, plaintiffs’ counsel stipulated to decertify and dismiss those claims as AMR’s policy complies with a recent Court of Appeals decision. The Company is unable at this time to estimate the amount of potential damages, if any. On August 7, 2012, EmCare received a subpoena from the OIG requesting copies of documents for the period from January 1, 2007 through the present that appears to be primarily focused on EmCare’s contracts for services at hospitals that are affiliated with Health Management Associates, Inc. (“HMA”). During the months of December 2013 and January 2014, several lawsuits filed by whistleblowers on behalf of the federal and certain state governments against HMA were unsealed; the Company is a named defendant in two of these lawsuits (the “HMA Lawsuits”). Although the federal government intervened in these lawsuits in connection with certain of the allegations against HMA, the federal government has not, at this time, intervened in these matters as they relate to the Company. The Company has been engaged in dialogue with the relevant federal government representatives in an effort to reach a resolution of this matter. As the Company and these government representatives have made significant progress towards resolution of these matters, the Company has recorded a reserve of $30.0 million for the three months ended September 30, 2015, based on the Company ’s estimates of probable exposure resulting from the HMA Lawsuits. The reserve has been included in restructuring and other charges in the Company’s statements of operations for the three and nine months ended September 30, 2015. The Company is involved in other litigation arising in the ordinary course of business. Management believes the outcome of these legal proceedings will not have a material adverse impact on its financial condition, results of operations or liquidity. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions | |
Related Party Transactions | 12. Related Party Transactions CD&R Affiliates Stockholders Agreement In connection with the Company’s initial public offering in August of 2013, the Company entered into a stockholders agreement (“Stockholders Agreement”) with CD&R Affiliates. Under the Stockholders Agreement, CD&R Affiliates were granted the right to designate nominees for the Company’s board, subject to the maintenance of specified ownership requirements. Following the CD&R Affiliates’ disposition of their remaining shares of the Company’s common stock in a registered secondary offering, o n March 11, 2015, the Stockholders A greement terminated pursuant to its terms and, as a result, the CD&R Affiliates are no longer entitled to designate directors for nomination as of such date. Registration Rights Agreement In connection with the closing of the Merger, the Company entered into a registration rights agreement (“Registration Rights Agreement”) with the CD&R Affiliates, which granted the CD&R Affiliates specified demand and piggyback registration rights with respect to the Company’s common stock. Upon the CD&R Affiliate s ’ disposition of the remaining shares of the Company’s common stock beneficially owned by them in a registered secondary o ffering, on March 11, 2015 the Registration Rights A greement t erminated pursuant to its terms . Indemnification Agreements In connection with the closing of the Merger, the Company entered into separate indemnification agreements with CD&R and CD&R Affiliates (the “CD&R Entities”). Under the indemnification agreement with the CD&R Entities, the Company, subject to certain limitations, agreed to indemnify the CD&R Entities and certain of their affiliates against certain liabilities arising out of performance of the Company’s consulting agreement with CD&R, which was terminated in 2013, and certain other claims and liabilities. Employment agreements with certain of the Company’s executive officers include indemnification provisions whereby the Company agrees to indemnify each of these individuals against claims arising out of events or occurrences related to that individual’s service as the Company’s agent or the agent of any of its subsidiaries to the fullest extent legally permitted. In connection with the Company’s initial public offering, the Company entered into indemnification agreements with each of its directors. On November 11, 2013, the Company entered into an indemnification agreement with Mark V. Mactas. Under these agreements, the Company agreed to indemnify each of these individuals against claims arising out of events or occurrences related to that individual’s service as the Company’s agent or the agent of any of its subsidiaries to the fullest extent permitted by law. |
Variable Interest Entities
Variable Interest Entities | 9 Months Ended |
Sep. 30, 2015 | |
Variable Interest Entities | |
Variable Interest Entities | 13. Variable Interest Entities GAAP requires the assets, liabilities, noncontrolling interests and activities of Variable Interest Entities (“VIE”) to be consolidated if an entity’s interest in the VIE has specific characteristics including: voting rights not proportional to ownership and the right to receive a majority of expected income or absorb a majority of expected losses. In addition, the entity exposed to the majority of the risks and rewards associated with the VIE is deemed its primary beneficiary and must consolidate the entity. AHAH-Evolution JV Evolution Health, LLC (“Evolution”), included within the EmCare segment, entered into an agreement in 2014 with Ascension Health to form an entity which would provide home health, hospice, and home infusion therapy pharmacy services to patients (“AHAH-Evolution JV”). AHAH-Evolution JV began providing services to patients during the first quarter of 2015 and meets the definition of a VIE. The Company determined that, although Evolution holds 50% voting control, Evolution is the primary beneficiary and must consolidate this VIE because: · Evolution provides management services to AHAH-Evolution JV including providing comprehensive management oversight, operational reporting guidelines, recruiting, credentialing, billing, payroll, accounting, and other various administrative services and therefore substantially all of AHAH-Evolution JV’s activities involve Evolution; and · as payment for management services, Evolution is entitled to receive a variable management fee from AHAH-Evolution. The following table summarizes the AHAH-Evolution JV assets and liabilities as of September 30, 2015, which are included in the Company’s consolidated financial statements (in thousands): September 30, 2015 Current assets $ Current liabilities During the nine months ended September 30, 2015, cash contributions of $0.1 million were made to AHAH-Evolution JV by each of the parties for working capital requirements. UHS-EmCare JV EmCare entered into an agreement in 2014 with Universal Health Services, Inc. to form an entity which would provide physician services to various healthcare facilities (“UHS-EmCare JV”). UHS-EmCare JV began providing services to healthcare facilities during the second quarter of 2014 and meets the definition of a VIE. The Company determined that, although EmCare holds 50% voting control, EmCare is the primary beneficiary and must consolidate this VIE because: · EmCare provides management services to UHS-EmCare JV including recruiting, credentialing, scheduling, billing, payroll, accounting and other various administrative services and therefore substantially all of UHS-EmCare JV’s activities involve EmCare; and · as payment for management services, EmCare is entitled to receive a variable management fee from UHS-EmCare JV. The following table summarizes the UHS-EmCare JV assets and liabilities as of September 30, 2015 and December 31, 2014, which are included in the Company’s consolidated financial statements (in thousands): September 30, December 31, 2015 2014 Current assets $ $ Current liabilities During the nine months ended September 30, 2015 and 2014, cash contributions of zero and $0.3 million, respectively, were made to UHS-EmCare JV by each of the parties for working capital requirements. HCA-EmCare JV EmCare entered into an agreement in 2011 with an indirect wholly-owned subsidiary of HCA Holdings Inc. to form an entity which would provide physician services to various healthcare facilities (“HCA-EmCare JV”). HCA-EmCare JV began providing services to healthcare facilities during the first quarter of 2012 and meets the definition of a VIE. The Company determined that, although EmCare only holds 50% voting control, EmCare is the primary beneficiary and must consolidate this VIE because: · EmCare provides management services to HCA-EmCare JV including recruiting, credentialing, scheduling, billing, payroll, accounting and other various administrative services and therefore substantially all of HCA-EmCare JV’s activities involve EmCare; and · as payment for management services, EmCare is entitled to receive a base management fee from HCA-EmCare JV as well as a bonus management fee. The following table summarizes the HCA-EmCare JV assets and liabilities as of September 30, 2015 and December 31, 2014, which are included in the Company’s consolidated financial statements (in thousands): September 30, December 31, 2015 2014 Current assets $ $ Current liabilities During the nine months ended September 30, 2015 and 2014, there were no cash contributions made to HCA-EmCare JV by either of the parties for working capital requirements. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2015 | |
Segment Information | |
Segment Information | 14. Segment Information The Company is organized around two separately managed business units: facility-based and post-acute care physician services and healthcare transportation services, which have been identified as reportable operating segments. The facility-based and post-acute care physician services reportable segment provides physician services to hospitals primarily for emergency department, anesthesiology, hospitalist/inpatient, radiology, tele-radiology and surgery services. It also offers physician-led care management solutions outside the hospital. The healthcare transportation services reportable segment focuses on providing a full range of medical transportation services from basic patient transit to the most advanced emergency care and pre-hospital assistance. The Chief Executive Officer has been identified as the chief operating decision maker (the “CODM”) as he assesses the performance of the business units and decides how to allocate resources to the business units. Net income (loss) before equity in earnings of unconsolidated subsidiary, income tax benefit (expense), loss on early debt extinguishment, other income (expense), net, realized gains (losses) on investments, interest expense, net, equity-based compensation expense, transaction costs related to acquisition activity, related party management fees, restructuring and other charges, severance and related costs, adjustment to net (income) loss attributable to noncontrolling interest due to deferred taxes, and depreciation and amortization expense (“Adjusted EBITDA”) is the measure of profit and loss that the CODM uses to assess performance and make decisions. Adjusted EBITDA is not considered a measure of financial performance under GAAP and the items excluded from Adjusted EBITDA are significant components in understanding and assessing the Company’s financial performance. Adjusted EBITDA should not be considered in isolation or as an alternative to such GAAP measures as net income, cash flows provided by or used in operating, investing or financing activities or other financial statement data presented in the Company’s financial statements as an indicator of financial performance. Since Adjusted EBITDA is not a measure determined to be in accordance with GAAP and is susceptible to varying calculations, Adjusted EBITDA, as presented, may not be comparable to other similarly titled measures of other companies. Pre-tax income from continuing operations represents net revenue less direct operating expenses incurred within the operating segments. The accounting policies for reported segments are the same as for the Company as a whole (see Note 2). During the fourth quarter of 2014, the Company included within the definition of Adjusted EBITDA transaction costs related to acquisition activity. Adjusted EBITDA for the three and nine months ended September 30, 2014 has been presented to conform to the current period presentation. The Company’s operating segment results were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Facility-Based and Post-Acute Care Physician Services Net revenue $ $ $ $ Income from operations Adjusted EBITDA Healthcare Transportation Services Net revenue $ $ $ $ Income from operations Adjusted EBITDA Segment Totals Net revenue $ $ $ $ Income from operations Adjusted EBITDA A reconciliation of net income (loss) to Adjusted EBITDA (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Net income (loss) $ $ $ $ Add-back of non-operating expense (income): Interest expense, net Income tax expense (benefit) Loss on early debt extinguishment — — — Realized losses (gains) on investments — Interest income from restricted assets Equity in earnings of unconsolidated subsidiary Other expense (income), net Income from operations — segment totals Add-back of operating expense (income): Depreciation and amortization expense Restructuring and other charges Severance and related costs — — Net (income) loss attributable to noncontrolling interest Interest income from restricted assets Equity-based compensation expense Transaction costs Adjusted EBITDA $ $ $ $ |
Consolidating Financial Informa
Consolidating Financial Information | 9 Months Ended |
Sep. 30, 2015 | |
Consolidating Financial Information | |
Consolidating Financial Information | 15. Consolidating Financial Information Pursuant to the indenture governing the 2022 Notes, so long as any of the 2022 Notes are outstanding, the Company is required to provide condensed consolidating financial information with a separate column for (i) the Company and its subsidiaries (other than Corporation and its subsidiaries) on a combined basis, (ii) Corporation and its subsidiaries, (iii) consolidating adjustments on a combined basis, and (iv) the total consolidated amount. The consolidating adjustments column represents the elimination of any intercompany activity between EVHC (excluding Corporation and its subsidiaries) and Corporation. Consolidating Balance Sheet As of September 30, 2015 (in thousands, unaudited) EVHC Corporation (excluding and Consolidating Corporation) Subsidiaries Adjustments Total Assets Current assets: Cash and cash equivalents $ $ $ — $ Insurance collateral — — Trade and other accounts receivable, net — — Parts and supplies inventory — — Prepaids and other current assets Total current assets Property, plant, and equipment, net — — Intangible assets, net — — Long-term deferred tax assets — — Insurance collateral — — Goodwill — — Other long-term assets — — Investment in wholly owned subsidiary — — Total assets $ $ $ $ Liabilities and Equity Current liabilities: Accounts payable $ $ $ — $ Accrued liabilities — Current deferred tax liabilities — Current portion of long-term debt and capital lease obligations — — Total current liabilities Long-term debt and capital lease obligations — — Long-term deferred tax liabilities — Insurance reserves — — Other long-term liabilities — — Total liabilities Equity: Common stock — — Preferred stock — — — — Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Total Envision Healthcare Holdings, Inc. equity Noncontrolling interest — — Total equity Total liabilities and equity $ $ $ $ Consolidating Balance Sheet As of December 31, 2014 (in thousands) EVHC Corporation (excluding and Consolidating Corporation) Subsidiaries Adjustments Total Assets Current assets: Cash and cash equivalents $ $ $ — $ Insurance collateral — — Trade and other accounts receivable, net — — Parts and supplies inventory — — Prepaids and other current assets Total current assets Property, plant, and equipment, net — — Intangible assets, net — — Long-term deferred tax assets — — Insurance collateral — — Goodwill — — Other long-term assets — — Investment in wholly owned subsidiary — — Total assets $ $ $ $ Liabilities and Equity Current liabilities: Accounts payable $ $ $ — $ Accrued liabilities — Current deferred tax liabilities — Current portion of long-term debt and capital lease obligations — — Total current liabilities Long-term debt and capital lease obligations — — Long-term deferred tax liabilities — Insurance reserves — — Other long-term liabilities — — Total liabilities Equity: Common stock — — Preferred stock — — — — Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Total Envision Healthcare Holdings, Inc. equity Noncontrolling interest — — Total equity Total liabilities and equity $ $ $ $ Condensed Consolidating Statement of Operations (in thousands, unaudited) Three Months Ended September 30, 2015 EVHC Corporation (excluding and Consolidating Corporation) Subsidiaries Adjustments Total Net revenue $ — $ $ — $ Compensation and benefits — — Operating expenses — — Insurance expense — — Selling, general and administrative expenses — — Depreciation and amortization expense — — Restructuring and other charges — — Income (loss) from operations — — Interest income from restricted assets — — Interest expense, net — — Realized gains (losses) on investments — — — — Other income (expense), net — Income (loss) before taxes and equity in earnings of unconsolidated subsidiary — Income tax benefit (expense) — Income (loss) before equity in net income (loss) of subsidiary and equity in earnings of unconsolidated subsidiary — Equity in net income (loss) of subsidiary — — Equity in earnings of unconsolidated subsidiary — — Net income (loss) Less: Net (income) loss attributable to noncontrolling interest — — Net income (loss) attributable to Envision Healthcare Holdings, Inc. $ $ $ $ Condensed Consolidating Statement of Operations (in thousands, unaudited) Three Months Ended September 30, 2014 EVHC Corporation (excluding and Consolidating Corporation) Subsidiaries Adjustments Total Net revenue $ — $ $ — $ Compensation and benefits — — Operating expenses — — Insurance expense — — Selling, general and administrative expenses — — Depreciation and amortization expense — — Restructuring charges — — Income from operations — — Interest income from restricted assets — — Interest expense, net — — Realized gains (losses) on investments — — Other income (expense), net — Loss on early debt extinguishment — — — — Income (loss) before taxes and equity in earnings of unconsolidated subsidiary — Income tax benefit (expense) — Income (loss) before equity in net income (loss) of subsidiary and equity in earnings of unconsolidated subsidiary — Equity in net income (loss) of subsidiary — — Equity in earnings of unconsolidated subsidiary — — Net income (loss) Less: Net (income) loss attributable to noncontrolling interest — — Net income (loss) attributable to Envision Healthcare Holdings, Inc. $ $ $ $ Condensed Consolidating Statement of Operations (in thousands, unaudited) Nine Months Ended September 30, 2015 EVHC Corporation (excluding and Consolidating Corporation) Subsidiaries Adjustments Total Net revenue $ — $ $ — $ Compensation and benefits — — Operating expenses — — Insurance expense — — Selling, general and administrative expenses — — Depreciation and amortization expense — — Restructuring charges — — Income from operations — — Interest income from restricted assets — — Interest expense, net — — Realized gains (losses) on investments — — Other income (expense), net — Income (loss) before taxes and equity in earnings of unconsolidated subsidiary — Income tax benefit (expense) — Income (loss) before equity in net income (loss) of subsidiary and equity in earnings of unconsolidated subsidiary — Equity in net income (loss) of subsidiary — — Equity in earnings of unconsolidated subsidiary — — Net income (loss) Less: Net (income) loss attributable to noncontrolling interest — — Net income (loss) attributable to Envision Healthcare Holdings, Inc. $ $ $ $ Condensed Consolidating Statement of Operations (in thousands, unaudited) Nine Months Ended September 30, 2014 EVHC (excluding Corporation and Consolidating Corporation) Subsidiaries Adjustments Total Net revenue $ — $ $ — $ Compensation and benefits — — Operating expenses — — Insurance expense — — Selling, general and administrative expenses — — Depreciation and amortization expense — — Restructuring charges — — Income from operations — — Interest income from restricted assets — — Interest expense, net — — Realized gains (losses) on investments — — Other income (expense), net — Loss on early debt extinguishment — — Income (loss) before taxes and equity in earnings of unconsolidated subsidiary — Income tax benefit (expense) — Income before equity in net income (loss) of subsidiary and equity in earnings of unconsolidated subsidiary — Equity in net income (loss) of subsidiary — — Equity in earnings of unconsolidated subsidiary — — Net income (loss) Less: Net (income) loss attributable to noncontrolling interest — — Net income (loss) attributable to Envision Healthcare Holdings, Inc. $ $ $ $ Condensed Consolidating Statement of Cash Flows (in thousands, unaudited) Nine Months Ended September 30, 2015 EVHC (excluding Corporation and Corporation) Subsidiaries Total Cash Flows from Operating Activities Net cash provided by (used in) operating activities $ $ $ Cash Flows from Investing Activities Purchases of available-for-sale securities — Sales and maturities of available-for-sale securities — Purchase of property, plant and equipment — Proceeds from sale of property, plant and equipment — Acquisition of businesses, net of cash received — Net change in insurance collateral — Other investing activities — Net cash provided by (used in) investing activities — Cash Flows from Financing Activities Borrowings under the ABL Facility — Repayments of the Term Loan — Repayments of the ABL Facility — Debt issuance costs — Proceeds from stock options exercised — Excess tax benefits from equity-based compensation — Contributions from noncontrolling interest, net — Other financing activities — Net intercompany borrowings (payments) — Net cash provided by (used in) financing activities Change in cash and cash equivalents — Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period $ $ $ Condensed Consolidating Statement of Cash Flows (in thousands, unaudited) Nine Months Ended September 30, 2014 EVHC (excluding Corporation and Corporation) Subsidiaries Total Cash Flows from Operating Activities Net cash provided by (used in) operating activities $ $ $ Cash Flows from Investing Activities Purchases of available-for-sale securities — Sales and maturities of available-for-sale securities — Purchase of property, plant and equipment — Proceeds from sale of property, plant and equipment — Acquisition of businesses, net of cash received — Net change in insurance collateral — Other investing activities — Net cash provided by (used in) investing activities — Cash Flows from Financing Activities Borrowings under the ABL Facility — Proceeds from issuance of senior notes — Repayments of the Term Loan — Repayments of the ABL Facility — Repayments of senior notes — Payment for debt extinguishment premiums — Debt issuance costs — Proceeds from stock options exercised — Excess tax benefits from equity-based compensation — Shares repurchased for tax withholdings — Contributions from noncontrolling interest, net — Other financing activities Net intercompany borrowings (payments) — Net cash provided by (used in) financing activities Change in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period $ $ $ |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events | |
Subsequent Events | 16. Subsequent Events On October 21, 2015, the Company’s board of directors authorized a share repurchase program of up to $500 million of the Company’s common stock. Purchases under the share repurchase program may be made through open market purchases, privately negotiated transactions, or Rule 10b5-1 trading plans, subject to market conditions and other factors including compliance with the Company’s debt covenants. The Company may elect not to purchase the maximum amount of shares allowable under this program. The share repurchase authorization has no expiration. On October 28, 2015 the Company completed the acquisition of Rural/ Metro Corporation (“Rural/ Metro”), for total purchase consideration of $620 million in cash, subject to working capital adjustments. The acquisition of Rural/ Metro enhances the Company’s mobile integrated healthcare delivery capability, a key component of its care coordination model amongst its pre-hospital, acute care and post-acute care services. On October 28, 2015 and in connection with the financing of the Rural/ Metro acquisition, Corporation entered into incremental $635.0 million term loans under the Term Loan Facility at an interest rate of LIBOR plus 3.25% maturing 7 years from the closing date of the acquisition. The proceeds of the incremental term loans were used to fund the purchase price of Rural/ Metro and to pay certain fees, commissions and expenses. The incremental term loans were issued with 50 basis points of original issue discount and a six month soft call protection at 101% of the principal amount of the incremental term loans then outstanding. On November 3 , 2015, the Company entered into a definitive agreement to acquire Questcare Medical Services, P.A. and QRx Medical Management, LLC (“Questcare”) for total purchase consideration of approximately $135.0 million. Questcare provides em ergency department, hospitalist, urgent care, and post-acute facility based care services at more than 50 facilities located throughout Texas, Oklahoma and Colorado. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Summary of Significant Accounting Policies | |
Consolidation | Consolidation The consolidated financial statements of the Company include all of its wholly-owned subsidiaries, including Corporation, EmCare and AMR and their respective subsidiaries and affiliated physician groups. All significant intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements requires management to make estimates and assumptions relating to the reporting of results of operations, financial condition and related disclosure of contingent assets and liabilities at the date of the financial statements including, but not limited to, estimates and assumptions for accounts receivable and insurance related reserves. Actual results may differ from those estimates under different assumptions or conditions. |
Insurance Collateral | Insurance Collateral Insurance collateral is comprised of investments in U.S. Treasuries and marketable equity and debt securities held by the Company’s captive insurance subsidiary that supports the Company’s insurance program and reserves, as well as cash deposits with third parties. Certain of these investments, if sold or otherwise liquidated, would have to be replaced by other suitable financial assurances and are, therefore, considered restricted. These investments are designated as available-for-sale and reported at fair value with the related temporary unrealized gains and losses reported as a separate component of accumulated other comprehensive income (loss), net of deferred income tax. Declines in the fair value of a marketable investment security which are determined to be other-than-temporary are recognized in the statements of operations, thus establishing a new cost basis for such investment. Investment income earned on these investments is reported as interest income from restricted assets in the statements of operations. Realized gains and losses are determined based on an average cost basis. Insurance collateral also includes a receivable from insurers of $0.5 million and $1.5 million as of September 30, 2015 and December 31, 2014, respectively, for liabilities in excess of the Company’s self-insured retention. |
Trade and Other Accounts Receivable, net | Trade and Other Accounts Receivable, net The Company estimates its allowances based on payor reimbursement schedules, historical collections and write-off experience and other economic data. The Company’s billing systems do not provide contractual allowances or uncompensated care reserves on outstanding patient accounts. The allowance for uncompensated care is related principally to receivables recorded for self-pay patients and is not recorded on specific accounts due to the volume and variability of individual patient receivable collections. While the billing systems do not specifically record the allowance for doubtful accounts to individual accounts owed or specific payor classifications, the portion of the allowance for uncompensated care associated with fee-for-service charges as of December 31, 2014 was equal to approximately 86% and 82% of outstanding self-pay receivables for EmCare and AMR, respectively, consistent with the Company’s collection history. Account balances are charged off against the uncompensated care allowance when it is probable the receivable will not be recovered and to the contractual allowance when payment is received. The Company’s accounts receivable and allowances as of September 30, 2015 and December 31, 2014 were as follows (in thousands): September 30, December 31, 2015 2014 Gross trade accounts receivable $ $ Allowance for contractual discounts Allowance for uncompensated care Trade accounts receivable, net Other receivables, net Trade and other accounts receivable, net $ $ Other receivables primarily represent employee advances and other miscellaneous receivables. Accounts receivable allowances at EmCare are estimated based on cash collection and write-off experience at a facility level contract and facility specific payor mix. These allowances are reviewed and adjusted monthly through revenue provisions. The Company continuously compares actual cash collected on a date of service basis to the revenue recorded for that period and records any adjustment necessary for an overage or deficit in these allowances based on actual collections. AMR contractual allowances are determined primarily on payor reimbursement schedules that are included and regularly updated in the billing systems, and by historical collection experience. The billing systems calculate the difference between payor specific gross billings and contractually agreed to, or governmentally driven, reimbursement rates. The allowance for uncompensated care at AMR is related principally to receivables recorded for self-pay patients. AMR’s allowances on self-pay accounts receivable are estimated based on historical write-off experience. |
Business Combinations | Business Combinations Assets and liabilities of an acquired business are recorded at their fair values at the date of acquisition. The excess of the acquisition consideration over the estimated fair values is recorded as goodwill. All acquisition costs are expensed as incurred. While the Company uses its best estimates and assumptions as a part of the acquisition consideration allocation process to accurately value assets acquired and liabilities assumed at the acquisition date, the estimates are inherently uncertain and subject to refinement. As a result, during the measurement period the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period any subsequent adjustments are recorded as income or expense. |
Insurance Reserves | Insurance Reserves Insurance reserves are established for automobile, workers compensation, general liability and professional liability claims utilizing policies with both fully-insured and self-insured components. This includes the use of an off-shore captive insurance program through a wholly-owned subsidiary for certain liability programs for both EmCare and AMR. In those instances where the Company has obtained third-party insurance coverage, the Company normally retains liability for the first $1 to $3 million of the loss. Insurance reserves cover known claims and incidents within the level of Company retention that may result in the assertion of additional claims, as well as claims from unknown incidents that may be asserted arising from activities through the balance sheet date. The Company establishes reserves for claims based upon an assessment of actual claims and claims incurred but not reported. The reserves are established based on quarterly consultation with third-party independent actuaries using actuarial principles and assumptions that consider a number of factors, including historical claim payment patterns and legal costs, changes in case reserves and the assumed rate of inflation in healthcare costs and property damage repairs. Claims are discounted at a rate of 1.5 % which is commensurate with the risk free rate. The Company’s most recent actuarial valuation was completed in September 2015. As a result of this and previous actuarial valuations, the Company recorded increases in its provision for insurance liabilities of $ 5.1 million and $ 9.1 million for the three and nine months ended September 30, 2015, respectively, as compared to a decrease of $0.7 million and an increase of $6.6 million for the three and nine months ended September 30, 2014, respectively, related to reserves for losses in prior years. |
Public Offerings | Public Offerings On each of February 5, 2014 and July 10, 2014, the Company registered the offering and sale of 27,500,000 shares of common stock, and an additional 4,125,000 shares of common stock, upon the underwriters’ exercise of their overallotment option in each offering, which were sold by certain stockholders of the Company, including investment funds sponsored by, or affiliated with Clayton, Dubilier & Rice, LLC (“CD&R Affiliates”), to the underwriters at $30.50 per share and $34.00 per share, respectively, less an underwriting discount. On September 30, 2014, the Company registered the offering and sale of 17,500,000 shares of common stock by certain stockholders of the Company, including the CD&R Affiliates, to the underwriter at $34.97 per share. Additionally, on March 5, 2015, the Company registered the offering and sale of 50,857,145 shares of common stock by CD&R Affiliates, which constituted the remaining shares beneficially owned by them, to the underwriter at $36.25 per share, less an underwriting discount. The underwriters in these selling stockholder transactions offered the shares to the public from time to time at prevailing market prices or at negotiated prices. The Company did not receive any of the proceeds from the sale of the shares sold by the selling stockholders in these transactions, including any shares sold pursuant to any exercise of the underwriters’ overallotment option. |
Financial Instruments and Concentration of Credit Risk | Financial Instruments and Concentration of Credit Risk The Company’s cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, insurance collateral, long-term debt and other long-term liabilities constitute financial instruments. Based on management’s estimates, the carrying value of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximates fair value as of September 30, 2015 and December 31, 2014. Concentration of credit risks in accounts receivable is limited, due to the large number of customers comprising the Company’s customer base throughout the United States. A significant component of the Company’s revenue is derived from Medicare and Medicaid. Given that these are government programs, the credit risk for these customers is considered low. The Company performs ongoing credit evaluations of its other customers, but does not require collateral to support customer accounts receivable. The Company establishes an allowance for uncompensated care based on the credit risk applicable to particular customers, historical trends and other relevant information. For the nine months ended September 30, 2015 and 2014, the Company derived approximately 35% and 33% , respectively, of its revenue from Medicare and Medicaid, 62% and 64% , respectively, from insurance providers and contracted payors, and 3% and 3% , respectively, directly from patients. The Company estimates the fair value of its fixed rate senior notes based on an analysis in which the Company evaluates market conditions, related securities, various public and private offerings, and other publicly available information (Level 2, as defined below). The estimated fair value of the senior notes as of September 30, 2015 and December 31, 2014 was approximately $744.4 million, with a carrying amount of $750.0 million. |
Fair Value Measurement | Fair Value Measurement The Company classifies its financial instruments that are reported at fair value based on a hierarchal framework which ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is impacted by a number of factors, including the type of instrument and the characteristics specific to the instrument. Instruments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. Financial instruments measured and reported at fair value are classified and disclosed in one of the following categories: Level 1—Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. The Company does not adjust the quoted price for these assets or liabilities, which include investments held in connection with the Company’s captive insurance program. Level 2—Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Balances in this category include derivatives and corporate bonds. Level 3—Pricing inputs are unobservable as of the reporting date and reflect the Company’s own assumptions about the fair value of the asset or liability. Balances in this category include the Company’s estimate, using a combination of internal and external fair value analyses, of contingent consideration for acquisitions described in Note 4. The following table summarizes the valuation of the Company’s financial instruments by the above fair value hierarchy levels as of September 30, 2015 and December 31, 2014 (in thousands): September 30, 2015 Description Level 1 Level 2 Level 3 Total Assets: Available-for-sale securities (insurance collateral) $ $ $ — $ Liabilities: Contingent consideration — — Fuel hedge — — December 31, 2014 Description Level 1 Level 2 Level 3 Total Assets: Available-for-sale securities (insurance collateral) $ $ — $ — $ Liabilities: Contingent consideration — — Fuel hedge — — Interest rate swap — — The contingent consideration balance classified as a Level 3 liability has increased $2.1 million since December 31, 2014 as a result of acquisitions completed during the nine months ended September 30, 2015. During the nine months ended September 30, 2015, the Company had transfers of $5.1 million out of Level 1 and into Level 2 due to limited quoted market prices at the measurement date for certain available-for-sale securities . During the nine months ended September 30 2014, the Company had no transfers between Level 1 and Level 2 fair value measurements. |
Revenue Recognition | Revenue Recognition Fee-for-service revenue is recognized at the time of service and is recorded net of provisions for contractual discounts and estimated uncompensated care. Fee-for-service revenue represents billings for services provided to patients, for which the Company receives payment from the patient or their third-party payor. Provisions for contractual discounts are related to differences between gross charges and specific payor, including governmental, reimbursement schedules. The Company records fee-for-service revenue, net of the contractual discounts based on the information entered into the Company’s billing systems from received medical charts. An estimate for unprocessed medical charts for a given service period is made and adjusted in future periods based on actual medical charts processed. Information entered into the billing systems is subject to change, e.g. change in payor status, and may impact recorded fee-for-service revenue, net of the contractual discounts. Such changes are recognized in the period the change is known. Revenue from home health services, net of revenue adjustments and provisions for contractual discounts, is earned and billed either on an episode of care basis (“episodic-based revenue”), on a per visit basis, or on a daily basis depending upon the payment terms and conditions established with each payor for services provided. Revenue recognized on a non-episodic basis is recorded in a similar manner to the Company’s fee-for-service revenue. Home health service revenue under the Medicare prospective payment system is based on a 60 -day episode payment rate that is subject to adjustment based on certain variables including, but not limited to: (a) a low utilization payment adjustment if the number of visits was fewer than five; (b) a partial payment if the patient transferred to another provider or the Company received a patient from another provider before completing the episode; (c) an outlier payment if the patient’s care was unusually costly (capped at 10% of total reimbursement per provider number); (d) a payment adjustment based upon the level of therapy services required; (e) acceleration if an episode concludes satisfactorily before the end of the 60-day episode period. Adjustments are made to reflect differences between estimated and actual payment amounts, the inability to obtain appropriate billing documentation or authorizations and other reasons unrelated to credit risk. These adjustments are estimated based on historical experience and are recorded in the period in which services are rendered as an estimated revenue adjustment and a corresponding reduction to patient accounts receivable. In addition to revenue recognized on completed episodes, a portion of revenue is recognized on episodes in progress. Episodes in progress are 60-day episodes of care that are active during the reporting period, but were not completed as of the end of the period. Revenue is estimated on a monthly basis based upon historical trends. The primary factors underlying this estimate are the number of episodes in progress at the end of the reporting period, expected Medicare revenue per episode and the calculation of the number of days episodes were active in the period based on the 60-day estimate from the episode start date. Non-Medicare episodic-based revenue is recognized in a similar manner as the Medicare episodic-based revenue; however, rates paid by other insurance carriers can vary based upon the negotiated terms. Revenue from contract staffing assignments, net of sales adjustments and discounts, are recognized when earned, based on the hours worked by the Company’s contract professionals. Conversion and direct hire fees are recognized when the employment candidate accepts permanent employment and all obligations are satisfied. The Company includes reimbursed expenses in revenue, net of contractual discounts and the associated amount of reimbursement expense in compensation and benefits. Subsidy and fee revenue primarily represent hospital subsidies and fees at EmCare and fees for stand-by, special event and community subsidies at AMR. Provisions for estimated uncompensated care, or bad debts, are related principally to the number of self-pay patients treated in the period. The Company has historically reported Medicare and Medicaid managed care in the line “Commercial insurance and managed care”. During 2014, the Company determined that Medicare and Medicaid managed care programs would be better categorized in the Medicare and Medicaid payor class and has reclassified those encounters in the presentation below and conformed prior periods to current period presentation. Net revenue for the three and nine months ended September 30, 2015 and 2014 consisted of the following (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenue, net of contractual discounts, excluding subsidies and fees: Medicare $ $ $ $ Medicaid Commercial insurance and managed care (excluding Medicare and Medicaid managed care) Self-pay Sub-total Subsidies and fees Revenue, net of contractual discounts Provision for uncompensated care Net revenue $ $ $ $ Healthcare reimbursement is complex and may involve lengthy delays. Third-party payors are continuing their efforts to control expenditures for healthcare, including proposals to revise reimbursement policies. The Company has from time to time experienced delays in reimbursement from third-party payors. In addition, third-party payors may disallow, in whole or in part, claims for payment based on determinations that certain amounts are not reimbursable under plan coverage, determinations of medical necessity, or the need for additional information. Laws and regulations governing the Medicare and Medicaid programs are very complex and subject to interpretation. Revenue is recognized on an estimated basis in the period in which related services are rendered. As a result, there is a reasonable possibility that recorded estimates will change materially in the short-term. Such amounts, including adjustments between provisions for contractual discounts and uncompensated care, are adjusted in future periods, as adjustments become known. These adjustments in the aggregate decreased the contractual discount and uncompensated care provisions (and correspondingly increased net revenue) by approximately $4.2 million and $11.6 million for the three and nine months ended September 30, 2015, respectively, and by approximately $1.1 million for the three months ended September 30, 2014 and increased the contractual discount and uncompensated care provisions (and correspondingly decreased net revenue) by approximately $2.7 million for the nine months ended September 30, 2014. The Company provides services to patients who have no insurance or other third-party payor coverage. In certain circumstances, federal law requires providers to render services to any patient who requires care regardless of their ability to pay. Services to these patients are not considered to be charity care and provisions for uncompensated care for these services are estimated accordingly. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”) to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards. The guidance will be effective for public companies for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with early adoption for annual reporting periods beginning after December 15, 2016, permitted. The Company has not yet determined the effects, if any, that adoption of ASU 2014-09 may have on its consolidated financial position or results of operations or the method of adoption. In February 2015, the FASB issued ASU No. 2015-02, Amendments to the Consolidation Analysis (“ASU 2015-02”), which amends existing accounting standards for consolidation under the variable interest entity and voting interest entity models. The new guidance changes the analysis for determining whether a fee paid to a decision maker or service provider is a variable interest. ASU 2015-02 is effective for interim and annual periods beginning after December 15, 2015. Early adoption is permitted. Entities may choose to adopt the standard using either a full retrospective approach or a modified retrospective approach. The Company has not yet determined the effects, if any, that adoption of ASU 2015-02 may have on its consolidated financial position or results of operations or the method of adoption. In April 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”) which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. ASU 2015-03 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. The Company expects to adopt this guidance when effective, and does not expect this guidance to have a significant impact on its financial statements. |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Summary of Significant Accounting Policies | |
Schedule of accounts receivable and allowances | The Company’s accounts receivable and allowances as of September 30, 2015 and December 31, 2014 were as follows (in thousands): September 30, December 31, 2015 2014 Gross trade accounts receivable $ $ Allowance for contractual discounts Allowance for uncompensated care Trade accounts receivable, net Other receivables, net Trade and other accounts receivable, net $ $ |
Summary of the valuation of the Company's financial instruments by the fair value hierarchy levels | The following table summarizes the valuation of the Company’s financial instruments by the above fair value hierarchy levels as of September 30, 2015 and December 31, 2014 (in thousands): September 30, 2015 Description Level 1 Level 2 Level 3 Total Assets: Available-for-sale securities (insurance collateral) $ $ $ — $ Liabilities: Contingent consideration — — Fuel hedge — — December 31, 2014 Description Level 1 Level 2 Level 3 Total Assets: Available-for-sale securities (insurance collateral) $ $ — $ — $ Liabilities: Contingent consideration — — Fuel hedge — — Interest rate swap — — |
Schedule of net revenue | Net revenue for the three and nine months ended September 30, 2015 and 2014 consisted of the following (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenue, net of contractual discounts, excluding subsidies and fees: Medicare $ $ $ $ Medicaid Commercial insurance and managed care (excluding Medicare and Medicaid managed care) Self-pay Sub-total Subsidies and fees Revenue, net of contractual discounts Provision for uncompensated care Net revenue $ $ $ $ |
Basic and Diluted Net Income 24
Basic and Diluted Net Income (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Basic and Diluted Net Income (Loss) Per Share | |
EPS amounts and the basic and diluted weighted-average shares outstanding used in the calculation | The following table presents EPS amounts for all periods and the basic and diluted weighted-average shares outstanding used in the calculation (in thousands, except share and per share amounts). Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Net income (loss) attributable to Envision Healthcare Holdings, Inc. $ $ $ $ Weighted-average common shares outstanding — common stock: Basic Dilutive impact of stock awards outstanding Diluted Net income (loss) per share attributable to Envision Healthcare Holdings, Inc.: Basic $ $ $ $ Diluted $ $ $ $ |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
SEA | |
Schedule of allocation of the purchase price | The allocation of the purchase price is in the table below, which is subject to adjustment based upon the completion of purchase price allocations (in thousands): Cash and cash equivalents $ Accounts receivable Prepaid and other current assets Acquired intangible assets Goodwill Accounts payable Accrued liabilities Long-term deferred tax liabilities Total purchase price $ |
VISTA | |
Schedule of allocation of the purchase price | The allocation of the purchase price is in the table below, which is subject to adjustment based upon the completion of purchase price allocations (in thousands): Cash and cash equivalents $ Accounts receivable Prepaid and other current assets Property, plant and equipment Acquired intangible assets Goodwill Other long-term assets Accounts payable Accrued liabilities Long-term deferred tax liabilities Insurance reserves Other long-term liabilities Total purchase price $ |
EMA | |
Schedule of allocation of the purchase price | The allocation of the purchase price is in the table below, which is subject to adjustment based upon the completion of purchase price allocations (in thousands): Cash and cash equivalents $ Accounts receivable Prepaid and other current assets Property, plant, and equipment Acquired intangible assets Goodwill Other long-term assets Accounts payable Accrued liabilities Long-term deferred tax liabilities Insurance reserves Total purchase price $ |
Phoenix Physicians | |
Schedule of allocation of the purchase price | The final allocation of the purchase price is in the table below (in thousands): Cash and cash equivalents $ Accounts receivable Prepaid and other current assets Property, plant, and equipment Acquired intangible assets Goodwill Accounts payable Accrued liabilities Long-term deferred tax liabilities Insurance reserves Total purchase price $ |
Schedule of unaudited pro forma operating results | Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2015 2014 2015 2014 Net revenue $ $ $ $ Net income (loss) |
Insurance Collateral (Tables)
Insurance Collateral (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Insurance Collateral | |
Schedule of insurance collateral | Insurance collateral consisted of the following as of September 30, 2015 and December 31, 2014 (in thousands): September 30, December 31, 2015 2014 Available-for-sale securities: U.S. Treasuries $ $ Corporate bonds/ Fixed income Corporate equity Total available-for-sale securities Insurance receivable Cash deposits and other Total insurance collateral $ $ |
Schedule of amortized cost basis and aggregate fair value of the Company's available-for-sale securities | Amortized cost basis and aggregate fair value of the Company’s available-for-sale securities as of September 30, 2015 and December 31, 2014 were as follows (in thousands): September 30, 2015 Gross Gross Unrealized Unrealized Fair Description Cost Basis Gains Losses Value U.S. Treasuries $ $ $ $ Corporate bonds/ Fixed income Corporate equity — Total available-for-sale securities $ $ $ $ December 31, 2014 Gross Gross Unrealized Unrealized Fair Description Cost Basis Gains Losses Value U.S. Treasuries $ $ $ $ Corporate bonds/ Fixed income Corporate equity Total available-for-sale securities $ $ $ $ |
Schedule of the Company's temporarily impaired investment securities available-for-sale | The Company’s temporarily impaired investment securities available-for-sale as of September 30, 2015 and December 31, 2014 were as follows (in thousands): September 30, 2015 December 31, 2014 Unrealized Unrealized Fair Value Loss Fair Value Loss U.S. Treasuries: Less than 12 months $ — $ — $ — $ — 12 months or more Corporate bonds/ Fixed income: Less than 12 months — 12 months or more — Corporate equity: Less than 12 months 12 months or more — — — — Total $ $ $ $ |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Accrued Liabilities | |
Schedule of accrued liabilities | Accrued liabilities were as follows as of September 30, 2015 and December 31, 2014 (in thousands): September 30, December 31, 2015 2014 Accrued wages and benefits $ $ Accrued paid time-off Current portion of self-insurance reserve Accrued severance and related costs Current portion of compliance and legal Accrued billing and collection fees Accrued incentive compensation Accrued interest Other Total accrued liabilities $ $ |
Debt and Capital Lease Obliga28
Debt and Capital Lease Obligations (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Debt and Capital Lease Obligations | |
Schedule of debt and capital leases | Debt and capital lease obligations consisted of the following as of September 30, 2015 and December 31, 2014 (in thousands): September 30, December 31, 2015 2014 Senior unsecured notes due 2022 $ $ Senior secured term loan due 2018 (4.00% as of September 30, 2015 and December 30, 2014) Discount on senior secured term loan ABL Facility — Notes due at various dates from 2015 to 2022 with interest rates from 6% to 10% Capital lease obligations due at various dates from 2015 to 2018 Total Less current portion Total long-term debt and capital lease obligations $ $ |
Changes in Accumulated Other 29
Changes in Accumulated Other Comprehensive Income (Loss) by Component (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |
Summary of changes in the Company's accumulated other comprehensive income ("AOCI") by component, after tax | The following table summarizes the changes in the Company’s accumulated other comprehensive income (loss) (“AOCI”) by component as of September 30, 2015 and December 31, 2014 (in thousands). All amounts are after tax. Unrealized holding gains (losses) on Interest rate available-for-sale Fuel hedge swap securities Total Balance as of January 1, 2014 $ $ $ $ Other comprehensive income (loss) before reclassifications Amounts reclassified from accumulated other comprehensive income (loss) Net current-period other comprehensive income (loss) Balance as of December 31, 2014 Other comprehensive income (loss) before reclassifications Amounts reclassified from accumulated other comprehensive income (loss) Net current-period other comprehensive income (loss) Balance as of September 30, 2015 $ $ — $ $ |
Schedule of Statements of Operations affected by reclassifications out of AOCI | The following table shows the line on the statements of operations affected by reclassifications out of AOCI (in thousands): Amount reclassified from AOCI Three Months Ended September 30, Nine Months Ended September 30, Details about AOCI components 2015 2014 2015 2014 Statements of Operations Gains and losses on cash flow hedges: Fuel hedge $ $ $ $ Operating expenses Interest rate swap Interest expense, net Total before tax Tax benefit (expense) $ $ $ $ Net of tax Unrealized holding gains (losses) on available-for-sale securities $ — $ $ $ Realized gains (losses) on investments — Total before tax — Tax benefit (expense) $ — $ $ $ Net of tax |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
AHAH-Evolution JV | |
Variable Interest Entities | |
Summary of the variable interest entity assets and liabilities which are included in the Company's consolidated financial statements | The following table summarizes the AHAH-Evolution JV assets and liabilities as of September 30, 2015, which are included in the Company’s consolidated financial statements (in thousands): September 30, 2015 Current assets $ Current liabilities |
UHS-EmCare JV | |
Variable Interest Entities | |
Summary of the variable interest entity assets and liabilities which are included in the Company's consolidated financial statements | The following table summarizes the UHS-EmCare JV assets and liabilities as of September 30, 2015 and December 31, 2014, which are included in the Company’s consolidated financial statements (in thousands): September 30, December 31, 2015 2014 Current assets $ $ Current liabilities |
HCA-EmCare JV | |
Variable Interest Entities | |
Summary of the variable interest entity assets and liabilities which are included in the Company's consolidated financial statements | The following table summarizes the HCA-EmCare JV assets and liabilities as of September 30, 2015 and December 31, 2014, which are included in the Company’s consolidated financial statements (in thousands): September 30, December 31, 2015 2014 Current assets $ $ Current liabilities |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Information | |
Schedule of the Company's operating segment results | The Company’s operating segment results were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Facility-Based and Post-Acute Care Physician Services Net revenue $ $ $ $ Income from operations Adjusted EBITDA Healthcare Transportation Services Net revenue $ $ $ $ Income from operations Adjusted EBITDA Segment Totals Net revenue $ $ $ $ Income from operations Adjusted EBITDA |
Schedule of reconciliation of net income (loss) to Adjusted EBITDA | A reconciliation of net income (loss) to Adjusted EBITDA (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Net income (loss) $ $ $ $ Add-back of non-operating expense (income): Interest expense, net Income tax expense (benefit) Loss on early debt extinguishment — — — Realized losses (gains) on investments — Interest income from restricted assets Equity in earnings of unconsolidated subsidiary Other expense (income), net Income from operations — segment totals Add-back of operating expense (income): Depreciation and amortization expense Restructuring and other charges Severance and related costs — — Net (income) loss attributable to noncontrolling interest Interest income from restricted assets Equity-based compensation expense Transaction costs Adjusted EBITDA $ $ $ $ |
Consolidating Financial Infor32
Consolidating Financial Information (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Consolidating Financial Information | |
Schedule of Consolidating Balance Sheet | Consolidating Balance Sheet As of September 30, 2015 (in thousands, unaudited) EVHC Corporation (excluding and Consolidating Corporation) Subsidiaries Adjustments Total Assets Current assets: Cash and cash equivalents $ $ $ — $ Insurance collateral — — Trade and other accounts receivable, net — — Parts and supplies inventory — — Prepaids and other current assets Total current assets Property, plant, and equipment, net — — Intangible assets, net — — Long-term deferred tax assets — — Insurance collateral — — Goodwill — — Other long-term assets — — Investment in wholly owned subsidiary — — Total assets $ $ $ $ Liabilities and Equity Current liabilities: Accounts payable $ $ $ — $ Accrued liabilities — Current deferred tax liabilities — Current portion of long-term debt and capital lease obligations — — Total current liabilities Long-term debt and capital lease obligations — — Long-term deferred tax liabilities — Insurance reserves — — Other long-term liabilities — — Total liabilities Equity: Common stock — — Preferred stock — — — — Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Total Envision Healthcare Holdings, Inc. equity Noncontrolling interest — — Total equity Total liabilities and equity $ $ $ $ Consolidating Balance Sheet As of December 31, 2014 (in thousands) EVHC Corporation (excluding and Consolidating Corporation) Subsidiaries Adjustments Total Assets Current assets: Cash and cash equivalents $ $ $ — $ Insurance collateral — — Trade and other accounts receivable, net — — Parts and supplies inventory — — Prepaids and other current assets Total current assets Property, plant, and equipment, net — — Intangible assets, net — — Long-term deferred tax assets — — Insurance collateral — — Goodwill — — Other long-term assets — — Investment in wholly owned subsidiary — — Total assets $ $ $ $ Liabilities and Equity Current liabilities: Accounts payable $ $ $ — $ Accrued liabilities — Current deferred tax liabilities — Current portion of long-term debt and capital lease obligations — — Total current liabilities Long-term debt and capital lease obligations — — Long-term deferred tax liabilities — Insurance reserves — — Other long-term liabilities — — Total liabilities Equity: Common stock — — Preferred stock — — — — Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Total Envision Healthcare Holdings, Inc. equity Noncontrolling interest — — Total equity Total liabilities and equity $ $ $ $ |
Schedule of Condensed Consolidating Statements of Operations | Condensed Consolidating Statement of Operations (in thousands, unaudited) Three Months Ended September 30, 2015 EVHC Corporation (excluding and Consolidating Corporation) Subsidiaries Adjustments Total Net revenue $ — $ $ — $ Compensation and benefits — — Operating expenses — — Insurance expense — — Selling, general and administrative expenses — — Depreciation and amortization expense — — Restructuring and other charges — — Income (loss) from operations — — Interest income from restricted assets — — Interest expense, net — — Realized gains (losses) on investments — — — — Other income (expense), net — Income (loss) before taxes and equity in earnings of unconsolidated subsidiary — Income tax benefit (expense) — Income (loss) before equity in net income (loss) of subsidiary and equity in earnings of unconsolidated subsidiary — Equity in net income (loss) of subsidiary — — Equity in earnings of unconsolidated subsidiary — — Net income (loss) Less: Net (income) loss attributable to noncontrolling interest — — Net income (loss) attributable to Envision Healthcare Holdings, Inc. $ $ $ $ Condensed Consolidating Statement of Operations (in thousands, unaudited) Three Months Ended September 30, 2014 EVHC Corporation (excluding and Consolidating Corporation) Subsidiaries Adjustments Total Net revenue $ — $ $ — $ Compensation and benefits — — Operating expenses — — Insurance expense — — Selling, general and administrative expenses — — Depreciation and amortization expense — — Restructuring charges — — Income from operations — — Interest income from restricted assets — — Interest expense, net — — Realized gains (losses) on investments — — Other income (expense), net — Loss on early debt extinguishment — — — — Income (loss) before taxes and equity in earnings of unconsolidated subsidiary — Income tax benefit (expense) — Income (loss) before equity in net income (loss) of subsidiary and equity in earnings of unconsolidated subsidiary — Equity in net income (loss) of subsidiary — — Equity in earnings of unconsolidated subsidiary — — Net income (loss) Less: Net (income) loss attributable to noncontrolling interest — — Net income (loss) attributable to Envision Healthcare Holdings, Inc. $ $ $ $ Condensed Consolidating Statement of Operations (in thousands, unaudited) Nine Months Ended September 30, 2015 EVHC Corporation (excluding and Consolidating Corporation) Subsidiaries Adjustments Total Net revenue $ — $ $ — $ Compensation and benefits — — Operating expenses — — Insurance expense — — Selling, general and administrative expenses — — Depreciation and amortization expense — — Restructuring charges — — Income from operations — — Interest income from restricted assets — — Interest expense, net — — Realized gains (losses) on investments — — Other income (expense), net — Income (loss) before taxes and equity in earnings of unconsolidated subsidiary — Income tax benefit (expense) — Income (loss) before equity in net income (loss) of subsidiary and equity in earnings of unconsolidated subsidiary — Equity in net income (loss) of subsidiary — — Equity in earnings of unconsolidated subsidiary — — Net income (loss) Less: Net (income) loss attributable to noncontrolling interest — — Net income (loss) attributable to Envision Healthcare Holdings, Inc. $ $ $ $ Condensed Consolidating Statement of Operations (in thousands, unaudited) Nine Months Ended September 30, 2014 EVHC (excluding Corporation and Consolidating Corporation) Subsidiaries Adjustments Total Net revenue $ — $ $ — $ Compensation and benefits — — Operating expenses — — Insurance expense — — Selling, general and administrative expenses — — Depreciation and amortization expense — — Restructuring charges — — Income from operations — — Interest income from restricted assets — — Interest expense, net — — Realized gains (losses) on investments — — Other income (expense), net — Loss on early debt extinguishment — — Income (loss) before taxes and equity in earnings of unconsolidated subsidiary — Income tax benefit (expense) — Income before equity in net income (loss) of subsidiary and equity in earnings of unconsolidated subsidiary — Equity in net income (loss) of subsidiary — — Equity in earnings of unconsolidated subsidiary — — Net income (loss) Less: Net (income) loss attributable to noncontrolling interest — — Net income (loss) attributable to Envision Healthcare Holdings, Inc. $ $ $ $ |
Schedule of Condensed Consolidating Statement of Cash Flows | Condensed Consolidating Statement of Cash Flows (in thousands, unaudited) Nine Months Ended September 30, 2015 EVHC (excluding Corporation and Corporation) Subsidiaries Total Cash Flows from Operating Activities Net cash provided by (used in) operating activities $ $ $ Cash Flows from Investing Activities Purchases of available-for-sale securities — Sales and maturities of available-for-sale securities — Purchase of property, plant and equipment — Proceeds from sale of property, plant and equipment — Acquisition of businesses, net of cash received — Net change in insurance collateral — Other investing activities — Net cash provided by (used in) investing activities — Cash Flows from Financing Activities Borrowings under the ABL Facility — Repayments of the Term Loan — Repayments of the ABL Facility — Debt issuance costs — Proceeds from stock options exercised — Excess tax benefits from equity-based compensation — Contributions from noncontrolling interest, net — Other financing activities — Net intercompany borrowings (payments) — Net cash provided by (used in) financing activities Change in cash and cash equivalents — Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period $ $ $ Condensed Consolidating Statement of Cash Flows (in thousands, unaudited) Nine Months Ended September 30, 2014 EVHC (excluding Corporation and Corporation) Subsidiaries Total Cash Flows from Operating Activities Net cash provided by (used in) operating activities $ $ $ Cash Flows from Investing Activities Purchases of available-for-sale securities — Sales and maturities of available-for-sale securities — Purchase of property, plant and equipment — Proceeds from sale of property, plant and equipment — Acquisition of businesses, net of cash received — Net change in insurance collateral — Other investing activities — Net cash provided by (used in) investing activities — Cash Flows from Financing Activities Borrowings under the ABL Facility — Proceeds from issuance of senior notes — Repayments of the Term Loan — Repayments of the ABL Facility — Repayments of senior notes — Payment for debt extinguishment premiums — Debt issuance costs — Proceeds from stock options exercised — Excess tax benefits from equity-based compensation — Shares repurchased for tax withholdings — Contributions from noncontrolling interest, net — Other financing activities Net intercompany borrowings (payments) — Net cash provided by (used in) financing activities Change in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period $ $ $ |
General (Details)
General (Details) | 9 Months Ended |
Sep. 30, 2015item | |
General | |
Number of operating segments | 2 |
Summary of Significant Accoun34
Summary of Significant Accounting Policies - Insurance Collateral, Trade and Accounts Receivable, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Insurance Collateral | ||
Reinsurance receivable | $ 501 | $ 1,470 |
Trade and Other Accounts Receivable, net | ||
Gross trade accounts receivable | 5,818,544 | 4,978,738 |
Allowance for contractual discounts | (3,037,462) | (2,800,852) |
Allowance for uncompensated care | (1,647,742) | (1,227,799) |
Trade accounts receivable, net | 1,133,340 | 950,087 |
Other receivables, net | 275 | 28 |
Trade and other accounts receivable, net | $ 1,133,615 | $ 950,115 |
EmCare | ||
Trade and Other Accounts Receivable, net | ||
Provision for uncompensated care associated with fee for service charges as a percentage of outstanding self-pay receivables | 86.00% | |
AMR | ||
Trade and Other Accounts Receivable, net | ||
Provision for uncompensated care associated with fee for service charges as a percentage of outstanding self-pay receivables | 82.00% |
Summary of Significant Accoun35
Summary of Significant Accounting Policies - Insurance Reserves (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Insurance Reserves | ||||
Discount rate for claims other than general liability claims (as a percent) | 1.50% | |||
Increase (decrease) in provisions for insurance liabilities for prior year losses | $ 5.1 | $ (0.7) | $ 9.1 | $ 6.6 |
Minimum | ||||
Insurance Reserves | ||||
Liability exposure in instances where third-party insurance coverage is obtained | 1 | |||
Maximum | ||||
Insurance Reserves | ||||
Liability exposure in instances where third-party insurance coverage is obtained | $ 3 |
Summary of Significant Accoun36
Summary of Significant Accounting Policies - Public Offerings (Details) - $ / shares | Mar. 05, 2015 | Sep. 30, 2014 | Jul. 10, 2014 | Feb. 05, 2014 |
Equity Structure and Public Offerings | ||||
Shares of common stock issued | 27,500,000 | 27,500,000 | ||
Underwriter overallotment option | ||||
Equity Structure and Public Offerings | ||||
Shares of common stock issued | 50,857,145 | 17,500,000 | 4,125,000 | 4,125,000 |
Issue price (in dollars per share) | $ 36.25 | $ 34.97 | $ 34 | $ 30.50 |
Summary of Significant Accoun37
Summary of Significant Accounting Policies - Concentration of Credit Risk (Details) - Net revenue - Customer concentration risk | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Medicare and Medicaid | ||
Concentration of Credit Risk | ||
Percentage of concentration risk | 35.00% | 33.00% |
Insurance providers and contracted payors | ||
Concentration of Credit Risk | ||
Percentage of concentration risk | 62.00% | 64.00% |
Self-pay | ||
Concentration of Credit Risk | ||
Percentage of concentration risk | 3.00% | 3.00% |
Summary of Significant Accoun38
Summary of Significant Accounting Policies - Financial Instruments (Details) - Senior subordinated unsecured notes purchased by the Company's subsidiary - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Financial Instruments | ||
Estimated fair value of the senior subordinate notes | $ 744.4 | |
Carrying value of the senior subordinate notes | $ 750 | $ 750 |
Summary of Significant Accoun39
Summary of Significant Accounting Policies - Fair Value (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | |
Fair Value Measurement | |||
Increase in a level 3 liability of the contingent consideration | $ 2,100 | ||
Transfers in assets from Level 1 to level 2 fair value measurements | 5,100 | $ 0 | |
Transfers in assets from Level 2 to level 1 fair value measurements | 0 | ||
Transfers in liabilities from Level 1 to level 2 fair value measurements | 0 | ||
Transfers in liabilities from Level 2 to level 1 fair value measurements | $ 0 | ||
Available-for-sale securities (insurance collateral) | |||
Fair Value Measurement | |||
Assets | 24,276 | $ 30,243 | |
Contingent consideration | |||
Fair Value Measurement | |||
Liabilities | 4,095 | 2,000 | |
Fuel hedge | |||
Fair Value Measurement | |||
Liabilities | 2,253 | 1,433 | |
Interest rate swap agreements | |||
Fair Value Measurement | |||
Liabilities | 1,493 | ||
Level 1 | Available-for-sale securities (insurance collateral) | |||
Fair Value Measurement | |||
Assets | 19,170 | 30,243 | |
Level 2 | Available-for-sale securities (insurance collateral) | |||
Fair Value Measurement | |||
Assets | 5,106 | ||
Level 2 | Fuel hedge | |||
Fair Value Measurement | |||
Liabilities | 2,253 | 1,433 | |
Level 2 | Interest rate swap agreements | |||
Fair Value Measurement | |||
Liabilities | 1,493 | ||
Level 3 | Contingent consideration | |||
Fair Value Measurement | |||
Liabilities | $ 4,095 | $ 2,000 |
Summary of Significant Accoun40
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenue Recognition | ||||
Episode period | 60 days | |||
Payment percentage on total reimbursement per provider | 10.00% | |||
Revenue, net of contractual discounts, excluding subsidies and fees: | $ 2,218,419 | $ 1,800,841 | $ 6,412,023 | $ 5,247,500 |
Subsidies and fees | 259,758 | 189,116 | 735,883 | 554,653 |
Net revenue | 2,478,177 | 1,989,957 | 7,147,906 | 5,802,153 |
Provision for uncompensated care | (1,110,807) | (839,628) | (3,181,776) | (2,562,286) |
Net revenue | 1,367,370 | 1,150,329 | 3,966,130 | 3,239,867 |
Revenue Recognition | ||||
Increase (decrease) in contractual discount or uncompensated care provisions | 4,200 | 1,100 | 11,600 | 2,700 |
Medicare | ||||
Revenue Recognition | ||||
Revenue, net of contractual discounts, excluding subsidies and fees: | 411,001 | 310,412 | 1,193,665 | 861,152 |
Medicaid | ||||
Revenue Recognition | ||||
Revenue, net of contractual discounts, excluding subsidies and fees: | 155,955 | 119,991 | 454,050 | 286,432 |
Commercial insurance and managed care (excluding Medicare and Medicaid managed care) | ||||
Revenue Recognition | ||||
Revenue, net of contractual discounts, excluding subsidies and fees: | 708,149 | 641,840 | 2,092,339 | 1,894,590 |
Self-pay | ||||
Revenue Recognition | ||||
Revenue, net of contractual discounts, excluding subsidies and fees: | $ 943,314 | $ 728,598 | $ 2,671,969 | $ 2,205,326 |
Basic and Diluted Net Income 41
Basic and Diluted Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Basic and Diluted Net Income Per Share | ||||
Net income (loss) attributable to Envision Healthcare Holdings, Inc. | $ 17,236 | $ 52,776 | $ 103,027 | $ 75,609 |
Weighted-average common shares outstanding - common stock: | ||||
Basic (in shares) | 185,969,475 | 182,564,837 | 185,214,021 | 181,502,232 |
Dilutive impact of stock awards outstanding (in shares) | 5,799,632 | 7,619,486 | 6,159,585 | 8,205,377 |
Diluted (in shares) | 191,769,107 | 190,184,323 | 191,373,606 | 189,707,609 |
Net income (loss) per share attributable to Envision Healthcare Holdings, Inc.: | ||||
Basic (in dollars per share) | $ 0.09 | $ 0.29 | $ 0.56 | $ 0.42 |
Diluted (in dollars per share) | $ 0.09 | $ 0.28 | $ 0.54 | $ 0.40 |
Stock awards of common stock outstanding excluded from the computations of diluted loss per share and weighted-average common shares outstanding | 57,087 | 0 | 63,654 | 0 |
Acquisitions (Details)
Acquisitions (Details) $ in Thousands | Sep. 30, 2015USD ($)item | Jul. 10, 2015USD ($) | Feb. 27, 2015USD ($)item | Feb. 23, 2015USD ($) | Feb. 01, 2015USD ($) | Jan. 30, 2015USD ($)item | Jun. 17, 2014USD ($) | May. 21, 2014USD ($) | Sep. 30, 2015USD ($)item | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)item | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($) |
Allocation of the purchase price, which is subject to adjustment based upon the completion of purchase price allocations | |||||||||||||
Goodwill | $ 2,808,187 | $ 2,808,187 | $ 2,808,187 | $ 2,538,633 | |||||||||
Unaudited pro forma operating results | |||||||||||||
Net revenue | 1,367,370 | $ 1,150,329 | 3,966,130 | $ 3,239,867 | |||||||||
SEA | |||||||||||||
Acquisitions | |||||||||||||
Total consideration of acquisitions paid in cash | $ 104,800 | ||||||||||||
Number of Physicians Employed | item | 40 | ||||||||||||
Tax deductible goodwill | $ 0 | ||||||||||||
Allocation of the purchase price, which is subject to adjustment based upon the completion of purchase price allocations | |||||||||||||
Cash and cash equivalents | 545 | ||||||||||||
Accounts receivable | 7,516 | ||||||||||||
Prepaid and other current assets | 10,286 | ||||||||||||
Acquired intangible assets | 86,200 | ||||||||||||
Goodwill | 47,259 | ||||||||||||
Accounts payable | (1,153) | ||||||||||||
Accrued liabilities | (10,258) | ||||||||||||
Long-term deferred tax liabilities | (35,561) | ||||||||||||
Total purchase price | $ 104,834 | ||||||||||||
Purchase price allocation adjustment, intangible assets | 49,200 | ||||||||||||
Purchase price allocation adjustment, long-term deferred tax liabilities | 19,000 | ||||||||||||
Purchase price allocation adjustment, accrued liabilities | 10,100 | ||||||||||||
VISTA | |||||||||||||
Acquisitions | |||||||||||||
Total consideration of acquisitions paid in cash | $ 123,800 | ||||||||||||
Tax deductible goodwill | 13,800 | ||||||||||||
Allocation of the purchase price, which is subject to adjustment based upon the completion of purchase price allocations | |||||||||||||
Cash and cash equivalents | 1,062 | ||||||||||||
Accounts receivable | 22,548 | ||||||||||||
Prepaid and other current assets | 1,245 | ||||||||||||
Property, plant and equipment | 2,739 | ||||||||||||
Acquired intangible assets | 53,270 | ||||||||||||
Goodwill | 76,253 | ||||||||||||
Other long-term assets | 5,920 | ||||||||||||
Accounts payable | (1,784) | ||||||||||||
Accrued liabilities | (5,493) | ||||||||||||
Long-term deferred tax liabilities | (16,651) | ||||||||||||
Insurance reserves | (13,639) | ||||||||||||
Other long-term liabilities | (1,132) | ||||||||||||
Total purchase price | 124,338 | ||||||||||||
Working capital adjustment | $ 500 | ||||||||||||
Purchase price allocation adjustment, intangible assets | 8,400 | ||||||||||||
Purchase price allocation adjustment, long-term deferred tax liabilities | 6,200 | ||||||||||||
EMA | |||||||||||||
Acquisitions | |||||||||||||
Total consideration of acquisitions paid in cash | $ 271,800 | ||||||||||||
Number of Health Care Facilities | item | 47 | ||||||||||||
Tax deductible goodwill | $ 98,100 | ||||||||||||
Allocation of the purchase price, which is subject to adjustment based upon the completion of purchase price allocations | |||||||||||||
Cash and cash equivalents | 7,388 | ||||||||||||
Accounts receivable | 52,828 | ||||||||||||
Prepaid and other current assets | 4,848 | ||||||||||||
Property, plant and equipment | 2,276 | ||||||||||||
Acquired intangible assets | 147,300 | ||||||||||||
Goodwill | 107,650 | ||||||||||||
Other long-term assets | 22,327 | ||||||||||||
Accounts payable | (12,863) | ||||||||||||
Accrued liabilities | (33,597) | ||||||||||||
Long-term deferred tax liabilities | (4,091) | ||||||||||||
Insurance reserves | (22,300) | ||||||||||||
Total purchase price | $ 271,766 | ||||||||||||
Purchase price allocation adjustment, intangible assets | 52,300 | ||||||||||||
Purchase price allocation adjustment, long-term deferred tax liabilities | 600 | ||||||||||||
SEA, VISTA and EMA | |||||||||||||
Unaudited pro forma operating results | |||||||||||||
Net revenue | $ 120,200 | $ 288,300 | |||||||||||
Care First, Inc. | |||||||||||||
Acquisitions | |||||||||||||
Total consideration of acquisitions paid in cash | $ 7,300 | ||||||||||||
Allocation of the purchase price, which is subject to adjustment based upon the completion of purchase price allocations | |||||||||||||
Working capital adjustment | $ 700 | ||||||||||||
Vital Marlboro Entities [Member] | |||||||||||||
Acquisitions | |||||||||||||
Total consideration of acquisitions paid in cash | $ 42,500 | ||||||||||||
Tax deductible goodwill | $ 8,500 | ||||||||||||
NTEP | |||||||||||||
Acquisitions | |||||||||||||
Total consideration of acquisitions paid in cash | $ 25,000 | ||||||||||||
Number of Physicians Employed | item | 27 | 27 | 27 | ||||||||||
Number of mid-level providers | item | 5 | 5 | 5 | ||||||||||
Contingent consideration liability | $ 2,000 | $ 2,000 | $ 2,000 | ||||||||||
Allocation of the purchase price, which is subject to adjustment based upon the completion of purchase price allocations | |||||||||||||
Net current assets | 3,400 | 3,400 | 3,400 | ||||||||||
Acquired intangible assets | 47,100 | 47,100 | 47,100 | ||||||||||
Goodwill | 23,300 | 23,300 | 23,300 | ||||||||||
Long-term deferred tax liabilities | (6,300) | (6,300) | (6,300) | ||||||||||
Phoenix Physicians | |||||||||||||
Acquisitions | |||||||||||||
Total consideration of acquisitions paid in cash | $ 169,500 | ||||||||||||
Allocation of the purchase price, which is subject to adjustment based upon the completion of purchase price allocations | |||||||||||||
Cash and cash equivalents | 24,795 | ||||||||||||
Accounts receivable | 16,748 | ||||||||||||
Prepaid and other current assets | 139 | ||||||||||||
Property, plant and equipment | 92 | ||||||||||||
Acquired intangible assets | 57,630 | ||||||||||||
Goodwill | 98,408 | ||||||||||||
Accounts payable | (1,073) | ||||||||||||
Accrued liabilities | (13,128) | ||||||||||||
Long-term deferred tax liabilities | (445) | ||||||||||||
Insurance reserves | (13,716) | ||||||||||||
Other long-term liabilities | $ (169,450) | ||||||||||||
Increase in goodwill due to purchase price allocation adjustments | 1,200 | ||||||||||||
Unaudited pro forma operating results | |||||||||||||
Net revenue | 1,367,370 | 1,256,723 | 4,023,161 | 3,604,603 | |||||||||
Net income | 18,570 | $ 54,604 | 107,972 | $ 80,690 | |||||||||
Other 2014 Acquisition | |||||||||||||
Acquisitions | |||||||||||||
Total consideration of acquisitions paid in cash | $ 38,000 | ||||||||||||
Tax deductible goodwill | 4,900 | ||||||||||||
Allocation of the purchase price, which is subject to adjustment based upon the completion of purchase price allocations | |||||||||||||
Net current assets | 3,500 | ||||||||||||
Acquired intangible assets | $ 1,300 | 28,700 | $ 1,300 | $ 1,300 | |||||||||
Goodwill | 9,500 | ||||||||||||
Long-term deferred tax liabilities | $ (3,700) |
Insurance Collateral - Summary
Insurance Collateral - Summary (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Insurance collateral | ||
Available-for-sale securities | $ 24,276 | $ 30,243 |
Insurance receivable | 501 | 1,470 |
Cash deposits and other | 12,486 | 11,683 |
Total insurance collateral | 37,263 | 43,396 |
Amortized cost basis and aggregate fair value of the Company's available-for-sale securities | ||
Available-for-sale Securities, Amortized Cost Basis, Total | 25,181 | 30,406 |
Gross Unrealized Gains | 63 | 98 |
Gross Unrealized Losses | (968) | (261) |
Fair Value | 24,276 | 30,243 |
U.S. Treasuries | ||
Insurance collateral | ||
Available-for-sale securities | 1,196 | 1,191 |
Amortized cost basis and aggregate fair value of the Company's available-for-sale securities | ||
Available-for-sale Securities, Amortized Cost Basis, Total | 1,193 | 1,182 |
Gross Unrealized Gains | 8 | 12 |
Gross Unrealized Losses | (5) | (3) |
Fair Value | 1,196 | 1,191 |
Corporate bonds / Fixed income | ||
Insurance collateral | ||
Available-for-sale securities | 13,160 | 15,397 |
Amortized cost basis and aggregate fair value of the Company's available-for-sale securities | ||
Available-for-sale Securities, Amortized Cost Basis, Total | 13,107 | 15,339 |
Gross Unrealized Gains | 55 | 59 |
Gross Unrealized Losses | (2) | (1) |
Fair Value | 13,160 | 15,397 |
Corporate equity | ||
Insurance collateral | ||
Available-for-sale securities | 9,920 | 13,655 |
Amortized cost basis and aggregate fair value of the Company's available-for-sale securities | ||
Available-for-sale Securities, Amortized Cost Basis, Total | 10,881 | 13,885 |
Gross Unrealized Gains | 27 | |
Gross Unrealized Losses | (961) | (257) |
Fair Value | 9,920 | $ 13,655 |
U.S. Treasuries and Corporate bonds / Fixed income securities | ||
Contractual maturities of available-for-sale securities | ||
Within one year | 5,100 | |
Longer than one year through five years | $ 9,300 |
Insurance Collateral - Cost and
Insurance Collateral - Cost and Fair Value (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Insurance collateral | ||||
Securities available-for-sale, Fair Value, Total | $ 13,766 | $ 12,853 | ||
Securities available-for-sale, Unrealized Loss, Total | (968) | (261) | ||
Realized net losses on the sale and maturities of available-for-sale securities | $ 500 | |||
Realized net gains on the sale and maturities of available-for-sale securities | $ 600 | |||
Maximum | ||||
Insurance collateral | ||||
Realized net losses on the sale and maturities of available-for-sale securities | 100 | |||
U.S. Treasuries | ||||
Insurance collateral | ||||
Securities available-for-sale, 12 months or more, Fair Value | 129 | 130 | ||
Securities available-for-sale, 12 months or more, Unrealized Loss | (5) | (3) | ||
Corporate bonds / Fixed income | ||||
Insurance collateral | ||||
Securities available-for-sale, Less than 12 months, Fair Value | 1,965 | 1,312 | ||
Securities available-for-sale, 12 months or more, Fair Value | 1,752 | 251 | ||
Securities available-for-sale, Less than 12 months, Unrealized Loss | (1) | |||
Securities available-for-sale, 12 months or more, Unrealized Loss | (2) | |||
Corporate equity | ||||
Insurance collateral | ||||
Securities available-for-sale, Less than 12 months, Fair Value | 9,920 | 11,160 | ||
Securities available-for-sale, Less than 12 months, Unrealized Loss | $ (961) | $ (257) |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Accrued Liabilities | ||
Accrued wages and benefits | $ 248,104 | $ 190,220 |
Accrued paid time-off | 36,375 | 27,156 |
Current portion of self-insurance reserves | 76,416 | 74,212 |
Accrued severance and related costs | 5,437 | 8,376 |
Current portion of compliance and legal | 37,212 | 3,407 |
Accrued billing and collection fees | 1,304 | 3,823 |
Accrued incentive compensation | 31,742 | 32,324 |
Accrued interest | 11,199 | 22,324 |
Other | 50,454 | 50,815 |
Total accrued liabilities | $ 498,243 | $ 412,657 |
Debt and Capital Lease Obliga46
Debt and Capital Lease Obligations - Types of Obligations (Details) $ in Thousands | Jun. 18, 2014USD ($) | Dec. 30, 2013USD ($) | Feb. 27, 2013USD ($) | Feb. 07, 2013USD ($) | Feb. 06, 2013 | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Feb. 05, 2015USD ($) | Jun. 19, 2014USD ($) | Jun. 30, 2012USD ($) | May. 25, 2011USD ($) |
Long-Term Debt | ||||||||||||||
Amount of debt held | $ 2,238,584 | $ 2,038,226 | ||||||||||||
Loss on early debt extinguishment | $ 66,397 | |||||||||||||
Outstanding debt | 134,100 | 112,300 | ||||||||||||
Debt issuance expense related to amendments | 27 | $ 2,221 | ||||||||||||
Senior unsecured notes due 2019 | ||||||||||||||
Long-Term Debt | ||||||||||||||
Principal amount of debt redeemed | $ 617,500 | $ 332,500 | ||||||||||||
Redemption price (as a percent) | 106.094% | 108.125% | ||||||||||||
Repayments of debt and capital lease obligations | $ 2,400 | $ 2,200 | ||||||||||||
Loss on early debt extinguishment | 66,400 | $ 38,700 | ||||||||||||
Senior unsecured notes due 2019 | Corporation | ||||||||||||||
Long-Term Debt | ||||||||||||||
Debt issued | $ 950,000 | |||||||||||||
Senior unsecured notes due 2019 | Captive insurance subsidiary | ||||||||||||||
Long-Term Debt | ||||||||||||||
Amount of debt held | 9,800 | $ 5,200 | ||||||||||||
Senior unsecured notes purchased by EMSC subsidiary | ||||||||||||||
Long-Term Debt | ||||||||||||||
Amount of debt held | $ 0 | $ 0 | $ 15,000 | |||||||||||
Credit Facilities | Corporation | ||||||||||||||
Long-Term Debt | ||||||||||||||
Maximum borrowing capacity | 1,800,000 | |||||||||||||
Term Loan Facility | ||||||||||||||
Long-Term Debt | ||||||||||||||
Amount of debt held | $ 1,279,546 | $ 1,289,575 | ||||||||||||
Additional debt borrowings | $ 150,000 | |||||||||||||
Loss on early debt extinguishment | $ 100 | |||||||||||||
Applicable interest rate variance threshold for incremental borrowings that will determine a re-price of the Term Loan Facility (as a percent) | 0.50% | |||||||||||||
Percentage range of the re-price of the Term Loan Facility that is dependent on the interest rate variance between the incremental borrowings and Term Loan Facility (as a percent) | 0.50% | |||||||||||||
Interest rate (as a percent) | 4.00% | 4.00% | ||||||||||||
Term Loan Facility | Corporation | ||||||||||||||
Long-Term Debt | ||||||||||||||
Maximum borrowing capacity | 1,440,000 | |||||||||||||
Term Loan Facility | Option one | Corporation | ||||||||||||||
Long-Term Debt | ||||||||||||||
Interest rate margin (as a percent) | 3.00% | |||||||||||||
Interest rate in the event of meeting specified consolidated first lien net leverage ratio (as a percent) | 2.75% | |||||||||||||
Consolidated first lien net leverage ratio | 2.50 | |||||||||||||
Term Loan Facility | Option one | Adjusted LIBOR rate | ||||||||||||||
Long-Term Debt | ||||||||||||||
Reference rate (as a percent) | 1.00% | |||||||||||||
Variable interest rate basis | LIBOR | |||||||||||||
Term Loan Facility | Option two | Corporation | ||||||||||||||
Long-Term Debt | ||||||||||||||
Reference rate (as a percent) | 2.00% | |||||||||||||
Interest rate margin (as a percent) | 2.00% | |||||||||||||
Interest rate in the event of meeting specified consolidated first lien net leverage ratio (as a percent) | 1.75% | |||||||||||||
Consolidated first lien net leverage ratio | 2.50 | |||||||||||||
Term Loan Facility | Option two | Overnight federal funds rate | Corporation | ||||||||||||||
Long-Term Debt | ||||||||||||||
Interest rate margin (as a percent) | 0.50% | |||||||||||||
Term Loan Facility | Option two | LIBOR rate | ||||||||||||||
Long-Term Debt | ||||||||||||||
Variable interest rate basis | one-month LIBOR | |||||||||||||
Interest rate margin (as a percent) | 1.00% | |||||||||||||
ABL Facility | ||||||||||||||
Long-Term Debt | ||||||||||||||
Amount of debt held | $ 210,000 | |||||||||||||
Maximum borrowing capacity | $ 450,000 | |||||||||||||
Outstanding debt | 134,100 | |||||||||||||
Available borrowing capacity | $ 205,900 | |||||||||||||
Period of average excess availability exceeding agreed upon thresholds | 30 days | |||||||||||||
Fixed charge coverage ratio | 1 | |||||||||||||
ABL Facility | Minimum | ||||||||||||||
Long-Term Debt | ||||||||||||||
Commitment fee (as a percent) | 0.375% | |||||||||||||
ABL Facility | Maximum | ||||||||||||||
Long-Term Debt | ||||||||||||||
Commitment fee (as a percent) | 0.50% | |||||||||||||
ABL Facility | Corporation | ||||||||||||||
Long-Term Debt | ||||||||||||||
Maximum borrowing capacity | $ 550,000 | $ 350,000 | ||||||||||||
ABL Facility | Option one | Adjusted LIBOR rate | ||||||||||||||
Long-Term Debt | ||||||||||||||
Variable interest rate basis | LIBOR | |||||||||||||
ABL Facility | Option one | Adjusted LIBOR rate | Average daily excess availability less than or equal to 33% of availability | ||||||||||||||
Long-Term Debt | ||||||||||||||
Interest rate margin (as a percent) | 2.00% | |||||||||||||
ABL Facility | Option one | Adjusted LIBOR rate | Average daily excess availability less than or equal to 33% of availability | Maximum | ||||||||||||||
Long-Term Debt | ||||||||||||||
Average daily excess availability as a percentage of availability | 33.00% | |||||||||||||
ABL Facility | Option one | Adjusted LIBOR rate | Average daily excess availability greater than 33% but less than or equal to 66% of availability | Minimum | ||||||||||||||
Long-Term Debt | ||||||||||||||
Average daily excess availability as a percentage of availability | 33.00% | |||||||||||||
ABL Facility | Option one | Adjusted LIBOR rate | Average daily excess availability greater than 33% but less than or equal to 66% of availability | Maximum | ||||||||||||||
Long-Term Debt | ||||||||||||||
Average daily excess availability as a percentage of availability | 66.00% | |||||||||||||
ABL Facility | Option one | Adjusted LIBOR rate | Average daily excess availability greater than 66% of availability | Minimum | ||||||||||||||
Long-Term Debt | ||||||||||||||
Average daily excess availability as a percentage of availability | 66.00% | |||||||||||||
ABL Facility | Option one | Adjusted LIBOR rate | Corporation | Average daily excess availability greater than 33% but less than or equal to 66% of availability | ||||||||||||||
Long-Term Debt | ||||||||||||||
Interest rate margin (as a percent) | 1.75% | |||||||||||||
ABL Facility | Option one | Adjusted LIBOR rate | Corporation | Average daily excess availability greater than 66% of availability | ||||||||||||||
Long-Term Debt | ||||||||||||||
Interest rate margin (as a percent) | 1.50% | |||||||||||||
ABL Facility | Option two | Overnight federal funds rate | Corporation | ||||||||||||||
Long-Term Debt | ||||||||||||||
Interest rate margin (as a percent) | 0.50% | |||||||||||||
ABL Facility | Option two | Adjusted LIBOR rate | Average daily excess availability less than or equal to 33% of availability | Maximum | ||||||||||||||
Long-Term Debt | ||||||||||||||
Average daily excess availability as a percentage of availability | 33.00% | |||||||||||||
ABL Facility | Option two | Adjusted LIBOR rate | Average daily excess availability greater than 33% but less than or equal to 66% of availability | Minimum | ||||||||||||||
Long-Term Debt | ||||||||||||||
Average daily excess availability as a percentage of availability | 33.00% | |||||||||||||
ABL Facility | Option two | Adjusted LIBOR rate | Average daily excess availability greater than 33% but less than or equal to 66% of availability | Maximum | ||||||||||||||
Long-Term Debt | ||||||||||||||
Average daily excess availability as a percentage of availability | 66.00% | |||||||||||||
ABL Facility | Option two | Adjusted LIBOR rate | Average daily excess availability greater than 66% of availability | Minimum | ||||||||||||||
Long-Term Debt | ||||||||||||||
Average daily excess availability as a percentage of availability | 66.00% | |||||||||||||
ABL Facility | Option two | Adjusted LIBOR rate | Corporation | ||||||||||||||
Long-Term Debt | ||||||||||||||
Variable interest rate basis | One-month LIBOR rate | |||||||||||||
Interest rate margin (as a percent) | 1.00% | |||||||||||||
ABL Facility | Option two | Adjusted LIBOR rate | Corporation | Average daily excess availability less than or equal to 33% of availability | ||||||||||||||
Long-Term Debt | ||||||||||||||
Interest rate margin (as a percent) | 1.00% | |||||||||||||
ABL Facility | Option two | Adjusted LIBOR rate | Corporation | Average daily excess availability greater than 33% but less than or equal to 66% of availability | ||||||||||||||
Long-Term Debt | ||||||||||||||
Interest rate margin (as a percent) | 0.75% | |||||||||||||
ABL Facility | Option two | Adjusted LIBOR rate | Corporation | Average daily excess availability greater than 66% of availability | ||||||||||||||
Long-Term Debt | ||||||||||||||
Interest rate margin (as a percent) | 0.50% | |||||||||||||
Senior Unsecured Notes due 2022 | ||||||||||||||
Long-Term Debt | ||||||||||||||
Amount of debt held | $ 750,000 | $ 750,000 | ||||||||||||
Loss on early debt extinguishment | $ (9,400) | |||||||||||||
Repurchase price of debt instrument as a percentage of principal amount in the event of a change of control | 101.00% | |||||||||||||
Repurchase price of debt instrument as a percentage of principal amount in the event of sale of assets | 100.00% | |||||||||||||
Senior Unsecured Notes due 2022 | Period prior to July 1, 2017 | ||||||||||||||
Long-Term Debt | ||||||||||||||
Redemption price (as a percent) | 100.00% | |||||||||||||
Percentage of aggregate principal amount of debt instrument that may be redeemed | 40.00% | |||||||||||||
Redemption price of debt instrument as a percentage of principal amount with proceeds of certain equity offerings | 105.125% | |||||||||||||
Senior Unsecured Notes due 2022 | Period on and after July 1, 2017 and prior to July 1, 2018 | ||||||||||||||
Long-Term Debt | ||||||||||||||
Redemption price (as a percent) | 103.844% | |||||||||||||
Senior Unsecured Notes due 2022 | Period on or after July 1, 2018 and prior to July 1, 2019 | ||||||||||||||
Long-Term Debt | ||||||||||||||
Redemption price (as a percent) | 102.563% | |||||||||||||
Senior Unsecured Notes due 2022 | Period on or after July 1, 2019 and prior to July 1, 2020 | ||||||||||||||
Long-Term Debt | ||||||||||||||
Redemption price (as a percent) | 101.281% | |||||||||||||
Senior Unsecured Notes due 2022 | Period on or after July 1, 2020 | ||||||||||||||
Long-Term Debt | ||||||||||||||
Redemption price (as a percent) | 100.00% | |||||||||||||
Senior Unsecured Notes due 2022 | Corporation | ||||||||||||||
Long-Term Debt | ||||||||||||||
Debt issued | $ 750,000 | |||||||||||||
Interest rate (as a percent) | 5.125% |
Debt and Capital Lease Obliga47
Debt and Capital Lease Obligations - Summary (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Long-Term Debt | ||
Debt and Capital Lease Obligations, Total | $ 2,238,584 | $ 2,038,226 |
Less current portion | (12,374) | (12,349) |
Long-term debt | 2,226,210 | 2,025,877 |
Senior Unsecured Notes due 2022 | ||
Long-Term Debt | ||
Debt and Capital Lease Obligations, Total | 750,000 | 750,000 |
Term Loan Facility | ||
Long-Term Debt | ||
Debt and Capital Lease Obligations, Total | 1,279,546 | 1,289,575 |
Discount on debt | $ (2,572) | $ (3,317) |
Interest rate (as a percent) | 4.00% | 4.00% |
ABL Facility | ||
Long-Term Debt | ||
Debt and Capital Lease Obligations, Total | $ 210,000 | |
Notes due at various dates from 2015 to 2022 | ||
Long-Term Debt | ||
Debt and Capital Lease Obligations, Total | $ 443 | $ 482 |
Interest rate, minimum (as a percent) | 6.00% | 6.00% |
Interest rate, maximum (as a percent) | 10.00% | 10.00% |
Capital lease obligations due at various dates from 2014 to 2018 | ||
Long-Term Debt | ||
Debt and Capital Lease Obligations, Total | $ 1,167 | $ 1,486 |
Derivative Instruments and He48
Derivative Instruments and Hedging Activities (Details) item in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015USD ($)item | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)itemagreement$ / gal | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($) | |
Fuel hedge | |||||
Derivative Instruments and Hedging Activities | |||||
Number of master agreements | agreement | 1 | ||||
Total gallons of diesel fuel | item | 3.1 | 3.1 | |||
Gallons of diesel fuel as a percentage of total estimated annual usage | 18.00% | 18.00% | |||
Fair value of derivative asset | $ 2.3 | $ 2.3 | $ 1.4 | ||
Period over which deferred gain (loss) is expected to be reclassified from accumulated comprehensive income | 12 months | ||||
Amount of deferred gain (loss) expected to be reclassified from accumulated comprehensive income | $ 1.1 | ||||
Net payments to the counterparty | 0.3 | $ 0.7 | |||
Net receipts from the counterparty | $ 0.1 | $ 0.4 | |||
Fuel hedge | Minimum | |||||
Derivative Instruments and Hedging Activities | |||||
Diesel fuel price (in dollars per gallon) | $ / gal | 3.16 | ||||
Fuel hedge | Maximum | |||||
Derivative Instruments and Hedging Activities | |||||
Diesel fuel price (in dollars per gallon) | $ / gal | 3.58 | ||||
Interest rate swap agreements | |||||
Derivative Instruments and Hedging Activities | |||||
Notional amount of debt obligations | $ 400 | $ 400 | |||
Effective rate of interest of debt (as a percent) | 4.49% | 4.49% | |||
Minimum variable interest rate of debt (as a percent) | 1.00% | 1.00% | |||
Fair value of derivative liability | $ 1.5 | ||||
Net payments to the counterparty | $ 0.5 | $ 0.5 | $ 1.5 | $ 1.5 |
Changes in Accumulated Other 49
Changes in Accumulated Other Comprehensive Income (Loss) by Component - Changes in AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Changes in the company's AOCI by component, after tax | |||||
Balance at the beginning of the period | $ (1,856) | $ (839) | $ (839) | ||
Other comprehensive income (loss) before reclassifications | (1,485) | (1,837) | |||
Amounts reclassified from accumulated other comprehensive income (loss) | 1,426 | 820 | |||
Total other comprehensive income (loss), net of tax | $ (726) | $ (384) | (59) | (772) | (1,017) |
Balance at the end of the period | (1,915) | (1,915) | (1,856) | ||
Unrealized holding gains on available-for-sale securities | |||||
Changes in the company's AOCI by component, after tax | |||||
Balance at the beginning of the period | (24,000) | 699,000 | 699,000 | ||
Other comprehensive income (loss) before reclassifications | (501,000) | (491,000) | |||
Amounts reclassified from accumulated other comprehensive income (loss) | 21,000 | (232,000) | |||
Total other comprehensive income (loss), net of tax | (480,000) | (723,000) | |||
Balance at the end of the period | (504,000) | (504,000) | (24,000) | ||
Fuel hedge | Gains and losses on cash flow hedges | |||||
Changes in the company's AOCI by component, after tax | |||||
Balance at the beginning of the period | (897,000) | 420,000 | 420,000 | ||
Other comprehensive income (loss) before reclassifications | (964,000) | (1,130,000) | |||
Amounts reclassified from accumulated other comprehensive income (loss) | 450,000 | (187,000) | |||
Total other comprehensive income (loss), net of tax | (514,000) | (1,317,000) | |||
Balance at the end of the period | $ (1,411,000) | (1,411,000) | (897,000) | ||
Interest rate swap agreements | Gains and losses on cash flow hedges | |||||
Changes in the company's AOCI by component, after tax | |||||
Balance at the beginning of the period | (935,000) | $ (1,958,000) | (1,958,000) | ||
Other comprehensive income (loss) before reclassifications | (20,000) | (216,000) | |||
Amounts reclassified from accumulated other comprehensive income (loss) | 955,000 | 1,239,000 | |||
Total other comprehensive income (loss), net of tax | $ 935,000 | 1,023,000 | |||
Balance at the end of the period | $ (935,000) |
Changes in Accumulated Other 50
Changes in Accumulated Other Comprehensive Income (Loss) by Component - Reclassifications (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Amounts Reclassified from Accumulated Other Comprehensive Income | ||||
Operating expenses | $ (165,099) | $ (129,535) | $ (472,954) | $ (364,885) |
Interest expense, net | (27,579) | (25,742) | (82,360) | (84,793) |
Realized gains (losses) on investments | (466) | (34) | 648 | |
Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary | 32,306 | 87,208 | 174,995 | 121,891 |
Tax benefit (expense) | (13,795) | (34,437) | (69,009) | (49,700) |
Gains and losses on cash flow hedges | Amounts Reclassified from Accumulated Other Comprehensive Income | ||||
Amounts Reclassified from Accumulated Other Comprehensive Income | ||||
Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary | (807) | (410) | (2,215) | (1,127) |
Tax benefit (expense) | 282 | 153 | 810 | 424 |
Net income | (525) | (257) | (1,405) | (703) |
Gains and losses on cash flow hedges | Fuel hedge | Amounts Reclassified from Accumulated Other Comprehensive Income | ||||
Amounts Reclassified from Accumulated Other Comprehensive Income | ||||
Operating expenses | (294) | 86 | (709) | 362 |
Gains and losses on cash flow hedges | Interest rate swap agreements | Amounts Reclassified from Accumulated Other Comprehensive Income | ||||
Amounts Reclassified from Accumulated Other Comprehensive Income | ||||
Interest expense, net | $ (513) | (496) | (1,506) | (1,489) |
Unrealized holding gains on available-for-sale securities | Amounts Reclassified from Accumulated Other Comprehensive Income | ||||
Amounts Reclassified from Accumulated Other Comprehensive Income | ||||
Realized gains (losses) on investments | (466) | (34) | 648 | |
Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary | (466) | (34) | 648 | |
Tax benefit (expense) | 176 | 13 | (244) | |
Net income | $ (290) | $ (21) | $ 404 |
Equity Based Compensation (Deta
Equity Based Compensation (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2015USD ($)itemshares | Mar. 31, 2015shares | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)itemshares | Sep. 30, 2014USD ($) | Aug. 19, 2013shares | |
Equity based compensation | ||||||
Compensation charges | $ | $ 1,800 | $ 1,100 | $ 4,786 | $ 3,612 | ||
Maximum | ||||||
Equity based compensation | ||||||
Number of shares granted | 2,500,000 | |||||
Omnibus Incentive Plan | ||||||
Equity based compensation | ||||||
Shares of Common Stock available for grant | 16,406,238 | 16,406,238 | 16,708,289 | |||
Number of participants to whom awards granted in a calendar year may exceed 2.5 million shares of Common Stock or 1.5 million performance awards with a value exceeding $5.0 million | item | 0 | 0 | ||||
Omnibus Incentive Plan | Maximum | ||||||
Equity based compensation | ||||||
Fair market value of awards granted | $ | $ 5,000 | |||||
Omnibus Incentive Plan | Performance based awards | ||||||
Equity based compensation | ||||||
Number of shares granted | 0 | |||||
Omnibus Incentive Plan | Performance based awards | Maximum | ||||||
Equity based compensation | ||||||
Number of shares granted | 1,500,000 | |||||
Omnibus Incentive Plan | Stock options | Maximum | ||||||
Equity based compensation | ||||||
Term of awards | 10 years |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | May. 20, 2011USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Mar. 10, 2010item | Dec. 31, 2014USD ($) | Jan. 31, 2014item |
Commitments and Contingencies | ||||||||
Rental expense | $ 13 | $ 11.3 | $ 40.4 | $ 34 | ||||
Outstanding letters of credit | 134.1 | 134.1 | $ 112.3 | |||||
AMR | Predecessor | ||||||||
Commitments and Contingencies | ||||||||
Number of lawsuits purporting to be class actions filed | item | 4 | |||||||
HMA Lawsuits | Pending Litigation | ||||||||
Commitments and Contingencies | ||||||||
Reserve | $ 30 | $ 30 | ||||||
HMA Lawsuits | Pending Litigation | EmCare | ||||||||
Commitments and Contingencies | ||||||||
Number of lawsuits, in which the Company is defendant | item | 2 | |||||||
Subpoena from the DOJ | AMR | ||||||||
Commitments and Contingencies | ||||||||
Term of CIA | 5 years | |||||||
Subpoena from the DOJ | AMR | Predecessor | ||||||||
Commitments and Contingencies | ||||||||
Settlement amount to resolve the claims | $ 2.7 |
Variable Interest Entities (Det
Variable Interest Entities (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Summary of the assets and liabilities which are included in the Company's consolidated financial statements | |||
Current assets | $ 1,373,617 | $ 1,363,239 | |
Current liabilities | 687,273 | 576,868 | |
AHAH-Evolution JV | |||
Summary of the assets and liabilities which are included in the Company's consolidated financial statements | |||
Current assets | 30,669 | ||
Current liabilities | 8,673 | ||
Cash contributions for working capital requirements | $ 100 | ||
AHAH-Evolution JV | Evolution | |||
Variable Interest Entities | |||
Voting control (as a percent) | 50.00% | ||
UHS-EmCare JV | |||
Summary of the assets and liabilities which are included in the Company's consolidated financial statements | |||
Current assets | $ 31,690 | 21,427 | |
Current liabilities | 11,978 | 6,748 | |
Cash contributions for working capital requirements | $ 0 | $ 300 | |
UHS-EmCare JV | EmCare | |||
Variable Interest Entities | |||
Voting control (as a percent) | 50.00% | ||
HCA-EmCare JV | |||
Summary of the assets and liabilities which are included in the Company's consolidated financial statements | |||
Current assets | $ 180,641 | 155,041 | |
Current liabilities | 54,401 | $ 31,163 | |
Cash contributions for working capital requirements | $ 0 | $ 0 | |
HCA-EmCare JV | EmCare | |||
Variable Interest Entities | |||
Voting control (as a percent) | 50.00% |
Segment Information - Operating
Segment Information - Operating Results (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)item | Sep. 30, 2014USD ($) | |
Segment Information | ||||
Number of separately managed business units | item | 2 | |||
Segment Information | ||||
Net revenue | $ 1,367,370 | $ 1,150,329 | $ 3,966,130 | $ 3,239,867 |
Income from operations | 59,957 | 113,901 | 257,540 | 275,358 |
Adjusted EBITDA | 142,478 | 153,728 | 434,105 | 399,635 |
Segment | ||||
Segment Information | ||||
Net revenue | 1,367,370 | 1,150,329 | 3,966,130 | 3,239,867 |
Income from operations | 59,957 | 113,901 | 257,540 | 275,358 |
Segment | Facility-Based Physician Services | ||||
Segment Information | ||||
Net revenue | 933,941 | 748,080 | 2,688,117 | 2,082,661 |
Income from operations | 28,858 | 81,246 | 158,964 | 201,325 |
Adjusted EBITDA | 86,367 | 100,889 | 268,665 | 260,879 |
Segment | Healthcare Transportation Services | ||||
Segment Information | ||||
Net revenue | 433,429 | 402,249 | 1,278,013 | 1,157,206 |
Income from operations | 31,099 | 32,655 | 98,576 | 74,033 |
Adjusted EBITDA | $ 56,111 | $ 52,839 | $ 165,440 | $ 138,756 |
Segment Information - Reconcili
Segment Information - Reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Reconciliation of net income (loss) to Adjusted EBITDA | ||||
Net income (loss) | $ 18,570 | $ 52,843 | $ 106,188 | $ 72,376 |
Add-back of non-operating expense (income): | ||||
Interest expense, net | 27,579 | 25,742 | 82,360 | 84,793 |
Income tax expense (benefit) | 13,795 | 34,437 | 69,009 | 49,700 |
Loss on early debt extinguishment | 66,397 | |||
Realized (losses) gains on investments | 466 | 34 | (648) | |
Interest income from restricted assets | (149) | (175) | (442) | (507) |
Equity in earnings of unconsolidated subsidiary | (59) | (72) | (202) | (185) |
Other expense (income), net | 221 | 660 | 593 | 3,432 |
Income from operations | 59,957 | 113,901 | 257,540 | 275,358 |
Add-back of operating expense (income): | ||||
Depreciation and amortization expense | 44,547 | 36,796 | 129,364 | 108,786 |
Restructuring charges | 30,000 | 366 | 30,000 | 4,906 |
Net (income) loss attributable to noncontrolling interest | (1,334) | (67) | (3,161) | 3,233 |
Interest income from restricted assets | 149 | 175 | 442 | 507 |
Equity-based compensation expense | 1,800 | 1,100 | 4,786 | 3,612 |
Adjusted EBITDA | 142,478 | 153,728 | 434,105 | 399,635 |
Segment | ||||
Reconciliation of net income (loss) to Adjusted EBITDA | ||||
Net income (loss) | 18,570 | 52,843 | 106,188 | 72,376 |
Add-back of non-operating expense (income): | ||||
Interest expense, net | 27,579 | 25,742 | 82,360 | 84,793 |
Income tax expense (benefit) | 13,795 | 34,437 | 69,009 | 49,700 |
Loss on early debt extinguishment | 66,397 | |||
Realized (losses) gains on investments | 466 | 34 | (648) | |
Interest income from restricted assets | (149) | (175) | (442) | (507) |
Equity in earnings of unconsolidated subsidiary | (59) | (72) | (202) | (185) |
Other expense (income), net | 221 | 660 | 593 | 3,432 |
Income from operations | 59,957 | 113,901 | 257,540 | 275,358 |
Add-back of operating expense (income): | ||||
Depreciation and amortization expense | 44,547 | 36,796 | 129,364 | 108,786 |
Restructuring charges | 30,000 | 366 | 30,000 | 4,906 |
Severance and related costs | 863 | 3,426 | ||
Net (income) loss attributable to noncontrolling interest | (1,334) | (67) | (3,161) | 3,233 |
Interest income from restricted assets | 149 | 175 | 442 | 507 |
Equity-based compensation expense | 1,761 | 1,062 | 4,786 | 3,612 |
Transaction costs | $ 6,535 | $ 1,495 | $ 11,708 | $ 3,233 |
Consolidating Financial Infor56
Consolidating Financial Information - Balance Sheet (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2013 |
Current assets: | ||||
Cash and cash equivalents | $ 129,890 | $ 318,895 | $ 247,170 | $ 204,712 |
Insurance collateral | 27,808 | 32,828 | ||
Trade and other accounts receivable, net | 1,133,615 | 950,115 | ||
Parts and supplies inventory | 25,220 | 24,484 | ||
Prepaids and other current assets | 57,084 | 36,917 | ||
Total current assets | 1,373,617 | 1,363,239 | ||
Property, plant, and equipment, net | 231,873 | 211,276 | ||
Intangible assets, net | 783,766 | 524,482 | ||
Insurance collateral | 9,455 | 10,568 | ||
Goodwill | 2,808,187 | 2,538,633 | ||
Other long-term assets | 90,042 | 55,555 | ||
Total assets | 5,296,940 | 4,703,753 | ||
Current liabilities: | ||||
Accounts payable | 68,625 | 47,584 | ||
Accrued liabilities | 498,243 | 412,657 | ||
Current deferred tax liabilities | 108,031 | 104,278 | ||
Current portion of long-term debt and capital lease obligations | 12,374 | 12,349 | ||
Total current liabilities | 687,273 | 576,868 | ||
Long-term debt and capital lease obligations | 2,226,210 | 2,025,877 | ||
Long-term deferred tax liabilities | 193,535 | 130,963 | ||
Insurance reserves | 222,387 | 180,639 | ||
Other long-term liabilities | 23,351 | 20,365 | ||
Total liabilities | 3,352,756 | 2,934,712 | ||
Equity: | ||||
Common stock | 1,863 | 1,837 | ||
Additional paid-in capital | 1,667,325 | 1,616,747 | ||
Retained earnings | 246,876 | 143,849 | ||
Accumulated other comprehensive income (loss) | (1,915) | (1,856) | (839) | |
Total Envision Healthcare Holdings, Inc. equity | 1,914,149 | 1,760,577 | ||
Noncontrolling interest | 30,035 | 8,464 | ||
Total equity | 1,944,184 | 1,769,041 | ||
Total liabilities and equity | 5,296,940 | 4,703,753 | ||
Consolidating Adjustments | ||||
Current assets: | ||||
Prepaids and other current assets | (5,019) | (5,019) | ||
Total current assets | (5,019) | (5,019) | ||
Long-term deferred tax assets | (145) | (145) | ||
Investment in wholly owned subsidiary | (1,909,983) | (1,756,407) | ||
Total assets | (1,915,147) | (1,761,571) | ||
Current liabilities: | ||||
Accrued liabilities | (3,650) | (3,650) | ||
Current deferred tax liabilities | (1,369) | (1,369) | ||
Total current liabilities | (5,019) | (5,019) | ||
Long-term deferred tax liabilities | (145) | (145) | ||
Total liabilities | (5,164) | (5,164) | ||
Equity: | ||||
Additional paid-in capital | (1,594,511) | (1,544,222) | ||
Retained earnings | (317,387) | (214,041) | ||
Accumulated other comprehensive income (loss) | 1,915 | 1,856 | ||
Total Envision Healthcare Holdings, Inc. equity | (1,909,983) | (1,756,407) | ||
Total equity | (1,909,983) | (1,756,407) | ||
Total liabilities and equity | (1,915,147) | (1,761,571) | ||
EVHC (excluding Corporation) | ||||
Current assets: | ||||
Cash and cash equivalents | 5 | 5 | 5 | 81,722 |
EVHC (excluding Corporation) | Reportable legal entity | ||||
Current assets: | ||||
Cash and cash equivalents | 5 | 5 | ||
Prepaids and other current assets | 5,019 | 5,019 | ||
Total current assets | 5,024 | 5,024 | ||
Long-term deferred tax assets | 145 | 145 | ||
Investment in wholly owned subsidiary | 1,909,983 | 1,756,407 | ||
Total assets | 1,915,152 | 1,761,576 | ||
Current liabilities: | ||||
Accounts payable | 1,003 | 999 | ||
Total current liabilities | 1,003 | 999 | ||
Total liabilities | 1,003 | 999 | ||
Equity: | ||||
Common stock | 1,863 | 1,837 | ||
Additional paid-in capital | 1,667,325 | 1,616,747 | ||
Retained earnings | 246,876 | 143,849 | ||
Accumulated other comprehensive income (loss) | (1,915) | (1,856) | ||
Total Envision Healthcare Holdings, Inc. equity | 1,914,149 | 1,760,577 | ||
Total equity | 1,914,149 | 1,760,577 | ||
Total liabilities and equity | 1,915,152 | 1,761,576 | ||
Corporation and Subsidiaries | ||||
Current assets: | ||||
Cash and cash equivalents | 129,885 | 318,890 | $ 247,165 | $ 122,990 |
Corporation and Subsidiaries | Reportable legal entity | ||||
Current assets: | ||||
Cash and cash equivalents | 129,885 | 318,890 | ||
Insurance collateral | 27,808 | 32,828 | ||
Trade and other accounts receivable, net | 1,133,615 | 950,115 | ||
Parts and supplies inventory | 25,220 | 24,484 | ||
Prepaids and other current assets | 57,084 | 36,917 | ||
Total current assets | 1,373,612 | 1,363,234 | ||
Property, plant, and equipment, net | 231,873 | 211,276 | ||
Intangible assets, net | 783,766 | 524,482 | ||
Insurance collateral | 9,455 | 10,568 | ||
Goodwill | 2,808,187 | 2,538,633 | ||
Other long-term assets | 90,042 | 55,555 | ||
Total assets | 5,296,935 | 4,703,748 | ||
Current liabilities: | ||||
Accounts payable | 67,622 | 46,585 | ||
Accrued liabilities | 501,893 | 416,307 | ||
Current deferred tax liabilities | 109,400 | 105,647 | ||
Current portion of long-term debt and capital lease obligations | 12,374 | 12,349 | ||
Total current liabilities | 691,289 | 580,888 | ||
Long-term debt and capital lease obligations | 2,226,210 | 2,025,877 | ||
Long-term deferred tax liabilities | 193,680 | 131,108 | ||
Insurance reserves | 222,387 | 180,639 | ||
Other long-term liabilities | 23,351 | 20,365 | ||
Total liabilities | 3,356,917 | 2,938,877 | ||
Equity: | ||||
Additional paid-in capital | 1,594,511 | 1,544,222 | ||
Retained earnings | 317,387 | 214,041 | ||
Accumulated other comprehensive income (loss) | (1,915) | (1,856) | ||
Total Envision Healthcare Holdings, Inc. equity | 1,909,983 | 1,756,407 | ||
Noncontrolling interest | 30,035 | 8,464 | ||
Total equity | 1,940,018 | 1,764,871 | ||
Total liabilities and equity | $ 5,296,935 | $ 4,703,748 |
Consolidating Financial Infor57
Consolidating Financial Information - Income Statement (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Condensed Consolidating Statements of Operations | ||||
Net revenue | $ 1,367,370 | $ 1,150,329 | $ 3,966,130 | $ 3,239,867 |
Compensation and benefits | 997,213 | 819,353 | 2,874,328 | 2,330,021 |
Operating expenses | 165,099 | 129,535 | 472,954 | 364,885 |
Insurance expense | 41,091 | 27,527 | 114,783 | 90,091 |
Selling, general and administrative expenses | 29,463 | 22,851 | 87,161 | 65,820 |
Depreciation and amortization expense | 44,547 | 36,796 | 129,364 | 108,786 |
Restructuring charges | 30,000 | 366 | 30,000 | 4,906 |
Income from operations | 59,957 | 113,901 | 257,540 | 275,358 |
Interest income from restricted assets | 149 | 175 | 442 | 507 |
Interest expense, net | (27,579) | (25,742) | (82,360) | (84,793) |
Realized gains (losses) on investments | (466) | (34) | 648 | |
Other income (expense), net | (221) | (660) | (593) | (3,432) |
Loss on early debt extinguishment | (66,397) | |||
Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary | 32,306 | 87,208 | 174,995 | 121,891 |
Income tax benefit (expense) | (13,795) | (34,437) | (69,009) | (49,700) |
Income (loss) before equity in earnings of unconsolidated subsidiary | 18,511 | 52,771 | 105,986 | 72,191 |
Equity in earnings of unconsolidated subsidiary | 59 | 72 | 202 | 185 |
Net income (loss) | 18,570 | 52,843 | 106,188 | 72,376 |
Less: Net (income) loss attributable to noncontrolling interest | (1,334) | (67) | (3,161) | 3,233 |
Net income (loss) attributable to Envision Healthcare Holdings, Inc. | 17,236 | 52,776 | 103,027 | 75,609 |
Consolidating Adjustments | ||||
Condensed Consolidating Statements of Operations | ||||
Equity in earnings of unconsolidated subsidiary | (17,327) | (53,512) | (103,346) | (78,249) |
Net income (loss) | (17,327) | (53,512) | (103,346) | (78,249) |
Net income (loss) attributable to Envision Healthcare Holdings, Inc. | (17,327) | (53,512) | (103,346) | (78,249) |
EVHC (excluding Corporation) | Reportable legal entity | ||||
Condensed Consolidating Statements of Operations | ||||
Other income (expense), net | (154) | (1,433) | (526) | (4,232) |
Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary | (154) | (1,433) | (526) | (4,232) |
Income tax benefit (expense) | 63 | 697 | 207 | 1,592 |
Income (loss) before equity in earnings of unconsolidated subsidiary | (91) | (736) | (319) | (2,640) |
Equity in earnings of unconsolidated subsidiary | 17,327 | 53,512 | 103,346 | 78,249 |
Net income (loss) | 17,236 | 52,776 | 103,027 | 75,609 |
Net income (loss) attributable to Envision Healthcare Holdings, Inc. | 17,236 | 52,776 | 103,027 | 75,609 |
Corporation and Subsidiaries | Reportable legal entity | ||||
Condensed Consolidating Statements of Operations | ||||
Net revenue | 1,367,370 | 1,150,329 | 3,966,130 | 3,239,867 |
Compensation and benefits | 997,213 | 819,353 | 2,874,328 | 2,330,021 |
Operating expenses | 165,099 | 129,535 | 472,954 | 364,885 |
Insurance expense | 41,091 | 27,527 | 114,783 | 90,091 |
Selling, general and administrative expenses | 29,463 | 22,851 | 87,161 | 65,820 |
Depreciation and amortization expense | 44,547 | 36,796 | 129,364 | 108,786 |
Restructuring charges | 30,000 | 366 | 30,000 | 4,906 |
Income from operations | 59,957 | 113,901 | 257,540 | 275,358 |
Interest income from restricted assets | 149 | 175 | 442 | 507 |
Interest expense, net | (27,579) | (25,742) | (82,360) | (84,793) |
Realized gains (losses) on investments | (466) | (34) | 648 | |
Other income (expense), net | (67) | 773 | (67) | 800 |
Loss on early debt extinguishment | (66,397) | |||
Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary | 32,460 | 88,641 | 175,521 | 126,123 |
Income tax benefit (expense) | (13,858) | (35,134) | (69,216) | (51,292) |
Income (loss) before equity in earnings of unconsolidated subsidiary | 18,602 | 53,507 | 106,305 | 74,831 |
Equity in earnings of unconsolidated subsidiary | 59 | 72 | 202 | 185 |
Net income (loss) | 18,661 | 53,579 | 106,507 | 75,016 |
Less: Net (income) loss attributable to noncontrolling interest | (1,334) | (67) | (3,161) | 3,233 |
Net income (loss) attributable to Envision Healthcare Holdings, Inc. | $ 17,327 | $ 53,512 | $ 103,346 | $ 78,249 |
Consolidating Financial Infor58
Consolidating Financial Information - Cash Flow Statement (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash Flows from Operating Activities | ||
Net cash provided by (used in) operating activities | $ 194,945 | $ 194,004 |
Cash Flows from Investing Activities | ||
Purchases of available-for-sale securities | (2,507) | (52,654) |
Sales and maturities of available-for-sale securities | 9,409 | 40,425 |
Purchase of property, plant and equipment | (65,687) | (55,659) |
Proceeds from sale of property, plant and equipment | 377 | 2,299 |
Acquisition of businesses, net of cash received | (568,570) | (199,261) |
Net change in insurance collateral | (1,250) | 2,021 |
Other investing activities | (1,226) | (1,774) |
Net cash provided by (used in) investing activities | (629,454) | (264,603) |
Cash Flows from Financing Activities | ||
Borrowings under the ABL Facility | 365,000 | 50,000 |
Proceeds from issuance of senior notes | 740,625 | |
Repayments of the Term Loan | (10,029) | (6,686) |
Repayments of the ABL Facility | (155,000) | (50,000) |
Repayments of senior notes | (607,750) | |
Payment for debt extinguishment premiums | (37,630) | |
Debt issuance costs | (27) | (2,221) |
Proceeds from stock options exercised | 11,767 | 7,405 |
Excess tax benefits from equity-based compensation | 34,051 | 38,520 |
Shares repurchased for tax withholdings | (14,430) | |
Contributions from noncontrolling interest, net | 100 | 250 |
Other financing activities | (358) | (5,026) |
Net cash provided by (used in) financing activities | 245,504 | 113,057 |
Change in cash and cash equivalents | (189,005) | 42,458 |
Cash and cash equivalents, beginning of period | 318,895 | 204,712 |
Cash and cash equivalents, end of period | 129,890 | 247,170 |
EVHC (excluding Corporation) | ||
Cash Flows from Operating Activities | ||
Net cash provided by (used in) operating activities | (315) | (859) |
Cash Flows from Financing Activities | ||
Other financing activities | 859 | |
Net intercompany borrowings (payments) | 315 | (81,717) |
Net cash provided by (used in) financing activities | 315 | (80,858) |
Change in cash and cash equivalents | (81,717) | |
Cash and cash equivalents, beginning of period | 5 | 81,722 |
Cash and cash equivalents, end of period | 5 | 5 |
Corporation and Subsidiaries | ||
Cash Flows from Operating Activities | ||
Net cash provided by (used in) operating activities | 195,260 | 194,863 |
Cash Flows from Investing Activities | ||
Purchases of available-for-sale securities | (2,507) | (52,654) |
Sales and maturities of available-for-sale securities | 9,409 | 40,425 |
Purchase of property, plant and equipment | (65,687) | (55,659) |
Proceeds from sale of property, plant and equipment | 377 | 2,299 |
Acquisition of businesses, net of cash received | (568,570) | (199,261) |
Net change in insurance collateral | (1,250) | 2,021 |
Other investing activities | (1,226) | (1,774) |
Net cash provided by (used in) investing activities | (629,454) | (264,603) |
Cash Flows from Financing Activities | ||
Borrowings under the ABL Facility | 365,000 | 50,000 |
Proceeds from issuance of senior notes | 740,625 | |
Repayments of the Term Loan | (10,029) | (6,686) |
Repayments of the ABL Facility | (155,000) | (50,000) |
Repayments of senior notes | (607,750) | |
Payment for debt extinguishment premiums | (37,630) | |
Debt issuance costs | (27) | (2,221) |
Proceeds from stock options exercised | 11,767 | 7,405 |
Excess tax benefits from equity-based compensation | 34,051 | 38,520 |
Shares repurchased for tax withholdings | (14,430) | |
Contributions from noncontrolling interest, net | 100 | 250 |
Other financing activities | (358) | (5,885) |
Net intercompany borrowings (payments) | (315) | 81,717 |
Net cash provided by (used in) financing activities | 245,189 | 193,915 |
Change in cash and cash equivalents | (189,005) | 124,175 |
Cash and cash equivalents, beginning of period | 318,890 | 122,990 |
Cash and cash equivalents, end of period | $ 129,885 | $ 247,165 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event $ in Millions | Nov. 03, 2015USD ($)item | Oct. 28, 2015USD ($) | Oct. 21, 2015USD ($) |
Subsequent events | |||
Share repurchase program, authorized amount | $ 500 | ||
Incremental Term Loans | |||
Subsequent events | |||
Debt issued | $ 635 | ||
Debt term | 7 years | ||
Original issue discount (as a percent) | 0.50% | ||
Soft call protection, period | 6 months | ||
Soft call protection rate as a percentage of principal amount of incremental term loans outstanding (as percent) | 101.00% | ||
Rural Metro | |||
Subsequent events | |||
Total consideration of acquisitions paid in cash | $ 620 | ||
Questcare | |||
Subsequent events | |||
Total consideration of acquisitions paid in cash | $ 135 | ||
Number of Health Care Facilities | item | 50 | ||
LIBOR rate | Incremental Term Loans | |||
Subsequent events | |||
Variable interest rate basis | LIBOR | ||
Interest rate margin (as a percent) | 3.25% |