Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Aug. 01, 2016 | |
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 | Jun. 30, 2016 | |
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 | 187,170,381 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 212,745 | $ 141,677 |
Insurance collateral | 58,826 | 68,849 |
Trade and other accounts receivable, net | 1,325,665 | 1,257,021 |
Parts and supplies inventory | 34,026 | 34,023 |
Prepaids and other current assets | 87,887 | 96,857 |
Total current assets | 1,719,149 | 1,598,427 |
Non-current assets: | ||
Property, plant and equipment, net | 380,183 | 335,869 |
Intangible assets, net | 1,063,755 | 1,051,631 |
Goodwill | 3,351,277 | 3,271,933 |
Other long-term assets | 100,044 | 95,712 |
Total assets | 6,614,408 | 6,353,572 |
Current liabilities: | ||
Accounts payable | 57,087 | 68,985 |
Accrued liabilities | 672,722 | 612,445 |
Current portion of long-term debt and capital lease obligations | 24,937 | 24,550 |
Total current liabilities | 754,746 | 705,980 |
Long-term debt and capital lease obligations | 3,057,811 | 2,958,481 |
Long-term deferred tax liabilities, net | 389,926 | 369,110 |
Insurance reserves | 251,600 | 252,650 |
Other long-term liabilities | 66,383 | 65,910 |
Total liabilities | 4,520,466 | 4,352,131 |
Commitments and contingencies | ||
Equity: | ||
Common stock ($0.01 par value; 2,000,000,000 shares authorized, 187,169,947 and 186,924,004 issued and outstanding as of June 30, 2016 and December 31, 2015, respectively) | 1,872 | 1,869 |
Preferred stock ($0.01 par value; 200,000,000 shares authorized, none issued and outstanding as of June 30, 2016 and December 31, 2015) | ||
Additional paid-in capital | 1,686,302 | 1,677,578 |
Retained earnings | 344,023 | 288,741 |
Accumulated other comprehensive income (loss) | (1,147) | (1,649) |
Total Envision Healthcare Holdings, Inc. equity | 2,031,050 | 1,966,539 |
Noncontrolling interest | 62,892 | 34,902 |
Total equity | 2,093,942 | 2,001,441 |
Total liabilities and equity | $ 6,614,408 | $ 6,353,572 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2016 | Dec. 31, 2015 |
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 | 187,169,947 | 186,924,004 |
Common stock, shares outstanding | 187,169,947 | 186,924,004 |
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 | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | ||||
Revenue, net of contractual discounts | $ 2,877,961 | $ 2,417,011 | $ 5,741,875 | $ 4,669,729 |
Provision for uncompensated care | (1,236,931) | (1,062,753) | (2,503,299) | (2,070,969) |
Net revenue | 1,641,030 | 1,354,258 | 3,238,576 | 2,598,760 |
Compensation and benefits | 1,144,804 | 969,458 | 2,268,677 | 1,877,115 |
Operating expenses | 263,181 | 156,129 | 516,396 | 307,855 |
Insurance expense | 35,454 | 38,166 | 72,874 | 73,692 |
Selling, general and administrative expenses | 41,593 | 31,249 | 79,583 | 57,698 |
Depreciation and amortization expense | 59,756 | 44,936 | 117,189 | 84,817 |
Restructuring charges | 7,456 | 7,562 | ||
Income from operations | 88,786 | 114,320 | 176,295 | 197,583 |
Interest income from restricted assets | 103 | 163 | 466 | 293 |
Interest expense, net | (39,568) | (28,094) | (78,451) | (54,781) |
Realized gains (losses) on investments | (55) | (34) | (40) | (34) |
Other income (expense), net | (735) | (40) | (13) | (372) |
Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary | 48,531 | 86,315 | 98,257 | 142,689 |
Income tax benefit (expense) | (18,162) | (32,698) | (37,554) | (55,214) |
Income (loss) before equity in earnings of unconsolidated subsidiary | 30,369 | 53,617 | 60,703 | 87,475 |
Equity in earnings of unconsolidated subsidiary | 1,503 | 71 | 1,635 | 143 |
Net income (loss) | 31,872 | 53,688 | 62,338 | 87,618 |
Less: Net (income) loss attributable to noncontrolling interest | (3,440) | (1,272) | (7,056) | (1,827) |
Net income (loss) attributable to Envision Healthcare Holdings, Inc. | $ 28,432 | $ 52,416 | $ 55,282 | $ 85,791 |
Net income (loss) per share attributable to Envision Healthcare Holdings, Inc.: | ||||
Basic (in dollars per share) | $ 0.15 | $ 0.28 | $ 0.29 | $ 0.46 |
Diluted (in dollars per share) | $ 0.15 | $ 0.27 | $ 0.29 | $ 0.45 |
Weighted-average common shares outstanding: | ||||
Basic (in shares) | 187,134,606 | 185,493,085 | 187,090,957 | 184,830,033 |
Diluted (in shares) | 192,022,884 | 191,511,920 | 191,976,741 | 191,166,956 |
Comprehensive income (loss): | ||||
Net income (loss) | $ 31,872 | $ 53,688 | $ 62,338 | $ 87,618 |
Other comprehensive income (loss), net of tax: | ||||
Unrealized holding gains (losses) during the period | (403) | 18 | (435) | (102) |
Unrealized gains (losses) on derivative financial instruments | 2,370 | 512 | 937 | 769 |
Total other comprehensive income (loss), net of tax | 1,967 | 530 | 502 | 667 |
Comprehensive income (loss) | 33,839 | 54,218 | 62,840 | 88,285 |
Less: Comprehensive (income) loss attributable to noncontrolling interest | (3,440) | (1,272) | (7,056) | (1,827) |
Comprehensive income (loss) attributable to Envision Healthcare Holdings, Inc. | $ 30,399 | $ 52,946 | $ 55,784 | $ 86,458 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash Flows from Operating Activities | ||
Net income (loss) | $ 62,338 | $ 87,618 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization expense | 123,521 | 89,058 |
(Gain) loss on disposal of property, plant and equipment | 145 | 239 |
Equity-based compensation expense | 5,937 | 3,025 |
Excess tax benefits from equity-based compensation | (1,219) | (24,476) |
Equity in earnings of unconsolidated subsidiary | (1,635) | (143) |
Dividends received | 386 | 370 |
Deferred income taxes | 9,741 | 1,100 |
Changes in operating assets/liabilities, net of acquisitions: | ||
Trade and other accounts receivable, net | (32,196) | (37,766) |
Parts and supplies inventory | 286 | (161) |
Prepaids and other current assets | 15,523 | (4,717) |
Accounts payable and accrued liabilities | (11,410) | 47,717 |
Insurance reserves | (9,870) | (2,221) |
Other assets and liabilities, net | (2,327) | 1,279 |
Net cash provided by (used in) operating activities | 159,220 | 160,922 |
Cash Flows from Investing Activities | ||
Purchases of available-for-sale securities | (6,808) | (2,067) |
Sales and maturities of available-for-sale securities | 1,448 | 9,209 |
Purchases of property, plant and equipment | (90,760) | (43,028) |
Proceeds from sale of property, plant and equipment | 42 | 352 |
Acquisition of businesses, net of cash received | (114,808) | (498,917) |
Net change in insurance collateral | 34,963 | (5,706) |
Other investing activities | 429 | 971 |
Net cash provided by (used in) investing activities | (175,494) | (539,186) |
Cash Flows from Financing Activities | ||
Borrowings under the ABL Facility | 235,000 | 305,000 |
Repayments of the ABL Facility | (130,000) | (100,000) |
Repayments of the Term Loan | (11,686) | (6,686) |
Debt issuance costs | (723) | (27) |
Proceeds from stock options exercised and issuance of shares under employee stock purchase plan and provider stock purchase plan | 1,571 | 9,350 |
Excess tax benefits from equity-based compensation | 1,219 | 24,476 |
Contributions from (distributions to) noncontrolling interest, net | (8,833) | 100 |
Other financing activities | 794 | (239) |
Net cash provided by (used in) financing activities | 87,342 | 231,974 |
Change in cash and cash equivalents | 71,068 | (146,290) |
Cash and cash equivalents, beginning of period | 141,677 | 318,895 |
Cash and cash equivalents, end of period | $ 212,745 | $ 172,605 |
General
General | 6 Months Ended |
Jun. 30, 2016 | |
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, 2016. 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, 2015, which includes all disclosures required by GAAP, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. 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., including its affiliates (“AMR”), its healthcare transportation services segment. Proposed Merger with AmSurg Corp. On June 15, 2016, the Company, AmSurg Corp., a Tennessee corporation (“AmSurg”), and New Amethyst Corp., a newly formed Delaware corporation and a direct , wholly-owned subsidiary of AmSurg (“New Amethyst”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) , pursuant to which the Company and AmSurg will combine in an all-stock merger of equals. Upon the terms and subject to the conditions set forth in the Merger Agreement, AmSurg will merge with and into New Amethyst (“Merger 1”), with New Amethyst continuing as the surviving corporation, immediately after which the Company will merge with and into New Amethyst (“Merger 2” and together with Merger 1, the “Mergers”), with New Amethyst continuing as the surviving corporation. Upon the closing of the Mergers, the name of the combined company will be changed to “Envision Healthcare Corporation”. Upon the closing of Merger 1, each issued and outstanding share of AmSurg common stock, no par value, will automatically convert into the right to receive one share of common stock, par value $0.01 per share, of New Amethyst (“New Amethyst Common Stock”) and each issued and outstanding share of AmSurg 5.250% Mandatory Convertible Preferred Stock, Series A-1, no par value, will automatically convert into one share of 5.250% Mandatory Convertible Preferred Stock, Series A-1, par value $0.01 per share, of New Amethyst (“New Amethyst Series A-1 Preferred Stock”). Upon the closing of Merger 2, each issued and outstanding share of the Company’s common stock, par value $0.01 per share (the “Envision Common Stock”), will automatically convert into the right to receive 0.334 shares of New Amethyst Common Stock. Upon the closing of the Mergers, the Company ’s stockholders will own approximately 53% and AmSurg shareholders will own approximately 47% of the combined company on a fully diluted basis . Consummation of the Mergers is subject to customary closing conditions, including approvals by the Company’s stockholders and AmSurg shareholders, the absence of certain legal impediments, the expiration or termination of the required waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the effectiveness of certain filings with the Securities and Exchange Commission , the listing of the New Amethyst Common Stock and the New Amethyst Series A-1 Preferred Stock issuable to the shareholders of AmSurg and the stockholders of the Company, as applicable, on the New York Stock Exchange, and receipt of opinions from legal counsel regarding the intended tax treatment of the Mergers. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2016 | |
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, insurance related reserves and acquired intangible assets. Actual results may differ from those estimates under different assumptions or conditions. Insurance Collateral Insurance collateral is comprised of investments in 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 $1.5 million and $0.6 million as of June 30, 2016 and December 31, 2015, 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 uncompensated care 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, 2015, was equal to approximately 94% and 86% 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 June 30, 2016, and December 31, 2015, were as follows (in thousands): June 30, December 31, 2016 2015 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 $ $ 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 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 and future estimated 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 and future estimated collections. Debt Issuance Costs Debt issuance costs related to the Company’s senior secured credit facilities and senior unsecured notes are included as a deduction from the carrying amount of long-term debt in the consolidated balance sheets, and are amortized to interest expense using the effective interest method over the term of the related debt. 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 June 2016. As a result of this and previous actuarial valuations, the Company recorded decreases in its provision for insurance liabilities of $2.6 million and $1.7 million for the three and six months ended June 30, 2016, respectively, as compared to increases of $1.4 million and $4.0 million for the three and six months ended June 30, 2015, respectively, related to reserves for losses in prior years. 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, accrued liabilities and the senior secured credit facility approximates fair value as of June 30, 2016, and December 31, 2015. 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 six months ended June 30, 2016 and 2015, the Company derived approximately 35% , respectively, of its revenue from Medicare and Medicaid, 63% and 62% , respectively, from insurance providers and contracted payors, and 2% 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 June 30, 2016, and December 31, 2015, was approximately $759.4 million and $735.0 million, respectively, with a principal 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 June 30, 2016, and December 31, 2015 (in thousands): June 30, 2016 Description Level 1 Level 2 Level 3 Total Assets: Available-for-sale securities (insurance collateral) $ $ $ — $ Liabilities: Contingent consideration — — Fuel hedge — — December 31, 2015 Description Level 1 Level 2 Level 3 Total Assets: Available-for-sale securities (insurance collateral) $ $ $ — $ Liabilities: Contingent consideration — — Fuel hedge — — The contingent consideration balance classified as a Level 3 liability decreased $ 2.0 million during the six months ended June 30, 2016 due to the Company’s final determination that no contingent consideration was payable under the terms of a previously completed acquisition. During the s ix months ended June 30, 2016 and 2015, 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. Adjustments are estimated based on historical experience and are recorded in the period in which services are rendered. 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. Revenue generated under fire protection service contracts is recognized over the life of the contract. Subscription fees, which are generally received in advance, are deferred and recognized on a straight-line basis over the term of the subscription agreement, which is generally one year. 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. Net revenue for the three and six months ended June 30, 2016 and 2015 consisted of the following (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 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 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 increased the contractual discount and uncompensated care provisions (and correspondingly decreased net revenue) by approximately $2.4 million and $5. 3 million for the three and six months ended June 30, 2016, respectively, and by approximately $3.8 million and $7.4 million for the three and six months ended June 30, 2015, respectively. 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. Reclassifications Certain prior period balances in the consolidated balance sheets have been reclassified to conform to the current year presentation. Such reclassifications had no impact on the results of operations or cash flows previously reported. 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 is currently evaluating the impact and 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 August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”), which requires management to evaluate, in connection with preparing financial statements for each annual and interim reporting period, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable) and provide related disclosures. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. The adoption of ASU 2014-15 is not expected to impact the Company's consolidated financial statements. 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. Entities may choose to adopt the standard using either a full retrospective approach or a modified retrospective approach. The Company adopted ASU 2015-02 under the modified retrospective approach during the current period and determined that its adoption does not impact our consolidated financial position or results of operations. 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 retrospectively adopted ASU 2015-03 effective January 1, 2016 and, as a result, $34.6 million of debt issuance costs related to the Company’s senior secured credit facilities and senior unsecured notes were reclassified from other long-term assets to long-term debt and capital lease obligations on the Company’s consolidated balance sheets as of December 31, 2015. In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”), which simplifies the presentation of deferred income taxes and requires that deferred tax liabilities and assets be classified as non-current in the consolidated balance sheets. ASU 2015-17 is effective for annual reporting periods beginning after December 15, 2016, with early adoption permitted. The Company retrospectively adopted ASU 2015-17 effective January 1, 2016 and, as a result, $85.8 million of current deferred tax liabilities were reclassified to deferred income tax es on the Company’s consolidated balance sheets as of December 31, 2015. In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”), which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on the consolidated balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective for annual periods beginning after December 15, 2018, with early adoption permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the impact and has not yet determined the effects, if any, that adoption of ASU 2016-02 may have on its consolidated financial position or results of operations. In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718) (“ASU 2016-09”), which was issued as part of the FASB's simplification initiative and affects all entities that issue share-based payment awards to their employees. This ASU covers accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 will be effective for annual periods beginning after December 15, 2016, with early adoption permitted. The Company is currently evaluating the impact and has not yet determined the effects, if any, that adoption of ASU 2016-09 may have on its consolidated financial position or results of operations. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326) (“ASU 2016-13”), which modifies the impairment model for most financial instruments , including trade receivables. The new standard replaces the exi s ting incurred loss methodology with an expected loss methodology and will result in the more timely recognition of losses. ASU 2016-13 will be effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact and has not yet determined the effects, if any, that adoption of ASU 2016-13 may have on its consolidated financial position or results of operations. |
Basic and Diluted Net Income (L
Basic and Diluted Net Income (Loss) Per Share | 6 Months Ended |
Jun. 30, 2016 | |
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 Basic net income per common share attributable to the Company’s common stockholders is determined using the two-class method and is computed by dividing net income attributable to the Company’s common stockholders by the weighted-average of common shares outstanding during the period. The two-class method is an earnings allocation formula that determines income per share for each class of common stock and participating security according to participation rights in undistributed earnings. Diluted net income per common share attributable to the Company’s common shareholders reflects the more dilutive earnings per share amount calculated using the treasury stock method or the two-class method. The following table presents earnings per share 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 June 30, Six Months Ended June 30, 2016 2015 2016 2015 Net income (loss) attributable to Envision Healthcare Holdings, Inc. stockholders $ $ $ $ Net income (loss) allocated to participating securities (a) — — Net income (loss) attributable to Envision Healthcare Holdings, Inc. common stockholders 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. common stockholders: Basic $ $ $ $ Diluted $ $ $ $ (a) Restricted stock units and market-based performance share units granted to employees and non-employee directors are considered participating securities. For the three and six months ended June 30, 201 6, there were stock awards to acquire 1,747,716 shares and 1,731,430 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 six months ended June 30, 2015 , there were 82,506 shares and 66,313 whose effect was anti-dilutive. |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2016 | |
Acquisitions | |
Acquisitions | 4. Acquisitions 2016 Acquisitions Emergency Physicians Medical Group (“EPMG”). On April 7, 2016, the Company completed the acquisition of EPMG for $119.1 million paid in cash, subject to working capital adjustments, and preferred stock issued in the direct parent company of EPMG (“EPMG Holdco”), representing $10.5 million of total purchase consideration, for aggregate purchase consideration of $129.6 million . All other outstanding equity of EPMG Holdco is wholly-owned by EmCare. EPMG employs more than 500 clinical providers who staff emergency departments, hospital medicine departments, and urgent care centers at 37 facilities in Michigan, Illinois, Indiana, Ohio, Iowa and Delaware. In addition, EPMG operates community paramedicine programs and provides tele-medicine services in urgent care and post-acute care operations. The goodwill recognized in connection with the EPMG acquisition is assigned to the EmCare segment and is primarily attributable to synergies that are expected to be achieved through the integration of EPMG into the existing operations of EmCare. Of the goodwill recorded, $39.3 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 and working capital adjustments (in thousands): Cash and cash equivalents $ Insurance collateral Accounts receivable Prepaid and other current assets Property, plant and equipment Acquired intangible assets Goodwill Other long-term assets Accounts payable Accrued liabilities Deferred income taxes Insurance reserves Other long-term liabilities Total purchase price $ The Company has accounted for this acquisition 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. 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. Prior to the acquisition, SEA had a pension plan that was terminated and liquidated during the second quarter of 2016. 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 Acquired intangible assets Goodwill Accounts payable Accrued liabilities Deferred income taxes Total purchase price $ During the six months ended June 30, 2016, the Company made purchase price allocation adjustments including a decrease of deferred income taxes of $0.4 million. 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. 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, $15.4 million is tax deductible. 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 Other long-term assets Accounts payable Accrued liabilities Deferred income taxes Insurance reserves Other long-term liabilities Total purchase price $ During the six months ended June 30, 2016, the Company made purchase price allocation adjustments including a reclassification from goodwill to accounts receivable of $0.3 million and a decrease to deferred income taxes of $0.4 million. 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 $282.3 million paid in cash. During the first quarter of 2016, the Company executed a purchase agreement amendment that increased the total consideration by $10.5 million (the “EMA Amendment”). The Company acquired EMA to achieve certain operational and strategic benefits. EMA provides emergency department, hospitalist and urgent care services at 47 facilities in New Jersey, New York, Rhode Island, and North Carolina. 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, $117.8 million is tax deductible. 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 Other long-term assets Accounts payable Accrued liabilities Deferred income taxes Insurance reserves Total purchase price $ During the six months ended June 30, 2016, goodwill recognized in connection with the EMA acquisition increased by $10.5 million due to the EMA Amendment. Additionally, the Company made purchase price allocation adjustments including an increase to other current assets of $1.1 million, an increase to accrued liabilities of $0.9 million to record an adjustment to accrued benefits, and other adjustments to opening balances for assets and liabilities. Rural/ Metro Corporation. On October 28, 2015, the Company completed the acquisition of Rural/ Metro Corporation (“Rural/ Metro”) for total purchase consideration of approximately $620.0 million, subject to working capital adjustments of $54.1 million paid in cash. As of the closing date, Rural/ Metro provided ambulance and fire protection services in 19 states and approximately 700 communities throughout the United States. The Company acquired Rural/ Metro to achieve certain operational and strategic benefits. The goodwill recognized in connection with the Rural/ Metro acquisition is assigned to the AMR segment and is primarily attributable to synergies that are expected to be achieved through the integration of Rural/ Metro into the existing operations of AMR. Of the goodwill recorded, $4.2 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 and working capital adjustments (in thousands): Cash and cash equivalents $ Insurance collateral Accounts receivable Parts and supplies inventory Prepaid and other current assets Property, plant and equipment Acquired intangible assets Goodwill Other long-term assets Accounts payable Accrued liabilities Capital lease obligations Deferred income taxes Insurance reserves Other long-term liabilities Total purchase price $ During the six months ended June 30, 2016, the Company made purchase price allocation adjustments including an increase to goodwill of $6.1 million related to the working capital adjustment paid during the first quarter of 2016, offset by an increase in other current assets of $1.7 million, an increase in intangible assets of $1.4 million, an increase in other long-term liabilities of $1.0 million, and other adjustments to opening balances for assets and liabilities. Questcare Medical Services, P.A and QRx Medical Management, LLC. On December 3, 2015, the Company completed the acquisition of Questcare Medical Services, P.A. and QRx Medical Management, LLC (collectively “Questcare”) for total purchase consideration of $136.3 million, subject to a working capital adjustment of $0.1 million, paid in cash. Questcare has more than 800 clinical providers staffing more than 50 facilities in Texas, Oklahoma and Colorado. Questcare clinicians manage patient care across multiple hospital-based clinical specialties including emergency department, hospitalist, critical care unit and pediatric and obstetric hospitalist care services. In addition, Questcare provides post-acute facility-based care as well as primary care, urgent care and tele-medicine services. The Company acquired Questcare to achieve certain operational and strategic benefits. The goodwill recognized in connection with the Questcare acquisition is assigned to the EmCare segment and is primarily attributable to synergies that are expected to be achieved through the integration of Questcare into the existing operations of EmCare. Of the goodwill recorded, $2 3.2 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 and working capital adjustments (in thousands): Cash and cash equivalents $ Insurance collateral Accounts receivable Prepaid and other current assets Property, plant and equipment Acquired intangible assets Goodwill Other long-term assets Accounts payable Accrued liabilities Deferred income taxes Insurance reserves Total purchase price $ During the six months ended June 30, 2016, the Company made a purchase price allocation adjustment to decrease other long-term assets of $1.5 million, decrease deferred income taxes by $1.5 million, and other adjustments to opening balances for assets and liabilities. 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 Company’s statements of operations for the three and six months ended June 30, 2016, include net revenue of $261.2 million and $533.7 million, respectively, for SEA, VISTA, EMA and Rural/ Metro. 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, $9.3 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. Prior to the acquisition, NTEP had a pension plan that was terminated and liquidated during the three months ended June 30, 2016. 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. On December 24, 2015, the Company completed the acquisition of MetroCare Services-Abilene GP, LLC (“MetroCare”), a provider of ambulance service operations located in Texas for total purchase consideration of $5.0 million, subject to working capital adjustments. The goodwill recognized in connection with the MetroCare acquisition is assigned to the AMR segment and is primarily attributable to synergies that are expected to be achieved through the integration of MetroCare into the existing operations of AMR. Of the goodwill recorded, $1. 0 million 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 $23.7 million, other acquired intangible assets of $53.1 million, net assets of $6.8 million and deferred income taxes of $11.0 million. These allocations are subject to adjustment based upon the completion of purchase price allocations, except for the allocation of the CareFirst, Inc. acquisition, which was complete as of March 31, 2016. Pro Forma Information The following unaudited pro forma operating results give effect to the SEA, VISTA, EMA and Rural/ Metro acquisitions, as if they had been completed as of January 1, 2015. 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 Six Months Ended (in thousands) June 30, 2015 June 30, 2015 Net revenue $ $ Net income (loss) |
Insurance Collateral
Insurance Collateral | 6 Months Ended |
Jun. 30, 2016 | |
Insurance Collateral | |
Insurance Collateral | 5. Insurance Collateral Insurance collateral consisted of the following as of June 30, 2016 and December 31, 2015 (in thousands): June 30, December 31, 2016 2015 Available-for-sale securities: Corporate bonds/ Fixed income $ $ Corporate equity Total available-for-sale securities Insurance receivable Cash deposits and other Total insurance collateral $ $ As of June 30, 2016 and December 31, 2015, approximately $10.0 million and $9.1 million, respectively, of insurance collateral is included in other long-term assets on the consolidated balance sheets. Amortized cost basis and aggregate fair value of the Company’s available-for-sale securities as of June 30, 2016 and December 31, 2015 were as follows (in thousands): June 30, 2016 Gross Gross Unrealized Unrealized Fair Description Cost Basis Gains Losses Value Corporate bonds/ Fixed income $ $ $ — $ Corporate equity Total available-for-sale securities $ $ $ $ December 31, 2015 Gross Gross Unrealized Unrealized Fair Description Cost Basis Gains Losses Value Corporate bonds/ Fixed income $ $ $ $ Corporate equity — Total available-for-sale securities $ $ $ $ As of June 30, 2016, available-for-sale securities included corporate bonds/ fixed income securities of $4.4 million with contractual maturities within one year and $12.2 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 June 30, 2016 and December 31, 2015 were as follows (in thousands): June 30, 2016 December 31, 2015 Unrealized Unrealized Fair Value Loss Fair Value Loss 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 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 both the three and six months ended June 30, 2016, respectively, and both the three and six months ended June 30, 2015, respectively. |
Debt and Capital Lease Obligati
Debt and Capital Lease Obligations | 6 Months Ended |
Jun. 30, 2016 | |
Debt and Capital Lease Obligations | |
Debt and Capital Lease Obligations | 7. Debt and Capital Lease Obligations Debt and capital lease obligations consisted of the following as of June 30, 2016 and December 31, 2015 (in thousands): June 30, December 31, 2016 2015 Senior unsecured notes due 2022 $ $ Senior secured term loans due 2018 and 2022 (4.25% to 4.50% as of June 30, 2016 and December 31, 2015) ABL Facility — Notes due at various dates from 2016 to 2022 with interest rates from 6% to 10% Capital lease obligations due at various dates from 2016 to 2018 Total Less current portion Discount on senior secured term loan Debt issuance costs on senior unsecured notes, senior secured term loans and ABL Facility Total long-term debt and capital lease obligations $ $ As of June 30, 2016, letters of credit outstanding, which impact the available credit under the ABL Facility were $134.8 million and the maximum amount available under the ABL Facility was $310.2 million. These letters of credit primarily secure the Company’s obligations under its captive insurance program. Debt Commitment Letter On June 15, 2016, in connection with the Mergers, Corporation and AmSurg entered into a debt commitment letter (the “Commitment Letter”) with certain lenders. The lenders committed to provide (i) Corporation and AmSurg a term loan facility (the “New Term Loan Facility”) in an aggregate principal amount of up to $5.3 billion, maturing seven years from the closing date of the Mergers and (ii) a senior secured asset-based revolving credit facility in an aggregate principal amount of up to $1.0 billion (the “New ABL Facility” and together with the New Term Loan Facility, the “New Credit Facilities”) maturing five years from the closing date of the Mergers. On July 25, 2016, pursuant to an amendment, Corporation received a change of control waiver under its existing term loan credit facility, pursuant to which the New Term Loan Facility will be structured as an incremental credit facility under the Term Loan Credit Agreement. The New ABL Facility may be structured as a new credit agreement or, if Corporation receives a change of control under its existing asset-based revolving credit facility, as an incremental facility under the ABL Credit Agreement. The Commitment Letter contemplates that if Corporation is successful in obtaining change in control waivers under either the Term Loan Credit Agreement or ABL Credit Agreement, the commitments to provide the New Credit Facilities will be reduced by the amount of any indebtedness outstanding under the existing senior secured credit facilities. As a result of the change of control waiver that Corporation received under its Term Loan Credit Agreement, the lenders’ commitments to provide the New Term Loan Facility were reduced by the amount of indebtedness outstanding under the existing Term Loan Facility, which was $2,264.5 million as of June 30, 2016. After giving effect to such reduction, the lenders’ remaining commitment to provide Corporation and AmSurg with a term loan facility is $3.04 billion. Proceeds of the New Credit Facilities will be used, among other things, to refinance portions of Corporation’s and Amsurg’s outstanding debt and to fund expenses incurred in connection with the Mergers. The New Credit Facilities will be guaranteed by various subsidiaries of Corporation and AmSurg. The funding of the New Credit Facilities is subject to customary conditions, including the negotiation of definitive documentation and other customary closing conditions. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 6 Months Ended |
Jun. 30, 2016 | |
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, 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 June 30, 2016, the Company was party to a series of fuel hedge transactions with a major financial institution under one master agreement executed in December 2014. 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 1.2 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 $1.3 million and $2.8 million, respectively, as of June 30, 2016 and December 31, 2015, respectively. Over the next six months, the Company expects to reclassify $1.3 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 $0.7 million and $1.5 million for the three and six months ended June 30, 2016, respectively, and net payments to the counterparty of $0.2 million and $0.4 million for the three and six months ended June 30, 2015, respectively. |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Income (Loss) by Component | 6 Months Ended |
Jun. 30, 2016 | |
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 June 30, 2016 and December 31, 2015 (in thousands). All amounts are after tax. Unrealized holding gains (losses) on Interest rate available-for-sale Fuel hedge swap securities Other Total Balance as of January 1, 2015 $ $ $ $ — $ 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, 2015 — Other comprehensive income (loss) before reclassifications — Amounts reclassified from accumulated other comprehensive income (loss) — — Net current-period other comprehensive income (loss) — Balance as of June 30, 2016 $ $ — $ $ — $ 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 June 30, Six Months Ended June 30, Details about AOCI components 2016 2015 2016 2015 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 |
Retirement Plans and Employee B
Retirement Plans and Employee Benefits | 6 Months Ended |
Jun. 30, 2016 | |
Retirement Plans and Employee Benefits | |
Retirement Plans and Employee Benefits | 10. Retirement Plans and Employee Benefits Defined Benefit Pension Plan Rural/ Metro Pension Plan As part of the Company’s acquisition of Rural/ Metro on October 28, 2015, the Company acquired a defined benefit pension plan (the “Pension Plan”) that covers eligible employees of one of Rural/ Metro’s subsidiaries, primarily those covered by collective bargaining arrangements. Eligibility is achieved upon the completion of one year of service. Participants become fully vested in their accrued benefit after the completion of five years of service. The Pension Plan was amended on April 8, 2016 (the “curtailment date”), whereby the Pension Plan became frozen for all participants as of June 30, 2016. As part of the freezing of the Pension Plan, no new benefits accrue, no hours of service earned after the freeze date will count in determining a participant’s credited service, and no earnings earned after the freeze date are counted in determining a participant’s average annual earnings. The amendment qualified as a curtailment. The elimination of future years of service and future salaries results in the post-curtailment pension obligation being based on the accumulated benefit obligation rather than the projected benefit obligation. As a result, the Company recognized, effective on the curtailment date, a net curtailment gain of approximately $1.1 million, consisting of a $2.2 million gain from the decrease in the projected benefit obligation and a $1.1 million loss for the elimination of the accumulated net actuarial loss within other comprehensive income (loss) as of the date of the amendment. The net gain of $1.1 million is included in net periodic pension cost for the three and six months ended June 30, 2016. The Company’s general funding policy is to make annual contributions to the Pension Plan as required by the Employee Retirement Income Security Act. The Company contributed zero and $0.7 million during the three and six months ended June 30, 2016. The following table shows a reconciliation of plan assets for the six months ended June 30, 2016 (in thousands): Change in plan assets: Fair value of plan assets as of December 31, 2015 $ Actual return on plan assets Employer contributions Benefits paid Plan participants' contributions — Fair value of plan assets at June 30, 2016 $ The Company has adopted the fair value provisions (as described in Note 2) for the plan assets. The Company categorizes plan assets within a three-level fair value hierarchy. The fair values of the Pension Plan assets as of June 30, 2016 and December 31, 2015, by asset class were as follows (in thousands): June 30, 2016 Description Level 1 Level 2 Level 3 Total Assets: Equity securities $ $ $ — $ Debt securities — Real estate — Total equity securities $ $ $ $ December 31, 2015 Description Level 1 Level 2 Level 3 Total Assets: Equity securities $ $ $ — $ Debt securities — Real estate — Total equity securities $ $ $ $ The real estate balance classified as a Level 3 liability has increased approximately $0.1 million since December 31, 2015 as a result of purchases and net unrealized gains during the six months ended June 30, 2016. Amortization of the net actuarial gain or loss resulting from experience different from that assumed and from changes in assumptions is included as a component of Net Periodic Benefit Cost or Income for each year. If, at the beginning of the year, that net gain or loss exceeds 10% of the greater of the projected benefit obligation and the market-related value of plan assets, the amortization is that excess divided by the average remaining service period of participating employees expected to receive benefits under the plan. The components of net periodic benefit cost and other amounts recognized as comprehensive (loss) income during the three and six months ended June 30, 2016, are as follows (in thousands): Three Months Ended June 30, 2016 Six Months Ended June 30, 2016 Net periodic (benefit) cost: Service cost $ $ Interest cost Expected return on plan assets Curtailment net gain Net periodic (benefit) cost $ $ Other changes in plan assets and benefit obligations recognized as other comprehensive loss (income) Net loss (gain) — Net gain recognized during the period — — Total recognized in other comprehensive loss (income) $ — $ Total recognized as net periodic benefit cost and other comprehensive loss (income) $ $ As of June 30, 2016, there were no amounts of accumulated unrecognized net actuarial gains or losses in accumulated other comprehensive income (loss), before income taxes. Other Pension Plans SEA had a pension plan (the “SEA Plan”) with $10.1 million in accumulated benefit obligations as of the acquisition date. The SEA Plan was frozen at acquisition. The SEA Plan was fully funded, with both investments and escrow funds set aside to cover any shortfall of the investments in covering the liabilities upon liquidation. SEA received a favorable determination letter from the IRS dated February 2, 2016, and the liquidation of the SEA Plan was completed in the second quarter of 2016. NTEP had a pension plan (the “NTEP Plan”) with $2.8 million in accumulated benefit obligations as of the acquisition date. The NTEP Plan was frozen at acquisition. The NTEP Plan was fully funded, with both investments and escrow funds set aside to cover any shortfall of the investments in covering the liabilities upon liquidation. The NTEP Plan was terminated and liquidated during the second quarter of 2016. Employee Stock Purchase Plan and Provider Stock Purchase Plan Beginning on May 1, 2015, the Company’s employees may participate in the Envision Healthcare Holdings, Inc. 2015 Employee Stock Purchase Plan (the “ESPP”), pursuant to which the Company is authorized to issue up to 1.2 million shares of common stock. Substantially all full-time employees who have been employed by the Company for at least 60 days prior to the offering period are eligible to participate in the ESPP. Employee stock purchases are made through payroll deductions. Beginning on May 1, 2015, certain individuals that provide clinical services for the Company and its subsidiaries or professional association affiliates may participate in the Envision Healthcare Holdings, Inc. 2015 Provider Stock Purchase Plan (the “PSPP”), pursuant to which the Company is authorized to issue up to 1.2 million shares of common stock. All active service providers that customarily work more than 120 hours per month and have provided at least 240 hours of service prior to the relevant offering period are eligible to participate in the PSPP. Provider stock purchases are made through paycheck deductions. Under the terms of both the ESPP and PSPP, employees and service providers may not deduct an amount which would permit such employee or service provider to purchase the Company’s capital stock under all of the Company’s stock purchase plans at a rate which would exceed $25,000 in fair value of capital stock in any offering period. The purchase price of the stock is 90% of the closing price of the common stock on the last trading day of the offering period. During the three and six months ended June 30, 2016, employee and provider purchases of common stock through the ESPP and PSPP totaled less than 0.1 million shares. There were no employee or provider purchases of common stock through the ESPP or the PSPP during the three and six months ended June 30, 2015. Under the terms of the Merger Agreement, the Company has agreed to terminate the ESPP and PSPP upon the consummation of the Mergers. |
Equity Based Compensation
Equity Based Compensation | 6 Months Ended |
Jun. 30, 2016 | |
Equity Based Compensation | |
Equity Based Compensation | 11. Equity-Based Compensation Omnibus Incentive Plan Upon completion of the Company’s initial public offering in August 2013, the then-existing 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 June 30, 2016, a total of 13,903,035 shares remained available for grant under the Omnibus Incentive Plan. Awards under the Omnibus Incentive Plan include both performance and non-performance based awards. Awards are granted with exercise prices equal to the fair value of the Company’s com mon 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 market-based objectives. All options have 10 -year terms. During February 2016, the Company adopted a long-term incentive plan (the “2016 LTIP”) which provides stock options, restricted stock units (“RSUs”), and market-based performance share units (“PSUs”) in combination. The stock options and RSUs vest ratably over three years. The PSUs vest based on achievement of both the three -year service condition and market condition. The holders of the RSUs and PSUs are entitled to receive cash dividend equivalents related to regular cash dividends paid by the Company. As of June 30, 2016, the Company had issued awards under the 2016 LTIP including 1,573,288 stock options with a grant date fair value of $8.38 per option using the Black-Scholes valuation model, 278,904 RSUs with a grant date fair value of $21.99 per RSU using the market price on the date of grant, and 585,587 PSUs with a grant date fair value of $22.41 per PSU using a Monte Carlo simulation model. The Monte Carlo simulation used to calculate the fair value of the PSUs simulates the present value of the potential outcomes of future stock prices of the Company and the companies included in the defined performance index over the performance cycle. The projection of stock prices are based on the risk-free rate of return, the volatilities of the stock price of the Company and the companies included in the defined performance index, and the correlation of the stock price of the Company with these companies. Total equity-based compensation charges of $3.6 million and $5.9 million were recorded for the three and six months ended June 30, 2016, respectively and $1.6 million and $3.0 million were recorded for the three and six months ended June 30, 2015, respectively. As of June 30, 2016, total unrecognized compensation cost related to unvested awards was $34.2 million, which will be recognized over the weighted average remaining vesting life of 1.9 years. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies | |
Commitments and Contingencies | 12. Commitments and Contingencies Lease Commitments The Company leases various facilities and equipment under operating lease agreements. Rental expense incurred under these leases was $19.4 million and $13.9 million for the three months ended June 30, 2016 and 2015, respectively, and $38.4 million and $26.7 million for the six months ended June 30, 2016 and 2015, 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 June 30, 2016 and December 31, 2015, the Company had $134.8 million and $140.8 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 certification of the rest period claims in the consolidated Karapetian/ Aguilar case was denied, 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 setting rates for those employees. On October 13, 2015, the Court decertified all classes in the Karapetian/ Aguilar case, a decision that is being appealed. In the Banta case, the Court denied certification of the meal and rest period claims as to EMTs and paramedics, a decision that plaintiff’s counsel appealed. The appeal was denied because of the pendency of other class and representative claims in the case. The Court indicated that it would certify a class on overtime claims; however, in July 2016, Banta’s counsel filed a stipulation requesting that the Court decertify and dismiss the overtime claims. In the Bartoni case, the Court denied certification on the meal and rest period claims of all unionized employees in Northern California, a decision 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. In September 2009, a qui tam action was filed against Rural/Metro in the U. S. District Court for the Northern District of Alabama. The complaint alleged that Rural/Metro had falsified Medicare required documents and billed Medicare and Medicaid improperly for ambulance services. The federal government intervened in the lawsuit on March 14, 2011, and on June 14, 2012, Rural/Metro entered into a settlement agreement with the DOJ and plaintiff, agreeing to pay $5.5 million to the federal government. In connection with this settlement, Rural/Metro entered into a CIA with the OIG (the “Rural/Metro CIA”), which requires it to maintain a compliance program. This program includes, among other elements, the appointment of a compliance officer and committee, training of employees nationwide, safeguards for Rural/Metro’s billing operations, review by an independent review organization and reporting of certain reportable events. The term of the Rural/Metro CIA is five years and is set to expire in June 2017. On October 28, 2015, the Company completed its acquisition of Rural/Metro. On December 10, 2012, an OIG subpoena was served on Mercy Hospital in Buffalo, New York, requesting documents related to interfacility specialty care transports provided by Rural/Metro’s Buffalo division. Rural/Metro provided responsive documents. On April 14, 2014, Rural/Metro received a second subpoena from the DOJ, Western District of New York, requesting additional information. The investigation was subsequently expanded to include Rural/Metro’s Kentucky market. Rural/Metro is cooperating with the government and is in the process of providing additional responsive documents. The Company is unable to determine the potential impact, if any, that will result from this investigation. 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 continues to engage 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 recorded a reserve of $30.0 million as of June 30, 2016 , based on the Company’s estimates of probable exposure resulting from the HMA Lawsuits. On January 8, 2015, the U.S. Attorney’s Office for the District of Arizona issued a Civil Investigative Demand (“CID”) for copies of documents pertaining to ambulance transports provided by Rural/ Metro in its San Diego and Arizona markets. The CID does not provide any information regarding specific allegations or claims made by the government. Rural/ Metro is cooperating with the government during its investigation and has provided responsive documents. The Company is unable to determine the potential impact, if any, that will result from this investigation. Following the announcement of the proposed Mergers, a purported stockholder of the Company filed a putative stockholder class action lawsuit against the members of the Company’s Board and Barclays PLC in the Court of Chancery of the state of Delaware on July 15, 2016. The lawsuit alleges that the members of the Company’s Board violated their fiduciary duties in connection with the proposed Mergers and that Barclays PLC aided and abetted those breaches. Among other remedies, the plaintiff seeks to enjoin the Mergers from proceeding or, alternatively, damages in the event the Mergers are consummated. The Company believes this lawsuit is without merit and intends to defend the lawsuit vigorously. 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. |
Variable Interest Entities
Variable Interest Entities | 6 Months Ended |
Jun. 30, 2016 | |
Variable Interest Entities | |
Variable Interest Entities | 13. Variable Interest Entities The Company periodically enters into arrangements with outside partners within the healthcare industry in order to facilitate growth and provide for further investment in patient services provided by EmCare. GAAP requires the assets, liabilities , noncontrolling interests and activities of Variable Interest Entities (“VIEs”) to be consolidated if an entity’s interest in the VIE has a controlling financial interest. Under the Variable Interest Model, a controlling financial interest is determined based on which entity, if any, has: i) the power to direct the activities of the VIE that most significantly impacts the VIE’s economic performance and ii) the obligations to absorb the losses that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. For all consolidated VIEs, the Company is not contractually obligated to fund losses, if any, in excess of its investment. The Company’s financial statements include the accounts of these arrangements because they both qualify as VIEs and the Company is the primary beneficiary. All of the VIEs which the Company consolidates have relatively few variable interests, and are primarily related to equity investments, subordinated financial support and management services agreements (“MSAs”) for which the Company is contracted to manage the VIE. Under the MSAs, EmCare provides management services including recruiting, credentialing, billing, payroll, accounting and other various administrative services. The significant judgments involved in determining whether to consolidate relate to the interaction of the decision making rights of each variable interest holder that most significantly impact economic performance. As of June 30, 2016 and December 31, 2015, current assets of VIEs that were consolidated were $298.3 million and $255.9 million, respectively, and current liabilities were $95.2 million and $77.6 million, respectively. The Company has no material unconsolidated VIEs as of June 30, 2016 and December 31, 2015, respectively. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2016 | |
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 income taxes, and depreciation and amortization expense (“Adjusted EBITDA”) is the measure of profit and loss that the CODM uses to assess financial performance and make decisions. Adjusted EBITDA is a non-GAAP measure used by management solely as a performance measure. 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). The Company’s operating segment results were as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 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 June 30, Six Months Ended June 30, 2016 2015 2016 2015 Net income (loss) $ $ $ $ Add-back of non-operating expense (income): Interest expense, net Income tax expense (benefit) 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 $ $ $ $ Three Months Ended June 30, Six Months Ended June 30, Facility-Based and Post-Acute Care Physician Services 2016 2015 2016 2015 Adjusted EBITDA $ $ $ 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 Income from operations $ $ $ $ Three Months Ended June 30, Six Months Ended June 30, Healthcare Transportation Services 2016 2015 2016 2015 Adjusted EBITDA $ $ $ $ Depreciation and amortization expense Severance and related costs Interest income from restricted assets Equity-based compensation expense Transaction costs Income from operations $ $ $ $ |
Consolidating Financial Informa
Consolidating Financial Information | 6 Months Ended |
Jun. 30, 2016 | |
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 June 30, 2016 (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 — — Goodwill — — Other long-term assets Investment in wholly owned subsidiary — — Total assets $ $ $ $ Liabilities and Equity Current liabilities: Accounts payable $ — $ $ — $ Accrued liabilities — — Current portion of long-term debt and capital lease obligations — — Total current liabilities — — Long-term debt and capital lease obligations — — Deferred income taxes — 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, 2015 (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 — — Goodwill — — Other long-term assets Investment in wholly owned subsidiary — — Total assets $ $ $ $ Liabilities and Equity Current liabilities: Accounts payable $ $ $ — $ Accrued liabilities — Current portion of long-term debt and capital lease obligations — — Total current liabilities Long-term debt and capital lease obligations — — Deferred income taxes — 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 June 30, 2016 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 June 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 — — 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) Six Months Ended June 30, 2016 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 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) Six Months Ended June 30, 2015 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 — — 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 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) Six Months Ended June 30, 2016 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 ABL Facility — Repayments of the Term Loan — Debt issuance costs — Proceeds from stock options exercised and issuance of shares under employee stock purchase plan and provider stock purchase plan — 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) Six Months Ended June 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 ABL Facility — Repayments of the Term Loan — Debt issuance costs — Proceeds from stock options exercised and issuance of shares under employee stock purchase plan and provider stock purchase plan — 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 $ $ $ |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
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, insurance related reserves and acquired intangible assets. Actual results may differ from those estimates under different assumptions or conditions. |
Insurance Collateral | Insurance Collateral Insurance collateral is comprised of investments in 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 $1.5 million and $0.6 million as of June 30, 2016 and December 31, 2015, 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 uncompensated care 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, 2015, was equal to approximately 94% and 86% 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 June 30, 2016, and December 31, 2015, were as follows (in thousands): June 30, December 31, 2016 2015 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 $ $ 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 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 and future estimated 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 and future estimated collections. |
Debt Issuance Costs | Debt Issuance Costs Debt issuance costs related to the Company’s senior secured credit facilities and senior unsecured notes are included as a deduction from the carrying amount of long-term debt in the consolidated balance sheets, and are amortized to interest expense using the effective interest method over the term of the related debt. |
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 June 2016. As a result of this and previous actuarial valuations, the Company recorded decreases in its provision for insurance liabilities of $2.6 million and $1.7 million for the three and six months ended June 30, 2016, respectively, as compared to increases of $1.4 million and $4.0 million for the three and six months ended June 30, 2015, respectively, related to reserves for losses in prior years. |
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, accrued liabilities and the senior secured credit facility approximates fair value as of June 30, 2016, and December 31, 2015. 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 six months ended June 30, 2016 and 2015, the Company derived approximately 35% , respectively, of its revenue from Medicare and Medicaid, 63% and 62% , respectively, from insurance providers and contracted payors, and 2% 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 June 30, 2016, and December 31, 2015, was approximately $759.4 million and $735.0 million, respectively, with a principal 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 June 30, 2016, and December 31, 2015 (in thousands): June 30, 2016 Description Level 1 Level 2 Level 3 Total Assets: Available-for-sale securities (insurance collateral) $ $ $ — $ Liabilities: Contingent consideration — — Fuel hedge — — December 31, 2015 Description Level 1 Level 2 Level 3 Total Assets: Available-for-sale securities (insurance collateral) $ $ $ — $ Liabilities: Contingent consideration — — Fuel hedge — — The contingent consideration balance classified as a Level 3 liability decreased $ 2.0 million during the six months ended June 30, 2016 due to the Company’s final determination that no contingent consideration was payable under the terms of a previously completed acquisition. During the s ix months ended June 30, 2016 and 2015, 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. Adjustments are estimated based on historical experience and are recorded in the period in which services are rendered. 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. Revenue generated under fire protection service contracts is recognized over the life of the contract. Subscription fees, which are generally received in advance, are deferred and recognized on a straight-line basis over the term of the subscription agreement, which is generally one year. 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. Net revenue for the three and six months ended June 30, 2016 and 2015 consisted of the following (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 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 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 increased the contractual discount and uncompensated care provisions (and correspondingly decreased net revenue) by approximately $2.4 million and $5. 3 million for the three and six months ended June 30, 2016, respectively, and by approximately $3.8 million and $7.4 million for the three and six months ended June 30, 2015, respectively. 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. |
Reclassifications | Reclassifications Certain prior period balances in the consolidated balance sheets have been reclassified to conform to the current year presentation. Such reclassifications had no impact on the results of operations or cash flows previously reported. |
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 is currently evaluating the impact and 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 August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”), which requires management to evaluate, in connection with preparing financial statements for each annual and interim reporting period, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable) and provide related disclosures. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. The adoption of ASU 2014-15 is not expected to impact the Company's consolidated financial statements. 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. Entities may choose to adopt the standard using either a full retrospective approach or a modified retrospective approach. The Company adopted ASU 2015-02 under the modified retrospective approach during the current period and determined that its adoption does not impact our consolidated financial position or results of operations. 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 retrospectively adopted ASU 2015-03 effective January 1, 2016 and, as a result, $34.6 million of debt issuance costs related to the Company’s senior secured credit facilities and senior unsecured notes were reclassified from other long-term assets to long-term debt and capital lease obligations on the Company’s consolidated balance sheets as of December 31, 2015. In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”), which simplifies the presentation of deferred income taxes and requires that deferred tax liabilities and assets be classified as non-current in the consolidated balance sheets. ASU 2015-17 is effective for annual reporting periods beginning after December 15, 2016, with early adoption permitted. The Company retrospectively adopted ASU 2015-17 effective January 1, 2016 and, as a result, $85.8 million of current deferred tax liabilities were reclassified to deferred income tax es on the Company’s consolidated balance sheets as of December 31, 2015. In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”), which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on the consolidated balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective for annual periods beginning after December 15, 2018, with early adoption permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the impact and has not yet determined the effects, if any, that adoption of ASU 2016-02 may have on its consolidated financial position or results of operations. In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718) (“ASU 2016-09”), which was issued as part of the FASB's simplification initiative and affects all entities that issue share-based payment awards to their employees. This ASU covers accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 will be effective for annual periods beginning after December 15, 2016, with early adoption permitted. The Company is currently evaluating the impact and has not yet determined the effects, if any, that adoption of ASU 2016-09 may have on its consolidated financial position or results of operations. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326) (“ASU 2016-13”), which modifies the impairment model for most financial instruments , including trade receivables. The new standard replaces the exi s ting incurred loss methodology with an expected loss methodology and will result in the more timely recognition of losses. ASU 2016-13 will be effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact and has not yet determined the effects, if any, that adoption of ASU 2016-13 may have on its consolidated financial position or results of operations. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Summary of Significant Accounting Policies | |
Schedule of accounts receivable and allowances | June 30, December 31, 2016 2015 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 June 30, 2016, and December 31, 2015 (in thousands): June 30, 2016 Description Level 1 Level 2 Level 3 Total Assets: Available-for-sale securities (insurance collateral) $ $ $ — $ Liabilities: Contingent consideration — — Fuel hedge — — December 31, 2015 Description Level 1 Level 2 Level 3 Total Assets: Available-for-sale securities (insurance collateral) $ $ $ — $ Liabilities: Contingent consideration — — Fuel hedge — — |
Schedule of net revenue | Net revenue for the three and six months ended June 30, 2016 and 2015 consisted of the following (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 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 22
Basic and Diluted Net Income (Loss) Per Share (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 earnings per share 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 June 30, Six Months Ended June 30, 2016 2015 2016 2015 Net income (loss) attributable to Envision Healthcare Holdings, Inc. stockholders $ $ $ $ Net income (loss) allocated to participating securities (a) — — Net income (loss) attributable to Envision Healthcare Holdings, Inc. common stockholders 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. common stockholders: Basic $ $ $ $ Diluted $ $ $ $ (a) Restricted stock units and market-based performance share units granted to employees and non-employee directors are considered participating securities. |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
EPMG | |
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 and working capital adjustments (in thousands): Cash and cash equivalents $ Insurance collateral Accounts receivable Prepaid and other current assets Property, plant and equipment Acquired intangible assets Goodwill Other long-term assets Accounts payable Accrued liabilities Deferred income taxes Insurance reserves Other long-term liabilities Total purchase price $ |
SEA | |
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 Acquired intangible assets Goodwill Accounts payable Accrued liabilities Deferred income taxes Total purchase price $ |
VISTA | |
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 Other long-term assets Accounts payable Accrued liabilities Deferred income taxes Insurance reserves Other long-term liabilities Total purchase price $ |
EMA | |
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 Other long-term assets Accounts payable Accrued liabilities Deferred income taxes Insurance reserves Total purchase price $ |
Rural Metro | |
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 and working capital adjustments (in thousands): Cash and cash equivalents $ Insurance collateral Accounts receivable Parts and supplies inventory Prepaid and other current assets Property, plant and equipment Acquired intangible assets Goodwill Other long-term assets Accounts payable Accrued liabilities Capital lease obligations Deferred income taxes Insurance reserves Other long-term liabilities Total purchase price $ |
Questcare | |
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 and working capital adjustments (in thousands): Cash and cash equivalents $ Insurance collateral Accounts receivable Prepaid and other current assets Property, plant and equipment Acquired intangible assets Goodwill Other long-term assets Accounts payable Accrued liabilities Deferred income taxes Insurance reserves Total purchase price $ |
SEA, VISTA, EMA and Rural/ Metro | |
Schedule of unaudited pro forma operating results | Three Months Ended Six Months Ended (in thousands) June 30, 2015 June 30, 2015 Net revenue $ $ Net income (loss) |
Insurance Collateral (Tables)
Insurance Collateral (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Insurance Collateral | |
Schedule of insurance collateral | Insurance collateral consisted of the following as of June 30, 2016 and December 31, 2015 (in thousands): June 30, December 31, 2016 2015 Available-for-sale securities: 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 June 30, 2016 and December 31, 2015 were as follows (in thousands): June 30, 2016 Gross Gross Unrealized Unrealized Fair Description Cost Basis Gains Losses Value Corporate bonds/ Fixed income $ $ $ — $ Corporate equity Total available-for-sale securities $ $ $ $ December 31, 2015 Gross Gross Unrealized Unrealized Fair Description Cost Basis Gains Losses Value 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 June 30, 2016 and December 31, 2015 were as follows (in thousands): June 30, 2016 December 31, 2015 Unrealized Unrealized Fair Value Loss Fair Value Loss 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) | 6 Months Ended |
Jun. 30, 2016 | |
Accrued Liabilities | |
Schedule of accrued liabilities | 6. Accrued Liabilities Accrued liabilities were as follows as of June 30, 2016 and December 31, 2015 (in thousands): June 30, December 31, 2016 2015 Accrued wages and benefits $ $ Current portion of self-insurance reserve Current portion of compliance and legal Accrued incentive compensation Accrued income taxes Accrued medical claim liabilities Deferred revenue Other Total accrued liabilities $ $ |
Debt and Capital Lease Obliga26
Debt and Capital Lease Obligations (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Debt and Capital Lease Obligations | |
Schedule of debt and capital leases | Debt and capital lease obligations consisted of the following as of June 30, 2016 and December 31, 2015 (in thousands): June 30, December 31, 2016 2015 Senior unsecured notes due 2022 $ $ Senior secured term loans due 2018 and 2022 (4.25% to 4.50% as of June 30, 2016 and December 31, 2015) ABL Facility — Notes due at various dates from 2016 to 2022 with interest rates from 6% to 10% Capital lease obligations due at various dates from 2016 to 2018 Total Less current portion Discount on senior secured term loan Debt issuance costs on senior unsecured notes, senior secured term loans and ABL Facility Total long-term debt and capital lease obligations $ $ |
Changes in Accumulated Other 27
Changes in Accumulated Other Comprehensive Income (Loss) by Component (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 June 30, 2016 and December 31, 2015 (in thousands). All amounts are after tax. Unrealized holding gains (losses) on Interest rate available-for-sale Fuel hedge swap securities Other Total Balance as of January 1, 2015 $ $ $ $ — $ 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, 2015 — Other comprehensive income (loss) before reclassifications — Amounts reclassified from accumulated other comprehensive income (loss) — — Net current-period other comprehensive income (loss) — Balance as of June 30, 2016 $ $ — $ $ — $ |
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 June 30, Six Months Ended June 30, Details about AOCI components 2016 2015 2016 2015 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 |
Retirement Plans and Employee28
Retirement Plans and Employee Benefits (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Retirement Plans and Employee Benefits | |
Schedule of the reconciliation of plan assets | Change in plan assets: Fair value of plan assets as of December 31, 2015 $ Actual return on plan assets Employer contributions Benefits paid Plan participants' contributions — Fair value of plan assets at June 30, 2016 $ |
Schedule of the fair value of the Pension Plan assets by asset class | June 30, 2016 Description Level 1 Level 2 Level 3 Total Assets: Equity securities $ $ $ — $ Debt securities — Real estate — Total equity securities $ $ $ $ December 31, 2015 Description Level 1 Level 2 Level 3 Total Assets: Equity securities $ $ $ — $ Debt securities — Real estate — Total equity securities $ $ $ $ |
Schedule of components of net periodic benefit cost and other amounts recognized as comprehensive (loss) income | Three Months Ended June 30, 2016 Six Months Ended June 30, 2016 Net periodic (benefit) cost: Service cost $ $ Interest cost Expected return on plan assets Curtailment net gain Net periodic (benefit) cost $ $ Other changes in plan assets and benefit obligations recognized as other comprehensive loss (income) Net loss (gain) — Net gain recognized during the period — — Total recognized in other comprehensive loss (income) $ — $ Total recognized as net periodic benefit cost and other comprehensive loss (income) $ $ |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Schedule of the Company's operating segment results | The Company’s operating segment results were as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 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 June 30, Six Months Ended June 30, 2016 2015 2016 2015 Net income (loss) $ $ $ $ Add-back of non-operating expense (income): Interest expense, net Income tax expense (benefit) 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 $ $ $ $ |
Facility-Based Physician Services | |
Schedule of reconciliation Adjusted EBITDA to Segments | Three Months Ended June 30, Six Months Ended June 30, Facility-Based and Post-Acute Care Physician Services 2016 2015 2016 2015 Adjusted EBITDA $ $ $ 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 Income from operations $ $ $ $ |
Healthcare Transportation Services | |
Schedule of reconciliation Adjusted EBITDA to Segments | Three Months Ended June 30, Six Months Ended June 30, Healthcare Transportation Services 2016 2015 2016 2015 Adjusted EBITDA $ $ $ $ Depreciation and amortization expense Severance and related costs Interest income from restricted assets Equity-based compensation expense Transaction costs Income from operations $ $ $ $ |
Consolidating Financial Infor30
Consolidating Financial Information (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Consolidating Financial Information | |
Schedule of Consolidating Balance Sheet | Consolidating Balance Sheet As of June 30, 2016 (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 — — Goodwill — — Other long-term assets Investment in wholly owned subsidiary — — Total assets $ $ $ $ Liabilities and Equity Current liabilities: Accounts payable $ — $ $ — $ Accrued liabilities — — Current portion of long-term debt and capital lease obligations — — Total current liabilities — — Long-term debt and capital lease obligations — — Deferred income taxes — 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, 2015 (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 — — Goodwill — — Other long-term assets Investment in wholly owned subsidiary — — Total assets $ $ $ $ Liabilities and Equity Current liabilities: Accounts payable $ $ $ — $ Accrued liabilities — Current portion of long-term debt and capital lease obligations — — Total current liabilities Long-term debt and capital lease obligations — — Deferred income taxes — 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 June 30, 2016 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 June 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 — — 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) |
Schedule of Condensed Consolidating Statement of Cash Flows | Six Months Ended June 30, 2016 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 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) Six Months Ended June 30, 2015 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 — — 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 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) Six Months Ended June 30, 2016 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 ABL Facility — Repayments of the Term Loan — Debt issuance costs — Proceeds from stock options exercised and issuance of shares under employee stock purchase plan and provider stock purchase plan — 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) Six Months Ended June 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 ABL Facility — Repayments of the Term Loan — Debt issuance costs — Proceeds from stock options exercised and issuance of shares under employee stock purchase plan and provider stock purchase plan — 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 $ $ $ |
General - Basis of Presentation
General - Basis of Presentation (Details) | 6 Months Ended |
Jun. 30, 2016item | |
General | |
Number of operating segments | 2 |
General - Proposed Merger (Deta
General - Proposed Merger (Details) | Jun. 15, 2016$ / shares | Jun. 30, 2016$ / shares | Dec. 31, 2015$ / shares |
Merger | |||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Proposed Merger with AmSurg Corp | |||
Merger | |||
Expected ownership percentage as a result of the merger | 53.00% | ||
Proposed Merger with AmSurg Corp | Merger One | |||
Merger | |||
Share exchange ratio applied to the conversion of common stock | 1 | ||
Proposed Merger with AmSurg Corp | Merger One | Mandatory Convertible Preferred Stock, Series A-1 | |||
Merger | |||
Share exchange ratio applied to the conversion of preferred stock | 1 | ||
Proposed Merger with AmSurg Corp | Merger Two | |||
Merger | |||
Common stock, par value (in dollars per share) | $ 0.01 | ||
Share exchange ratio applied to the conversion of common stock | 0.334 | ||
Proposed Merger with AmSurg Corp | AmSurg | |||
Merger | |||
Expected ownership percentage as a result of the merger | 47.00% | ||
Proposed Merger with AmSurg Corp | AmSurg | Merger One | |||
Merger | |||
Common stock, no par value (in dollars per share) | $ 0 | ||
Proposed Merger with AmSurg Corp | AmSurg | Merger One | Mandatory Convertible Preferred Stock, Series A-1 | |||
Merger | |||
Preferred stock, no par value (in dollars per share) | $ 0 | ||
Preferred stock, dividend rate (as a percent) | 5.25% | ||
Proposed Merger with AmSurg Corp | New Amethyst Corp | Merger One | |||
Merger | |||
Common stock, par value (in dollars per share) | $ 0.01 | ||
Proposed Merger with AmSurg Corp | New Amethyst Corp | Merger One | Mandatory Convertible Preferred Stock, Series A-1 | |||
Merger | |||
Preferred stock, par value (in dollars per share) | $ 0.01 | ||
Preferred stock, dividend rate (as a percent) | 5.25% |
Summary of Significant Accoun33
Summary of Significant Accounting Policies - Insurance Collateral, Trade and Accounts Receivable, Net (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Insurance Collateral | ||
Reinsurance receivable | $ 1,475 | $ 644 |
Trade and Other Accounts Receivable, net | ||
Gross trade accounts receivable | 6,554,996 | 6,375,473 |
Allowance for contractual discounts | (3,270,546) | (3,340,078) |
Allowance for uncompensated care | (1,959,095) | (1,779,200) |
Trade accounts receivable, net | 1,325,355 | 1,256,195 |
Other receivables, net | 310 | 826 |
Trade and other accounts receivable, net | $ 1,325,665 | $ 1,257,021 |
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 | 94.00% | |
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 | 86.00% |
Summary of Significant Accoun34
Summary of Significant Accounting Policies - Insurance Reserves (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
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 | $ 2.6 | $ 1.4 | $ 1.7 | $ 4 |
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 Accoun35
Summary of Significant Accounting Policies - Concentration of Credit Risk (Details) - Net revenue - Customer concentration risk | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Medicare and Medicaid | ||
Concentration of Credit Risk | ||
Percentage of concentration risk | 35.00% | 35.00% |
Insurance providers and contracted payors | ||
Concentration of Credit Risk | ||
Percentage of concentration risk | 63.00% | 62.00% |
Self-pay | ||
Concentration of Credit Risk | ||
Percentage of concentration risk | 2.00% | 3.00% |
Summary of Significant Accoun36
Summary of Significant Accounting Policies - Financial Instruments (Details) - Senior subordinated unsecured notes purchased by the Company's subsidiary - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
Financial Instruments | ||
Estimated fair value of the senior subordinate notes | $ 759.4 | $ 735 |
Carrying value of the senior subordinate notes | $ 750 | $ 750 |
Summary of Significant Accoun37
Summary of Significant Accounting Policies - Fair Value (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2016 | Dec. 31, 2015 | Jun. 30, 2015 | |
Fair Value Measurement | |||
Decrease in level 3 liability, contingent consideration | $ 2,000 | ||
Transfers in assets from Level 1 to level 2 fair value measurements | 0 | $ 0 | |
Transfers in assets from Level 2 to level 1 fair value measurements | 0 | 0 | |
Transfers in liabilities from Level 1 to level 2 fair value measurements | 0 | 0 | |
Transfers in liabilities from Level 2 to level 1 fair value measurements | 0 | $ 0 | |
Available-for-sale securities (insurance collateral) | |||
Fair Value Measurement | |||
Assets | 28,829 | $ 23,192 | |
Contingent consideration | |||
Fair Value Measurement | |||
Liabilities | 166 | 2,116 | |
Fuel hedge | |||
Fair Value Measurement | |||
Liabilities | 1,281 | 2,777 | |
Level 1 | Available-for-sale securities (insurance collateral) | |||
Fair Value Measurement | |||
Assets | 24,860 | 19,116 | |
Level 2 | Available-for-sale securities (insurance collateral) | |||
Fair Value Measurement | |||
Assets | 3,969 | 4,076 | |
Level 2 | Fuel hedge | |||
Fair Value Measurement | |||
Liabilities | 1,281 | 2,777 | |
Level 3 | Contingent consideration | |||
Fair Value Measurement | |||
Liabilities | $ 166 | $ 2,116 |
Summary of Significant Accoun38
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Revenue Recognition | ||||
Episode period | 60 days | |||
Revenue, net of contractual discounts, excluding subsidies and fees: | $ 2,528,775 | $ 2,192,631 | $ 5,049,914 | $ 4,193,604 |
Subsidies and fees | 349,186 | 224,380 | 691,961 | 476,125 |
Net revenue | 2,877,961 | 2,417,011 | 5,741,875 | 4,669,729 |
Provision for uncompensated care | (1,236,931) | (1,062,753) | (2,503,299) | (2,070,969) |
Net revenue | 1,641,030 | 1,354,258 | 3,238,576 | 2,598,760 |
Revenue Recognition | ||||
Increase (decrease) in contractual discount or uncompensated care provisions | 2,400 | 3,800 | 5,300 | 7,400 |
Medicare | ||||
Revenue Recognition | ||||
Revenue, net of contractual discounts, excluding subsidies and fees: | 487,319 | 420,596 | 947,646 | 782,664 |
Medicaid | ||||
Revenue Recognition | ||||
Revenue, net of contractual discounts, excluding subsidies and fees: | 187,644 | 167,120 | 368,412 | 298,095 |
Commercial insurance and managed care (excluding Medicare and Medicaid managed care) | ||||
Revenue Recognition | ||||
Revenue, net of contractual discounts, excluding subsidies and fees: | 806,623 | 732,374 | 1,609,338 | 1,384,190 |
Self-pay | ||||
Revenue Recognition | ||||
Revenue, net of contractual discounts, excluding subsidies and fees: | $ 1,047,189 | $ 872,541 | $ 2,124,518 | $ 1,728,655 |
Summary of Significant Accoun39
Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Recent Accounting Pronouncements | ||
Decrease in other long-term assets due to reclassification | $ (100,044) | $ (95,712) |
Decrease in long-term debt and capital lease obligations due to reclassification | (3,057,811) | (2,958,481) |
Increase in Long-term deferred tax liabilities due to reclassification | $ 389,926 | 369,110 |
Accounting Standards Update 2015-03 | Adjustment | ||
Recent Accounting Pronouncements | ||
Decrease in other long-term assets due to reclassification | 34,600 | |
Decrease in long-term debt and capital lease obligations due to reclassification | 34,600 | |
Accounting Standards Update 2015-17 | Early Adoption | ||
Recent Accounting Pronouncements | ||
Decrease in current deferred tax liabilities due to reclassification | 85,800 | |
Increase in Long-term deferred tax liabilities due to reclassification | $ 85,800 |
Basic and Diluted Net Income 40
Basic and Diluted Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Basic and Diluted Net Income Per Share | ||||
Net income (loss) attributable to Envision Healthcare Holdings, Inc. | $ 28,432 | $ 52,416 | $ 55,282 | $ 85,791 |
Net income (loss) allocated to participating securities | 150 | 218 | ||
Net income (loss) attributable to Envision Healthcare Holdings, Inc. common stockholders | $ 28,282 | $ 52,416 | $ 55,064 | $ 85,791 |
Weighted-average common shares outstanding - common stock: | ||||
Basic (in shares) | 187,134,606 | 185,493,085 | 187,090,957 | 184,830,033 |
Dilutive impact of stock awards outstanding (in shares) | 4,888,278 | 6,018,835 | 4,885,784 | 6,336,923 |
Diluted (in shares) | 192,022,884 | 191,511,920 | 191,976,741 | 191,166,956 |
Net income (loss) per share attributable to Envision Healthcare Holdings, Inc.: | ||||
Basic (in dollars per share) | $ 0.15 | $ 0.28 | $ 0.29 | $ 0.46 |
Diluted (in dollars per share) | $ 0.15 | $ 0.27 | $ 0.29 | $ 0.45 |
Stock awards of common stock outstanding excluded from the computations of diluted loss per share and weighted-average common shares outstanding | 1,747,716 | 82,506 | 1,731,430 | 66,313 |
Acquisitions (Details)
Acquisitions (Details) $ in Thousands | Apr. 07, 2016USD ($)item | Dec. 24, 2015USD ($) | Dec. 03, 2015USD ($)item | Oct. 28, 2015USD ($)item | Sep. 30, 2015USD ($)item | Jul. 10, 2015USD ($) | Feb. 27, 2015USD ($)item | Feb. 23, 2015USD ($) | Feb. 01, 2015USD ($) | Jan. 30, 2015USD ($)item | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Dec. 31, 2015USD ($) |
Allocation of the purchase price, which is subject to adjustment based upon the completion of purchase price allocations | ||||||||||||||||
Goodwill | $ 3,351,277 | $ 3,351,277 | $ 3,271,933 | |||||||||||||
Net income (loss) | 28,282 | $ 52,416 | 55,064 | $ 85,791 | ||||||||||||
Net revenue | 1,641,030 | $ 1,354,258 | 3,238,576 | 2,598,760 | ||||||||||||
EPMG | ||||||||||||||||
Acquisitions | ||||||||||||||||
Total consideration of acquisitions paid in cash | $ 119,100 | |||||||||||||||
Preferred stock issued as consideration | 10,500 | |||||||||||||||
Total consideration | $ 129,600 | |||||||||||||||
Number of Health Care Facilities | item | 37 | |||||||||||||||
Tax deductible goodwill | $ 39,300 | |||||||||||||||
Allocation of the purchase price, which is subject to adjustment based upon the completion of purchase price allocations | ||||||||||||||||
Cash and cash equivalents | 18,870 | |||||||||||||||
Insurance collateral | 16,900 | |||||||||||||||
Accounts receivable | 19,637 | |||||||||||||||
Prepaid and other current assets | 3,904 | |||||||||||||||
Property, plant and equipment | 3,541 | |||||||||||||||
Acquired intangible assets | 66,900 | |||||||||||||||
Goodwill | 54,730 | |||||||||||||||
Other long-term assets | 641 | |||||||||||||||
Accounts payable | (1,165) | |||||||||||||||
Accrued liabilities | (35,313) | |||||||||||||||
Long-term deferred tax liabilities, net | 834 | |||||||||||||||
Insurance reserves | (11,872) | |||||||||||||||
Other long-term liabilities | (8,050) | |||||||||||||||
Total purchase price | $ 129,557 | |||||||||||||||
EPMG | Minimum | ||||||||||||||||
Acquisitions | ||||||||||||||||
Number of Clinical Providers | item | 500 | |||||||||||||||
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 | 210 | |||||||||||||||
Acquired intangible assets | 86,200 | |||||||||||||||
Goodwill | 46,961 | |||||||||||||||
Accounts payable | (1,153) | |||||||||||||||
Accrued liabilities | (182) | |||||||||||||||
Long-term deferred tax liabilities, net | (35,263) | |||||||||||||||
Total purchase price | $ 104,834 | |||||||||||||||
Increase (decrease) in goodwill due to purchase price allocation adjustments | (400) | |||||||||||||||
SEA | Minimum | ||||||||||||||||
Acquisitions | ||||||||||||||||
Number of mid-level providers | item | 12 | |||||||||||||||
VISTA | ||||||||||||||||
Acquisitions | ||||||||||||||||
Total consideration of acquisitions paid in cash | $ 123,800 | |||||||||||||||
Tax deductible goodwill | 15,400 | |||||||||||||||
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 | 22,219 | |||||||||||||||
Prepaid and other current assets | 1,245 | |||||||||||||||
Property, plant and equipment | 2,739 | |||||||||||||||
Acquired intangible assets | 53,270 | |||||||||||||||
Goodwill | 73,458 | |||||||||||||||
Other long-term assets | 5,920 | |||||||||||||||
Accounts payable | (1,940) | |||||||||||||||
Accrued liabilities | (5,493) | |||||||||||||||
Long-term deferred tax liabilities, net | (13,138) | |||||||||||||||
Insurance reserves | (13,639) | |||||||||||||||
Other long-term liabilities | (1,365) | |||||||||||||||
Total purchase price | 124,338 | |||||||||||||||
Working capital adjustment | $ 500 | |||||||||||||||
Purchase price allocation, accounts receivable | 300 | |||||||||||||||
Purchase price allocation adjustment, long-term deferred tax liabilities, net | (400) | |||||||||||||||
EMA | ||||||||||||||||
Acquisitions | ||||||||||||||||
Total consideration of acquisitions paid in cash | $ 282,300 | |||||||||||||||
Increase in total consideration | $ 10,500 | |||||||||||||||
Number of Health Care Facilities | item | 47 | |||||||||||||||
Tax deductible goodwill | $ 117,800 | |||||||||||||||
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 | 53,099 | |||||||||||||||
Prepaid and other current assets | 5,922 | |||||||||||||||
Property, plant and equipment | 2,276 | |||||||||||||||
Acquired intangible assets | 147,300 | |||||||||||||||
Goodwill | 128,590 | |||||||||||||||
Other long-term assets | 22,327 | |||||||||||||||
Accounts payable | (12,863) | |||||||||||||||
Accrued liabilities | (35,631) | |||||||||||||||
Long-term deferred tax liabilities, net | (6,442) | |||||||||||||||
Insurance reserves | (29,700) | |||||||||||||||
Total purchase price | $ 282,266 | |||||||||||||||
Increase (decrease) in goodwill due to purchase price allocation adjustments | 10,500 | |||||||||||||||
Purchase price allocation adjustment, current assets | 1,100 | |||||||||||||||
Purchase price allocation adjustment, accrued liabilities | 900 | |||||||||||||||
Rural Metro | ||||||||||||||||
Acquisitions | ||||||||||||||||
Total consideration of acquisitions paid in cash | $ 620,000 | |||||||||||||||
Tax deductible goodwill | $ 4,200 | |||||||||||||||
Number of states where ambulance and fire protections servcies are provided | item | 19 | |||||||||||||||
Number of communities where ambulance and fire protection services are provided | item | 700 | |||||||||||||||
Allocation of the purchase price, which is subject to adjustment based upon the completion of purchase price allocations | ||||||||||||||||
Cash and cash equivalents | $ 18,559 | |||||||||||||||
Insurance collateral | 39,934 | |||||||||||||||
Accounts receivable | 89,000 | |||||||||||||||
Parts and supplies inventory | 7,835 | |||||||||||||||
Prepaid and other current assets | 19,974 | |||||||||||||||
Property, plant and equipment | 92,164 | |||||||||||||||
Acquired intangible assets | 226,200 | |||||||||||||||
Goodwill | 405,651 | |||||||||||||||
Other long-term assets | 2,650 | |||||||||||||||
Accounts payable | (16,748) | |||||||||||||||
Accrued Liablities | (84,692) | |||||||||||||||
Capital Lease Obligations | (1,408) | |||||||||||||||
Long-term deferred tax liabilities, net | (71,567) | |||||||||||||||
Insurance reserves | (25,510) | |||||||||||||||
Other long-term liabilities | (27,899) | |||||||||||||||
Total purchase price | 674,143 | |||||||||||||||
Working capital adjustment | $ 54,100 | |||||||||||||||
Increase (decrease) in goodwill due to purchase price allocation adjustments | 6,100 | |||||||||||||||
Purchase price allocation adjustment, current assets | 1,700 | |||||||||||||||
Purchase price allocation adjustment, intangible assets | 1,400 | |||||||||||||||
Purchase price allocation adjustment, other long-term liabilities | 1,000 | |||||||||||||||
Questcare | ||||||||||||||||
Acquisitions | ||||||||||||||||
Total consideration | $ 136,300 | |||||||||||||||
Tax deductible goodwill | 23,200 | |||||||||||||||
Allocation of the purchase price, which is subject to adjustment based upon the completion of purchase price allocations | ||||||||||||||||
Cash and cash equivalents | 2,594 | |||||||||||||||
Insurance collateral | 6,420 | |||||||||||||||
Accounts receivable | 22,794 | |||||||||||||||
Prepaid and other current assets | 2,482 | |||||||||||||||
Property, plant and equipment | 2,017 | |||||||||||||||
Acquired intangible assets | 67,200 | |||||||||||||||
Goodwill | 55,400 | |||||||||||||||
Other long-term assets | 685 | |||||||||||||||
Accounts payable | (2,531) | |||||||||||||||
Accrued liabilities | (12,699) | |||||||||||||||
Long-term deferred tax liabilities, net | 70 | |||||||||||||||
Insurance reserves | (8,047) | |||||||||||||||
Total purchase price | 136,385 | |||||||||||||||
Working capital adjustment | $ 100 | |||||||||||||||
Purchase price allocation adjustment, other long-term assets | (1,500) | |||||||||||||||
Purchase price allocation adjustment, long-term deferred tax liabilities, net | (1,500) | |||||||||||||||
Questcare | Minimum | ||||||||||||||||
Acquisitions | ||||||||||||||||
Number of Clinical Providers | item | 800 | |||||||||||||||
Number of Health Care Facilities | item | 50 | |||||||||||||||
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 | ||||||||||||||||
Acquisitions | ||||||||||||||||
Total consideration of acquisitions paid in cash | $ 42,500 | |||||||||||||||
Tax deductible goodwill | $ 9,300 | |||||||||||||||
NTEP | ||||||||||||||||
Acquisitions | ||||||||||||||||
Total consideration of acquisitions paid in cash | $ 25,000 | |||||||||||||||
Number of Physicians Employed | item | 27 | |||||||||||||||
Number of mid-level providers | item | 5 | |||||||||||||||
Tax deductible goodwill | $ 0 | |||||||||||||||
MetroCare | ||||||||||||||||
Acquisitions | ||||||||||||||||
Total consideration | $ 5,000 | |||||||||||||||
Tax deductible goodwill | $ 1,000 | |||||||||||||||
SEA, VISTA, EMA and Rural/ Metro | ||||||||||||||||
Allocation of the purchase price, which is subject to adjustment based upon the completion of purchase price allocations | ||||||||||||||||
Net revenue | $ 261,200 | 533,700 | ||||||||||||||
Phoenix Physicians | ||||||||||||||||
Unaudited pro forma operating results | ||||||||||||||||
Net revenue | 1,505,447 | 2,960,053 | ||||||||||||||
Net income | $ 47,344 | $ 78,860 | ||||||||||||||
Other 2015 Acquisition | ||||||||||||||||
Allocation of the purchase price, which is subject to adjustment based upon the completion of purchase price allocations | ||||||||||||||||
Net current assets | 6,800 | |||||||||||||||
Acquired intangible assets | 53,100 | |||||||||||||||
Goodwill | 23,700 | |||||||||||||||
Long-term deferred tax liabilities, net | $ (11,000) |
Insurance Collateral - Summary
Insurance Collateral - Summary (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Insurance collateral | ||
Available-for-sale securities | $ 28,829 | $ 23,192 |
Insurance receivable | 1,475 | 644 |
Cash deposits and other | 38,485 | 54,078 |
Total insurance collateral | 68,789 | 77,914 |
Amortized cost basis and aggregate fair value of the Company's available-for-sale securities | ||
Available-for-sale Securities, Amortized Cost Basis, Total | 29,204 | 24,047 |
Gross Unrealized Gains | 347 | 43 |
Gross Unrealized Losses | (722) | (898) |
Fair Value | 28,829 | 23,192 |
Other long-term assets | ||
Insurance collateral | ||
Insurance collateral | 10,000 | 9,100 |
Corporate bonds / Fixed income | ||
Insurance collateral | ||
Available-for-sale securities | 16,609 | 13,096 |
Amortized cost basis and aggregate fair value of the Company's available-for-sale securities | ||
Available-for-sale Securities, Amortized Cost Basis, Total | 16,325 | 13,073 |
Gross Unrealized Gains | 284 | 43 |
Gross Unrealized Losses | (20) | |
Fair Value | 16,609 | 13,096 |
Equity securities | ||
Insurance collateral | ||
Available-for-sale securities | 12,220 | 10,096 |
Amortized cost basis and aggregate fair value of the Company's available-for-sale securities | ||
Available-for-sale Securities, Amortized Cost Basis, Total | 12,879 | 10,974 |
Gross Unrealized Gains | 63 | |
Gross Unrealized Losses | (722) | (878) |
Fair Value | 12,220 | $ 10,096 |
U.S. Treasuries and Corporate bonds / Fixed income securities | ||
Contractual maturities of available-for-sale securities | ||
Within one year | 4,400 | |
Longer than one year through five years | $ 12,200 |
Insurance Collateral - Cost and
Insurance Collateral - Cost and Fair Value (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Insurance collateral | |||||
Securities available-for-sale, Fair Value, Total | $ 10,302 | $ 10,302 | $ 16,449 | ||
Securities available-for-sale, Unrealized Loss, Total | (722) | (722) | (898) | ||
Realized net losses on the sale and maturities of available-for-sale securities | (55) | $ (34) | (40) | $ (34) | |
Corporate bonds / Fixed income | |||||
Insurance collateral | |||||
Securities available-for-sale, Less than 12 months, Fair Value | 6,103 | ||||
Securities available-for-sale, 12 months or more, Fair Value | 250 | ||||
Securities available-for-sale, Less than 12 months, Unrealized Loss | (19) | ||||
Securities available-for-sale, 12 months or more, Unrealized Loss | (1) | ||||
Equity securities | |||||
Insurance collateral | |||||
Securities available-for-sale, Less than 12 months, Fair Value | 2,702 | 2,702 | |||
Securities available-for-sale, 12 months or more, Fair Value | 7,600 | 7,600 | 10,096 | ||
Securities available-for-sale, Less than 12 months, Unrealized Loss | (88) | (88) | |||
Securities available-for-sale, 12 months or more, Unrealized Loss | $ (634) | $ (634) | $ (878) |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Accrued Liabilities | ||
Accrued wages and benefits | $ 310,322 | $ 285,660 |
Current portion of self-insurance reserves | 110,333 | 103,922 |
Current portion of compliance and legal | 39,402 | 34,021 |
Accrued incentive compensation | 30,884 | 33,090 |
Accrued income taxes | 6,140 | 17,719 |
Accrued medical claim liabilities | 24,369 | 6,115 |
Deferred revenue | 27,976 | 27,461 |
Other | 123,296 | 104,457 |
Total accrued liabilities | $ 672,722 | $ 612,445 |
Debt and Capital Lease Obliga45
Debt and Capital Lease Obligations - Summary (Details) - USD ($) $ in Thousands | Jun. 15, 2016 | Jun. 30, 2016 | Dec. 31, 2015 |
Long-Term Debt | |||
Total debt and capital lease obligations | $ 3,123,832 | $ 3,029,725 | |
Less current portion | (24,937) | (24,550) | |
Debt issuance costs on senior unsecured notes, senior secured term loan and ABL Facility | (30,249) | (34,619) | |
Long-term debt | 3,057,811 | 2,958,481 | |
Outstanding letters of credit | 134,800 | 140,800 | |
Senior Unsecured Notes due 2022 | |||
Long-Term Debt | |||
Total debt and capital lease obligations | 750,000 | 750,000 | |
Term Loan Facility | |||
Long-Term Debt | |||
Total debt and capital lease obligations | 2,264,518 | 2,276,204 | |
Discount on debt | $ (10,835) | $ (12,075) | |
Interest rate, minimum (as a percent) | 4.25% | 4.25% | |
Interest rate, maximum (as a percent) | 4.50% | 4.50% | |
ABL Facility | |||
Long-Term Debt | |||
Total debt and capital lease obligations | $ 105,000 | ||
Outstanding letters of credit | 134,800 | ||
Maximum available borrowing capacity | 310,200 | ||
Notes due at various dates from 2016 to 2022 | |||
Long-Term Debt | |||
Total debt and capital lease obligations | $ 407 | $ 432 | |
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 2016 to 2018 | |||
Long-Term Debt | |||
Total debt and capital lease obligations | $ 3,907 | $ 3,089 | |
New Term Loan Facility | Debt Commitment Letter | |||
Long-Term Debt | |||
Maximum available borrowing capacity | $ 3,040,000 | ||
Maximum borrowing capacity | $ 5,300,000 | ||
Debt term | 7 years | ||
New ABL Facility | Debt Commitment Letter | |||
Long-Term Debt | |||
Maximum borrowing capacity | $ 1,000,000 | ||
Debt term | 5 years |
Derivative Instruments and He46
Derivative Instruments and Hedging Activities (Details) - Fuel hedge item in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016USD ($)item | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)itemagreement$ / gal | Jun. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Derivative Instruments and Hedging Activities | |||||
Number of master agreements | agreement | 1 | ||||
Total gallons of diesel fuel | item | 1.2 | 1.2 | |||
Gallons of diesel fuel as a percentage of total estimated annual usage | 18.00% | 18.00% | |||
Fair value of derivative asset | $ 1.3 | $ 1.3 | $ 2.8 | ||
Period over which deferred gain (loss) is expected to be reclassified from accumulated comprehensive income | 6 months | ||||
Amount of deferred gain (loss) expected to be reclassified from accumulated comprehensive income | $ 1.3 | ||||
Net payments to the counterparty | $ 0.7 | $ 0.2 | $ 1.5 | $ 0.4 | |
Minimum | |||||
Derivative Instruments and Hedging Activities | |||||
Diesel fuel price (in dollars per gallon) | $ / gal | 3.16 | ||||
Maximum | |||||
Derivative Instruments and Hedging Activities | |||||
Diesel fuel price (in dollars per gallon) | $ / gal | 3.58 |
Changes in Accumulated Other 47
Changes in Accumulated Other Comprehensive Income (Loss) by Component - Changes in AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Changes in the company's AOCI by component, after tax | |||||
Balance at the beginning of the period | $ (1,649) | $ (1,856) | $ (1,856) | ||
Other comprehensive income (loss) before reclassifications | (432) | (1,505) | |||
Amounts reclassified from accumulated other comprehensive income (loss) | 934 | 1,712 | |||
Total other comprehensive income (loss), net of tax | $ 1,967 | $ 530 | 502 | 667 | 207 |
Balance at the end of the period | (1,147) | (1,147) | (1,649) | ||
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 | (510) | (24) | (24) | ||
Other comprehensive income (loss) before reclassifications | 141 | (473) | |||
Amounts reclassified from accumulated other comprehensive income (loss) | 25 | (13) | |||
Total other comprehensive income (loss), net of tax | 166 | (486) | |||
Balance at the end of the period | (344) | (344) | (510) | ||
Other | |||||
Changes in the company's AOCI by component, after tax | |||||
Balance at the beginning of the period | 601 | ||||
Other comprehensive income (loss) before reclassifications | (601) | 601 | |||
Total other comprehensive income (loss), net of tax | (601) | 601 | |||
Balance at the end of the period | 601 | ||||
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 | (1,740) | (897) | (897) | ||
Other comprehensive income (loss) before reclassifications | 28 | (1,627) | |||
Amounts reclassified from accumulated other comprehensive income (loss) | 909 | 784 | |||
Total other comprehensive income (loss), net of tax | 937 | (843) | |||
Balance at the end of the period | $ (803) | $ (803) | (1,740) | ||
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) | (935) | |||
Other comprehensive income (loss) before reclassifications | (6) | ||||
Amounts reclassified from accumulated other comprehensive income (loss) | 941 | ||||
Total other comprehensive income (loss), net of tax | $ 935 |
Changes in Accumulated Other 48
Changes in Accumulated Other Comprehensive Income (Loss) by Component - Reclassifications (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Amounts Reclassified from Accumulated Other Comprehensive Income | ||||
Operating expenses | $ (263,181) | $ (156,129) | $ (516,396) | $ (307,855) |
Interest expense, net | (39,568) | (28,094) | (78,451) | (54,781) |
Realized gains (losses) on investments | (55) | (34) | (40) | (34) |
Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary | 48,531 | 86,315 | 98,257 | 142,689 |
Tax benefit (expense) | (18,162) | (32,698) | (37,554) | (55,214) |
Net income (loss) attributable to Envision Healthcare Holdings, Inc. | 28,432 | 52,416 | 55,282 | 85,791 |
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 | (662) | (716) | (1,454) | (1,408) |
Tax benefit (expense) | 248 | 268 | 545 | 528 |
Net income (loss) attributable to Envision Healthcare Holdings, Inc. | (414) | (448) | (909) | (880) |
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 | (662) | (219) | (1,454) | (415) |
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 | (497) | (993) | ||
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 | (55) | (34) | (40) | (34) |
Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary | (55) | (34) | (40) | (34) |
Tax benefit (expense) | 21 | 13 | 15 | 13 |
Net income (loss) attributable to Envision Healthcare Holdings, Inc. | $ (34) | $ (21) | $ (25) | $ (21) |
Retirement Plans and Employee49
Retirement Plans and Employee Benefits - Change in Plan Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2016 | Jun. 30, 2016 | |
Defined Benefit Pension Plan | ||
Net curtailment gain | $ 1,146 | |
Gains from decrease in the projected benefit obligation | 2,200 | |
Loss form the elimination of accumulated net actuarial loss within other comprehensive loss (income) | $ 1,100 | |
Change in plan assets: | ||
Employer contributions | $ 0 | |
Pension Plan | ||
Defined Benefit Pension Plan | ||
Requisite service period for eligibility in plan | 1 year | |
Vesting period | 5 years | |
Net curtailment gain | 1,146 | |
Change in plan assets: | ||
Fair value of plan assets, Beginning balance | $ 18,382 | |
Actual return on plan assets | 365 | |
Employer contributions | 700 | |
Benefits paid | (100) | |
Fair value of plan assets, Ending balance | $ 19,347 | $ 19,347 |
Retirement Plans and Employee50
Retirement Plans and Employee Benefits - Fair Value of Plan Assets (Details) - Pension Plan - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Dec. 31, 2015 | |
Defined Benefit Pension Plan | ||
Total plan assets | $ 19,347 | $ 18,382 |
Equity securities | ||
Defined Benefit Pension Plan | ||
Total plan assets | 11,029 | 10,627 |
Debt securities | ||
Defined Benefit Pension Plan | ||
Total plan assets | 6,654 | 6,239 |
Real estate | ||
Defined Benefit Pension Plan | ||
Total plan assets | 1,664 | 1,516 |
Level 1 | ||
Defined Benefit Pension Plan | ||
Total plan assets | 12,910 | 12,312 |
Level 1 | Equity securities | ||
Defined Benefit Pension Plan | ||
Total plan assets | 10,730 | 10,350 |
Level 1 | Debt securities | ||
Defined Benefit Pension Plan | ||
Total plan assets | 1,718 | 1,560 |
Level 1 | Real estate | ||
Defined Benefit Pension Plan | ||
Total plan assets | 462 | 402 |
Level 2 | ||
Defined Benefit Pension Plan | ||
Total plan assets | 5,235 | 4,956 |
Level 2 | Equity securities | ||
Defined Benefit Pension Plan | ||
Total plan assets | 299 | 277 |
Level 2 | Debt securities | ||
Defined Benefit Pension Plan | ||
Total plan assets | 4,936 | 4,679 |
Level 3 | ||
Defined Benefit Pension Plan | ||
Total plan assets | 1,202 | 1,114 |
Level 3 | Real estate | ||
Defined Benefit Pension Plan | ||
Total plan assets | 1,202 | $ 1,114 |
Increase in plan assets as a result of purchases and net unrealized gains | $ 100 |
Retirement Plans and Employee51
Retirement Plans and Employee Benefits - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2016 | Jun. 30, 2016 | |
Net periodic benefit costs | ||
Service cost | $ 1,476 | |
Interest cost | 963 | |
Expected return on plan assets | (652) | |
Curtailment net gain | (1,146) | |
Net periodic benefit cost | 641 | |
Other changes in plan assets and benefit obligations recognized as other comprehensive loss (income) | ||
Net gain | 1,745 | |
Total recognized as net periodic benefit cost and other comprehensive loss (income) | $ 2,386 | |
Pension Plan | ||
Net periodic benefit costs | ||
Service cost | $ 687 | |
Interest cost | 489 | |
Expected return on plan assets | (347) | |
Curtailment net gain | (1,146) | |
Net periodic benefit cost | (317) | |
Other changes in plan assets and benefit obligations recognized as other comprehensive loss (income) | ||
Total recognized as net periodic benefit cost and other comprehensive loss (income) | $ (317) |
Retirement Plans and Employee52
Retirement Plans and Employee Benefits - Other Pension Plans (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Jan. 30, 2015 |
SEA Pension Plan | ||
Other pension plans | ||
Accumulated benefit obligation | $ 10.1 | |
NTEP Pension Plan | ||
Other pension plans | ||
Accumulated benefit obligation | $ 2.8 |
Retirement Plans and Employee53
Retirement Plans and Employee Benefits - Employee Stock Purchase Plan and Provider Stock Purchase Plan (Details) $ in Thousands, shares in Millions | May 01, 2015USD ($)itemshares | Jun. 30, 2016shares | Jun. 30, 2015shares | Jun. 30, 2016shares | Jun. 30, 2015shares |
the ESPP and the PSPP | |||||
Employee Stock Purchase Plan and Provider Stock Purchase Plan | |||||
Maximum fair value of common stock in any offering period | $ | $ 25 | ||||
Purchase price of stock expressed as a percentage of the closing price of the common stock on the last trading day of the offering period | 90.00% | ||||
Stock issued under plans (in shares) | 0 | 0 | |||
the ESPP and the PSPP | Maximum | |||||
Employee Stock Purchase Plan and Provider Stock Purchase Plan | |||||
Stock issued under plans (in shares) | 0.1 | 0.1 | |||
the ESPP | |||||
Employee Stock Purchase Plan and Provider Stock Purchase Plan | |||||
Common stock, shares authorized for issuance | 1.2 | 1.2 | |||
Requisite service period for participation in plan | 60 days | ||||
the PSPP | |||||
Employee Stock Purchase Plan and Provider Stock Purchase Plan | |||||
Common stock, shares authorized for issuance | 1.2 | ||||
Requisite service provider work hours per month for participation in plan | item | 120 | ||||
Requisite service provider hours | item | 240 |
Equity Based Compensation (Deta
Equity Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Feb. 29, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Aug. 31, 2013 | |
Equity based compensation | ||||||
Compensation charges | $ 3.6 | $ 1.6 | $ 5.9 | $ 3 | ||
Total unrecognized compensation cost related to unvested awards | $ 34.2 | $ 34.2 | ||||
Total unrecognized compensation cost related to unvested awards, period of recognition | 1 year 10 months 24 days | |||||
Omnibus Incentive Plan | ||||||
Equity based compensation | ||||||
Number or common shares available for grant (in shares) | 13,903,035 | 13,903,035 | 16,708,289 | |||
Maximum value of shares available for grant in any calendar year per participant under the share-based compensation plan | $ 5 | $ 5 | ||||
Omnibus Incentive Plan | Stock options | ||||||
Equity based compensation | ||||||
Maximum number of shares available for grant in any calendar year per participant (in shares) | 2,500,000 | |||||
Term of awards | 10 years | |||||
Omnibus Incentive Plan | Performance based awards | ||||||
Equity based compensation | ||||||
Maximum number of shares available for grant in any calendar year per participant (in shares) | 1,500,000 | |||||
2016 LTIP | Stock options | ||||||
Equity based compensation | ||||||
Vesting period of awards | 3 years | |||||
Number of awards issued (in shares) | 1,573,288 | |||||
Grant date fair value (in dollars per share) | $ 8.38 | |||||
2016 LTIP | Performance based awards | ||||||
Equity based compensation | ||||||
Vesting period of awards | 3 years | |||||
Number of awards issued (in shares) | 585,587 | |||||
Grant date fair value (in dollars per share) | $ 22.41 | |||||
2016 LTIP | RSUs | ||||||
Equity based compensation | ||||||
Vesting period of awards | 3 years | |||||
Number of awards issued (in shares) | 278,904 | |||||
Grant date fair value (in dollars per share) | $ 21.99 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Jun. 14, 2012USD ($) | May 20, 2011USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Mar. 10, 2010item | Dec. 31, 2015USD ($) | Jan. 31, 2014item |
Commitments and Contingencies | |||||||||
Rental expense | $ 19.4 | $ 13.9 | $ 38.4 | $ 26.7 | |||||
Outstanding letters of credit | 134.8 | 134.8 | $ 140.8 | ||||||
AMR | Predecessor | |||||||||
Commitments and Contingencies | |||||||||
Number of lawsuits purporting to be class actions filed | item | 4 | ||||||||
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 | ||||||||
Rural Metro | |||||||||
Commitments and Contingencies | |||||||||
Term of CIA | 5 years | ||||||||
Settlement amount to resolve the claims | $ 5.5 | ||||||||
Pending Litigation | HMA Lawsuits | |||||||||
Commitments and Contingencies | |||||||||
Reserve | $ 30 | $ 30 | |||||||
Pending Litigation | HMA Lawsuits | EmCare | |||||||||
Commitments and Contingencies | |||||||||
Number of lawsuits, in which the Company is defendant | item | 2 |
Variable Interest Entities (Det
Variable Interest Entities (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Summary of the assets and liabilities which are included in the Company's consolidated financial statements | ||
Current assets | $ 1,719,149 | $ 1,598,427 |
Current liabilities | 754,746 | 705,980 |
Consolidated VIEs, aggregate disclosure | ||
Summary of the assets and liabilities which are included in the Company's consolidated financial statements | ||
Current assets | 298,300 | 255,900 |
Current liabilities | $ 95,200 | $ 77,600 |
Segment Information - Operating
Segment Information - Operating Results (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)item | Jun. 30, 2015USD ($) | |
Segment Information | ||||
Number of separately managed business units | item | 2 | |||
Net revenue | $ 1,641,030 | $ 1,354,258 | $ 3,238,576 | $ 2,598,760 |
Income from operations | 88,786 | 114,320 | 176,295 | 197,583 |
Adjusted EBITDA | 172,002 | 162,761 | 323,590 | 291,627 |
Segment | ||||
Segment Information | ||||
Net revenue | 1,641,030 | 1,354,258 | 3,238,576 | 2,598,760 |
Income from operations | 88,786 | 114,320 | 176,295 | 197,583 |
Segment | Facility-Based Physician Services | ||||
Segment Information | ||||
Net revenue | 1,050,609 | 929,068 | 2,063,457 | 1,754,176 |
Income from operations | 66,313 | 77,931 | 125,294 | 130,106 |
Adjusted EBITDA | 103,842 | 105,203 | 191,170 | 182,298 |
Segment | Healthcare Transportation Services | ||||
Segment Information | ||||
Net revenue | 590,421 | 425,190 | 1,175,119 | 844,584 |
Income from operations | 22,473 | 36,389 | 51,001 | 67,477 |
Adjusted EBITDA | $ 68,160 | $ 57,558 | $ 132,420 | $ 109,329 |
Segment Information - Reconcili
Segment Information - Reconciliation of Net Income (Loss) to Adjusted EBITDA (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Reconciliation of net income (loss) to Adjusted EBITDA | ||||
Net income (loss) | $ 31,872 | $ 53,688 | $ 62,338 | $ 87,618 |
Add-back of non-operating expense (income): | ||||
Interest expense, net | 39,568 | 28,094 | 78,451 | 54,781 |
Income tax expense (benefit) | 18,162 | 32,698 | 37,554 | 55,214 |
Realized (losses) gains on investments | 55 | 34 | 40 | 34 |
Interest income from restricted assets | (103) | (163) | (466) | (293) |
Equity in earnings of unconsolidated subsidiary | (1,503) | (71) | (1,635) | (143) |
Other expense (income), net | 735 | 40 | 13 | 372 |
Income from operations | 88,786 | 114,320 | 176,295 | 197,583 |
Add-back of operating expense (income): | ||||
Depreciation and amortization expense | 59,756 | 44,936 | 117,189 | 84,817 |
Restructuring charges | 7,456 | 7,562 | ||
Net (income) loss attributable to noncontrolling interest | (3,440) | (1,272) | (7,056) | (1,827) |
Interest income from restricted assets | 103 | 163 | 466 | 293 |
Equity-based compensation expense | 5,937 | 3,025 | ||
Adjusted EBITDA | 172,002 | 162,761 | 323,590 | 291,627 |
Segment | ||||
Reconciliation of net income (loss) to Adjusted EBITDA | ||||
Net income (loss) | 31,872 | 53,688 | 62,338 | 87,618 |
Add-back of non-operating expense (income): | ||||
Interest expense, net | 39,568 | 28,094 | 78,451 | 54,781 |
Income tax expense (benefit) | 18,162 | 32,698 | 37,554 | 55,214 |
Realized (losses) gains on investments | 55 | 34 | 40 | 34 |
Interest income from restricted assets | (103) | (163) | (466) | (293) |
Equity in earnings of unconsolidated subsidiary | (1,503) | (71) | (1,635) | (143) |
Other expense (income), net | 735 | 40 | 13 | 372 |
Income from operations | 88,786 | 114,320 | 176,295 | 197,583 |
Add-back of operating expense (income): | ||||
Depreciation and amortization expense | 59,756 | 44,936 | 117,189 | 84,817 |
Restructuring charges | 7,456 | 7,562 | ||
Severance and related costs | 2,750 | 869 | 4,572 | 2,563 |
Net (income) loss attributable to noncontrolling interest | (3,440) | (1,272) | (7,056) | (1,827) |
Interest income from restricted assets | 103 | 163 | 466 | 293 |
Equity-based compensation expense | 3,652 | 1,672 | 5,937 | 3,025 |
Transaction costs | $ 12,939 | $ 2,073 | $ 18,625 | $ 5,173 |
Segment Information - Adjusted
Segment Information - Adjusted EBITDA Reconciliation by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Add-back of operating expense (income): | ||||
Adjusted EBITDA | $ 172,002 | $ 162,761 | $ 323,590 | $ 291,627 |
Depreciation and amortization expense | (59,756) | (44,936) | (117,189) | (84,817) |
Restructuring charges | (7,456) | (7,562) | ||
Net (income) loss attributable to noncontrolling interest | (3,440) | (1,272) | (7,056) | (1,827) |
Interest income from restricted assets | (103) | (163) | (466) | (293) |
Equity-based compensation expense | (5,937) | (3,025) | ||
Income from operations | 88,786 | 114,320 | 176,295 | 197,583 |
Segment | ||||
Add-back of operating expense (income): | ||||
Depreciation and amortization expense | (59,756) | (44,936) | (117,189) | (84,817) |
Restructuring charges | (7,456) | (7,562) | ||
Severance and related costs | (2,750) | (869) | (4,572) | (2,563) |
Net (income) loss attributable to noncontrolling interest | (3,440) | (1,272) | (7,056) | (1,827) |
Interest income from restricted assets | (103) | (163) | (466) | (293) |
Equity-based compensation expense | (3,652) | (1,672) | (5,937) | (3,025) |
Transaction costs | (12,939) | (2,073) | (18,625) | (5,173) |
Income from operations | 88,786 | 114,320 | 176,295 | 197,583 |
Facility-Based Physician Services | Segment | ||||
Add-back of operating expense (income): | ||||
Adjusted EBITDA | 103,842 | 105,203 | 191,170 | 182,298 |
Depreciation and amortization expense | (27,656) | (25,558) | (54,647) | (46,087) |
Restructuring charges | (7,456) | (7,562) | ||
Severance and related costs | (1,684) | (808) | (2,287) | (2,032) |
Net (income) loss attributable to noncontrolling interest | 3,440 | 1,272 | 7,056 | 1,827 |
Interest income from restricted assets | 8 | (52) | (244) | (71) |
Equity-based compensation expense | (1,939) | (752) | (3,036) | (1,361) |
Transaction costs | (2,242) | (1,374) | (5,156) | (4,468) |
Income from operations | 66,313 | 77,931 | 125,294 | 130,106 |
Healthcare Transportation Services | Segment | ||||
Add-back of operating expense (income): | ||||
Adjusted EBITDA | 68,160 | 57,558 | 132,420 | 109,329 |
Depreciation and amortization expense | (32,100) | (19,378) | (62,542) | (38,730) |
Severance and related costs | (1,066) | (61) | (2,285) | (531) |
Interest income from restricted assets | (111) | (111) | (222) | (222) |
Equity-based compensation expense | (1,713) | (920) | (2,901) | (1,664) |
Transaction costs | (10,697) | (699) | (13,469) | (705) |
Income from operations | $ 22,473 | $ 36,389 | $ 51,001 | $ 67,477 |
Consolidating Financial Infor60
Consolidating Financial Information - Balance Sheet (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||||
Cash and cash equivalents | $ 212,745 | $ 141,677 | $ 172,605 | $ 318,895 |
Insurance collateral | 58,826 | 68,849 | ||
Trade and other accounts receivable, net | 1,325,665 | 1,257,021 | ||
Parts and supplies inventory | 34,026 | 34,023 | ||
Prepaids and other current assets | 87,887 | 96,857 | ||
Total current assets | 1,719,149 | 1,598,427 | ||
Property, plant, and equipment, net | 380,183 | 335,869 | ||
Intangible assets, net | 1,063,755 | 1,051,631 | ||
Goodwill | 3,351,277 | 3,271,933 | ||
Other long-term assets | 100,044 | 95,712 | ||
Total assets | 6,614,408 | 6,353,572 | ||
Current liabilities: | ||||
Accounts payable | 57,087 | 68,985 | ||
Accrued liabilities | 672,722 | 612,445 | ||
Current portion of long-term debt and capital lease obligations | 24,937 | 24,550 | ||
Total current liabilities | 754,746 | 705,980 | ||
Long-term debt and capital lease obligations | 3,057,811 | 2,958,481 | ||
Long-term deferred tax liabilities, net | 389,926 | 369,110 | ||
Insurance reserves | 251,600 | 252,650 | ||
Other long-term liabilities | 66,383 | 65,910 | ||
Total liabilities | 4,520,466 | 4,352,131 | ||
Equity: | ||||
Common stock | 1,872 | 1,869 | ||
Preferred stock | ||||
Additional paid-in capital | 1,686,302 | 1,677,578 | ||
Retained earnings | 344,023 | 288,741 | ||
Accumulated other comprehensive income (loss) | (1,147) | (1,649) | (1,856) | |
Total Envision Healthcare Holdings, Inc. equity | 2,031,050 | 1,966,539 | ||
Noncontrolling interest | 62,892 | 34,902 | ||
Total equity | 2,093,942 | 2,001,441 | ||
Total liabilities and equity | 6,614,408 | 6,353,572 | ||
Consolidating Adjustments | ||||
Current assets: | ||||
Prepaids and other current assets | (3,650) | |||
Total current assets | (3,650) | |||
Other long-term assets | (105) | (103) | ||
Investment in wholly owned subsidiary | (2,030,940) | (1,963,780) | ||
Total assets | (2,031,045) | (1,967,533) | ||
Current liabilities: | ||||
Accrued liabilities | (3,650) | |||
Total current liabilities | (3,650) | |||
Long-term deferred tax liabilities, net | (105) | (103) | ||
Total liabilities | (105) | (3,753) | ||
Equity: | ||||
Additional paid-in capital | (1,618,328) | (1,606,975) | ||
Retained earnings | (413,759) | (358,454) | ||
Accumulated other comprehensive income (loss) | 1,147 | 1,649 | ||
Total Envision Healthcare Holdings, Inc. equity | (2,030,940) | (1,963,780) | ||
Total equity | (2,030,940) | (1,963,780) | ||
Total liabilities and equity | (2,031,045) | (1,967,533) | ||
EVHC (excluding Corporation) | ||||
Current assets: | ||||
Cash and cash equivalents | 5 | 5 | 5 | 5 |
EVHC (excluding Corporation) | Reportable legal entity | ||||
Current assets: | ||||
Cash and cash equivalents | 5 | 5 | ||
Prepaids and other current assets | 3,650 | |||
Total current assets | 5 | 3,655 | ||
Other long-term assets | 105 | 103 | ||
Investment in wholly owned subsidiary | 2,030,940 | 1,963,780 | ||
Total assets | 2,031,050 | 1,967,538 | ||
Current liabilities: | ||||
Accounts payable | 999 | |||
Total current liabilities | 999 | |||
Total liabilities | 999 | |||
Equity: | ||||
Common stock | 1,872 | 1,869 | ||
Additional paid-in capital | 1,686,302 | 1,677,578 | ||
Retained earnings | 344,023 | 288,741 | ||
Accumulated other comprehensive income (loss) | (1,147) | (1,649) | ||
Total Envision Healthcare Holdings, Inc. equity | 2,031,050 | 1,966,539 | ||
Total equity | 2,031,050 | 1,966,539 | ||
Total liabilities and equity | 2,031,050 | 1,967,538 | ||
Corporation and Subsidiaries | ||||
Current assets: | ||||
Cash and cash equivalents | 212,740 | 141,672 | $ 172,600 | $ 318,890 |
Corporation and Subsidiaries | Reportable legal entity | ||||
Current assets: | ||||
Cash and cash equivalents | 212,740 | 141,672 | ||
Insurance collateral | 58,826 | 68,849 | ||
Trade and other accounts receivable, net | 1,325,665 | 1,257,021 | ||
Parts and supplies inventory | 34,026 | 34,023 | ||
Prepaids and other current assets | 87,887 | 96,857 | ||
Total current assets | 1,719,144 | 1,598,422 | ||
Property, plant, and equipment, net | 380,183 | 335,869 | ||
Intangible assets, net | 1,063,755 | 1,051,631 | ||
Goodwill | 3,351,277 | 3,271,933 | ||
Other long-term assets | 100,044 | 95,712 | ||
Total assets | 6,614,403 | 6,353,567 | ||
Current liabilities: | ||||
Accounts payable | 57,087 | 67,986 | ||
Accrued liabilities | 672,722 | 616,095 | ||
Current portion of long-term debt and capital lease obligations | 24,937 | 24,550 | ||
Total current liabilities | 754,746 | 708,631 | ||
Long-term debt and capital lease obligations | 3,057,811 | 2,958,481 | ||
Long-term deferred tax liabilities, net | 390,031 | 369,213 | ||
Insurance reserves | 251,600 | 252,650 | ||
Other long-term liabilities | 66,383 | 65,910 | ||
Total liabilities | 4,520,571 | 4,354,885 | ||
Equity: | ||||
Additional paid-in capital | 1,618,328 | 1,606,975 | ||
Retained earnings | 413,759 | 358,454 | ||
Accumulated other comprehensive income (loss) | (1,147) | (1,649) | ||
Total Envision Healthcare Holdings, Inc. equity | 2,030,940 | 1,963,780 | ||
Noncontrolling interest | 62,892 | 34,902 | ||
Total equity | 2,093,832 | 1,998,682 | ||
Total liabilities and equity | $ 6,614,403 | $ 6,353,567 |
Consolidating Financial Infor61
Consolidating Financial Information - Income Statement (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Condensed Consolidating Statements of Operations | ||||
Net revenue | $ 1,641,030 | $ 1,354,258 | $ 3,238,576 | $ 2,598,760 |
Compensation and benefits | 1,144,804 | 969,458 | 2,268,677 | 1,877,115 |
Operating expenses | 263,181 | 156,129 | 516,396 | 307,855 |
Insurance expense | 35,454 | 38,166 | 72,874 | 73,692 |
Selling, general and administrative expenses | 41,593 | 31,249 | 79,583 | 57,698 |
Depreciation and amortization expense | 59,756 | 44,936 | 117,189 | 84,817 |
Restructuring charges | 7,456 | 7,562 | ||
Income from operations | 88,786 | 114,320 | 176,295 | 197,583 |
Interest income from restricted assets | 103 | 163 | 466 | 293 |
Interest expense, net | (39,568) | (28,094) | (78,451) | (54,781) |
Realized gains (losses) on investments | (55) | (34) | (40) | (34) |
Other income (expense), net | (735) | (40) | (13) | (372) |
Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary | 48,531 | 86,315 | 98,257 | 142,689 |
Income tax benefit (expense) | (18,162) | (32,698) | (37,554) | (55,214) |
Income (loss) before equity in earnings of unconsolidated subsidiary | 30,369 | 53,617 | 60,703 | 87,475 |
Equity in earnings of unconsolidated subsidiary | 1,503 | 71 | 1,635 | 143 |
Net income (loss) | 31,872 | 53,688 | 62,338 | 87,618 |
Less: Net (income) loss attributable to noncontrolling interest | (3,440) | (1,272) | (7,056) | (1,827) |
Net income (loss) attributable to Envision Healthcare Holdings, Inc. | 28,432 | 52,416 | 55,282 | 85,791 |
Consolidating Adjustments | ||||
Condensed Consolidating Statements of Operations | ||||
Equity in earnings of unconsolidated subsidiary | (28,894) | (52,441) | (55,244) | (86,019) |
Net income (loss) | (28,894) | (52,441) | (55,244) | (86,019) |
Net income (loss) attributable to Envision Healthcare Holdings, Inc. | (28,894) | (52,441) | (55,244) | (86,019) |
EVHC (excluding Corporation) | Reportable legal entity | ||||
Condensed Consolidating Statements of Operations | ||||
Other income (expense), net | (755) | (40) | 24 | (372) |
Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary | (755) | (40) | 24 | (372) |
Income tax benefit (expense) | 293 | 15 | 14 | 144 |
Income (loss) before equity in earnings of unconsolidated subsidiary | (462) | (25) | 38 | (228) |
Equity in earnings of unconsolidated subsidiary | 28,894 | 52,441 | 55,244 | 86,019 |
Net income (loss) | 28,432 | 52,416 | 55,282 | 85,791 |
Net income (loss) attributable to Envision Healthcare Holdings, Inc. | 28,432 | 52,416 | 55,282 | 85,791 |
Corporation and Subsidiaries | Reportable legal entity | ||||
Condensed Consolidating Statements of Operations | ||||
Net revenue | 1,641,030 | 1,354,258 | 3,238,576 | 2,598,760 |
Compensation and benefits | 1,144,804 | 969,458 | 2,268,677 | 1,877,115 |
Operating expenses | 263,181 | 156,129 | 516,396 | 307,855 |
Insurance expense | 35,454 | 38,166 | 72,874 | 73,692 |
Selling, general and administrative expenses | 41,593 | 31,249 | 79,583 | 57,698 |
Depreciation and amortization expense | 59,756 | 44,936 | 117,189 | 84,817 |
Restructuring charges | 7,456 | 7,562 | ||
Income from operations | 88,786 | 114,320 | 176,295 | 197,583 |
Interest income from restricted assets | 103 | 163 | 466 | 293 |
Interest expense, net | (39,568) | (28,094) | (78,451) | (54,781) |
Realized gains (losses) on investments | (55) | (34) | (40) | (34) |
Other income (expense), net | 20 | (37) | ||
Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary | 49,286 | 86,355 | 98,233 | 143,061 |
Income tax benefit (expense) | (18,455) | (32,713) | (37,568) | (55,358) |
Income (loss) before equity in earnings of unconsolidated subsidiary | 30,831 | 53,642 | 60,665 | 87,703 |
Equity in earnings of unconsolidated subsidiary | 1,503 | 71 | 1,635 | 143 |
Net income (loss) | 32,334 | 53,713 | 62,300 | 87,846 |
Less: Net (income) loss attributable to noncontrolling interest | (3,440) | (1,272) | (7,056) | (1,827) |
Net income (loss) attributable to Envision Healthcare Holdings, Inc. | $ 28,894 | $ 52,441 | $ 55,244 | $ 86,019 |
Consolidating Financial Infor62
Consolidating Financial Information - Cash Flow Statement (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash Flows from Operating Activities | ||
Net cash provided by (used in) operating activities | $ 159,220 | $ 160,922 |
Cash Flows from Investing Activities | ||
Purchases of available-for-sale securities | (6,808) | (2,067) |
Sales and maturities of available-for-sale securities | 1,448 | 9,209 |
Purchase of property, plant and equipment | (90,760) | (43,028) |
Proceeds from sale of property, plant and equipment | 42 | 352 |
Acquisition of businesses, net of cash received | (114,808) | (498,917) |
Net change in insurance collateral | 34,963 | (5,706) |
Other investing activities | 429 | 971 |
Net cash provided by (used in) investing activities | (175,494) | (539,186) |
Cash Flows from Financing Activities | ||
Borrowings under the ABL Facility | 235,000 | 305,000 |
Repayments of the ABL Facility | (130,000) | (100,000) |
Repayments of the Term Loan | (11,686) | (6,686) |
Debt issuance costs | (723) | (27) |
Proceeds from stock options exercised and issuance of shares under employee stock purchase plan and provider stock purchase plan | 1,571 | 9,350 |
Excess tax benefits from equity-based compensation | 1,219 | 24,476 |
Contributions from noncontrolling interest, net | (8,833) | 100 |
Other financing activities | 794 | (239) |
Net cash provided by (used in) financing activities | 87,342 | 231,974 |
Change in cash and cash equivalents | 71,068 | (146,290) |
Cash and cash equivalents, beginning of period | 141,677 | 318,895 |
Cash and cash equivalents, end of period | 212,745 | 172,605 |
EVHC (excluding Corporation) | ||
Cash Flows from Operating Activities | ||
Net cash provided by (used in) operating activities | (1,024) | (231) |
Cash Flows from Financing Activities | ||
Net intercompany borrowings (payments) | 1,024 | 231 |
Net cash provided by (used in) financing activities | 1,024 | 231 |
Cash and cash equivalents, beginning of period | 5 | 5 |
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 | 160,244 | 161,153 |
Cash Flows from Investing Activities | ||
Purchases of available-for-sale securities | (6,808) | (2,067) |
Sales and maturities of available-for-sale securities | 1,448 | 9,209 |
Purchase of property, plant and equipment | (90,760) | (43,028) |
Proceeds from sale of property, plant and equipment | 42 | 352 |
Acquisition of businesses, net of cash received | (114,808) | (498,917) |
Net change in insurance collateral | 34,963 | (5,706) |
Other investing activities | 429 | 971 |
Net cash provided by (used in) investing activities | (175,494) | (539,186) |
Cash Flows from Financing Activities | ||
Borrowings under the ABL Facility | 235,000 | 305,000 |
Repayments of the ABL Facility | (130,000) | (100,000) |
Repayments of the Term Loan | (11,686) | (6,686) |
Debt issuance costs | (723) | (27) |
Proceeds from stock options exercised and issuance of shares under employee stock purchase plan and provider stock purchase plan | 1,571 | 9,350 |
Excess tax benefits from equity-based compensation | 1,219 | 24,476 |
Contributions from noncontrolling interest, net | (8,833) | 100 |
Other financing activities | 794 | (239) |
Net intercompany borrowings (payments) | (1,024) | (231) |
Net cash provided by (used in) financing activities | 86,318 | 231,743 |
Change in cash and cash equivalents | 71,068 | (146,290) |
Cash and cash equivalents, beginning of period | 141,672 | 318,890 |
Cash and cash equivalents, end of period | $ 212,740 | $ 172,600 |