Document And Entity Information
Document And Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Feb. 15, 2016 | Jun. 30, 2015 | |
Entity Registrant Name | Adeptus Health Inc. | ||
Entity Central Index Key | 1,602,367 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 764.7 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Common Class A | |||
Entity Common Stock, Shares Outstanding | 14,266,784 | ||
Common Class B | |||
Entity Common Stock, Shares Outstanding | 6,510,738 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash | $ 16,037 | $ 2,002 |
Restricted cash | 4,795 | |
Accounts receivable, less allowance for doubtful accounts of $28,818 and $13,068, respectively | 65,954 | 37,422 |
Other receivables and current assets | 31,532 | 17,137 |
Medical supplies inventory | 5,167 | 4,287 |
Total current assets | 118,690 | 65,643 |
Property and equipment, net | 70,187 | 93,892 |
Investment in unconsolidated joint venture | 43,104 | 2,100 |
Deposits | 1,163 | 1,772 |
Deferred tax asset | 206,265 | 34,084 |
Intangibles, net | 18,235 | 20,015 |
Goodwill | 61,009 | 61,009 |
Other long-term assets | 6,628 | 4,303 |
Total assets | 525,281 | 282,818 |
Current liabilities | ||
Accounts payable and accrued expenses | 27,521 | 25,420 |
Accrued compensation | 23,197 | 13,521 |
Current maturities of long-term debt | 7,585 | 1,816 |
Current maturities of capital lease obligations | 102 | 81 |
Deferred rent | 858 | 607 |
Total current liabilities | 59,263 | 41,445 |
Long-term debt, less current maturities | 117,241 | 104,982 |
Payable to related parties pursuant to tax receivable agreement | 191,302 | 30,039 |
Capital lease obligations, less current maturities | 3,954 | 4,056 |
Deferred rent | 3,837 | 2,416 |
Total liabilities | $ 375,597 | $ 182,938 |
Commitments and contingencies | ||
Shareholders' Equity | ||
Additional paid-in capital | $ 85,457 | $ 51,238 |
Accumulated other comprehensive loss | (74) | |
Retained earnings (deficit) | 6,323 | (3,351) |
Total shareholders' equity | 91,988 | 48,019 |
Non-controlling interest | 57,696 | 51,861 |
Total equity | 149,684 | 99,880 |
Total liabilities and shareholders' equity | 525,281 | 282,818 |
Common Class A | ||
Shareholders' Equity | ||
Common Stock | 143 | 98 |
Common Class B | ||
Shareholders' Equity | ||
Common Stock | $ 65 | $ 108 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Allowance for doubtful accounts | $ 28,818 | $ 13,068 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common Class A | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 14,257,187 | 9,845,016 |
Common stock, shares outstanding | 14,257,187 | 9,845,016 |
Common Class B | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 6,510,738 | 10,781,153 |
Common stock, shares outstanding | 6,510,738 | 10,781,153 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Revenue | |||
Patient service revenue | $ 420,612 | $ 243,298 | $ 114,960 |
Provision for bad debt | (70,119) | (32,624) | (12,077) |
Net patient service revenue | 350,493 | 210,674 | 102,883 |
Management and contract services revenue | 14,194 | 20 | |
Total net operating revenue | 364,687 | 210,694 | 102,883 |
Equity in earnings of unconsolidated joint ventures | 8,927 | (900) | |
Operating expenses: | |||
Salaries, wages and benefits | 218,114 | 136,498 | 65,244 |
General and administrative | 51,083 | 37,604 | 17,436 |
Other operating expenses | 51,374 | 27,287 | 11,392 |
Depreciation and amortization | 17,875 | 15,037 | 7,920 |
Total operating expenses | 338,446 | 216,426 | 101,992 |
Income (loss) from operations | 35,168 | $ (6,632) | $ 891 |
Other (expense) income: | |||
Gain on contribution to joint venture | 24,250 | ||
Interest expense | (12,759) | $ (11,966) | $ (2,827) |
Realized (loss) gain on derivative | (92) | 112 | |
Loss on extinguishment of debt | (5,011) | (440) | |
Total other (expense) income | 6,388 | (11,966) | (3,155) |
Income (loss) before provision (benefit) for income taxes | 41,556 | (18,598) | (2,264) |
Provision (benefit) for income taxes | 8,733 | (1,326) | 720 |
Net income (loss) | 32,823 | (17,272) | (2,984) |
Less: Net income (loss) attributable to non-controlling interest | 19,606 | (13,921) | $ (2,984) |
Net income (loss) attributable to Adeptus Health Inc. | $ 13,217 | $ (3,351) | |
Common Class A | |||
Net income (loss) per share of Class A common stock: | |||
Basic (in dollars per share) | $ 1.09 | $ (0.34) | |
Diluted (in dollars per share) | $ 1.09 | $ (0.34) | |
Weighted average shares of Class A common stock: | |||
Basic (in shares) | 12,103,383 | 9,845,016 | |
Diluted (in shares) | 12,103,383 | 9,845,016 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Condensed Consolidated Statement of Comprehensive Income | |||
Net income (loss) | $ 13,217 | $ (3,351) | |
Net income (loss) attributable to the non-controlling interest | 19,606 | (13,921) | $ (2,984) |
Net income | 32,823 | (17,272) | (2,984) |
Other comprehensive loss, net of tax: | |||
Unrealized loss on interest rate contract-parent | 74 | (74) | |
Unrealized loss on interest rate contract | 74 | (74) | |
Comprehensive income (loss) | 13,291 | (3,425) | |
Comprehensive income (loss) - noncontrolling interest | 19,606 | (13,921) | (2,984) |
Comprehensive income (loss) including portion attributable to noncontrolling interest | $ 32,897 | $ (17,346) | $ (2,984) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY/OWNERS' EQUITY - USD ($) | Adeptus Health LLC Equity | Common StockCommon Class A | Common StockCommon Class B | Additional Paid In Capital | Accumulated Other Comprehensive Loss | Retained Earnings (Deficit) | Noncontrolling Interest | Total Stockholders Equity Including Noncontrolling Interests | Common Class A | Common Class B | Total |
Balance at Dec. 31, 2012 | $ 82,734,000 | $ 82,734,000 | |||||||||
Stock subscriptions | 83,000 | 83,000 | |||||||||
Stockbased compensation | 586,000 | 586,000 | |||||||||
Distributions to existing owners | (1,768,000) | (1,768,000) | |||||||||
Tax distribution to LLC Unit holders | (33,000) | ||||||||||
Net income | (2,984,000) | (2,984,000) | |||||||||
Balance at Dec. 31, 2013 | 78,651,000 | 78,651,000 | |||||||||
Stockbased compensation | 316,000 | 316,000 | |||||||||
Capital contribution | 167,000 | 167,000 | |||||||||
Distributions to existing owners | (483,000) | (483,000) | |||||||||
Dividends paid to existing owners | 60,000,000 | 60,000,000 | |||||||||
Issuance of Class A common stock (in shares) | 5,321,414 | ||||||||||
Issuance of Class A common stock | $ (311,000) | $ 53,000 | $ 96,483,000 | $ 96,536,000 | 96,225,000 | ||||||
Investment of merged entity into Class A shares | $ 4,474,107 | ||||||||||
Increase In Shares By Investment Of Merged Entity | (3,307,000) | 45,000 | 3,262,000 | 3,307,000 | |||||||
Issuance of Class A shares to directors | 13,639 | ||||||||||
Class A Stock issued to employees for value | $ 1,000 | $ (1,000) | |||||||||
Class A stock issued to employees (in shares) | 35,856 | 39,314 | |||||||||
Issuance of Class B shares in Reorganization and Offering | $ (7,940,000) | $ 107,000 | 7,833,000 | $ 7,940,000 | |||||||
Issuance of Class B shares in Reorganization and Offering - Shares | 10,741,839 | ||||||||||
Impact of non-controlling interest upon reorganization | (58,687,000) | $ 58,687,000 | (58,687,000) | ||||||||
Effects of Tax Receivable Agreement (See Note 12) | 1,992,000 | 1,992,000 | 1,992,000 | ||||||||
Tax distribution to LLC Unit holders | (9,000) | ||||||||||
Adjustment to true up tax effects of merger and reorganization | (343,000) | (343,000) | (343,000) | ||||||||
Stock-based compensation subsequent to IPO | 699,000 | 699,000 | 699,000 | ||||||||
Unrealized loss on interest rate contract | $ (74,000) | (74,000) | (74,000) | ||||||||
Net income | (17,272,000) | ||||||||||
Balance at Dec. 31, 2014 | $ 98,000 | $ 108,000 | 51,238,000 | (74,000) | $ (3,351,000) | 51,861,000 | 48,019,000 | 99,880,000 | |||
Balance at Dec. 31, 2014 | 9,845,016 | 10,781,153 | 9,845,016 | 10,781,153 | |||||||
Issuance of Class A restricted stock (in shares) | 144,330 | ||||||||||
Issuance of Class A restricted stock | $ 2,000 | (2,000) | |||||||||
Issuance of Class A common stock (in shares) | 4,270,415 | ||||||||||
Issuance of Class A common stock | $ 43,000 | (43,000) | |||||||||
Purchase of Class B common stock (in shares) | (4,270,415) | ||||||||||
Purchase of Class B common stock | $ (43,000) | 13,814,000 | (13,771,000) | 13,771,000 | |||||||
Class A restricted stock withheld on vesting (in shares) | (2,574) | ||||||||||
Class A restricted stock withheld on vesting | (238,000) | (238,000) | (238,000) | ||||||||
Stock based compensation | 2,819,000 | 2,819,000 | 2,819,000 | ||||||||
Effects of Tax Receivable Agreement (See Note 12) | 17,869,000 | 17,869,000 | 17,869,000 | ||||||||
Tax distribution to LLC Unit holders | (3,543,000) | (3,543,000) | (3,543,000) | ||||||||
Unrealized loss on interest rate contract | $ 74,000 | 74,000 | 74,000 | ||||||||
Net income | 13,217,000 | 19,606,000 | 13,217,000 | 32,823,000 | |||||||
Balance at Dec. 31, 2015 | $ 143,000 | $ 65,000 | $ 85,457,000 | $ 6,323,000 | $ 57,696,000 | $ 91,988,000 | $ 149,684,000 | ||||
Balance at Dec. 31, 2015 | 14,257,187 | 6,510,738 | 14,257,187 | 6,510,738 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities: | |||
Net income (loss) | $ 32,823 | $ (17,272) | $ (2,984) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||
Loss (gain) from the disposal or impairment of assets | 68 | (42) | 207 |
Realized loss on derivative | 92 | (112) | |
Depreciation and amortization | 17,875 | 15,037 | 7,920 |
Deferred tax benefit | 6,950 | (2,147) | |
Amortization of deferred loan costs | 928 | 891 | 293 |
Write-off of deferred loan costs | 2,931 | 440 | |
Provision for bad debts | 70,119 | $ 32,624 | $ 12,077 |
Gain on contribution to unconsolidated joint venture | (24,250) | ||
Equity in earnings (loss) of unconsolidated joint venture | (8,927) | $ 900 | |
Distribution from unconsolidated joint venture | 4,200 | ||
Stock-based compensation | 2,819 | 1,015 | $ 586 |
Changes in operating assets and liabilities: | |||
Restricted cash | 4,795 | (4,501) | (294) |
Accounts receivable | (98,651) | (54,159) | (18,107) |
Other receivables and current assets | (10,712) | (8,248) | (1,757) |
Medical supplies inventory | (1,720) | (2,793) | (850) |
Other long-term assets | (717) | 63 | (79) |
Accounts payable and accrued expenses | 2,407 | 7,413 | 5,632 |
Accrued compensation | 9,676 | 4,363 | 3,883 |
Deferred rent | 2,375 | 2,158 | 17 |
Net cash provided by (used in) operating activities | 13,081 | (24,698) | 6,872 |
Cash flows from investing activities: | |||
Investment in unconsolidated joint venture | (3,000) | ||
Deposits | 544 | (1,022) | (413) |
Proceeds from sale of property and equipment | 1,535 | 2,003 | 1,814 |
Capital expenditures | (7,421) | (47,429) | (46,048) |
Net cash used in investing activities | (5,342) | (49,448) | (44,647) |
Cash flows from financing activities: | |||
Proceeds from initial public offering, net of underwriters fees and expenses | 360,420 | 96,226 | |
Purchase of limited liability units from LLC Unit holders | (360,420) | ||
Proceeds from long-term borrowings | 184,000 | 99,457 | 102,000 |
Payment of deferred loan costs | (5,484) | (751) | (4,954) |
Payments on borrowings | (168,358) | (70,380) | (50,855) |
Payment of capital lease obligations | (81) | (57) | (5) |
Payment to terminate interest rate swap | (421) | ||
Payments of dividends | (60,000) | ||
Tax distribution to LLC Unit holders | (3,543) | (9) | (33) |
Restricted stock forfeited on vesting to satisfy withholding requirements | (238) | ||
Contribution from original owner | 167 | 83 | |
Net cash provided by financing activities | 6,296 | 64,653 | 45,815 |
Net increase (decrease) in cash and cash equivalents | 14,035 | (9,493) | 8,040 |
Cash, beginning of period | 2,002 | 11,495 | 3,455 |
Cash, end of period | $ 16,037 | $ 2,002 | $ 11,495 |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Dec. 31, 2015 | |
ORGANIZATION | |
Organization | NOTE 1— ORGANIZATION Adeptus Health Inc. (the "Company") was incorporated as a Delaware corporation on March 7, 2014 for the purpose of facilitating an initial public offering of common equity. The Company is a holding company with its sole material asset being a controlling equity interest in Adeptus Health LLC (“Adeptus Health”). As the sole managing member of Adeptus Health LLC, the Company operates and controls all of the business and affairs of Adeptus Health LLC and, through Adeptus Health LLC and its subsidiaries, conducts its business. Prior to the initial public offering, the Company had not engaged in any business or other activities except in connection with its formation and the initial public offering . Adeptus Health is a leading patient-centered healthcare organization expanding access to the highest quality emergency medical care through its network of freestanding emergency rooms and partnerships with premier healthcare providers. In Texas, Adeptus Health or its predecessors began operations in 2002 and owns and operates First Choice Emergency Room. In Colorado, in partnership with University of Colorado Health, Adeptus Health operates UCHealth Emergency Room. Together with Dignity Health, the Company operates Dignity Health Arizona General Hospital and freestanding emergency departments in Arizona. Adeptus Health is the largest network of freestanding emergency rooms in the United States, delivering both major and minor emergency medical services for adult and pediatric patients . Adeptus Health has experienced rapid growth in recent periods, growing from 14 freestanding facilities at the end of 2012 to 81 freestanding facilities and two fully licensed general hospitals as of December 31, 2015. In Texas, the Company’s facilities are currently located in Houston, Dallas/Fort Worth, San Antonio and Austin. In Colorado, facilities are located in Colorado Springs and Denver. In Arizona, Dignity Health Arizona General Hospital, a full service general hospital, along with its freestanding emergency departments are located in the Phoenix market. On June 24, 2014, the Company’s registration statement on Form S-1 (File No. 333-196142) relating to its initial public offering of Class A common stock was declared effective by the Securities and Exchange Commission (“SEC”). The Company sold 4,900,000 shares of Class A common stock in its public offering. An additional 735,000 shares were sold to the public , of which 313,586 shares were sold by a significant stockholder and 421,414 shares were sold by the Company with the proceeds received by the Company used to purchase an equivalent number of LLC Units from such significant stockholder . The Company’s stock began trading on the New York Stock Exchange on June 25, 2014 under the symbol “ADPT,” and the initial public offering closed on June 30, 2014. In connection with the initial public offering, the limited liability company agreement of Adeptus Health LLC was amended and restated to, among other things, modify its capital structure by replacing the different classes of interests previously held by the Adeptus Health LLC owners to a single new class of units called “LLC Units.” In addition, each LLC Unit holder received on a one-for-one basis one share of the Company’s Class B common stock, which entitles the holder to vote on all matters of Adeptus Health Inc. but has no economic rights. One of the then-existing owners converted a portion of its interest into 4,895,521 shares of the Company’s Class A common stock, which is referred to as the merged entity. The Company and its then-existing owners also entered into an exchange agreement under which they have the right to exchange their LLC Units and shares of Class B common stock for shares of Class A common stock on a one -for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. These transactions are collectively referred to as the “Reorganization Transactions.” Prior to the initial public offering, the Company borrowed under the Senior Secured Credit Facility (See Note 8 Debt for further information) to fund a dividend of $60.0 million to the then-e xisting o wners which was paid in connection with the consummation of the initial public offering. The Company used proceeds from the initial public offering to repay indebtedness under the Senior Secured Credit Facility from this borrowing. In May 2015, an existing stockholder of ADPT (the “Selling Stockholder”) and the Company sold 750,329 and 1,349,671 shares, respectively, of the Company’s Class A common stock in an underwritten public offering at a price of $63.75 per share. In connection with the offering, the underwriters exercised in full their option to purchase an additional 222,625 from the Company and 92,375 from the Selling Stockholder. As a result, the total offering size was 2,415,000 shares of common stock. The Company used the net proceeds from its issuance of and sale of Class A common stock, par value $0.01 per share, to purchase, for cash, 1,572,296 limited liability company units of Adeptus Health LLC, its direct subsidiary, from certain of the unit holders of Adeptus Health LLC, including certain of its directors and executive officers. The Company did not receive any of the proceeds from the sale of shares of common stock of the Company by the Selling Stockholder. In July 2015, the Selling Stockholder and the Company sold 1,079,649 and 2,320,351 shares, respectively, of the Company’s Class A common stock in an underwritten public offering at a price of $105.00 per share. In connection with the offering, the underwriters exercised in full their option to purchase an additional 324,926 from the Company and 185,074 from the Selling Stockholder. As a result, the total offering size was 3,910,000 shares of common stock. The Company used the net proceeds from its issuance of and sale of Class A common stock, par value $0.01 per share, to purchase, for cash, 2,645,277 limited liability company units of Adeptus Health LLC, its direct subsidiary, from certain of the unit holders of Adeptus Health LLC, including certain of its directors and executive officers. The Company did not receive any of the proceeds from the sale of shares of common stock of the Company by the Selling Stockholder . The Company consolidates the financial results of Adeptus Health LLC and its subsidiaries and records non-controlling interest for the economic interest in Adeptus Health LLC held by the non-controlling unit holders. The non-controlling interest ownership percentage as of December 31, 2015 was 31.5% . |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated balance sheets as of December 31, 2015 and 2014 and the accompanying consolidated statements of operations and cash flows for each of the three years ended December 31, 2015, 2014 and 2013 represent our financial position, results of operations and cash flows as of and for the years then ended. The consolidated financial statements include the accounts of Adeptus Health Inc. and its wholly owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. Accounting Policies and Use of Estimates The preparation of financial statements in conformity with GAAP requires our management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant accounting policies and estimates include: the useful lives of fixed assets, revenue recognition, allowances for doubtful accounts, leases, reserves for employee health benefit obligations, stock-based compensation, and other contingencies. Actual results could differ from these estimates. Segment and Geographic Information The Company’s chief operating decision maker is our Chief Executive Officer, who reviews financial information presented on a company-wide basis. As a result, the Company determined that it has a single reporting segment and operating unit structure. All of the Company’s revenue for the years ended December 31, 2015, 2014 and 2013 was earned in the United States. Cash and Cash Equivalents and Concentrations of Risk The Company includes all securities with a maturity date of six months or less at date of purchase as cash equivalents. The Company currently has no cash equivalents. The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and does not believe it is exposed to any significant risk related to uninsured bank deposits. Restricted Cash The Company maintained a restricted cash balance through September 2015 to cover letters of credit required by the Master Funding and Development Agreements, as amended, for the first $250.0 million in facility fundings. See Note 11 ( Commitments and Contingencies) for more information. Each letter of credit is issued in an amount equal to approximately 50% of one year's base rent relating to completed facilities. As of December 31, 2014, restri cted cash was $4.8 million. Beginning in October 2015, restricted cash is no longer required as the Company entered into a New Facility with Bank of America, N.A., which includes a revolving credit facility with a sub-limit of $15.0 million for letters of credit. See Note 8 ( Debt ) for more information. Patient Revenue and Accounts Receivable Revenues consist primarily of net patient service revenues, which are based on the facilities’ established billing rates less allowances and discounts, principally for patients covered under contractual programs with private insurance companies. Revenue is recognized when services are rendered to patients. Charges for all services provided to insured patients are initially billed and processed by the patients' insurance provider. The Company has agreements with insurance companies that provide for payments to the Company at amounts different from its established rates or as determined by the patient's out of network benefits. Differences between established rates and those set by insurance programs, as well as charity care, employee and prompt pay adjustments, are recorded as adjustments directly to patient service revenue. Amounts not covered by the insurance companies are then billed to the patients. Estimated uncollectible amounts from insured patients are recorded as bad debt expense in the period the services are provided. Collection of payment for services provided to patients without insurance coverage is done at the time of service. With respect to management and contract service revenues, amounts are recognized as services are provided. The Company is party to two management services agreements under which it provides management services to a hospital facility and freestanding emergency room facilities. As compensation for these services, the Company charges the managed entities a management fee based on a fixed percentage of each entity’s net revenue. The Company also holds minority ownership in these entities . Net patient service revenue by major payor source for the years ended December 31, 2015, 2014 and 2013 were as follows (in thousands) : Year ended December 31, 2015 2014 2013 Commercial $ $ $ Self-pay Other — Medicaid — Medicare — Patient Service Revenue Provision for bad debt Net Patient Service Revenue $ $ $ The Company receives payments from third-party payors that have contracts with the Company or the Company uses MultiPlan arrangements whereby the Company accesses third-party payors at in-network rates. Four major third-party payors accounted for 84.6% , 84.8% and 86.7% of patient service revenue for the years ended December 31, 2015, 2014 and 2013, respectively. These same payors also accounted for 65.9% and 80.0% of accounts receivable as of December 31, 2015 and 2014, respectively. The following table sets forth the percentage of patient service revenue earned by major payor source for the years ended December 31, 2015, 2014 and 2013: Year ended December 31, 2015 2014 2013 Payor: United HealthCare % % % Blue Cross Blue Shield Aetna Cigna Other Medicaid/Medicare — — % % % Accounts receivable are reduced by an allowance for doubtful accounts. In establishing the Company's allowance for doubtful accounts, management considers historical collection experience, the aging of the account, the payor classification, and patient payment patterns. Amounts due directly from patients represent the Company's highest collectability risk. There were not any significant changes in the estimates or assumptions underlying the calculation of the allowance for doubtful accounts for the years ended December 31, 2015 and 2014. The Company treats anyone that is emergent. Total charity care was approximately 7.8% , 8.6% and 7.0% of patient service revenue for the years ended December 31, 2015, 2014 and 2013, respectively. Advertising Costs Advertising costs are expensed as incurred. Advertising expense for the years ended December 31, 2015, 2014 and 2013, was approximately $5.7 million, $5.4 million and $2.1 million, respectively, and is included as a component of general and administrative expenses within the consolidated statements of operations. Medical Supplies Inventory Inventory is carried at the lower of cost or market using the first-in, first-out method and consists of a standard set of medical supplies held in stock at all facilities. Property and Equipment Property and equipment are stated at cost, less accumulated depreciation and amortization computed using the straight-line method over the estimated useful life of each asset. Leasehold improvements are amortized over the shorter of the noncancelable lease term or the estimated useful life of the improvements. When assets are retired, the cost and applicable accumulated depreciation are removed from the respective accounts, and the resulting gain or loss is recognized. Expenditures for normal repairs and maintenance are expensed as incurred. Material expenditures that increase the life of an asset are capitalized and depreciated over the estimated remaining useful life of the asset. The estimated useful lives of depreciable fixed assets are as follows: Estimated useful life (in years) Computer equipment 3 to 5 Automobiles Office equipment Medical equipment 5 to 7 Leasehold improvement 4 to 10 Buildings 15 to 40 Amortization of assets acquired under capital leases is included as a component of depreciation and amortization expense in the accompanying consolidated statements of operations. Amortization is calculated using the straight-line method over the shorter of the useful lives or the term of the underlying lease agreements. Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount of an asset or group of assets might not be recoverable. The Company does not perform a periodic assessment of assets for impairment in the absence of such information or indicators. Conditions that would indicate a potential impairment include a significant decline in the observable market value of an asset or a significant change in the extent or manner in which an asset is used. The impairment review includes a comparison of future projected cash flows generated by the asset or group of assets with its associated net carrying value. If the net carrying value of the asset or group of assets exceeds expected cash flows (undiscounted and without interest charges), an impairment loss is recognized to the extent the carrying amount of the asset exceeds its fair value. There were no impairments recorded for the years ending December 31, 2015, 2014 or 2013. Goodwill In accordance with the FASB ASC 805, Business Combinations , the purchase method of accounting requires that the excess of purchase price paid over the estimated fair value of identifiable tangible and intangible net assets of acquired businesses be recorded as goodwill. In accordance with the provisions of ASC 350, Intangibles—Goodwill and Other , goodwill is tested for impairment annually, and interim impairment tests are performed whenever an event occurs or circumstances change that indicate an impairment has more likely than not occurred. We have one reporting unit and goodwill is evaluated at that level. We evaluate impairment of goodwill by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than the carrying value. If it is concluded that this is the case, it is necessary to perform a two ‑ step impairment test. The first step involves a comparison of the fair value of a reporting unit with its carrying amount. If the carrying value of the reporting unit exceeds its fair value, the second step involves a comparison of the implied fair value and the carrying amount of the goodwill of that reporting unit to determine the impairment charge, if necessary. We have established October 31 as the date for our annual impairment review. The Company estimates the fair value of its total invested capital using an income and market approach, reduced by interest bearing debt as of the valuation date. These valuations require management to make estimates and assumptions regarding industry economic factors and prospective financial information. There were no goodwill impairment charges recorded for the years ended December 31, 2015, 2014 and 2013. Intangible Assets Intangible assets are recorded at their estimated fair values as of the date of acquisition. Intangible assets consist of trade and domain names and noncompete agreements. In accordance with ASC 350, Intangibles—Goodwill and Other , the Company reviews the intangible assets with indefinite lives, which include trade and domain names, at least annually for impairment, or more often if triggering events exist. Intangible assets with definite lives are reviewed for impairment if an indicator of impairment exists similar to long-lived assets. We evaluate impairment of intangible assets by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the asset is less than the carrying value. If it is concluded that this is the case, it is necessary to perform a two ‑ step impairment test. An impairment loss is recognized if the carrying amount of an intangible asset is not recoverable and its carrying amount exceeds its fair value. There were no impairment charges recorded on intangible assets for the years ended December 31, 2015, 2014 and 2013. Intangible assets with finite useful lives are amortized over their estimated useful life. Fair Value of Financial Instruments The carrying amounts of the Company's financial instruments, including cash, receivables, accounts payable and accrued liabilities approximate their fair value due to their relatively short maturities. At December 31, 2015 and 2014, the carrying value of the Company's long-term debt was based on the current interest rates and approximates its fair value. Derivative Instruments and Hedging Activities The Company recognizes all derivative instruments as either assets or liabilities in the balance sheet at their respective fair values. For derivatives not designated as a hedging instrument, changes in the fair value are recorded in net earnings immediately. For derivatives designated in hedging relationships, changes in the fair value are either offset through earnings against the change in fair value of the hedged item attributable to the risk being hedged or recognized in accumulated other comprehensive income, to the extent the derivative is effective at offsetting the changes in cash flows being hedged until the hedged item affects earnings. For the year ended December 31, 2012 and continuing through October 31, 2013, the Company maintained one derivative instrument that it did not designate as a hedge. As a result, changes in the fair value were recorded in earnings for this period. Beginning in November 2013, the Company only enters into derivative contracts that it intends to designate as a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge). For all hedging relationships, the Company formally documents the hedging relationship and its risk-management objective and strategy for undertaking the hedge, the hedging instrument, the hedged transaction, the nature of the risk being hedged, how the hedging instrument's effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and a description of the method used to measure ineffectiveness. The Company also formally assesses, both at the inception of the hedging relationship and on an ongoing basis, whether the derivatives that are used in hedging relationships are highly effective in offsetting changes in cash flows of hedged transactions. For derivative instruments that are designated and qualify as part of a cash flow hedging relationship, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or years during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. The Company discontinues hedge accounting prospectively when it determines that the derivative is no longer effective in offsetting cash flows attributable to the hedged risk, the derivative expires or is sold, terminated, or exercised or the cash flow hedge is dedesignated because a forecasted transaction is not probable of occurring. In all situations in which hedge accounting is discontinued and the derivative remains outstanding, the Company continues to carry the derivative at its fair value on the balance sheet and recognizes any subsequent changes in its fair value in earnings. When it is probable that a forecasted transaction will not occur, the Company discontinues hedge accounting and recognizes immediately in earnings gains and losses that were accumulated in other comprehensive income related to the hedging relationship. Lease Accounting The Company determines whether to account for its facility leases as operating or capital leases depending on the underlying terms of the lease agreement. This determination of classification is complex and requires significant judgment relating to certain information including the estimated fair value and remaining economic life of the facilities, the Company's cost of funds, minimum lease payments and other lease terms. The lease rates under the Company's lease agreements are subject to certain conditional escalation clauses that are recognized when probable or incurred and are based on changes in the consumer price index or certain operational performance measures. As of December 31, 2015, the Company leased 82 facilities, 81 of which the Company classified as operating leases and one of which the Company classified as a capital lease. Income Taxes We provide for income taxes using the asset and liability method. This approach recognizes the amount of federal, state and local taxes payable or refundable for the current year, as well as deferred tax assets and liabilities for the future tax consequence of events recognized in the consolidated financial statements and income tax returns. Deferred income tax assets and liabilities are adjusted to recognize the effects of changes in tax laws or enacted tax rates. A valuation allowance is required when it is more-likely-than-not that some portion of the deferred tax assets will not be realized. Realization is dependent on generating sufficient future taxable income. We file a consolidated federal income tax return. State income tax returns are filed on a separate, combined or consolidated basis in accordance with relevant state laws and regulations. LPs, LLPs, LLCs and other pass-through entities that we consolidate file separate federal and state income tax returns. We include the allocable portion of each pass-through entity’s income or loss in our federal income tax return. We allocate the remaining income or loss of each pass-through entity to the other partners or members who are responsible for their portion of the taxes. Estimated tax expense (benefit) of approximately $8.7 million , ($1.3) million and $0.7 million are included in the provision for income taxes in the financial statements for the years ended December 31, 2015, 2014 and 2013, respectively. The Company's estimate of the potential outcome of any uncertain tax positions is subject to management's assessment of relevant risks, facts, and circumstances existing at that time. The Company uses a more likely than not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. To the extent that the Company's assessment of such tax position changes, the change in estimate is recorded in the period in which the determination is made. The Company reports tax related interest and penalties as a component of the provision for income tax and operating expenses, respectively, if applicable. The Company has not recognized any uncertain tax positions. Deferred Rent The Company records rent expense for operating leases on a straight-line basis over the life of the related leases. The Company has certain facility and equipment leases that allow for leasehold improvements allowance, free rent, and escalating rental payments. Straight-line expenses that are greater than the actual amount paid are recorded as deferred rent and amortized over the life of the lease. Variable Interest Entities The Company follows the guidance in ASC 810-10-15-14 in order to determine if we are the primary beneficiary of a variable interest entity (“VIE”) for financial reporting purposes. We consider whether we have the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and whether we have the obligation to absorb losses or the right to receive returns that would be significant to the VIE. We consolidate a VIE when we are the primary beneficiary of the VIE. At December 31, 2015, the Company determined that it has one joint venture interest which it considers a VIE for which it is not the primary beneficiary. Accordingly, we account for this investment in joint venture using the equity method. Investment in Unconsolidated Joint Ventures Investments in unconsolidated companies in which the Company exerts significant influence but does not control or otherwise consolidate are accounted for using the equity method. As of December 30, 2015, the Company accounted for 15 freestanding facilities associated with our joint venture with University of Colorado Health and our Arizona hospital and its four freestanding departments associated with our joint venture with Dignity Health using the equity method. The Company has an ownership interest of 49.9% in each joint venture. These investments are included as investment in unconsolidated joint ventures in the accompanying consolidated balance sheets. Equity in earnings of unconsolidated joint ventures consists of (i) the Company’s share of the income (loss) generated from its non-controlling equity investment in one full-service healthcare hospital facility and four freestanding emergency rooms in Arizona, and (ii) the Company’s preferred return and its share of the income (loss) generated from its non-controlling equity investment in 15 freestanding emergency rooms in Colorado. Because the operations are central to the Company’s business strategy, equity in earnings of unconsolidated joint ventures is classified as a component of operating income in the accompanying consolidated statements of operations. The Company has contracts to manage the facilities, which results in the Company having an active role in the operations of the facilities and devoting a significant portion of its corporate resources to the fulfillment of these management responsibilities. Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard will become effective for the Company on January 1, 2018. Early application is permitted to the original effective date of January 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. In February 2015, the FASB issued ASU No. 2015-02, “ Consolidation: Amendments to the Consolidation Analysis” (Topic 810) . This standard modifies existing consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 is effective for fiscal years and interim periods within those years beginning after December 15, 2015 and requires either a retrospective or a modified retrospective approach to adoption. Early adoption is permitted. We are currently evaluating the potential impact of this standard on our consolidated financial position, results of operations and cash flows. In April 2015, the FASB issued ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs" (Subtopic 835-30) , which changes the presentation of debt issuance costs in financial statements. ASU No. 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. ASU No. 2015-03 is effective for annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The new guidance will be applied retrospectively to each prior period presented. The Company will implement the provisions of ASU 2015-03 as of January 1, 2016. In November 2015, the FASB issued ASU No. 2015-17, “ Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes ”, which amended the balance sheet classification requirements for deferred income taxes to simplify their presentation in the statement of financial position. The ASU requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. This ASU is effective for fiscal years beginning after December 31, 2016, with early adoption permitted. The Company early adopted the provisions of this ASU for the presentation and classification of its deferred tax assets at December 31, 2015 and has reflected the change on the consolidated balance sheet for all periods presented. In February 2016, the FASB issued ASU No. 2016-02, “Leases” (Topic 842). This new standard establishes a comprehensive new lease accounting model. The new standard clarifies the definition of a lease, requires a dual approach to lease classification similar to current lease classifications, and causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease term of more than twelve months. The standard is effective for interim and annual periods beginning after December 15, 2018. Early adoption is permitted. The new standard requires a modified retrospective transition for capital or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements, but it does not require transition accounting for leases that expire prior to the date of initial application. We are evaluating the impact of the new standard on our consolidated financial statements. We do not believe any other recently issued, but not yet effective, revisions to authoritative guidance will have a material effect on our condensed consolidated financial position, results of operations or cash flow s. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2015 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 3—PROPERTY AND EQUIPMENT Property and equipment consisted of the following, as of December 31, 2015 and 2014 ( in thousands ): December 31, December 31, 2015 2014 Leasehold improvements $ $ Computer equipment Medical equipment Office equipment Automobiles Land Construction in progress Buildings Less accumulated depreciation Property and equipment, net $ $ Assets under capital leases totaled approximately $4.2 million as of December 31, 2015 and 2014, respectively, and were included within the buildings component of net property and equipment. Accumulated depreciation associated with these capital lease assets totaled approximately $0.6 million and $0.3 million as of December 31, 2015 and 2014, respectively. |
INVESTMENT IN UNCONSOLIDATED JO
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES | 12 Months Ended |
Dec. 31, 2015 | |
PROPERTY AND EQUIPMENT | |
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES | NOTE 4—INVESTMENT IN UNCONSOLIDATED JOINT VENTURES Joint Venture with Dignity Health On October 22, 2014, the Company announced its expansion into Arizona through a joint venture with Dignity Health, one of the nation’s largest health systems. The partnership started with Dignity Health Arizona General Hospital, a full-service general hospital facility in Laveen, Arizona, and includes providing for additional access to emergency medical care in the Phoenix area. As of December 31, 2015, the joint venture with Dignity Health has four freestanding emergency departments in Arizona. Joint Venture with UCHealth On April 21, 2015, the Company announced the formation of a joint venture with UCHealth to enhance access to emergency medical care in Colorado. The Company contributed the 12 existing freestanding emergency rooms it held in Colorado and the related business associated with these facilities to the joint venture. The contribution of the controlling interest in these facilities and their operations was deemed a change of control for accounting purposes, and as such, the Company has recorded a gain of $24.3 million on the contribution of the previously fully owned facilities during the year ended December 31, 2015. As of December 31, 2015, the joint venture had 15 freestanding facilities under the UCHealth partnership. Pursuant to the terms of the joint venture agreement, the Company receives an annual preferred return up to a specified amount on its investment in the joint venture prior to proportionate distributions to the partners. Due to this preferred return provision within the joint venture agreement, this joint venture interest is considered a variable interest entity. Additional terms within the agreement allow for certain decisions to be made in which the Company has determined that it does not have control. As such, the Company concluded that it is not the primary beneficiary of the VIE. Accordingly, the Company accoun ts for this investment in joint venture under the equity method. Joint Venture with Ochsner Health System In September 2015, the Company announced the formation of a new partnership with New Orleans-based Ochsner Health System to enhance access to emergency medical care in Louisiana. The joint venture will include a hospital and multiple freestanding emergency departments in locations still to be determined. This joint venture did not have operations during the year ended December 31, 2015. The Company accounts for each of these joint ventures under the equity method of accounting as an investment in unconsolidated joint ventures, as the Company’s level of influence is significant but does not reach the threshold of controlling the entity. Summarized unaudited financial information for the Company’s equity method investees is as follows ( in thousands ): Year ended December 31, 2015 2014 Net patient service revenue $ $ Total operating expenses Income (loss) from operations Balance sheet information (as of December 31): Current Assets $ $ Noncurrent assets Current Liabilities Noncurrent liabilities — Our investment in unconsolidated joint ventures consists of the following (in thousands): As of December 31, 2015 2014 Beginning balance $ $ — Share of income (loss) Initial investment Gain on contribution — Distributions — Investment in unconsolidated joint ventures $ $ |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2015 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 5—GOODWILL AND OTHER INTANGIBLE ASSETS The following table summarizes the change in goodwill during the years ended December 31, 2015 and 2014 (in thousands) : 2015 2014 Balance at beginning of year $ $ Adjustments — — Balance at beginning of year $ $ The following table summarizes the change in intangible assets during the years ended December 31, 2015 and 2014 (in thousands) : Noncompete Trade Domain Agreements Names Names Total Balance at December 31, 2013 $ $ $ $ Additions — — — — Amortization — — Balance at December 31, 2014 $ $ $ $ Additions — — — — Amortization — — Balance at December 31, 2015 $ $ $ $ As of December 31, 2015, the estimated amortization of the noncompete agreements will be $1.3 million for the year ended 2016. |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 12 Months Ended |
Dec. 31, 2015 | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | NOTE 6—DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company used interest-rate-related derivative instruments to manage its exposure related to changes in interest rates on its variable-rate debt instruments. The Company does not enter into derivative instruments for any purpose other than cash flow hedging. The Company does not speculate using derivative instruments. By using derivative financial instruments to hedge exposures to changes in interest rates, the Company expose s itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk for the Company. When the fair value of a derivative contract is negative, the Company owes the counterparty, and therefore, the Company is not exposed to the counterparty's credit risk in those circumstances. The Company minimizes counterparty credit risk in derivative instruments by entering into transactions with high-quality counterparties whose credit rating is higher than Aa. The derivative instruments entered into by the Company do not contain credit-risk-related contingent features. Market risk is the adverse effect on the value of a derivative instrument that results from a change in interest rates, currency exchange rates, or commodity prices. The market risk associated with interest-rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. The Company assesses interest rate risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities. The Company maintains risk management control systems to monitor interest rate risk attributable to both the Company's outstanding or forecasted debt obligations as well as the Company's offsetting hedge positions. The risk management control systems involve the use of analytical techniques, including cash flow sensitivity analysis, to estimate the expected impact of changes in interest rates on the Company's future cash flows. Changes in the fair value of interest rate swaps and cap agreements designated as hedging instruments that effectively offset the variability of cash flows associated with variable-rate, long-term debt obligations are reported in accumulated other comprehensive income. These amounts subsequently are reclassified into interest expense as a yield adjustment of the hedged interest payments in the same period in which the related interest affects earnings. In May 2012, the Company entered into a forward interest rate swap agreement with a notional amount of $24.0 million to manage exposure to changes in interest rates associated with its variable interest rate debt. This agreement had the economic effect of modifying the LIBOR variable component of the Company's interest rate on an equivalent amount of the Company's Term Loan to a fixed rate of 1.20% . This swap agreement was not designated by the Company as a hedge as of December 31, 2013. The Company did not utilize the swap agreement until April 30, 2013. The Company recognized a loss of approximately $0.1 million for the year ended December 31, 2013 on the change in fair value of the swap agreement, which is included as a component of other (expense) income within the consolidated statements of operations. As of December 31, 2015, the Company maintained one interest rate cap agreement with notional amount totaling $37.5 million. This agreement has the economic effect of capping the LIBOR variable component of the Company's interest rate at a maximum of 3.00% on an equivalent amount of the Company's Term Loan debt. The cap agreement does not contain credit-risk contingent features. In October 2015, the Company extinguished the debt related to the existing Credit Facility, and reclassified losses of $0.1 million from accumulated other comprehensive income into earnings. The interest rate cap agreement was terminated on January 4, 2016. The following table summarizes the Company's derivative instruments (in thousands) : December 31, December 31, 2015 2014 Balance Sheet Location Fair Value Fair Value Derivative designated as hedging instruments Interest rate contracts Other long-term assets $ — $ |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2015 | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | NOTE 7—ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consisted of the following (in thousands) : December 31, December 31, 2015 2014 Accounts payable $ $ Accrued expenses Accrued tax distribution to LLC Unit holders Other Total accounts payable and accrued expenses $ $ |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2015 | |
DEBT | |
DEBT | NOTE 8—DEBT The components of debt consisted of the following (in thousands) : December 31, December 31, 2015 2014 Term loan $ $ Delayed draw term loan — Revolving credit — Other financing agreements Less current maturities $ $ On October 31, 2013, the Company entered into a Senior Secured Credit Facility (the “Facility”) for a $75.0 million term loan which matures on October 31, 2018. The Facility includes an additional $165.0 million delayed draw term loan commitment, which expired in April 2015, and a $10.0 million revolving commitment that matures on October 31, 2018. All of the Company's assets are pledged as collateral under the Facility. The borrowing under the Facility is used by the Company to provide financing for working capital, capital expenditures and for new facility expansion and replaced an existing credit facility. On March 31, 2014, the Company amended the Facility to, among other things, increase the maximum aggregate amount permitted to be funded by Medical Properties Trust (“MPT”) under the MPT Agreements to $250.0 million . See Note 11 ( Commitments and Contingencies ) for more information. On June 11, 2014, the Company entered into a second amendment to the Facility to, among other things, provide for a borrowing under the delayed draw term loan in an aggregate principal amount of up to $75.0 million, up to $60 .0 million in principal amount of which will be used to make specified distributions and up to $10 .0 million in principal amount of which will be used to repay certain revolving loans. On June 11, 2014, the Company drew $75.0 million and made the $ 60.0 million dividend distribution on June 24, 2014. On April 20, 2015, the Company amended the Facility to, among other things, increase the maximum aggregate amount permitted to be funded by MPT under the MPT Agreements to $500.0 million. Borrowings under the Facility bear interest, at our option, at a rate equal to an applicable margin over (a) a base rate determined by reference to the highest of (1) the prime rate , (2) the federal funds effective rate plus 0.50% and (3) LIBOR for an interest period of one month plus 1% , or (b) LIBOR for the applicable interest period. The margin for the Facility is 6.50% in the case of base rate loans and 7.50% in the case of LIBOR loans. The Facility includes an unused line fee of 0.50% per annum on the revolving commitment and delayed draw term loan commitment, a draw fee of 1.0% of the principal amount of each borrowing on the delayed draw term loan and an annual Agency fee of $0.1 million. In April 2015, the Company drew $30.0 million on the delayed draw term loan prior to its expiration. At December 31, 2014, the Company had $80.2 million available under the delayed draw term commitment, and $4.0 million available under the revolving commitment, respectively. On October 6, 2015, the Company entered into a senior secured credit facility (the “New Facility”) for a $125.0 million term loan and a $50.0 million revolving facility. The New Facility matures on October 6, 2020 . The revolving credit facility includes a sub-limit of $15.0 million for letters of credit and a sub-limit of $5.0 million for swing line loans. In addition, the New Facility contains an option to borrow up to an additional $50.0 million under certain conditions. All of the assets of the Company’s subsidiaries are pledged as collateral under the New Facility, and such subsidiaries guarantee the New Facility. Borrowings under the New Facility replace the Company’s existing credit facility and will be used by the Company to provide financing for working capital and capital expenditures. Borrowings under the New Facility bear interest, at our option, at a rate equal to an applicable margin over (a) a base rate determined by reference to the highest of (1) the prime rate, (2) the federal funds effective rate plus 0.50% and (3) LIBOR for an interest period of one month plus 1% , or (b) LIBOR for the applicable interest period. The applicable margin for the New Facility ranges, based on our consolidated net leverage ratio, from 2.25% to 3.00% in the case of base rate loans and from 3.25% to 4.00% in the case of LIBOR loans. The New Facility includes an unused line fee ranging, based on our consolidated net leverage ratio, from 0.40% to 0.50% per annum on the revolving commitment. The Company had $39.8 million available under the revolving commitment at December 31, 2015. The Facility contains certain affirmative covenants, negative covenants, and financial covenants which are measured on a quarterly basis. As of December 31, 2015, the Company was in compliance with all covenant requirements. In conjunction with entering into the New Facility, the Company incurred a $5.0 million loss, consisting of a prepayment premium of $2.1 million and write off of deferred loan costs of $2.9 million, on the extinguishment of debt related to previously capitalized costs from its previous debt agreements. In 2015, the Company entered into finance agreements totaling approximately $2.4 million to finance the renewal of certain insurance policies. The finance agreements have fixed interest rates ranging between 2.49% and 3.50% with principal being repaid over 9 to 11 months. In 2014, the Company entered into finance agreements totaling approximately $1.9 million to finance the renewal of certain insurance policies. The finance agreements have fixed interest rates ranging between 2.49% and 3.25% with principal being repaid over 9 to 11 months. In October 2013, the Company renewed certain insurance policies and entered into a finance agreement totaling approximately $0.8 million. The finance agreement has a fixed interest rate of 1.93% with principal being repaid over 9 months. Future Maturities Scheduled future aggregate maturities of principal of long-term debt are as follows: ( in thousands ): Years ending December 31, Amount 2016 $ 2017 2018 2019 2020 Total $ |
TRANSACTIONS WITH RELATED PARTI
TRANSACTIONS WITH RELATED PARTIES | 12 Months Ended |
Dec. 31, 2015 | |
TRANSACTIONS WITH RELATED PARTIES | |
TRANSACTIONS WITH RELATED PARTIES | NOTE 9—TRANSACTIONS WITH RELATED PARTIES The Company made payments to a significant shareholder of the Company for management services related to an advisory services agreement and reimbursement of certain expenses. The total amount paid to this related party was approximately $24,000 , $0.8 million and $0.6 million for the years ended December 31, 2015, 2014 and 2013, respectively. In connection with the consummation of the initial public offering, the advisory services agreement was terminated and the Company paid a one-time termination payment fee of $2.0 million in July 2014. The Company made payments for contractor services to various related-party vendors, which totaled approximately $ 0.2 million, $0.1 million and $0.06 million for the years ended December 31, 2015, 2014 and 2013, respectively. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2015 | |
EMPLOYEE BENEFIT PLANS | |
EMPLOYEE BENEFIT PLANS | NOTE 10—EMPLOYEE BENEFIT PLANS The Company provides a 401(k) savings plan to all employees who have met certain eligibility requirements, including performing / one month of service with the Company. The 401(k) plan permits matching and discretionary employer contributions. During the years ended December 31, 2015 and 2014, the Company contributed approximately $0.9 million and $0.5 million to the 401(k) Plan for 2014 and 2013 matching contributions, respectively. The board of directors approved a contribution of $1.7 million for the year ended December 31, 2015, which will be paid during 2016 . |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2015 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 11—COMMITMENTS AND CONTINGENCIES Litigation and Asserted Claims The Company is a party to various legal proceedings arising in the ordinary course of business. While, management believes the outcome of pending litigation and claims will not have a material adverse effect on the Company's consolidated financial condition, operations, or cash flows, litigation is subject to inherent uncertainties. Insurance Arrangements The Company is self-insured for employee health benefits. Accruals for losses are provided based upon claims experience and actuarial assumptions, including provisions for incurred but not reported losses. At December 31, 201 5 and 201 4 , the Company has an accrual of approximately $0.8 million and $0.7 million, respectively , for incurred but not reported claims, which is included in accrued compensation within the consolidated balance sheets. The Company is insured for worker's compensation claims up to $1.0 million per accident and per employee with a policy limit of $1.0 million. The Company submits periodic payments to its insurance broker based upon estimated payroll. Worker's compensation expense for the years ended December 31, 2015, 2014 and 2013 was approxima tely $0.3 million, $0.3 million and $0.07 million , respectively. The Company is insured for professional liability claims up to $1.0 million per incident and $3.0 million per facility with an aggregate policy limit of $20.0 million. Leases The Company leases certain medical facilities and equipment under various noncancelable operating leases. In June 2013, the Company entered into an initial MPT Agreement (the “Initial MPT Agreement”) with an affiliate of Medical Properties Trust (“ MPT ”) to fund future facilit y development and construction . The lessor to the MPT Agreement will acquire parcels of land, fund the ground-up construction of new freestanding emergency room facilities and lease the facilities to the Company upon completion of construction. Under the terms of the agreement, the lessor is to fund all hard and soft costs, including the project purchase price, closing costs and pursuit costs for the assets relating to the construction of up to twenty-five facilities with a maximum aggregate funding of $100.0 million. Each completed project will be leased for an initial term of 15 years, with three 5 -year renewal options. The Company follows the guidance in ASC 840, Leases , and ASC 810, Consolidation, in evaluating the lease as a build-to-suit lease transaction to determine whether the Company would be considered the accounting owner of the facilities during the construction period. In applying the accounting guidance, the Company concluded that the one facility completed in 2013 under this arrangement qualified for capitalization. In July 2014, the Company entered into an additional Master Funding and Development Agreement (the “Additional MPT Agreement” and, together with the Initial MPT Agreement, the “MPT Agreements”) with MPT to fund future new freestanding emergency rooms and hospitals . This agreement is separate from and in addition to the Company’s Initial MPT Agreement. The Additional MPT A greement allows for an additional maximum aggregate funding of $150.0 million. All other material terms remain consistent with the Initial MPT Agreement. On April 20, 2015, the Company entered into an amendment to the Additional MPT Agreement which adds an additional aggregate funding of $250.0 million, increasing the maximum aggregate funding under all of the MPT Agreements to $500.0 million. All newly constructed facilities under the MPT Agreements will have initial terms of 15 years, with three five -year renewal options. In addition to the MPT Agreements, the Company has entered into similar agreements with certain developers to fund and lead the development efforts on the construction of future facilities. As of December 30, 2015, the Company had total receivables of $12.2 million from the lessor to the MPT agreements and certain other developers for soft costs incurred for facilities currently under development . The Company leases approximately 80,000 square feet for its corporate headquarters. Lease expense associated with this lease was $1.6 million, $1.4 million and $0.7 million for the years ended December 31, 2015, 2014 and 2013, respectively . In November 2015, the Company extended the lease term through August 2021 for its corporate headquarters. F uture minimum lease payments required under noncancelable operating leases and future minimum, capital lease payments as of December 31, 2015 were as follows (in thousands) : Capital Operating Years ending December 31, leases leases 2016 $ $ 2017 2018 2019 2020 Thereafter Total future minimum lease payments $ $ Less: Amounts representing interest Present value of minimum lease payments Current portion of capital lease obligations Long-term portion of capital lease payments $ Rent expense totaled approxim ately $31.1 million, $15.2 million and $4.5 million for the years ended December 31, 2015, 2014 and 2013, respectively and is included as a component of other operating expenses within the Consolidated Statements of Operations. The Company has sublease agreements with the joint ventures in Arizona and Colorado, under which the Company subleases certain freestanding emergency room facilities, ground leases and equipment leases to the joint ventures. Under these agreements, the Company received $10.8 million and $0.4 million during the years ended December 3 1, 2015 and 2014, respectively, as rental income which is accounted for as a reduction of rent expense. In January 2013, the Company entered into a termination agreement with the landlord of the leased facility in Georgetown, Texas. Under the termination agreement, the landlord and the Company mutually released the other from any further obligations under the lease and any liability, cause of action, claim, or loss arising out of or connected with the lease. In accordance with the termination agreement, the Company paid the landlord a lease termination fee of $0.2 million . |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 12 Months Ended |
Dec. 31, 2015 | |
Supplemental Cash Flow Information | |
SUPPLEMENTAL CASH FLOW INFORMATION | NOTE 12— SUPPLEMENTAL CASH FLOW INFORMATION Supplemental cash flow information and supplemental noncash activities consisted of the following for the years ended December 31, 2015, 2014 and 2013 (in thousands) : December 31, December 31, December 31, 2015 2014 2013 Supplemental cash flow information: Interest paid $ $ $ Taxes paid Supplemental noncash activities: Acquisition of property and equipment in accounts payable and accrued expenses $ — $ $ Assets acquired through capital lease — Note payable for other financing agreements Contribution of assets to joint venture — — Effects of tax receivable agreement — Accrual of owner distributions — |
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2015 | |
STOCK BASED COMPENSATION | |
STOCK BASED COMPENSATION | NOTE 13—STOCK BASED COMPENSATION In connection with the initial public offering, the Company’s Board of Directors adopted the Adeptus Health Inc. 2014 Omnibus Incentive Plan (the “2014 Plan”). The Omnibus Incentive Plan provides for the granting of stock options, restricted stock and other stock-based or performance-based awards to directors, officers, employees, consultants and advisors of the Company and its affiliates. The total number of shares of Class A common stock that may be issued under the Omnibus Incentive Plan is 1,033,500 . On June 24, 2014, the Company granted 11,934 restricted Class A shares to its non-employee directors under the Omnibus Incentive Plan, representing the prorated amount of the directors’ annual equity award for fiscal 2014. These restricted shares vested on January 1, 2015. In July 2014, the Company granted to certain employees 35,856 restricted Class A shares, which vest over 4 years. For the year ended December 31, 2015, the Company granted 149,741 restricted Class A shares to certain employees and non-employee directors, which vest over 6 months to 4 years. The weighted average grant date-fair value of restricted Class A shares granted during the years ended December 31, 2015 and 2014 was $37.10 and $24.33 per share, respectively. At December 31, 2015, 1 70 , 521 of these restricted Class A shares remained unvested. Compensation expense for time-based restricted share awards is recognized over the vesting period on a straight-line basis, adjusted for estimated forfeitures. The 2014 Plan allowed for the grant of incentive stock options intended to qualify under Section 422 of the Internal Revenue Code (the “IRC”). The Company granted 30,000 stock options with an exercise price of $86.80 , which vest quarterly over three years and expire ten years from the date of grant. All outstanding stock options were unvested as of December 31, 2015. As of December 31, 2015, there was $4.7 million of unrecognized stock-based compensation expense related to outstanding unvested restricted Class A shares and stock option awards. That cost is expected to be recognized over a weighted average period of 2.0 years. The Company also has one legacy equity-compensation plan, under which it has issued agreements awarding incentive units (restricted units) in the Company to certain employees and non-employee directors. In conjunction with the Reorganization Transactions, these restricted units were replaced with LLC Units with consistent restrictive terms. The restricted units are subject to such conditions as continued employment, passage of time and/or satisfaction of performance criteria as specified in the agreements. The restricted units vest over 3 to 4 years from the date of grant. The Company used a waterfall calculation, based on the capital structure and payout of each class of debt and equity, and a present value pricing model less marketability discount to determine the fair values of the restricted units. The assumptions used in the price simulation model for units granted during 2013 include risk-free interest rates of 0.93% , volatility of 25.0% and a dividend rate of 0% . The weighted average fair value of incentive units granted during the year ended December 31, 2013 was $1,262 and $384 for the time-based and performance based units, respectively. The assumptions used for the 2012 incentive units included a risk-free interest rate of 0.72% , volatility of 30.0% and a dividend yield of 0% . The weighted average fair value of incentive units granted during 2012 was $204 and $37 for the time-based and performance based units, respectively. The Company has not issued any incentive units under the legacy plan since 2013. The Company recorded compensation expense of $2.7 million, $1.0 million, and $0.6 million, adjusted for forfeitures, during the years ended December 31, 2015, 2014 and 2013, respectively, related to restricted units and stock options with time-based vesting schedules. Compensation expense for the value of the portion of the time-based restricted unit that is ultimately expected to vest is recognized using a straight-line method over the vesting period, adjusted for forfeitures. On February 18, 2015, our Board of Directors accelerated the vesting of all performance based units. As a result of the acceleration, the Company recognized $0.1 million of additional stock-based compensation expense for the year ended December 31, 2015. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure | |
INCOME TAXES | NOTE 14— INCOME TAXES The components of our (benefit) provision for income taxes were as follows ( in thousands ): 2015 2014 2013 Current: Federal $ - $ - $ - State Total current taxes Deferred: Federal - State - Total deferred taxes - Total income tax (benefit) provision $ $ $ The reconciliation of our income tax (benefit) expense computed at the U.S. federal statutory tax rate to the actual income tax (benefit) expense is as follows (in thousands ): 2015 2014 2013 Expense derived by applying the federal income tax rate to income (loss) before taxes $ $ $ Tax applicable to pass-through entities - State income tax, net of federal benefit - Nondeductible expenses - Provision (benefit) for income taxes $ $ $ - Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities are as follows ( in thousands ): 2015 2014 Deferred tax assets TRA liability $ $ Investment in partnership Net operating loss carryforwards State net operating loss carryforwards Total deferred tax assets $ 206,265 $ 34,084 Prior to the Reorganization, we were not a federal taxpayer. The Company’s effective tax rate for the period differs from the statutory rates due primarily to state taxes that are not based on pre-tax income/(loss) but on gross margin resulting in state tax expense with little relation to pre-tax income even in periods of pretax losses . Our management evaluates the realizability of the deferred tax assets and determines whether it is more likely than not that the deferred tax assets are realizable. We consider whether a valuation allowance is needed on our deferred tax assets by evaluating all positive and negative evidence relative to our ability to recover deferred tax assets, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. During 2014, we were able to conclude that given our performance, the forecast of future income and the realization of our deferred tax asset was more likely than not . As such, we did not record a valuation allowance for t he period. This determination was based on an estimated forecast of future taxable income which includes many judgments and assumptions. Accordingly, it is at least reasonably possible for future changes in one or more assumptions may lead to a change in judgment regarding the necessity of a valuation allowance required in future periods. Our largest deferred tax asset is related to our investment in partnership of $ 136.1 million. This deferred tax asset is a result of the differences between the book and tax basis in Adeptus Health LLC, which is the partnership that operates our facilities. A second component of the deferred tax asset is related to the Tax Receivable Agreement (noted below) liability of $ 65.9 million. As the Company becomes profitable, the deferred tax asset related to this liability will be reduced. The final component of the deferred tax asset is the federal net operating loss carryforwards of $4.2 million. The federal net operating losses will begin to expire in 2034. The net operating loss carryforward is primarily related to depreciation and amortization deductions . The gross amount of the federal net operating loss carryforward was $12.0 million at December 31, 2015. A cumulative change in ownership among material shareholders, as defined in Section 382 of the Internal Revenue Code, during a three-year period may limit the utilization of the federal net operating loss carryforwards. At this time, the Company is not subject to the Section 382 limitation; however the Company may be subject to this limitation depending on the extent and timing of change in ownership in the future. Uncertain Tax Positions At December 31, 201 5 , the Company has not identified or accrued for any uncertain tax positions. Our policy is to include interest and penalties related to uncertain tax positions, and as of December 31, 201 5 , there were no accrued interest and penalties. We file tax returns in the U.S. federal jurisdiction and state jurisdictions where we have facilities and operations. We are not currently under audit for fed eral or any state jurisdictions; however, our 2011 (Texas only) – 2014 tax returns remain open for examination. Tax Receivable Agreement Upon the consummation of the Company’s initial public offering, the Company entered into a tax receivable agreement with the LLC Unit holders after the closing of the offering that provides for the payment from time to time by the Company to the LLC Unit holders of 85% of the amount of the benefits, if any, that the Company is deemed to realize as a result of increases in tax basis and certain other tax benefits related to exchanges of LLC Units pursuant to the exchange agreement, including tax benefits attributable to payments under the tax receivable agreement. These payment obligations are obligations of the Company ; however, payments to LLC Unit holders will only be paid as tax benefits for the Company are realized. For purposes of the tax receivable agreement, the benefit deemed realized by the Company was computed by comparing its actual income tax liability (calculated with certain assumptions) to the amount of such taxes that the Company would have been required to pay had there been no increase to the tax basis of the assets of Adeptus Health LLC as a result of the exchanges and had the Company not entered into the tax receivable agreement. The step-up in basis will depend on the fair value of the LLC Units at conversion. As of December 31, 201 5 , the Company has recorded an estimated payable pursuant to the tax receivable agreement of $191.3 million related to exchanges of LLC Units in connection with public offering s and other exchanges that are expected to give rise to certain tax benefits in the future. |
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE | 12 Months Ended |
Dec. 31, 2015 | |
NET INCOME (LOSS) PER SHARE | |
NET INCOME (LOSS) PER SHARE | NOTE 15— NET INCOME ( LOSS ) PER SHARE Prior to the consummation of the Company’s initial public offering, the Company did not have outstanding common stock. However, in conjunction with the closing of the initial public offering, an existing owner exchanged their LLC Units for shares of the Company’s Class A common stock . Basic net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by using the weighted average number of common shares outstanding, including potential dilutive shares of common stock assuming the dilutive effect of outstanding stock options and restricted stock using the treasury stock method. The following table sets forth the computation of basic and diluted net income ( loss ) per common share (in thousands, except share and per share data) : Year ended December 31, 2015 2014 Numerator: Net income (loss) attributable to Adeptus Health Inc. $ $ Denominator: Denominator for basic net income (loss) per Class A common share-weighted average shares Effect of dilutive securities: Restricted shares — — Denominator for diluted net income (loss) per Class A common share-weighted average shares Net income (loss) attributable to Adeptus Health Inc. per Class A common share - Basic $ $ Net income (loss) attributable to Adeptus Health Inc. per Class A common share - Diluted $ $ Earnings per share information is not applicable for reporting periods prior to the initial public offering. The shares of Class B common stock do not share in the earnings or losses of Adeptus Health Inc. and are therefore not participating securities. Accordingly, basic and diluted net loss per share of Class B common stock has not been presented. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 16—SUBSEQUENT EVENTS In February 2016, the Company announce d its expansion into Ohio and a new partnership with Mount Carmel Health Syste m. The partnership will construct and operate freestanding emerg ency rooms in the Columbus area. |
SELECTED QUARTERLY FINANCIAL DA
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Dec. 31, 2015 | |
Selected Quarterly Financial Data | |
SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | NOTE 17—SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) The following table presents certain unaudited quarterly statement of operations data for the years ended December 31, 201 5 and 201 4 . Results of operations for any particular quarter are not necessarily indicative of results of operations for a full year or predictive of future periods. Three months ended December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31, 2015 2015 2015 2015 2014 2014 2014 2014 (in thousands, except per share data) Patient service revenue $ $ $ $ $ $ $ $ Provision for bad debt Net patient service revenue Management and contract services revenue — — — Total net operating revenue Income (loss) from operations Net income (loss) Less: Net income (loss) attributable to non-controlling interest Net income (loss) attributable to Adeptus Health Inc. $ $ $ $ $ $ $ $ — Net income (loss) per share of Class A common stock: Basic and Diluted $ $ $ $ $ $ $ $ — |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation The accompanying consolidated balance sheets as of December 31, 2015 and 2014 and the accompanying consolidated statements of operations and cash flows for each of the three years ended December 31, 2015, 2014 and 2013 represent our financial position, results of operations and cash flows as of and for the years then ended. The consolidated financial statements include the accounts of Adeptus Health Inc. and its wholly owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. |
Accounting Policies and Use of Estimates | Accounting Policies and Use of Estimates The preparation of financial statements in conformity with GAAP requires our management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant accounting policies and estimates include: the useful lives of fixed assets, revenue recognition, allowances for doubtful accounts, leases, reserves for employee health benefit obligations, stock-based compensation, and other contingencies. Actual results could differ from these estimates. |
Segment and Geographic Information | Segment and Geographic Information The Company’s chief operating decision maker is our Chief Executive Officer, who reviews financial information presented on a company-wide basis. As a result, the Company determined that it has a single reporting segment and operating unit structure. All of the Company’s revenue for the years ended December 31, 2015, 2014 and 2013 was earned in the United States. |
Cash and Cash Equivalents and Concentrations of Risk | Cash and Cash Equivalents and Concentrations of Risk The Company includes all securities with a maturity date of six months or less at date of purchase as cash equivalents. The Company currently has no cash equivalents. The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and does not believe it is exposed to any significant risk related to uninsured bank deposits. |
Restricted Cash | Restricted Cash The Company maintained a restricted cash balance through September 2015 to cover letters of credit required by the Master Funding and Development Agreements, as amended, for the first $250.0 million in facility fundings. See Note 11 ( Commitments and Contingencies) for more information. Each letter of credit is issued in an amount equal to approximately 50% of one year's base rent relating to completed facilities. As of December 31, 2014, restri cted cash was $4.8 million. Beginning in October 2015, restricted cash is no longer required as the Company entered into a New Facility with Bank of America, N.A., which includes a revolving credit facility with a sub-limit of $15.0 million for letters of credit. See Note 8 ( Debt ) for more information. |
Patient Revenue and Accounts Receivable | Patient Revenue and Accounts Receivable Revenues consist primarily of net patient service revenues, which are based on the facilities’ established billing rates less allowances and discounts, principally for patients covered under contractual programs with private insurance companies. Revenue is recognized when services are rendered to patients. Charges for all services provided to insured patients are initially billed and processed by the patients' insurance provider. The Company has agreements with insurance companies that provide for payments to the Company at amounts different from its established rates or as determined by the patient's out of network benefits. Differences between established rates and those set by insurance programs, as well as charity care, employee and prompt pay adjustments, are recorded as adjustments directly to patient service revenue. Amounts not covered by the insurance companies are then billed to the patients. Estimated uncollectible amounts from insured patients are recorded as bad debt expense in the period the services are provided. Collection of payment for services provided to patients without insurance coverage is done at the time of service. With respect to management and contract service revenues, amounts are recognized as services are provided. The Company is party to two management services agreements under which it provides management services to a hospital facility and freestanding emergency room facilities. As compensation for these services, the Company charges the managed entities a management fee based on a fixed percentage of each entity’s net revenue. The Company also holds minority ownership in these entities . Net patient service revenue by major payor source for the years ended December 31, 2015, 2014 and 2013 were as follows (in thousands) : Year ended December 31, 2015 2014 2013 Commercial $ $ $ Self-pay Other — Medicaid — Medicare — Patient Service Revenue Provision for bad debt Net Patient Service Revenue $ $ $ The Company receives payments from third-party payors that have contracts with the Company or the Company uses MultiPlan arrangements whereby the Company accesses third-party payors at in-network rates. Four major third-party payors accounted for 84.6% , 84.8% and 86.7% of patient service revenue for the years ended December 31, 2015, 2014 and 2013, respectively. These same payors also accounted for 65.9% and 80.0% of accounts receivable as of December 31, 2015 and 2014, respectively. The following table sets forth the percentage of patient service revenue earned by major payor source for the years ended December 31, 2015, 2014 and 2013: Year ended December 31, 2015 2014 2013 Payor: United HealthCare % % % Blue Cross Blue Shield Aetna Cigna Other Medicaid/Medicare — — % % % Accounts receivable are reduced by an allowance for doubtful accounts. In establishing the Company's allowance for doubtful accounts, management considers historical collection experience, the aging of the account, the payor classification, and patient payment patterns. Amounts due directly from patients represent the Company's highest collectability risk. There were not any significant changes in the estimates or assumptions underlying the calculation of the allowance for doubtful accounts for the years ended December 31, 2015 and 2014. The Company treats anyone that is emergent. Total charity care was approximately 7.8% , 8.6% and 7.0% of patient service revenue for the years ended December 31, 2015, 2014 and 2013, respectively. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred. Advertising expense for the years ended December 31, 2015, 2014 and 2013, was approximately $5.7 million, $5.4 million and $2.1 million, respectively, and is included as a component of general and administrative expenses within the consolidated statements of operations. |
Medical Supplies Inventory | Medical Supplies Inventory Inventory is carried at the lower of cost or market using the first-in, first-out method and consists of a standard set of medical supplies held in stock at all facilities. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, less accumulated depreciation and amortization computed using the straight-line method over the estimated useful life of each asset. Leasehold improvements are amortized over the shorter of the noncancelable lease term or the estimated useful life of the improvements. When assets are retired, the cost and applicable accumulated depreciation are removed from the respective accounts, and the resulting gain or loss is recognized. Expenditures for normal repairs and maintenance are expensed as incurred. Material expenditures that increase the life of an asset are capitalized and depreciated over the estimated remaining useful life of the asset. The estimated useful lives of depreciable fixed assets are as follows: Estimated useful life (in years) Computer equipment 3 to 5 Automobiles Office equipment Medical equipment 5 to 7 Leasehold improvement 4 to 10 Buildings 15 to 40 Amortization of assets acquired under capital leases is included as a component of depreciation and amortization expense in the accompanying consolidated statements of operations. Amortization is calculated using the straight-line method over the shorter of the useful lives or the term of the underlying lease agreements. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount of an asset or group of assets might not be recoverable. The Company does not perform a periodic assessment of assets for impairment in the absence of such information or indicators. Conditions that would indicate a potential impairment include a significant decline in the observable market value of an asset or a significant change in the extent or manner in which an asset is used. The impairment review includes a comparison of future projected cash flows generated by the asset or group of assets with its associated net carrying value. If the net carrying value of the asset or group of assets exceeds expected cash flows (undiscounted and without interest charges), an impairment loss is recognized to the extent the carrying amount of the asset exceeds its fair value. There were no impairments recorded for the years ending December 31, 2015, 2014 or 2013. |
Goodwill | Goodwill In accordance with the FASB ASC 805, Business Combinations , the purchase method of accounting requires that the excess of purchase price paid over the estimated fair value of identifiable tangible and intangible net assets of acquired businesses be recorded as goodwill. In accordance with the provisions of ASC 350, Intangibles—Goodwill and Other , goodwill is tested for impairment annually, and interim impairment tests are performed whenever an event occurs or circumstances change that indicate an impairment has more likely than not occurred. We have one reporting unit and goodwill is evaluated at that level. We evaluate impairment of goodwill by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than the carrying value. If it is concluded that this is the case, it is necessary to perform a two ‑ step impairment test. The first step involves a comparison of the fair value of a reporting unit with its carrying amount. If the carrying value of the reporting unit exceeds its fair value, the second step involves a comparison of the implied fair value and the carrying amount of the goodwill of that reporting unit to determine the impairment charge, if necessary. We have established October 31 as the date for our annual impairment review. The Company estimates the fair value of its total invested capital using an income and market approach, reduced by interest bearing debt as of the valuation date. These valuations require management to make estimates and assumptions regarding industry economic factors and prospective financial information. There were no goodwill impairment charges recorded for the years ended December 31, 2015, 2014 and 2013. |
Intangible Assets | Intangible Assets Intangible assets are recorded at their estimated fair values as of the date of acquisition. Intangible assets consist of trade and domain names and noncompete agreements. In accordance with ASC 350, Intangibles—Goodwill and Other , the Company reviews the intangible assets with indefinite lives, which include trade and domain names, at least annually for impairment, or more often if triggering events exist. Intangible assets with definite lives are reviewed for impairment if an indicator of impairment exists similar to long-lived assets. We evaluate impairment of intangible assets by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the asset is less than the carrying value. If it is concluded that this is the case, it is necessary to perform a two ‑ step impairment test. An impairment loss is recognized if the carrying amount of an intangible asset is not recoverable and its carrying amount exceeds its fair value. There were no impairment charges recorded on intangible assets for the years ended December 31, 2015, 2014 and 2013. Intangible assets with finite useful lives are amortized over their estimated useful life. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of the Company's financial instruments, including cash, receivables, accounts payable and accrued liabilities approximate their fair value due to their relatively short maturities. At December 31, 2015 and 2014, the carrying value of the Company's long-term debt was based on the current interest rates and approximates its fair value. |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities The Company recognizes all derivative instruments as either assets or liabilities in the balance sheet at their respective fair values. For derivatives not designated as a hedging instrument, changes in the fair value are recorded in net earnings immediately. For derivatives designated in hedging relationships, changes in the fair value are either offset through earnings against the change in fair value of the hedged item attributable to the risk being hedged or recognized in accumulated other comprehensive income, to the extent the derivative is effective at offsetting the changes in cash flows being hedged until the hedged item affects earnings. For the year ended December 31, 2012 and continuing through October 31, 2013, the Company maintained one derivative instrument that it did not designate as a hedge. As a result, changes in the fair value were recorded in earnings for this period. Beginning in November 2013, the Company only enters into derivative contracts that it intends to designate as a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge). For all hedging relationships, the Company formally documents the hedging relationship and its risk-management objective and strategy for undertaking the hedge, the hedging instrument, the hedged transaction, the nature of the risk being hedged, how the hedging instrument's effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and a description of the method used to measure ineffectiveness. The Company also formally assesses, both at the inception of the hedging relationship and on an ongoing basis, whether the derivatives that are used in hedging relationships are highly effective in offsetting changes in cash flows of hedged transactions. For derivative instruments that are designated and qualify as part of a cash flow hedging relationship, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or years during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. The Company discontinues hedge accounting prospectively when it determines that the derivative is no longer effective in offsetting cash flows attributable to the hedged risk, the derivative expires or is sold, terminated, or exercised or the cash flow hedge is dedesignated because a forecasted transaction is not probable of occurring. In all situations in which hedge accounting is discontinued and the derivative remains outstanding, the Company continues to carry the derivative at its fair value on the balance sheet and recognizes any subsequent changes in its fair value in earnings. When it is probable that a forecasted transaction will not occur, the Company discontinues hedge accounting and recognizes immediately in earnings gains and losses that were accumulated in other comprehensive income related to the hedging relationship. |
Lease Accounting | Lease Accounting The Company determines whether to account for its facility leases as operating or capital leases depending on the underlying terms of the lease agreement. This determination of classification is complex and requires significant judgment relating to certain information including the estimated fair value and remaining economic life of the facilities, the Company's cost of funds, minimum lease payments and other lease terms. The lease rates under the Company's lease agreements are subject to certain conditional escalation clauses that are recognized when probable or incurred and are based on changes in the consumer price index or certain operational performance measures. As of December 31, 2015, the Company leased 82 facilities, 81 of which the Company classified as operating leases and one of which the Company classified as a capital lease. |
Income Taxes | Income Taxes We provide for income taxes using the asset and liability method. This approach recognizes the amount of federal, state and local taxes payable or refundable for the current year, as well as deferred tax assets and liabilities for the future tax consequence of events recognized in the consolidated financial statements and income tax returns. Deferred income tax assets and liabilities are adjusted to recognize the effects of changes in tax laws or enacted tax rates. A valuation allowance is required when it is more-likely-than-not that some portion of the deferred tax assets will not be realized. Realization is dependent on generating sufficient future taxable income. We file a consolidated federal income tax return. State income tax returns are filed on a separate, combined or consolidated basis in accordance with relevant state laws and regulations. LPs, LLPs, LLCs and other pass-through entities that we consolidate file separate federal and state income tax returns. We include the allocable portion of each pass-through entity’s income or loss in our federal income tax return. We allocate the remaining income or loss of each pass-through entity to the other partners or members who are responsible for their portion of the taxes. Estimated tax expense (benefit) of approximately $8.7 million , ($1.3) million and $0.7 million are included in the provision for income taxes in the financial statements for the years ended December 31, 2015, 2014 and 2013, respectively. The Company's estimate of the potential outcome of any uncertain tax positions is subject to management's assessment of relevant risks, facts, and circumstances existing at that time. The Company uses a more likely than not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. To the extent that the Company's assessment of such tax position changes, the change in estimate is recorded in the period in which the determination is made. The Company reports tax related interest and penalties as a component of the provision for income tax and operating expenses, respectively, if applicable. The Company has not recognized any uncertain tax positions. |
Deferred Rent | Deferred Rent The Company records rent expense for operating leases on a straight-line basis over the life of the related leases. The Company has certain facility and equipment leases that allow for leasehold improvements allowance, free rent, and escalating rental payments. Straight-line expenses that are greater than the actual amount paid are recorded as deferred rent and amortized over the life of the lease. |
Variable Interest Entities | Variable Interest Entities The Company follows the guidance in ASC 810-10-15-14 in order to determine if we are the primary beneficiary of a variable interest entity (“VIE”) for financial reporting purposes. We consider whether we have the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and whether we have the obligation to absorb losses or the right to receive returns that would be significant to the VIE. We consolidate a VIE when we are the primary beneficiary of the VIE. At December 31, 2015, the Company determined that it has one joint venture interest which it considers a VIE for which it is not the primary beneficiary. Accordingly, we account for this investment in joint venture using the equity method. |
Investment in Unconsolidated Joint Ventures | Investment in Unconsolidated Joint Ventures Investments in unconsolidated companies in which the Company exerts significant influence but does not control or otherwise consolidate are accounted for using the equity method. As of December 30, 2015, the Company accounted for 15 freestanding facilities associated with our joint venture with University of Colorado Health and our Arizona hospital and its four freestanding departments associated with our joint venture with Dignity Health using the equity method. The Company has an ownership interest of 49.9% in each joint venture. These investments are included as investment in unconsolidated joint ventures in the accompanying consolidated balance sheets. Equity in earnings of unconsolidated joint ventures consists of (i) the Company’s share of the income (loss) generated from its non-controlling equity investment in one full-service healthcare hospital facility and four freestanding emergency rooms in Arizona, and (ii) the Company’s preferred return and its share of the income (loss) generated from its non-controlling equity investment in 15 freestanding emergency rooms in Colorado. Because the operations are central to the Company’s business strategy, equity in earnings of unconsolidated joint ventures is classified as a component of operating income in the accompanying consolidated statements of operations. The Company has contracts to manage the facilities, which results in the Company having an active role in the operations of the facilities and devoting a significant portion of its corporate resources to the fulfillment of these management responsibilities. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard will become effective for the Company on January 1, 2018. Early application is permitted to the original effective date of January 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. In February 2015, the FASB issued ASU No. 2015-02, “ Consolidation: Amendments to the Consolidation Analysis” (Topic 810) . This standard modifies existing consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 is effective for fiscal years and interim periods within those years beginning after December 15, 2015 and requires either a retrospective or a modified retrospective approach to adoption. Early adoption is permitted. We are currently evaluating the potential impact of this standard on our consolidated financial position, results of operations and cash flows. In April 2015, the FASB issued ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs" (Subtopic 835-30) , which changes the presentation of debt issuance costs in financial statements. ASU No. 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. ASU No. 2015-03 is effective for annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The new guidance will be applied retrospectively to each prior period presented. The Company will implement the provisions of ASU 2015-03 as of January 1, 2016. In November 2015, the FASB issued ASU No. 2015-17, “ Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes ”, which amended the balance sheet classification requirements for deferred income taxes to simplify their presentation in the statement of financial position. The ASU requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. This ASU is effective for fiscal years beginning after December 31, 2016, with early adoption permitted. The Company early adopted the provisions of this ASU for the presentation and classification of its deferred tax assets at December 31, 2015 and has reflected the change on the consolidated balance sheet for all periods presented. In February 2016, the FASB issued ASU No. 2016-02, “Leases” (Topic 842). This new standard establishes a comprehensive new lease accounting model. The new standard clarifies the definition of a lease, requires a dual approach to lease classification similar to current lease classifications, and causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease term of more than twelve months. The standard is effective for interim and annual periods beginning after December 15, 2018. Early adoption is permitted. The new standard requires a modified retrospective transition for capital or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements, but it does not require transition accounting for leases that expire prior to the date of initial application. We are evaluating the impact of the new standard on our consolidated financial statements. We do not believe any other recently issued, but not yet effective, revisions to authoritative guidance will have a material effect on our condensed consolidated financial position, results of operations or cash flow s. |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of net patient service revenue by major payor source | Net patient service revenue by major payor source for the years ended December 31, 2015, 2014 and 2013 were as follows (in thousands) : Year ended December 31, 2015 2014 2013 Commercial $ $ $ Self-pay Other — Medicaid — Medicare — Patient Service Revenue Provision for bad debt Net Patient Service Revenue $ $ $ |
Table of percentage of patient service revenue earned by major payor source | The following table sets forth the percentage of patient service revenue earned by major payor source for the years ended December 31, 2015, 2014 and 2013: Year ended December 31, 2015 2014 2013 Payor: United HealthCare % % % Blue Cross Blue Shield Aetna Cigna Other Medicaid/Medicare — — % % % |
Schedule of estimated useful lives of assets | Estimated useful life (in years) Computer equipment 3 to 5 Automobiles Office equipment Medical equipment 5 to 7 Leasehold improvement 4 to 10 Buildings 15 to 40 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
PROPERTY AND EQUIPMENT | |
Schedule of property and equipment | Property and equipment consisted of the following, as of December 31, 2015 and 2014 ( in thousands ): December 31, December 31, 2015 2014 Leasehold improvements $ $ Computer equipment Medical equipment Office equipment Automobiles Land Construction in progress Buildings Less accumulated depreciation Property and equipment, net $ $ |
INVESTMENT IN UNCONSOLIDATED 28
INVESTMENT IN UNCONSOLIDATED JOINT VENTURE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
PROPERTY AND EQUIPMENT | |
Summary of unaudited results of operations of equity method investees | Summarized unaudited financial information for the Company’s equity method investees is as follows ( in thousands ): Year ended December 31, 2015 2014 Net patient service revenue $ $ Total operating expenses Income (loss) from operations Balance sheet information (as of December 31): Current Assets $ $ Noncurrent assets Current Liabilities Noncurrent liabilities — |
Summary of investment in unconsolidated joint ventures | Our investment in unconsolidated joint ventures consists of the following (in thousands): As of December 31, 2015 2014 Beginning balance $ $ — Share of income (loss) Initial investment Gain on contribution — Distributions — Investment in unconsolidated joint ventures $ $ |
GOODWILL AND OTHER INTANGIBLE29
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Table summarizing the changes in goodwill | The following table summarizes the change in goodwill during the years ended December 31, 2015 and 2014 (in thousands) : 2015 2014 Balance at beginning of year $ $ Adjustments — — Balance at beginning of year $ $ |
Table summarizing the changes in intangible assets | The following table summarizes the change in intangible assets during the years ended December 31, 2015 and 2014 (in thousands) : Noncompete Trade Domain Agreements Names Names Total Balance at December 31, 2013 $ $ $ $ Additions — — — — Amortization — — Balance at December 31, 2014 $ $ $ $ Additions — — — — Amortization — — Balance at December 31, 2015 $ $ $ $ |
DERIVATIVE INSTRUMENTS AND HE30
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |
Summary of the Company's derivative instruments | The following table summarizes the Company's derivative instruments (in thousands) : December 31, December 31, 2015 2014 Balance Sheet Location Fair Value Fair Value Derivative designated as hedging instruments Interest rate contracts Other long-term assets $ — $ |
ACCOUNTS PAYABLE AND ACCRUED 31
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | |
Summary of accounts payable and accrued expenses | Accounts payable and accrued expenses consisted of the following (in thousands) : December 31, December 31, 2015 2014 Accounts payable $ $ Accrued expenses Accrued tax distribution to LLC Unit holders Other Total accounts payable and accrued expenses $ $ |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
DEBT | |
Summary of components of debt | The components of debt consisted of the following (in thousands) : December 31, December 31, 2015 2014 Term loan $ $ Delayed draw term loan — Revolving credit — Other financing agreements Less current maturities $ $ |
Schedule of future aggregate maturities of long-term debt | Scheduled future aggregate maturities of principal of long-term debt are as follows: ( in thousands ): Years ending December 31, Amount 2016 $ 2017 2018 2019 2020 Total $ |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
COMMITMENTS AND CONTINGENCIES | |
Contractual obligations | F uture minimum lease payments required under noncancelable operating leases and future minimum, capital lease payments as of December 31, 2015 were as follows (in thousands) : Capital Operating Years ending December 31, leases leases 2016 $ $ 2017 2018 2019 2020 Thereafter Total future minimum lease payments $ $ Less: Amounts representing interest Present value of minimum lease payments Current portion of capital lease obligations Long-term portion of capital lease payments $ |
SUPPLEMENTAL CASH FLOW INFORM34
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Supplemental Cash Flow Information | |
Summary of supplemental cash flow information and supplemental noncash activities | Supplemental cash flow information and supplemental noncash activities consisted of the following for the years ended December 31, 2015, 2014 and 2013 (in thousands) : December 31, December 31, December 31, 2015 2014 2013 Supplemental cash flow information: Interest paid $ $ $ Taxes paid Supplemental noncash activities: Acquisition of property and equipment in accounts payable and accrued expenses $ — $ $ Assets acquired through capital lease — Note payable for other financing agreements Contribution of assets to joint venture — — Effects of tax receivable agreement — Accrual of owner distributions — |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure | |
Schedule of components of our (benefit) provision for income taxes | The components of our (benefit) provision for income taxes were as follows ( in thousands ): 2015 2014 2013 Current: Federal $ - $ - $ - State Total current taxes Deferred: Federal - State - Total deferred taxes - Total income tax (benefit) provision $ $ $ |
Schedule of reconciliation of our income tax (benefit) expense | The reconciliation of our income tax (benefit) expense computed at the U.S. federal statutory tax rate to the actual income tax (benefit) expense is as follows (in thousands ): 2015 2014 2013 Expense derived by applying the federal income tax rate to income (loss) before taxes $ $ $ Tax applicable to pass-through entities - State income tax, net of federal benefit - Nondeductible expenses - Provision (benefit) for income taxes $ $ $ - |
Schedule of components of our deferred tax assets and liabilities | Significant components of our deferred tax assets and liabilities are as follows ( in thousands ): 2015 2014 Deferred tax assets TRA liability $ $ Investment in partnership Net operating loss carryforwards State net operating loss carryforwards Total deferred tax assets $ 206,265 $ 34,084 |
NET INCOME (LOSS) PER SHARE (Ta
NET INCOME (LOSS) PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
NET INCOME (LOSS) PER SHARE | |
Summary of computation of basic and diluted net income (loss) per common share | The following table sets forth the computation of basic and diluted net income ( loss ) per common share (in thousands, except share and per share data) : Year ended December 31, 2015 2014 Numerator: Net income (loss) attributable to Adeptus Health Inc. $ $ Denominator: Denominator for basic net income (loss) per Class A common share-weighted average shares Effect of dilutive securities: Restricted shares — — Denominator for diluted net income (loss) per Class A common share-weighted average shares Net income (loss) attributable to Adeptus Health Inc. per Class A common share - Basic $ $ Net income (loss) attributable to Adeptus Health Inc. per Class A common share - Diluted $ $ |
SELECTED QUARTERLY FINANCIAL 37
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Selected Quarterly Financial Data | |
Selected unaudited quarterly statements of operations data | Three months ended December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31, 2015 2015 2015 2015 2014 2014 2014 2014 (in thousands, except per share data) Patient service revenue $ $ $ $ $ $ $ $ Provision for bad debt Net patient service revenue Management and contract services revenue — — — Total net operating revenue Income (loss) from operations Net income (loss) Less: Net income (loss) attributable to non-controlling interest Net income (loss) attributable to Adeptus Health Inc. $ $ $ $ $ $ $ $ — Net income (loss) per share of Class A common stock: Basic and Diluted $ $ $ $ $ $ $ $ — |
ORGANIZATION (Details)
ORGANIZATION (Details) | Jun. 24, 2014USD ($)shares | Jul. 31, 2015$ / sharesshares | May. 31, 2015$ / sharesshares | Dec. 31, 2015USD ($)itemfacility$ / sharesshares | Dec. 31, 2014USD ($)$ / shares | Dec. 31, 2012facility |
Ownership, voting power and economic interest | ||||||
Number of emergency room facilities | facility | 81 | 14 | ||||
Number of fully licensed general hospitals | item | 2 | |||||
Issuance of Class A common stock (in shares) | 735,000 | |||||
Shares sold by a significant shareholder | 313,586 | |||||
Shares sold by the Company with specific purpose of proceeds | 421,414 | |||||
Dividends paid to existing owners | $ | $ 60,000,000 | $ 60,000,000 | ||||
Noncontrolling ownership percentage | 31.50% | |||||
Over-Allotment Option | ||||||
Ownership, voting power and economic interest | ||||||
Issuance of Class A common stock (in shares) | 324,926 | |||||
Selling Stockholder | Over-Allotment Option | ||||||
Ownership, voting power and economic interest | ||||||
Issuance of Class A common stock (in shares) | 185,074 | |||||
Selling Shareholder And Adeptus | ||||||
Ownership, voting power and economic interest | ||||||
Issuance of Class A common stock (in shares) | 3,910,000 | |||||
Common Class A | ||||||
Ownership, voting power and economic interest | ||||||
Issuance of Class A common stock (in shares) | 4,900,000 | 2,320,351 | 1,349,671 | |||
Public offering price | $ / shares | $ 105 | $ 63.75 | ||||
Common stock, par value | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | ||
Conversion ratio | 1 | |||||
Purchase of shares by underwriters | 222,625 | |||||
Common Class A | IPO | ||||||
Ownership, voting power and economic interest | ||||||
Issuance of Class A common stock (in shares) | 2,415,000 | |||||
Common Class A | Selling Stockholder | ||||||
Ownership, voting power and economic interest | ||||||
Issuance of Class A common stock (in shares) | 1,079,649 | 750,329 | ||||
Units purchased from Adeptus Health LLC | 92,375 | |||||
Common Class B | ||||||
Ownership, voting power and economic interest | ||||||
Common stock, par value | $ / shares | $ 0.01 | $ 0.01 | ||||
Conversion ratio | 1 | |||||
Adeptus Health LLC | ||||||
Ownership, voting power and economic interest | ||||||
Dividends paid to existing owners | $ | $ 60,000,000 | |||||
Adeptus Health LLC | Common Class A | ||||||
Ownership, voting power and economic interest | ||||||
Shares converted | 4,895,521 | |||||
Units purchased from Adeptus Health LLC | 2,645,277 | 1,572,296 |
SUMMARY OF SIGNIFICANT ACCOUN39
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Patient Revenue and Accounts Receivable (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2014USD ($) | Jun. 30, 2014USD ($) | Mar. 31, 2014USD ($) | Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Patient service revenue by major payor source | |||||||||||
Number of management services agreement | item | 2 | ||||||||||
Patient service revenue | $ 119,093 | $ 101,254 | $ 104,363 | $ 95,902 | $ 80,290 | $ 66,533 | $ 51,946 | $ 44,529 | $ 420,612 | $ 243,298 | $ 114,960 |
Provision for bad debt | (19,754) | (17,907) | (17,514) | (14,945) | (10,234) | (8,934) | (7,708) | (5,748) | (70,119) | (32,624) | (12,077) |
Net patient service revenue | $ 99,339 | $ 83,347 | $ 86,849 | $ 80,957 | $ 70,056 | $ 57,599 | $ 44,238 | $ 38,781 | 350,493 | 210,674 | 102,883 |
Medicare | |||||||||||
Patient service revenue by major payor source | |||||||||||
Patient service revenue | 1,370 | 3 | |||||||||
Medicaid | |||||||||||
Patient service revenue by major payor source | |||||||||||
Patient service revenue | 2,205 | 3 | |||||||||
Commercial | |||||||||||
Patient service revenue by major payor source | |||||||||||
Patient service revenue | 402,017 | 237,907 | 113,603 | ||||||||
Self Pay | |||||||||||
Patient service revenue by major payor source | |||||||||||
Patient service revenue | 11,155 | 4,287 | $ 1,357 | ||||||||
Other | |||||||||||
Patient service revenue by major payor source | |||||||||||
Patient service revenue | $ 3,865 | $ 1,098 |
SUMMARY OF SIGNIFICANT ACCOUN40
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Third-party Payors (Details) - entity | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Major Third Party Payors | |||
Major payor revenues and receivables | |||
Number of major third-party payors | 4 | ||
Sales Revenue Services Net | Customer Concentration Risk | |||
Major payor revenues and receivables | |||
Percentage of Company total | 100.00% | 100.00% | 100.00% |
Sales Revenue Services Net | Customer Concentration Risk | Medicaid and Medicare | |||
Major payor revenues and receivables | |||
Percentage of Company total | 0.90% | ||
Sales Revenue Services Net | Customer Concentration Risk | Major Third Party Payors | |||
Major payor revenues and receivables | |||
Percentage of Company total | 84.60% | 84.80% | 86.70% |
Sales Revenue Services Net | Customer Concentration Risk | Blue Cross Blue Shield | |||
Major payor revenues and receivables | |||
Percentage of Company total | 23.10% | 27.60% | 28.00% |
Sales Revenue Services Net | Customer Concentration Risk | United Health Care | |||
Major payor revenues and receivables | |||
Percentage of Company total | 29.20% | 23.60% | 26.50% |
Sales Revenue Services Net | Customer Concentration Risk | Aetna | |||
Major payor revenues and receivables | |||
Percentage of Company total | 18.80% | 19.30% | 21.00% |
Sales Revenue Services Net | Customer Concentration Risk | Cigna | |||
Major payor revenues and receivables | |||
Percentage of Company total | 13.50% | 14.30% | 11.20% |
Sales Revenue Services Net | Customer Concentration Risk | Other Payors | |||
Major payor revenues and receivables | |||
Percentage of Company total | 14.50% | 15.20% | 13.30% |
Accounts Receivable | Credit Concentration Risk | Major Third Party Payors | |||
Major payor revenues and receivables | |||
Percentage of Company total | 65.90% | 80.00% |
SUMMARY OF SIGNIFICANT ACCOUN41
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($)itemfacilityroom | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Oct. 31, 2013item | |
Derivative Instruments and Hedging Activities | |||||
Cash equivalents | $ 0 | ||||
Percentage of base rent on which letter of credit is issued | 50.00% | ||||
Restricted cash | $ 4,795,000 | ||||
Long-term Line of Credit | $ 15,000,000 | ||||
Charity care, percent of patient service revenue | 7.8 | 8.6 | $ 7 | ||
Advertising expense | 5,700,000 | 5,400,000 | 2,100,000 | ||
Impairment charges of long-lived assets | 0 | 0 | 0 | ||
Goodwill impairment charges | $ 0 | 0 | 0 | ||
Number of reporting units | item | 1 | ||||
Impairment charges of intangible assets | $ 0 | 0 | 0 | ||
Number of facilities leased | facility | 82 | ||||
Number of facilities classified as operating leases | facility | 81 | ||||
Number of leased facilities capitalized (in facilities) | facility | 1 | ||||
Provision (benefit) for income taxes | $ 8,733,000 | $ (1,326,000) | $ 720,000 | ||
Number of freestanding emergency departments | room | 15 | ||||
Number of joint venture interests considered a VIE for which the entity is not the primary beneficiary | item | 1 | ||||
Number of full-service healthcare hospital facilities | item | 1 | ||||
Investment ownership percentage | 49.90% | ||||
Nondesignated | |||||
Derivative Instruments and Hedging Activities | |||||
Number of derivative instruments maintained | item | 1 | ||||
Computer Equipment | Minimum | |||||
Derivative Instruments and Hedging Activities | |||||
Estimated useful lives of assets | 3 years | ||||
Computer Equipment | Maximum | |||||
Derivative Instruments and Hedging Activities | |||||
Estimated useful lives of assets | 5 years | ||||
Automobiles | |||||
Derivative Instruments and Hedging Activities | |||||
Estimated useful lives of assets | 5 years | ||||
Office Equipment | |||||
Derivative Instruments and Hedging Activities | |||||
Estimated useful lives of assets | 5 years | ||||
Medical Equipment | Minimum | |||||
Derivative Instruments and Hedging Activities | |||||
Estimated useful lives of assets | 5 years | ||||
Medical Equipment | Maximum | |||||
Derivative Instruments and Hedging Activities | |||||
Estimated useful lives of assets | 7 years | ||||
Leasehold Improvements | Minimum | |||||
Derivative Instruments and Hedging Activities | |||||
Estimated useful lives of assets | 4 years | ||||
Leasehold Improvements | Maximum | |||||
Derivative Instruments and Hedging Activities | |||||
Estimated useful lives of assets | 10 years | ||||
Building | Minimum | |||||
Derivative Instruments and Hedging Activities | |||||
Estimated useful lives of assets | 15 years | ||||
Building | Maximum | |||||
Derivative Instruments and Hedging Activities | |||||
Estimated useful lives of assets | 40 years | ||||
Master Funding And Development Agreement | |||||
Derivative Instruments and Hedging Activities | |||||
Number of leased facilities capitalized (in facilities) | item | 1 | ||||
Additional Master Funding And Development Agreement | |||||
Derivative Instruments and Hedging Activities | |||||
Cash restriction letters of credit facility fundings | $ 250,000,000 | ||||
University of Colorado Health | |||||
Derivative Instruments and Hedging Activities | |||||
Number of freestanding emergency departments | facility | 15 | ||||
Dignity Health Arizona General Hospital | |||||
Derivative Instruments and Hedging Activities | |||||
Number of freestanding emergency departments | facility | 4 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Property and Equipment | ||
Property and equipment | $ 100,767 | $ 111,595 |
Less accumulated depreciation | 30,580 | 17,703 |
Property and equipment, net | 70,187 | 93,892 |
Assets under capital leases | 4,200 | 4,200 |
Accumulated depreciation associated with capital lease assets | 600 | 300 |
Leasehold Improvements | ||
Property and Equipment | ||
Property and equipment | 73,249 | 77,354 |
Computer Equipment | ||
Property and Equipment | ||
Property and equipment | 5,627 | 3,700 |
Medical Equipment | ||
Property and Equipment | ||
Property and equipment | 4,458 | 4,213 |
Office Equipment | ||
Property and Equipment | ||
Property and equipment | 5,445 | 4,307 |
Automobiles | ||
Property and Equipment | ||
Property and equipment | 218 | 243 |
Land | ||
Property and Equipment | ||
Property and equipment | 6,758 | 8,276 |
Asset Under Construction | ||
Property and Equipment | ||
Property and equipment | 345 | 8,835 |
Building | ||
Property and Equipment | ||
Property and equipment | $ 4,667 | $ 4,667 |
INVESTMENT IN UNCONSOLIDATED 43
INVESTMENT IN UNCONSOLIDATED JOINT VENTURE (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015USD ($)roomfacility | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Schedule of Equity Method Investments [Line Items] | |||
Number of freestanding emergency departments | room | 15 | ||
Gain on contribution to joint venture | $ | $ 24,250 | ||
Equity in earnings of unconsolidated joint ventures | $ | $ 8,927 | $ (900) | |
University of Colorado Health | |||
Schedule of Equity Method Investments [Line Items] | |||
Number of freestanding emergency departments | facility | 15 | ||
Gain on contribution to joint venture | $ | $ 24,300 | ||
Dignity Health Arizona General Hospital | |||
Schedule of Equity Method Investments [Line Items] | |||
Number of freestanding emergency departments | facility | 4 | ||
Dignity Health Arizona General Hospital | |||
Schedule of Equity Method Investments [Line Items] | |||
Number of freestanding emergency departments | facility | 4 | ||
University of Colorado Health | |||
Schedule of Equity Method Investments [Line Items] | |||
Number of freestanding emergency rooms contributed to the joint venture | room | 12 |
INVESTMENT IN UNCONSOLIDATED 44
INVESTMENT IN UNCONSOLIDATED JOINT VENTURE - Equity Method Investees (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Equity method investment information | |||||||||||
Net patient service revenue | $ 99,339 | $ 83,347 | $ 86,849 | $ 80,957 | $ 70,056 | $ 57,599 | $ 44,238 | $ 38,781 | $ 350,493 | $ 210,674 | $ 102,883 |
Total operating expenses | 338,446 | 216,426 | 101,992 | ||||||||
Income (loss) from operations | 10,105 | $ 6,058 | $ 13,650 | $ 5,354 | (139) | $ (1,079) | $ (5,072) | $ (341) | 35,168 | (6,632) | $ 891 |
Balance sheet information: | |||||||||||
Current Assets | 118,690 | 65,643 | 118,690 | 65,643 | |||||||
Current Liabilities | 59,263 | 41,445 | 59,263 | 41,445 | |||||||
Equity Method Investee | |||||||||||
Equity method investment information | |||||||||||
Net patient service revenue | 74,769 | 247 | |||||||||
Total operating expenses | 66,172 | 2,049 | |||||||||
Income (loss) from operations | 8,597 | (1,803) | |||||||||
Balance sheet information: | |||||||||||
Current Assets | 25,646 | 1 | 25,646 | 1 | |||||||
Noncurrent assets | 36,154 | 5 | 36,154 | 5 | |||||||
Current Liabilities | 20,774 | $ 2 | 20,774 | $ 2 | |||||||
Noncurrent liabilities | $ 1,637 | $ 1,637 |
INVESTMENT IN UNCONSOLIDATED 45
INVESTMENT IN UNCONSOLIDATED JOINT VENTURE - Investment in Unconsolidated Joint Ventures (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
INVESTMENT IN UNCONSOLIDATED JOINT VENTURE | |||
Beginning balance | $ 2,100 | ||
Equity in earnings of unconsolidated joint ventures | 8,927 | $ (900) | |
Initial investment | 12,027 | ||
Initial investment | $ 3,000 | ||
Gain on contribution | 24,250 | ||
Distributions | (4,200) | ||
Ending balance | $ 43,104 | $ 2,100 |
GOODWILL AND OTHER INTANGIBLE46
GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Goodwill | ||
Balance at beginning of year | $ 61,009 | $ 61,009 |
Balance at end of year | 61,009 | 61,009 |
Changes in intangible assets | ||
Balance at beginning of period | 20,015 | 21,795 |
Amortization | (1,780) | (1,780) |
Balance at end of period | 18,235 | 20,015 |
Trade Names | ||
Changes in intangible assets | ||
Balance at beginning of period | 9,300 | 9,300 |
Balance at end of period | 9,300 | 9,300 |
Domain Names | ||
Changes in intangible assets | ||
Balance at beginning of period | 7,600 | 7,600 |
Balance at end of period | 7,600 | 7,600 |
Noncompete Agreements | ||
Changes in intangible assets | ||
Balance at beginning of period | 3,115 | 4,895 |
Amortization | (1,780) | (1,780) |
Balance at end of period | 1,335 | $ 3,115 |
Future Amortization | ||
2,016 | $ 1,300 |
DERIVATIVE INSTRUMENTS AND HE47
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Oct. 31, 2015USD ($) | Dec. 31, 2015USD ($)item | Dec. 31, 2013USD ($) | Dec. 31, 2014USD ($) | May. 31, 2012USD ($) | |
Derivatives | |||||
Realized (loss) gain on derivative | $ (92) | $ 112 | |||
Designated As Hedging Instrument | Other Noncurrent Assets | |||||
Derivatives | |||||
Fair Value | $ 19 | ||||
Interest Rate Swap | Nondesignated | Cash Flow Hedging | Forward Contracts | |||||
Derivatives | |||||
Notional amount | $ 24,000 | ||||
Fixed interest rate | 1.20% | ||||
Interest Rate Swap | Designated As Hedging Instrument | Forward Contracts | |||||
Derivatives | |||||
Realized (loss) gain on derivative | $ 100 | ||||
Interest Rate Cap | Cash Flow Hedging | |||||
Derivatives | |||||
Losses reclassified from accumulated other comprehensive income into earnings | $ 100 | ||||
Interest Rate Cap | Designated As Hedging Instrument | Cash Flow Hedging | |||||
Derivatives | |||||
Number of agreements | item | 1 | ||||
Notional amount | $ 37,500 | ||||
Capped interest rate | 3.00% |
ACCOUNTS PAYABLE AND ACCRUED 48
ACCOUNTS PAYABLE AND ACCRUED EXPENSE (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | ||
Accounts payable | $ 13,600 | $ 14,133 |
Accrued expenses | 7,297 | 4,431 |
Accrued tax distribution to LLC unit holders | 4,246 | 4,246 |
Other | 2,378 | 2,610 |
Total accounts payable and accrued expenses | $ 27,521 | $ 25,420 |
DEBT - Components (Details)
DEBT - Components (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Debt | ||
Less current maturities | $ 7,585 | $ 1,816 |
Long-term debt, less current maturities | 117,241 | 104,982 |
Insurance Financing Agreement | ||
Debt | ||
Debt, long-term and short-term combined amount | 1,388 | 1,298 |
Senior Secured Credit Facility | ||
Debt | ||
Debt, long-term and short-term combined amount | 124,826 | 106,798 |
Secured Debt | ||
Debt | ||
Debt, long-term and short-term combined amount | $ 123,438 | 75,000 |
Delayed Draw Term Loan | ||
Debt | ||
Debt, long-term and short-term combined amount | 25,000 | |
Revolving Credit Facility | ||
Debt | ||
Debt, long-term and short-term combined amount | $ 5,500 |
DEBT - Details (Details)
DEBT - Details (Details) - USD ($) | Oct. 06, 2015 | Jun. 11, 2014 | Dec. 31, 2015 | Apr. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Apr. 20, 2015 | Jun. 30, 2014 | Mar. 31, 2014 | Oct. 31, 2013 |
Line of Credit Facility | |||||||||||
Maximum aggregate funding amount permitted | $ 500,000,000 | $ 250,000,000 | |||||||||
Proceeds from long-term borrowings | $ 184,000,000 | $ 99,457,000 | $ 102,000,000 | ||||||||
Prepayment Premium On Repayments Of Lines Of Credit | $ 5,000,000 | ||||||||||
Prepayment premium | 2,100,000 | ||||||||||
Write-off of deferred loan costs | $ 2,931,000 | $ 440,000 | |||||||||
Senior Secured Credit Facility Original Agreement | |||||||||||
Line of Credit Facility | |||||||||||
Debt instrument face amount | $ 75,000,000 | ||||||||||
Senior Secured Credit Facility Second Amendment | |||||||||||
Line of Credit Facility | |||||||||||
Proceeds from long-term borrowings | $ 75,000,000 | ||||||||||
Senior Secured Credit Facility | |||||||||||
Line of Credit Facility | |||||||||||
Unused line fee | 0.50% | ||||||||||
Annual Agency fee | $ 100,000 | ||||||||||
Senior Secured Credit Facility | Debt Instrument Base Rate Loans | Federal Funds Effective Rate | |||||||||||
Line of Credit Facility | |||||||||||
Basis spread on variable rate interest | 0.50% | ||||||||||
Margin added to variable interest rate | 6.50% | ||||||||||
Senior Secured Credit Facility | Debt Instrument Libor Rate Loans | LIBOR | |||||||||||
Line of Credit Facility | |||||||||||
Basis spread on variable rate interest | 1.00% | ||||||||||
Margin added to variable interest rate | 7.50% | ||||||||||
Delayed Draw Term Loan | |||||||||||
Line of Credit Facility | |||||||||||
Maximum borrowing capacity | 165,000,000 | ||||||||||
Draw fee | 1.00% | ||||||||||
Draw from delayed draw term loan | $ 30,000,000 | ||||||||||
Remaining borrowing capacity | 80,200,000 | ||||||||||
Delayed Draw Term Loan | Senior Secured Credit Facility Second Amendment | |||||||||||
Line of Credit Facility | |||||||||||
Maximum borrowing capacity | $ 75,000,000 | ||||||||||
Amount of principal which will be used for specified distributions | 60,000,000 | ||||||||||
Amount of principal which will be used to repay certain revolving loans | $ 10,000,000 | ||||||||||
Revolving Credit Facility | |||||||||||
Line of Credit Facility | |||||||||||
Maximum borrowing capacity | $ 10,000,000 | ||||||||||
Remaining borrowing capacity | $ 4,000,000 | ||||||||||
Senior Secured Credit Facility Maturing October 2020 | |||||||||||
Line of Credit Facility | |||||||||||
Remaining borrowing capacity | $ 39,800,000 | $ 39,800,000 | |||||||||
Senior Secured Credit Facility Maturing October 2020 | Federal Funds Effective Rate | |||||||||||
Line of Credit Facility | |||||||||||
Margin added to variable interest rate | 0.50% | ||||||||||
Senior Secured Credit Facility Maturing October 2020 | LIBOR | |||||||||||
Line of Credit Facility | |||||||||||
Margin added to variable interest rate | 1.00% | ||||||||||
Term Loan Maturing October 2020 | |||||||||||
Line of Credit Facility | |||||||||||
Maximum borrowing capacity | $ 125,000,000 | ||||||||||
Revolving Credit Facility Maturing October 2020 | |||||||||||
Line of Credit Facility | |||||||||||
Maximum borrowing capacity | 50,000,000 | ||||||||||
Standby Letters Of Credit Maturing October 2020 | |||||||||||
Line of Credit Facility | |||||||||||
Maximum borrowing capacity | 15,000,000 | ||||||||||
Swing Line Loans Maturing October 2020 | |||||||||||
Line of Credit Facility | |||||||||||
Maximum borrowing capacity | 5,000,000 | ||||||||||
Conditional Borrowing Option Maturing October 2020 | |||||||||||
Line of Credit Facility | |||||||||||
Maximum borrowing capacity | $ 50,000,000 | ||||||||||
Minimum | Senior Secured Credit Facility | LIBOR | |||||||||||
Line of Credit Facility | |||||||||||
Margin added to variable interest rate | 3.25% | ||||||||||
Minimum | Senior Secured Credit Facility Maturing October 2020 | |||||||||||
Line of Credit Facility | |||||||||||
Unused line fee | 0.40% | ||||||||||
Minimum | Senior Secured Credit Facility Maturing October 2020 | Base Rate | |||||||||||
Line of Credit Facility | |||||||||||
Margin added to variable interest rate | 2.25% | ||||||||||
Maximum | Senior Secured Credit Facility | LIBOR | |||||||||||
Line of Credit Facility | |||||||||||
Margin added to variable interest rate | 4.00% | ||||||||||
Maximum | Senior Secured Credit Facility Maturing October 2020 | |||||||||||
Line of Credit Facility | |||||||||||
Unused line fee | 0.50% | ||||||||||
Maximum | Senior Secured Credit Facility Maturing October 2020 | Base Rate | |||||||||||
Line of Credit Facility | |||||||||||
Margin added to variable interest rate | 3.00% |
DEBT - Insurance Finance Agreem
DEBT - Insurance Finance Agreements (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Oct. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | |
Insurance Financing Agreement July 2014 | |||
Finance Agreement | |||
Debt instrument face amount | $ 1,900,000 | ||
Insurance Financing Agreement July 2014 | Minimum | |||
Finance Agreement | |||
Stated interest rate | 2.49% | ||
Debt instrument term | 9 months | ||
Insurance Financing Agreement July 2014 | Maximum | |||
Finance Agreement | |||
Stated interest rate | 3.25% | ||
Debt instrument term | 11 months | ||
Insurance Financing Agreement October 2013 | |||
Finance Agreement | |||
Debt instrument face amount | $ 800,000 | ||
Stated interest rate | 1.93% | ||
Debt instrument term | 9 months | ||
Insurance Financing Agreement June 2015 | |||
Finance Agreement | |||
Debt instrument face amount | $ 2,400,000 | ||
Insurance Financing Agreement June 2015 | Minimum | |||
Finance Agreement | |||
Debt instrument face amount | $ 2.49 | ||
Debt instrument term | 9 months | ||
Insurance Financing Agreement June 2015 | Maximum | |||
Finance Agreement | |||
Debt instrument face amount | $ 3.50 | ||
Debt instrument term | 11 months |
DEBT - Future Aggregate Matutie
DEBT - Future Aggregate Matuties (Details) $ in Thousands | Dec. 31, 2015USD ($) |
Future aggregate maturities of long term debt | |
2,016 | $ 7,585 |
2,017 | 7,085 |
2,018 | 9,375 |
2,019 | 10,156 |
2,020 | 90,625 |
Total | $ 124,826 |
TRANSACTIONS WITH RELATED PAR53
TRANSACTIONS WITH RELATED PARTIES (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Jul. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Sponsor Of Company | Management Services And Reimbursement Of Certain Expenses | ||||
Agreement provisions | ||||
Payments | $ 24,000 | $ 800,000 | $ 600,000 | |
Sponsor Of Company | Termination Of Advisory Services Agreement | ||||
Agreement provisions | ||||
Payments | $ 2,000,000 | |||
Various Related Party Vendors | Contractor Services | ||||
Agreement provisions | ||||
Payments | $ 200,000 | $ 100,000 | $ 60,000 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
EMPLOYEE BENEFIT PLANS | ||
Employer contributions | $ 0.9 | $ 0.5 |
Contributions approved by board of directors | $ 1.7 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Insurance Arrangements (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Uninsured Risk | |||
Loss Contingencies | |||
Accrual for incurred but not reported claims | $ 800 | $ 700 | |
Workers Compensation Insurance | |||
Loss Contingencies | |||
Maximum amount of worker's compensation claims | 1,000 | ||
Policy limit | 1,000 | ||
Professional Malpractice Liability | |||
Loss Contingencies | |||
Worker's compensation expense | 300 | $ 300 | $ 70 |
Maximum professional liability insurance per incident | 1,000 | ||
Maximum professional liability insurance per facility | 3,000 | ||
Maximum professional liability aggregate policy limit | $ 20,000 |
COMMITMENTS AND CONTINGENCIES56
COMMITMENTS AND CONTINGENCIES - Leases (Details) $ in Millions | Apr. 20, 2015USD ($)item | Jul. 31, 2014USD ($) | Dec. 31, 2015USD ($)ft²itemfacilityOption | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) |
Other Commitments | |||||
Number of leased facilities capitalized (in facilities) | facility | 1 | ||||
Receivables from developers | $ 12.2 | ||||
Lease expense | $ 31.1 | $ 15.2 | $ 4.5 | ||
Master Funding And Development Agreement | |||||
Other Commitments | |||||
Maximum number of facilities | facility | 25 | ||||
Maximum funding per agreement | $ 100 | ||||
Initial term of lease | 15 years | ||||
Number of lease renewal options (in leases) | Option | 3 | ||||
Lease renewal terms | 5 years | ||||
Number of leased facilities capitalized (in facilities) | item | 1 | ||||
Amendment Additional MPT Agreement | |||||
Other Commitments | |||||
Maximum funding per agreement | $ 500 | ||||
Additional funding due to amendment | $ 250 | ||||
Initial term of lease | 15 years | ||||
Number of lease renewal options (in leases) | item | 3 | ||||
Lease renewal terms | 5 years | ||||
Additional Master Funding And Development Agreement | |||||
Other Commitments | |||||
Maximum funding per agreement | $ 150 | ||||
Corporate Headquarters | |||||
Other Commitments | |||||
Square footage leased (in square feet) | ft² | 80,000 | ||||
Lease expense | $ 1.6 | $ 1.4 | $ 0.7 |
COMMITMENTS AND CONTINGENCIES57
COMMITMENTS AND CONTINGENCIES - Capital Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Capital Leases, Future Minimum Payments Due, Fiscal Year Maturity | ||
2,016 | $ 533 | |
2,017 | 543 | |
2,018 | 554 | |
2,019 | 565 | |
2,020 | 577 | |
Thereafter | 4,936 | |
Total future minimum lease payments | 7,708 | |
Less: Amounts representing interest | (3,652) | |
Present value of minimum lease payments | 4,056 | |
Current maturities of capital lease obligations | 102 | $ 81 |
Capital lease obligations, less current maturities | $ 3,954 | $ 4,056 |
COMMITMENTS AND CONTINGENCIES58
COMMITMENTS AND CONTINGENCIES - Operating Leases (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Jan. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity | ||||
2,016 | $ 12,177 | |||
2,017 | 46,825 | |||
2,018 | 44,255 | |||
2,019 | 39,087 | |||
2,020 | 32,470 | |||
Thereafter | 297,786 | |||
Total future minimum lease payments | 472,600 | |||
Leases | ||||
Lease expense | 31,100 | $ 15,200 | $ 4,500 | |
Sublease rental income | $ 10,800 | $ 400 | ||
Georgetown, Texas | ||||
Leases | ||||
Lease termination fees | $ 200 |
SUPPLEMENTAL CASH FLOW INFORM59
SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Supplemental Cash Flow Information | |||
Interest paid | $ 11,769 | $ 9,294 | $ 2,486 |
Taxes Paid | 1,650 | 680 | 530 |
Noncash Investing and Financing Items [Abstract] | |||
Acquisition of property and equipment in accounts payable and accrued expenses | 2,239 | 467 | |
Assets acquired through capital lease | 287 | 3,911 | |
Note payable for other financing agreements | 2,386 | 2,056 | 757 |
Contribution of assets to joint venture | 12,027 | ||
Effects of tax receivable agreement | $ 17,869 | 1,992 | |
Accrual of owner distributions | $ 474 | $ 1,735 |
STOCK BASED COMPENSATION (Detai
STOCK BASED COMPENSATION (Details) - USD ($) | Jun. 24, 2014 | Jul. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Time Based Restricted Stock Units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology | ||||||
Compensation expense | $ 2,700,000 | $ 1,000,000 | $ 600,000 | |||
Performance Based Restricted Stock Units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology | ||||||
Compensation expense | $ 100,000 | |||||
Omnibus Incentive Plan | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Total number of shares which may be issued | 1,033,500 | |||||
Omnibus Incentive Plan | Restricted Stock | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Granted weighted average exercise price (in dollars per share) | $ 37.10 | $ 24.33 | ||||
Omnibus Incentive Plan | Restricted Stock | Non Employee Directors | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Restricted shares granted | 11,934 | |||||
Omnibus Incentive Plan | Restricted Stock | Certain employees | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Restricted shares granted | 35,856 | |||||
Vesting period | 4 years | |||||
Omnibus Incentive Plan | Restricted Stock | CertainEmployeesAndNonEmployeeDirectorsMember | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Restricted shares granted | 149,741 | |||||
Omnibus Incentive Plan | Restricted Stock | CertainEmployeesAndNonEmployeeDirectorsMember | Minimum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Vesting period | 6 months | |||||
Omnibus Incentive Plan | Restricted Stock | CertainEmployeesAndNonEmployeeDirectorsMember | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Vesting period | 4 years | |||||
Omnibus Incentive Plan | Employee Stock Option | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Vesting period | 3 years | |||||
Granted weighted average exercise price (in dollars per share) | $ 86.80 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 30,000 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 10 years | |||||
Omnibus Incentive Plan | Time Based Restricted Stock Units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Unrecognized compensation cost related to share-based awards | $ 4,700,000 | |||||
Weighted average recognition period of unrecognized compensation cost | 2 years | |||||
Legacy Equity Compensation Plan | Time Based Restricted Stock Units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology | ||||||
Risk-free interest rate assumption | 0.93% | 0.72% | ||||
Volatility assumption | 25.00% | 30.00% | ||||
Dividend rate assumption | 0.00% | 0.00% | ||||
Weighted average fair value of incentive units granted | $ 1,262 | $ 204 | ||||
Legacy Equity Compensation Plan | Time Based Restricted Stock Units | Minimum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Vesting period | 3 years | |||||
Legacy Equity Compensation Plan | Time Based Restricted Stock Units | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Vesting period | 4 years | |||||
Legacy Equity Compensation Plan | Performance Based Restricted Stock Units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology | ||||||
Weighted average fair value of incentive units granted | $ 384 | $ 37 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Current: | |||
State | $ 1,783 | $ 821 | $ 720 |
Total Current Taxes | 1,783 | 821 | 720 |
Deferred: | |||
Federal | 7,108 | (2,123) | |
State | (158) | (24) | |
Total deferred taxes | 6,950 | (2,147) | |
Total Income tax (benefit) provision | 8,733 | (1,326) | 720 |
Reconciliation of income tax (benefit) expense | |||
Benefit derived by applying the Federal Income tax rate to loss before taxes | 7,411 | (6,509) | (792) |
Tax applicable to pass-through entities | 4,631 | 792 | |
State Income Tax, net of federal benefit | 1,272 | 534 | |
Investment in Partnership (Nondeductible expenses) | 50 | 18 | |
Total Income tax (benefit) provision | 8,733 | (1,326) | $ 720 |
Deferred Tax Assets | |||
TRA Liability | 65,897 | 8,125 | |
Investment in Partnership | 136,124 | 20,940 | |
Net Operating Loss Carryforwards | 4,193 | 4,957 | |
State Net Operating Loss Carryforwards | 51 | 62 | |
Total Deferred Tax Assets | 206,265 | $ 34,084 | |
Federal | |||
Deferred Tax Assets | |||
Net Operating Loss Carryforwards | 4,200 | ||
Net operating loss carryforwards | $ 12,000 |
INCOME TAXES - Tax Receivable A
INCOME TAXES - Tax Receivable Agreement (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Agreement provisions | ||
Payable to related parties pursuant to tax receivable agreement | $ 191,302 | $ 30,039 |
Deferred tax asset composition | ||
Deferred tax asset | $ 206,265 | $ 34,084 |
Post IPO Unit Holders And Merged Owner | Tax Receivable Agreement | ||
Agreement provisions | ||
Percentage of deemed tax benefits required to be paid | 85.00% | |
Payable to related parties pursuant to tax receivable agreement | $ 191,300 |
NET INCOME (LOSS) PER SHARE (De
NET INCOME (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Numerator | |||||||||
Net loss attributable to Adeptus Health Inc. | $ 1,313 | $ 674 | $ 10,634 | $ 594 | $ 262 | $ (1,597) | $ (2,016) | $ 13,217 | $ (3,351) |
Common Class A | |||||||||
Initial public offering | |||||||||
Common stock, shares outstanding | 14,257,187 | 9,845,016 | 14,257,187 | 9,845,016 | |||||
Common stock, shares issued | 14,257,187 | 9,845,016 | 14,257,187 | 9,845,016 | |||||
Denominator: | |||||||||
Denominator for basic net loss per Class A common share-weighted average shares | 12,103,383 | 9,845,016 | |||||||
Effective of dilutive securities: | |||||||||
Denominator for diluted net loss per Class A common share-weighted average shares | 12,103,383 | 9,845,016 | |||||||
Net loss attributable to Adeptus Health Inc. per Class A common share - Basic | $ 1.09 | $ (0.34) | |||||||
Net loss attributable to Adeptus Health Inc. per Class A common share - Diluted | $ 1.09 | $ (0.34) |
SELECTED QUARTERLY FINANCIAL 64
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Selected Quarterly Financial Data | |||||||||||||
Patient service revenue | $ 119,093 | $ 101,254 | $ 104,363 | $ 95,902 | $ 80,290 | $ 66,533 | $ 51,946 | $ 44,529 | $ 420,612 | $ 243,298 | $ 114,960 | ||
Provision for bad debt | (19,754) | (17,907) | (17,514) | (14,945) | (10,234) | (8,934) | (7,708) | (5,748) | (70,119) | (32,624) | (12,077) | ||
Net patient service revenue | 99,339 | 83,347 | 86,849 | 80,957 | 70,056 | 57,599 | 44,238 | 38,781 | 350,493 | 210,674 | 102,883 | ||
Management and contract services revenue | 6,095 | 4,865 | 2,738 | 496 | 20 | 14,194 | 20 | ||||||
Total net operating revenue | 105,434 | 88,212 | 89,587 | 81,453 | 70,076 | 57,599 | 44,238 | 38,781 | 364,687 | 210,694 | 102,883 | ||
(Loss) income from operations | 10,105 | 6,058 | 13,650 | 5,354 | (139) | (1,079) | (5,072) | (341) | 35,168 | (6,632) | 891 | ||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 2,052 | 1,494 | 27,674 | 1,602 | (1,477) | (3,598) | (9,429) | (2,767) | $ (10,177) | $ (7,093) | 32,823 | (17,272) | (2,984) |
Net income (loss) attributable to the non-controlling interest | 739 | 820 | 17,040 | 1,008 | (1,739) | (2,001) | (7,413) | $ (2,767) | 19,606 | (13,921) | $ (2,984) | ||
Net income (loss) attributable to Adeptus Health Inc. | $ 1,313 | $ 674 | $ 10,634 | $ 594 | $ 262 | $ (1,597) | $ (2,016) | $ 13,217 | $ (3,351) | ||||
Basic and diluted (in dollars per share) | $ 0.09 | $ 0.05 | $ 0.97 | $ 0.06 | $ 0.03 | $ (0.16) | $ (0.21) |
Uncategorized Items - adpt-2015
Label | Element | Value |
Noncontrolling Interest [Member] | ||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | us-gaap_ProfitLoss | $ (6,826,000) |
Retained Earnings [Member] | ||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | us-gaap_ProfitLoss | (3,351,000) |
Adeptus Health L L C Equity [Member] | ||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | us-gaap_ProfitLoss | (7,093,000) |
Total Stockholders Equity Including Noncontrolling Interests [Member] | ||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | us-gaap_ProfitLoss | $ (3,351,000) |