Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 30, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | PRA Health Sciences, Inc. | |
Entity Central Index Key | 1,613,859 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 60,233,503 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED CONDENSED BALANCE
CONSOLIDATED CONDENSED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 48,438 | $ 85,192 |
Restricted cash | 5,482 | 6,337 |
Accounts receivable and unbilled services, net | 400,453 | 338,781 |
Other current assets | 84,948 | 58,413 |
Total current assets | 539,321 | 488,723 |
Fixed assets, net | 79,609 | 72,933 |
Goodwill | 1,023,361 | 1,033,999 |
Intangible assets, net | 553,029 | 600,910 |
Other assets | 46,232 | 42,012 |
Total assets | 2,241,552 | 2,238,577 |
Current liabilities: | ||
Current portion of borrowings under credit facilities | 20,000 | |
Accounts payable | 55,263 | 39,100 |
Accrued expenses and other current liabilities | 145,977 | 131,135 |
Advance billings | 291,588 | 296,121 |
Total current liabilities | 512,828 | 466,356 |
Long-term debt, net | 909,427 | 948,537 |
Other long-term liabilities | 126,246 | 146,869 |
Total liabilities | $ 1,548,501 | $ 1,561,762 |
Commitments and contingencies (Note 12) | ||
Stockholders' equity: | ||
Common stock, $0.01 par value, 1,000,000,000 authorized shares at September 30, 2015 and December 31, 2014; 60,203,935 and 59,814,444 issued and outstanding at September 30, 2015 and December 31, 2014, respectively | $ 602 | $ 598 |
Additional paid-in capital | 826,650 | 821,411 |
Accumulated other comprehensive loss | (111,777) | (69,509) |
Accumulated deficit | (22,424) | (75,685) |
Total stockholders' equity | 693,051 | 676,815 |
Total liabilities and stockholders' equity | $ 2,241,552 | $ 2,238,577 |
CONSOLIDATED CONDENSED BALANCE3
CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 |
CONSOLIDATED CONDENSED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 60,203,935 | 59,814,444 |
Common stock, shares outstanding | 60,203,935 | 59,814,444 |
CONSOLIDATED CONDENSED STATEMEN
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenue: | ||||
Service revenue | $ 345,096 | $ 320,063 | $ 1,013,582 | $ 942,837 |
Reimbursement revenue | 58,414 | 57,274 | 171,354 | 146,786 |
Total revenue | 403,510 | 377,337 | 1,184,936 | 1,089,623 |
Operating expenses: | ||||
Direct costs | 212,808 | 215,746 | 651,646 | 644,275 |
Reimbursable out-of-pocket costs | 58,414 | 57,274 | 171,354 | 146,786 |
Selling, general and administrative | 63,091 | 63,432 | 182,831 | 180,281 |
Depreciation and amortization | 19,762 | 23,903 | 58,217 | 73,140 |
Loss on disposal of fixed assets | 256 | 8 | 451 | 9 |
Income from operations | 49,179 | 16,974 | 120,437 | 45,132 |
Interest expense, net | (15,255) | (21,026) | (46,064) | (63,610) |
Loss on modification of debt | (1,384) | |||
Foreign currency gains, net | 3,697 | 10,658 | 8,797 | 1,559 |
Other expense, net | (947) | (58) | (1,507) | (230) |
Income (loss) before income taxes and equity in losses of unconsolidated joint ventures | 36,674 | 6,548 | 81,663 | (18,533) |
Provision for (benefit from) income taxes | 10,696 | 4,899 | 24,341 | (6,619) |
Income (loss) before equity in losses of unconsolidated joint ventures | 25,978 | 1,649 | 57,322 | (11,914) |
Equity in losses of unconsolidated joint ventures, net of tax | (2,319) | (474) | (4,061) | (1,008) |
Net income (loss) | $ 23,659 | $ 1,175 | $ 53,261 | $ (12,922) |
Net income (loss) per share attributable to common stockholders: | ||||
Basic (in dollars per share) | $ 0.39 | $ 0.03 | $ 0.89 | $ (0.32) |
Diluted (in dollars per share) | $ 0.37 | $ 0.03 | $ 0.84 | $ (0.32) |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 60,050 | 40,284 | 59,917 | 40,273 |
Diluted (in shares) | 63,504 | 42,072 | 63,082 | 40,273 |
CONSOLIDATED CONDENSED STATEME5
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Net income (loss) | $ 23,659 | $ 1,175 | $ 53,261 | $ (12,922) |
Other comprehensive (loss) income: | ||||
Foreign currency translation adjustments | (22,179) | (47,609) | (32,303) | (31,329) |
Unrealized (losses) gains on derivative instruments, net of income tax (benefit) expense of ($1,808), $277, ($2,508) and ($5,647) | (5,724) | 433 | (10,192) | (8,817) |
Reclassification adjustments: | ||||
Losses on derivatives included in net income (loss), net of income taxes, $ -, $ -, $ - and $ - | 158 | 227 | ||
Comprehensive income (loss) | $ (4,086) | $ (46,001) | $ 10,993 | $ (53,068) |
CONSOLIDATED CONDENSED STATEME6
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Unrealized losses on derivative instruments, tax | $ (1,808) | $ 277 | $ (2,508) | $ (5,647) |
CONSOLIDATED CONDENSED STATEME7
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 53,261 | $ (12,922) |
Adjustment to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 58,217 | 73,140 |
Amortization of debt issuance costs and discount | 4,822 | 4,378 |
Stock-based compensation | 3,634 | 2,729 |
Unrealized foreign currency gains | (11,749) | (1,716) |
Loss on modification of debt | 1,384 | |
Equity in losses of unconsolidated joint ventures, net of tax | 4,061 | 1,008 |
Unrealized loss on derivatives | 1,785 | |
Deferred income taxes | (2,213) | (19,122) |
Other reconciling items | 981 | 677 |
Changes in operating assets and liabilities: | ||
Accounts receivable, unbilled services, and advance billings | (66,640) | (76,629) |
Other operating assets and liabilities | 26,043 | 28,532 |
Net cash provided by operating activities | 72,202 | 1,459 |
Cash flows from investing activities: | ||
Purchase of fixed assets | (26,035) | (18,992) |
Cash paid to termination interest rate swaps | (32,907) | |
Investment in unconsolidated joint ventures | (23,000) | |
Acquisition of Value Health Solutions Inc. | (543) | |
Proceeds from the sale of fixed assets | 44 | |
Payment of amounts held in escrow | (787) | |
Net cash used in investing activities | (84,134) | (3,928) |
Cash flows from financing activities: | ||
Repayments of long-term debt | (40,000) | (6,675) |
Borrowings on line of credit | 65,000 | 65,000 |
Repayments of line of credit | (45,000) | (75,000) |
Proceeds from stock options exercises | 27 | 33 |
Proceeds from common stock issued | 102 | |
Payment of acquisition-related contingent consideration | (2,000) | (1,589) |
Payments for common stock issuance costs | (525) | |
Net cash used in financing activities | (22,498) | (18,129) |
Effects of foreign exchange changes on cash and cash equivalents | (2,324) | (2,303) |
Change in cash and cash equivalents | (36,754) | (22,901) |
Cash and cash equivalents, beginning of period | 85,192 | 72,155 |
Cash and cash equivalents, end of period | 48,438 | 49,254 |
Non-cash investing activities: | ||
Issuance of common stock for the acquisition of Value Health Solutions Inc. | 1,582 | |
RPS | ||
Cash flows from investing activities: | ||
Proceeds from working capital settlement | 15,000 | |
CRI Lifetree | ||
Cash flows from investing activities: | ||
Proceeds from working capital settlement | $ 851 | |
ClinStar | ||
Cash flows from investing activities: | ||
Payment of working capital settlement | $ (1,693) |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2015 | |
Basis of Presentation | |
Basis of Presentation | (1) Basis of Presentation Unaudited Interim Financial Information The interim consolidated condensed financial statements include the accounts of PRA Health Sciences, Inc. and its subsidiaries, or the Company. These financial statements are prepared in conformity with U.S. generally accepted accounting principles, or GAAP, and are unaudited. In the opinion of the Company’s management, all adjustments of a normal recurring nature necessary for a fair presentation have been reflected. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been omitted. The accompanying interim consolidated condensed financial statements and related notes should be read in conjunction with the Company’s consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The preparation of the interim consolidated condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim consolidated condensed financial statements and the reported amounts of revenues and claims and expenses during the reporting period. Actual results could differ from those estimates. The Company The Company is a full-service global contract research organization providing a broad range of product development services for pharmaceutical and biotechnology companies around the world. The Company’s integrated services include data management, statistical analysis, clinical trial management, and regulatory and drug development consulting. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board, or FASB, issued an Accounting Standards Update, or ASU, No. 2014-09, ‘‘Revenue from Contracts with Customers,’’ to clarify the principles of recognizing revenue and create common revenue recognition guidance between GAAP and International Financial Reporting Standards. ASU No. 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period . Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that period. The Company is currently assessing the potential impact of ASU No. 2014-09 on the Company’s consolidated condensed financial statements. In August 2014, the FASB issued ASU No. 2014-15, “ Presentation of Financial Statements - Going Concern .” ASU No. 2014-15 clarifies management’s responsibility to evaluate whether there is a substantial doubt about the entity’s ability to continue as a going concern and provides guidance for related footnote disclosures. ASU No. 2014-15 will be effective for annual periods ending after December 15, 2016, and interim periods beginning after December 15, 2016. The adoption of ASU No. 2014-15 is not expected to have a material effect on the Company’s consolidated condensed financial statements. During 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs” and ASU No. 2015-15, “ Interest — Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements.” These proposed standards require all debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability except costs associated with line-of-credit arrangements, which will continue to present as an asset. ASU No. 2015-03 and ASU No. 2015-15 will be effective for annual reporting periods beginning after December 15, 2015 and interim periods within those fiscal years. As of September 30, 2015, the Company had $20.9 million in debt issuance costs in other assets that would be reclassified to long-term debt, net. |
Business Combination
Business Combination | 9 Months Ended |
Sep. 30, 2015 | |
Business Combination | |
Business Combination | (2) Business Combination On June 8, 2015, the Company purchased the assets of Value Health Solutions Inc., or VHS, a software development firm, for $0.5 million in cash and 47,598 unregistered shares of the Company’s common stock with a fair market value of $1.6 million; an additional $0.4 million of common stock will be issued in June 2017, less amounts reimbursable to the Company for any indemnification obligations of the seller. The asset purchase agreement also includes contingent consideration in the form of potential earn-out payments of up to $16.0 million. Earn-out payments totaling $1.0 million and $15.0 million are contingent upon the achievement of project milestones and certain external software sales targets, respectively, during the 48-month period following closing. The Company has recognized a liability of approximately $1.0 million as the estimated acquisition date fair value of the earn-out; this amount is included in the accrued expenses and other current liabilities in the consolidated condensed balance sheet. The fair value of the contingent consideration was based on significant inputs not observed in the market and thus represented a Level 3 measurement. Any change in the fair value of the contingent consideration subsequent to the acquisition date will be recognized in earnings in the period of the change. With this acquisition, the Company expects to enhance its ability to serve customers throughout the clinical research process with technologies that include improved efficiencies by reducing study durations and costs through integrated operational management. The acquisition of VHS was accounted for as a business combination and, accordingly, the assets acquired and the liabilities assumed have been recorded at their respective fair values as of the acquisition date. In connection with the acquisition, the Company recorded approximately $1.0 million of goodwill, which is deductible for income tax purposes. The goodwill is attributable to the workforce of the acquired business and expected synergies with the Company’s existing information technology operations. Due to the timing of the acquisition, the valuation of net assets acquired has not been finalized and is expected to be completed by the end of December 2015, and in any case, no later than one year from the acquisition date in accordance with GAAP. The Company’s preliminary estimate of the purchase price allocation is as follows (in thousands): Purchase Weighted Price Amortization Allocation Period Software intangible $ 5 years Property, plant and equipment Estimated fair value of net assets acquired Purchase price, including contingent consideration Total goodwill $ Pro forma information is not provided as the acquisition did not have a material effect on the Company’s consolidated results. |
Joint Ventures
Joint Ventures | 9 Months Ended |
Sep. 30, 2015 | |
Joint Ventures | |
Joint Ventures | (3) Joint Ventures In August 2015, the Company and an affiliate of Kohlberg Kravis Roberts & Co. L.P., or KKR, entered into a joint venture. The purpose of the joint venture includes, among other things, the evaluation of investments or acquisitions to enhance the strategic objectives of the Company. The joint venture is jointly owned by the Company (11%) and KKR (89%). The Company contributed $20.0 million to the joint venture in August 2015, which is recorded in other current assets in the consolidated condensed balance sheet. The Company has recorded a $1.6 million reduction to the investment balance for the three and nine month periods ended September 30, 2015, which is recorded in equity in losses of unconsolidated joint ventures, net of tax in the consolidated condensed statements of operations. The investment in the joint venture will be adjusted for the Company’s equity in the venture’s net income (loss), cash contributions, distributions, and other adjustments required by the equity method of accounting. The Company and WuXi PharmaTech, or WuXi, operate a joint venture, WuXiPRA Clinical Research Co., Ltd, or WuXiPRA, with operations in China, Hong Kong and Macau. During April 2015, both the Company and WuXi made a $3.0 million contribution to WuXiPRA to fund the joint venture’s working capital needs. The Company’s interest in WuXiPRA remains at 49% after the capital contribution. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Measurements | |
Fair Value Measurements | (4) Fair Value Measurements The Company records certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy that prioritizes the inputs used to measure fair value is described below. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: · Level 1 — Quoted prices in active markets for identical assets or liabilities. · Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. · Level 3 — Unobservable inputs that are supported by little or no market activity. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The carrying amount of financial instruments, including cash and cash equivalents, accounts receivable, unbilled services, accounts payable and advanced billings, approximate fair value due to the short maturities of these instruments . Recurring Fair Value Measurements The following table summarizes the fair value of the Company’s financial assets and liabilities that are measured on a recurring basis as of September 30, 2015 (in thousands): Level 1 Level 2 Level 3 Total Liabilities: Interest rate contracts $ — $ $ — $ Contingent consideration — — Total $ — $ $ $ Interest rate contracts are measured at fair value using a market approach valuation technique. The valuation is based on an estimate of net present value of the expected cash flows using relevant mid-market observable data inputs and based on the assumption of no unusual market conditions or forced liquidation. The Company values contingent consideration, related to business combinations, using a weighted probability of potential payment scenarios discounted at rates reflective of the weighted average cost of capital for the businesses acquired. Key assumptions used to estimate the fair value of contingent consideration include operational milestones and the probability of achieving the specific milestones. The following table summarizes the changes in Level 3 financial liabilities measured on a recurring basis for the nine months ended September 30, 2015 (in thousands): Contingent Considerations - Accrued expenses and other current liabilities Balance at December 31, 2014 $ Revaluations included in earnings Payments on ClinStar contingent consideration ) Initial estimate of VHS contingent consideration Balance at September 30, 2015 $ Non-recurring Fair Value Measurements Certain assets and liabilities are carried on the accompanying consolidated condensed balance sheets at cost and are not remeasured to fair value on a recurring basis. These assets include finite-lived intangible assets which are tested when a triggering event occurs and goodwill and identifiable indefinite-lived intangible assets which are tested for impairment annually on October 1 or when a triggering event occurs. As of September 30, 2015, assets carried on the balance sheet and not remeasured to fair value on a recurring basis totaling approximately $1,576.4 million were identified as Level 3. These assets are comprised of goodwill of $1,023.4 million and identifiable intangible assets, net of $553.0 million. |
Concentration of Credit Risk
Concentration of Credit Risk | 9 Months Ended |
Sep. 30, 2015 | |
Concentration of Credit Risk | |
Concentration of Credit Risk | (5) Concentration of Credit Risk Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, accounts receivable, and unbilled services. As of September 30, 2015, substantially all of the Company’s cash and cash equivalents were held in or invested with large financial institutions. Accounts receivable include amounts due from pharmaceutical and biotechnology companies. The Company establishes an allowance for potentially uncollectible receivables. In management’s opinion, there is no additional material credit risk beyond amounts provided for such losses. Service revenue from individual customers greater than 10% of consolidated service revenue in the respective periods was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Customer A % — % — Accounts receivable and unbilled receivables from individual customers that were equal to or greater than 10% of consolidated accounts receivable and unbilled receivables at the respective dates were as follows: September 30, December 31, 2015 2014 Customer A % % Customer B — % |
Accounts Receivable and Unbille
Accounts Receivable and Unbilled Services | 9 Months Ended |
Sep. 30, 2015 | |
Accounts Receivable and Unbilled Services | |
Accounts Receivable and Unbilled Services | (6) Accounts Receivable and Unbilled Services Accounts receivable and unbilled services include service revenue, reimbursement revenue, and amounts associated with work performed by investigators. Accounts receivable and unbilled services were as follows (in thousands): September 30, December 31, 2015 2014 Accounts receivable $ $ Unbilled services Less allowance for doubtful accounts ) ) Total accounts receivable and unbilled services, net $ $ |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | (7) Goodwill and Intangible Assets Goodwill The changes in the carrying amount of goodwill are as follows (in thousands): Balance at December 31, 2014 $ VHS Acquisition Currency translation ) Balance at September 30, 2015 $ There are no accumulated impairment charges as of September 30, 2015. Based upon the Company’s most recent annual goodwill impairment test that was conducted during the fourth quarter of 2014, the fair value of its Product Registration Services and Strategic Solutions reporting units substantially exceeded their carrying values; the estimated fair value of the Early Development Services, or EDS, reporting unit, however, closely approximated its carrying value. The goodwill of EDS was $125.1 million at September 30, 2015. The EDS reporting unit experienced significant cancellations in the second half of 2014 and was not able to realize synergies from the CRI Lifetree acquisition as quickly as originally forecasted. The Company has made operational improvements during 2015 in order to improve the profitability of the EDS reporting unit. As a result of these changes, EDS saw growth in both backlog and new business awards during the quarter ended September 30, 2015 and its financial performance exceeded forecast. Any negative changes in assumptions on revenue, new business awards, cancellations, or the Company’s ability to improve operations while maintaining a competitive cost structure could adversely affect the fair value of EDS and result in significant goodwill impairment charges in 2015 or later. Intangible Assets Intangible assets consist of the following (in thousands): September 30, December 31, 2015 2014 Customer relationships $ $ Customer backlog Trade names (definite-lived) Patient list and other intangibles Non-competition agreements Total finite-lived intangible assets, gross Accumulated amortization ) ) Total finite-lived intangible assets, net Trade names (indefinite-lived) Total intangible assets, net $ $ Amortization expense was $14.3 million and $42.6 million for the three and nine months ended September 30, 2015, respectively, and $17.9 million and $56.3 million for the three and nine months ended September 30, 2014, respectively. The estimated future amortization expense of finite-lived intangible assets is expected to be as follows (in thousands): 2015 (remaining) $ 2016 2017 2018 2019 2020 and thereafter Total $ |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2015 | |
Long-Term Debt. | |
Long-Term Debt | (8) Long-Term Debt Long-term debt consists of the following (in thousands): September 30, December 31, 2015 2014 Term loans, first lien $ $ Senior notes Less debt discount ) ) Total long-term debt, net $ $ Principal payments on long-term debt are due as follows (in thousands): 2015 (remaining) $ — 2016 — 2017 — 2018 — 2019 — 2020 and thereafter Total $ The estimated fair value of long-term debt was $937.9 million and $966.0 million at September 30, 2015 and December 31, 2014, respectively. The fair value of the senior notes was determined based on Level 2 inputs using the market approach, which is primarily based on rates at which the debt is traded among financial institutions. The fair value of the term loans and borrowings under credit facilities was determined based on Level 3 inputs, which is primarily based on rates at which the debt is traded among financial institutions adjusted for the Company’s credit standing. Revolving Credit Facilities The Company’s revolving credit facilities provide for $125.0 million of potential borrowings and expires on September 23, 2018. The interest rate on the revolving credit facilities is based on the LIBOR plus an applicable rate, based on the leverage ratio of the Company. The Company, at its discretion, may choose interest periods of 1, 2, 3 or 6 months. In addition, the Company is required to pay to the lenders a commitment fee of 0.5% quarterly for unused commitments on the revolver, subject to a step-down to 0.375% based upon achievement of a certain leverage ratio. At September 30, 2015, the Company had outstanding borrowings under the revolving credit facilities of $20.0 million with a weighted average interest rate of 3.2%. At December 31 , 2014, the Company had no outstanding borrowings under the revolving credit facilities. The fair value of borrowings under the revolving credit facilitates was $20.0 million at September 30, 2015. In addition, at September 30, 2015 and December 31 , 2014, the Company had $4.7 million and $5.1 million, respectively, in letters of credit outstanding, which are secured by the revolving credit facilities. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' Equity | |
Stockholders' Equity | (9) Stockholders’ Equity Authorized Shares The Company is authorized to issue up to one billion shares of common stock, with a par value of $0.01. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2015 | |
Stock-Based Compensation | |
Stock-Based Compensation | (10) Stock-Based Compensation The Company granted 712,554 service-based options, 123,624 restricted stock awards, or RSAs, and 15,000 restricted stock units, or RSUs, with a total grant date fair value of $7.8 million, $3.5 million and $0.4 million, respectively, during the nine months ended September 30, 2015. Aggregated information regarding the Company’s option plans is summarized below: Wtd. Average Intrinsic Wtd. Average Remaining Value Options Exercise Price Contractual Life (millions) Outstanding at December 31, 2014 $ $ Granted $ Exercised ) Expired/forfeited ) Outstanding at September 30, 2015 $ $ Exercisable at September 30, 2015 $ $ The Company’s restricted share activity in 2015 is as follows: Wtd. Average Grant-Date Intrinsic Value Awards Fair Value (millions) Outstanding at December 31, 2014 $ Granted Outstanding at September 30, 2015 $ $ Stock-based compensation expense related to employee stock options, RSAs, and RSUs are summarized below (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Direct costs $ $ $ $ Selling, general and administrative Total stock-based compensation expense $ $ $ $ |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income Taxes | |
Income Taxes | (11) Income Taxes The Company’s effective income tax rate was 29.8% and 35.7% for the nine months ended September 30, 2015 and 2014, respectively. The variation between the Company’s effective income tax rate and the U.S. statutory rate of 35% for the nine months ended September 30, 2015 is primarily due to (i) income from foreign subsidiaries being taxed at rates lower than the U.S. statutory rate and (ii) the favorable impact of research and development tax credits. GAAP requires a two-step approach when evaluating uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence demonstrates that it is more likely than not that the position will be sustained upon audit, including resolution of any related appeals or litigation processes. The second step is to quantify the amount of tax benefit to recognize as the amount that is cumulatively more than 50% likely to be realized upon ultimate settlement with the taxing authorities. As of September 30, 2015, the Company’s liability for unrecognized tax benefits was $14.8 million. If any portion of this $14.8 million is recognized that impacts the effective tax rate, the Company will then include that portion in the computation of its effective tax rate. Although the ultimate timing of the resolution of audits is highly uncertain, the Company believes it is reasonably possible that approximately $0.4 million of gross unrecognized tax benefits will change in the next 12 months as a result of pending audit settlements or statute of limitations expirations. The Company files U.S. federal, U.S. state, and foreign tax returns. For U.S. federal purposes, the Company is generally no longer subject to tax examinations for years ended December 31, 2012 and prior. For U.S. state tax returns, the Company is generally no longer subject to tax examinations for years prior to 2011. For foreign purposes, the Company is generally no longer subject to examination for tax periods 2008 and prior. Certain carryforward tax attributes generated in prior years remain subject to examination and adjustment. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies | |
Commitments and Contingencies | (12) Commitments and Contingencies Legal Proceedings The Company is involved in legal proceedings from time to time in the ordinary course of its business, including employment claims and claims related to other business transactions. Although the outcome of such claims is uncertain, management believes that these legal proceedings will not have a material adverse effect on the financial condition or results of future operations of the Company. The Company is currently a party to litigation with the City of Sao Paulo, Brazil. The dispute relates to whether the export of services provided by the Company is subject to a local tax on services. The Company has not recorded a liability associated with the claim, which totaled $3.6 million at September 30, 2015, given that it is not deemed probable the Company will incur a loss related to this case. However, a deposit totaling $3.6 million has been made to the Brazilian court in order to annul the potential tax obligation and to avoid the accrual of additional interest and penalties. This balance is recorded in other assets on the consolidated condensed balance sheet. During June 2015, the Judiciary Court of Justice of the State of Sao Paulo ruled in the favor of the Company, however, the judgment was appealed by the City of Sao Paulo. The Company expects to recover the full amount of the deposit when the case is final. |
Derivatives
Derivatives | 9 Months Ended |
Sep. 30, 2015 | |
Derivatives | |
Derivatives | (13) Derivatives The Company is exposed to certain risks relating to our ongoing business operations. The primary risk that the Company seeks to manage by using derivative instruments is interest rate risk. Accordingly, the Company has instituted interest rate hedging programs that are accounted for in accordance with ASC 815, “Derivatives and Hedging.” The interest rate hedging program is a cash flow hedge program designed to minimize interest rate volatility. The Company swaps the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount, at specified intervals. The Company also employed an interest rate cap that compensated us if variable interest rates rise above a pre-determined rate. The Company’s interest rate contracts are designated as hedging instruments. The Company records the effective portion of any change in the fair value of derivatives designated as hedging instruments under ASC 815 to other accumulated comprehensive loss in our consolidated condensed balance sheet, net of deferred taxes, and will later reclassify into earnings when the hedged item affects earnings or is no longer expected to occur. Gains and losses from the ineffective portion of any hedge are recognized in earnings immediately. For other derivative contracts that do not qualify or no longer qualify for hedge accounting, changes in the fair value of the derivatives are recognized in earnings each period. The Company has elected the accounting policy that cash flows associated with interest rate derivative contracts are classified as cash flows from investing activities. The following table presents the notional amounts and fair values (determined using level 2 inputs) of our derivatives as of September 30, 2015 and December 31, 2014. All liability amounts are reported in other long-term liabilities (in thousands): September 30, 2015 December 31, 2014 Balance Sheet Classification Notional amount Liability Notional amount Liability Derivatives in a liability position: Interest rate contracts Other long-term liabilities $ $ ) $ $ ) Total designated derivatives $ $ ) $ $ ) During the third quarter of 2015, the Company’s interest rate cap with a notional principal amount of $800.0 million expired. Additionally, during the third quarter of 2015, the Company paid $32.9 million to terminate the Company’s interest rate swaps with an aggregate notional principal amount of $620.0 million. Amounts previously recorded in accumulated other comprehensive loss related to these interest rate swaps, totaling $29.6 million, will be reclassified into earnings over the term of the previously hedged borrowing using the swaplet method. For the terminated swaps, the Company reclassified $0.1 million previously recorded in accumulated other comprehensive loss into interest expense during the three and nine months ended September 30, 2015. Subsequent to the termination of all existing interest rate swaps, the Company entered into a new interest rate swap agreement with a notional principal amount of $250.0 million and a fixed three month LIBOR rate of 1.48%. The interest rate swap began on September 23, 2015 and will mature on September 23, 2018. The interest rate swap is used to hedge the Company’s variable rate debt. The table below presents the effect of our derivatives on the consolidated condensed statements of operations and comprehensive loss for the three and nine months ended September 30, 2015 and 2014 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, Derivatives in Cash Flow Hedging Relationships (Interest Rate Contracts) 2015 2014 2015 2014 Amount of pre-tax (loss) gain recognized in other comprehensive (loss) income on derivatives $ ) $ $ ) $ ) Amount of loss recognized in other expense, net on derivatives (ineffective portion) ) — ) — Amount of loss recognized in other expense, net on derivatives (no longer qualify for hedge accounting) ) — ) — Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net on derivatives ) — ) — The Company expects that $4.0 million of unrealized losses will be reclassified out of accumulated other comprehensive loss and into interest expense, net over the next 12 months. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions | |
Related Party Transactions | (14) Related Party Transactions The Company entered into a joint venture with an affiliate of KKR during the third quarter of 2015. For further discussion on the related party transaction, refer to Note 3. At September 30, 2015 and December 31, 2014, KKR held $24.9 million and $0.8 million in first lien term debt, respectively. The Company paid management fees of $0.5 million and $1.6 million to KKR pursuant to the terms of the monitoring agreement between the Company and KKR that was in effect prior to the initial public offering, or IPO, during the three and nine months ended September 30, 2014, respectively. The Company did not pay any management fees to KKR during the three and nine months ended September 30, 2015 due to the termination of the monitoring agreement in conjunction with the IPO during the fourth quarter of 2014. |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 9 Months Ended |
Sep. 30, 2015 | |
Net Income (Loss) Per Share | |
Net Income (Loss) Per Share | (15) Net Income (Loss) Per Share Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the applicable period. Diluted net income (loss) per share is calculated after adjusting the denominator of the basic net income (loss) per share calculation for the effect of all potentially dilutive common shares, which, in the Company’s case, includes shares issuable under the stock option and incentive award plan. The following table reconciles the basic to diluted weighted average shares outstanding (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Basic weighted average common shares outstanding Effect of dilutive securities — Diluted weighted average common shares outstanding Anti-dilutive shares — The dilutive and anti-dilutive shares disclosed above were calculated using the treasury stock method. During the three and nine months ended September 30, 2015, the anti-dilutive shares were due to the assumed exercise price exceeding the average market price of the Company’s common stock during the period. During the nine months ended September 30, 2014, the anti-dilutive shares were due to the Company being in a net loss position during the period. |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
VHS | |
Business Combination | |
Schedule of preliminary estimate of the purchase price allocation | The Company’s preliminary estimate of the purchase price allocation is as follows (in thousands): Purchase Weighted Price Amortization Allocation Period Software intangible $ 5 years Property, plant and equipment Estimated fair value of net assets acquired Purchase price, including contingent consideration Total goodwill $ |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Measurements | |
Summary of the fair value of financial assets and liabilities measured on a recurring basis | The following table summarizes the fair value of the Company’s financial assets and liabilities that are measured on a recurring basis as of September 30, 2015 (in thousands): Level 1 Level 2 Level 3 Total Liabilities: Interest rate contracts $ — $ $ — $ Contingent consideration — — Total $ — $ $ $ |
Summary of the changes in Level 3 financial assets and liabilities measured on a recurring basis | The following table summarizes the changes in Level 3 financial liabilities measured on a recurring basis for the nine months ended September 30, 2015 (in thousands): Contingent Considerations - Accrued expenses and other current liabilities Balance at December 31, 2014 $ Revaluations included in earnings Payments on ClinStar contingent consideration ) Initial estimate of VHS contingent consideration Balance at September 30, 2015 $ |
Concentration of Credit Risk (T
Concentration of Credit Risk (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Service revenue | |
Concentration risk | |
Schedule of concentration of risk by risk factor | Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Customer A % — % — |
Accounts receivable and unbilled receivables | |
Concentration risk | |
Schedule of concentration of risk by risk factor | September 30, December 31, 2015 2014 Customer A % % Customer B — % |
Accounts Receivable and Unbil26
Accounts Receivable and Unbilled Services (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Accounts Receivable and Unbilled Services | |
Schedule of accounts receivable and unbilled services | Accounts receivable and unbilled services were as follows (in thousands): September 30, December 31, 2015 2014 Accounts receivable $ $ Unbilled services Less allowance for doubtful accounts ) ) Total accounts receivable and unbilled services, net $ $ |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets | |
Schedule of changes in the carrying amount of goodwill | The changes in the carrying amount of goodwill are as follows (in thousands): Balance at December 31, 2014 $ VHS Acquisition Currency translation ) Balance at September 30, 2015 $ |
Schedule of intangible assets | Intangible assets consist of the following (in thousands): September 30, December 31, 2015 2014 Customer relationships $ $ Customer backlog Trade names (definite-lived) Patient list and other intangibles Non-competition agreements Total finite-lived intangible assets, gross Accumulated amortization ) ) Total finite-lived intangible assets, net Trade names (indefinite-lived) Total intangible assets, net $ $ |
Schedule of estimated future amortization expense | The estimated future amortization expense of finite-lived intangible assets is expected to be as follows (in thousands): 2015 (remaining) $ 2016 2017 2018 2019 2020 and thereafter Total $ |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Long-Term Debt. | |
Schedule of long-term debt | Long-term debt consists of the following (in thousands): September 30, December 31, 2015 2014 Term loans, first lien $ $ Senior notes Less debt discount ) ) Total long-term debt, net $ $ |
Schedule of principal payments on long-term debt due | Principal payments on long-term debt are due as follows (in thousands): 2015 (remaining) $ — 2016 — 2017 — 2018 — 2019 — 2020 and thereafter Total $ |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Stock-Based Compensation | |
Summary of stock option plans | Wtd. Average Intrinsic Wtd. Average Remaining Value Options Exercise Price Contractual Life (millions) Outstanding at December 31, 2014 $ $ Granted $ Exercised ) Expired/forfeited ) Outstanding at September 30, 2015 $ $ Exercisable at September 30, 2015 $ $ |
Schedule of restricted stock activity | Wtd. Average Grant-Date Intrinsic Value Awards Fair Value (millions) Outstanding at December 31, 2014 $ Granted Outstanding at September 30, 2015 $ $ |
Schedule of stock-based compensation expense | Stock-based compensation expense related to employee stock options, RSAs, and RSUs are summarized below (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Direct costs $ $ $ $ Selling, general and administrative Total stock-based compensation expense $ $ $ $ |
Derivatives (Tables)
Derivatives (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Derivatives | |
Schedule of notional amounts and fair values of derivatives determined using level 2 inputs | All liability amounts are reported in other long-term liabilities (in thousands): September 30, 2015 December 31, 2014 Balance Sheet Classification Notional amount Liability Notional amount Liability Derivatives in a liability position: Interest rate contracts Other long-term liabilities $ $ ) $ $ ) Total designated derivatives $ $ ) $ $ ) |
Schedule of the effect of derivatives on the condensed consolidated statements of operations and comprehensive (loss) income | The table below presents the effect of our derivatives on the consolidated condensed statements of operations and comprehensive loss for the three and nine months ended September 30, 2015 and 2014 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, Derivatives in Cash Flow Hedging Relationships (Interest Rate Contracts) 2015 2014 2015 2014 Amount of pre-tax (loss) gain recognized in other comprehensive (loss) income on derivatives $ ) $ $ ) $ ) Amount of loss recognized in other expense, net on derivatives (ineffective portion) ) — ) — Amount of loss recognized in other expense, net on derivatives (no longer qualify for hedge accounting) ) — ) — Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net on derivatives ) — ) — |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Net Income (Loss) Per Share | |
Schedule of weighted average basic and diluted common shares | The following table reconciles the basic to diluted weighted average shares outstanding (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Basic weighted average common shares outstanding Effect of dilutive securities — Diluted weighted average common shares outstanding Anti-dilutive shares — |
Basis of Presentation (Details)
Basis of Presentation (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Basis of Presentation | |
Debt issuance costs | $ 20.9 |
Business Combination (Details)
Business Combination (Details) - USD ($) $ in Thousands | Jun. 08, 2015 | Sep. 30, 2015 | Dec. 31, 2014 |
Business Combination | |||
Cash paid | $ 543 | ||
Fair market value of common stock issued | 1,582 | ||
Preliminary estimate of purchase price allocation | |||
Total goodwill | $ 1,023,361 | $ 1,033,999 | |
VHS | |||
Business Combination | |||
Cash paid | $ 500 | ||
Number of unregistered shares of common stock issued | 47,598 | ||
Fair market value of common stock issued | $ 1,600 | ||
Additional amount of common stock to be issued at a future date | 400 | ||
Aggregate potential contingent earn-out payments | 16,000 | ||
Potential contingent earn-out payments based on milestones | 1,000 | ||
Potential contingent earn-out payments based on sales targets | $ 15,000 | ||
Earn-out period for contingent consideration | 48 months | ||
Liability recognized | $ 1,000 | ||
Preliminary estimate of purchase price allocation | |||
Software intangible | 2,500 | ||
Property, plant and equipment | 43 | ||
Estimated fair value of net assets acquired | 2,543 | ||
Purchase price, including contingent consideration | 3,499 | ||
Total goodwill | $ 956 | ||
Software intangible | VHS | |||
Preliminary estimate of purchase price allocation | |||
Weighted Amortization Period | 5 years |
Joint Ventures (Details)
Joint Ventures (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Aug. 31, 2015 | Apr. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2015 | Apr. 30, 2014 | |
Joint Ventures | |||||
Contribution to joint venture | $ 23,000 | ||||
Joint Venture with KKR Affiliate | |||||
Joint Ventures | |||||
Equity interest percentage of ownership | 11.00% | ||||
Contribution to joint venture | $ 20,000 | ||||
Reduction in investment balance | $ 1,600 | $ 1,600 | |||
PRA-WuXi Joint Venture | |||||
Joint Ventures | |||||
Equity interest percentage of ownership | 49.00% | ||||
Contribution to joint venture | $ 3,000 | ||||
KKR | Joint Venture with KKR Affiliate | |||||
Joint Ventures | |||||
Ownership percentage held by another entity | 89.00% |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring $ in Thousands | Sep. 30, 2015USD ($) |
Liabilities: | |
Total | $ 1,819 |
Interest rate contracts | |
Liabilities: | |
Total | 820 |
Contingent consideration | |
Liabilities: | |
Total | 999 |
Level 2 | |
Liabilities: | |
Total | 820 |
Level 2 | Interest rate contracts | |
Liabilities: | |
Total | 820 |
Level 3 | |
Liabilities: | |
Total | 999 |
Level 3 | Contingent consideration | |
Liabilities: | |
Total | $ 999 |
Fair Value Measurements (Deta36
Fair Value Measurements (Details 2) - Level 3 $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Nonrecurring | |
Assets fair value measurements | |
Assets fair value | $ 1,576,400 |
Goodwill | 1,023,400 |
Identifiable intangible assets | 553,000 |
Contingent consideration | Recurring | |
Changes in the fair value of the Company's Level 3 financial liabilities | |
Beginning balance | 1,911 |
Revaluations included in earnings | 89 |
Ending balance | 999 |
VHS | Contingent consideration | Recurring | |
Changes in the fair value of the Company's Level 3 financial liabilities | |
Initial estimate of VHS contingent consideration | 999 |
ClinStar | Contingent consideration | Recurring | |
Changes in the fair value of the Company's Level 3 financial liabilities | |
Payments on ClinStar contingent consideration | $ (2,000) |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details) - Customer Concentration Risk | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | |
Service revenue | Customer A | |||
Concentration risk | |||
Concentration risk percentage | 11.40% | 11.00% | |
Accounts receivable and unbilled receivables | Customer A | |||
Concentration risk | |||
Concentration risk percentage | 14.10% | 14.40% | |
Accounts receivable and unbilled receivables | Customer B | |||
Concentration risk | |||
Concentration risk percentage | 10.20% |
Accounts Receivable and Unbil38
Accounts Receivable and Unbilled Services (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Accounts Receivable and Unbilled Services | ||
Accounts receivable | $ 284,599 | $ 235,058 |
Unbilled services | 118,533 | 105,542 |
Total accounts receivable, gross | 403,132 | 340,600 |
Less allowance for doubtful accounts | (2,679) | (1,819) |
Total accounts receivable and unbilled services, net | $ 400,453 | $ 338,781 |
Goodwill and Intangible Asset39
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Changes in carrying amount of goodwill | |||||
Balance at the beginning of the period | $ 1,033,999 | ||||
Currency translation | (11,594) | ||||
Balance at the end of the period | $ 1,023,361 | 1,023,361 | |||
Accumulated impairment charges | 0 | 0 | |||
Intangible Assets | |||||
Total finite-lived intangible assets, gross | 566,636 | 566,636 | $ 573,322 | ||
Accumulated amortization | (131,617) | (131,617) | (90,422) | ||
Total finite-lived intangible assets, net | 435,019 | 435,019 | 482,900 | ||
Trade names (indefinite-lived) | 118,010 | 118,010 | 118,010 | ||
Total intangible assets, net | 553,029 | 553,029 | 600,910 | ||
Amortization expense | 14,300 | $ 17,900 | 42,600 | $ 56,300 | |
2015 (remaining) | 14,189 | 14,189 | |||
2,016 | 45,918 | 45,918 | |||
2,017 | 36,133 | 36,133 | |||
2,018 | 31,716 | 31,716 | |||
2,019 | 26,200 | 26,200 | |||
2020 and thereafter | 280,863 | 280,863 | |||
Total finite-lived intangible assets, net | 435,019 | 435,019 | 482,900 | ||
Customer relationships | |||||
Intangible Assets | |||||
Total finite-lived intangible assets, gross | 385,597 | 385,597 | 393,053 | ||
Customer backlog | |||||
Intangible Assets | |||||
Total finite-lived intangible assets, gross | 129,218 | 129,218 | 130,833 | ||
Trade names | |||||
Intangible Assets | |||||
Total finite-lived intangible assets, gross | 25,719 | 25,719 | 25,762 | ||
Patient list and other intangibles | |||||
Intangible Assets | |||||
Total finite-lived intangible assets, gross | 23,400 | 23,400 | 20,900 | ||
Non-competition agreements | |||||
Intangible Assets | |||||
Total finite-lived intangible assets, gross | 2,702 | 2,702 | $ 2,774 | ||
EDS | |||||
Changes in carrying amount of goodwill | |||||
Balance at the end of the period | $ 125,100 | 125,100 | |||
VHS | |||||
Changes in carrying amount of goodwill | |||||
VHS Acquisition | $ 956 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Current borrowings and long-term debt | ||
Long-term debt, gross | $ 914,000 | $ 954,000 |
Less debt discount | (4,573) | (5,463) |
Total long-term debt, net | 909,427 | 948,537 |
Estimated fair value of borrowings | 937,900 | 966,000 |
Principal payments on long-term debt | ||
2020 and thereafter | 914,000 | |
Total | 914,000 | 954,000 |
Term loans, first lien | ||
Current borrowings and long-term debt | ||
Long-term debt, gross | 689,000 | 729,000 |
Principal payments on long-term debt | ||
Total | 689,000 | 729,000 |
Revolving credit facilities | ||
Current borrowings and long-term debt | ||
Maximum borrowing capacity | $ 125,000 | |
Variable rate basis | LIBOR | |
Interest period, option one | 1 month | |
Interest period, option two | 2 months | |
Interest period, option three | 3 months | |
Interest period, fourth option | 6 months | |
Commitment fee (as a percent) | 0.50% | |
Step-down commitment fee based upon achievement of a certain leverage ratio (as a percent) | 0.375% | |
Outstanding borrowings | $ 20,000 | 0 |
Fair value of borrowings | $ 20,000 | |
Weighted average interest rate (as a percent) | 3.20% | |
Outstanding letters of credit | $ 4,700 | 5,100 |
Senior notes | ||
Current borrowings and long-term debt | ||
Long-term debt, gross | 225,000 | 225,000 |
Principal payments on long-term debt | ||
Total | $ 225,000 | $ 225,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 |
Stockholders' Equity | ||
Authorized shares (in shares) | 1,000,000,000 | 1,000,000,000 |
Par value of share (in dollars per share) | $ 0.01 | $ 0.01 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details 1) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Stock options, restricted stock awards and restricted stock units | |||||
Stock-based compensation | |||||
Total stock-based compensation expense | $ 1,614 | $ 969 | $ 3,634 | $ 2,729 | |
Stock options | |||||
Stock-based compensation | |||||
Total grant date fair value of awards granted | $ 7,800 | ||||
Options | |||||
Outstanding at beginning of period (in shares) | 6,961,796 | ||||
Granted (in shares) | 712,554 | ||||
Exercised (in shares) | (263,527) | ||||
Expired/forfeited (in shares) | (470,364) | ||||
Outstanding at end of period (in shares) | 6,940,459 | 6,940,459 | 6,961,796 | ||
Exercisable (in shares) | 2,838,486 | 2,838,486 | |||
Weighted Average Exercise Price | |||||
Outstanding at beginning of period (in dollars per share) | $ 9.40 | ||||
Granted (in dollars per share) | 29.65 | ||||
Exercised (in dollars per share) | 5.61 | ||||
Expired/forfeited (in dollars per share) | 13.31 | ||||
Outstanding at end of period (in dollars per share) | $ 11.36 | 11.36 | $ 9.40 | ||
Exercisable (in dollars per share) | $ 6.08 | $ 6.08 | |||
Weighted Average Remaining Contractual Life | |||||
Outstanding | 7 years | 7 years 7 months 6 days | |||
Exercisable | 5 years 1 month 6 days | ||||
Intrinsic Value | |||||
Outstanding | $ 190,600 | $ 190,600 | $ 103,100 | ||
Exercisable | $ 93,000 | $ 93,000 | |||
Restricted Stock | |||||
Restricted Shares | |||||
Outstanding at beginning of period (in dollars per share) | 5,556 | ||||
Granted (in shares) | 138,624 | ||||
Outstanding at end of period (in dollars per share) | 144,180 | 144,180 | 5,556 | ||
Weighted Average Grant-Date Fair Value | |||||
Outstanding at beginning of period (in dollars per share) | $ 20.35 | ||||
Granted (in dollars per share) | 28.44 | ||||
Outstanding at end of period (in dollars per share) | $ 28.13 | $ 28.13 | $ 20.35 | ||
Intrinsic Value | |||||
Outstanding at end of period | $ 5,600 | $ 5,600 | |||
Restricted Stock Awards (RSAs) | |||||
Stock-based compensation | |||||
Total grant date fair value of awards granted | $ 3,500 | ||||
Restricted Shares | |||||
Granted (in shares) | 123,624 | ||||
Restricted Stock Units (RSUs) | |||||
Stock-based compensation | |||||
Total grant date fair value of awards granted | $ 400 | ||||
Restricted Shares | |||||
Granted (in shares) | 15,000 | ||||
Direct costs | Stock options, restricted stock awards and restricted stock units | |||||
Stock-based compensation | |||||
Total stock-based compensation expense | 385 | 155 | $ 812 | 437 | |
Selling, general, and administrative expenses | Stock options, restricted stock awards and restricted stock units | |||||
Stock-based compensation | |||||
Total stock-based compensation expense | $ 1,229 | $ 814 | $ 2,822 | $ 2,292 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Income Taxes | ||
Effective income tax rate (as a percent) | 29.80% | 35.70% |
U.S. statutory rate (as a percent) | 35.00% | |
Liability for unrecognized tax benefits | $ 14.8 | |
Amount of gross unrecognized tax benefits that will change in the next 12 months as a result of pending audit settlements or statute of limitations expirations | $ 0.4 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - Tax related claim on export of services provided $ in Millions | Sep. 30, 2015USD ($) |
Commitments and Contingencies | |
Amount of tax claimed to be due in litigation | $ 3.6 |
Other assets | |
Commitments and Contingencies | |
Deposit made to Brazilian court in tax litigation | $ 3.6 |
Derivatives (Details)
Derivatives (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 23, 2015 | Dec. 31, 2014 | |
Derivatives | ||||||
Amount paid to terminate interest rate swaps | $ 32,907 | |||||
Interest rate contracts | Designated as hedging instruments | ||||||
Derivatives in a liability position: | ||||||
Notional amount | $ 250,000 | 250,000 | $ 1,420,000 | |||
Interest rate contracts | Designated as hedging instruments | Other long-term liabilities | ||||||
Derivatives in a liability position: | ||||||
Notional amount | 250,000 | 250,000 | 1,420,000 | |||
Interest rate contracts | Cash flow hedging | ||||||
Derivative Gain (Loss) | ||||||
Amount of pre-tax (loss) gain recognized in other comprehensive income (loss) on derivatives | (7,532) | $ 710 | (12,700) | $ (14,464) | ||
Amount of loss recognized in other expense, net on derivatives (ineffective portion) | (359) | (444) | ||||
Amount of loss recognized in other expense, net on derivatives (no longer qualify for hedge accounting) | (628) | (1,137) | ||||
Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net on derivatives | (158) | (227) | ||||
Unrealized losses expected to be reclassified out of accumulated other comprehensive (loss) income into interest expense over the next 12 months | 4,000 | |||||
Interest rate swaps | ||||||
Derivatives | ||||||
Notional amount | $ 250,000 | |||||
Fixed interest rate | 1.48% | |||||
Terminated interest rate swaps | ||||||
Derivatives | ||||||
Amount paid to terminate interest rate swaps | 32,900 | |||||
Notional amount of terminated agreements | 620,000 | 620,000 | ||||
Unrealized losses expected to be reclassified out of accumulated other comprehensive (loss) income into interest expense | 29,600 | |||||
Derivative Gain (Loss) | ||||||
Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net on derivatives | 100 | 100 | ||||
Interest rate cap | ||||||
Derivatives | ||||||
Notional amount | 800,000 | 800,000 | ||||
Level 2 | Interest rate contracts | Designated as hedging instruments | ||||||
Derivatives in a liability position: | ||||||
Liability | (820) | (820) | (19,446) | |||
Level 2 | Interest rate contracts | Designated as hedging instruments | Other long-term liabilities | ||||||
Derivatives in a liability position: | ||||||
Liability | $ (820) | $ (820) | $ (19,446) |
Related Party Transactions (Det
Related Party Transactions (Details) - KKR - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2015 | Dec. 31, 2014 | |
Related Party Transactions | ||||
Management fees paid | $ 0.5 | $ 1.6 | ||
First lien term debt | ||||
Related Party Transactions | ||||
First lien term debt held by related parties | $ 24.9 | $ 0.8 |
Net Income (Loss) Per Share (De
Net Income (Loss) Per Share (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Reconciliation of basic to diluted weighted average shares outstanding | ||||
Basic weighted average common shares outstanding | 60,050 | 40,284 | 59,917 | 40,273 |
Effect of dilutive securities | 3,454 | 1,788 | 3,165 | |
Diluted weighted average common shares outstanding | 63,504 | 42,072 | 63,082 | 40,273 |
Anti-dilutive shares | 212 | 96 | 856 |