Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2016 | Feb. 17, 2017 | Jun. 30, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | PRA Health Sciences, Inc. | ||
Entity Central Index Key | 1,613,859 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 1.3 | ||
Entity Common Stock, Shares Outstanding | 61,655,141 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 144,623 | $ 121,065 |
Restricted cash | 4,715 | 5,060 |
Accounts receivable and unbilled services, net | 439,053 | 415,077 |
Prepaid expenses and other current assets | 35,367 | 30,175 |
Income taxes receivable | 979 | 2,399 |
Total current assets | 624,737 | 573,776 |
Fixed assets, net | 87,577 | 80,691 |
Goodwill | 971,980 | 1,014,798 |
Intangible assets, net | 473,976 | 533,938 |
Deferred tax assets | 6,568 | 3,069 |
Investment in unconsolidated joint ventures | 284 | 1,288 |
Deferred financing fees | 1,762 | 2,490 |
Other assets | 23,507 | 18,693 |
Total assets | 2,190,391 | 2,228,743 |
Current liabilities: | ||
Current portion of long-term debt | 31,250 | |
Accounts payable | 51,335 | 57,096 |
Accrued expenses and other current liabilities | 123,589 | 119,893 |
Income taxes payable | 25,524 | 19,262 |
Advanced billings | 332,501 | 333,729 |
Total current liabilities | 564,199 | 529,980 |
Deferred tax liabilities | 73,703 | 81,691 |
Long-term debt, net | 797,052 | 889,514 |
Other long-term liabilities | 26,185 | 24,836 |
Total liabilities | 1,461,139 | 1,526,021 |
Commitments and contingencies (Note 13) | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value, 100,000,000 shares authorized; 0 shares issued and outstanding at December 31, 2016 and 2015, respectively | ||
Common stock, $0.01 par value, 1,000,000,000 authorized shares at December 31, 2016 and December 31, 2015; 61,597,705 and 60,245,009 issued and outstanding at December 31, 2016 and December 31, 2015, respectively | 616 | 602 |
Additional paid-in capital | 879,067 | 828,347 |
Accumulated other comprehensive loss | (224,686) | (132,307) |
Retained earnings | 74,255 | 6,080 |
Total stockholders' equity | 729,252 | 702,722 |
Total liabilities and stockholders' equity | $ 2,190,391 | $ 2,228,743 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
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 | 61,597,705 | 60,245,009 |
Common stock, shares outstanding | 61,597,705 | 60,245,009 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue: | |||
Service revenue | $ 1,580,023 | $ 1,375,847 | $ 1,266,596 |
Reimbursement revenue | 231,688 | 238,036 | 192,990 |
Total revenue | 1,811,711 | 1,613,883 | 1,459,586 |
Operating expenses: | |||
Direct costs | 1,032,688 | 886,528 | 859,218 |
Reimbursable out-of-pocket costs | 231,688 | 238,036 | 192,990 |
Selling, general and administrative | 269,893 | 246,417 | 253,970 |
Transaction-related costs | 44,834 | ||
Depreciation and amortization | 69,506 | 77,952 | 96,564 |
Loss on disposal of fixed assets | 753 | 652 | 5 |
Income from operations | 162,349 | 164,298 | 56,839 |
Interest expense, net | (54,913) | (61,747) | (81,939) |
Loss on modification or extinguishment of debt | (38,178) | (25,036) | |
Foreign currency gains, net | 24,029 | 14,048 | 10,538 |
Other income (expense), net | 607 | (1,434) | (2,254) |
Income (loss) before income taxes and equity in gains (losses) of unconsolidated joint ventures | 93,894 | 115,165 | (41,852) |
Provision for (benefit from) income taxes | 28,494 | 30,004 | (8,154) |
Income (loss) before equity in gains (losses) of unconsolidated joint ventures | 65,400 | 85,161 | (33,698) |
Equity in gains (losses) of unconsolidated joint ventures, net of tax | 2,775 | (3,396) | (2,044) |
Net income (loss) | $ 68,175 | $ 81,765 | $ (35,742) |
Net income (loss) per share attributable to common stockholders: | |||
Basic (in dollars per share) | $ 1.12 | $ 1.36 | $ (0.83) |
Diluted (in dollars per share) | $ 1.06 | $ 1.29 | $ (0.83) |
Weighted average common shares outstanding: | |||
Basic (in shares) | 60,759 | 59,965 | 42,897 |
Diluted (in shares) | 64,452 | 63,207 | 42,897 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME | |||
Net income (loss) | $ 68,175 | $ 81,765 | $ (35,742) |
Other comprehensive loss: | |||
Foreign currency translation adjustments | (95,019) | (52,433) | (68,700) |
Unrealized losses on derivative instruments, net of income taxes of $(622), $(578), and $(3,298) | (978) | (11,273) | (17,681) |
Reclassification adjustments: | |||
Losses on derivatives included in net income (loss), net of income taxes of $2,303, $0, and $0 | 3,618 | 908 | 3 |
Comprehensive (loss) income | $ (24,204) | $ 18,967 | $ (122,120) |
CONSOLIDATED STATEMENTS OF COM6
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME | |||
Unrealized (losses) gains on derivative instruments, tax | $ (622) | $ (578) | $ (3,298) |
Losses on derivatives included in net income, tax | $ 2,303 | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common stock | Additional Paid-in Capital | Accumulated Other Comprehensive (Loss) Income | Retained Earnings (Accumulated Deficit) | Total |
Balance at Dec. 31, 2013 | $ 403 | $ 490,006 | $ 16,869 | $ (39,943) | $ 467,335 |
Balance (shares) at Dec. 31, 2013 | 40,268 | ||||
Statement of Changes in Stockholders' Equity | |||||
Exercise of common stock options | 33 | 33 | |||
Exercise of common stock options (in shares) | 11 | ||||
Issuance of common stock | $ 195 | 351,326 | 351,521 | ||
Issuance of common stock (shares) | 19,535 | ||||
Common stock issuance costs | (23,421) | (23,421) | |||
Stock-based compensation expense | 3,467 | 3,467 | |||
Net income (loss) | (35,742) | (35,742) | |||
Other comprehensive loss, net of tax | (86,378) | (86,378) | |||
Balance at Dec. 31, 2014 | $ 598 | 821,411 | (69,509) | (75,685) | 676,815 |
Balance (shares) at Dec. 31, 2014 | 59,814 | ||||
Statement of Changes in Stockholders' Equity | |||||
Exercise of common stock options | $ 3 | 78 | 81 | ||
Exercise of common stock options (in shares) | 257 | ||||
Issuance of common stock | $ 1 | 1,582 | 1,583 | ||
Issuance of common stock (shares) | 174 | ||||
Stock-based compensation expense | 5,276 | 5,276 | |||
Net income (loss) | 81,765 | 81,765 | |||
Other comprehensive loss, net of tax | (62,798) | (62,798) | |||
Balance at Dec. 31, 2015 | $ 602 | 828,347 | (132,307) | 6,080 | 702,722 |
Balance (shares) at Dec. 31, 2015 | 60,245 | ||||
Statement of Changes in Stockholders' Equity | |||||
Exercise of common stock options | $ 13 | 642 | 655 | ||
Exercise of common stock options (in shares) | 1,303 | ||||
Stock-based compensation - shares issued | $ 1 | ||||
Stock-based compensation - shares issued (shares) | 50 | ||||
Stock-based compensation expense | 49,232 | 49,233 | |||
Income tax benefit from stock-based award activities | 846 | 846 | |||
Net income (loss) | 68,175 | 68,175 | |||
Other comprehensive loss, net of tax | (92,379) | (92,379) | |||
Balance at Dec. 31, 2016 | $ 616 | $ 879,067 | $ (224,686) | $ 74,255 | $ 729,252 |
Balance (shares) at Dec. 31, 2016 | 61,598 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | |||
Net income (loss) | $ 68,175 | $ 81,765 | $ (35,742) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 69,506 | 77,952 | 96,564 |
Amortization of debt issuance costs and discount | 4,433 | 5,983 | 5,737 |
Amortization of terminated interest rate swaps | 4,961 | 731 | |
Stock-based compensation expense | 7,067 | 5,276 | 3,467 |
Non-cash transaction-related costs | 42,166 | ||
Unrealized foreign currency gains | (24,499) | (16,464) | (12,222) |
Loss on modification or extinguishment of debt | 38,178 | 25,036 | |
Loss on disposal of fixed assets | 753 | 652 | 5 |
Change in acquisition-related contingent consideration | (527) | 89 | 504 |
Equity in (gains) losses of unconsolidated joint ventures | (2,775) | 3,396 | 2,044 |
Unrealized loss on derivatives | 47 | 1,787 | 1,731 |
Other reconciling items | (652) | 443 | 978 |
Excess tax benefit from stock-based compensation | (846) | ||
Deferred income taxes | (10,469) | (3,219) | (31,968) |
Changes in operating assets and liabilities: | |||
Accounts receivable and unbilled services | (31,313) | (83,211) | (32,781) |
Prepaid expenses and other assets | (10,071) | (11,675) | (10,944) |
Accounts payable and other liabilities | (1,474) | 36,135 | 19,727 |
Income taxes | 7,308 | 9,958 | 15,634 |
Advanced billings | 79 | 42,830 | (13,736) |
Net cash provided by operating activities | 160,047 | 152,428 | 34,034 |
Cash flows from investing activities: | |||
Purchase of fixed assets | (33,143) | (32,814) | (27,323) |
Cash paid for interest on interest rate swap | (913) | (302) | |
Cash paid to terminate interest rate swaps | (32,907) | ||
Acquisition of Nextrials, Inc., net of cash acquired | (4,268) | ||
Acquisition of Value Health Solutions, Inc., net of cash acquired | (543) | ||
Proceeds from RPS Parent Holding Corp. working capital settlement | 15,000 | ||
Proceeds from CRI Holding Company, LLC working capital adjustment | 851 | ||
Payment of ClinStar, LLC working capital settlement | (1,693) | ||
Distributions from unconsolidated joint ventures | 3,700 | 19,529 | |
Contributions to unconsolidated joint venture | (23,000) | ||
Proceeds from the sale of fixed assets | 10 | 44 | |
Net cash used in investing activities | (34,614) | (71,686) | (11,472) |
Cash flows from financing activities: | |||
Proceeds from issuance of long-term debt | 625,000 | ||
Proceeds from accounts receivable financing activities | 120,000 | ||
Repayment of long-term debt | (822,559) | (40,000) | (308,775) |
Borrowings on line of credit | 110,000 | 90,000 | 105,000 |
Repayments of line of credit | (110,000) | (90,000) | (115,000) |
Payment of debt prepayment and debt extinguishment costs | (17,824) | (14,250) | |
Payments for debt issuance costs | (7,713) | ||
Proceeds from common stock issued, net of underwriters discount | 333,950 | ||
Payment of common stock issuance costs | (525) | (5,325) | |
Excess tax benefit from stock-based compensation | 846 | ||
Proceeds from stock option exercises | 655 | 81 | 33 |
Payment of acquisition-related contingent consideration | (2,000) | (1,589) | |
Net cash used in financing activities | (101,595) | (42,444) | (5,956) |
Effects of foreign exchange changes on cash, cash equivalents, and restricted cash | (625) | (3,702) | (5,992) |
Change in cash, cash equivalents, and restricted cash | 23,213 | 34,596 | 10,614 |
Cash, cash equivalents, and restricted cash, beginning of period | 126,125 | 91,529 | 80,915 |
Cash, cash equivalents, and restricted cash, end of period | $ 149,338 | $ 126,125 | $ 91,529 |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Dec. 31, 2016 | |
Basis of Presentation | |
Basis of Presentation | PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2016 (1) Basis of Presentation Description of Business PRA Health Sciences, Inc. and its subsidiaries (collectively, 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. Organization and Initial Public Offering, or IPO On November 13, 2014, the Company’s common stock began trading on the NASDAQ Global Select Market under the symbol “PRAH,” at a price to the public of $18.00 per share. The Company issued and sold 19,523,255 shares of common stock, including 2,546,511 common shares issued pursuant to the full exercise of the underwriters’ option to purchase additional shares. The offering raised net proceeds of approximately $328.0 million after deducting underwriting discounts and commissions and offering expenses. On September 23, 2013, all of the outstanding stock of PRA Holdings, Inc., or the Predecessor Company, was acquired by affiliates of Kohlberg Kravis Roberts & Co. L.P., or KKR, pursuant to a plan of merger by and among Pinnacle Holdco Parent, Inc., or Parent, Pinnacle Merger Sub, Inc., or merger sub, and Genstar Capital Partners V, L.P., or Genstar. Upon completion of the merger, or the Merger, the merger sub was folded into the Predecessor Company, which became a subsidiary of the Parent. On December 19, 2013, Pinnacle Holdco Parent, Inc. changed its name to PRA Global Holdings, Inc. and on July 10, 2014, PRA Global Holdings, Inc. changed its name to PRA Health Sciences, Inc. Basis of Presentation Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP, and include our accounts and the accounts of our subsidiaries. Reverse Stock Split On September 29, 2014, the Board of Directors of the Company approved, and made legally effective, a 2.34539 to 1 reverse stock split of the Company’s common stock. All shares, stock options and per share information presented in the consolidated financial statements have been adjusted to reflect the reverse stock split on a retroactive basis for all Successor periods presented. There was no change in number of authorized shares or the par value of the Company’s common stock. Secondary Offerings During 2016, KKR and certain executive officers of the Company sold a total of 17,500,000 shares of the Company’s common stock as part of three seperate secondary offerings, or the Secondary Offerings. The Company incurred professional fees in connection with the Secondary Offerings of $1.3 million during year ended December 31, 2016. The fees are included in transaction-related costs in the accompanying consolidated statement of operations. As of December 31, 2016, KKR owned 36.9% of the Company’s outstanding common stock. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Significant Accounting Policies | |
Significant Accounting Policies | (2) Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts and results of operations of the Company. All intercompany balances and transactions have been eliminated. Variable Interest Entities Financial Accounting Standards Board’s, or FASB, accounting guidance concerning variable interest entities, or VIE, addresses the consolidation of business enterprise to which the usual condition of consolidation (ownership of a majority voting interest) does not apply. This guidance focuses on controlling financial interests that may be achieved through arrangements that do not involve voting interests. The guidance requires an assessment of who the primary beneficiary is and whether the primary beneficiary should consolidate the VIE. The primary beneficiary is identified as the variable interest holder that has both the power to direct the activities of the variable interest entity that most significantly impacts the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the variable interest entity. Application of the VIE consolidation requirements may require the exercise of significant judgment by management. Accounts Receiveable Financing Agreement On March 22, 2016, the Company entered into a three-year accounts receivable financing agreement and related arrangements to securitize certain of its accounts receivable. Under the accounts receivable financing agreement, certain of the Company’s U.S. accounts receivable and unbilled services balances are sold by certain of its consolidated subsidiaries to another of its consolidated subsidiaries, a wholly-owned bankruptcy-remote special purpose entity, or SPE. The SPE in turn may borrow up to $140.0 million from a third party lender, secured by liens on the receivables and other assets of the SPE. The Company retains the servicing of the securitized accounts receivable portfolio and has a variable interest in the SPE by holding the residual equity. The Company determined that the SPE is a VIE and it is the primary beneficiary because (i) the Company’s servicing responsibilities for the securitized portfolio gives it the power to direct the activities that most significantly impact the performance of the VIE and (ii) its variable interest in the VIE gives it the obligation to absorb losses and the right to receive residual returns that could potentially be significant. As a result, the Company has consolidated the VIE within its financial statements. Refer to Note 9, Current Borrowings and Long-Term Debt, for additional information regarding the accounts receivable financing agreement. CNS Research Institute, Inc. In order to comply with laws in New Jersey and Pennsylvania prohibiting the corporate practice of medicine, the Company has management contracts for medical services with a professional corporation, CNS Research Institute, Inc., or CNS, for physician investigators working in New Jersey and Pennsylvania. CNS is owned by an employee of the Company. The management contracts expire on January 30, 2025. The Company pays CNS a management fee equal to the salary, bonus and benefits for the physicians. The Company manages all aspects of CNS’ operations including providing administrative support and making all significant operational decisions. Additionally, CNS cannot provide services to any other party without the prior written approval of the Company. After evaluating all of the factors noted above, it was concluded that CNS should be included in the Company’s consolidated financial statements as it is a variable interest entity and the Company is the primary beneficiary. The Company paid CNS $0.8 million, $0.7 million and $0.9 million during the years ended December 31, 2016, 2015 and 2014, respectively, as compensation under the management contract, which was eliminated in consolidation. CNS had no net income for the years ended December 31, 2016, 2015 and 2014. Risks and Other Factors The Company’s revenues are dependent on research and development expenditures of the pharmaceutical and biotechnology industries. Any significant reduction in research and development expenditures by the pharmaceutical and biotechnology industries could have a material adverse effect on the Company and its results of operations. Clients of the Company generally may terminate contracts without cause upon 30 to 60 days’ notice. While the Company generally negotiates deposit payments and early termination fees up front, such terminations could significantly impact the future level of staff utilization and have a material adverse effect on the Company and the results of future operations. Use of Estimates The preparation of 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 financial statements and the reported amounts of revenues and expenses during the reporting period. In particular, the Company’s primary method of revenue recognition requires estimates of costs to be incurred to fulfill existing long‑term contract obligations. Actual results could differ from those estimates. Estimates are also used when accounting for certain items such as allowance for doubtful accounts, depreciation and amortization, asset impairment, certain acquisition‑related assets and liabilities, income taxes, fair market value determinations, and contingencies. Reportable Segments The Company is solely focused on the execution of clinical trials on a global basis. The Company has considered whether the delivery of the different types of capabilities in various stages of clinical development constitute separate products or lines of service in accordance with ASC 280, “Segment Reporting,” or ASC 280, and has concluded that there are substantial similarities and overlaps in the capabilities delivered at each stage of clinical development, with the primary differences between the Early Development Services, or EDS, compared to the Product Registration, or PR, and Strategic Solutions, or SS, relating to the points during the life cycle of a clinical trial at which such capabilities are delivered. After review and analysis of the operating characteristics of each service offering and using the aggregation characteristics under ASC 280, the Company has concluded that the services provided are similar across most characteristics. The Company's operations consist of one reportable segment, which represents management's view of the Company's operations based on its management and internal reporting structure. The Company considered the guidance in ASC 350, “Intangibles—Goodwill and Other,” which notes that a reporting unit is an operating segment or one level below an operating segment. PR, EDS, and SS are the business units that are one level below the Company’s sole operating segment and the Company determined that they meet the definition of “components,” as discrete financial information exists and this information is regularly reviewed by segment management. Business Combinations Business combinations are accounted for using the acquisition method and, accordingly, the identifiable assets acquired, the liabilities assumed, and any non‑controlling interest in the acquiree are recorded at their estimated fair values on the date of the acquisition. Goodwill represents the excess of the purchase price over the estimated fair value of the net assets acquired, including the amount assigned to identifiable intangible assets. Contingent Liabilities The Company provides for contingent liabilities when (1) it is probable that an asset has been impaired or a liability has been incurred at the date of the consolidated financial statements and (2) the amount of the loss can be reasonably estimated. Disclosure in the notes to the consolidated financial statements is required for loss contingencies that do not meet both these conditions if there is a reasonable possibility that a loss may have been incurred. The Company expenses as incurred the costs of defending legal claims against the Company. Cash Equivalents The Company considers all highly‑liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of December 31, 2016 and 2015, substantially all of the Company’s cash and cash equivalents were held in or invested with large financial institutions. Certain bank deposits may at times be in excess of the Federal Deposit Insurance Corporation insurance limits. Restricted cash The Company receives cash advances from its customers to be used for the payment of investigator costs and other pass‑through expenses. The terms of certain customer contracts require that such advances be maintained in separate escrow accounts; these accounts are not commingled with the Company’s cash and cash equivalents and are presented separately in the consolidated balance sheets as restricted cash. Additionally, as part of the acquisition of Nextrials, Inc., or Nextrials, the Company was required to transfer $0.5 million to an escrow account held by a subsidiary. As of December 31, 2016, the balance of the cash held in escrow was $0.5 million. These funds are expected to be distributed in 2017. Also, as part of the acquisition of ClinStar, LLC, or ClinStar, the Company was required to transfer $1.0 million to an escrow account held by a subsidiary. The funds were used to pay deferred compensation to certain former ClinStar employees. During the year ended December 31, 2014, the Company distributed all of the remaining funds held in the escrow account. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statements of cash flows: December 31, 2016 2015 2014 Cash and cash equivalents $ $ $ Restricted cash Total cash, cash equivalents, and restricted cash $ $ $ Accounts Receivable and Unbilled Services Accounts receivable represent amounts for which invoices have been sent to clients based upon contract terms. Unbilled services represent amounts earned for services that have been rendered but for which clients have not been billed and include reimbursement revenue. Unbilled services are generally billable upon submission of appropriate billing information, achievement of contract milestones or contract completion. Allowances for Doubtful Accounts The Company maintains an allowance for estimated losses resulting from the inability of its customers to make required payments. The Company performs credit reviews of each customer, monitors collections and payments from our customers, and determines the allowance based upon historical experience and specific customer collection issues. The Company ages billed accounts receivable and assesses exposure by customer type, by aged category, and by specific identification. After all attempts to collect a receivable have failed, the receivable is written off against the allowance or, to the extent unreserved, to bad debt expense. Advanced Billings Advanced billings represent amounts associated with services, reimbursement revenue and investigator fees that have been received but have not yet been earned or paid. Fixed Assets Fixed assets and software purchased or developed for internal use are recorded at cost and are depreciated on a straight‑line basis over the following estimated useful lives: Furniture, fixtures and equipment 5-7 years Computer hardware and software 3-7 years Leasehold improvements Lesser of the life of the lease or useful life of the improvements Internal Use Software The Company accounts for internal use software in accordance with the provisions of accounting standards, which require certain direct costs and interest costs incurred during the application stage of development to be capitalized and amortized over the useful life of the software. Derivative Financial Instruments All derivatives are measured at fair value and recognized as either assets or liabilities on the consolidated balance sheets. Derivatives that are not determined to be effective hedges are adjusted to fair value with a corresponding effect on earnings. Changes in the fair value of derivatives that are designated and determined to be effective as part of a hedge transaction have no immediate effect on earnings and depending on the type of hedge, are recorded either as part of other comprehensive loss and will be included in earnings in the period in which earnings are affected by the hedged item, or are included in earnings as an offset to the earnings impact of the hedged item. Any ineffective portion of hedges is reported in earnings as it occurs. The Company utilizes interest rate swap and cap agreements, or interest rate contracts, to manage changes in market conditions related to debt obligations. Amounts previously recorded in accumulated other comprehensive loss related to these interest rate swaps will be reclassified into earnings over the term of the previously hedged borrowing using the swaplet method. The Company has elected the accounting policy that cash flows associated with interest rate derivative contracts are classified as cash flows from investing activities. 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 December 31, 2016 (in thousands): Level 1 Level 2 Level 3 Total Liabilities: Interest rate swap $ — $ $ — $ Contingent consideration — — Total $ — $ $ $ The following table summarizes the fair value of the Company’s financial assets and liabilities that are measured on a recurring basis as of December 31, 2015 (in thousands): Level 1 Level 2 Level 3 Total Assets: Interest rate swap $ — $ $ — $ Total $ — $ $ — $ Liabilities: Contingent consideration $ — $ — $ $ Total $ — $ — $ $ 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 revenue and operating forecasts and the probability of achieving the specific targets. Interest rate swaps and caps 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 following table summarizes the changes in Level 3 financial liabilities measured on a recurring basis (in thousands): Contingent Consideration - Accrued expenses and Other long-term liabilities Balance at December 31, 2014 $ Revaluations included in earnings Payments on ClinStar contingent consideration Initial estimate of VHS contingent consideration Balance at December 31, 2015 $ Initial estimate of Nextrials contingent consideration Revaluations included in earnings Balance at December 31, 2016 $ Non‑recurring Fair Value Measurements Certain assets and liabilities are carried on the accompanying consolidated 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 December 31, 2016, assets carried on the balance sheet and not remeasured to fair value on a recurring basis totaling approximately $1,446.0 million were identified as Level 3. These assets are comprised of goodwill of $972.0 million and identifiable intangible assets, net of $474.0 million. Refer to Note 9, Current Borrowings and Long-Term Debt, for additional information regarding the fair value of long-term debt balances. Impairment of Long‑Lived Assets The Company reviews the recoverability of its long‑lived asset groups, including furniture and equipment, computer hardware and software, leasehold improvements, and other finite‑lived intangibles, when events or changes in circumstances occur that indicate the carrying value of the asset group may not be recoverable. The assessment of possible impairment is based on the Company’s ability to recover the carrying value of the asset group from the expected future pre‑tax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. The Company’s primary measure of fair value is based on discounted cash flows. The measurement of impairment requires the Company to make estimates of these cash flows related to long‑lived assets, as well as other fair value determinations. Goodwill and Other Intangibles Goodwill and indefinite‑lived intangible assets are tested for impairment annually or more frequently if an event or circumstance indicates that an impairment loss may have been incurred. Separate intangible assets that have finite useful lives are amortized over their estimated useful lives or over the period in which economic benefit is received. The Company’s primary finite lived intangibles are customer relationships and customer backlog, which are amortized on an accelerated basis, which coincides with the period of economic benefit received by the Company. The Company reviews the carrying value of goodwill to determine whether impairment may exist on an annual basis or whenever it has reason to believe goodwill may not be recoverable. The annual impairment test of goodwill is performed during the fourth quarter of each fiscal year. The Company did not have an impairment for any of the years presented. When evaluating for impairment, the Company may first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit or indefinite-lived intangible asset is impaired. If the Company does not perform a qualitative assessment, or if it determines that it is not more likely than not that the fair value of the reporting unit or indefinite-lived intangible asset exceeds its carrying amount, the Company will calculate the estimated fair value of the reporting unit or indefinite-lived intangible asset. The Company’s decision to perform a qualitative impairment assessment for an individual reporting unit in a given year is influenced by a number of factors, inclusive of the size of the reporting unit's goodwill, the significance of the excess of the reporting unit's estimated fair value over carrying value at the last quantitative assessment date, the amount of time in between quantitative fair value assessments and the date of acquisition. During 2016, as part of the Company’s annual impairment analysis, the Company performed the qualitative assessment for approximately $850.0 million, or 87.5%, of its total goodwill balance of $972.0 million, which resides in its PR and SS reporting units, and for its indefinite-lived trade name intangible asset. If the Company does not perform a qualitative assessment, goodwill impairment is determined by the Company using a two‑step process. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of each reporting unit, determined using various valuation techniques, with the primary technique being a discounted cash flow analysis, to its carrying value. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized. The estimated fair value of the EDS reporting unit closely approximated its carrying value when the Company performed its annual goodwill impairment test during the fourth quarter of 2014. The Company made operational improvements during 2015 and 2016 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 that contributed to its improved financial performance during the year and led to the Company to update its forecast for future periods. The Company considered all of these factors when it performed its most recent goodwill impairment test during the fourth quarter of 2016 and it was concluded that the estimated fair value of the EDS reporting unit exceeded its carrying value by approximately $70.0 million or 33%. 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 2017 or later. Revenue Recognition The Company generally enters into contracts with customers to provide services with payments based on either fixed‑fee, time and materials, or fee‑for‑service arrangements. Revenue for services is recognized only after persuasive evidence of an arrangement exists, the sales price is determinable, services have been rendered, and collectability is reasonably assured. Once these criteria have been met, the Company recognizes revenue for the services provided on fixed‑fee contracts based on the proportional performance methodology, which determines the proportion of outputs or performance obligations which have been completed or delivered compared to the total contractual outputs for performance obligations. To measure performance, the Company compares the contract costs incurred to estimated total contract costs through completion. As part of the client proposal and contract negotiation process, the Company develops a detailed project budget for the direct costs based on the scope of the work, the complexity of the study, the geographical location involved and the Company’s historical experience. The Company then establishes the individual contract pricing based on the Company’s internal pricing guidelines, discount agreements, if any, and negotiations with the client. The estimated total contract costs are reviewed and revised periodically throughout the lives of the contracts, with adjustments to revenue resulting from such revisions being recorded on a cumulative basis in the period in which the revisions are first identified. Contract costs consist primarily of direct labor and other project‑related costs. Revenue from time and materials contracts is recognized as hours are incurred. Revenues and the related costs of fee‑for‑service contracts are recognized in the period in which services are performed. A majority of the Company’s contracts undergo modifications over the contract period and the Company’s contracts provide for these modifications. During the modification process, the Company recognizes revenue to the extent it incurs costs, provided client acceptance and payment is deemed reasonably assured. The Company often offers volume discounts to certain of its large customers based on annual volume thresholds. The Company records an estimate of the annual volume rebate as a reduction of revenue throughout the period based on the estimated total rebate to be earned for the period. Most of the Company’s contracts can be terminated by the client either immediately or after a specified period following notice. These contracts require the client to pay the Company the fees earned through the termination date, the fees and expenses to wind down the study, and, in some cases, a termination fee or some portion of the fees or profit that the Company could have earned under the contract if it had not been terminated early. Therefore, revenue recognized prior to cancellation generally does not require a significant adjustment upon cancellation. Reimbursement Revenue and Reimbursable Out‑of‑Pocket Costs The Company incurs out‑of‑pocket costs, in excess of contract amounts, which are reimbursable by its customers. The Company includes out‑of‑pocket costs both as reimbursement revenue and as reimbursable out‑of‑pocket costs in the consolidated statements of operations. As is customary in the industry, the Company routinely enters into separate agreements on behalf of its clients with independent physician investigators in connection with clinical trials. The funds received for investigator fees are netted against the related cost because such fees are the obligation of the Company’s clients, without risk or reward to the Company. The Company is not obligated either to perform the service or to pay the investigator in the event of default by the client. In addition, the Company does not pay the independent physician investigator until funds are received from the client. Total payments to investigators were $249.6 million, $208.0 million, and $211.5 million for the years ended December 31, 2016, 2015, and 2014, respectively. 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 December 31, 2016, 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: Years Ended December 31, 2016 2015 2014 Customer A — — Customer B — 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: December 31, 2016 2015 Customer A — Customer B — Customer C — Foreign Currency The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars at exchange rates in effect as of the end of the period. Equity activities are translated at the spot rate effective at the date of the transaction. Revenue and expense accounts and cash flows of these operations are translated at average exchange rates prevailing during the period the transactions occurred. Translation gains and losses are included as an adjustment to the accumulated other comprehensive loss account in stockholders’ equity. Translation gains and losses from foreign currency transactions, such as those resulting from the settlement and revaluation of foreign receivables and payables, are included in the determination of net income (loss). These amounts are included in foreign currency gains, net in the consolidated statement of operations. In addition, gains or losses related to the Company’s intercompany loans payable and receivable denominated in a foreign currency other than the subsidiary’s functional currency that are deemed to be of a long‑term investment nature are remeasured to cumulative translation and recorded in accumulated other comprehensive loss in the consolidated balance sheets. Income Taxes The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets are recognized for future deductible temporary differences, along with net operating loss carryforwards and credit carryforwards, if it is more likely than not that the tax benefits will be realized. To the extent a deferred tax asset cannot be recognized under the preceding criteria, a valuation allowance is established to reduce the deferred tax asset to the amount that is more likely than not to be realized. Deferred tax liabilities are recognized for future taxable temporary differences. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. There are inherent uncertainties related to the interpretation of tax regulations in the jurisdictions in which the Company transacts business. The judgments and estimates made at a point in time may change based on the outcome of tax audits, as well as changes to, or further interpretations of, regulations. Income tax expense is adjusted in the period in which these events occur, and these adjustments are included in the Company’s consolidated statement of operations. If such changes take place, there is a risk that the Company’s effective tax rate may increase or decrease in any period. A company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Stock‑Based Compensation The primary type of stock‑based compensation utilized by the Company is stock options. Stock options are awards which allow the employee to purchase shares of the Company’s stock at a fixed price. The Company measures compensation cost at the grant date, based on fair value of the award, and recognizes it as expense over the employees’ requisite service period. The fair value of each option issued during these periods was estimated on the date of grant using the Black‑Scholes option pricing model for service condition awards and a lattice model for market and performance condition awards with the following weighted average assumptions: Years Ended December 31, 2016 2015 2014 Risk-free interest rate Expected life, in years Dividend yield N/A N/A N/A Volatility The risk‑free interest rate is based on the United States Treasury yield curve in effect at the time of the grant. The expected life represents the period of time the grants are expected to be outstanding. The Company uses the historical volatilities of |
Joint Ventures
Joint Ventures | 12 Months Ended |
Dec. 31, 2016 | |
Joint Ventures | |
Joint Ventures | (3) Joint Ventures On May 6, 2016, the Company and WuXi AppTec (Shanghai) Co., Ltd., or WuXi, finalized an agreement to dissolve the WuXiPRA joint venture. Under the agreement, the Company sold its 49% portion of the joint venture located in mainland China for $4.0 million, which subsequently became a wholly owned subsidiary of WuXi. The portion of the joint venture located in Hong Kong became a wholly owned subsidiary of the Company and was acquired for $0.3 million. As a result of the transaction, the Company recognized a $3.3 million gain on the sale, which is recorded in the equity in gains (losses) of unconsolidated joint ventures in the accompanying consolidated statement of operations. During April 2015, prior to the dissolution of the WuXiPRA joint venture, 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 remained at 49% after the capital contribution. The Company recorded reductions to the investment balance of $0.7 million (excluding the gain on the sale), $2.9 million, and $2.1 million during the years ended December 31, 2016, 2015, and 2014, respectively, for our equity in the venture’s net loss for the period, which is recorded in the equity in gains (losses) of unconsolidated joint ventures, net of tax in our consolidated statement of operations. The investment was adjusted for our equity in the venture’s net income (loss), cash contributions, distributions, and other adjustments required by the equity method of accounting. The investment in WuXiPRA totaled $1.1 million as of December 31, 2015. The Company entered into a joint venture agreement with A2 Healthcare Corporation (formerly part of Asklep, Inc.). The joint venture provides research and development outsourcing solutions in Japan to the biopharmaceutical and medical device industries. This joint venture is based in Tokyo, Japan and is owned by the Company (49%) and Asklep (51%). On October 17, 2014, the joint venture changed its name from RPS Asklep, Inc. to A2PRA Corporation, or A2PRA. The Company recorded changes to the investment balance totaling $0.1 million, $0.0 million, and $(0.1) million during the years ended December 31, 2016, 2015, and 2014, respectively, for the Company’s equity in the venture’s net income (loss) for the period, which is recorded in the equity in gains (losses) of unconsolidated joint venture, net of tax in our consolidated statement of operations. The investment 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 investment in A2PRA totaled $0.3 million and $0.2 million at December 31, 2016 and 2015, respectively. In August 2015, the Company and an affiliate of KKR entered into a joint venture. The joint venture was dissolved in December 2015. The purpose of the joint venture included, among other things, the evaluation of investments or acquisitions to enhance the strategic objectives of the Company. The joint venture was jointly owned by the Company (11%) and KKR (89%). The Company contributed $20.0 million to the joint venture in August 2015 and received $19.5 million in December 2015 when the joint venture was dissolved. The Company recorded the $0.5 million reduction to the investment balance in equity in gains (losses) of unconsolidated joint ventures, net of tax in the consolidated statement of operations. The investment in the joint venture was 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. |
Business Combinations
Business Combinations | 12 Months Ended |
Dec. 31, 2016 | |
Business Combination | |
Business Combinations | (4) Business Combinations Acquisition of VHS 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 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. The Company’s 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. Acquisition of Nextrials On March 18, 2016, the Company acquired all of the outstanding shares of Nextrials, Inc., or Nextrials, a developer of web-based software which integrates electronic health records with clinical trials, for $4.8 million in cash and contingent consideration in the form of potential earn-out payments of up to $3.0 million. Earn-out payments totaling $2.0 million and $1.0 million are contingent upon the achievement of project milestones and certain external software sales targets, respectively, during the 30-month period following closing. The Company recognized a liability of approximately $2.3 million as the estimated acquisition date fair value of the earn-out; the fair value was based on significant inputs not observed in the market and thus represented a Level 3 measurement. Changes in the fair value of the earn-out subsequent to the acquisition date were recognized in earnings in the period of the change. The fair value of the contingent consideration decreased by $0.5 million during the year ended December 31, 2016. As of December 31, 2016, the earn-out liability totaled $1.8 million; $0.7 million of the balance is included in accrued expenses and other current liabilities and the remaining $1.1 million is included in other long-term liabilities in the consolidated balance sheet. 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 Nextrials 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 $4.3 million of goodwill, which is not 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. The Company’s purchase price allocation is as follows (in thousands): Purchase Weighted Price Amortization Allocation Period Cash and cash equivalents $ Accounts receivable Other current assets Property, plant and equipment Software intangible 5 years Accounts payable and accrued expenses Other long-term liabilities Estimated fair value of net assets acquired Purchase price, including contingent consideration Total goodwill $ Since the acquisition date, goodwill increased by $2.0 million, primarily as a result of adjustments to the acquired income tax balances. Pro forma information is not provided as the acquisition did not have a material effect on the Company’s consolidated results. Acquisition of WuXiPRA’s Hong Kong Operations As noted in Note 3, the Company acquired WuXiPRA’s Hong Kong operations for $0.3 million when the joint venture was dissolved on May 6, 2016. The acquisition 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 $0.6 million of goodwill, which is attributable to the workforce of the acquired business. Pro forma information is not provided as the acquisition did not have a material effect on the Company’s consolidated results. |
Accounts Receivable and Unbille
Accounts Receivable and Unbilled Services | 12 Months Ended |
Dec. 31, 2016 | |
Accounts Receivable and Unbilled Services | |
Accounts Receivable and Unbilled Services | (5) 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 (in thousands): December 31, 2016 2015 Accounts receivable $ $ Unbilled services Less allowance for doubtful accounts Total accounts receivable and unbilled services, net $ $ A rollforward of the allowance for doubtful accounts is as follows (in thousands): Years Ended December 31, 2016 2015 2014 Beginning balance $ $ $ Charged (credited) to income from operations Write-offs, recoveries and the effects of foreign currency exchange Ending balance $ $ $ |
Fixed Assets
Fixed Assets | 12 Months Ended |
Dec. 31, 2016 | |
Fixed Assets | |
Fixed Assets | (6) Fixed Assets The carrying amount of fixed assets is as follows (in thousands): December 31, 2016 2015 Leasehold improvements $ $ Computer hardware and software Furniture and equipment Accumulated depreciation Total fixed assets, net $ $ All fixed assets are included as collateral for the payment and performance in full of the term loans pledged by the Company and its subsidiaries. Depreciation expense was $24.1 million, $21.2 million, and $22.2 million for the years ended December 31, 2016, 2015 and 2014, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2016 | |
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 December 31, 2014 $ Acquisition of VHS Currency translation Balance December 31, 2015 $ Acquisition of Nextrials Acquisition of the WuXiPRA joint venture’s Hong Kong operations Currency translation Balance December 31, 2016 $ There are no accumulated impairment charges as of December 31, 2016 and 2015. Intangible Assets Intangible assets consist of the following (in thousands): December 31, 2016 2015 Customer relationships $ $ Customer backlog Trade names (finite-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 $ $ The Company conducts its annual impairment test of indefinite‑lived intangibles during the fourth quarter of the fiscal year. For the periods ended December 31, 2016, 2015, and 2014, the Company concluded that the fair value of indefinite‑lived intangibles exceeded the carrying value and, therefore, no impairment exists. Amortization expense was $45.4 million, $56.7 million and $74.4 million for the years ended December 31, 2016, 2015 and 2014, respectively. Estimated amortization expense related to finite‑lived intangible assets for the next five years and thereafter is as follows (in thousands): 2017 $ 2018 2019 2020 2021 2022 and thereafter Total $ |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2016 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | (8) Accrued Expenses and Other Current Liabilities Accrued expenses consisted of the following (in thousands): December 31, 2016 2015 Compensation, including bonuses, fringe benefits and payroll taxes $ $ Other Interest Total accrued expenses and other liabilities $ $ |
Current Borrowings and Long-Ter
Current Borrowings and Long-Term Debt | 12 Months Ended |
Dec. 31, 2016 | |
Current Borrowings and Long-Term Debt | |
Current Borrowings and Long-Term Debt | (9) Current Borrowings and Long‑Term Debt Long‑term debt consists of the following (in thousands): December 31, 2016 2015 Term loans, first lien $ $ Senior notes Accounts receivable financing agreement — Less debt issuance costs and discount Less current portion — Total long-term debt, net $ $ Principal payments on long‑term debt are due as follows (in thousands): Current maturities of long-term debt: 2017 $ 2018 2019 2020 2021 2022 and thereafter Total $ 2016 Credit Facilities On December 6, 2016, the Company through its wholly-owned subsidiary, Pharmaceutical Research Associates, Inc., entered into new senior secured credit facilities, or the 2016 Credit Facilities, totaling $750.0 million. The 2016 Credit Facilities are comprised of a $625.0 million first lien term loan due 2021, or 2016 First Lien Term Loan, and a five-year $125.0 million revolving line of credit, or 2016 Revolver. The proceeds from the 2016 Credit Facilities were used to repay the then outstanding 2013 First Lien Term Loan (defined below). In accordance with the guidance in ASC 470‑50, “Debt—Modifications and Extinguishments,” the debt repayment was accounted for as a partial debt extinguishment. The repayment resulted in a $16.7 million loss on extinguishment of debt, consisting of $15.8 million write-off of unamortized debt issuance costs and $0.9 million of fees associated with the transaction, which is included in loss on modification or extinguishment of debt in the consolidated statement of operations for the year ended December 31, 2016. As collateral for borrowings under the 2016 Credit Facilities, the Company granted a pledge on primarily all of its assets, and the stock of wholly‑owned U.S. restricted subsidiaries. The Company was subject to certain financial covenants, which require the Company to maintain certain debt‑to‑EBITDA and interest expense-to-EBITDA ratios. The 2016 Credit Facilities also contain covenants that, among other things, restrict the Company’s ability to incur create any liens, make investments and acquisitions, incur or guarantee additional indebtness, enter into mergers or consolidations and other fundamental changes, conduct sales and other dispositions of property or assets, enter into sale-leaseback transactions or hedge agreements, prepay subordinated debt, pay dividends or make other payments in respect of capital stock, change the line of business, enter into transactions with affiliates, enter into burdensome agreements with negative pledge clauses and clauses restriction, and make subsidiary distributions . After giving effect to the applicable restrictions on the payment of dividends under the 2016 Credit Facilities, subject to compliance with applicable law, as of December 31, 2016, all amounts in retained earnings were free of restriction and were available for the payment of dividends. The Company does not expect to pay dividends in the foreseeable future. The Company does not expect these covenants to restrict its liquidity, financial condition or access to capital resources in the foreseeable future. The 2016 Credit Facilities also contains customary representations, warranties, affirmative covenants, and events of default. 2016 First Lien Term Loan The 2016 First Lien Term Loan is a floating rate term loan with scheduled, fixed quarterly principal payments as follows: · 1.25% by quarterly term loan amortization payments, or $7.8 million per quarter, to be made commencing March 31, 2017 and made on or prior to December 31, 2017; · 1.88% by quarterly term loan amortization payments, or $11.7 million per quarter, to be made on or after March 31, 2018, but on or prior to December 31, 2019; · 2.50% by quarterly term loan amortization payments, or $15.6 million per quarter, to be made on or after March 31, 2020, but on or prior to December 31, 2020; · 3.13% by quarterly term loan amortization payments, or $19.5 million per quarter, to be made on or after March 31, 2021, but prior to September 30, 2021; and · 60.63% (or if less, the remaining principal amount of the term loan) on December 06, 2021. The variable interest rate is a rate equal to the London Interbank Offered Rate, or LIBOR, or the adjusted base rate, or ABR rate, at the election of the Company, plus a margin based on the ratio of total indebtedness to EBITDA and ranges from 1.25% to 2.25%, in the case of LIBOR rate loans, and 0.25% to 1.25%, in the case of ABR rate loans. The Company has the option of 1, 2, 3 or 6 month base interest rates. As of December 31, 2016, the weighted average interest rate on the first lien term loan was 2.70%. There are no prepayment penalties. 2016 Revolver The Company’s 2016 Revolver provides for $125.0 million of potential borrowings and expires on December 6, 2021. The interest rate on the 2016 Revolver is based on the LIBOR with a 0% LIBOR floor or ABR rate, at the election of the Company, plus an applicable margin, based on the leverage ratio of the Company. The Company, at its discretion, may elect interest periods of 1, 2, 3 or 6 months. In addition, the Company was required to pay to the lenders a commitment fee of 0.3% quarterly for unused commitments on the revolver from December 6, 2016 to December 31, 2016. Following December 31, 2016, the commitment fee will range from 0.2% to 0.4% based on the Company’s debt-to-EBITDA ratio. At December 31, 2016, the Company had no outstanding borrowings under the 2016 Revolver. In addition, at December 31, 2016, the Company had $7.0 million in letters of credit outstanding, which are secured by the 2016 Revolver. 2013 Credit Facilities In September 2013, the Company entered into a senior secured credit facilities, or the 2013 Credit Facilities, for an aggregate principal amount of $825.0 million of first lien term loan, or 2013 First Lien Term Loan, and a $125.0 million revolving line of credit, or 2013 Revolver. In September 2013, the Company also issued $375.0 million in senior notes, or Senior Notes. The proceeds from the 2013 Credit Facilities and the Senior Notes issuances were used in conjunction with the acquisition by KKR, to fund the acquisition of RPS, repay existing debt, and pay for fees and expenses related to the aforementioned events. The Company paid an $8.3 million debt discount in connection with the 2013 First Lien Term Loan. On December 2, 2013, the Company borrowed $65.0 million under the first lien term loan facility of the 2013 Credit Facilities, or the Incremental Term Loan Borrowing. The proceeds were used to fund the acquisition of CRI Lifetree. In accordance with the guidance in ASC 470‑50, “Debt—Modifications and Extinguishments,” the Incremental Term Loan Borrowing was accounted for as a debt modification. On March 24, 2014, the Company completed a repricing transaction, or the Repricing, associated with the 2013 First Lien Term Loan that reduced the applicable margin from 4.0% to 3.5%. As part of the repricing, eight previous lenders did not consent to the repricing terms; therefore the non‑consenting lenders were replaced by new lenders. In accordance with the guidance in ASC 470‑50, “Debt—Modifications and Extinguishments,” the Repricing was accounted for as a partial debt extinguishment based on non‑consenting lenders no longer having a holding interest. As a result of the partial debt extinguishment, the Company recognized a loss of extinguishment of debt totaling $1.3 million, which was recorded during the year ended December 31, 2014. The Company incurred $0.1 million in expenses for the repricing transaction, which were expensed during the year ended December 31, 2014. As collateral for borrowings under the 2013 Credit Facilities, the Company granted a pledge on primarily all of its assets, and the stock of designated subsidiaries. The Company was subject to certain financial covenants, which require the Company to maintain certain debt‑to‑EBITDA ratios. The 2013 Credit Facilities also contains covenants that, among other things, restrict the Company’s ability to incur additional indebtedness, grant liens, make investments, loans, guarantees or advances, make restricted junior payments, including dividends, redemptions of capital stock and voluntary prepayments or repurchase of certain other indebtedness, engage in mergers, acquisitions or sales of assets, enter into sale and leaseback transactions or engage in certain transactions with affiliates and otherwise restrict certain corporate activities. After giving effect to the applicable restrictions on the payment of dividends under the 2013 Credit Facilities, subject to compliance with applicable law, as of December 31, 2015, there was approximately $3.0 million free of restriction, which was available for the payment of dividends. The 2013 Credit Facilities also contained customary representations, warranties, affirmative covenants, and events of default. 2013 First Lien Term Loan The 2013 First Lien Term Loan was a floating rate term loan with scheduled, fixed quarterly principal payments of 0.25% of the original principal balance through September 2020. The voluntary prepayments made during 2014, using proceeds from the IPO, fully satisfied all required quarterly principal payments through maturity. The variable interest rate was based on the LIBOR, with a 1.0% LIBOR floor, plus an applicable margin of 3.5%. The applicable margin was dependent upon the Company’s debt to consolidated EBITDA ratio as defined in the 2013 Credit Facilities. The 2013 Credit Facilities required us to prepay outstanding term loans, subject to certain exceptions, with 50% of our annual Excess Cash Flow, which percentage would be reduced to 25% if PRA achieves a debt‑to‑EBITDA ratio of less than or equal to 3.75 to 1.0, but greater than 3.25 to 1.0 on the date of prepayment for the most recent test period and no prepayment would be required if PRA achieves a debt‑to‑EBITDA ratio of less than or equal to 3.25 to 1.0 on the date of prepayment for the most recent test period, commencing in 2014. The Company had the option of 1, 2, 3 or 6 month base interest rates. As of December 31, 2015, the weighted average interest rate on the first lien term loan was 4.5%. There were no prepayment penalties. On November 18, 2014, the Company repaid $152.1 million in principal using proceeds from the Company’s IPO. In accordance with the guidance in ASC 470‑50, “Debt—Modifications and Extinguishments,” the debt repayment was accounted for as a partial debt extinguishment. The repayment resulted in the write‑off of $4.8 million in unamortized debt issuance costs which is included in loss on modification or extinguishment of debt in the consolidated statement of operations during the year ended December 31, 2014. 2013 Revolver The Company’s 2013 Revolver provided for $125.0 million of potential borrowings and would have expired on September 23, 2018. The interest rate on the 2013 Revolver was based on the LIBOR plus an applicable rate, based on the leverage ratio of the Company. The Company, at its discretion, may have chosen interest periods of 1, 2, 3 or 6 months. In addition, the Company was 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 December 31, 2015, the Company had no outstanding borrowings under the 2013 Revolver. In addition, at December 31, 2015, the Company had $4.4 million in letters of credit outstanding, which were secured by the 2013 Revolver. Senior Notes In September 2013, the Company issued $375.0 million of Senior Notes. The Senior Notes do not require principal payments and mature on October 1, 2023. The Senior Notes bear interest at a rate of 9.50% per year payable on April 1, and October 1 of each year, beginning April 1, 2014. The Company may redeem the Senior Notes, in whole or in part, at any time prior to October 1, 2018 subject to a prepayment premium calculated in accordance with the Senior Notes indenture. From October 1, 2018 through October 1, 2019, the prepayment premium is 4.75% declining ratably to 0% beginning on October 1, 2021. In the event of a change in control, the Company may be required to offer to repurchase the Senior Notes at a price equal to the outstanding principal balance and a 1% prepayment premium plus accrued and unpaid interest. The Senior Notes include covenants which place limitations on incurring additional indebtedness, selling certain assets, and making certain distributions. The Senior Notes agreement contains certain provisions that restrict the payment of dividends from the Company’s subsidiaries to the parent company. As a result, there are no material balances present within the parent company that are available for the payment of dividends as the parent company did not have any net income during 2016 that was free of restrictions. The Company does not expect to pay dividends in the foreseeable future. On November 18, 2014, the Company repaid $150.0 million in principal and a $14.3 million prepayment penalty using proceeds from the Company’s IPO. In accordance with the guidance in ASC 470‑50, the debt repayment was accounted for as a partial debt extinguishment. The repayment also resulted in the write‑off of $4.6 million in unamortized debt issuance costs, which is included in loss on modification or extinguishment of debt in the consolidated statement of operations during the year ended December 31, 2014. On March 17, 2016, the Company repurchased $133.6 million aggregate principal amount of its Senior Notes as part of a cash tender offer. In accordance with the guidance in ASC 470-50, the debt repurchase was accounted for as a partial debt extinguishment. The repurchase resulted in a $21.5 million loss on extinguishment of debt, which consists of a $17.4 million early tender premium, a $3.7 million write-off of unamortized debt issuance cost and $0.4 million of fees associated with the transaction which is included in loss on modification or extinguishment of debt in the consolidated statement of operations during the year ended December 31, 2016. Accounts Receivable Financing Agreement In March 2016, the Company entered into a $140.0 million accounts receivable financing agreement, of which $120.0 million was outstanding as of December 31, 2016. The borrowings were used to repay amounts outstanding on the Company’s revolving credit facility that were used to fund the cash tender offer for the Senior Notes. Loans under the accounts receivable financing agreement accrue interest at either a reserve-adjusted LIBOR or a base rate, plus 1.6%. The Company may prepay loans upon one business day prior notice and may terminate the accounts receivable financing agreement with 15 days’ prior notice. As of December 31, 2016, the weighted average interest rate on the accounts receivable financing agreement was 2.31%. The accounts receivable financing agreement contains various customary representations and warranties and covenants, and default provisions which provide for the termination and acceleration of the commitments and loans under the agreement in circumstances including, but not limited to, failure to make payments when due, breach of representations, warranties or covenants, certain insolvency events or failure to maintain the security interest in the trade receivables, and defaults under other material indebtedness. The accounts receivable financing agreement terminates on March 22, 2019, unless terminated earlier pursuant to its terms. At December 31, 2016, there was $20.0 million of remaining capacity available under the accounts receivable financing agreement. Fair Value of Debt The estimated fair value of the Company’s debt was $844.2 million and $924.9 million at December 31, 2016 and 2015, respectively. The fair value of the Senior Notes, which totaled $99.2 million and $246.2 million at December 31, 2016 and 2015, respectively, 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, borrowings under credit facilities, and accounts receivable financing agreement which totaled $745.0 million and $678.7 million at December 31, 2016 and 2015, respectively, 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. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity | |
Stockholders' Equity | (10) 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. The Company is authorized to issue up to one hundred million shares of preferred stock, with a par value of $0.01. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2016 | |
Stock-Based Compensation | |
Stock-Based Compensation | (11) Stock‑Based Compensation On September 23, 2013 and in connection with the acquisition of the Company by KKR, the Board of Directors approved the formation of the 2013 Stock Incentive Plan for Key Employees of Pinnacle Holdco Parent, Inc. and its subsidiaries, or the Plan. The Plan allowed for the issuance of stock options and other stock‑based awards as permitted by applicable laws. The number of shares available for grant under the Plan is 12.5% of the outstanding shares at closing on a fully diluted basis. The Company rolled over 2,052,909 stock options under the Plan; this amount is comprised of 2,016,581 and 36,328 options rolled over by employees of the Predecessor Company and RPS, respectively. The fair value of the options that were rolled over equaled the fair value of the options in the Predecessor Company and, therefore, there was no additional stock‑based compensation expense recorded. All stock options granted under the Plan are subject to transfer restrictions of the stock option’s underlying shares once vested and exercised. This lack of marketability was included as a discount, calculated using the Finnerty Model, when determining the grant date value of these options. In conjunction with the Secondary Offerings, the transfer restrictions on a portion of such shares issuable upon exercise of vested options granted under the Plan were released. The release of the transfer restrictions is considered a modification under ASC 718, “Stock Compensation.” As a result of these modifications, the Company incurred approximately $10.1 million of incremental compensation expense associated with service-based options during the year ended December 31, 2016, which is included in transaction-related costs in the accompanying consolidated statement of operations. On November 23, 2014 and in connection with the Company’s IPO, the Board of Directors approved the formation of the 2014 Omnibus Plan for Key Employees, or the 2014 Omnibus Plan. The 2014 Omnibus Plan allows for the issuance of stock options, stock appreciation rights, restricted shares and restricted stock units, other stock‑based awards, and performance compensation awards as permitted by applicable laws. The number of shares available for grant under the 2014 Omnibus Plan is 3,200,000. Generally, the Company grants stock options with exercise prices greater than or equal to the fair market value of the Company’s common stock on the date of grant. The stock option compensation cost calculated under the fair value approach is recognized on a pro‑rata basis over the vesting period of the stock options (usually five years under the Plan and four years under the 2014 Omnibus Plan). Most stock option grants are subject to graded vesting as services are rendered and have a contractual life of ten years. In December 2013, the Company granted certain employees market-based options under the Plan that vest only upon the achievement of a specified internal rate of return from a liquidity event (“2.0x Options” and “2.5x Options”). At the time of grant, no compensation expense was recorded as the 2.0x Options and 2.5x Options vest upon a liquidity event, which is not considered probable until the date it occurs. On January 20, 2016, the Compensation Committee of the Board of Directors adopted a resolution to adjust the vesting criteria for all 2.0x Options granted and still outstanding on such date. Under the revised vesting criteria, the 2.0x Options vest upon the announcement of a secondary offering. The Company did not record compensation expense on the January 20, 2016 modification date as the Company determined the modification resulted in Type IV Improbable-to-Improbable modification as the secondary offering was deemed improbable since the event was outside of the Company’s control and could not be considered probable until the date it occured. On March 2, 2016, the Company announced a secondary offering of shares by KKR and certain management stockholders, and it became probable that the 2.0x Options would vest. Due to the modification of the terms of the 2.0x Options, the Company calculated the fair value of these options using the Black‑Scholes option pricing model with the following assumptions: expected life of 2.92 years; risk-free rate of 1.04%; volatility of 45%; dividend yield of 0%; and a Finnerty discount of approximately 16%. In total, 835,551 2.0x Options held by current employees were modified. As a result of this modification, and the modifications associated with the transfer restrictions releases noted above, the Company incurred approximately $25.7 million of incremental compensation expense associated with the 2.0x Options during the year ended December 31, 2016, which is included in transaction-related costs in the accompanying consolidated statement of operations. On November 16, 2016, the 2.5x Options vested upon the achievement of a specified internal rate of return and multiple on invested capital in connection with the closing of a secondary offering of shares by KKR. In total, 809,755 2.5x Options held by current employees vested. The Company incurred approximately $6.4 million of incremental compensation expense associated with the vesting and transfer restriction release of the 2.5x Options during the year ended December 31, 2016, which is included in transaction-related costs in the accompanying consolidated statement of operations. As of December 31, 2016, there was $16.2 million of unrecognized compensation cost related to unvested stock-based compensation, which is expected to be recognized over a weighted average period of 2 years. The total fair value of options vested during the years ended December 31, 2016, 2015 and 2014 was $27.3 million, $3.1 million and $2.8 million, respectively. Aggregated information regarding the Company’s option plans is summarized below: Wtd. Average Wtd. Average Remaining Intrinsic Value Options Exercise Price Contractual Life (in millions) Outstanding at December 31, 2015 $ $ Granted Exercised Expired/forfeited Outstanding at December 31, 2016 $ $ Exercisable at December 31, 2016 $ $ The weighted‑average fair value of service‑based options granted was $15.57, $10.87 and $6.71 during the years ended December 31, 2016, 2015 and 2014, respectively. Selected information regarding the Company’s stock options as of December 31, 2016 is as follows: Options Outstanding Options Exercisable Wtd Average Wtd. Average Number of Remaining Life Wtd. Average Number of Remaining Life Wtd. Average Exercise Price Options (in Years) Exercise Price Options (in Years) Exercise Price $ 2.8 $ 2.8 $ $ 7.0 $ 7.0 $ $ 7.5 $ 7.3 $ $ 25.35 - 54.69 8.7 $ 7.6 $ Restricted Stock Awards and Units The Company’s RSAs/RSUs will settle in shares of the Company’s common stock on the applicable vesting date. RSAs/RSUs granted to employees vest 100% on the third anniversary of the date of grant. RSAs/RSUs granted to our non-employee directors vest 50% on the first anniversary of the date of grant and 50% on the second anniversary of the date of grant. Activity related to the Company’s RSAs/RSUs in 2016 is as follows: Wtd. Average Intrinsic Grant-Date Value Awards Fair Value (millions) Unvested at December 31, 2015 $ $ Granted Vested Unvested at December 31, 2016 $ $ Stock‑based compensation expense related to employee stock options and RSAs/RSUs is summarized below (in thousands): Years Ended December 31, 2016 2015 2014 Direct costs $ $ $ Selling, general and administrative Transaction-related costs — — Total stock-based compensation expense $ $ $ |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | |
Income Taxes | (12) Income Taxes The components of income (loss) before income taxes and equity in gains (losses) of unconsolidated joint ventures are as follows (in thousands): Years Ended December 31, 2016 2015 2014 Domestic $ $ $ Foreign $ $ $ The components of the provision for (benefit from) income taxes were as follows (in thousands): Years Ended December 31, 2016 2015 2014 Current: Federal $ $ $ — State Foreign Total current income tax expense Deferred: Federal State Foreign Total deferred income tax benefit Total income tax expense (benefit) $ $ $ Income taxes computed at the statutory U.S. federal income tax rate of 35.0% are reconciled to the benefit from income taxes as follows: Years Ended December 31, 2016 2015 2014 Statutory federal income tax rate State income taxes, net of federal benefit Tax on foreign earnings: Foreign rate differential Foreign earnings taxed in the U.S. Non-U.S. research and development credits Stock-based compensation Change in liability for uncertain tax positions — Nondeductible expenses Other Effective income tax rate Components of the deferred tax assets and liabilities were as follows (in thousands): December 31, 2016 2015 Net operating loss carryforwards $ $ Accruals and reserves Equity based compensation Prepaid expenses and other Deferred and unbilled revenue Tax credits Valuation allowance Deferred tax assets Identified intangibles Depreciable, amortizable and other property Deferred tax liabilities Total deferred tax liability $ $ Long-term deferred tax asset $ $ Long-term deferred tax liability $ $ The Company’s foreign subsidiaries are taxed separately in their respective jurisdictions. As of December 31, 2016, the Company has cumulative foreign net operating loss carryforwards of approximately $9.7 million. In addition, the Company has federal net operating loss carryforwards of approximately $70.9 million and state net operating loss carryforwards of approximately $279.4 million. The carryforward periods for the Company’s net operating losses vary from five years to an indefinite number of years depending on the jurisdiction. The Company’s ability to offset future taxable income with net operating loss carryforwards may be limited in certain instances, including changes in ownership. The Company also has federal and state income tax credit carryforwards available to potentially offset future federal and state income tax of $3.1 million and $1.6 million, respectively. The federal credits are indefinitely-lived. The state credits begin expiring in 2022. The Company has provided a partial valuation allowance against the benefits of these credits. In determining the extent to which a valuation allowance for deferred tax assets is required, the Company evaluates all available evidence including projections of future taxable income, carry back opportunities, reversal of certain deferred tax liabilities, and other tax‑planning strategies. The valuation allowance at December 31, 2016 relates to the U.S. net federal deferred tax asset (including the federal net operating loss), certain foreign net operating losses, state net operating losses and state tax credit carryforwards. Based upon the available evidence, the Company has concluded that it is not more likely than not that a certain portion of these net deferred tax assets will be realized as of December 31, 2016. If the Company determines at some point in the future that utilization of these deferred tax assets becomes more likely than not, the Company will reduce the valuation allowance accordingly at that time. A reconciliation of the beginning and ending amount of gross unrecognized income tax benefits is presented below (in thousands): Years Ended December 31, 2016 2015 2014 Beginning balance $ $ $ Additions based on tax positions related to current year Additions for income tax positions of prior years Impact of changes in exchange rates Settlements with tax authorities — — Reductions for income tax positions for prior years Reductions due to lapse of applicable statute of limitations — Ending balance $ $ $ As of December 31, 2016, 2015, and 2014, the total gross unrecognized tax benefits were $12.4 million, $11.7 million, and $16.2 million, respectively. As of December 31, 2016, the total amount of gross unrecognized tax benefits which, if recognized, would impact the Company’s effective tax rate is $7.6 million. The Company anticipates changes in total unrecognized tax benefits due to the expiration of statute of limitations within the next 12 months and an income tax audit resolution. Specifically, adjustments related to transfer pricing and foreign tax exposures are expected to be resolved in various jurisdictions. A reasonable estimate of the change in the total gross unrecognized tax benefit expected to be recognized as a result is $3.7 million as of the balance sheet date. The Company’s policy for recording interest and penalties associated with uncertain tax positions is to record such items as a component of income tax expense. The Company recorded an increase of $0.1 million, a decrease of $0.1 million, and an increase of $0.1 million during the years ended December 31, 2016, 2015 and 2014, respectively. As of December 31, 2016, the Company has a total of $2.4 million recognized on uncertain tax positions. To the extent interest and penalties are not incurred with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction in income tax expense. The Company has analyzed filing positions in all of the significant federal, state and foreign jurisdictions where the Company is required to file income tax returns. The only periods subject to examination by the major tax jurisdictions where the Company does business are the 2008 through 2015 tax years. The Company has concluded that a portion of the undistributed earnings of its foreign subsidiaries related to certain previously taxed income is not indefinitely reinvested. With respect to the previously taxed income, as of December 31, 2016 and December 31, 2015, there is no liability recorded for the effect of repatriating those foreign earnings due to the movement in foreign exchange rates which would cause a foreign exchange loss if the previously taxed income were distributed. As of December 31, 2015 the Company recorded a deferred tax liability in the amount of $0.3 million on Russian earnings of $3.4 for which there was not an indefinite reinvestment assertion. The Company has since concluded that this portion of Russian earnings is indefinitely reinvested and has removed the prior year deferred tax liability in the amount of $0.3 million as of December 31, 2016. For the remaining undistributed earnings of $256.6 million, $236.7 million, and $186.1 million as of December 31, 2016, 2015, and 2014, respectively, the Company has concluded that these earnings would be permanently reinvested in the local jurisdictions and not repatriated to the United States. Accordingly, the Company has not provided for U.S. federal and foreign withholding taxes on those undistributed earnings of its foreign subsidiaries. It is not practicable to estimate the amount that might be payable if some or all of such earnings were to be remitted. The amount of the tax liability that would result from a repatriation is impracticable to calculate given the uncertainty as to which repatriation structure would be used should the Company change its assertion and repatriate foreign earnings. Furthermore, given the uncertainty as to the repatriation structure, the Company cannot analyze the availability and amount of foreign tax credits that might be available. These earnings will provide the Company with the opportunity to continue to expand the Company’s global footprint and fund the working capital needs of the Company’s foreign locations for future growth. A rollforward of the deferred tax asset valuation allowance accounts is as follows (in thousands): Years Ended December 31, 2016 2015 2014 Beginning balance $ $ $ Additions - purchase accounting — — Additions - other comprehensive income — Additions - charged to expense Deductions - charged to expense (including translation adjustments) Ending balance $ $ $ The valuation allowance is primarily related to U.S. federal loss carryforwards, state loss carryforwards, state credit carryforwards, and loss carryforwards in various foreign jurisdictions. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies | |
Commitments and Contingencies | (13) Commitments and Contingencies Operating Leases The Company leases office space under operating lease agreements expiring at various times through 2030. The Company has sublease agreements for certain facilities to reduce rent expense and accommodate expansion needs. The subleases expire at various times through 2022. The Company also leases certain office equipment under the terms of operating leases expiring at various times through 2021. Rent expense under operating leases, net of sublease rental income, was $31.9 million, $30.1 million and $33.4 million for the years ended December 31, 2016, 2015 and 2014, respectively. Future minimum lease commitments on non‑cancelable operating leases are as follows (in thousands): Year Ending December 31, Leases Sublease Net Total 2017 $ $ $ 2018 2019 2020 2021 2022 and thereafter Total $ $ $ Employment Agreements The Company has entered into employment and non‑compete agreements with certain management employees. In the event of termination of employment for certain instances, employees will receive severance payments for base salary and benefits for a specified period (six months for vice presidents, nine months for senior vice presidents and twelve months for executive vice presidents, the president and chief executive officer). Each employment agreement also contains provisions that restrict the employee’s ability to compete directly with the Company for a comparable period after employment terminates. In addition, stock option grant agreements for these employees provide the Company with the right to repurchase from the employee, or the employee with the right to sell to the Company, stock owned by the employee in certain limited instances of termination. 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 $4.9 million at December 31, 2016, given that it is not deemed probable the Company will incur a loss related to this case. However, a deposit totaling $4.9 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 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 settled. Insurance The Company currently maintains insurance for risks associated with the operation of its business, provision of professional services, and ownership of property. These policies provide coverage for a variety of potential losses, including, without limitation, loss or damage to property, bodily injury, general commercial liability, professional errors and omissions, and medical malpractice. The Company’s retentions and deductibles associated with these insurance policies range up to a maximum of $0.5 million. Employee Health Insurance The Company is self‑insured for health insurance for employees within the United States. The Company maintains stop‑loss insurance on a “claims made” basis for expenses in excess of $0.3 million per member per year. As of December 31, 2016 and 2015, the Company maintained a reserve of approximately $4.1 million and $3.6 million, respectively, included in accrued expense and other current liabilities on the consolidated balance sheets, to cover open claims and estimated claims incurred but not reported. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2016 | |
Employee Benefit Plans | |
Employee Benefit Plans | (14) Employee Benefit Plans Defined contribution or profit sharing style plans are offered in Australia, Belgium, Germany, Hong Kong, India, Israel, the Netherlands, New Zealand, the Philippines, South Africa, Spain, Sweden, Thailand, and the United Kingdom. In some cases these plans are required by local laws or regulations. The Company maintains a 401(k) Plan in the United States, which covers substantially all employees of its U.S. subsidiaries. The Company matches 50% of each participant's voluntary contributions after six months of employment, subject to a maximum contribution of 6% of the participant's compensation. The employer contributions to the 401(k) Plan were approximately $9.9 million, $6.6 million and $4.4 million for the years ended December 31, 2016, 2015 and 2014, respectively. |
Derivatives
Derivatives | 12 Months Ended |
Dec. 31, 2016 | |
Derivatives | |
Derivatives | (15) 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 would have compensated the Company if variable interest rates had risen above a pre‑determined rate. The Company’s interest rate contracts are designated as hedging instruments. On October 2, 2013, the Company entered into interest rate swap agreements with an aggregate notional principal amount of $620.0 million, or the 2013 Swaps. The interest rate swaps were set to begin on September 23, 2015. The interest rate swaps were to be used to hedge the Company’s variable rate debt. The interest rate swaps had maturity dates ranging from one to five years. During the third quarter of 2015, the Company paid $32.9 million to terminate the 2013 Swaps. Amounts previously recorded in accumulated other comprehensive loss related to these interest rate swaps, totaling $29.6 million, are being reclassified into earnings over the term of the previously hedged borrowing using the swaplet method. For the terminated swaps, the Company reclassified $4.7 million and $0.7 million previously recorded in accumulated other comprehensive loss into interest expense during the years ended December 31, 2016 and 2015, respectively. In addition, on October 2, 2013 the Company also entered into an interest rate cap with an aggregate notional principal amount of $800.0 million. The interest rate cap began on September 23, 2014. The interest rate cap was used to hedge the variable rate of the Company’s 2013 First Lien Term Loan to the extent that the LIBOR exceeded 4.00%. During the third quarter of 2015, the Company’s interest rate cap with a notional principal amount of $800.0 million expired. 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%, or the 2015 Swap. The interest rate swap began on September 23, 2015 and will mature on September 23, 2018. The interest rate swap is being used to hedge the Company’s variable rate debt. In conjunction with the closing of the 2016 Credit Facilities in December 2016, the 2015 Swap was amended to modify the fixed rate, repricing dates and embedded floor, or the Modified 2015 Swap. The Company re-designated the Modified 2015 Swap against the refinanced debt under the 2016 Credit Facilities. As a result of the re-designation, all amounts previously recorded in accumulated other comprehensive loss related to the 2015 Swap, totaling $0.8 million, were frozen and will be amortized into earnings over the term of the previously hedged borrowing using the swaplet method. The closing of the 2016 Credit Facilities did not impact the amortization of the losses frozen in accumulated other comprehensive loss associated with the 2013 Swaps. The following table presents the notional amounts and fair values (determined using level 2 inputs) of the Company’s derivatives as of December 31, 2016 and 2015 (in thousands): Balance Sheet December 31, 2016 December 31, 2015 Classification Notional amount Asset/(Liability) Notional amount Asset/(Liability) Derivatives in an asset position: Other assets $ — $ — $ $ Derivatives in a liability position: Other long-term liabilities — — 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 the consolidated balance sheets, 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. During 2014, due to the debt repayments made in conjunction with the Company’s IPO and related changes to forecasted voluntary debt repayments in future periods, the Company determined interest rate swaps with a notional principal amount of $47.5 million no longer qualified for hedge accounting and interest rate swaps with a notional principal amount of $297.5 million experienced ineffectiveness. During 2015, the Company further revised its forecasted voluntary debt repayments in future periods; as a result of the change in expected future cash flows, an interest rate swap with a notional principal amount of $17.5 million experienced ineffectiveness. This also caused interest rate swaps with a notional principal amount of $40.0 million, which experienced ineffectiveness during 2014, to no longer qualify for hedge accounting. All of abovementioned interest rate swaps were terminated during the third quarter of 2015. The table below presents the effect of our derivatives on the consolidated statements of operations and comprehensive (loss) income (in thousands): Years Ended December 31, Derivatives in Cash Flow Hedging Relationships (Interest Rate Contracts) 2016 2015 2014 Amount of pretax loss recognized in other comprehensive income (loss) on derivatives $ $ $ Amount of loss recognized in other income (expense), net on derivatives (ineffective portion) Amount of loss recognized in other income (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 $6.9 million of unrealized losses will be reclassified out of accumulated other comprehensive loss and into interest expense, net over the next 12 months. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive (Loss) Income | 12 Months Ended |
Dec. 31, 2016 | |
Accumulated Other Comprehensive (Loss) Income | |
Accumulated Other Comprehensive Loss | (16) Accumulated Other Comprehensive (Loss) Income Below is a summary of the components of accumulated other comprehensive (loss) income (in thousand): Foreign Currency Derivative Translation Instruments Total Balance at December 31, 2013 $ $ $ Other comprehensive loss before reclassifications, net of tax Reclassification adjustments, net of tax — Balance at December 31, 2014 Other comprehensive loss before reclassifications, net of tax Reclassification adjustments, net of tax — Balance at December 31, 2015 Other comprehensive loss before reclassifications, net of tax Reclassification adjustments, net of tax — Balance at December 31, 2016 $ $ $ Foreign Currency Translation The change in the foreign currency translation adjustment during the year ended December 31, 2016 was primarily due to the movements in the British Pound, or GBP, Euro, or EUR, Canadian dollar, or CAD, and Russian Ruble, or RUB, exchange rates against the U.S. dollar, or USD. The USD strengthened by 16.7% and 3.6% versus the GBP and EUR, respectively, during the year ended December 31, 2016, and the USD depreciated by 3.1% and 19.5% against the CAD and RUB, respectively, during the same period. The movement in the GBP and EUR represented $90.2 million and $8.4 million, respectively, of the $95.0 million loss recorded to accumulated other comprehensive loss during the year ended December 31, 2016. The overall change was partially offset by gains in the CAD and RUB, representing $1.1 million and $4.0 million of the adjustment, respectively. The change in the foreign currency translation adjustment during the year ended December 31, 2015 was primarily due to the movements in the GBP, EUR, and CAD exchange rates against the USD. The USD strengthened by 4.6%, 10.1%, and 16.1% against the GBP, EUR, and CAD, respectively. The movement of the GBP, EUR, and CAD represented $25.8 million, $16.4 million, and $7.1 million, respectively, of the $52.4 million loss recorded to accumulated other comprehensive loss during the year ended December 31, 2015. The change in the foreign currency translation adjustment during the year ended December 31, 2014 was primarily due to the movements in the GBP and EUR exchange rates against the USD. The USD strengthened by 5.7% and 11.8% against the GBP and EUR, respectively. The movement of the GBP and EUR represented $32.3 million and $20.6 million, respectively, of the $68.7 million loss recorded to accumulated other comprehensive loss during the year ended December 31, 2014. Derivative Instruments See Note 15 for further information on changes to accumulated other comprehensive income related to the derivative instruments. |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 12 Months Ended |
Dec. 31, 2016 | |
Net Income (Loss) Per Share | |
Net Income (Loss) Per Share | (17) 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): Years Ended December 31, 2016 2015 2014 Basic weighted average common shares outstanding Effect of dilutive stock options and RSAs — Diluted weighted average common shares outstanding Anti-dilutive shares The anti‑dilutive shares disclosed above were calculated using the treasury stock method. The treasury stock method calculates dilution assuming the exercise of all in-the-money options and vesting of RSAs/RSUs, reduced by the repurchase of shares with the proceeds from the assumed exercises, and unrecognized compensation expense for outstanding awards. As the Company was in a net loss position during the year ended December 31, 2014, all options and RSAs outstanding (as disclosed in Note 11) would be anti‑dilutive. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions | |
Related Party Transactions | (18) Related Party Transactions KKR, a significant stockholder of the Company, was a participant in the syndicate of lenders that provided financing under the 2013 Credit Facilities. KKR contributed $28.0 million of the $887.8 million of 2013 First Lien Term Loan issued under the 2013 Credit Facilities, which makes up approximately 3% of the 2013 First Lien Term Loan. Based on the limited contribution of KKR in the 2013 Credit Facilities, the Company represents that the 2013 Credit Facilities was arranged at an arm’s length basis. KKR and UBS were the underwriters of the Incremental Term Loan Borrowing for $32.5 million each. At December 31, 2015, KKR held $14.7 million in 2013 First Lien Term Loan. The 2013 Credit Facilities was extinguished in December 2016. For further discussion of the 2013 Credit Facilities transaction and extinguishment, see Note 9. In connection with the Merger, the Company entered into a monitoring agreement with KKR pursuant to which KKR provided management services to the Company and its affiliates. The monitoring agreement provided a termination fee based on the net present value of future payment obligations under the monitoring agreement, under certain circumstances in which the monitoring agreement was terminated by us. In connection with the IPO, the Company paid a termination fee of $11.9 million during the year ended December 31, 2014, and therefore, no management fees to KKR were incurred subsequent to the IPO. Prior to the termination of the monitoring agreement, the Company paid management fees of $1.6 million for the year ended December 31, 2014. Also, in connection with the IPO, the Company paid an underwriting discount and commission of $4.0 million to affiliates of KKR. The Company also entered into a joint venture with an affiliate of KKR during 2015. The joint venture was dissolved during the same year. For further discussion on the related party transaction, refer to Note 3. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 12 Months Ended |
Dec. 31, 2016 | |
Supplemental Cash Flow Information | |
Supplemental Cash Flow Information | (19) Supplemental Cash Flow Information The following table presents the Company’s supplemental cash flow information (in thousands): Years Ended December 31, 2016 2015 2014 Cash paid during the period for: Income taxes, net of refunds $ $ $ Interest Non-cash investing and financing activities: Issuance of common stock for the acquisition of Value Health Solutions, Inc. — — IPO cost incurred but not paid — — Accrued fixed assets purchases Cashless exercises of stock options — |
Operations by Geographic Area
Operations by Geographic Area | 12 Months Ended |
Dec. 31, 2016 | |
Operations by Geographic Area | |
Operations by Geographic Area | (20) Operations by Geographic Area The table below presents certain enterprise‑wide information about the Company’s operations by geographic area for the years ended December 31, 2016, 2015 and 2014. The Company attributes revenues to geographical locations based upon where the services are performed. The Company’s operations within each geographical region are further broken down to show each country which accounts for 10% or more of the totals (in thousands): Years Ended December 31, 2016 2015 2014 Service revenue: Americas: United States $ $ $ Other Americas Europe, Africa, and Asia-Pacific United Kingdom Netherlands Other Europe, Africa, and Asia-Pacific Total service revenue Reimbursement revenues Total revenue $ $ $ December 31, 2016 2015 Long-lived assets: Americas: United States $ $ Other Americas Europe, Africa, and Asia-Pacific United Kingdom Netherlands Other Europe, Africa, and Asia-Pacific Total long-lived assets $ $ |
Quarterly Financial Data (unaud
Quarterly Financial Data (unaudited) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Data (unaudited) | |
Quarterly Financial Data (unaudited) | (21) Quarterly Financial Data (unaudited) The following table summarizes the Company’s unaudited quarterly results of operations (in thousands, except per share data: 2016 First Quarter Second Quarter Third Quarter Fourth Quarter Service revenue $ $ $ $ Reimbursement revenue Total revenue Income from operations (1) (Benefit from) provision for income taxes (Losses) income before equity in (losses) gains of unconsolidated joint ventures (2) Equity in (losses) gains of unconsolidated joint ventures Net (loss) income Comprehensive (loss) income $ $ $ $ Basic (losses) earnings per share (3) $ $ $ $ Diluted (losses) earnings per share (3) $ $ $ $ 2015 First Quarter Second Quarter Third Quarter Fourth Quarter Service revenue $ $ $ $ Reimbursement revenue Total revenue Income from operations Provision for income taxes Income before equity in (losses) gains of unconsolidated joint ventures Equity in (losses) gains of unconsolidated joint ventures Net income Comprehensive (loss) income $ $ $ $ Basic earnings per share (3) $ $ $ $ Diluted earnings per share (3) $ $ $ $ (1) Tr ansaction-related costs for the three months ended March 31, 2016, June 30, 2016 and December 31, 2016 were $28.9 million, $2.9 million and $13.0 million, respectively. There were no transaction-related costs for the three months ended September 30, 2016. Transaction-related costs primarily relate to costs incurred in connection with the March, May and November 2016 secondary offerings and receivables financing agreement. These costs include $42.1 million of non-cash stock-based compensation expense and $2.7 million of third-party fees. (2) During the three months ended March 31, 2016 and December 31, 2016, the Company recorded a loss on extinguishment of debt of $21.5 million and $16.7 million, respectively. The loss on extinguishment of debt recorded during the three months ended March 31, 2016 related to the cash tender offer on the Company’s Senior Notes. The loss on extinguishment of debt recorded during the three months ended December 31, 2016 related to the refinancing of the Company’s 2013 Credit Facilities. Refer to Note 9, Current Borrowings and Long-Term Debt, for additional information regarding the cash tender on the Senior Notes and the 2013 Credit Facilities refinancing. (3) The sum of the quarterly per share amounts may not equal per share amounts reported for year‑to‑date periods. This is due to changes in the number of weighted average shares outstanding and the effects of rounding for each period. |
Significant Accounting Polici30
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts and results of operations of the Company. All intercompany balances and transactions have been eliminated. |
Variable Interest Entities | Variable Interest Entities Financial Accounting Standards Board’s, or FASB, accounting guidance concerning variable interest entities, or VIE, addresses the consolidation of business enterprise to which the usual condition of consolidation (ownership of a majority voting interest) does not apply. This guidance focuses on controlling financial interests that may be achieved through arrangements that do not involve voting interests. The guidance requires an assessment of who the primary beneficiary is and whether the primary beneficiary should consolidate the VIE. The primary beneficiary is identified as the variable interest holder that has both the power to direct the activities of the variable interest entity that most significantly impacts the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the variable interest entity. Application of the VIE consolidation requirements may require the exercise of significant judgment by management. Accounts Receiveable Financing Agreement On March 22, 2016, the Company entered into a three-year accounts receivable financing agreement and related arrangements to securitize certain of its accounts receivable. Under the accounts receivable financing agreement, certain of the Company’s U.S. accounts receivable and unbilled services balances are sold by certain of its consolidated subsidiaries to another of its consolidated subsidiaries, a wholly-owned bankruptcy-remote special purpose entity, or SPE. The SPE in turn may borrow up to $140.0 million from a third party lender, secured by liens on the receivables and other assets of the SPE. The Company retains the servicing of the securitized accounts receivable portfolio and has a variable interest in the SPE by holding the residual equity. The Company determined that the SPE is a VIE and it is the primary beneficiary because (i) the Company’s servicing responsibilities for the securitized portfolio gives it the power to direct the activities that most significantly impact the performance of the VIE and (ii) its variable interest in the VIE gives it the obligation to absorb losses and the right to receive residual returns that could potentially be significant. As a result, the Company has consolidated the VIE within its financial statements. Refer to Note 9, Current Borrowings and Long-Term Debt, for additional information regarding the accounts receivable financing agreement. CNS Research Institute, Inc. In order to comply with laws in New Jersey and Pennsylvania prohibiting the corporate practice of medicine, the Company has management contracts for medical services with a professional corporation, CNS Research Institute, Inc., or CNS, for physician investigators working in New Jersey and Pennsylvania. CNS is owned by an employee of the Company. The management contracts expire on January 30, 2025. The Company pays CNS a management fee equal to the salary, bonus and benefits for the physicians. The Company manages all aspects of CNS’ operations including providing administrative support and making all significant operational decisions. Additionally, CNS cannot provide services to any other party without the prior written approval of the Company. After evaluating all of the factors noted above, it was concluded that CNS should be included in the Company’s consolidated financial statements as it is a variable interest entity and the Company is the primary beneficiary. The Company paid CNS $0.8 million, $0.7 million and $0.9 million during the years ended December 31, 2016, 2015 and 2014, respectively, as compensation under the management contract, which was eliminated in consolidation. CNS had no net income for the years ended December 31, 2016, 2015 and 2014. |
Risks and Other Factors | Risks and Other Factors The Company’s revenues are dependent on research and development expenditures of the pharmaceutical and biotechnology industries. Any significant reduction in research and development expenditures by the pharmaceutical and biotechnology industries could have a material adverse effect on the Company and its results of operations. Clients of the Company generally may terminate contracts without cause upon 30 to 60 days’ notice. While the Company generally negotiates deposit payments and early termination fees up front, such terminations could significantly impact the future level of staff utilization and have a material adverse effect on the Company and the results of future operations. |
Business Combinations | Business Combinations Business combinations are accounted for using the acquisition method and, accordingly, the identifiable assets acquired, the liabilities assumed, and any non‑controlling interest in the acquiree are recorded at their estimated fair values on the date of the acquisition. Goodwill represents the excess of the purchase price over the estimated fair value of the net assets acquired, including the amount assigned to identifiable intangible assets. |
Contingent Liabilities | Contingent Liabilities The Company provides for contingent liabilities when (1) it is probable that an asset has been impaired or a liability has been incurred at the date of the consolidated financial statements and (2) the amount of the loss can be reasonably estimated. Disclosure in the notes to the consolidated financial statements is required for loss contingencies that do not meet both these conditions if there is a reasonable possibility that a loss may have been incurred. The Company expenses as incurred the costs of defending legal claims against the Company. |
Cash Equivalents | Cash Equivalents The Company considers all highly‑liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of December 31, 2016 and 2015, substantially all of the Company’s cash and cash equivalents were held in or invested with large financial institutions. Certain bank deposits may at times be in excess of the Federal Deposit Insurance Corporation insurance limits. |
Restricted Cash | Restricted cash The Company receives cash advances from its customers to be used for the payment of investigator costs and other pass‑through expenses. The terms of certain customer contracts require that such advances be maintained in separate escrow accounts; these accounts are not commingled with the Company’s cash and cash equivalents and are presented separately in the consolidated balance sheets as restricted cash. Additionally, as part of the acquisition of Nextrials, Inc., or Nextrials, the Company was required to transfer $0.5 million to an escrow account held by a subsidiary. As of December 31, 2016, the balance of the cash held in escrow was $0.5 million. These funds are expected to be distributed in 2017. Also, as part of the acquisition of ClinStar, LLC, or ClinStar, the Company was required to transfer $1.0 million to an escrow account held by a subsidiary. The funds were used to pay deferred compensation to certain former ClinStar employees. During the year ended December 31, 2014, the Company distributed all of the remaining funds held in the escrow account. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statements of cash flows: December 31, 2016 2015 2014 Cash and cash equivalents $ $ $ Restricted cash Total cash, cash equivalents, and restricted cash $ $ $ |
Accounts Receivable and Unbilled Services | Accounts Receivable and Unbilled Services Accounts receivable represent amounts for which invoices have been sent to clients based upon contract terms. Unbilled services represent amounts earned for services that have been rendered but for which clients have not been billed and include reimbursement revenue. Unbilled services are generally billable upon submission of appropriate billing information, achievement of contract milestones or contract completion. |
Allowances for Doubtful Accounts | Allowances for Doubtful Accounts The Company maintains an allowance for estimated losses resulting from the inability of its customers to make required payments. The Company performs credit reviews of each customer, monitors collections and payments from our customers, and determines the allowance based upon historical experience and specific customer collection issues. The Company ages billed accounts receivable and assesses exposure by customer type, by aged category, and by specific identification. After all attempts to collect a receivable have failed, the receivable is written off against the allowance or, to the extent unreserved, to bad debt expense. |
Advanced Billings | Advanced Billings Advanced billings represent amounts associated with services, reimbursement revenue and investigator fees that have been received but have not yet been earned or paid. |
Fixed Assets | Fixed Assets Fixed assets and software purchased or developed for internal use are recorded at cost and are depreciated on a straight‑line basis over the following estimated useful lives: Furniture, fixtures and equipment 5-7 years Computer hardware and software 3-7 years Leasehold improvements Lesser of the life of the lease or useful life of the improvements |
Internal Use Software | Internal Use Software The Company accounts for internal use software in accordance with the provisions of accounting standards, which require certain direct costs and interest costs incurred during the application stage of development to be capitalized and amortized over the useful life of the software. |
Derivative Financial Instruments | Derivative Financial Instruments All derivatives are measured at fair value and recognized as either assets or liabilities on the consolidated balance sheets. Derivatives that are not determined to be effective hedges are adjusted to fair value with a corresponding effect on earnings. Changes in the fair value of derivatives that are designated and determined to be effective as part of a hedge transaction have no immediate effect on earnings and depending on the type of hedge, are recorded either as part of other comprehensive loss and will be included in earnings in the period in which earnings are affected by the hedged item, or are included in earnings as an offset to the earnings impact of the hedged item. Any ineffective portion of hedges is reported in earnings as it occurs. The Company utilizes interest rate swap and cap agreements, or interest rate contracts, to manage changes in market conditions related to debt obligations. Amounts previously recorded in accumulated other comprehensive loss related to these interest rate swaps will be reclassified into earnings over the term of the previously hedged borrowing using the swaplet method. The Company has elected the accounting policy that cash flows associated with interest rate derivative contracts are classified as cash flows from investing activities. |
Fair Value Measurements | 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 December 31, 2016 (in thousands): Level 1 Level 2 Level 3 Total Liabilities: Interest rate swap $ — $ $ — $ Contingent consideration — — Total $ — $ $ $ The following table summarizes the fair value of the Company’s financial assets and liabilities that are measured on a recurring basis as of December 31, 2015 (in thousands): Level 1 Level 2 Level 3 Total Assets: Interest rate swap $ — $ $ — $ Total $ — $ $ — $ Liabilities: Contingent consideration $ — $ — $ $ Total $ — $ — $ $ 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 revenue and operating forecasts and the probability of achieving the specific targets. Interest rate swaps and caps 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 following table summarizes the changes in Level 3 financial liabilities measured on a recurring basis (in thousands): Contingent Consideration - Accrued expenses and Other long-term liabilities Balance at December 31, 2014 $ Revaluations included in earnings Payments on ClinStar contingent consideration Initial estimate of VHS contingent consideration Balance at December 31, 2015 $ Initial estimate of Nextrials contingent consideration Revaluations included in earnings Balance at December 31, 2016 $ Non‑recurring Fair Value Measurements Certain assets and liabilities are carried on the accompanying consolidated 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 December 31, 2016, assets carried on the balance sheet and not remeasured to fair value on a recurring basis totaling approximately $1,446.0 million were identified as Level 3. These assets are comprised of goodwill of $972.0 million and identifiable intangible assets, net of $474.0 million. Refer to Note 9, Current Borrowings and Long-Term Debt, for additional information regarding the fair value of long-term debt balances. |
Impairment of Long-Lived Assets | Impairment of Long‑Lived Assets The Company reviews the recoverability of its long‑lived asset groups, including furniture and equipment, computer hardware and software, leasehold improvements, and other finite‑lived intangibles, when events or changes in circumstances occur that indicate the carrying value of the asset group may not be recoverable. The assessment of possible impairment is based on the Company’s ability to recover the carrying value of the asset group from the expected future pre‑tax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. The Company’s primary measure of fair value is based on discounted cash flows. The measurement of impairment requires the Company to make estimates of these cash flows related to long‑lived assets, as well as other fair value determinations. |
Goodwill and Other Intangibles | Goodwill and Other Intangibles Goodwill and indefinite‑lived intangible assets are tested for impairment annually or more frequently if an event or circumstance indicates that an impairment loss may have been incurred. Separate intangible assets that have finite useful lives are amortized over their estimated useful lives or over the period in which economic benefit is received. The Company’s primary finite lived intangibles are customer relationships and customer backlog, which are amortized on an accelerated basis, which coincides with the period of economic benefit received by the Company. The Company reviews the carrying value of goodwill to determine whether impairment may exist on an annual basis or whenever it has reason to believe goodwill may not be recoverable. The annual impairment test of goodwill is performed during the fourth quarter of each fiscal year. The Company did not have an impairment for any of the years presented. When evaluating for impairment, the Company may first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit or indefinite-lived intangible asset is impaired. If the Company does not perform a qualitative assessment, or if it determines that it is not more likely than not that the fair value of the reporting unit or indefinite-lived intangible asset exceeds its carrying amount, the Company will calculate the estimated fair value of the reporting unit or indefinite-lived intangible asset. The Company’s decision to perform a qualitative impairment assessment for an individual reporting unit in a given year is influenced by a number of factors, inclusive of the size of the reporting unit's goodwill, the significance of the excess of the reporting unit's estimated fair value over carrying value at the last quantitative assessment date, the amount of time in between quantitative fair value assessments and the date of acquisition. During 2016, as part of the Company’s annual impairment analysis, the Company performed the qualitative assessment for approximately $850.0 million, or 87.5%, of its total goodwill balance of $972.0 million, which resides in its PR and SS reporting units, and for its indefinite-lived trade name intangible asset. If the Company does not perform a qualitative assessment, goodwill impairment is determined by the Company using a two‑step process. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of each reporting unit, determined using various valuation techniques, with the primary technique being a discounted cash flow analysis, to its carrying value. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized. The estimated fair value of the EDS reporting unit closely approximated its carrying value when the Company performed its annual goodwill impairment test during the fourth quarter of 2014. The Company made operational improvements during 2015 and 2016 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 that contributed to its improved financial performance during the year and led to the Company to update its forecast for future periods. The Company considered all of these factors when it performed its most recent goodwill impairment test during the fourth quarter of 2016 and it was concluded that the estimated fair value of the EDS reporting unit exceeded its carrying value by approximately $70.0 million or 33%. 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 2017 or later. |
Revenue Recognition | Revenue Recognition The Company generally enters into contracts with customers to provide services with payments based on either fixed‑fee, time and materials, or fee‑for‑service arrangements. Revenue for services is recognized only after persuasive evidence of an arrangement exists, the sales price is determinable, services have been rendered, and collectability is reasonably assured. Once these criteria have been met, the Company recognizes revenue for the services provided on fixed‑fee contracts based on the proportional performance methodology, which determines the proportion of outputs or performance obligations which have been completed or delivered compared to the total contractual outputs for performance obligations. To measure performance, the Company compares the contract costs incurred to estimated total contract costs through completion. As part of the client proposal and contract negotiation process, the Company develops a detailed project budget for the direct costs based on the scope of the work, the complexity of the study, the geographical location involved and the Company’s historical experience. The Company then establishes the individual contract pricing based on the Company’s internal pricing guidelines, discount agreements, if any, and negotiations with the client. The estimated total contract costs are reviewed and revised periodically throughout the lives of the contracts, with adjustments to revenue resulting from such revisions being recorded on a cumulative basis in the period in which the revisions are first identified. Contract costs consist primarily of direct labor and other project‑related costs. Revenue from time and materials contracts is recognized as hours are incurred. Revenues and the related costs of fee‑for‑service contracts are recognized in the period in which services are performed. A majority of the Company’s contracts undergo modifications over the contract period and the Company’s contracts provide for these modifications. During the modification process, the Company recognizes revenue to the extent it incurs costs, provided client acceptance and payment is deemed reasonably assured. The Company often offers volume discounts to certain of its large customers based on annual volume thresholds. The Company records an estimate of the annual volume rebate as a reduction of revenue throughout the period based on the estimated total rebate to be earned for the period. Most of the Company’s contracts can be terminated by the client either immediately or after a specified period following notice. These contracts require the client to pay the Company the fees earned through the termination date, the fees and expenses to wind down the study, and, in some cases, a termination fee or some portion of the fees or profit that the Company could have earned under the contract if it had not been terminated early. Therefore, revenue recognized prior to cancellation generally does not require a significant adjustment upon cancellation. |
Reimbursement Revenue and Reimbursable Out-of-Pocket Costs | Reimbursement Revenue and Reimbursable Out‑of‑Pocket Costs The Company incurs out‑of‑pocket costs, in excess of contract amounts, which are reimbursable by its customers. The Company includes out‑of‑pocket costs both as reimbursement revenue and as reimbursable out‑of‑pocket costs in the consolidated statements of operations. As is customary in the industry, the Company routinely enters into separate agreements on behalf of its clients with independent physician investigators in connection with clinical trials. The funds received for investigator fees are netted against the related cost because such fees are the obligation of the Company’s clients, without risk or reward to the Company. The Company is not obligated either to perform the service or to pay the investigator in the event of default by the client. In addition, the Company does not pay the independent physician investigator until funds are received from the client. Total payments to investigators were $249.6 million, $208.0 million, and $211.5 million for the years ended December 31, 2016, 2015, and 2014, respectively. |
Concentration of Credit Risk | 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 December 31, 2016, 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: Years Ended December 31, 2016 2015 2014 Customer A — — Customer B — 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: December 31, 2016 2015 Customer A — Customer B — Customer C — |
Foreign Currency | Foreign Currency The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars at exchange rates in effect as of the end of the period. Equity activities are translated at the spot rate effective at the date of the transaction. Revenue and expense accounts and cash flows of these operations are translated at average exchange rates prevailing during the period the transactions occurred. Translation gains and losses are included as an adjustment to the accumulated other comprehensive loss account in stockholders’ equity. Translation gains and losses from foreign currency transactions, such as those resulting from the settlement and revaluation of foreign receivables and payables, are included in the determination of net income (loss). These amounts are included in foreign currency gains, net in the consolidated statement of operations. In addition, gains or losses related to the Company’s intercompany loans payable and receivable denominated in a foreign currency other than the subsidiary’s functional currency that are deemed to be of a long‑term investment nature are remeasured to cumulative translation and recorded in accumulated other comprehensive loss in the consolidated balance sheets. |
Income Taxes | Income Taxes The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets are recognized for future deductible temporary differences, along with net operating loss carryforwards and credit carryforwards, if it is more likely than not that the tax benefits will be realized. To the extent a deferred tax asset cannot be recognized under the preceding criteria, a valuation allowance is established to reduce the deferred tax asset to the amount that is more likely than not to be realized. Deferred tax liabilities are recognized for future taxable temporary differences. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. There are inherent uncertainties related to the interpretation of tax regulations in the jurisdictions in which the Company transacts business. The judgments and estimates made at a point in time may change based on the outcome of tax audits, as well as changes to, or further interpretations of, regulations. Income tax expense is adjusted in the period in which these events occur, and these adjustments are included in the Company’s consolidated statement of operations. If such changes take place, there is a risk that the Company’s effective tax rate may increase or decrease in any period. A company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. |
Stock-Based Compensation | Stock‑Based Compensation The primary type of stock‑based compensation utilized by the Company is stock options. Stock options are awards which allow the employee to purchase shares of the Company’s stock at a fixed price. The Company measures compensation cost at the grant date, based on fair value of the award, and recognizes it as expense over the employees’ requisite service period. The fair value of each option issued during these periods was estimated on the date of grant using the Black‑Scholes option pricing model for service condition awards and a lattice model for market and performance condition awards with the following weighted average assumptions: Years Ended December 31, 2016 2015 2014 Risk-free interest rate Expected life, in years Dividend yield N/A N/A N/A Volatility The risk‑free interest rate is based on the United States Treasury yield curve in effect at the time of the grant. The expected life represents the period of time the grants are expected to be outstanding. The Company uses the historical volatilities of a selected peer group as it does not have sufficient history to estimate the volatility of its common share price. The Company calculates expected volatility based on reported data for selected reasonably similar publicly traded companies for which the historical information is available. For the purpose of identifying peer companies, the Company considers characteristics such as industry, length of trading history, similar vesting terms and in‑the‑money option status. Due to the absence of an active market for the Company’s common shares prior to the Company’s IPO, the fair value of our common shares for purposes of determining the exercise price for award grants was determined in good faith by the Company’s Board of Directors, with the assistance and upon the recommendation of management based on a number of market factors, including: the common shares underlying the award involved illiquid securities in a private company; results of operations and financial position; and the market performance of publicly traded companies compared to the Company. The Company accounts for its stock‑based compensation for restricted share awards and restricted share units, or collectively, RSAs/RSUs, based on the closing market price of the Company’s common stock on the trading day immediately prior to the grant date. |
Net Income (Loss) Per Share | Net Income (Loss) Per Share The calculation of net income (loss) per share, or EPS, is based on the weighted average number of common shares or common stock equivalents outstanding during the applicable period. The dilutive effect of common stock equivalents is excluded from basic earnings per share and is included in the calculation of diluted earnings per share, unless the effect of inclusion would be anti‑dilutive. |
Debt Issuance Costs | Debt Issuance Costs Debt issuance costs relating to the Company’s long‑term debt are recorded as a direct reduction of long-term debt; these costs are deferred and amortized to interest expense using the effective interest method, over the respective terms of the related debt. Debt issuance costs relating to the Company’s revolving credit facilities are recorded as an asset; these costs are deferred and amortized to interest expense using the straight‑line method. |
Compensated Absences | Compensated Absences The Company accrues for the costs of compensated absences to the extent that the employee’s right to receive payment relates to service already rendered, the obligation vests or accumulates, payment is probable and the amount can be reasonably estimated. The Company’s policies related to compensated absences vary by jurisdiction and obligations are recorded net of estimated forfeiture due to turnover when reasonably predictable. |
Operating Leases | Operating Leases The Company records rent expense for operating leases, some of which have escalating rent over the term of the lease, on a straight‑line basis over the initial effective lease term. The Company begins depreciation on the date of initial possession, which is generally when the Company enters the space and begins to make improvements in preparation for its intended use. Some of the Company’s facility leases provide for concessions by the landlords, including payments for leasehold improvements considered tenant assets, free rent periods, and other lease inducements. The Company reflects these concessions as deferred rent in the accompanying consolidated financial statements. The Company accounts for the difference between rent expense and rent paid as deferred rent. For tenant allowances for improvements considered to be tenant assets, rent holidays and other lease incentives, the Company records a deferred rent liability at the inception of the lease term and amortizes the deferred rent over the term of the lease as a reduction to rent expense. For tenant allowances considered to be property owner assets, the payment is treated as a reimbursement for the cost of the lessor asset. |
Recently Implemented Accounting Standards | Recently Implemented Accounting Standards In August 2016, the FASB issued Accounting Standard Update, or ASU, No. 2016-15, “Statement of Cash Flows Classification of Certain Cash Receipts and Cash Payments,” which clarifies existing guidance related to accounting for cash receipts and cash payments and classification on the statement of cash flows. In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” which requires restricted cash be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted. The guidance for both standards requires application using a retrospective transition method. The Company early adopted both ASUs in the accompanying consolidated financial statements. As a result of the retrospective application of ASU 2016-15, $14.3 million of payments of debt prepayment and debt extinguishment costs originally recorded as operating cash outflows were reclassified to financing outflows in the consolidated statement of cash flows for the year ended December 31, 2014. The retrospective application of ASU 2016-18 resulted in restricted cash being reclassified as a component of cash, cash equivalents, and restricted cash in the consolidated statement of cash flows for all periods presented. In August 2014, the FASB issued ASU No. 2014‑15, “Presentation of Financial Statements—Going Concern.” This ASU 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. This ASU became effective beginning in 2016. The adoption of this ASU did not impact the Company’s consolidated financial statements. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers.” The new revenue standard establishes a single revenue recognition model for recognizing contracts from customers. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued several amendments to the standard, including clarification on principal versus agent considerations, identifying performance obligations, and accounting for licenses of intellectual property. The new standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The standard permits the use of either the retrospective or modified retrospective (cumulative effect) transition method. The Company plans to adopt the new revenue guidance as of January 1, 2018 and is currently evaluating the transition methods and the potential impact to the Company’s consolidated financial statements. The Company has established an implementation team that consists of both internal resources and external advisors to assist with the adoption of the new standard. The evaluation and implementation process is ongoing and is expected to continue through 2017 as the Company performs an analysis on the contract portfolio to identify potential differences from its current accounting policies, and as it reviews the business processes, systems and controls required to support recognition and disclosure under the new standard. In February 2016, the FASB issued ASU No. 2016-02, “Leases,” which revises the accounting related to lessee accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases with terms greater than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The provisions of ASU No. 2016-02 are effective for fiscal years beginning after December 15, 2018 and should be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. The Company is currently assessing the potential impact of ASU No. 2016-02 on the Company’s consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” This update includes provisions intended to simplify various aspects of accounting for share-based compensation. In addition, ASU No. 2016-09 will take effect for public companies for the annual periods beginning after December 15, 2016. The Company will adopt this ASU beginning with the first quarter of 2017. The adoption of this ASU will have the following effects on the consolidated financial statements: Income taxes - The new guidance requires excess tax benefits and tax deficiencies to be recorded as income tax benefit or expense in the statement of operations. The Company will apply the modified retrospective adoption approach beginning in 2017 and expects to record a cumulative-effect adjustment to retained earnings and reduce its deferred tax liabilities by $12.6 million with an offsetting increase to the valuation allowance of $12.6 million. As such, it is expected that the net impact to retained earnings will be zero. The Company continuously evaluates its need for a valuation allowance on its net deferred tax assets based upon the weight of available evidence. If the Company is able to support the recognition of certain net deferred tax assets in the future, it is noted that an additional tax benefit from the release of this additional valuation could occur in the future. This adjustment relates to tax assets that had previously arisen from tax deductions for equity compensation expenses that were greater than the compensation recognized for financial reporting. Forfeitures – The standard provides an accounting policy election to account for forfeitures as they occur. The Company plans to make this accounting policy election and does not expect the modified retrospective adoption for this component of the standard to have a material impact on its financial statements. Statements of Cash Flows - Cash flows related to excess tax benefits will no longer be separately classified as a financing activity apart from other income tax cash flows. The Company will adopt this component of the standard on a prospective basis. Earnings Per Share - The Company uses the treasury stock method to compute diluted earnings per share, unless the effect would be anti-dilutive. Under this method, the Company will no longer be required to estimate the tax rate and apply it to the dilutive share calculation for determining the dilutive earnings per share. |
Significant Accounting Polici31
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Schedule of cash, cash equivalents, and restricted cash | December 31, 2016 2015 2014 Cash and cash equivalents $ $ $ Restricted cash Total cash, cash equivalents, and restricted cash $ $ $ |
Schedule of estimated useful lives of fixed assets | Furniture, fixtures and equipment 5-7 years Computer hardware and software 3-7 years Leasehold improvements Lesser of the life of the lease or useful life of the improvements |
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 December 31, 2016 (in thousands): Level 1 Level 2 Level 3 Total Liabilities: Interest rate swap $ — $ $ — $ Contingent consideration — — Total $ — $ $ $ The following table summarizes the fair value of the Company’s financial assets and liabilities that are measured on a recurring basis as of December 31, 2015 (in thousands): Level 1 Level 2 Level 3 Total Assets: Interest rate swap $ — $ $ — $ Total $ — $ $ — $ Liabilities: 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 (in thousands): Contingent Consideration - Accrued expenses and Other long-term liabilities Balance at December 31, 2014 $ Revaluations included in earnings Payments on ClinStar contingent consideration Initial estimate of VHS contingent consideration Balance at December 31, 2015 $ Initial estimate of Nextrials contingent consideration Revaluations included in earnings Balance at December 31, 2016 $ |
Schedule of weighted-average assumptions used for calculating fair values of stock options granted | Years Ended December 31, 2016 2015 2014 Risk-free interest rate Expected life, in years Dividend yield N/A N/A N/A Volatility |
Customer Concentration Risk | Service revenue | |
Schedule of concentration of risk by risk factor | Years Ended December 31, 2016 2015 2014 Customer A — — Customer B — |
Customer Concentration Risk | Accounts receivable and unbilled receivables | |
Schedule of concentration of risk by risk factor | December 31, 2016 2015 Customer A — Customer B — Customer C — |
Business Combination (Tables)
Business Combination (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
VHS | |
Business Combination | |
Schedule of purchase price allocation | The Company’s 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 $ |
Nextrials | |
Business Combination | |
Schedule of purchase price allocation | The Company’s purchase price allocation is as follows (in thousands): Purchase Weighted Price Amortization Allocation Period Cash and cash equivalents $ Accounts receivable Other current assets Property, plant and equipment Software intangible 5 years Accounts payable and accrued expenses Other long-term liabilities Estimated fair value of net assets acquired Purchase price, including contingent consideration Total goodwill $ |
Accounts Receivable and Unbil33
Accounts Receivable and Unbilled Services (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounts Receivable and Unbilled Services | |
Schedule of accounts receivable and unbilled services | Accounts receivable and unbilled services were (in thousands): December 31, 2016 2015 Accounts receivable $ $ Unbilled services Less allowance for doubtful accounts Total accounts receivable and unbilled services, net $ $ |
Schedule of changes in the allowance for doubtful accounts | A rollforward of the allowance for doubtful accounts is as follows (in thousands): Years Ended December 31, 2016 2015 2014 Beginning balance $ $ $ Charged (credited) to income from operations Write-offs, recoveries and the effects of foreign currency exchange Ending balance $ $ $ |
Fixed Assets (Tables)
Fixed Assets (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Fixed Assets | |
Schedule of changes in carrying values of fixed assets | The carrying amount of fixed assets is as follows (in thousands): December 31, 2016 2015 Leasehold improvements $ $ Computer hardware and software Furniture and equipment Accumulated depreciation Total fixed assets, net $ $ |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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 December 31, 2014 $ Acquisition of VHS Currency translation Balance December 31, 2015 $ Acquisition of Nextrials Acquisition of the WuXiPRA joint venture’s Hong Kong operations Currency translation Balance December 31, 2016 $ |
Schedule of intangible assets | Intangible assets consist of the following (in thousands): December 31, 2016 2015 Customer relationships $ $ Customer backlog Trade names (finite-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 | Estimated amortization expense related to finite‑lived intangible assets for the next five years and thereafter is as follows (in thousands): 2017 $ 2018 2019 2020 2021 2022 and thereafter Total $ |
Accrued Expenses and Other Cu36
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of accrued expenses | Accrued expenses consisted of the following (in thousands): December 31, 2016 2015 Compensation, including bonuses, fringe benefits and payroll taxes $ $ Other Interest Total accrued expenses and other liabilities $ $ |
Current Borrowings and Long-T37
Current Borrowings and Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Current Borrowings and Long-Term Debt | |
Schedule of long-term debt | Long‑term debt consists of the following (in thousands): December 31, 2016 2015 Term loans, first lien $ $ Senior notes Accounts receivable financing agreement — Less debt issuance costs and discount Less current portion — 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): Current maturities of long-term debt: 2017 $ 2018 2019 2020 2021 2022 and thereafter Total $ |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Stock-Based Compensation | |
Summary of stock option activity | Wtd. Average Wtd. Average Remaining Intrinsic Value Options Exercise Price Contractual Life (in millions) Outstanding at December 31, 2015 $ $ Granted Exercised Expired/forfeited Outstanding at December 31, 2016 $ $ Exercisable at December 31, 2016 $ $ |
Schedule of stock options by exercise price range | Selected information regarding the Company’s stock options as of December 31, 2016 is as follows: Options Outstanding Options Exercisable Wtd Average Wtd. Average Number of Remaining Life Wtd. Average Number of Remaining Life Wtd. Average Exercise Price Options (in Years) Exercise Price Options (in Years) Exercise Price $ 2.8 $ 2.8 $ $ 7.0 $ 7.0 $ $ 7.5 $ 7.3 $ $ 25.35 - 54.69 8.7 $ 7.6 $ |
Schedule of RSA/RSU activity | Wtd. Average Intrinsic Grant-Date Value Awards Fair Value (millions) Unvested at December 31, 2015 $ $ Granted Vested Unvested at December 31, 2016 $ $ |
Schedule of stock-based compensation expense | Stock‑based compensation expense related to employee stock options and RSAs/RSUs is summarized below (in thousands): Years Ended December 31, 2016 2015 2014 Direct costs $ $ $ Selling, general and administrative Transaction-related costs — — Total stock-based compensation expense $ $ $ |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | |
Schedule of components of income (loss) before income taxes and equity in losses of unconsolidated joint ventures | The components of income (loss) before income taxes and equity in gains (losses) of unconsolidated joint ventures are as follows (in thousands): Years Ended December 31, 2016 2015 2014 Domestic $ $ $ Foreign $ $ $ |
Schedule of components of the provision for (benefit from) income taxes | The components of the provision for (benefit from) income taxes were as follows (in thousands): Years Ended December 31, 2016 2015 2014 Current: Federal $ $ $ — State Foreign Total current income tax expense Deferred: Federal State Foreign Total deferred income tax benefit Total income tax expense (benefit) $ $ $ |
Schedule of reconciliation of effective income tax rate | Years Ended December 31, 2016 2015 2014 Statutory federal income tax rate State income taxes, net of federal benefit Tax on foreign earnings: Foreign rate differential Foreign earnings taxed in the U.S. Non-U.S. research and development credits Stock-based compensation Change in liability for uncertain tax positions — Nondeductible expenses Other Effective income tax rate |
Schedule of components of deferred tax assets and liabilities | Components of the deferred tax assets and liabilities were as follows (in thousands): December 31, 2016 2015 Net operating loss carryforwards $ $ Accruals and reserves Equity based compensation Prepaid expenses and other Deferred and unbilled revenue Tax credits Valuation allowance Deferred tax assets Identified intangibles Depreciable, amortizable and other property Deferred tax liabilities Total deferred tax liability $ $ Long-term deferred tax asset $ $ Long-term deferred tax liability $ $ |
Schedule of reconciliation of gross unrecognized tax benefits | A reconciliation of the beginning and ending amount of gross unrecognized income tax benefits is presented below (in thousands): Years Ended December 31, 2016 2015 2014 Beginning balance $ $ $ Additions based on tax positions related to current year Additions for income tax positions of prior years Impact of changes in exchange rates Settlements with tax authorities — — Reductions for income tax positions for prior years Reductions due to lapse of applicable statute of limitations — Ending balance $ $ $ |
Schedule of changes in valuation allowance | A rollforward of the deferred tax asset valuation allowance accounts is as follows (in thousands): Years Ended December 31, 2016 2015 2014 Beginning balance $ $ $ Additions - purchase accounting — — Additions - other comprehensive income — Additions - charged to expense Deductions - charged to expense (including translation adjustments) Ending balance $ $ $ |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies | |
Schedule of future minimum lease commitments | Future minimum lease commitments on non‑cancelable operating leases are as follows (in thousands): Year Ending December 31, Leases Sublease Net Total 2017 $ $ $ 2018 2019 2020 2021 2022 and thereafter Total $ $ $ |
Derivatives (Tables)
Derivatives (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Derivatives | |
Schedule of notional amounts and fair values (determined using level 2 inputs) of derivatives | The following table presents the notional amounts and fair values (determined using level 2 inputs) of the Company’s derivatives as of December 31, 2016 and 2015 (in thousands): Balance Sheet December 31, 2016 December 31, 2015 Classification Notional amount Asset/(Liability) Notional amount Asset/(Liability) Derivatives in an asset position: Other assets $ — $ — $ $ Derivatives in a liability position: Other long-term liabilities — — |
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 statements of operations and comprehensive (loss) income (in thousands): Years Ended December 31, Derivatives in Cash Flow Hedging Relationships (Interest Rate Contracts) 2016 2015 2014 Amount of pretax loss recognized in other comprehensive income (loss) on derivatives $ $ $ Amount of loss recognized in other income (expense), net on derivatives (ineffective portion) Amount of loss recognized in other income (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 |
Accumulated Other Comprehensi42
Accumulated Other Comprehensive Loss (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accumulated Other Comprehensive (Loss) Income | |
Summary of components of accumulated other comprehensive (loss) income | Below is a summary of the components of accumulated other comprehensive (loss) income (in thousand): Foreign Currency Derivative Translation Instruments Total Balance at December 31, 2013 $ $ $ Other comprehensive loss before reclassifications, net of tax Reclassification adjustments, net of tax — Balance at December 31, 2014 Other comprehensive loss before reclassifications, net of tax Reclassification adjustments, net of tax — Balance at December 31, 2015 Other comprehensive loss before reclassifications, net of tax Reclassification adjustments, net of tax — Balance at December 31, 2016 $ $ $ |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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): Years Ended December 31, 2016 2015 2014 Basic weighted average common shares outstanding Effect of dilutive stock options and RSAs — Diluted weighted average common shares outstanding Anti-dilutive shares |
Supplemental Cash Flow Inform44
Supplemental Cash Flow Information (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Supplemental Cash Flow Information | |
Schedule of supplemental cash flow information | The following table presents the Company’s supplemental cash flow information (in thousands): Years Ended December 31, 2016 2015 2014 Cash paid during the period for: Income taxes, net of refunds $ $ $ Interest Non-cash investing and financing activities: Issuance of common stock for the acquisition of Value Health Solutions, Inc. — — IPO cost incurred but not paid — — Accrued fixed assets purchases Cashless exercises of stock options — |
Operations by Geographic Area (
Operations by Geographic Area (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Operations by Geographic Area | |
Schedule of operations and long-lived assets by geographical region | The Company’s operations within each geographical region are further broken down to show each country which accounts for 10% or more of the totals (in thousands): Years Ended December 31, 2016 2015 2014 Service revenue: Americas: United States $ $ $ Other Americas Europe, Africa, and Asia-Pacific United Kingdom Netherlands Other Europe, Africa, and Asia-Pacific Total service revenue Reimbursement revenues Total revenue $ $ $ December 31, 2016 2015 Long-lived assets: Americas: United States $ $ Other Americas Europe, Africa, and Asia-Pacific United Kingdom Netherlands Other Europe, Africa, and Asia-Pacific Total long-lived assets $ $ |
Quarterly Financial Data (una46
Quarterly Financial Data (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Data (unaudited) | |
Schedule of unaudited quarterly results of operations | The following table summarizes the Company’s unaudited quarterly results of operations (in thousands, except per share data: 2016 First Quarter Second Quarter Third Quarter Fourth Quarter Service revenue $ $ $ $ Reimbursement revenue Total revenue Income from operations (1) (Benefit from) provision for income taxes (Losses) income before equity in (losses) gains of unconsolidated joint ventures (2) Equity in (losses) gains of unconsolidated joint ventures Net (loss) income Comprehensive (loss) income $ $ $ $ Basic (losses) earnings per share (3) $ $ $ $ Diluted (losses) earnings per share (3) $ $ $ $ 2015 First Quarter Second Quarter Third Quarter Fourth Quarter Service revenue $ $ $ $ Reimbursement revenue Total revenue Income from operations Provision for income taxes Income before equity in (losses) gains of unconsolidated joint ventures Equity in (losses) gains of unconsolidated joint ventures Net income Comprehensive (loss) income $ $ $ $ Basic earnings per share (3) $ $ $ $ Diluted earnings per share (3) $ $ $ $ T |
Basis of Presentation (Details)
Basis of Presentation (Details) $ / shares in Units, $ in Millions | Nov. 13, 2014USD ($)$ / sharesshares | Sep. 29, 2014 | Dec. 31, 2016USD ($)itemshares |
Basis of Presentation | |||
Reverse stock split ratio | 2.34539 | ||
Public Offerings | |||
Professional fees | $ | $ 2.7 | ||
IPO | Common stock | |||
Public Offerings | |||
Stock issuance price (in dollars per share) | $ / shares | $ 18 | ||
Stock issued (in shares) | shares | 19,523,255 | ||
Net proceeds of IPO | $ | $ 328 | ||
Underwriters' option | Common stock | |||
Public Offerings | |||
Stock issued (in shares) | shares | 2,546,511 | ||
Secondary Offerings | Transaction-related costs | |||
Public Offerings | |||
Professional fees | $ | $ 1.3 | ||
Secondary Offerings | KKR and certain executive officers of the Company | |||
Public Offerings | |||
Shares sold by selling stockholders | shares | 17,500,000 | ||
Number of stock offerings | item | 3 | ||
KKR | |||
Public Offerings | |||
Percentage of common stock owned by KKR | 36.90% |
Significant Accounting Polici48
Significant Accounting Policies - Variable Interest Entities (Details) - USD ($) $ in Millions | Mar. 22, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2016 |
CNS | |||||
Variable Interest Entities | |||||
Compensation paid under management contract with VIE | $ 0.8 | $ 0.7 | $ 0.9 | ||
Net income of VIE | $ 0 | $ 0 | $ 0 | ||
Accounts Receivable Financing Agreement | |||||
Variable Interest Entities | |||||
Term of accounts receivable financing agreement and related arrangements to securitize accounts receivable | 3 years | ||||
Maximum borrowing capacity | $ 140 | ||||
Accounts Receivable Financing Agreement | SPE | |||||
Variable Interest Entities | |||||
Maximum borrowing capacity | $ 140 |
Significant Accounting Polici49
Significant Accounting Policies - Risks, Reportable Segments, and Restricted Cash (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016USD ($)segment | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Reportable segments | ||||
Number of reportable segment | segment | 1 | |||
Cash, cash equivalents, and restricted cash | ||||
Cash and cash equivalents | $ 144,623 | $ 121,065 | $ 85,192 | |
Restricted cash | 4,715 | 5,060 | 6,337 | |
Total cash, cash equivalents, and restricted cash | $ 149,338 | $ 126,125 | $ 91,529 | $ 80,915 |
Minimum | ||||
Risks and Other Factors | ||||
Notice required for a customer to terminate a contract without cause | 30 days | |||
Maximum | ||||
Risks and Other Factors | ||||
Notice required for a customer to terminate a contract without cause | 60 days | |||
Nextrials | ||||
Restricted cash | ||||
Escrow deposit | $ 500 | |||
ClinStar | ||||
Restricted cash | ||||
Escrow deposit | $ 1,000 |
Significant Accounting Polici50
Significant Accounting Policies - Fixed Assets (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Furniture and equipment | Minimum | |
Fixed Assets | |
Estimated useful lives | P5Y |
Furniture and equipment | Maximum | |
Fixed Assets | |
Estimated useful lives | P7Y |
Computer hardware and software | Minimum | |
Fixed Assets | |
Estimated useful lives | P3Y |
Computer hardware and software | Maximum | |
Fixed Assets | |
Estimated useful lives | P7Y |
Significant Accounting Polici51
Significant Accounting Policies - Fair Value Measurements of Assets and Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Recurring | ||
Assets: | ||
Assets fair value | $ 28 | |
Liabilities: | ||
Liabilities fair value | $ 3,344 | 999 |
Level 2 | Recurring | ||
Assets: | ||
Assets fair value | 28 | |
Liabilities: | ||
Liabilities fair value | 590 | |
Level 3 | Recurring | ||
Liabilities: | ||
Liabilities fair value | 2,754 | 999 |
Level 3 | Nonrecurring | ||
Assets: | ||
Assets fair value | 1,446,000 | |
Goodwill | 972,000 | |
Identifiable intangible assets | 474,000 | |
2013 Swaps | Recurring | ||
Liabilities: | ||
Liabilities fair value | 590 | |
2013 Swaps | Level 2 | Recurring | ||
Liabilities: | ||
Liabilities fair value | 590 | |
Contingent consideration | Recurring | ||
Liabilities: | ||
Liabilities fair value | 2,754 | 999 |
Contingent consideration | Level 3 | Recurring | ||
Liabilities: | ||
Liabilities fair value | 2,754 | 999 |
Changes in the fair value of the Company's Level 3 financial liabilities | ||
Beginning balance | 999 | 1,911 |
Revaluations included in earnings | (527) | 89 |
Ending balance | 2,754 | 999 |
Contingent consideration | Level 3 | Recurring | ClinStar | ||
Changes in the fair value of the Company's Level 3 financial liabilities | ||
Payments on contingent consideration | (2,000) | |
Contingent consideration | Level 3 | Recurring | VHS | ||
Changes in the fair value of the Company's Level 3 financial liabilities | ||
Initial estimate of contingent consideration | 999 | |
Contingent consideration | Level 3 | Recurring | Nextrials | ||
Changes in the fair value of the Company's Level 3 financial liabilities | ||
Initial estimate of contingent consideration | $ 2,282 | |
2013 Swaps | Recurring | ||
Assets: | ||
Assets fair value | 28 | |
2013 Swaps | Level 2 | Recurring | ||
Assets: | ||
Assets fair value | $ 28 |
Significant Accounting Polici52
Significant Accounting Policies - Goodwill and Reimbursable Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Goodwill and other intangibles | |||
Amount of goodwill included in the qualitative assessment as part of the annual impairment analysis | $ 850,000 | ||
Percentage of total goodwill included in the qualitative assessment as part of the annual impairment analysis | 87.50% | ||
Goodwill. | $ 971,980 | $ 1,014,798 | $ 1,033,999 |
Reimbursement Revenue and Reimbursable Out-of-Pocket Costs | |||
Payments for investigation fees | 249,600 | $ 208,000 | $ 211,500 |
EDS | |||
Goodwill and other intangibles | |||
Fair value of reporting unit in excess of carrying amount | $ 70,000 | ||
Percent of fair value of reporting unit in excess of carrying amount | 33.00% |
Significant Accounting Polici53
Significant Accounting Policies - Concentration of Risk (Details) - Customer Concentration Risk | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Service revenue | Customer A | ||
Concentration risk | ||
Concentration risk percentage | 11.00% | |
Service revenue | Customer B | ||
Concentration risk | ||
Concentration risk percentage | 10.40% | 10.70% |
Accounts receivable and unbilled receivables | Customer A | ||
Concentration risk | ||
Concentration risk percentage | 12.00% | |
Accounts receivable and unbilled receivables | Customer B | ||
Concentration risk | ||
Concentration risk percentage | 13.40% | |
Accounts receivable and unbilled receivables | Customer C | ||
Concentration risk | ||
Concentration risk percentage | 10.10% |
Significant Accounting Polici54
Significant Accounting Policies - Stock-Based Compensation (Details) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Weighted average fair value assumptions | |||
Risk-free interest rate | 1.50% | 1.70% | 2.00% |
Expected life, in years | 6 years 3 months 18 days | 6 years 3 months 18 days | 6 years 6 months |
Volatility | 31.20% | 34.40% | 39.50% |
Significant Accounting Polici55
Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Recent Accounting Pronouncements | ||||
Operating cash flows | $ 160,047 | $ 152,428 | $ 34,034 | |
Financing cash flows | (101,595) | (42,444) | (5,956) | |
Deferred tax liabilities | 73,703 | 81,691 | ||
Valuation allowance | 21,689 | 23,205 | $ 16,142 | $ 6,120 |
Retained earnings | 74,255 | $ 6,080 | ||
Accounting Standards Update 2016-15 | New Accounting Pronouncement, Early Adoption, Effect | ||||
Recent Accounting Pronouncements | ||||
Operating cash flows | 14,300 | |||
Financing cash flows | (14,300) | |||
Accounting Standards Update 2016-09 | Scenario Forecast Adjustment | ||||
Recent Accounting Pronouncements | ||||
Deferred tax liabilities | (12,600) | |||
Valuation allowance | 12,600 | |||
Retained earnings | $ 0 |
Joint Ventures (Details)
Joint Ventures (Details) - USD ($) $ in Thousands | May 06, 2016 | Dec. 31, 2015 | Aug. 31, 2015 | Apr. 30, 2015 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Joint Ventures | |||||||||||||||
Contributions to joint venture | $ 23,000 | ||||||||||||||
Equity in losses of unconsolidated joint ventures, net of tax | $ (33) | $ (33) | $ (3,247) | $ 538 | $ (665) | $ 2,319 | $ 805 | $ 937 | |||||||
WuXiPRA Joint Venture | |||||||||||||||
Joint Ventures | |||||||||||||||
Equity interest percentage of ownership | 49.00% | ||||||||||||||
Increase (reduction) in investment from net income (loss) of venture | $ (700) | (2,900) | $ (2,100) | ||||||||||||
Equity investment amount | $ 1,100 | 1,100 | 1,100 | ||||||||||||
Contributions to joint venture | $ 3,000 | ||||||||||||||
Gain on sale of interest in joint venture | $ 3,300 | ||||||||||||||
WuXiPRA Joint Venture | CHINA | |||||||||||||||
Joint Ventures | |||||||||||||||
Equity interest percentage of ownership | 49.00% | ||||||||||||||
Proceeds from the sale or dissolution of joint venture | $ 4,000 | ||||||||||||||
A2PRA Joint Venture | |||||||||||||||
Joint Ventures | |||||||||||||||
Equity interest percentage of ownership | 49.00% | 49.00% | |||||||||||||
Increase (reduction) in investment from net income (loss) of venture | $ 100 | 0 | $ (100) | ||||||||||||
Equity investment amount | 200 | $ 300 | $ 200 | $ 300 | $ 200 | ||||||||||
KKR Affiliate Joint Venture | |||||||||||||||
Joint Ventures | |||||||||||||||
Equity interest percentage of ownership | 11.00% | ||||||||||||||
Increase (reduction) in investment from net income (loss) of venture | (500) | ||||||||||||||
Contributions to joint venture | $ 20,000 | ||||||||||||||
Proceeds from the sale or dissolution of joint venture | $ 19,500 | ||||||||||||||
WuXi | WuXiPRA Joint Venture | |||||||||||||||
Joint Ventures | |||||||||||||||
Contributions to joint venture | $ 3,000 | ||||||||||||||
A2 Healthcare Corporation (Asklep) | A2PRA Joint Venture | |||||||||||||||
Joint Ventures | |||||||||||||||
Equity interest percentage of ownership | 51.00% | 51.00% | |||||||||||||
KKR | KKR Affiliate Joint Venture | |||||||||||||||
Joint Ventures | |||||||||||||||
Equity interest percentage of ownership | 89.00% | ||||||||||||||
WuXiPRA Hong Kong operations | |||||||||||||||
Joint Ventures | |||||||||||||||
Cash paid | $ 300 |
Business Combinations (Details)
Business Combinations (Details) - USD ($) $ in Thousands | May 06, 2016 | Mar. 18, 2016 | Jun. 08, 2015 | Dec. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Business Combination | |||||||
Amount of equity contribution | $ 1,582 | ||||||
Decrease in fair value of contingent consideration | $ (527) | 89 | $ 504 | ||||
Allocation of purchase price: | |||||||
Total goodwill | $ 971,980 | 971,980 | $ 1,014,798 | $ 1,033,999 | |||
VHS | |||||||
Business Combination | |||||||
Cash paid | $ 500 | ||||||
Number of unregistered shares of common stock issued | 47,598 | ||||||
Amount of equity contribution | $ 1,600 | ||||||
Additional amount of common stock to be issued at a future date | 400 | ||||||
Allocation of purchase price: | |||||||
Property, plant and equipment | 43 | ||||||
Estimated fair value of net assets acquired | 2,543 | ||||||
Purchase price, including contingent consideration | 3,499 | ||||||
Total goodwill | 956 | ||||||
VHS | Contingent Earn-out Payments | |||||||
Business Combination | |||||||
Potential contingent earn-out payments | $ 16,000 | ||||||
Earn-out period for contingent consideration | 48 months | ||||||
VHS | Contingent Earn-out Payments - Milestones | |||||||
Business Combination | |||||||
Potential contingent earn-out payments | $ 1,000 | ||||||
VHS | Contingent Earn-out Payments - Sales Targets | |||||||
Business Combination | |||||||
Potential contingent earn-out payments | 15,000 | ||||||
VHS | Software intangible | |||||||
Allocation of purchase price: | |||||||
Finite intangible assets acquired | $ 2,500 | ||||||
Weighted Amortization Period | |||||||
Weighted amortization period | 5 years | ||||||
Nextrials | |||||||
Business Combination | |||||||
Cash paid | $ 4,800 | ||||||
Allocation of purchase price: | |||||||
Cash and cash equivalents | 94 | ||||||
Accounts receivable | 211 | ||||||
Other current assets | 96 | ||||||
Property, plant and equipment | 111 | ||||||
Accounts payable and accrued expenses | (1,585) | ||||||
Other long-term liabilities | (1,663) | ||||||
Estimated fair value of net assets acquired | 2,838 | ||||||
Purchase price, including contingent consideration | 7,145 | ||||||
Total goodwill | 4,307 | ||||||
Increase (decrease) in goodwill | 2,000 | ||||||
Nextrials | Contingent Earn-out Payments | |||||||
Business Combination | |||||||
Potential contingent earn-out payments | $ 3,000 | ||||||
Earn-out period for contingent consideration | 30 months | ||||||
Decrease in fair value of contingent consideration | 500 | ||||||
Contingent liability recognized | 1,800 | 1,800 | |||||
Nextrials | Contingent Earn-out Payments - Milestones | |||||||
Business Combination | |||||||
Potential contingent earn-out payments | $ 2,000 | ||||||
Nextrials | Contingent Earn-out Payments - Sales Targets | |||||||
Business Combination | |||||||
Potential contingent earn-out payments | 1,000 | ||||||
Nextrials | Accrued expenses and other current liabilities | Contingent Earn-out Payments | |||||||
Business Combination | |||||||
Contingent liability recognized | 700 | 700 | |||||
Nextrials | Other long-term liabilities | Contingent Earn-out Payments | |||||||
Business Combination | |||||||
Contingent liability recognized | $ 1,100 | $ 1,100 | |||||
Nextrials | Software intangible | |||||||
Allocation of purchase price: | |||||||
Finite intangible assets acquired | $ 5,574 | ||||||
Weighted Amortization Period | |||||||
Weighted amortization period | 5 years | ||||||
WuXiPRA Hong Kong operations | |||||||
Business Combination | |||||||
Cash paid | $ 300 | ||||||
Allocation of purchase price: | |||||||
Total goodwill | $ 600 | ||||||
Level 3 | VHS | Accrued expenses and other current liabilities | Contingent Earn-out Payments | |||||||
Business Combination | |||||||
Contingent liability recognized | $ 1,000 | ||||||
Level 3 | Nextrials | Contingent Earn-out Payments | |||||||
Business Combination | |||||||
Contingent liability recognized | $ 2,300 |
Accounts Receivable and Unbil58
Accounts Receivable and Unbilled Services (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Accounts receivable and unbilled services | |||
Accounts receivable | $ 284,647 | $ 290,963 | |
Unbilled services | 155,609 | 126,755 | |
Total accounts receivable, gross | 440,256 | 417,718 | |
Less allowance for doubtful accounts | (1,203) | (2,641) | |
Total accounts receivable and unbilled services, net | 439,053 | 415,077 | |
Allowance for doubtful accounts | |||
Beginning balance | 2,641 | 1,819 | $ 129 |
Charged (credited) to income from operations | (652) | 443 | 976 |
Write-offs, recoveries and the effects of foreign currency exchange | (786) | 379 | 714 |
Ending balance | $ 1,203 | $ 2,641 | $ 1,819 |
Fixed Assets (Details)
Fixed Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Fixed Assets | |||
Fixed assets, gross | $ 150,929 | $ 127,667 | |
Accumulated depreciation | (63,352) | (46,976) | |
Total fixed assets, net | 87,577 | 80,691 | |
Depreciation expense | 24,100 | 21,200 | $ 22,200 |
Leasehold improvements | |||
Fixed Assets | |||
Fixed assets, gross | 25,083 | 20,606 | |
Computer hardware and software | |||
Fixed Assets | |||
Fixed assets, gross | 92,095 | 79,853 | |
Furniture and equipment | |||
Fixed Assets | |||
Fixed assets, gross | $ 33,751 | $ 27,208 |
Goodwill and Intangible Asset60
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Changes in carrying amount of goodwill | |||
Balance at the beginning of the period | $ 1,014,798 | $ 1,033,999 | |
Currency translation | (47,695) | (20,157) | |
Balance at the end of the period | 971,980 | 1,014,798 | $ 1,033,999 |
Accumulated impairment charges | 0 | 0 | |
Intangible Assets | |||
Total finite-lived intangible assets, gross | 537,002 | 560,342 | |
Accumulated amortization | (181,036) | (144,414) | |
Total finite-lived intangible assets, net | 355,966 | 415,928 | |
Trade names (indefinite-lived) | 118,010 | 118,010 | |
Total intangible assets, net | 473,976 | 533,938 | |
Impairments | 0 | 0 | 0 |
Amortization expense | 45,400 | 56,700 | $ 74,400 |
Estimated future amortization expense: | |||
2,017 | 35,221 | ||
2,018 | 31,118 | ||
2,019 | 25,859 | ||
2,020 | 24,612 | ||
2,021 | 22,507 | ||
2022 and thereafter | 216,649 | ||
Total finite-lived intangible assets, net | 355,966 | 415,928 | |
Customer relationships | |||
Intangible Assets | |||
Total finite-lived intangible assets, gross | 360,328 | 380,721 | |
Customer backlog | |||
Intangible Assets | |||
Total finite-lived intangible assets, gross | 119,223 | 127,871 | |
Trade names (finite-lived) | |||
Intangible Assets | |||
Total finite-lived intangible assets, gross | 25,740 | 25,693 | |
Patient list and other intangibles | |||
Intangible Assets | |||
Total finite-lived intangible assets, gross | 28,974 | 23,400 | |
Non-competition agreements | |||
Intangible Assets | |||
Total finite-lived intangible assets, gross | 2,737 | 2,657 | |
Nextrials | |||
Changes in carrying amount of goodwill | |||
Acquisition | 4,307 | ||
VHS | |||
Changes in carrying amount of goodwill | |||
Acquisition | $ 956 | ||
WuXiPRA Hong Kong operations | |||
Changes in carrying amount of goodwill | |||
Acquisition | $ 570 |
Accrued Expenses and Other Cu61
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Accrued Expenses and Other Current Liabilities | ||
Compensation, including bonuses, fringe benefits and payroll taxes | $ 86,160 | $ 77,650 |
Other | 33,813 | 36,093 |
Interest | 3,616 | 6,150 |
Accrued Liabilities, Current, Total | $ 123,589 | $ 119,893 |
Current Borrowings and Long-T62
Current Borrowings and Long-Term Debt - Summary (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2013 |
Long-term debt | |||
Long-term debt, gross | $ 836,441 | $ 914,000 | |
Less debt issuance costs and discount | (8,139) | (24,486) | |
Total | 828,302 | 889,514 | |
Less current portion | (31,250) | ||
Total long-term debt, net | 797,052 | 889,514 | |
First Lien Term Loan | |||
Long-term debt | |||
Long-term debt, gross | 625,000 | 689,000 | |
Senior Notes | |||
Long-term debt | |||
Long-term debt, gross | 91,441 | $ 225,000 | $ 375,000 |
Accounts Receivable Financing Agreement | |||
Long-term debt | |||
Long-term debt, gross | $ 120,000 |
Current Borrowings and Long-T63
Current Borrowings and Long-Term Debt - Future Principal Payments (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Principal payments on long-term debt | ||
2,017 | $ 31,250 | |
2,018 | 46,875 | |
2,019 | 166,875 | |
2,020 | 62,500 | |
2,021 | 437,500 | |
2022 and thereafter | 91,441 | |
Total | $ 836,441 | $ 914,000 |
Current Borrowings and Long-T64
Current Borrowings and Long-Term Debt - Credit Facilities (Details) $ in Thousands | Dec. 31, 2016USD ($) | Dec. 06, 2016USD ($) | Nov. 18, 2014USD ($) | Mar. 24, 2014item | Mar. 23, 2014 | Dec. 02, 2013USD ($) | Dec. 31, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Mar. 17, 2016USD ($) | Sep. 30, 2013USD ($) |
Long-term debt | |||||||||||||
Long-term debt, gross | $ 836,441 | $ 836,441 | $ 836,441 | $ 914,000 | |||||||||
Loss on extinguishment of debt | 16,700 | $ 21,500 | 38,178 | $ 25,036 | |||||||||
Repayment of debt | 822,559 | 40,000 | 308,775 | ||||||||||
First Lien Term Loan | |||||||||||||
Long-term debt | |||||||||||||
Long-term debt, gross | 625,000 | 625,000 | 625,000 | 689,000 | |||||||||
Senior Notes | |||||||||||||
Long-term debt | |||||||||||||
Long-term debt, gross | $ 91,441 | $ 91,441 | $ 91,441 | 225,000 | $ 375,000 | ||||||||
Repayment of principal | $ 150,000 | ||||||||||||
Interest rate (as a percent) | 9.50% | 9.50% | 9.50% | ||||||||||
Loss on extinguishment of debt | $ 21,500 | ||||||||||||
Prepayment penalty | 14,300 | ||||||||||||
Aggregate principal amount of debt repurchase | $ 133,600 | ||||||||||||
2016 Credit Facilities | |||||||||||||
Long-term debt | |||||||||||||
Maximum borrowing capacity | $ 750,000 | ||||||||||||
2016 Credit Facilities | First Lien Term Loan | |||||||||||||
Long-term debt | |||||||||||||
Interest period, option one | 1 month | ||||||||||||
Interest period, option two | 2 months | ||||||||||||
Interest period, option three | 3 months | ||||||||||||
Interest period, option four | 6 months | ||||||||||||
Prepayment penalty | $ 0 | ||||||||||||
Weighted average interest rate (as a percent) | 2.70% | 2.70% | 2.70% | ||||||||||
Additional Debt Disclosures | |||||||||||||
Aggregate principal amount | 625,000 | ||||||||||||
2016 Credit Facilities | First Lien Term Loan | Quarters March 31, 2017 to December 31,2017 | |||||||||||||
Additional Debt Disclosures | |||||||||||||
Scheduled principal payments as a percentage of original principal balance | 1.25% | ||||||||||||
Quarterly payment amount | $ 7,800 | ||||||||||||
2016 Credit Facilities | First Lien Term Loan | Quarters March 31, 2018 to December 31, 2019 | |||||||||||||
Additional Debt Disclosures | |||||||||||||
Scheduled principal payments as a percentage of original principal balance | 1.88% | ||||||||||||
Quarterly payment amount | $ 11,700 | ||||||||||||
2016 Credit Facilities | First Lien Term Loan | Quarters March 31, 2020 to December 31, 2020 | |||||||||||||
Additional Debt Disclosures | |||||||||||||
Scheduled principal payments as a percentage of original principal balance | 2.50% | ||||||||||||
Quarterly payment amount | $ 15,600 | ||||||||||||
2016 Credit Facilities | First Lien Term Loan | Quarters March 31, 2021 to September 30, 2021 | |||||||||||||
Additional Debt Disclosures | |||||||||||||
Scheduled principal payments as a percentage of original principal balance | 3.13% | ||||||||||||
Quarterly payment amount | $ 19,500 | ||||||||||||
2016 Credit Facilities | First Lien Term Loan | December 6, 2021 | |||||||||||||
Additional Debt Disclosures | |||||||||||||
Scheduled principal payments as a percentage of original principal balance | 60.63% | ||||||||||||
2016 Credit Facilities | First Lien Term Loan | LIBOR | |||||||||||||
Long-term debt | |||||||||||||
Variable rate basis | LIBOR | ||||||||||||
2016 Credit Facilities | First Lien Term Loan | LIBOR | Minimum | |||||||||||||
Long-term debt | |||||||||||||
Applicable margin on variable rate basis (as a percent) | 1.25% | ||||||||||||
2016 Credit Facilities | First Lien Term Loan | LIBOR | Maximum | |||||||||||||
Long-term debt | |||||||||||||
Applicable margin on variable rate basis (as a percent) | 2.25% | ||||||||||||
2016 Credit Facilities | First Lien Term Loan | ABR | |||||||||||||
Long-term debt | |||||||||||||
Variable rate basis | ABR | ||||||||||||
2016 Credit Facilities | First Lien Term Loan | ABR | Minimum | |||||||||||||
Long-term debt | |||||||||||||
Applicable margin on variable rate basis (as a percent) | 0.25% | ||||||||||||
2016 Credit Facilities | First Lien Term Loan | ABR | Maximum | |||||||||||||
Long-term debt | |||||||||||||
Applicable margin on variable rate basis (as a percent) | 1.25% | ||||||||||||
2016 Credit Facilities | Revolving Credit Facility | |||||||||||||
Long-term debt | |||||||||||||
Maximum borrowing capacity | $ 125,000 | $ 125,000 | $ 125,000 | $ 125,000 | |||||||||
Term of credit facility | 5 years | ||||||||||||
Interest period, option one | 1 month | ||||||||||||
Interest period, option two | 2 months | ||||||||||||
Interest period, option three | 3 months | ||||||||||||
Interest period, option four | 6 months | ||||||||||||
Commitment fee (as a percent) | 0.30% | ||||||||||||
Outstanding borrowings | 0 | 0 | $ 0 | ||||||||||
Outstanding letters of credit | $ 7,000 | $ 7,000 | $ 7,000 | ||||||||||
2016 Credit Facilities | Revolving Credit Facility | Minimum | |||||||||||||
Long-term debt | |||||||||||||
Commitment fee (as a percent) | 0.20% | ||||||||||||
2016 Credit Facilities | Revolving Credit Facility | Maximum | |||||||||||||
Long-term debt | |||||||||||||
Commitment fee (as a percent) | 0.40% | ||||||||||||
2016 Credit Facilities | Revolving Credit Facility | LIBOR | |||||||||||||
Long-term debt | |||||||||||||
Variable rate basis | LIBOR | ||||||||||||
2016 Credit Facilities | Revolving Credit Facility | LIBOR | Minimum | |||||||||||||
Long-term debt | |||||||||||||
Variable base rate minimum floor (as a percent) | 0.00% | ||||||||||||
2016 Credit Facilities | Revolving Credit Facility | ABR | |||||||||||||
Long-term debt | |||||||||||||
Variable rate basis | ABR | ||||||||||||
2013 Credit Facilities | |||||||||||||
Long-term debt | |||||||||||||
Amounts free of restrictions available for cash dividends or stock repurchases | $ 3,000 | ||||||||||||
2013 Credit Facilities | First Lien Term Loan | |||||||||||||
Long-term debt | |||||||||||||
Interest period, option one | 1 month | ||||||||||||
Interest period, option two | 2 months | ||||||||||||
Interest period, option three | 3 months | ||||||||||||
Interest period, option four | 6 months | ||||||||||||
Loss on extinguishment of debt | 1,300 | ||||||||||||
Prepayment penalty | $ 0 | ||||||||||||
Repayment of debt | 152,100 | ||||||||||||
Applicable margin on variable rate basis (as a percent) | 3.50% | 4.00% | |||||||||||
Weighted average interest rate (as a percent) | 4.50% | ||||||||||||
Additional Debt Disclosures | |||||||||||||
Aggregate principal amount | 825,000 | ||||||||||||
Debt discount | 8,300 | ||||||||||||
Scheduled principal payments as a percentage of original principal balance | 0.25% | ||||||||||||
Number of non-consenting lenders | item | 8 | ||||||||||||
Expenses incurred in repricing transaction | 100 | ||||||||||||
Percentage of annual excess cash flow required to be used for prepayment | 50.00% | ||||||||||||
Step-down percentage of annual excess cash flow required to be used for prepayment if specified debt-to-EBITDA ratio achieved | 25.00% | ||||||||||||
2013 Credit Facilities | First Lien Term Loan | Minimum | |||||||||||||
Additional Debt Disclosures | |||||||||||||
Specified debt-to-EBITDA ratio which triggers a reduced loan prepayment requirements | 3.25 | ||||||||||||
2013 Credit Facilities | First Lien Term Loan | Maximum | |||||||||||||
Additional Debt Disclosures | |||||||||||||
Specified debt-to-EBITDA ratio which triggers a reduced loan prepayment requirements | 3.75 | ||||||||||||
Specified debt-to-EBITDA ratio which, if achieved, will result in no prepayment requirements | 3.25 | ||||||||||||
2013 Credit Facilities | First Lien Term Loan | LIBOR | |||||||||||||
Long-term debt | |||||||||||||
Variable rate basis | LIBOR | ||||||||||||
Applicable margin on variable rate basis (as a percent) | 3.50% | ||||||||||||
2013 Credit Facilities | First Lien Term Loan | LIBOR | Minimum | |||||||||||||
Long-term debt | |||||||||||||
Variable base rate minimum floor (as a percent) | 1.00% | ||||||||||||
2013 Credit Facilities | Incremental term loan borrowing | |||||||||||||
Additional Debt Disclosures | |||||||||||||
Incremental amount borrowed | $ 65,000 | ||||||||||||
2013 Credit Facilities | Revolving Credit Facility | |||||||||||||
Long-term debt | |||||||||||||
Maximum borrowing capacity | $ 125,000 | $ 125,000 | |||||||||||
Interest period, option one | 1 month | ||||||||||||
Interest period, option two | 2 months | ||||||||||||
Interest period, option three | 3 months | ||||||||||||
Interest period, option four | 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 | $ 0 | ||||||||||||
Outstanding letters of credit | $ 4,400 | ||||||||||||
2013 Credit Facilities | Revolving Credit Facility | LIBOR | |||||||||||||
Long-term debt | |||||||||||||
Variable rate basis | LIBOR | ||||||||||||
Loss on modification or extinguishment of debt | Senior Notes | |||||||||||||
Long-term debt | |||||||||||||
Prepayment penalty | $ 17,400 | ||||||||||||
Write-off of unamortized debt issuance costs | $ 4,600 | 3,700 | |||||||||||
Fees associated with extinguishment of debt | 400 | ||||||||||||
Loss on modification or extinguishment of debt | 2013 Credit Facilities | First Lien Term Loan | |||||||||||||
Long-term debt | |||||||||||||
Loss on extinguishment of debt | 16,700 | ||||||||||||
Write-off of unamortized debt issuance costs | 15,800 | $ 4,800 | |||||||||||
Fees associated with extinguishment of debt | $ 900 |
Current Borrowings and Long-T65
Current Borrowings and Long-Term Debt - Senior Notes and A/R Financing Agreement (Details) - USD ($) $ in Thousands | Nov. 18, 2014 | Dec. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2014 | Mar. 17, 2016 | Dec. 31, 2015 | Sep. 30, 2013 |
Long-term debt | ||||||||
Long-term debt, gross | $ 836,441 | $ 836,441 | $ 914,000 | |||||
Loss on extinguishment of debt | 16,700 | $ 21,500 | 38,178 | $ 25,036 | ||||
Fair Value of Debt | ||||||||
Estimated fair value of long-term debt | 924,900 | 844,200 | ||||||
Senior Notes | ||||||||
Long-term debt | ||||||||
Long-term debt, gross | $ 91,441 | $ 91,441 | 225,000 | $ 375,000 | ||||
Interest rate (as a percent) | 9.50% | 9.50% | ||||||
Repayment of prepayment premium as percentage of principal amount in event of change in control | 1.00% | |||||||
Repayment of principal | $ 150,000 | |||||||
Prepayment penalty | 14,300 | |||||||
Aggregate principal amount of debt repurchase | $ 133,600 | |||||||
Loss on extinguishment of debt | $ 21,500 | |||||||
Senior Notes | Minimum | ||||||||
Long-term debt | ||||||||
Prepayment premium (as a percent) | 0.00% | |||||||
Senior Notes | Maximum | ||||||||
Long-term debt | ||||||||
Prepayment premium (as a percent) | 4.75% | |||||||
Accounts Receivable Financing Agreement | ||||||||
Long-term debt | ||||||||
Long-term debt, gross | $ 120,000 | $ 120,000 | ||||||
Maximum borrowing capacity | $ 140,000 | |||||||
Outstanding borrowings | $ 120,000 | $ 120,000 | ||||||
Notice period for prepayment of loans | 1 day | |||||||
Notice period required for termination of agreement | 15 days | |||||||
Weighted average interest rate (as a percent) | 2.31% | 2.31% | ||||||
Remaining borrowing capacity | $ 20,000 | $ 20,000 | ||||||
LIBOR | Accounts Receivable Financing Agreement | ||||||||
Long-term debt | ||||||||
Variable rate basis | LIBOR | |||||||
Applicable margin on variable rate basis (as a percent) | 1.60% | |||||||
ABR | Accounts Receivable Financing Agreement | ||||||||
Long-term debt | ||||||||
Variable rate basis | base rate | |||||||
Applicable margin on variable rate basis (as a percent) | 1.60% | |||||||
Level 2 | Senior Notes | ||||||||
Fair Value of Debt | ||||||||
Fair value of Senior Notes | 246,200 | 99,200 | ||||||
Level 3 | Term Loans, Credit Facility Borrowings, and Accounts Receivable Financing Agreement | ||||||||
Fair Value of Debt | ||||||||
Fair value of the term loans, borrowings under credit facilities, and accounts receivable financing agreement | $ 678,700 | $ 745,000 | ||||||
Loss on modification or extinguishment of debt | Senior Notes | ||||||||
Long-term debt | ||||||||
Prepayment penalty | $ 17,400 | |||||||
Write-off of unamortized debt issuance costs | $ 4,600 | 3,700 | ||||||
Fees associated with extinguishment of debt | $ 400 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Stockholders' Equity | ||
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Stock-Based Compensation - Shar
Stock-Based Compensation - Share-Based Compensation Plans (Details) - USD ($) $ in Millions | Nov. 16, 2016 | Mar. 02, 2016 | Sep. 23, 2013 | Dec. 31, 2013 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Nov. 23, 2014 |
Employee stock options | ||||||||
Stock-Based Compensation | ||||||||
Fair value of options vested in period | $ 27.3 | $ 3.1 | $ 2.8 | |||||
Unrecognized compensation cost | $ 16.2 | |||||||
Weighted average period for recognition of unrecognized compensation cost | 2 years | |||||||
Employee stock options | Service-based options | ||||||||
Stock-Based Compensation | ||||||||
Contractual life | 10 years | |||||||
Employee stock options | Service-based options | Transaction-related costs | ||||||||
Stock-Based Compensation | ||||||||
Incremental compensation expense | $ 10.1 | |||||||
2013 Plan | ||||||||
Stock-Based Compensation | ||||||||
Shares available for grant, as a percentage of the outstanding balance | 12.50% | |||||||
2013 Plan | Employee stock options | ||||||||
Stock-Based Compensation | ||||||||
Vesting period | 5 years | |||||||
Number of stock options rolled into new plan | 2,052,909 | |||||||
Number of stock options rolled into new plan from predecessor company | 2,016,581 | |||||||
Number of stock options rolled into new plan from RPS | 36,328 | |||||||
2013 Plan | Employee stock options | 2.0x Options | ||||||||
Stock-Based Compensation | ||||||||
Expected life, in years | 2 years 11 months 1 day | |||||||
Risk-free interest rate (as a percent) | 1.04% | |||||||
Volatility (as a percent) | 45.00% | |||||||
Dividend rate (as a percent) | 0.00% | |||||||
Finnerty discount (as a percent) | 16.00% | |||||||
Number of options for which vesting criteria was modified | 835,551 | |||||||
Compensation expense | $ 0 | |||||||
2013 Plan | Employee stock options | 2.0x Options | Transaction-related costs | ||||||||
Stock-Based Compensation | ||||||||
Incremental compensation expense | $ 25.7 | |||||||
2013 Plan | Employee stock options | 2.5x Options | ||||||||
Stock-Based Compensation | ||||||||
Compensation expense | $ 0 | |||||||
Options vested | 809,755 | |||||||
2013 Plan | Employee stock options | 2.5x Options | Transaction-related costs | ||||||||
Stock-Based Compensation | ||||||||
Incremental compensation expense | $ 6.4 | |||||||
2014 Omnibus Plan | ||||||||
Stock-Based Compensation | ||||||||
Shares authorized for grant | 3,200,000 | |||||||
2014 Omnibus Plan | Employee stock options | ||||||||
Stock-Based Compensation | ||||||||
Vesting period | 4 years |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Options (Details) - Employee stock options - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Options | |||
Outstanding at beginning of period (in shares) | 6,839,129 | ||
Granted (in shares) | 489,000 | ||
Exercised (in shares) | (1,492,797) | ||
Expired/forfeited (in shares) | (327,985) | ||
Outstanding at end of period (in shares) | 5,507,347 | 6,839,129 | |
Exercisable (in shares) | 3,622,518 | ||
Weighted Average Exercise Price | |||
Outstanding at beginning of period (in dollars per share) | $ 11.39 | ||
Granted (in dollars per share) | 46.10 | ||
Exercised (in dollars per share) | 6.77 | ||
Expired/forfeited (in dollars per share) | 17.23 | ||
Outstanding at end of period (in dollars per share) | 15.38 | $ 11.39 | |
Exercisable (in dollars per share) | $ 10.40 | ||
Other disclosures: | |||
Weighted average remaining contractual life, Outstanding | 6 years 8 months 12 days | 6 years 9 months 18 days | |
Weighted average remaining contractual life, Exercisable | 6 years | ||
Intrinsic value, Outstanding | $ 218.9 | $ 231.7 | |
Intrinsic value, Exercisable | $ 162 | ||
Service-based options | |||
Other disclosures: | |||
Weighted average fair value of options granted (in dollars per share) | $ 15.57 | $ 10.87 | $ 6.71 |
Stock-Based Compensation - St69
Stock-Based Compensation - Stock Options by Exercise Price (Details) - Employee stock options | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
$ 2.94 | |
Options outstanding | |
Number of options | shares | 871,026 |
Weighted average remaining life | 2 years 9 months 18 days |
Weighted average exercise price | $ 2.94 |
Options exercisable | |
Number of options | shares | 871,026 |
Weighted average remaining life | 2 years 9 months 18 days |
Weighted average exercise price | $ 2.94 |
$ 11.73 | |
Options outstanding | |
Number of options | shares | 3,420,136 |
Weighted average remaining life | 7 years |
Weighted average exercise price | $ 11.73 |
Options exercisable | |
Number of options | shares | 2,541,911 |
Weighted average remaining life | 7 years |
Weighted average exercise price | $ 11.73 |
$ 16.42 | |
Options outstanding | |
Number of options | shares | 144,060 |
Weighted average remaining life | 7 years 6 months |
Weighted average exercise price | $ 16.42 |
Options exercisable | |
Number of options | shares | 73,706 |
Weighted average remaining life | 7 years 3 months 18 days |
Weighted average exercise price | $ 16.42 |
25.35 - 54.69 | |
Stock options by exercise price range | |
Exercise price range, lower limit | 25.35 |
Exercise price range, upper limit | $ 54.69 |
Options outstanding | |
Number of options | shares | 1,072,125 |
Weighted average remaining life | 8 years 8 months 12 days |
Weighted average exercise price | $ 36.97 |
Options exercisable | |
Number of options | shares | 135,875 |
Weighted average remaining life | 7 years 7 months 6 days |
Weighted average exercise price | $ 30.01 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Awards and Units (Details) - RSAs and RSUs - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Stock-Based Compensation | ||
Outstanding at beginning of period (in shares) | 143,984 | |
Granted (in shares) | 50,487 | |
Vested (in shares) | (5,881) | |
Outstanding at end of period (in shares) | 188,590 | |
Weighted Average Grant-Date Fair Value | ||
Outstanding at beginning of period (in dollars per share) | $ 28.42 | |
Granted (in dollars per share) | 43.85 | |
Vested (in dollars per share) | 25.51 | |
Outstanding at end of period (in dollars per share) | $ 32.63 | |
Intrinsic Value | ||
Outstanding at end of period | $ 10.4 | $ 6.5 |
Non-employee directors | Vest on first anniversary | ||
Stock-Based Compensation | ||
Percentage vesting | 50.00% | |
Non-employee directors | Vest on second anniversary | ||
Stock-Based Compensation | ||
Percentage vesting | 50.00% | |
Employees | Vest on third anniversary | ||
Stock-Based Compensation | ||
Percentage vesting | 100.00% |
Stock-Based Compensation - St71
Stock-Based Compensation - Stock-Based Compensation Expense (Details) - Stock options, RSAs and RSUs - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Stock-based compensation | |||
Compensation expense | $ 49,233 | $ 5,276 | $ 3,467 |
Direct costs | |||
Stock-based compensation | |||
Compensation expense | 1,813 | 1,218 | 752 |
Selling, general, and administrative expenses | |||
Stock-based compensation | |||
Compensation expense | 5,254 | $ 4,058 | $ 2,715 |
Transaction-related costs | |||
Stock-based compensation | |||
Compensation expense | $ 42,166 |
Income Taxes - Components of In
Income Taxes - Components of Income (Loss) and Income Tax Benefit (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Components of income (loss) before income taxes and equity in losses of unconsolidated joint ventures: | |||||||||||
Domestic | $ (61,226) | $ (23,400) | $ (92,040) | ||||||||
Foreign | 155,120 | 138,565 | 50,188 | ||||||||
Income (loss) before income taxes and equity in gains (losses) of unconsolidated joint ventures | 93,894 | 115,165 | (41,852) | ||||||||
Current: | |||||||||||
Federal | 151 | 1,132 | |||||||||
State | 1,842 | 1,507 | (617) | ||||||||
Foreign | 36,970 | 30,584 | 24,431 | ||||||||
Total current income tax expense | 38,963 | 33,223 | 23,814 | ||||||||
Deferred: | |||||||||||
Federal | (2,230) | (1,349) | (22,002) | ||||||||
State | (451) | 1,564 | (1,867) | ||||||||
Foreign | (7,788) | (3,434) | (8,099) | ||||||||
Total deferred income tax benefit | (10,469) | (3,219) | (31,968) | ||||||||
Total income tax expense (benefit) | $ 10,625 | $ 10,821 | $ 12,312 | $ (5,264) | $ 5,663 | $ 10,696 | $ 5,623 | $ 8,022 | $ 28,494 | $ 30,004 | $ (8,154) |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Effective Tax Rate (Details) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Taxes | |||
Statutory federal income tax rate | 35.00% | 35.00% | 35.00% |
State income taxes, net of federal benefit | 0.30% | 2.00% | 5.50% |
Tax on foreign earnings: | |||
Foreign rate differential | (17.70%) | (13.60%) | 4.30% |
Foreign earnings taxed in the United States | 17.50% | 7.30% | (10.90%) |
Non-U.S. research and development credits | (3.90%) | (4.40%) | 3.80% |
Stock based compensation | 1.90% | 0.20% | (0.80%) |
Change in liability for uncertain tax positions | (0.60%) | (14.60%) | |
Nondeductible expenses | 0.10% | 0.30% | (2.00%) |
Other | (2.90%) | (0.10%) | (0.80%) |
Effective Income Tax Rate Reconciliation, Percent, Total | 30.30% | 26.10% | 19.50% |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Components of deferred tax assets and liabilities | ||||
Net operating loss carryforwards | $ 29,470 | $ 48,689 | ||
Accruals and reserves | 12,986 | 13,002 | ||
Equity based compensation | 17,392 | 8,418 | ||
Prepaid expenses and other | 25,232 | 18,311 | ||
Deferred and unbilled revenue | 25,718 | 29,560 | ||
Tax credits | 5,295 | 3,680 | ||
Deferred tax assets, gross | 116,093 | 121,660 | ||
Valuation allowance | (21,689) | (23,205) | $ (16,142) | $ (6,120) |
Deferred tax assets | 94,404 | 98,455 | ||
Identified intangibles | (148,576) | (164,645) | ||
Depreciable, amortizable and other property | (12,963) | (12,432) | ||
Deferred tax liabilities | (161,539) | (177,077) | ||
Total deferred tax liability | (67,135) | (78,622) | ||
Long-term deferred tax asset | 6,568 | 3,069 | ||
Long-term deferred tax liability | $ (73,703) | $ (81,691) |
Income Taxes - Deferred Tax A75
Income Taxes - Deferred Tax Assets and Liabilities - Net Defered Tax Liabilities (Details) (Calc 2) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Components of deferred tax assets and liabilities | ||||
Net operating loss carryforwards | $ 29,470 | $ 48,689 | ||
Accruals and reserves | 12,986 | 13,002 | ||
Equity based compensation | 17,392 | 8,418 | ||
Prepaid expenses and other | 25,232 | 18,311 | ||
Deferred and unbilled revenue | 25,718 | 29,560 | ||
Tax credits | 5,295 | 3,680 | ||
Deferred tax assets, gross | 116,093 | 121,660 | ||
Valuation allowance | (21,689) | (23,205) | $ (16,142) | $ (6,120) |
Deferred tax assets | 94,404 | 98,455 | ||
Identified intangibles | (148,576) | (164,645) | ||
Depreciable, amortizable and other property | (12,963) | (12,432) | ||
Deferred tax liabilities | (161,539) | (177,077) | ||
Total deferred tax liability | (67,135) | (78,622) | ||
Long-term deferred tax asset | 6,568 | 3,069 | ||
Long-term deferred tax liability | $ (73,703) | $ (81,691) |
Income Taxes - Net Operating Lo
Income Taxes - Net Operating Loss Carryforwards (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Operating loss carryforwards | |
Operating loss carryforward period, minimum | 5 years |
Foreign | |
Operating loss carryforwards | |
Cumulative net operating loss carryforwards | $ 9.7 |
Federal | |
Operating loss carryforwards | |
Cumulative net operating loss carryforwards | 70.9 |
State | |
Operating loss carryforwards | |
Cumulative net operating loss carryforwards | $ 279.4 |
Income Taxes - Tax Credit Carry
Income Taxes - Tax Credit Carryforwards (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Federal | |
Tax credit carryforwards | |
Income tax credit carryforwards | $ 3.1 |
State | |
Tax credit carryforwards | |
Income tax credit carryforwards | $ 1.6 |
Minimum | State | |
Tax credit carryforwards | |
Year tax credits begin expiring | Jan. 1, 2022 |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of gross unrecognized income tax benefits | |||
Unrecognized Tax Benefits, Beginning Balance | $ 11,729 | $ 16,207 | $ 11,284 |
Additions based on tax positions related to current year | 1,196 | 1,333 | 5,221 |
Additions for income tax positions of prior years | 542 | 95 | 1,559 |
Impact of changes in exchange rates | (127) | (594) | (1,005) |
Settlements with tax authorities | (559) | ||
Reductions for income tax positions for prior years | (349) | (4,308) | (452) |
Reductions due to lapse of applicable statute of limitations | (1,004) | (400) | |
Unrecognized Tax Benefits, Ending Balance | 12,432 | 11,729 | 16,207 |
Amount of gross unrecognized tax benefits which would impact the Company's effective tax rate | 7,600 | ||
Amount of gross unrecognized tax benefit expected to be recognized within the next 12 months | 3,700 | ||
Increase (decrease) in tax expense for interest and penalties associated with uncertain tax positions | 100 | $ (100) | $ 100 |
Interest and penalties recognized on uncertain tax positions | $ 2,400 |
Income Taxes - Undistributed Fo
Income Taxes - Undistributed Foreign Earnings (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Taxes | |||
Tax liability related to previously taxed foreign income | $ 0 | $ 0 | |
Undistributed foreign earnings permanently reinvested | 256.6 | 236.7 | $ 186.1 |
Russia | |||
Income Taxes | |||
Tax liability related to previously taxed foreign income | 0.3 | ||
Foreign earnings not permanently reinvested | $ 3.4 | ||
Decrease in tax liability related to previously taxed foreign income | $ 0.3 |
Income Taxes - Valuation Allowa
Income Taxes - Valuation Allowance (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Taxes | |||
Beginning balance | $ 23,205 | $ 16,142 | $ 6,120 |
Additions - purchase accounting | 1,069 | ||
Additions - other comprehensive income | 3,892 | 5,165 | |
Additions - charged to expense | 3,421 | 3,770 | 8,476 |
Deductions - charged to expense (including translation adjustments) | (4,937) | (599) | (4,688) |
Ending balance | $ 21,689 | $ 23,205 | $ 16,142 |
Commitments and Contingencies -
Commitments and Contingencies - Operating Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments and Contingencies | |||
Rent expense under operating leases, net of sublease rental income | $ 31,900 | $ 30,100 | $ 33,400 |
Leases | |||
2,017 | 37,975 | ||
2,018 | 32,450 | ||
2,019 | 28,614 | ||
2,020 | 26,845 | ||
2,021 | 25,070 | ||
2022 and thereafter | 117,083 | ||
Total | 268,037 | ||
Sublease Rental Income | |||
2,017 | (539) | ||
2,018 | (323) | ||
2,019 | (270) | ||
2,020 | (270) | ||
2,021 | (270) | ||
2022 and thereafter | (308) | ||
Total | (1,980) | ||
Net Total | |||
2,017 | 37,436 | ||
2,018 | 32,127 | ||
2,019 | 28,344 | ||
2,020 | 26,575 | ||
2,021 | 24,800 | ||
2022 and thereafter | 116,775 | ||
Total | $ 266,057 |
Commitments and Contingencies82
Commitments and Contingencies - Employment Agreements (Details) - Employment Agreements | 12 Months Ended |
Dec. 31, 2016 | |
Vice presidents | |
Employment Agreements | |
Severance period | 6 months |
Senior vice presidents | |
Employment Agreements | |
Severance period | 9 months |
Executive vice presidents | |
Employment Agreements | |
Severance period | 12 months |
President and chief executive officer | |
Employment Agreements | |
Severance period | 12 months |
Commitments and Contingencies83
Commitments and Contingencies - Legal Proceedings (Details) - Litigation with City of Sao Paulo, Brazil $ in Millions | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Legal Proceedings | |
Claim amount | $ 4.9 |
Amount deposited | $ 4.9 |
Commitments and Contingencies84
Commitments and Contingencies - Insurance (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
General Insurance | ||
Insurance | ||
Maximum retentions and deductibles | $ 0.5 | |
Employee Health Insurance | ||
Insurance | ||
Stop-loss limit per member | 0.3 | |
Self-insurance reserve | $ 4.1 | $ 3.6 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - Section 401K Plan - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Defined contribution plans | |||
Percentage of employer match of employee voluntary contributions | 50.00% | ||
Employer contributions | $ 9.9 | $ 6.6 | $ 4.4 |
Minimum | |||
Defined contribution plans | |||
Term of employment required before an employee is eligible for Company match | 6 months | ||
Maximum | |||
Defined contribution plans | |||
Percentage of pay matched by employer | 6.00% |
Derivatives - Hedging Instrumen
Derivatives - Hedging Instruments (Details) - USD ($) $ in Thousands | Sep. 23, 2015 | Oct. 02, 2013 | Dec. 31, 2016 | Sep. 30, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Derivatives | |||||||
Amount paid to terminate interest rate swaps | $ 32,907 | ||||||
Designated as hedging instruments | |||||||
Derivatives in an asset position: | |||||||
Notional amount | 250,000 | ||||||
Derivatives in a liability position: | |||||||
Notional amount | $ 250,000 | $ 250,000 | |||||
Designated as hedging instruments | Level 2 | Other assets | |||||||
Derivatives in an asset position: | |||||||
Asset | 28 | ||||||
Designated as hedging instruments | Level 2 | Other long-term liabilities | |||||||
Derivatives in a liability position: | |||||||
Liability | (590) | (590) | |||||
2013 Swaps | |||||||
Derivatives | |||||||
Notional amount | $ 620,000 | ||||||
Amount paid to terminate interest rate swaps | $ 32,900 | ||||||
Date swap begins | Sep. 23, 2015 | ||||||
Interest rate swap maturity, low end of range | 1 year | ||||||
Interest rate swap maturity, high end of range | 5 years | ||||||
Unrealized losses expected to be reclassified out of accumulated other comprehensive (loss) income into interest expense | 29,600 | ||||||
Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net on derivatives | $ 4,700 | 700 | |||||
Derivatives in a liability position: | |||||||
Derivative contract no longer qualifies as hedge, notional amount | 40,000 | $ 47,500 | |||||
Derivative contract ineffective, notional amount | $ 17,500 | $ 297,500 | |||||
2015 Swap | |||||||
Derivatives | |||||||
Notional amount | $ 250,000 | ||||||
Fixed interest rate | 1.48% | ||||||
Date swap begins | Sep. 23, 2015 | ||||||
Unrealized losses expected to be reclassified out of accumulated other comprehensive (loss) income into interest expense | $ 800 | ||||||
Variable rate basis | 3 month LIBOR | ||||||
Swap maturity date | Sep. 23, 2018 | ||||||
Interest rate cap | |||||||
Derivatives | |||||||
Notional amount | $ 800,000 | ||||||
Date swap begins | Sep. 23, 2014 | ||||||
Interest rate cap | 4.00% | ||||||
Variable rate basis | LIBOR |
Derivatives - Cash Flow Hedging
Derivatives - Cash Flow Hedging Instruments (Details) - Cash flow hedging - Interest rate contracts - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Effect of derivatives on the consolidated statements of operations and comprehensive income (loss) | |||
Amount of pre-tax loss recognized in other comprehensive loss on derivatives | $ (1,600) | $ (11,851) | $ (20,976) |
Amount of loss recognized in other expense, net on derivatives (ineffective portion) | 1 | (444) | (1,275) |
Amount of loss recognized in other expense, net on derivatives (no longer qualify for hedge accounting) | (1,137) | (453) | |
Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net on derivatives | (5,921) | $ (908) | $ (3) |
Unrealized losses expected to be reclassified out of accumulated other comprehensive (loss) income into interest expense over the next 12 months | $ 6,900 | ||
Estimated period for the anticipated transfer of (loss) income from accumulated other comprehensive income into earnings | 12 months |
Accumulated Other Comprehensi88
Accumulated Other Comprehensive (Loss) Income - Components (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Summary of components of accumulated other comprehensive loss | |||
Beginning balance | $ (132,307) | ||
End balance | (224,686) | $ (132,307) | |
Foreign Currency Translation | |||
Summary of components of accumulated other comprehensive loss | |||
Beginning balance | (106,072) | (53,639) | $ 15,061 |
Other comprehensive income (loss) before reclassifications, net of tax | (95,019) | (52,433) | (68,700) |
End balance | (201,091) | (106,072) | (53,639) |
Foreign Currency Translation | British Pound (GBP) | |||
Summary of components of accumulated other comprehensive loss | |||
Other comprehensive income (loss) before reclassifications, net of tax | $ (90,200) | $ (25,800) | $ (32,300) |
Change in valuation of U.S. Dollar during the period (as a percent) | 16.70% | 4.60% | 5.70% |
Foreign Currency Translation | Euro (EUR) | |||
Summary of components of accumulated other comprehensive loss | |||
Other comprehensive income (loss) before reclassifications, net of tax | $ (8,400) | $ (16,400) | $ (20,600) |
Change in valuation of U.S. Dollar during the period (as a percent) | 3.60% | 10.10% | 11.80% |
Foreign Currency Translation | Canadian Dollar (CAD) | |||
Summary of components of accumulated other comprehensive loss | |||
Other comprehensive income (loss) before reclassifications, net of tax | $ 1,100 | $ (7,100) | |
Change in valuation of U.S. Dollar during the period (as a percent) | (3.10%) | 16.10% | |
Foreign Currency Translation | Russian Ruble (RUB) | |||
Summary of components of accumulated other comprehensive loss | |||
Other comprehensive income (loss) before reclassifications, net of tax | $ 4,000 | ||
Change in valuation of U.S. Dollar during the period (as a percent) | (19.50%) | ||
Derivative Instruments | |||
Summary of components of accumulated other comprehensive loss | |||
Beginning balance | $ (26,235) | $ (15,870) | $ 1,808 |
Other comprehensive income (loss) before reclassifications, net of tax | (978) | (11,273) | (17,681) |
Reclassification adjustments, net of tax | 3,618 | 908 | 3 |
End balance | (23,595) | (26,235) | (15,870) |
Accumulated Other Comprehensive (Loss) Income | |||
Summary of components of accumulated other comprehensive loss | |||
Beginning balance | (132,307) | (69,509) | 16,869 |
Other comprehensive income (loss) before reclassifications, net of tax | (95,997) | (63,706) | (86,381) |
Reclassification adjustments, net of tax | 3,618 | 908 | 3 |
End balance | $ (224,686) | $ (132,307) | $ (69,509) |
Net Income (Loss) Per Share (De
Net Income (Loss) Per Share (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of basic to diluted weighted average shares outstanding | |||
Basic weighted average common shares outstanding | 60,759 | 59,965 | 42,897 |
Effect of dilutive stock options and RSAs/RSUs | 3,693 | 3,242 | |
Diluted weighted average common shares outstanding | 64,452 | 63,207 | 42,897 |
Anti-dilutive shares | 305 | 115 | 1,223 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 12 Months Ended | |||
Sep. 30, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 02, 2013 | |
Related Party Transactions | ||||||
Amount borrowed in debt agreements | $ 836,441 | $ 914,000 | ||||
First Lien Term Loan | ||||||
Related Party Transactions | ||||||
Amount borrowed in debt agreements | $ 625,000 | 689,000 | ||||
KKR | Monitoring agreement | ||||||
Related Party Transactions | ||||||
Management fee | $ 0 | $ 1,600 | ||||
KKR | IPO | ||||||
Related Party Transactions | ||||||
Underwriter fees and commissions paid to a related party in connection with IPO | 4,000 | |||||
KKR | IPO | Monitoring agreement | ||||||
Related Party Transactions | ||||||
Termination fee | $ 11,900 | |||||
2013 Credit Facilities | First Lien Term Loan | ||||||
Related Party Transactions | ||||||
Amount borrowed in debt agreements | $ 887,800 | |||||
2013 Credit Facilities | KKR | First Lien Term Loan | ||||||
Related Party Transactions | ||||||
Loan held by related party | $ 28,000 | $ 14,700 | ||||
Loan held by related party (as percentage of total) | 3.00% | |||||
2013 Credit Facilities | KKR | Incremental term loan borrowing | ||||||
Related Party Transactions | ||||||
Loan held by related party | $ 32,500 | |||||
2013 Credit Facilities | UBS | Incremental term loan borrowing | ||||||
Related Party Transactions | ||||||
Loan held by related party | $ 32,500 |
Supplemental Cash Flow Inform91
Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash paid during the period for: | |||
Income taxes, net of refunds | $ 27,644 | $ 17,148 | $ 6,778 |
Interest | 48,156 | 54,632 | 80,699 |
Non-cash investing and financing activities: | |||
Issuance of common stock for the acquisition of Value Health Solutions, Inc. | 1,582 | ||
IPO cost incurred but not paid | 525 | ||
Accrued fixed assets purchases | 2,644 | 2,733 | $ 1,644 |
Cashless exercises of stock options | $ 9,456 | $ 1,672 |
Operations by Geographic Area92
Operations by Geographic Area (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Operations by geographical region | |||||||||||
Service revenue | $ 413,613 | $ 399,841 | $ 394,249 | $ 372,320 | $ 362,265 | $ 345,096 | $ 336,518 | $ 331,968 | $ 1,580,023 | $ 1,375,847 | $ 1,266,596 |
Reimbursement revenue | 58,773 | 53,414 | 61,598 | 57,903 | 66,682 | 58,414 | 56,330 | 56,610 | 231,688 | 238,036 | 192,990 |
Total revenue | 472,386 | $ 453,255 | $ 455,847 | $ 430,223 | 428,947 | $ 403,510 | $ 392,848 | $ 388,578 | 1,811,711 | 1,613,883 | 1,459,586 |
Long-lived assets | 87,577 | 80,691 | 87,577 | 80,691 | |||||||
Americas | |||||||||||
Operations by geographical region | |||||||||||
Service revenue | 1,096,945 | 931,439 | 851,145 | ||||||||
Long-lived assets | 61,264 | 54,947 | 61,264 | 54,947 | |||||||
United States | |||||||||||
Operations by geographical region | |||||||||||
Service revenue | 1,063,625 | 898,637 | 822,220 | ||||||||
Long-lived assets | 60,462 | 54,058 | 60,462 | 54,058 | |||||||
Other within the Americas | |||||||||||
Operations by geographical region | |||||||||||
Service revenue | 33,320 | 32,802 | 28,925 | ||||||||
Long-lived assets | 802 | 889 | 802 | 889 | |||||||
Europe, Africa, and Asia Pacific | |||||||||||
Operations by geographical region | |||||||||||
Service revenue | 483,078 | 444,408 | 415,451 | ||||||||
Long-lived assets | 26,313 | 25,744 | 26,313 | 25,744 | |||||||
United Kingdom | |||||||||||
Operations by geographical region | |||||||||||
Service revenue | 394,363 | 364,476 | 313,535 | ||||||||
Long-lived assets | 3,569 | 4,773 | 3,569 | 4,773 | |||||||
Netherlands | |||||||||||
Operations by geographical region | |||||||||||
Service revenue | 68,118 | 57,739 | 67,208 | ||||||||
Long-lived assets | 13,313 | 10,850 | 13,313 | 10,850 | |||||||
Other within Europe, Africa and Asia Pacific | |||||||||||
Operations by geographical region | |||||||||||
Service revenue | 20,597 | 22,193 | $ 34,708 | ||||||||
Long-lived assets | $ 9,431 | $ 10,121 | $ 9,431 | $ 10,121 |
Quarterly Financial Data (una93
Quarterly Financial Data (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Quarterly Financial Data (unaudited) | |||||||||||
Service revenue | $ 413,613 | $ 399,841 | $ 394,249 | $ 372,320 | $ 362,265 | $ 345,096 | $ 336,518 | $ 331,968 | $ 1,580,023 | $ 1,375,847 | $ 1,266,596 |
Reimbursement revenue | 58,773 | 53,414 | 61,598 | 57,903 | 66,682 | 58,414 | 56,330 | 56,610 | 231,688 | 238,036 | 192,990 |
Total revenue | 472,386 | 453,255 | 455,847 | 430,223 | 428,947 | 403,510 | 392,848 | 388,578 | 1,811,711 | 1,613,883 | 1,459,586 |
Income from operations | 38,241 | 54,814 | 50,348 | 18,946 | 43,861 | 49,179 | 38,321 | 32,937 | 162,349 | 164,298 | 56,839 |
Provision for (benefit from) income taxes | 10,625 | 10,821 | 12,312 | (5,264) | 5,663 | 10,696 | 5,623 | 8,022 | 28,494 | 30,004 | (8,154) |
(Loss) income before equity in losses of unconsolidated joint ventures | 13,992 | 31,416 | 35,423 | (15,431) | 27,839 | 25,978 | 13,220 | 18,124 | |||
Equity in gains (losses) of unconsolidated joint ventures, net of tax | 33 | 33 | 3,247 | (538) | 665 | (2,319) | (805) | (937) | |||
Net income (loss) | 14,025 | 31,449 | 38,670 | (15,969) | 28,504 | 23,659 | 12,415 | 17,187 | 68,175 | 81,765 | (35,742) |
Comprehensive (loss) income | $ (24,502) | $ 21,982 | $ 567 | $ (22,251) | $ 7,974 | $ (4,086) | $ 44,470 | $ (29,391) | $ (24,204) | $ 18,967 | $ (122,120) |
Basic (losses) earnings per share | $ 0.23 | $ 0.52 | $ 0.64 | $ (0.27) | $ 0.47 | $ 0.39 | $ 0.21 | $ 0.29 | $ 1.12 | $ 1.36 | $ (0.83) |
Diluted (losses) earnings per share | $ 0.22 | $ 0.49 | $ 0.60 | $ (0.27) | $ 0.45 | $ 0.37 | $ 0.20 | $ 0.27 | $ 1.06 | $ 1.29 | $ (0.83) |
Transaction-related costs | $ 13,000 | $ 0 | $ 2,900 | $ 28,900 | $ 44,834 | ||||||
Non-cash transaction-related costs | 42,166 | ||||||||||
Third-party fees | 2,700 | ||||||||||
Loss on extinguishment of debt | $ 16,700 | $ 21,500 | $ 38,178 | $ 25,036 |