Press Ganey (PGND) 10-Q 4 May 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	May. 02, 2016
Document and Entity Information
Entity Registrant Name	Press Ganey Holdings, Inc.
Entity Central Index Key	1,633,142
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		52,865,354
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash	$ 56,632	$ 35,235
Accounts receivable, net of allowances of $737 and $774 at March 31, 2016 and December 31, 2015, respectively	56,812	53,568
Other receivables	3,242	2,993
Prepaid expenses and other assets	5,187	4,603
Income taxes receivable		4,603
Total current assets	121,873	101,002
Property and equipment, net	58,102	60,262
Deferred financing fees, net	848	897
Intangible assets, net	358,269	362,465
Goodwill	411,203	411,203
Total assets	950,295	935,829
Current liabilities:
Current portion of long-term debt	9,250	9,250
Current portion of capital lease obligations	4,778	4,626
Accounts payable	5,382	9,420
Accrued payroll and related liabilities	10,055	15,830
Accrued expenses and other liabilities	2,208	1,969
Income taxes payable	2,776
Deferred revenue	43,604	31,555
Total current liabilities	78,053	72,650
Long-term debt, less current portion	169,034	171,226
Capital lease obligations, less current portion	3,611	4,165
Deferred income taxes	123,975	125,179
Total liabilities	$ 374,673	$ 373,220
Commitments and contingencies
SHAREHOLDER’S EQUITY
Common stock, $0.01 par value; 350,000,000 shares authorized, 52,843,986 and 52,770,722 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively	$ 528	$ 528
Additional paid-in capital	603,470	598,575
Accumulated deficit	(28,376)	(36,494)
Total shareholder’s equity	575,622	562,609
Total liabilities and shareholder’s equity	$ 950,295	$ 935,829

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Condensed Consolidated Balance Sheets
Accounts receivable, allowances (in dollars)	$ 737	$ 774
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	350,000,000	350,000,000
Common stock, shares issued	52,843,986	52,770,722
Common stock, shares outstanding	52,843,986	52,770,722

Condensed Consolidated Statemen

Condensed Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Condensed Consolidated Statements of Income
Revenue	$ 86,731	$ 74,891
Operating expenses:
Cost of revenue	36,469	31,427
General and administrative	22,644	18,301
Depreciation and amortization	11,572	9,859
Loss (gain) on disposal of property and equipment	18	(46)
Total operating expenses	70,703	59,541
Income from operations	16,028	15,350
Other income (expense):
Interest expense, net	(1,230)	(4,579)
Management fee of related party		(286)
Total other income (expense), net	(1,230)	(4,865)
Income before income taxes	14,798	10,485
Provision for income taxes	6,680	4,511
Net income	$ 8,118	$ 5,974
Earnings per share:
Basic (in dollars per share)	$ 0.15	$ 0.14
Diluted (in dollars per share)	$ 0.15	$ 0.14
Weighted average shares of common stock outstanding:
Basic (in shares)	52,806,364	43,313,200
Diluted (in shares)	53,286,140	43,313,200

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Operating activities
Net income	$ 8,118	$ 5,974
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	11,572	9,859
Amortization of deferred financing costs and debt discount	170	185
Equity-based compensation	6,001	1,965
Provision for doubtful accounts	101	151
Loss (gain) on disposal of property and equipment	18	(46)
Deferred income taxes	(1,204)	1,221
Changes in assets and liabilities:
Accounts receivable	(3,345)	(10,691)
Other receivables	(249)	367
Prepaid expenses and other assets	(584)	(3,727)
Accounts payable	(3,258)	(7,762)
Accrued payroll and related liabilities	(5,775)	(4,852)
Accrued expenses and other liabilities	239	41
Deferred revenue	12,049	15,818
Income taxes receivable	7,379	2,896
Net cash provided by operating activities	31,232	11,399
Investing activities
Purchases of property and equipment	(6,014)	(2,726)
Net cash used in investing activities	(6,014)	(2,726)
Financing activities
Payments on long-term debt	(2,313)	(1,070)
Deferred financing payments		(50)
Payments on capital lease obligations	(402)	(1,722)
Proceeds from sale of equity interests		100
Purchases of equity interests	(473)	(731)
Taxes paid for net settlements of restricted stock vesting	(633)
Net cash used in financing activities	(3,821)	(3,473)
Net increase in cash	21,397	5,200
Cash at beginning of period	35,235	6,962
Cash at end of period	56,632	12,162
Supplemental disclosure of cash flow information
Cash paid during the period for interest	984	4,396
Cash paid during the period for income taxes	457	362
Disposal of property and equipment acquired through capital leases		333
Purchase of property and equipment in accounts payable	$ 2,002	$ 2,903

Basis of Presentation of Interi

Basis of Presentation of Interim Financial Information	3 Months Ended
	Mar. 31, 2016
Basis of Presentation of Interim Financial Information
Basis of Presentation of Interim Financial Information	1. Basis of Presentation of Interim Financial Information Press Ganey Holdings, Inc. (the “Company”) is a leading provider of patient experience and caregiver measurement, performance analytics and strategic advisory solutions for healthcare organizations across the continuum of care. The consolidated financial statements include the financial statements of Press Ganey Holdings, Inc. and its wholly owned subsidiary, Press Ganey Associates (“Associates”), and Associates’ wholly owned subsidiaries, PatientImpact LLC; Data Advantage LLC; Center for Performance Services, Inc.; Morehead Associates, Inc.; On The Spot Systems, Inc.; Dynamic Clinical Systems, Inc.; and Healthcare Performance Improvement, LLC. All significant intercompany balances and transactions have been eliminated in consolidation. Prior to the initial public offering (discussed below), the Company was a wholly owned subsidiary of PG Holdco, LLC (the “Parent”). Effective May 8, 2015, the name of the Company was changed from PGA Holdings, Inc. to Press Ganey Holdings, Inc. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal and recurring accruals necessary to present fairly the financial statements in accordance with GAAP. Operating results for the three months ended March 31, 2016 and 2015 are not necessarily indicative of results to be expected for any other interim period or for the full year. The preparation of the consolidated financial statements in accordance with GAAP requires management to make certain estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results could materially differ from those estimates. Initial Public Offering In May 2015, the Company completed its initial public offering (the “IPO”) of 8,900,000 shares of common stock and, upon the underwriters’ exercise of their option to purchase additional shares, issued an additional 1,335,000 shares for a total of 10,235,000 shares issued at an offering price of $25.00 per share. Proceeds from the IPO were approximately $234.4 million, net of underwriting discounts and commissions and offering-related transaction costs incurred. Stock Split On May 8, 2015, the Company’s common stock was split at a 2,800 -for-one ratio. The authorized shares were increased to 350.0 million. Accordingly, all references to numbers of common shares and per-share data in the accompanying unaudited condensed consolidated financial statements have been adjusted to reflect the stock split on a retroactive basis. Preferred Stock On May 27, 2015, the Company amended and restated its certificate of incorporation to, among other things, authorize 50.0 million shares of preferred stock with a par value of $0.01 .

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2016
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies A complete listing of the Company’s significant accounting policies is discussed in Note 2 – Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 . Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU 2014 ‑09, “Revenue from Contracts with Customers (Topic 606)”. This ASU requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In August 2015, the FASB deferred the effective date by one year to annual and interim reporting periods beginning after December 15, 2017. The FASB is permitting early adoption of the standard, but not until annual and interim reporting periods beginning after December 15, 2016, the original effective date. An entity may choose to adopt this ASU either retrospectively or through a cumulative effect adjustment as of the start of the first period for which it applies the standard. In March 2016, the FASB issued ASU 2016-08, “Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”, which clarifies the implementation guidance on principal versus agent considerations of ASU 2014-09. In April 2016, the FASB issued ASU 2016-10, “Identifying Performance Obligations and Licensing”, which clarifies the identification of performance obligations and the licensing implementation guidance of ASU 2014-09. The Company is currently in the process of evaluating the impact that this new guidance will have on its consolidated financial statements and its method of adoption. In April 2015, the FASB issued ASU 2015-05, “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement”. This ASU provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. In addition, this update changes the accounting for software licenses to be consistent with other licenses of intangible assets. This standard is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. The Company adopted ASU 2015-05 on January 1, 2016 on a prospective basis. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. In September 2015, the FASB issued ASU 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments”. This ASU requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this ASU require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. This standard is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. The Company adopted ASU 2015-16 on January 1, 2016 on a prospective basis. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases”. This ASU requires that a lessee record an operating lease in the balance sheet with a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. This standard is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. Adoption of this standard will be on a modified retrospective approach, which includes a number of optional practical expedients that the Company may elect to apply. The Company is currently in the process of evaluating the impact that this new guidance will have on its consolidated financial statements and its method of adoption. In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting”. This ASU simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, treatment of forfeitures and classification on the statement of cash flows. This standard is effective for annual and interim periods beginning after December 15, 2016, with early adoption permitted. The Company is currently in the process of evaluating the impact that this new guidance will have on its consolidated financial statements.

Property and Equipment

Property and Equipment	3 Months Ended
	Mar. 31, 2016
Property and Equipment
Property and Equipment	3. Property and Equipment Property and equipment, net consist of the following: March 31, December 31, 2016 2015 Furniture, fixtures, and leasehold improvements $ $ Office equipment Office equipment held under capital lease Computer equipment and software Construction in progress Accumulated amortization of office equipment held under capital leases Accumulated depreciation $ $ Depreciation and amortization of property and equipment was $7.4 million and $5.7 million for the three months ended March 31, 2016 and 2015 , respectively.

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Mar. 31, 2016
Fair Value Measurements
Fair Value Measurements	4. Fair Value Measurements Financial Instruments The recorded values of accounts receivable, accounts payable, and other liabilities approximate fair value because of the short maturity of these financial instruments. The recorded value of the variable rate Term Loan approximates fair value because the interest rate fluctuates with market rates.

Intangible Assets

Intangible Assets	3 Months Ended
	Mar. 31, 2016
Intangible Assets
Intangible Assets	5. Intangible Assets Intangible assets consist of the following: March 31, 2016 December 31, 2015 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying Amount Amortization Amount Amount Amortization Amount Trade name (indefinite life) $ $ — $ $ $ — $ Trade names (finite life) Customer relationships Proprietary technology Other $ $ $ $ $ $ Intangible asset amortization expense was $4.2 million and $4.1 million for the three months ended March 31, 2016 and 2015, respectively.

Revolving Line of Credit and Lo

Revolving Line of Credit and Long Term Debt	3 Months Ended
	Mar. 31, 2016
Revolving Line of Credit and Long Term Debt
Revolving Line of Credit and Long Term Debt	6. Revolving Line of Credit and Long ‑Term Debt As of March 31, 2016 and December 31, 2015 , the Company’s long ‑term debt consisted of the following: March 31, December 31, 2016 2015 Term Loan $ $ Unamortized deferred financing fees Less current portion Long-term debt $ $ Unamortized deferred financing fees related to the Company’s Revolving Credit Facility (as defined below) were $848,000 and $897,000 at March 31, 2016 and December 31, 2015 , respectively, and are classified as deferred financing fees, net in the condensed consolidated balance sheets. 2015 Credit Agreement On July 31, 2015, the Company entered into a new credit agreement (“2015 Credit Agreement”). The 2015 Credit Agreement consists of a five -year $185.0 million term loan (“Term Loan”) and a five -year $75.0 million revolving credit facility (“Revolving Credit Facility”). The Company used the proceeds from the Term Loan to repay the outstanding balance on its previous term loan of $183.2 million. At the discretion of the Company, interest accrues on outstanding borrowings under the 2015 Credit Agreement at either the London Interbank Offered Rate (“LIBOR”) plus an applicable margin, currently 1.50% , or the adjusted base rate (“ABR”) plus an applicable margin, currently 0.50% . The applicable margins for both the LIBOR and ABR are variable based upon stipulated ranges of the secured net leverage ratio, as defined in the agreement. The Company is required to repay the outstanding principal amount of the Term Loan in equal quarterly amounts of $2.3 million. The remaining Term Loan balance and any outstanding balances on the Revolving Credit Facility will be due upon maturity on July 31, 2020. The Term Loan and Revolving Credit Facility are secured by substantially all of the assets of the Company. There were no borrowings outstanding on the Revolving Credit Facility at March 31, 2016 ; however, the Company had a letter of credit outstanding of approximately $65,000 at March 31, 2016 , which reduced the borrowing capacity of the Revolving Credit Facility to $74.9 million. The Company is charged a loan commitment fee, currently 0.375% , for unused amounts on the Revolving Credit Facility. The 2015 Credit Agreement contains certain restrictive and financial covenants which the Company must comply with on a quarterly basis, including a maximum secured net leverage ratio, as defined in the agreement. The Company is also limited in its ability to incur additional indebtedness or liens; pay dividends or make certain other restricted payments, enter into certain transactions with affiliates, merge or consolidate with another entity; or sell, assign, transfer, convey, or otherwise dispose of all or substantially all of its assets. The Company was in compliance with these restrictive and financial covenants as of March 31, 2016 .

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2016
Income Taxes
Income Taxes	7. Income Taxes For the three months ended March 31, 2016 , the Company recorded income tax expense of $ 6.7 million compared to $ 4.5 million for the three months ended March 31, 2015 . The Company’s effective tax rate was 45.1 % for the three months ended March 31, 2016 compared to 43.0 % for the three months ended March 31, 2015 . The effective tax rate for the three months ended March 31, 2016 of 45.1% differs from the U.S. statutory rate primarily due to the impact of state tax rates and nondeductible equity-based compensation expense.

Segment Information

Segment Information	3 Months Ended
	Mar. 31, 2016
Segment Information
Segment Information	8. Segment Information An operating segment is a component of an enterprise that engages in business activities and has discrete financial information that is regularly reviewed by the enterprise’s chief operating decision maker to assess performance of the individual component and make decisions about allocating resources to the component. The Company produces one set of financial information at the enterprise level that is regularly reviewed by the Company’s chief operating decision maker. Discrete financial information is not produced or reviewed by the Company’s chief operating decision maker at a level lower than the enterprise level. As such, the Company has one operating segment as of March 31, 2016 and 2015 . The Company’s identifiable assets are located in the United States and over 99% of the Company’s revenues are from clients located in the United States.

Related Party Transactions

Related Party Transactions	3 Months Ended
	Mar. 31, 2016
Related Party Transactions
Related Party Transactions	9 . Related Party Transactions The Company was charged an annual management fee that was payable quarterly to its majority shareholder, Vestar Capital Partners, LLC (“Vestar”). The management agreement was terminated and the annual management fee was no longer required after the effective date of the IPO. The Company incurred management fees of $0 and $286,000 for the three months ended March 31, 2016 and 2015 , respectively.

Equity-Based Compensation

Equity-Based Compensation	3 Months Ended
	Mar. 31, 2016
Equity-Based Compensation
Equity-Based Compensation	10. Equity-Based Compensation The Company measures its equity-based compensation expense based on the grant date fair value of the awards and recognizes this expense in the consolidated financial statements over the requisite service or performance vesting period. Total equity-based compensation expense recorded in the condensed consolidated statements of operations for the periods indicated is as follows: Three Months Ended March 31, 2016 2015 Cost of revenue $ $ General and administrative Total equity-based compensation expense $ $ Parent Equity-Based Compensation Plan The Company’s former parent company, PG Holdco, LLC, had adopted an equity-based compensation plan (the “Parent Plan”), which authorized the granting of various equity awards of the Parent’s Preferred units, Class A common units, Class B common units, and Class C common units to employees and directors of the Company. The awards of the Parent were recorded as compensation expense in the accounts of the Company because the recipients are employees and directors of the Company. 2015 Incentive Award Plan The Company’s 2015 Incentive Award Plan (the “2015 Plan”) provides for the grant of stock options, restricted stock, dividend equivalents, stock payments, restricted stock units, stock appreciation rights, and other stock or cash based awards. The 2015 Plan authorized 7,120,000 shares of common stock for issuance pursuant to awards under the plan. Restricted Stock A summary of restricted stock activity during the three months ended March 31, 2016 , is as follows: Weighted Average Fair Value at Grant Shares Date Nonvested at January 1, 2016 $ Granted Vested Forfeited Nonvested at March 31, 2016 $ During the three months ended March 31, 2016, the Company granted 326,060 shares of restricted stock with four-year service vesting (20% for years 1-2, 30% for years 3-4) and 253,299 shares of restricted stock with three-year performance vesting (cliff). As of March 31, 2016, there was $53.6 million of unrecognized pre-tax compensation expense related to nonvested restricted stock, which is expected to be recognized over a weighted average period of 2.7 years. During the three months ended March 31, 2016 , the Company purchased $473,000 of unvested equity interests related to awards that were modified at the IPO. Stock Options A summary of stock option activity during the three months ended March 31, 2016 , is as follows: Weighted Average Exercise Options Price Outstanding at January 1, 2016 $ Granted Exercised — — Forfeited — — Outstanding at March 31, 2016 $ Exercisable at March 31, 2016 — $ — The Company granted options to purchase 778,220 shares of the Co mpany’s common stock during the three months ended March 31, 2016 . Options to purchase shares of common stock were granted with exercise prices equal to the fair value of the common stock on the date of grant. The fair value of the stock options granted was estimated using a Black-Scholes valuation model. The weighted average fair value of the options granted during the three months ended March 31, 2016 is estimated at $10.97 per share on the date of grant using the following weighted average assumptions: risk-free interest rate of 1.4%; an expected term of approximately 6 years; expected volatility of 41.5%; and dividend yield of 0.0% over the expected life of the option. The risk-free interest rate assumptions were based on the U.S. Treasury yield curve in effect at the time of grant. The expected volatility was based on historical volatility of several peer companies to Press Ganey Holdings, Inc. for periods equal to the expected life of the options at the date of grant. The expected life of options is the average number of years the Company estimates that options will be outstanding. As of March 31, 2016 , there was $7.4 million of unrecognized pre-tax compensation expense related to stock options, which is expected to be recognized over a weighted average period of 3.9 years .

Earnings Per Share

Earnings Per Share	3 Months Ended
	Mar. 31, 2016
Earnings Per Share
Earnings Per Share	11. Earnings Per Share Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares and common equivalent shares outstanding during the period. The weighted average number of common equivalent shares outstanding has been determined in accordance with the treasury stock method. Common equivalent shares consist of common stock issuable on the vesting of restricted stock units and exercise of outstanding options when dilutive. The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended March 31, 2016 2015 Net income $ $ Weighted average shares outstanding, basic Weighted average common equivalent shares — Weighted average shares outstanding, diluted Net earnings per share Basic $ $ Diluted $ $

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2016
Subsequent Events
Subsequent Events	12. Subsequent Event On May 2, 2016, the Company acquired Avatar International Holding Company and its subsidiary Avatar International LLC (“Avatar”) for a preliminary cash purchase price of $17.1 million , subject to certain post-closing adjustments. Avatar is a competitor in the patient experience and caregiver engagement markets.

Basis of Presentation of Inte18

Basis of Presentation of Interim Financial Information (Policies)	3 Months Ended
	Mar. 31, 2016
Basis of Presentation of Interim Financial Information
Basis of Presentation of Interim Financial Information	The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal and recurring accruals necessary to present fairly the financial statements in accordance with GAAP. Operating results for the three months ended March 31, 2016 and 2015 are not necessarily indicative of results to be expected for any other interim period or for the full year. The preparation of the consolidated financial statements in accordance with GAAP requires management to make certain estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results could materially differ from those estimates.

Summary of Significant Accoun19

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2016
Summary of Significant Accounting Policies
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU 2014 ‑09, “Revenue from Contracts with Customers (Topic 606)”. This ASU requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In August 2015, the FASB deferred the effective date by one year to annual and interim reporting periods beginning after December 15, 2017. The FASB is permitting early adoption of the standard, but not until annual and interim reporting periods beginning after December 15, 2016, the original effective date. An entity may choose to adopt this ASU either retrospectively or through a cumulative effect adjustment as of the start of the first period for which it applies the standard. In March 2016, the FASB issued ASU 2016-08, “Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”, which clarifies the implementation guidance on principal versus agent considerations of ASU 2014-09. In April 2016, the FASB issued ASU 2016-10, “Identifying Performance Obligations and Licensing”, which clarifies the identification of performance obligations and the licensing implementation guidance of ASU 2014-09. The Company is currently in the process of evaluating the impact that this new guidance will have on its consolidated financial statements and its method of adoption. In April 2015, the FASB issued ASU 2015-05, “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement”. This ASU provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. In addition, this update changes the accounting for software licenses to be consistent with other licenses of intangible assets. This standard is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. The Company adopted ASU 2015-05 on January 1, 2016 on a prospective basis. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. In September 2015, the FASB issued ASU 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments”. This ASU requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this ASU require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. This standard is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. The Company adopted ASU 2015-16 on January 1, 2016 on a prospective basis. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases”. This ASU requires that a lessee record an operating lease in the balance sheet with a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. This standard is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. Adoption of this standard will be on a modified retrospective approach, which includes a number of optional practical expedients that the Company may elect to apply. The Company is currently in the process of evaluating the impact that this new guidance will have on its consolidated financial statements and its method of adoption. In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting”. This ASU simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, treatment of forfeitures and classification on the statement of cash flows. This standard is effective for annual and interim periods beginning after December 15, 2016, with early adoption permitted. The Company is currently in the process of evaluating the impact that this new guidance will have on its consolidated financial statements.

Property and Equipment (Tables)

Property and Equipment (Tables)	3 Months Ended
	Mar. 31, 2016
Property and Equipment
Schedule of Property and equipment, net	March 31, December 31, 2016 2015 Furniture, fixtures, and leasehold improvements $ $ Office equipment Office equipment held under capital lease Computer equipment and software Construction in progress Accumulated amortization of office equipment held under capital leases Accumulated depreciation $ $

Intangible Assets (Tables)

Intangible Assets (Tables)	3 Months Ended
	Mar. 31, 2016
Intangible Assets
Schedule of intangible assets	March 31, 2016 December 31, 2015 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying Amount Amortization Amount Amount Amortization Amount Trade name (indefinite life) $ $ — $ $ $ — $ Trade names (finite life) Customer relationships Proprietary technology Other $ $ $ $ $ $

Revolving Line of Credit and 22

Revolving Line of Credit and Long Term Debt (Tables)	3 Months Ended
	Mar. 31, 2016
Revolving Line of Credit and Long Term Debt
Schedule of long-term debt	March 31, December 31, 2016 2015 Term Loan $ $ Unamortized deferred financing fees Less current portion Long-term debt $ $

Equity-Based Compensation (Tabl

Equity-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2016
Equity-Based Compensation
Schedule of equity-based compensation expense in condensed consolidated statements of operations	Three Months Ended March 31, 2016 2015 Cost of revenue $ $ General and administrative Total equity-based compensation expense $ $
Schedule of changes in nonvested restricted stock	Weighted Average Fair Value at Grant Shares Date Nonvested at January 1, 2016 $ Granted Vested Forfeited Nonvested at March 31, 2016 $
Schedule of stock option activity	Weighted Average Exercise Options Price Outstanding at January 1, 2016 $ Granted Exercised — — Forfeited — — Outstanding at March 31, 2016 $ Exercisable at March 31, 2016 — $ —

Earnings Per Share (Tables)

Earnings Per Share (Tables)	3 Months Ended
	Mar. 31, 2016
Earnings Per Share
Schedule of basic and diluted earnings (net loss) per share	Three Months Ended March 31, 2016 2015 Net income $ $ Weighted average shares outstanding, basic Weighted average common equivalent shares — Weighted average shares outstanding, diluted Net earnings per share Basic $ $ Diluted $ $

Basis of Presentation of Inte25

Basis of Presentation of Interim Financial Information - Initial Public Offering (Details) - Common $ / shares in Units, shares in Thousands, $ in Millions	1 Months Ended
	May. 31, 2015USD ($)$ / sharesshares
IPO
Initial Public Offering
Shares issued in offering	10,235
Share price (in dollars per share) | $ / shares	$ 25
Proceeds from the issuance of common stock in initial public offering, net of fees | $	$ 234.4
IPO, excluding Underwriters' Option
Initial Public Offering
Shares issued in offering	8,900
Underwriters' Option
Initial Public Offering
Shares issued in offering	1,335

Basis of Presentation of Inte26

Basis of Presentation of Interim Financial Information - Stock Split and Preferred Stock (Details)	May. 08, 2015shares	Mar. 31, 2016shares	Dec. 31, 2015shares	May. 27, 2015$ / sharesshares
Stock split
Common stock, shares authorized		350,000,000	350,000,000
Preferred Stock
Preferred, shares authorized				50,000,000
Preferred, par value (in dollars per share) | $ / shares				$ 0.01
Common
Stock split
Stock split, conversion ratio	2,800
Common stock, shares authorized	350,000,000

Property and Equipment - Compon

Property and Equipment - Components (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Property and equipment, net
Property and equipment, gross	$ 139,579	$ 139,395
Accumulated amortization on office equipment held under capital leases	(11,320)	(10,143)
Accumulated depreciation	(70,157)	(68,990)
Property and equipment, net	58,102	60,262
Furniture, fixtures, and leasehold improvements
Property and equipment, net
Property and equipment, gross	8,910	9,431
Office equipment
Property and equipment, net
Property and equipment, gross	17,733	19,619
Office equipment held under capital lease
Property and equipment, net
Property and equipment, gross	20,916	20,916
Computer equipment and software
Property and equipment, net
Property and equipment, gross	82,688	74,844
Construction in progress
Property and equipment, net
Property and equipment, gross	$ 9,332	$ 14,585

Property and Equipment - Deprec

Property and Equipment - Depreciation (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Depreciation and amortization
Depreciation and amortization	$ 7.4	$ 5.7

Intangible Assets - Intangibles

Intangible Assets - Intangibles, Net (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Finite-Lived Intangible Assets, Net
Accumulated Amortization	$ (117,181)	$ (112,985)
Intangible Assets, Net (Excluding Goodwill)
Gross Carrying Value	475,450	475,450
Accumulated Amortization	(117,181)	(112,985)
Intangible assets, net	358,269	362,465
Trade names
Finite-Lived Intangible Assets, Net
Gross Carrying Value (finite life)	2,410	2,410
Accumulated Amortization	(1,582)	(1,509)
Intangible Assets, Net (finite life)	828	901
Intangible Assets, Net (Excluding Goodwill)
Accumulated Amortization	(1,582)	(1,509)
Customer relationships
Finite-Lived Intangible Assets, Net
Gross Carrying Value (finite life)	237,620	237,620
Accumulated Amortization	(98,097)	(94,851)
Intangible Assets, Net (finite life)	139,523	142,769
Intangible Assets, Net (Excluding Goodwill)
Accumulated Amortization	(98,097)	(94,851)
Proprietary technology
Finite-Lived Intangible Assets, Net
Gross Carrying Value (finite life)	32,240	32,240
Accumulated Amortization	(15,649)	(14,849)
Intangible Assets, Net (finite life)	16,591	17,391
Intangible Assets, Net (Excluding Goodwill)
Accumulated Amortization	(15,649)	(14,849)
Other
Finite-Lived Intangible Assets, Net
Gross Carrying Value (finite life)	3,180	3,180
Accumulated Amortization	(1,853)	(1,776)
Intangible Assets, Net (finite life)	1,327	1,404
Intangible Assets, Net (Excluding Goodwill)
Accumulated Amortization	(1,853)	(1,776)
Trade names
Indefinite-Lived Intangible Assets (Excluding Goodwill)
Indefinite-lived intangible assets	$ 200,000	$ 200,000

Intangible Assets - Amortizatio

Intangible Assets - Amortization (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Amortization expense
Amortization expense	$ 4.2	$ 4.1

Revolving Line of Credit and 31

Revolving Line of Credit and Long Term Debt - Components (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Long-term debt
Unamortized deferred financing fees	$ (848)	$ (897)
Less current portion	(9,250)	(9,250)
Long-term debt	169,034	171,226
2015 Credit Agreement
Long-term debt
Unamortized deferred financing fees	(2,091)	(2,212)
Total debt	178,284	180,476
Less current portion	(9,250)	(9,250)
Long-term debt	169,034	171,226
2015 Credit Agreement | Term Loan
Long-term debt
Long-term debt, gross	$ 180,375	$ 182,688

Revolving Line of Credit and 32

Revolving Line of Credit and Long Term Debt - Unamortized Deferred Financing Fees (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Long-term debt
Deferred financing fees, net	$ 848	$ 897
2015 Credit Agreement
Long-term debt
Deferred financing fees, net	2,091	2,212
2015 Credit Agreement | Revolving Credit Facility
Long-term debt
Deferred financing fees, net	$ 848	$ 897

Revolving Line of Credit and 33

Revolving Line of Credit and Long Term Debt - Terms (Details) - USD ($)	Jul. 31, 2015	Mar. 31, 2016	Dec. 31, 2015
2015 Credit Agreement | LIBOR
Long-term debt
Variable rate, basis spread (as a percent)		1.50%
2015 Credit Agreement | Adjusted Base Rate (ABR)
Long-term debt
Variable rate, basis spread (as a percent)		0.50%
Term Loan | 2015 Credit Agreement
Long-term debt
Term of debt instrument	5 years
Face amount of debt	$ 185,000,000
Frequency of periodic payment		quarterly
Periodic payment required		$ 2,300,000
Long-term debt, amount outstanding		180,375,000	$ 182,688,000
Term Loan | First Lien Credit Agreement
Long-term debt
Payments on debt	$ 183,200,000
Revolving Credit Facility | 2015 Credit Agreement
Long-term debt
Term of debt instrument	5 years
Maximum borrowing capacity	$ 75,000,000
Long-term debt, amount outstanding		0
Letters of credit outstanding		65,000
Available borrowing capacity		$ 74,900,000
Commitment fee, unused amounts (as a percent)		0.375%

Income Taxes - Effective Tax Ra

Income Taxes - Effective Tax Rate (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Income tax expense
Income tax expense	$ 6,680	$ 4,511
Effective income tax reconciliation
Effective income tax rate, expense (benefit)	45.10%	43.00%

Segment Information (Details)

Segment Information (Details) - Operating - segment	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Segment Information
Number of operating segments	1	1
Revenues | Geographic Concentration Risk | US
Segment Information
Revenues by location, as a percent	99.00%	99.00%

Related Party Transactions - Ma

Related Party Transactions - Management Fees (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Related Party Transactions
Related party expenses		$ 286
Vestar | Management Fees
Related Party Transactions
Related party expenses	$ 0	$ 286

Equity-Based Compensation - All

Equity-Based Compensation - Allocated Equity-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Equity-based compensation expense
Total equity-based compensation expense	$ 6,001	$ 1,965
Cost of revenue, excluding depreciation and amortization
Equity-based compensation expense
Total equity-based compensation expense	1,111	713
General and administrative
Equity-based compensation expense
Total equity-based compensation expense	$ 4,890	$ 1,252

Equity-Based Compensation - Res

Equity-Based Compensation - Restricted Stock (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Nonvested awards
Equity interests purchased	$ 473,000	$ 731,000
2015 Plan
Equity-based compensation
Shares authorized for issuance	7,120,000
Restricted stock
Nonvested awards
Equity interests purchased	$ 473,000
Unrecognized compensation
Unrecognized compensation costs	$ 53,600,000
Unrecognized compensation costs, weighted average period for recognition	2 years 8 months 12 days
Restricted stock | 4-year service vesting
Nonvested awards
Granted (in shares)	326,060
Restricted stock | Service vesting, year 1
Vesting terms
Vesting percentage	20.00%
Restricted stock | Service vesting, year 2
Vesting terms
Vesting percentage	20.00%
Restricted stock | Service vesting, year 3
Vesting terms
Vesting percentage	30.00%
Restricted stock | Service vesting, year 4
Vesting terms
Vesting percentage	30.00%
Restricted stock | 3-year performance vesting (cliff)
Nonvested awards
Granted (in shares)	253,299
Restricted stock | 2015 Plan
Nonvested awards
Nonvested at beginning of period (in shares)	2,255,681
Granted (in shares)	579,359
Vested (in shares)	(95,416)
Forfeited (in shares)	(18,156)
Nonvested at end of period (in shares)	2,721,468
Weighted Average Fair Value at Grant Date
Nonvested at beginning of period (in dollars per share)	$ 25.15
Granted (in dollars per share)	26.18
Vested (in dollars per share)	25
Forfeited (in dollars per share)	25
Nonvested at end of period (in dollars per share)	$ 25.38

Equity-Based Compensation - Sto

Equity-Based Compensation - Stock Options (Details) - Stock Options $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2016USD ($)$ / sharesshares
Stock Options
Outstanding at beginning of period (in shares) | shares	36,304
Grants (in shares) | shares	778,220
Outstanding at end of period (in shares) | shares	814,524
Weighted Average Exercise Price
Outstanding at beginning of period (in dollars per share)	$ 31.74
Granted (in dollars per share)	26.18
Outstanding at end of period (in dollars per share)	26.43
Fair value assumptions, Black-Scholes valuation model
Weighted-average grant date fair value (in dollars per share)	$ 10.97
Risk-free interest rate (as a percent)	1.40%
Expected term (in years)	6 years
Expected volatility (as a percent)	41.50%
Dividend yield (as a percent)	0.00%
Unrecognized compensation
Unrecognized compensation costs | $	$ 7.4
Unrecognized compensation costs, weighted average period for recognition	3 years 10 months 24 days

Earnings Per Share (Details)

Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Earnings Per Share
Net income	$ 8,118	$ 5,974
Weighted average shares outstanding, basic	52,806,364	43,313,200
Weighted average common equivalent shares	479,776
Weighted average shares outstanding, diluted	53,286,140	43,313,200
Net earnings per share
Basic (in dollars per share)	$ 0.15	$ 0.14
Diluted (in dollars per share)	$ 0.15	$ 0.14

Subsequent Events (Details)

Subsequent Events (Details) $ in Millions	May. 02, 2016USD ($)
Avatar | Subsequent Event
Business Acquisitions
Consideration paid, cash	$ 17.1