Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 13, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Surgery Partners, Inc. | |
Entity Central Index Key | 1,638,833 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 48,156,990 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | |
Current assets: | |||
Cash and cash equivalents | $ 56,848 | $ 74,920 | |
Accounts receivable, less allowance for doubtful accounts of $12,693 and $5,329, respectively | 164,604 | 144,960 | |
Inventories | 24,747 | 23,692 | |
Prepaid expenses and other current assets | 26,678 | 24,005 | |
Acquisition escrow deposit | 14,054 | 0 | |
Indemnification receivable due from seller | 1,072 | 1,072 | |
Total current assets | 288,003 | 268,649 | |
Property and equipment, net | 173,813 | 175,006 | |
Intangible assets, net | 53,137 | 54,888 | |
Goodwill | 1,330,050 | 1,298,753 | |
Investments in and advances to affiliates | 33,877 | 33,441 | |
Restricted invested assets | 316 | 316 | |
Acquisition escrow deposit | 0 | 16,232 | |
Debt issuance costs | 4,816 | 5,630 | |
Other long-term assets | 7,510 | 5,879 | |
Total assets | 1,891,522 | 1,858,794 | |
Current liabilities: | |||
Accounts payable | 40,807 | 43,063 | |
Accrued payroll and benefits | 23,391 | 22,370 | |
Acquisition escrow liability | 14,054 | 0 | |
Other current liabilities | 70,247 | 53,870 | |
Current maturities of long-term debt | 27,678 | 22,088 | |
Total current liabilities | 176,177 | 141,391 | |
Long-term debt, less current maturities | 1,370,991 | 1,339,266 | |
Long-term deferred tax liabilities | 59,749 | 49,170 | |
Acquisition escrow liability | 0 | 16,232 | |
Other long-term liabilities | 83,778 | 90,610 | |
Non-controlling interests—redeemable | 183,581 | 192,589 | |
Stockholders' equity: | |||
Preferred stock, $0.01 par value, 20,000,000 shares authorized, no shares issued at September 30, 2015; no shares authorized, issued or outstanding at December 31, 2014 (1) | [1] | 0 | 0 |
Common stock, $0.01 par value, 300,000,000 shares authorized, 33,871,990 shares issued and outstanding at September 30, 2015; 1,000 shares authorized, issued and outstanding at December 31, 2014 (1) | [1] | 339 | 0 |
Additional paid-in capital | 59,766 | 58,151 | |
Retained deficit | (337,543) | (322,233) | |
Total Surgery Partners, Inc. stockholders' deficit | (277,438) | (264,082) | |
Non-controlling interests—non-redeemable | 294,684 | 293,618 | |
Total stockholders' equity | 17,246 | 29,536 | |
Total liabilities and stockholders' equity | $ 1,891,522 | $ 1,858,794 | |
[1] | As described in Note 1 herein, the authorized, issued and outstanding shares of the Company are those of Surgery Partners, Inc. as of September 30, 2015, and those of Surgery Center Holdings, Inc. as of December 31, 2014. |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, less allowance for doubtful accounts of $12,693 and $5,329, respectively | $ 12,693 | $ 5,329 |
Preferred stock, par value (USD per share) | $ 0.01 | $ 0 |
Preferred stock, shares authorized (shares) | 20,000,000 | 0 |
Preferred stock, shares issued (shares) | 0 | 0 |
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (shares) | 300,000,000 | 1,000 |
Common stock, shares issued (shares) | 33,871,990 | 1,000 |
Common stock, shares outstanding (shares) | 33,871,990 | 1,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||
Income Statement [Abstract] | |||||
Revenues | $ 239,599 | $ 76,303 | $ 696,569 | $ 223,598 | |
Operating expenses: | |||||
Salaries and benefits | 66,072 | 18,743 | 188,405 | 55,390 | |
Supplies | 60,377 | 17,129 | 176,550 | 50,068 | |
Professional and medical fees | 17,233 | 2,320 | 48,144 | 6,770 | |
Lease expense | 11,211 | 3,651 | 33,267 | 10,841 | |
Other operating expenses | 13,928 | 3,534 | 39,786 | 10,522 | |
Cost of revenues | 168,821 | 45,377 | 486,152 | 133,591 | |
General and administrative expenses | 11,236 | 6,738 | 34,944 | 20,038 | |
Depreciation and amortization | 8,611 | 2,834 | 25,538 | 8,557 | |
Provision for doubtful accounts | 5,840 | 1,383 | 16,049 | 4,411 | |
Income from equity investments | (1,320) | 0 | (2,866) | 0 | |
Loss (gain) on disposal or impairment of long-lived assets, net | 1,161 | (8) | (1,522) | 110 | |
Loss on debt extinguishment | 0 | 0 | 0 | 1,975 | |
Merger transaction and integration costs | 1,249 | 325 | 14,897 | 442 | |
Electronic records incentives | 57 | 0 | 107 | 0 | |
Other income | (330) | 0 | (356) | 0 | |
Total operating expenses | 195,325 | 56,649 | 572,943 | 169,124 | |
Operating income | 44,274 | 19,654 | 123,626 | 54,474 | |
Interest expense, net | (26,573) | (11,263) | (78,507) | (32,718) | |
Income before income taxes | 17,701 | 8,391 | 45,119 | 21,756 | |
Provision for income taxes | 3,917 | 7,961 | 8,368 | 12,043 | |
Net income | 13,784 | 430 | 36,751 | 9,713 | |
Less: Net income attributable to non-controlling interests | (16,906) | (7,338) | (52,061) | (21,346) | |
Net loss attributable to Surgery Partners, Inc. | $ (3,122) | $ (6,908) | $ (15,310) | $ (11,633) | |
Net loss per share attributable to common stockholders | |||||
Basic (in USD per share) | $ (0.10) | $ (0.22) | $ (0.48) | $ (0.37) | |
Diluted (in USD per share) | [1] | $ (0.10) | $ (0.22) | $ (0.48) | $ (0.37) |
Weighted average common shares outstanding (2) | |||||
Basic (in shares) | [2] | 32,054,089 | 31,698,638 | 32,054,089 | 31,698,638 |
Diluted (in shares) | [1],[2] | 32,054,089 | 31,698,638 | 32,054,089 | 31,698,638 |
[1] | The impact of potentially dilutive securities for the three and nine months ended September 30, 2015 and September 30, 2014 was not considered because the effect would be anti-dilutive in each of those periods. | ||||
[2] | Effect of the Reorganization, as defined in Note 1, has been retrospectively applied to all periods presented. |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 13,784 | $ 430 | $ 36,751 | $ 9,713 |
Other comprehensive income | 0 | 0 | 0 | 0 |
Comprehensive income | 13,784 | 430 | 36,751 | 9,713 |
Less: Comprehensive income attributable to non-controlling interests | (16,906) | (7,338) | (52,061) | (21,346) |
Comprehensive loss attributable to Surgery Partners, Inc. | $ (3,122) | $ (6,908) | $ (15,310) | $ (11,633) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Stockholders' Equity - 9 months ended Sep. 30, 2015 - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Deficit | Non-Controlling Interests— Non-Redeemable | ||
Beginning Balance, stockholders' equity (shares) at Dec. 31, 2014 | 1,000 | 1,000 | [1] | ||||
Beginning Balance, stockholders' equity at Dec. 31, 2014 | $ 29,536 | $ 58,151 | $ (322,233) | $ 293,618 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | 24,024 | (15,310) | 39,334 | ||||
Equity-based compensation | 1,279 | 1,279 | |||||
Acquisition and disposal of shares of non-controlling interests, net | (2,208) | 336 | (2,544) | ||||
Distributions to non-controlling interest—non-redeemable holders | (35,724) | (35,724) | |||||
Effect of Reorganization (shares) | [1],[2] | 33,870,990 | |||||
Effect of Reorganization | [2] | $ 339 | $ 339 | [1] | |||
Ending Balance, stockholders' equity (shares) at Sep. 30, 2015 | 33,871,990 | 33,871,990 | [1] | ||||
Ending Balance, stockholders' equity at Sep. 30, 2015 | $ 17,246 | $ 339 | [1] | $ 59,766 | $ (337,543) | $ 294,684 | |
[1] | As described in Note 1 herein, the common stock of the Company is that of Surgery Partners, Inc. as of September 30, 2015 and that of Surgery Center Holdings, Inc. as of December 31, 2014. | ||||||
[2] | As a result of the Reorganization that occurred on September 30, 2015 (as further described in Note 1), Surgery Center Holdings, Inc, became an indirect wholly owned subsidiary of Surgery Partners, Inc. and the common stock of Surgery Center Holdings, Inc. is eliminated in consolidation. |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities: | ||
Net income | $ 36,751 | $ 9,713 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 25,538 | 8,557 |
Amortization of debt issuance costs and discounts | 4,966 | 2,395 |
Amortization of unfavorable lease liability | (323) | 0 |
Equity-based compensation | 1,279 | 342 |
Loss (gain) on disposal or impairment of long-lived assets, net | (1,522) | 110 |
Loss on debt extinguishment | 0 | 1,975 |
Deferred income taxes | 7,419 | 10,742 |
Provision for doubtful accounts | 16,049 | 4,411 |
Income from equity investments, net of distributions received | (316) | 0 |
Changes in operating assets and liabilities, net of acquisitions and divestitures: | ||
Accounts receivable | (34,538) | (9,442) |
Other operating assets and liabilities | 4,989 | 431 |
Net cash provided by operating activities | 60,292 | 29,234 |
Cash flows from investing activities: | ||
Purchases of property and equipment, net | (18,115) | (3,437) |
Proceeds from divestitures | 11,193 | 0 |
Payments for acquisitions, net of cash acquired | (32,562) | (659) |
Net cash used in investing activities | (39,484) | (4,096) |
Cash flows from financing activities: | ||
Principal payments on long-term debt | (63,461) | (63,540) |
Borrowings of long-term debt | 85,432 | 146,651 |
Payments of debt issuance costs | 0 | (2,120) |
Share issuance costs | (1,448) | 0 |
Distributions to non-controlling interest holders | (51,195) | (21,408) |
Distribution to owners | 0 | (93,000) |
Payments related to ownership transactions with consolidated affiliates | (11,991) | (275) |
Repurchase of units | 0 | (86) |
Financing lease obligation | 3,783 | 0 |
Net cash used in financing activities | (38,880) | (33,778) |
Net decrease in cash and cash equivalents | (18,072) | (8,640) |
Cash and cash equivalents at beginning of period | 74,920 | 13,026 |
Cash and cash equivalents at end of period | $ 56,848 | $ 4,386 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Surgery Partners, Inc. , a Delaware corporation (together with its subsidiaries, the “Company”), was formed April 2, 2015, as a holding company for the purpose of facilitating an initial public offering (the “IPO”) of shares of common stock. Prior to September 30, 2015, the Company conducted business through Surgery Center Holdings, Inc. and its subsidiaries. Surgery Center Holdings, LLC was and is the sole direct owner of the equity interests of Surgery Center Holdings, Inc. and had no other material assets. On September 30, 2015, Surgery Partners, Inc. became the direct parent and sole member of Surgery Center Holdings, LLC (the "Reorganization"). In the Reorganization, all of the equity interests held by the existing owners of Surgery Center Holdings, LLC were contributed to Surgery Partners, Inc. in exchange for 33,871,990 shares of common stock of Surgery Partners, Inc. and certain rights to additional payments under a tax receivable agreement. After giving effect to the Reorganization, Surgery Partners, Inc. is a holding company, and its sole material asset is an equity interest in Surgery Center Holdings, LLC. The Company's condensed consolidated financial statements for periods prior to the Reorganization represent the historical operating results and financial position of Surgery Center Holdings, Inc. and certain of its subsidiaries. On November 3, 2014 , the Company completed the acquisition of Symbion Holdings Corp. ("Symbion") ("the Merger"), which added 55 surgical facilities, including 49 ambulatory surgery centers ("ASCs") and six surgical hospitals, to its network of existing facilities. The Company acquired Symbion for a purchase price of $792.0 million pursuant to the terms of an Agreement and Plan of Merger dated as of June 13, 2014 . The Symbion acquisition was financed through the issuance of approximately $1.4 billion under the Company's Term Loans and Revolving Facility. As of September 30, 2015 , the Company owned and operated a national network of surgical facilities and ancillary services in 28 states. The surgical facilities, which include ASCs and surgical hospitals, primarily provide non-emergency surgical procedures across many specialties, including, among others, cardiology, gastroenterology, ophthalmology, orthopedics and pain management. Some of the Company's surgical hospitals also provide acute care services such as diagnostic imaging, laboratory, obstetrics, oncology, pharmacy, physical therapy and wound care. Ancillary services are comprised of a diagnostic laboratory, multi-specialty physician practices, urgent care facilities, anesthesia services, optical services and specialty pharmacy services. As of September 30, 2015 , the Company owned or operated a portfolio of 99 surgical facilities, comprised of 94 ASCs, of which six are managed only, and five surgical hospitals. The Company owns these facilities in partnership with physicians and, in some cases, healthcare systems in the markets and communities it serves. The Company owned a majority interest in 71 of the surgical facilities and consolidated 88 of these facilities for financial reporting purposes. In addition, the Company operated or managed a network of 43 physician practices. |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, as well as interests in partnerships and limited liability companies controlled by the Company through its ownership of a majority voting interest or other rights granted to the Company by contract to manage and control the affiliate's business. All significant intercompany balances and transactions are eliminated in consolidation. The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for fair presentation of the Company's financial position and results of operations have been included. The Company’s fiscal year ends on December 31 and interim results are not necessarily indicative of results for a full year or any other interim period. The condensed consolidated balance sheet at December 31, 2014 has been derived from the audited financial statements as of that date. The information contained in these condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the fiscal year ended December 31, 2014 . The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Non-Controlling Interests The physician limited partners and physician minority members of the entities that the Company controls are responsible for the supervision and delivery of medical services. The governance rights of limited partners and minority members are restricted to those that protect their financial interests. Under certain partnership and operating agreements governing these partnerships and limited liability companies, the Company could be removed as the sole general partner or managing member for certain events such as material breach of the partnership or operating agreement, gross negligence or bankruptcy. These protective rights do not preclude consolidation of the respective partnerships and limited liability companies. Ownership interests in consolidated subsidiaries held by parties other than the Company are identified and generally presented in the condensed consolidated financial statements within the equity section but separate from the Company's equity. However, in instances in which certain redemption features that are not solely within the control of the Company are present, classification of non-controlling interests outside of permanent equity is required. Consolidated net income attributable to the Company and to the non-controlling interests are identified and presented on the condensed consolidated statements of operations; changes in ownership interests are accounted for as equity transactions. Certain transactions with non-controlling interests are classified within financing activities in the condensed consolidated statements of cash flows. The condensed consolidated financial statements of the Company include all assets, liabilities, revenues and expenses of surgical facilities in which the Company has sufficient ownership and rights to allow the Company to consolidate the surgical facilities. Similar to its investments in non-consolidated affiliates, the Company regularly engages in the purchase and sale of ownership interests with respect to its consolidated subsidiaries that do not result in a change of control. Non-Controlling Interests — Redeemable. Each of the partnerships and limited liability companies through which the Company owns and operates its surgical facilities is governed by a partnership or operating agreement. In certain circumstances, the partnership and operating agreements for the Company's surgical facilities provide that the facilities will purchase all of the physicians’ ownership if certain adverse regulatory events occur, such as it becoming illegal for the physicians to own an interest in a surgical facility, refer patients to a surgical facility or receive cash distributions from a surgical facility. The non-controlling interests - redeemable are reported outside of stockholders' equity in the condensed consolidated balance sheets. A summary of activity related to the non-controlling interests—redeemable follows (in thousands): Balance at December 31, 2014 $ 192,589 Net income attributable to non-controlling interests—redeemable 12,727 Acquisition and disposal of shares of non-controlling interests, net—redeemable (6,264 ) Distributions to non-controlling interest —redeemable holders (15,471 ) Balance at September 30, 2015 $ 183,581 Variable Interest Entities The condensed consolidated financial statements include the accounts of variable interest entities in which the Company is the primary beneficiary under the provisions of Accounting Standards Codification Topic ("ASC") 810, Consolidation . As of September 30, 2015 , the variable interest entities include three surgical facilities and one anesthesia practice. At December 31, 2014 , the variable interest entities included an additional surgical facility which was disposed of during the three months ended March 31, 2015 and an additional anesthesia practice which no longer met variable interest entity classification during the three months ended September 30, 2015 . The Company has the power to direct the activities that most significantly impact the variable interest entity's economic performance. Additionally, the Company would absorb the majority of the expected losses of these entities should they occur. As of September 30, 2015 and December 31, 2014 , the condensed consolidated balance sheets of the Company included total assets of $23.0 million and $24.7 million , respectively, and total liabilities of $2.0 million and $1.7 million , respectively, related to the Company's variable interest entities. Equity Method Investments The Company has non-consolidating investments in surgical facilities and management companies that own or manage surgical facilities. These investments are accounted for using the equity method of accounting. The total amount of these investments included in investments in and advances to affiliates in the condensed consolidated balance sheets was $33.9 million and $33.4 million as of September 30, 2015 and December 31, 2014 , respectively. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and footnotes. Examples include, but are not limited to, estimates of accounts receivable allowances, professional and general liabilities and the estimate of deferred tax assets or liabilities. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All adjustments are of a normal, recurring nature. Actual results could differ from those estimates. Reclassifications Certain reclassifications have been made to the comparative periods' financial statements to conform to the three and nine months ended September 30, 2015 presentation. The reclassifications primarily related to the presentation of certain expenses within costs of revenue and had no impact on the Company's consolidated financial position, results of operations or cash flows. Fair Value of Financial Instruments The fair value of a financial instrument is the amount at which the instrument could be exchanged in an orderly transaction between market participants to sell the asset or transfer the liability. The Company uses fair value measurements based on quoted prices in active markets for identical assets or liabilities (Level 1), inputs other than quoted prices in active markets that are either directly or indirectly observable (Level 2), or unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions (Level 3), depending on the nature of the item being valued. The carrying amounts reported in the condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, restricted invested assets and accounts payable approximate their fair values. A summary of the carrying amounts and fair values of the Company's long-term debt follows (in thousands): Carrying Amount Fair Value September 30, December 31, September 30, December 31, 2014 First Lien Credit Agreement, net of debt issuance and discount of $21,143 and $23,818 at September 30, 2015 and December 31, 2014, respectively $ 842,332 $ 846,183 $ 841,809 $ 820,799 2014 Second Lien Credit Agreement, net of debt issuance and discount of $16,700 and $18,184 at September 30, 2015 and December 31, 2014, respectively $ 473,300 $ 471,816 $ 476,258 $ 452,943 The fair values of the 2014 First Lien Credit Agreement and 2014 Second Lien Credit Agreement, as defined in Note 5 on Long-Term Debt, were based on a Level 2 computation using quoted prices for identical liabilities in inactive markets at September 30, 2015 and December 31, 2014 , as applicable. The carrying amounts related to the Company's other long-term debt obligations approximate their fair values. The Company maintains a supplemental executive retirement savings plan (the "SERP") for certain former Symbion executive officers. The SERP is a non-qualified deferred compensation plan for eligible executive officers and other key employees of the Company that allows participants to defer portions of their compensation. The fair value of the SERP asset and liability was based on a quoted market price, or a Level 1 computation. As of September 30, 2015 and December 31, 2014 , the fair value of the assets in the SERP were $1.5 million and $1.4 million , respectively, and were included in other long-term assets in the condensed consolidated balance sheets. The Company had a liability related to the SERP of $1.5 million and $1.4 million as of September 30, 2015 and December 31, 2014 , respectively, which was included in other long-term liabilities in the condensed consolidated balance sheets. Revenues The Company recognizes revenues in the period in which the services are performed. Patient service revenues and receivables from third-party payors are recorded net of estimated contractual adjustments and allowances, which the Company estimates based on the historical trend of its cash collections and contractual write-offs, accounts receivable agings, established fee schedules, contracts with payors and procedure statistics. A summary of revenues by service type as a percentage of total revenues follows: Three Months Ended September 30, 2015 2014 Patient service revenues: Surgical facilities revenues 91.2 % 77.7 % Ancillary services revenues 6.8 % 17.7 % 98.0 % 95.4 % Other service revenues: Optical services revenues 1.5 % 4.6 % Other 0.5 % — % 2.0 % 4.6 % Total revenues 100.0 % 100.0 % Nine Months Ended September 30, 2015 2014 Patient service revenues: Surgical facilities revenues 92.0 % 77.7 % Ancillary services revenues 5.9 % 17.5 % 97.9 % 95.2 % Other service revenues: Optical services revenues 1.6 % 4.8 % Other 0.5 % — % 2.1 % 4.8 % Total revenues 100.0 % 100.0 % Patient service revenues. The fee charged for healthcare procedures performed in surgical facilities varies depending on the type of service provided, but usually includes all charges for usage of an operating room, a recovery room, special equipment, medical supplies, nursing staff and medications. The fee does not normally include professional fees charged by the patient’s surgeon, anesthesiologist or other attending physician, which are billed directly by such physicians to the patient or third-party payor. However, in several surgical facilities, the Company charges for anesthesia services. Ancillary service revenues include fees for patient visits to the Company's physician practices, pharmacy services and diagnostic tests ordered by physicians. Patient service revenues are recognized on the date of service, net of estimated contractual adjustments and discounts from third-party payors, including Medicare and Medicaid. Changes in estimated contractual adjustments and discounts are recorded in the period of change. During the three and nine months ended September 30, 2015 , the Company recognized an increase to patient service revenues as a result of changes in estimates to third-party settlements related to prior years of approximately $1.8 million and $1.5 million , respectively. These adjustments were related to two of the Company's surgical hospitals that were acquired in connection with the acquisition of Symbion on November 3, 2014 . The following table sets forth patient service revenues by type of payor and as a percentage of total patient service revenues for the Company's consolidated surgical facilities (dollars in thousands): Three Months Ended September 30, 2015 2014 Amount % Amount % Patient service revenues: Private insurance $ 124,107 52.9 % $ 38,160 52.4 % Government 95,050 40.5 % 25,681 35.3 % Self-pay 3,336 1.4 % 1,614 2.2 % Other 12,306 5.2 % 7,302 10.1 % Total patient service revenues $ 234,799 100.0 % $ 72,757 100.0 % Other service revenues: Optical service revenues $ 3,621 $ 3,546 Other revenues 1,179 — Total net revenues $ 239,599 $ 76,303 Nine Months Ended September 30, 2015 2014 Amount % Amount % Patient service revenues: Private insurance $ 368,003 54.0 % $ 114,361 53.8 % Government 264,731 38.8 % 72,000 33.8 % Self-pay 12,519 1.8 % 5,509 2.6 % Other 37,007 5.4 % 20,787 9.8 % Total patient service revenues $ 682,260 100.0 % $ 212,657 100.0 % Other service revenues: Optical service revenues $ 11,112 $ 10,817 Other revenues 3,197 124 Total net revenues $ 696,569 $ 223,598 Other service revenues. Optical service revenues consist of product sales from the Company's optical laboratories as well as handling charges billed to the members of the Company's optical products purchasing organization and sales from the Company's marketing products and services business. The Company's optical products purchasing organization negotiates volume buying discounts with optical products manufacturers. The buying discounts and any handling charges billed to the members of the buying group represent the revenue recognized for financial reporting purposes. Revenue is recognized as orders are shipped to members. The Company bases its estimates for sales returns and discounts on historical experience and has not experienced significant fluctuations between estimated and actual return activity and discounts given. The Company's optical laboratories manufacture and distribute corrective lenses and eyeglasses to ophthalmologists and optometrists. Revenue is recognized when product is shipped, net of allowance for discounts. The Company's marketing products and services businesses recognize revenue when product is shipped or services are rendered. Other revenues include management and administrative service fees derived from the non-consolidated facilities that the Company accounts for under the equity method, management of surgical facilities in which it does not own an interest, and management services provided to physician practices for which the Company is not required to provide capital or additional assets. The fees derived from these management arrangements are based on a predetermined percentage of the revenues of each facility or practice and are recognized in the period in which services are rendered. Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Company maintains its cash and cash equivalent balances at high credit quality financial institutions. Accounts Receivable and Allowances for Contractual Adjustments and Doubtful Accounts Accounts receivable are recorded net of contractual adjustments and allowances for doubtful accounts to reflect accounts receivable at net realizable value. Accounts receivable consists of receivables from federal and state agencies (under the Medicare and Medicaid programs), managed care health plans, commercial insurance companies, employers and patients. Management recognizes that revenues and receivables from government agencies are significant to the Company's operations, but it does not believe that there is significant credit risk associated with these government agencies. Concentration of credit risk with respect to other payors is limited because of the large number of such payors. As of September 30, 2015 and December 31, 2014 , the Company had third-party Medicaid settlements of $6.9 million and $11.7 million , respectively, in other current liabilities in the condensed consolidated balance sheets. The Company recognizes that final reimbursement of accounts receivable is subject to final approval by each third-party payor. However, because the Company has contracts with its third-party payors and also verifies insurance coverage of the patient before medical services are rendered, the amounts that are pending approval from third-party payors are not significant. The Company's policy is to collect co-payments and deductibles prior to providing medical services. It is also the Company's policy to verify a patient’s insurance 72 hours prior to the patient’s procedure. Patient services of the Company are primarily non-emergency, which allows the surgical facilities to control the procedures for which third-party reimbursement is sought and obtained. The Company does not require collateral from self-pay patients. The Company analyzes accounts receivable at each of its facilities to ensure the proper aged category and collection assessment. At a consolidated level, the Company's policy is to review accounts receivable aging, by facility, to determine the appropriate allowance for doubtful accounts. Patient account balances are reviewed for delinquency based on contractual terms. This review is supported by an analysis of the actual revenues, contractual adjustments and cash collections received. An account balance is written off only after the Company has pursued collection with legal or collection agency assistance or otherwise has deemed an account to be uncollectible. The receivables related to the Company's optical products purchasing organization are recognized separately from patient accounts receivable, as discussed above, and are included in other current assets in the condensed consolidated balance sheets. Such receivables were $8.9 million and $7.6 million at September 30, 2015 and December 31, 2014 , respectively. Inventories Inventories, which consist primarily of medical and drug supplies, are stated at the lower of cost or market value. Cost is determined using the first-in, first-out method. Prepaid Expenses and Other Current Assets A summary of prepaid expenses and other current assets follows (in thousands): September 30, 2015 December 31, Prepaid expenses $ 8,122 $ 7,050 Receivables - optical product purchasing organization 8,894 7,556 Other current assets 9,662 9,399 Total $ 26,678 $ 24,005 Property and Equipment Property and equipment are stated at cost or, if obtained through acquisition, at fair value determined on the date of acquisition. Depreciation is recognized using the straight-line method over the estimated useful lives of the assets, generally three to five years for computers and software and five to seven years for furniture and equipment. Leasehold improvements are depreciated on a straight-line basis over the shorter of the lease term or the estimated useful life of the assets. Routine maintenance and repairs are expensed as incurred, while expenditures that increase capacities or extend useful lives are capitalized. A summary of property and equipment follows (in thousands): September 30, 2015 December 31, Land $ 6,790 $ 6,790 Buildings and improvements 102,557 100,574 Furniture and equipment 13,932 13,662 Computer and software 22,127 20,622 Medical equipment 91,772 86,132 Construction in progress 2,445 2,923 Property and equipment, at cost 239,623 230,703 Less: Accumulated depreciation (65,810 ) (55,697 ) Property and equipment, net $ 173,813 $ 175,006 The Company also leases certain facilities and equipment under capital leases. Assets held under capital leases are stated at the present value of minimum lease payments at the inception of the related lease. Such assets are depreciated on a straight-line basis over the lesser of the lease term or the remaining useful life of the leased asset. The carrying values of assets under capital lease were $11.3 million and $13.3 million as of September 30, 2015 and December 31, 2014 , respectively, which included accumulated depreciation of $9.7 million and $6.8 million , respectively. Intangible Assets The Company has indefinite-lived intangible assets related to the certificates of need held in jurisdictions where certain of its surgical facilities are located. The Company also has finite-lived intangible assets related to physician guarantee agreements, non-compete agreements, management agreements and customer relationships. Physician income guarantees are amortized into salaries and benefits costs in the condensed consolidated statements of operations over the commitment period of the contract, generally three to four years. Non-compete agreements and management rights agreements are amortized into depreciation and amortization expense in the condensed consolidated statements of operations over the service lives of the agreements, ranging from two years to 20 years for non-compete agreements and 15 years for the management rights agreements. Customer relationships are amortized into depreciation and amortization expense in the condensed consolidated statements of operations over the estimated lives of the relationships, ranging from three to ten years. A summary of the activity related to intangible assets for the nine months ended September 30, 2015 follows (in thousands): Physician Income Guarantees Management Rights Non-Compete Agreements Certificates of Need Customer Relationships Other Total Intangible Assets Balance at December 31, 2014 $ 973 $ 24,757 $ 16,590 $ 3,711 $ 6,274 $ 2,583 $ 54,888 Additions 800 — 4,621 — — — 5,421 Recruitment expense (500 ) — — — — — (500 ) Amortization — (1,298 ) (4,017 ) — (1,003 ) (354 ) (6,672 ) Balance at September 30, 2015 $ 1,273 $ 23,459 $ 17,194 $ 3,711 $ 5,271 $ 2,229 $ 53,137 Goodwill Goodwill represents the fair value of the consideration provided in an acquisition over the fair value of net assets acquired and is not amortized. Additions to goodwill include amounts resulting from new business combinations and incremental ownership purchases in the Company's subsidiaries. A summary of activity related to goodwill for the nine months ended September 30, 2015 follows (in thousands): Balance at December 31, 2014 $ 1,298,753 Acquisitions 40,649 Divestitures (8,399 ) Purchase price adjustments (953 ) Balance at September 30, 2015 $ 1,330,050 Impairment of Long-Lived Assets, Goodwill and Intangible Assets The Company evaluates the carrying value of long-lived assets when impairment indicators are present or when circumstances indicate that impairment may exist in accordance with ASC 350, Intangibles- Goodwill and Other . The Company performs an impairment test by preparing an expected undiscounted cash flow projection. If the projection indicates that the recorded amount of the long-lived asset is not expected to be recovered, the carrying value is reduced to estimated fair value. The cash flow projection and fair value represents management’s best estimate, using appropriate and customary assumptions, projections and methodologies, at the date of evaluation. The Company tests its goodwill and intangible assets for impairment at least annually, or more frequently if certain indicators arise. Restricted Invested Assets Restricted invested assets of $316,000 at September 30, 2015 and December 31, 2014 were related to a requirement under the operating lease agreement at the Company's Chesterfield, Missouri facility. In accordance with the provisions of the lease agreement, the Company has a deposit with the landlord that shall be held as security for performance under the Company's covenants and obligations within the agreement through January 2024 . Other Long-Term Assets A summary of other long-term assets follows (in thousands): September 30, 2015 December 31, Notes receivable $ 222 $ 182 Deposits 2,405 2,196 Assets of SERP 1,522 1,402 Other 3,361 2,099 Total $ 7,510 $ 5,879 Other Current Liabilities A summary of other current liabilities follows (in thousands): September 30, 2015 December 31, Interest payable $ 6,744 $ 7,027 Current taxes payable 3,370 3,189 Insurance liabilities 4,897 5,552 Third-party settlements 6,921 11,708 Acquisition consideration payable 16,768 — Amounts due to patients and payors 10,570 9,476 Other accrued expenses 20,977 16,918 Total $ 70,247 $ 53,870 Other Long-Term Liabilities A summary of other long-term liabilities follows (in thousands): September 30, 2015 December 31, Facility lease obligations $ 54,220 $ 50,749 Medical malpractice liability 4,253 4,253 Liability of SERP 1,522 1,415 Contingent consideration obligation 13,789 13,009 Acquisition consideration payable — 16,768 Unfavorable lease liability 2,104 2,427 Other long-term liabilities 7,890 1,989 Total $ 83,778 $ 90,610 The Company has facility lease obligations in connection with the surgical hospital located in Idaho Falls, Idaho and with a radiation oncology building at this facility. The obligation is payable to the lessor of this facility for the land, building and improvements. The current portion of the lease obligation was $729,000 and $568,000 at September 30, 2015 and December 31, 2014 , respectively, and was included in other current liabilities in the consolidated balance sheets. The total of the facility lease obligations related to the surgical hospital and radiation oncology building in Idaho Falls, Idaho was $51.0 million and $51.3 million at September 30, 2015 and December 31, 2014 , respectively. During the three months ended September 30, 2015 , the Company sold real estate in Ocala, Florida for $4.2 million and subsequently leased the real estate from the new owner. As this transaction did not qualify for sale leaseback treatment under ASC 840, Leases , the Company recorded a financing lease obligation of $4.2 million . The obligation is payable to the lessor of this facility for the building. The current portion of the liability was $165,000 included in other current liabilities and $4.0 million included in other long-term liabilities at September 30, 2015 . Operating Leases The Company leases office space and equipment for its surgical facilities, including surgical facilities under development. The lease agreements generally require the lessee, or the Company, to pay all maintenance, property taxes, utilities and insurance costs. The Company accounts for operating lease obligations and sublease income on a straight-line basis. Contingent obligations of the Company, as defined by each lease agreement, are recognized when specific contractual measures have been met, typically the result of an increase in the Consumer Price Index. Lease obligations paid in advance are recorded as prepaid rent and included in prepaid expenses and other current assets on the condensed consolidated balance sheets. The difference between actual lease payments and straight-line lease expense over the initial lease term, excluding optional renewal periods, is recorded as deferred rent and included in other current liabilities and other long-term liabilities on the condensed consolidated balance sheets. As part of the Merger, the Company ceased use of four of their operating leases and accrued a liability of $4.6 million , net of discounting and sublease income, during the three months ended June 30, 2015. The Company expensed this through merger transaction and integration costs, as the leases related to offices shut down in connection with the Merger. Equity-Based Compensation The Company recognizes in the financial statements the cost of employee services received in exchange for awards of equity instruments based on the fair value of those awards. Prior to the Reorganization, on the grant date, the Company employed a market approach to estimate the fair value of equity-based awards based on various considerations and assumptions, including implied earnings multiples and other metrics of relevant market participants, the Company’s operating results and forecasted cash flows and the Company’s capital structure. Such estimates require the input of highly subjective, complex assumptions. However, such assumptions will not be required to determine fair value of shares of the Company’s common stock once its underlying shares begin trading publicly. Once the shares begin trading publicly, the fair value of future stock options awarded will be based on the quoted market price of the Company’s common stock upon grant, as well as assumptions including expected stock price volatility, risk-free interest rate, expected dividends, and expected term. The Company’s policy is to recognize compensation expense using the straight line method over the relevant vesting period for units that vest based on time. The Company’s equity-based compensation expense can vary in the future depending on many factors, including levels of forfeitures and whether performance targets are met and whether a liquidity event occurs. Prior to the Reorganization, employees held membership units in Surgery Center Holdings, LLC, and the associated expense was referred to as unit-based compensation; following the Reorganization, such expense is referred to as share-based compensation. Professional, General and Workers' Compensation Insurance The Company maintains general liability and professional liability insurance in excess of self-insured retentions through third party commercial insurance carriers in amounts that management believes is sufficient for the Company's operations, although, potentially, some claims may exceed the scope of coverage in effect. The professional and general insurance coverage is on a claims-made basis. Workers' compensation insurance is on an occurrence basis. The Company expenses the costs under the self-insured retention exposure for general and professional liability and workers compensation claims which relate to (i) claims made during the policy period, which are offset by insurance recoveries and (ii) an estimate of claims incurred but not yet reported that are expected to be reported after the policy period expires. Reserves and provisions are based upon actuarially determined estimates. The reserves are estimated using individual case-basis valuations and actuarial analysis. Reserves for professional, general and workers' compensation claim liabilities are determined with no regard for expected insurance recoveries and are presented gross on the condensed consolidated balance sheets. Expected insurance recoveries are presented on the condensed consolidated balance sheets separately from the liabilities of which $2.9 million and $3.1 million are included in other current liabilities as of September 30, 2015 and December 31, 2014 , respectively and $4.3 million is included in other long-term liabilities on the condensed consolidated balance sheets as of September 30, 2015 and December 31, 2014 . Expected insurance recoveries of $2.2 million is included in prepaid expenses and other current assets and $2.8 million is included in other long-term assets on the condensed consolidated balance sheets at September 30, 2015 and December 31, 2014 . Electronic Health Record Incentives The American Recovery and Reinvestment Act of 2009 provides for Medicare and Medicaid incentive payments beginning in calendar year 2011 for eligible hospitals and professionals that implement and achieve meaningful use of certified Electronic Health Records ("EHR") technology. Several of the Company's surgical hospitals, which were acquired in connection with the acquisition of Symbion, have implemented plans to comply with the EHR meaningful use requirements of |
Acquisitions and Developments
Acquisitions and Developments | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Acquisitions and Developments | Acquisitions and Developments The Company accounts for its business combinations in accordance with the fundamental requirements of the acquisition method of accounting and under the premise that an acquirer can be identified for each business combination. The acquirer is the entity that obtains control of one or more businesses in the business combination and the acquisition date is the date the acquirer achieves control. The assets acquired, liabilities assumed and any non-controlling interests in the acquired business at the acquisition date are recognized at their fair values as of that date, and the direct costs incurred in connection with the business combination are recorded and expensed separately from the business combination. Acquisitions in which the Company is able to exert significant influence but does not have control are accounted for using the equity method. 2015 Transactions Surgical Facility Acquisitions During the nine months ended September 30, 2015, the Company acquired a controlling interest in one surgical facility located in a new market and one surgical facility and two anesthesia practices in existing markets for an aggregate purchase price of $20.2 million . The Company consolidates these facilities for financial reporting purposes. These transactions were funded with a combination of cash from operations, facility ownership, and proceeds from the refinancing of the Company's credit facilities in connection with the Symbion acquisition. Additionally, the Company acquired incremental ownership in two of its consolidated surgical facilities and in an existing anesthesia practice for an aggregate purchase price of $7.7 million . Ancillary Services During the nine months ended September 30, 2015, through its recruiting efforts and capital-efficient acquisitions, the Company completed eleven in-market physician practice transactions through an aggregate investment of $30.4 million . These transactions added total of 14 physicians to the Company’s physician network and were funded with a combination of cash from operations and revolver proceeds. Acquisition of Symbion On June 13, 2014 , the Company, through its wholly-owned subsidiary, SCH Acquisition Corp. (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Symbion Holdings Corporation ("Symbion"). Pursuant to the terms of the Merger Agreement, Merger Sub merged with and into Symbion, with Symbion being the surviving corporation in the merger (the “Merger”). At the closing of the Merger, each share of common stock of Symbion, other than those held by Symbion or by the Company, Merger Sub or their subsidiaries and other than those shares with respect to which appraisal rights are properly exercised in accordance with the General Corporation Law of the State of Delaware, were converted into the right to receive a cash payment per share equal to (x) $792.0 million , subject to certain adjustments for Symbion’s cash, debt, transaction expenses, working capital and other items at closing, plus the aggregate exercise price of all vested options, minus certain escrowed amounts relating to post-closing purchase price adjustment and indemnity obligations, divided by (y) the number of shares outstanding on a fully-diluted basis assuming full exercise of vested options and exercise of rights to receive shares upon the exchange of the 8.00% Senior PIK Exchangeable Notes due 2017 issued by Symbion (the “Merger Consideration”). In addition, each outstanding option to purchase shares of Symbion’s common stock were cancelled, and the holders of vested options were paid an amount equal to the excess, if any, of the Merger Consideration over the per-share exercise price of such vested options. The Company obtained financing commitments for the transactions contemplated by the Merger Agreement, the aggregate proceeds of which were sufficient for the Company to pay the aggregate Merger Consideration and all related fees and expenses. The Company completed the Merger effective November 3, 2014 . At closing, the Company paid approximately $300.1 million in cash, including $16.2 million funded to an escrow account, and assumed approximately $472.4 million of outstanding indebtedness of Symbion, plus related accrued and unpaid interest. During the three months ended June 30, 2015, $2.1 million of the escrow account was distributed based on a working capital settlement reducing the total amount funded on the escrow account to $14.1 million as of September 30, 2015 . The Company received $1.2 million of the escrow disbursement reducing the cash consideration to $298.9 million and adjusted the purchase price allocation to goodwill. The Company will fund an additional $16.8 million to the escrow account by May 3, 2016. The $30.9 million remaining escrow balance is payable to Symbion on May 3, 2016 , pending the resolution of any adjustments and the settlement of any other indemnities. The acquisition of Symbion enhances the growth profile of the Company by expanding its network of surgical facilities in attractive markets throughout the United States. The Merger was financed through the issuance of $1.4 billion of Senior Secured Credit Facilities ("Facilities"), which includes an $870.0 million first lien term loan due November 3, 2020 , a $490.0 million second lien term loan due November 3, 2021 and an $80.0 million revolving credit facility. Fees associated with the Merger, which includes fees incurred related to the Company's debt financings, were approximately $93.3 million . Approximately $5.3 million was capitalized as deferred financing costs, $21.7 million related to legal and other transaction fees was expensed as transaction costs, $42.9 million was recorded as a reduction of the carrying value of the Facilities and $23.4 million was recorded as debt extinguishment costs during the year ended December 31, 2014 . Acquired assets and assumed liabilities include, but are not limited to, fixed assets, intangible assets and professional liabilities. The valuations are based on appraisal reports, discounted cash flow analyses, actuarial analyses or other appropriate valuation techniques to determine the fair value of the assets acquired or liabilities assumed. A majority of the deferred income taxes recognized as a component of the Company's purchase price allocation is a result of the difference between the book and tax basis of the amortizable intangible assets recognized. The purchase price amount has been preliminarily allocated to the related assets acquired and liabilities assumed based upon their respective fair values as follows: Cash consideration $ 298,857 Acquisition consideration payable 16,768 Fair value of non-controlling interests 395,663 Fair value of Symbion 711,288 Net assets acquired: Cash 40,374 Accounts receivable, net 79,830 Inventories 18,389 Prepaid expenses and other current assets 9,876 Property and equipment 153,179 Investments in and advances to affiliates 32,728 Intangible assets 31,534 Restricted invested assets 316 Other long-term assets 6,239 Accounts payable (20,419 ) Accrued payroll and benefits (14,300 ) Other current liabilities (44,272 ) Current maturities of long-term debt (83,805 ) Long-term debt, less current maturities (376,395 ) Long-term deferred tax liabilities (17,895 ) Other long-term liabilities (60,500 ) Net assets acquired (245,121 ) Excess of fair value over identifiable net assets acquired $ 956,409 The entire amount of goodwill acquired in connection with the Merger was allocated to the Company's surgical facility services operating segment. The total amount of the goodwill related to the acquisition of Symbion that will be deductible for tax purposes is $142.5 million . Fair value attributable to non-controlling interests was based on a Level 3 computation using significant inputs that are not observable in the market. Key inputs used to determine the fair value include financial multiples used in the purchase of non-controlling interests, primarily from acquisitions of surgical facilities. Such multiples, based on earnings, are used as a benchmark for the discount to be applied for the lack of control or marketability. Fair value attributable to the property and equipment acquired was based on Level 3 computations using key inputs such as cost trend data and comparable asset sales. Fair value attributable to the intangible assets acquired was based on Level 3 computations using key inputs such as the Company's internally-prepared financial projections. Fair values assigned to acquired working capital were based on carrying amounts reported by Symbion at the date of acquisition, which approximate their fair values. The fair values assigned to certain assets and liabilities assumed by the Company have been estimated on a preliminary basis and are subject to change as new facts and circumstances emerge that were present at the date of acquisition. The unaudited consolidated pro forma results for three and nine months ended September 30, 2014 , assuming the Symbion acquisition had been consummated on January 1, 2014, are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2014 2014 Net revenues $ 218,595 $ 642,065 Net income 3,646 23,401 Less: net income attributable to non-controlling interests (16,158 ) (48,445 ) Net loss attributable to Surgery Partners, Inc. $ (12,512 ) $ (25,044 ) These pro forma amounts for the three and nine months ended September 30, 2014 , exclude expenses related to the Merger transaction of $702,000 and $3.1 million , respectively. In addition, the nine months ended September 30, 2014 excludes $2.0 million of expense related to loss on debt extinguishment. |
Divestitures
Divestitures | 9 Months Ended |
Sep. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Divestitures | Divestitures During the nine months ended September 30, 2015, the Company sold its interest in three surgical facilities and received aggregate proceeds of $10.9 million resulting in a pre-tax gain of approximately $2.9 million in the condensed consolidated statements of operations. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt A summary of long-term debt follows (in thousands): September 30, 2015 December 31, 2014 Revolver Loan $ 35,250 $ — 2014 First Lien Credit Agreement, dated November 3, 2014, maturing November 3, 2020, net of debt issuance and discount of $21,143 and $23,818 at September 30, 2015 and December 31, 2014, respectively 842,332 846,183 2014 Second Lien Credit Agreement, dated November 3, 2014, maturing November 3, 2021, net of debt issuance and discount of $16,700 and $18,184 at September 30, 2015 and December 31, 2014, respectively 473,300 471,816 Subordinated Notes 1,000 1,000 Notes payable and secured loans 36,445 31,600 Capital lease obligations 10,342 10,755 Total debt 1,398,669 1,361,354 Less: Current maturities 27,678 22,088 Total long-term debt $ 1,370,991 $ 1,339,266 The acquisition of Symbion on November 3, 2014 and payoff of the senior debt was financed through new $1.440 billion Senior Secured Credit Facilities (the "Facilities") consisting of the following: • $80.0 million revolving credit facility ("2014 Revolver Loan") • $870.0 million 1st lien term loan facility ("2014 First Lien Credit Agreement") • $490.0 million 2nd lien term loan facility ("2014 Second Lien Credit Agreement") On November 3, 2014 , in connection with the consummation of the Symbion acquisition, the Company assumed and paid down approximately $440.0 million of outstanding indebtedness of Symbion, including accrued interest. Simultaneously, the Company paid off all of the debt outstanding under its then-existing credit agreements ("Credit Facilities") and revolver loan. 2014 Revolver Loan The 2014 Revolver Loan (“Revolver”) will be used for working capital, acquisitions and development activities and general corporate purposes in an aggregate principal amount at any time outstanding not to exceed $80.0 million and matures on November 3, 2019 . The Company has the option of classifying borrowings under the Revolver as either Alternate Base Rate ("ABR") loans or Eurodollar ("ED") loans. The interest base rate on an ABR loan is equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 0.50% and (c) the adjusted LIBO Rate for a Eurodollar Borrowing with a one-month interest period plus 1.00% . In addition to the base rate, the Company is required to pay a 3.25% margin for ABR loans. The interest base rate on an ED loan is equal to (x) the LIBO Rate for such Eurodollar borrowing in effect for such Interest Period divided by (y) One minus the Statutory Reserves (if any) for such Eurodollar Borrowing for such interest period. In addition to the base rate, the Company is required to pay a 4.25% margin for ED loans. As of September 30, 2015 , the Company availability on the Revolver was $41.6 million . The Company paid $2.3 million in connection with obtaining the Revolver and recorded this amount as debt issuance costs, which is presented, net of accumulated amortization of approximately $417,000 and $76,000 , in the accompanying consolidated balance sheets as of September 30, 2015 and December 31, 2014 , respectively. The Company must also pay quarterly commitment fees of 0.50% per annum of the average daily unused amount of the Revolver. The credit agreement that governs the Revolver contains various covenants that include limitations on the Company's indebtedness, liens, acquisitions and investments. It additionally includes the requirement that the Company maintain a net leverage ratio within a specified range. At September 30, 2015 , the Company was in compliance with the covenants contained in the credit agreement. 2014 First Lien Credit Agreement The 2014 First Lien Credit Agreement (“2014 First Lien”) is a senior secured obligation of Surgery Center Holdings, Inc. and is guaranteed on a senior secured basis by the Company and certain of its subsidiaries. The 2014 First Lien matures on November 3, 2020 . The Company has the option of classifying the 2014 First Lien as either an ABR loan or an ED loan. The interest base rate on an ABR loan is equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 0.50% , and (c) the Adjusted LIBO Rate for a Eurodollar Borrowing with a one-month interest period plus 1.00% ; provided that the base rate shall not be less than 2.00% per annum. In addition to the base rate, the Company is required to pay a 3.25% margin for ABR loans. The interest base rate on an ED loan is equal to (x) the LIBO Rate for such Eurodollar borrowing in effect for such Interest Period divided by (y) One minus the Statutory Reserves (if any) for such Eurodollar Borrowing for such interest period; provided that the rate shall not be less than 1.00% per annum. In addition to the base rate, the Company is required to pay a 4.25% margin for ED loans. In 2014 , the Company classified the 2014 First Lien as an ED loan with an interest rate of 5.25% ( 1.00% base rate plus a 4.25% margin). Accrued interest is payable in arrears on a quarterly basis. Within five business days after the earlier of (i) 90 days after the end of each fiscal year or (ii) the date on which financial statements have been delivered, the Company is required to make mandatory prepayments in amounts calculated in accordance with the excess cash flow provisions of the 2014 First Lien Credit Agreement. There were no excess cash flow payments required as of September 30, 2015 . In 2014 , the Company recorded $4.4 million and $20.0 million as a reduction of the carrying value of the 2014 First Lien as original issue discount and amounts paid to lender for debt related issuance costs, respectively, which are accreted to interest expense over the term of the loan. During the nine months ended September 30, 2015 , approximately $2.7 million was accreted to interest expense. The Company also paid $1.9 million in connection with obtaining the 2014 First Lien and recorded this amount as debt issuance costs, which is presented as an asset, net of accumulated amortization of approximately $237,000 and $41,000 , in the accompanying condensed consolidated balance sheets as of September 30, 2015 and December 31, 2014 , respectively. The credit agreement that governs the 2014 First Lien contains various covenants that include limitations on the Company's indebtedness, liens, acquisitions and investments. It additionally includes the requirement that the Company maintain a net leverage ratio within a specified range. At September 30, 2015 , the Company was in compliance with the covenants contained in the credit agreement. The 2014 First Lien is collateralized by substantially all of the assets of the Company. 2014 Second Lien Credit Agreement The 2014 Second Lien Credit Agreement (“2014 Second Lien”) is a senior secured obligation of Surgery Center Holdings, Inc. and is guaranteed on a senior secured basis by the Company and certain of its subsidiaries. The 2014 Second Lien matures on November 3, 2021 . The Company has the option of classifying the 2014 Second Lien as either an ABR loan or an ED loan. The interest base rate on an ABR loan is equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 0.50% and (c) the Adjusted LIBO Rate for a Eurodollar Borrowing with a one-month interest period plus 1.00% ; provided that the base rate shall not be less than 2.00% per annum. In addition to the base rate, the Company is required to pay a 6.50% margin for ABR loans. The interest base rate on an ED loan is equal to (x) the LIBO Rate for such Eurodollar Borrowing in effect for such interest period divided by (y) One minus the Statutory Reserves (if any) for such Eurodollar Borrowing for such interest period; provided that the base rate shall not be less than 1.00% per annum. In addition to the base rate, the Company is required to pay a 7.50% margin for ED loans. During 2014 , the Company classified the 2014 Second Lien as an ED loan with an interest rate of 8.50% ( 1.00% base rate plus a 7.50% margin). Accrued interest is payable in arrears on a quarterly basis, on the last business day of each March, June, September and December. The Company is required to pay the principal balance of $490.0 million upon maturity of the 2014 Second Lien on November 3, 2021 . The Company has the right at any time to prepay any borrowings, in whole or in part, provided that each partial prepayment shall be in an amount that is an integral multiple of $0.5 million and not less than $1.0 million . Within five business days after the earlier of (i) 90 days after the end of each fiscal year or (ii) the date on which financial statements have been delivered, the Company is required to make mandatory prepayments in amounts calculated in accordance with the excess cash flow provisions of the 2014 Second Lien. There were no excess cash flow payments required as of September 30, 2015 . The Company recorded $4.9 million and $13.6 million as a reduction of the carrying value of the 2014 Second Lien as original issue discount and amounts paid to lender for debt related issuance costs, respectively, which are accreted to interest expense over the term of the loan. During the nine months ended September 30, 2015 , approximately $1.5 million was accreted to interest expense. The Company also paid $1.1 million in connection with obtaining the 2014 Second Lien and recorded this amount as debt issuance costs, which is presented as an asset, net of accumulated amortization of approximately $84,000 and $14,000 , in the accompanying condensed consolidated balance sheets as of September 30, 2015 and December 31, 2014 , respectively. The credit agreement that governs the 2014 Second Lien contains various covenants that include limitations on the Company's indebtedness, liens, acquisitions and investments. It additionally includes the requirement that the Company maintain a maximum net leverage ratio. At September 30, 2015 , the Company was in compliance with the covenants contained in the credit agreement. The 2014 Second Lien is collateralized by substantially all of the assets of the Company. Other Debt Transactions On January 27, 2014 , the Company obtained $90.0 million in additional borrowings on the Credit Facilities to return capital to shareholders. The Company recorded $1.4 million and $2.9 million as a reduction of the carrying value of the additional borrowings as original issue discount and amounts paid to lender for debt related issuance costs, respectively, which are accreted to interest expense over the term of the loan. During the nine months ended September 30, 2014 , approximately $339,000 was accreted to interest expense. The $90.0 million in additional borrowings, including the related debt issuance costs, were included in the extinguishment of debt that was financed with the proceeds of the Facilities obtained in connection with the acquisition of Symbion on November 3, 2014 . Subordinated Notes Effective April 11, 2013 , the Company amended and reduced the size of its subordinated debt facility ("Subordinated Notes") to $1.0 million from $53.8 million . The Company accounted for the amendment as extinguishment of debt. H.I.G. Surgery Centers, LLC, an affiliate of the Company, purchased the Subordinated Notes from an independent third party. At September 30, 2015 and December 31, 2014 , the debt is payable to H.I.G. Surgery Centers, LLC. and mature on August 4, 2017 . Effective January 1, 2014 , the Subordinated Notes bear interest of 17.00% per annum. Notes Payable and Secured Loans Certain of the Company’s subsidiaries have outstanding bank indebtedness, which is collateralized by the real estate and equipment owned by the surgical facilities to which the loans were made. The various bank indebtedness agreements contain covenants to maintain certain financial ratios and also restrict encumbrance of assets, creation of indebtedness, investing activities and payment of distributions. At September 30, 2015 , the Company was in compliance with its covenants contained in the credit agreement. The Company and its subsidiaries had notes payable to financial institutions of $36.4 million and $31.6 million as of September 30, 2015 and December 31, 2014 , respectively. Letters of Credit As of December 31, 2014 , the Company had two outstanding letters of credit at its optical purchasing group of $200,000 and $730,000 . In May 2015, the Company increased one of these letters of credit from $200,000 to $500,000 . The Company had two outstanding letters of credit issued to the landlords for two of its surgical facilities in Orlando, Florida in the amount of $100,000 and in Lubbock, Texas for $1.0 million . In addition, the Company had one outstanding letter of credit related to the Symbion, Inc. workers compensation self-insured plan for $835,000 . Capital Lease Obligations The Company is liable to various vendors for several equipment leases classified as capital leases. The carrying value of the leased assets was $11.3 million and $13.3 million as of September 30, 2015 and December 31, 2014 , respectively. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic and diluted earnings per share are calculated in accordance with ASC 260, Earnings Per Share , based on the weighted-average number of shares outstanding in each period and dilutive stock options, unvested shares and warrants, to the extent such securities exist and have a dilutive effect on earnings per share. The following is a reconciliation of the numerator and denominator of basic and diluted earnings per share for the three and nine months ended September 30, 2015 and 2014 (in thousands except share and per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Numerator: Net loss attributable to Surgery Partners, Inc. $ (3,122 ) $ (6,908 ) $ (15,310 ) $ (11,633 ) Denominator: Weighted average shares outstanding- basic (1) 32,054,089 31,698,638 32,054,089 31,698,638 Effect of dilutive securities (2) — — — — Weighted average shares outstanding- diluted 32,054,089 31,698,638 32,054,089 31,698,638 Earnings per share: Basic earnings per share $ (0.10 ) $ (0.22 ) $ (0.48 ) $ (0.37 ) Diluted earnings per share (2) $ (0.10 ) $ (0.22 ) $ (0.48 ) $ (0.37 ) (1) Effect of the Reorganization has been retrospectively applied to all periods presented. (2) The impact of potentially dilutive securities for the three and nine months ended September 30, 2015 and September 30, 2014 was not considered because the effect would be anti-dilutive in each of those periods. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions On December 24, 2009 , the Company and Bayside Capital, Inc. (or "Bayside"), an affiliate of H.I.G. Capital, LLC (or "H.I.G."), entered into a Management and Investment Advisory Services Agreement ("Management Agreement") pursuant to which the Company will receive certain management, consulting and financial advisory services. Effective November 3, 2014 , the Management Agreement was amended pursuant to the Symbion acquisition and the management fee was increased to $3.0 million annually. Fees related to the Management Agreement for the nine months ended September 30, 2015 and September 30, 2014 are recognized as general and administrative expense in the accompanying condensed consolidated statements of operations. Bayside was paid a transaction fee pursuant to the Management Agreement of $5.4 million as a result of the IPO and the Management Agreement was terminated upon the completion of the IPO. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Lease and Debt Guarantees of Non-Consolidated Facilities As of September 30, 2015 and December 31, 2014 , the Company had guaranteed approximately $196,000 and $539,000 , respectively, of operating lease payments for certain non-consolidated surgical facilities that were acquired in connection with the Symbion transaction. These operating leases typically have ten -year terms, with optional renewal periods. Professional, General and Workers' Compensation Liability Risks The Company is subject to claims and legal actions in the ordinary course of business, including claims relating to patient treatment, employment practices and personal injuries. To cover these claims, the Company maintains general liability and professional liability insurance in excess of self-insured retentions through third party commercial insurance carriers in amounts that management believes is sufficient for the Company's operations, although, potentially, some claims may exceed the scope of coverage in effect. The professional and general insurance coverage is on a claims-made basis. Workers' compensation insurance is on an occurrence basis. Plaintiffs in these matters may request punitive or other damages that may not be covered by insurance. The Company is not aware of any such proceedings that would have a material adverse effect on the Company's business, financial condition or results of operations. Laws and Regulations Laws and regulations governing the Company's business, including those relating to the Medicare and Medicaid programs, are complex and subject to interpretation. These laws and regulations govern every aspect of how the Company's surgical facilities conduct their operations, from licensing requirements to how and whether the Company's facilities may receive payments pursuant to the Medicare and Medicaid programs. Compliance with such laws and regulations can be subject to future government agency review and interpretation as well as legislative changes to such laws. Noncompliance with such laws and regulations may subject the Company to significant regulatory action including fines, penalties, and exclusion from the Medicare, Medicaid and other federal healthcare programs. From time to time, governmental regulatory agencies will conduct inquiries of the Company's practices, including, but not limited to, the Company's compliance with federal and state fraud and abuse laws, billing practices and relationships with physicians. It is the Company's current practice and future intent to cooperate fully with such inquiries. The Company is not aware of any such inquiry that would have a material adverse effect on the Company's business, results of operations or financial condition. Acquired Facilities The Company, through its wholly-owned subsidiaries or controlled partnerships and limited liability companies, has acquired and will continue to acquire surgical facilities with prior operating histories. Such facilities may have unknown or contingent liabilities, including liabilities for failure to comply with healthcare laws and regulations, such as billing and reimbursement, fraud and abuse and similar anti-referral laws. Although the Company attempts to assure that no such liabilities exist, obtain indemnification from prospective sellers covering such matters and institute policies designed to conform centers to its standards following completion of acquisitions, there can be no assurance that the Company will not become liable for past activities that may later be asserted to be improper by private plaintiffs or government agencies. There can be no assurance that any such matter will be covered by indemnification or, if covered, that the liability sustained will not exceed contractual limits or the financial capacity of the indemnifying party. The Company cannot predict whether federal or state statutory or regulatory provisions will be enacted that would prohibit or otherwise regulate relationships which the Company has established or may establish with other healthcare providers or have materially adverse effects on its business or revenues arising from such future actions. Management believes, however, that it will be able to adjust the Company's operations so as to be in compliance with any statutory or regulatory provision as may be applicable. Potential Physician Investor Liability A majority of the physician investors in the partnerships and limited liability companies which operate the Company's surgical facilities carry general and professional liability insurance on a claims-made basis. Each partnership or limited liability company may, however, be liable for damages to persons or property arising from occurrences at the surgical facilities. Although the various physician investors and other surgeons generally are required to obtain general and professional liability insurance with tail coverage that extends beyond the period of any claims-made policies, such individuals may not be able to obtain coverage in amounts sufficient to cover all potential liability. Since most insurance policies contain exclusions, the physician investors will not be insured against all possible occurrences. In the event of an uninsured or underinsured loss, the value of an investment in the partnership interests or limited liability company membership units and the amount of distributions could be adversely affected. Contingent Consideration Pursuant to a purchase agreement dated December 24, 2009 (“the Purchase Agreement”), the Company acquired controlling interests in thirty-six business entities in various Florida locations which operate freestanding ASCs and provided anesthesia and pain management services (“the 2009 Acquisition”). Non-controlling interests in the ASCs were owned by certain physicians that remained partners/members in the ASCs and other operating entities. The Purchase Agreement provided for maximum potential contingent consideration of up to $10.0 million based on operating results subsequent to the acquisition for the period from January 1, 2010 to December 31, 2010 . Pursuant to the Purchase Agreement, the contingent consideration is payable as principal under a Subordinated Promissory Note, the form of which was delivered concurrent with the Purchase Agreement. The balance is still outstanding due to ongoing litigation as a result of the civil claim discussed in detail below. The Subordinated Promissory Note bears interest at 8% and during the nine months ended September 30, 2015 and 2014 , the Company recorded approximately $781,000 and $723,000 , respectively, of interest expense related to the note. As discussed below, the Company has made indemnification claims against the Seller exceeding the amount of the contingent consideration liability. The Company has a contractual right of offset against the contingent consideration. The fair value of the contingent consideration liability, including accrued interest, as of September 30, 2015 and December 31, 2014 was $13.8 million and $ 13.0 million , respectively. In conjunction with the 2009 Acquisition, an escrow account in the amount of $2.9 million was created to cover any contingencies. With the formation of this escrow account, the Company was indemnified against certain indemnification obligations. In 2010 , $589,000 was paid to the Company in settlement of the acquisition price adjustment noted above. In December 2010 , the Company filed an indemnification claim against the Seller alleging breaches of and inaccuracies in representations and warranties included in the Purchase Agreement. Pursuant to the Purchase Agreement, the escrow agent has not paid the remaining escrow funds due to the unresolved claim associated with this acquisition. Pursuant to the terms of the Purchase Agreement, in December 2010 , the Company filed a claim for indemnification from the Seller for reimbursement of amounts to be repaid to payors for overpayment amounts received by the Seller prior to the date of acquisition, including other losses sustained, and submitted a withdrawal notice to the escrow agent in the amount of approximately $4.4 million . The indemnification claim asserts, among other allegations, that certain operating entities acquired from the Seller improperly recorded payments received from certain payors as income and that one acquired entity used improper billing, coding and collection practices for dates of service prior to acquisition date. The Seller submitted an objection to this claim and filed a civil claim requesting the court to dismiss the Company’s claim and release funds out of escrow. The Company has included in the accompanying condensed consolidated balance sheets a net indemnification receivable due from Seller of $1.1 million as of September 30, 2015 and December 31, 2014 pursuant to the terms of the Purchase Agreement. The amount due to the payors of approximately $1.8 million is included in accrued expenses in the accompanying condensed consolidated balance sheets as of September 30, 2015 and December 31, 2014 . Subsequent to the acquisition date, the Company determined the acquired accounts receivable were not properly recorded at the net realizable value of the asset. The Company determined the fair value assigned in the initial acquisition accounting resulted in accounts receivable being recorded at an amount which was approximately $14.0 million in excess of the fair value. On June 10, 2013 , the court issued a judgment in favor of the Company regarding its indemnification claim and its claim regarding the overstatement of accounts receivable. Specifically, the court ruled that the Company is entitled to recover approximately $454,000 for the indemnification claims which represents the amount of the original claim less the application of deductibles. The court also ruled that the Company is entitled to receive approximately $10.8 million for the overstated net accounts receivable. The Purchase Agreement provides for any award of damages to the Company to be offset first by the money in the escrow account and then by an offset to the contingent consideration. Therefore, the court ordered that the funds in the escrow account be paid to the Company and the balance of approximately $8.3 million be offset against the $10.0 million contingent consideration. To date, no final judgment has been made regarding the award of attorneys’ fees and interest. Following the judgment noted above, an appeal was filed by the Seller and the outcome of the appeal is still pending. The funds from the escrow account have not been released to the Company and the Company has retained the contingent consideration liability on its condensed consolidated balance sheets at September 30, 2015 and December 31, 2014 . |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting A public company is required to report annual and interim financial and descriptive information about its reportable operating segments. Operating segments, as defined, are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or "CODM," in deciding how to allocate resources and in assessing performance. The Company operates in three major lines of business that are also the Company's reportable operating segments - the operation of surgical facilities, the operation of optical services and the operation of ancillary services, which includes physician practices, a diagnostic laboratory and a specialty pharmacy. During the three months ended June 30, 2015 , the Company made changes to its internal reports issued to and reviewed by the CODM. The primary effect of these changes was to remove the allocation of general and administrative expense and assets to the reportable operating segments. The Company has revised the segment disclosures below to present corporate overhead and corporate assets as a reconciling item back to the reported condensed consolidated financial information. The following tables present financial information for each reportable segment (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Net Revenues: Surgical facility services $ 219,631 $ 59,245 $ 643,900 $ 173,730 Ancillary services 16,347 13,512 41,557 39,051 Optical services 3,621 3,546 11,112 10,817 Total $ 239,599 $ 76,303 $ 696,569 $ 223,598 Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Segment Operating Income: Surgical facility services $ 54,223 $ 21,509 $ 160,795 $ 61,647 Ancillary services 4,115 4,937 11,730 14,487 Optical services 525 525 1,900 1,726 Total $ 58,863 $ 26,971 $ 174,425 $ 77,860 General and administrative $ (12,179 ) $ (7,000 ) $ (37,424 ) $ (20,859 ) (Loss) gain on disposal or impairment of long-lived assets, net (1,161 ) 8 1,522 (110 ) Loss on debt extinguishment — — — (1,975 ) Merger transaction and integration costs (1,249 ) (325 ) (14,897 ) (442 ) Operating income $ 44,274 $ 19,654 $ 123,626 $ 54,474 Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Supplemental Information: Depreciation and amortization: Surgical facility services $ 6,714 $ 1,705 $ 20,620 $ 5,158 Ancillary services 550 458 1,219 1,352 Optical services 404 409 1,219 1,226 Total $ 7,668 $ 2,572 $ 23,058 $ 7,736 General and administrative $ 943 $ 262 $ 2,480 $ 821 Total depreciation and amortization $ 8,611 $ 2,834 $ 25,538 $ 8,557 September 30, 2015 December 31, 2014 Assets: Surgical facility services $ 1,656,762 $ 1,638,874 Ancillary services 104,072 70,370 Optical services 26,561 25,876 Total 1,787,395 1,735,120 General and administrative $ 104,127 $ 123,674 Total assets $ 1,891,522 $ 1,858,794 Nine Months Ended September 30, 2015 2014 Supplemental Information: Cash purchases of property and equipment, net: Surgical facility services $ 13,300 $ 1,391 Ancillary services 561 765 Optical services 89 315 Total $ 13,950 $ 2,471 General and administrative $ 4,165 $ 966 Total cash purchases of property and equipment, net $ 18,115 $ 3,437 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Initial Public Offering and Use of Proceeds On October 1, 2015, the Company completed its IPO of 14,285,000 shares of common stock at an offering price of $19.00 per share. On October 6, 2015, the Company received net proceeds from the sale of common stock in this offering of $255.8 million , after deducting underwriting discounts and other fees of $15.6 million . These net proceeds were used to repay a portion of the borrowings outstanding under the 2014 Second Lien and to pay fees associated with this offering. In connection with the completion of the IPO, the Company paid a transaction fee to Bayside of $5.4 million and terminated the Management Agreement. On October 6, 2015, the Company prepaid $243.5 million in principal, net of $8.3 million of discounts and issuance costs, and $65,000 of accrued interest on the 2014 Second Lien. Further, the Company incurred a prepayment penalty of 3% of the aggregate principal amount or $7.3 million . On a quarterly basis, the Company assesses the likelihood of realization of its deferred tax assets considering all available evidence, both positive and negative. In conjunction with the IPO, the repayment of debt and associated reduction in interest expense anticipated to occur in the quarter ending December 31, 2015 and the continued integration of Symbion into its operations, its analysis upon completion of the fourth quarter of fiscal 2015 may indicate an increased likelihood that deferred tax assets will be realized. If there is a change to the assessment of the amount of deferred income tax assets that is realizable, the valuation allowance will be adjusted and recorded as a component of income tax expense. Other Activity On October 7, 2015, the Company entered into an amendment to the 2014 First Lien to increase certain lenders’ commitments under the 2014 Revolving Loan from $80.0 million to an aggregate of $150.0 million . |
Significant Accounting Polici18
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, as well as interests in partnerships and limited liability companies controlled by the Company through its ownership of a majority voting interest or other rights granted to the Company by contract to manage and control the affiliate's business. All significant intercompany balances and transactions are eliminated in consolidation. The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for fair presentation of the Company's financial position and results of operations have been included. The Company’s fiscal year ends on December 31 and interim results are not necessarily indicative of results for a full year or any other interim period. The condensed consolidated balance sheet at December 31, 2014 has been derived from the audited financial statements as of that date. The information contained in these condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the fiscal year ended December 31, 2014 . The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Non-Controlling Interests | Non-Controlling Interests The physician limited partners and physician minority members of the entities that the Company controls are responsible for the supervision and delivery of medical services. The governance rights of limited partners and minority members are restricted to those that protect their financial interests. Under certain partnership and operating agreements governing these partnerships and limited liability companies, the Company could be removed as the sole general partner or managing member for certain events such as material breach of the partnership or operating agreement, gross negligence or bankruptcy. These protective rights do not preclude consolidation of the respective partnerships and limited liability companies. Ownership interests in consolidated subsidiaries held by parties other than the Company are identified and generally presented in the condensed consolidated financial statements within the equity section but separate from the Company's equity. However, in instances in which certain redemption features that are not solely within the control of the Company are present, classification of non-controlling interests outside of permanent equity is required. Consolidated net income attributable to the Company and to the non-controlling interests are identified and presented on the condensed consolidated statements of operations; changes in ownership interests are accounted for as equity transactions. Certain transactions with non-controlling interests are classified within financing activities in the condensed consolidated statements of cash flows. The condensed consolidated financial statements of the Company include all assets, liabilities, revenues and expenses of surgical facilities in which the Company has sufficient ownership and rights to allow the Company to consolidate the surgical facilities. Similar to its investments in non-consolidated affiliates, the Company regularly engages in the purchase and sale of ownership interests with respect to its consolidated subsidiaries that do not result in a change of control. Non-Controlling Interests — Redeemable. Each of the partnerships and limited liability companies through which the Company owns and operates its surgical facilities is governed by a partnership or operating agreement. In certain circumstances, the partnership and operating agreements for the Company's surgical facilities provide that the facilities will purchase all of the physicians’ ownership if certain adverse regulatory events occur, such as it becoming illegal for the physicians to own an interest in a surgical facility, refer patients to a surgical facility or receive cash distributions from a surgical facility. The non-controlling interests - redeemable are reported outside of stockholders' equity in the condensed consolidated balance sheets. |
Variable Interest Entities | Variable Interest Entities The condensed consolidated financial statements include the accounts of variable interest entities in which the Company is the primary beneficiary under the provisions of Accounting Standards Codification Topic ("ASC") 810, Consolidation . As of September 30, 2015 , the variable interest entities include three surgical facilities and one anesthesia practice. At December 31, 2014 , the variable interest entities included an additional surgical facility which was disposed of during the three months ended March 31, 2015 and an additional anesthesia practice which no longer met variable interest entity classification during the three months ended September 30, 2015 . The Company has the power to direct the activities that most significantly impact the variable interest entity's economic performance. Additionally, the Company would absorb the majority of the expected losses of these entities should they occur. |
Equity Method Investments | Equity Method Investments The Company has non-consolidating investments in surgical facilities and management companies that own or manage surgical facilities. These investments are accounted for using the equity method of accounting. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and footnotes. Examples include, but are not limited to, estimates of accounts receivable allowances, professional and general liabilities and the estimate of deferred tax assets or liabilities. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All adjustments are of a normal, recurring nature. Actual results could differ from those estimates. |
Reclassifications | Reclassifications Certain reclassifications have been made to the comparative periods' financial statements to conform to the three and nine months ended September 30, 2015 presentation. The reclassifications primarily related to the presentation of certain expenses within costs of revenue and had no impact on the Company's consolidated financial position, results of operations or cash flows. |
Fair Value of Financial Instruments | The fair values of the 2014 First Lien Credit Agreement and 2014 Second Lien Credit Agreement, as defined in Note 5 on Long-Term Debt, were based on a Level 2 computation using quoted prices for identical liabilities in inactive markets at September 30, 2015 and December 31, 2014 , as applicable. The carrying amounts related to the Company's other long-term debt obligations approximate their fair values. The Company maintains a supplemental executive retirement savings plan (the "SERP") for certain former Symbion executive officers. The SERP is a non-qualified deferred compensation plan for eligible executive officers and other key employees of the Company that allows participants to defer portions of their compensation. Fair Value of Financial Instruments The fair value of a financial instrument is the amount at which the instrument could be exchanged in an orderly transaction between market participants to sell the asset or transfer the liability. The Company uses fair value measurements based on quoted prices in active markets for identical assets or liabilities (Level 1), inputs other than quoted prices in active markets that are either directly or indirectly observable (Level 2), or unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions (Level 3), depending on the nature of the item being valued. The carrying amounts reported in the condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, restricted invested assets and accounts payable approximate their fair values. |
Revenue Recognition | Other service revenues. Optical service revenues consist of product sales from the Company's optical laboratories as well as handling charges billed to the members of the Company's optical products purchasing organization and sales from the Company's marketing products and services business. The Company's optical products purchasing organization negotiates volume buying discounts with optical products manufacturers. The buying discounts and any handling charges billed to the members of the buying group represent the revenue recognized for financial reporting purposes. Revenue is recognized as orders are shipped to members. The Company bases its estimates for sales returns and discounts on historical experience and has not experienced significant fluctuations between estimated and actual return activity and discounts given. The Company's optical laboratories manufacture and distribute corrective lenses and eyeglasses to ophthalmologists and optometrists. Revenue is recognized when product is shipped, net of allowance for discounts. The Company's marketing products and services businesses recognize revenue when product is shipped or services are rendered. Other revenues include management and administrative service fees derived from the non-consolidated facilities that the Company accounts for under the equity method, management of surgical facilities in which it does not own an interest, and management services provided to physician practices for which the Company is not required to provide capital or additional assets. The fees derived from these management arrangements are based on a predetermined percentage of the revenues of each facility or practice and are recognized in the period in which services are rendered. Revenues The Company recognizes revenues in the period in which the services are performed. Patient service revenues and receivables from third-party payors are recorded net of estimated contractual adjustments and allowances, which the Company estimates based on the historical trend of its cash collections and contractual write-offs, accounts receivable agings, established fee schedules, contracts with payors and procedure statistics. Patient service revenues. The fee charged for healthcare procedures performed in surgical facilities varies depending on the type of service provided, but usually includes all charges for usage of an operating room, a recovery room, special equipment, medical supplies, nursing staff and medications. The fee does not normally include professional fees charged by the patient’s surgeon, anesthesiologist or other attending physician, which are billed directly by such physicians to the patient or third-party payor. However, in several surgical facilities, the Company charges for anesthesia services. Ancillary service revenues include fees for patient visits to the Company's physician practices, pharmacy services and diagnostic tests ordered by physicians. Patient service revenues are recognized on the date of service, net of estimated contractual adjustments and discounts from third-party payors, including Medicare and Medicaid. Changes in estimated contractual adjustments and discounts are recorded in the period of change. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Company maintains its cash and cash equivalent balances at high credit quality financial institutions. |
Accounts Receivable and Allowances for Contractual Adjustments and Doubtful Accounts | Accounts Receivable and Allowances for Contractual Adjustments and Doubtful Accounts Accounts receivable are recorded net of contractual adjustments and allowances for doubtful accounts to reflect accounts receivable at net realizable value. Accounts receivable consists of receivables from federal and state agencies (under the Medicare and Medicaid programs), managed care health plans, commercial insurance companies, employers and patients. Management recognizes that revenues and receivables from government agencies are significant to the Company's operations, but it does not believe that there is significant credit risk associated with these government agencies. Concentration of credit risk with respect to other payors is limited because of the large number of such payors. As of September 30, 2015 and December 31, 2014 , the Company had third-party Medicaid settlements of $6.9 million and $11.7 million , respectively, in other current liabilities in the condensed consolidated balance sheets. The Company recognizes that final reimbursement of accounts receivable is subject to final approval by each third-party payor. However, because the Company has contracts with its third-party payors and also verifies insurance coverage of the patient before medical services are rendered, the amounts that are pending approval from third-party payors are not significant. The Company's policy is to collect co-payments and deductibles prior to providing medical services. It is also the Company's policy to verify a patient’s insurance 72 hours prior to the patient’s procedure. Patient services of the Company are primarily non-emergency, which allows the surgical facilities to control the procedures for which third-party reimbursement is sought and obtained. The Company does not require collateral from self-pay patients. The Company analyzes accounts receivable at each of its facilities to ensure the proper aged category and collection assessment. At a consolidated level, the Company's policy is to review accounts receivable aging, by facility, to determine the appropriate allowance for doubtful accounts. Patient account balances are reviewed for delinquency based on contractual terms. This review is supported by an analysis of the actual revenues, contractual adjustments and cash collections received. An account balance is written off only after the Company has pursued collection with legal or collection agency assistance or otherwise has deemed an account to be uncollectible. The receivables related to the Company's optical products purchasing organization are recognized separately from patient accounts receivable, as discussed above, and are included in other current assets in the condensed consolidated balance sheets. |
Inventories | Inventories Inventories, which consist primarily of medical and drug supplies, are stated at the lower of cost or market value. Cost is determined using the first-in, first-out method. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost or, if obtained through acquisition, at fair value determined on the date of acquisition. Depreciation is recognized using the straight-line method over the estimated useful lives of the assets, generally three to five years for computers and software and five to seven years for furniture and equipment. Leasehold improvements are depreciated on a straight-line basis over the shorter of the lease term or the estimated useful life of the assets. Routine maintenance and repairs are expensed as incurred, while expenditures that increase capacities or extend useful lives are capitalized. The Company also leases certain facilities and equipment under capital leases. Assets held under capital leases are stated at the present value of minimum lease payments at the inception of the related lease. Such assets are depreciated on a straight-line basis over the lesser of the lease term or the remaining useful life of the leased asset. |
Goodwill and Intangible Assets | Intangible Assets The Company has indefinite-lived intangible assets related to the certificates of need held in jurisdictions where certain of its surgical facilities are located. The Company also has finite-lived intangible assets related to physician guarantee agreements, non-compete agreements, management agreements and customer relationships. Physician income guarantees are amortized into salaries and benefits costs in the condensed consolidated statements of operations over the commitment period of the contract, generally three to four years. Non-compete agreements and management rights agreements are amortized into depreciation and amortization expense in the condensed consolidated statements of operations over the service lives of the agreements, ranging from two years to 20 years for non-compete agreements and 15 years for the management rights agreements. Customer relationships are amortized into depreciation and amortization expense in the condensed consolidated statements of operations over the estimated lives of the relationships, ranging from three to ten years. Goodwill Goodwill represents the fair value of the consideration provided in an acquisition over the fair value of net assets acquired and is not amortized. Additions to goodwill include amounts resulting from new business combinations and incremental ownership purchases in the Company's subsidiaries. |
Impairment of Long-Lived Assets, Goodwill and Intangible Assets | Impairment of Long-Lived Assets, Goodwill and Intangible Assets The Company evaluates the carrying value of long-lived assets when impairment indicators are present or when circumstances indicate that impairment may exist in accordance with ASC 350, Intangibles- Goodwill and Other . The Company performs an impairment test by preparing an expected undiscounted cash flow projection. If the projection indicates that the recorded amount of the long-lived asset is not expected to be recovered, the carrying value is reduced to estimated fair value. The cash flow projection and fair value represents management’s best estimate, using appropriate and customary assumptions, projections and methodologies, at the date of evaluation. The Company tests its goodwill and intangible assets for impairment at least annually, or more frequently if certain indicators arise. |
Operating Leases | Operating Leases The Company leases office space and equipment for its surgical facilities, including surgical facilities under development. The lease agreements generally require the lessee, or the Company, to pay all maintenance, property taxes, utilities and insurance costs. The Company accounts for operating lease obligations and sublease income on a straight-line basis. Contingent obligations of the Company, as defined by each lease agreement, are recognized when specific contractual measures have been met, typically the result of an increase in the Consumer Price Index. Lease obligations paid in advance are recorded as prepaid rent and included in prepaid expenses and other current assets on the condensed consolidated balance sheets. The difference between actual lease payments and straight-line lease expense over the initial lease term, excluding optional renewal periods, is recorded as deferred rent and included in other current liabilities and other long-term liabilities on the condensed consolidated balance sheets. As part of the Merger, the Company ceased use of four of their operating leases and accrued a liability of $4.6 million , net of discounting and sublease income, during the three months ended June 30, 2015. The Company expensed this through merger transaction and integration costs, as the leases related to offices shut down in connection with the Merger. |
Equity-Based Compensation | Equity-Based Compensation The Company recognizes in the financial statements the cost of employee services received in exchange for awards of equity instruments based on the fair value of those awards. Prior to the Reorganization, on the grant date, the Company employed a market approach to estimate the fair value of equity-based awards based on various considerations and assumptions, including implied earnings multiples and other metrics of relevant market participants, the Company’s operating results and forecasted cash flows and the Company’s capital structure. Such estimates require the input of highly subjective, complex assumptions. However, such assumptions will not be required to determine fair value of shares of the Company’s common stock once its underlying shares begin trading publicly. Once the shares begin trading publicly, the fair value of future stock options awarded will be based on the quoted market price of the Company’s common stock upon grant, as well as assumptions including expected stock price volatility, risk-free interest rate, expected dividends, and expected term. The Company’s policy is to recognize compensation expense using the straight line method over the relevant vesting period for units that vest based on time. The Company’s equity-based compensation expense can vary in the future depending on many factors, including levels of forfeitures and whether performance targets are met and whether a liquidity event occurs. Prior to the Reorganization, employees held membership units in Surgery Center Holdings, LLC, and the associated expense was referred to as unit-based compensation; following the Reorganization, such expense is referred to as share-based compensation. |
Professional, General and Workers' Compensation Insurance | Professional, General and Workers' Compensation Insurance The Company maintains general liability and professional liability insurance in excess of self-insured retentions through third party commercial insurance carriers in amounts that management believes is sufficient for the Company's operations, although, potentially, some claims may exceed the scope of coverage in effect. The professional and general insurance coverage is on a claims-made basis. Workers' compensation insurance is on an occurrence basis. The Company expenses the costs under the self-insured retention exposure for general and professional liability and workers compensation claims which relate to (i) claims made during the policy period, which are offset by insurance recoveries and (ii) an estimate of claims incurred but not yet reported that are expected to be reported after the policy period expires. Reserves and provisions are based upon actuarially determined estimates. The reserves are estimated using individual case-basis valuations and actuarial analysis. Reserves for professional, general and workers' compensation claim liabilities are determined with no regard for expected insurance recoveries and are presented gross on the condensed consolidated balance sheets. Expected insurance recoveries are presented on the condensed consolidated balance sheets separately from the liabilities of which $2.9 million and $3.1 million are included in other current liabilities as of September 30, 2015 and December 31, 2014 , respectively and $4.3 million is included in other long-term liabilities on the condensed consolidated balance sheets as of September 30, 2015 and December 31, 2014 . Expected insurance recoveries of $2.2 million is included in prepaid expenses and other current assets and $2.8 million is included in other long-term assets on the condensed consolidated balance sheets at September 30, 2015 and December 31, 2014 . |
Electronic Health Record Incentives | Electronic Health Record Incentives The American Recovery and Reinvestment Act of 2009 provides for Medicare and Medicaid incentive payments beginning in calendar year 2011 for eligible hospitals and professionals that implement and achieve meaningful use of certified Electronic Health Records ("EHR") technology. Several of the Company's surgical hospitals, which were acquired in connection with the acquisition of Symbion, have implemented plans to comply with the EHR meaningful use requirements of the Health Information Technology for Economic and Clinical Health Act ("HITECH") in time to qualify for the maximum available incentive payments. Compliance with the meaningful use requirements has and will continue to result in significant costs including business process changes, professional services focused on successfully designing and implementing the Company's EHR solutions, along with costs associated with the hardware and software components of the project. The Company currently estimates that total costs incurred to comply will be recovered through the total EHR incentive payments over the projected life cycle of this initiative. The Company incurs both capital expenditures and operating expenses in connection with the implementation of its various EHR initiatives. The amount and timing of these expenditures do not directly correlate with the timing of the Company's cash receipts or recognition of the EHR incentives as other income. The Company expects to receive incentive payments and recognize corresponding revenue upon the completion of the EHR meaningful use requirements. The Company recorded expense for returned payments of $57,000 and $107,000 during the three and nine months ended September 30, 2015 , respectively. No electronic records incentives were recorded during the three and nine months ended September 30, 2014 . |
Income Taxes and Tax Receivable Agreement | Income Taxes and Tax Receivable Agreement The Company uses the asset and liability method to account for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the 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 and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. If a net operating loss carryforward exists, the Company makes a determination as to whether that net operating loss carryforward will be utilized in the future. A valuation allowance is established for certain net operating loss carryforwards when their recoverability is deemed to be uncertain. The carrying value of the net deferred tax assets assumes that the Company will be able to generate sufficient future taxable income in certain tax jurisdictions, based on estimates and assumptions. If these estimates and related assumptions change in the future, the Company may be required to adjust its deferred tax valuation allowances. The Company, or one or more of its subsidiaries, files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal or state income tax examinations for years prior to 2010. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, " Revenue from Contracts with Customers ," which outlines a single comprehensive model for recognizing revenue and supersedes most existing revenue recognition guidance, including guidance specific to the healthcare industry. This ASU provides companies the option of applying a full or modified retrospective approach upon adoption. This ASU was originally set to be effective for fiscal years beginning after December 15, 2016, and early adoption was not permitted. In July 2015, the FASB deferred the effective date for the standard to be effective for fiscal years beginning after December 15, 2017. The FASB will now permit companies to early adopt within one year of the new effective date. The Company will adopt this ASU on January 1, 2018 and is currently evaluating its plan for adoption and the impact on the Company's revenue recognition policies, procedures and the resulting impact on the Company's condensed consolidated financial position, results of operations and cash flows. In February 2015, the FASB issued ASU 2015-02 “ Amendments to the Consolidation Analysis ,” which amends the current consolidation guidance, including introducing a separate consolidation analysis specific to limited partnerships and other similar entities. Under this analysis, limited partnerships and other similar entities will be considered a variable-interest entity unless the limited partners hold substantive kick-out rights or participating rights. The provisions of ASU 2015-02 are effective for annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2015-02 will have on its financial position, results of operation, cash flows and financial disclosures. In April 2015, the FASB issued ASU 2015-03, “ Simplifying the Presentation of Debt Issuance Costs ," which simplifies the presentation of debt issuance costs by requiring debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted, and the new guidance should be applied retrospectively. The Company plans to adopt this ASU on January 1, 2016, and does not anticipate that such adoption will have a material effect on its consolidated financial position, results of operations, or cash flows. In August 2015, the FASB issued ASU 2015-15, " Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements" which clarifies the SEC staff’s position on presenting and measuring debt issuance costs incurred in connection with line-of-credit arrangements given the lack of guidance on this topic in ASU 2015-03. The SEC staff has announced that it would “not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement.” The Company plans to adopt this ASU on January 1, 2016, and does not anticipate that such adoption will have a material effect on its consolidated financial position, results of operations, or cash flows. In September 2015, the FASB issued ASU 2015-16, “ Business Combinations: Simplifying the Accounting for Measurement-Period Adjustments ” which eliminates the requirement for an acquirer to retrospectively adjust its financial statements for changes to provisional amounts that are identified during the measurement-period following the consummation of a business combination. Instead, ASU 2015-16 requires these types of adjustments to be made during the reporting period in which they are identified and would require additional disclosure or separate presentation of the portion of the adjustment that would have been recorded in the previously reported periods as if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 is effective prospectively for fiscal years beginning after December 15, 2015, including interim periods within those years. The Company is currently evaluating the impact that the adoption of ASU 2015-02 will have on its financial position, results of operation, cash flows and financial disclosures. |
Significant Accounting Polici19
Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Rollforward of Non-Controlling Interests - Redeemable | A summary of activity related to the non-controlling interests—redeemable follows (in thousands): Balance at December 31, 2014 $ 192,589 Net income attributable to non-controlling interests—redeemable 12,727 Acquisition and disposal of shares of non-controlling interests, net—redeemable (6,264 ) Distributions to non-controlling interest —redeemable holders (15,471 ) Balance at September 30, 2015 $ 183,581 |
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments | A summary of the carrying amounts and fair values of the Company's long-term debt follows (in thousands): Carrying Amount Fair Value September 30, December 31, September 30, December 31, 2014 First Lien Credit Agreement, net of debt issuance and discount of $21,143 and $23,818 at September 30, 2015 and December 31, 2014, respectively $ 842,332 $ 846,183 $ 841,809 $ 820,799 2014 Second Lien Credit Agreement, net of debt issuance and discount of $16,700 and $18,184 at September 30, 2015 and December 31, 2014, respectively $ 473,300 $ 471,816 $ 476,258 $ 452,943 |
Schedule of Revenues by Type, HealthCare Organization | A summary of revenues by service type as a percentage of total revenues follows: Three Months Ended September 30, 2015 2014 Patient service revenues: Surgical facilities revenues 91.2 % 77.7 % Ancillary services revenues 6.8 % 17.7 % 98.0 % 95.4 % Other service revenues: Optical services revenues 1.5 % 4.6 % Other 0.5 % — % 2.0 % 4.6 % Total revenues 100.0 % 100.0 % Nine Months Ended September 30, 2015 2014 Patient service revenues: Surgical facilities revenues 92.0 % 77.7 % Ancillary services revenues 5.9 % 17.5 % 97.9 % 95.2 % Other service revenues: Optical services revenues 1.6 % 4.8 % Other 0.5 % — % 2.1 % 4.8 % Total revenues 100.0 % 100.0 % |
Schedule of Revenue Sources for Patient Service Revenues | The following table sets forth patient service revenues by type of payor and as a percentage of total patient service revenues for the Company's consolidated surgical facilities (dollars in thousands): Three Months Ended September 30, 2015 2014 Amount % Amount % Patient service revenues: Private insurance $ 124,107 52.9 % $ 38,160 52.4 % Government 95,050 40.5 % 25,681 35.3 % Self-pay 3,336 1.4 % 1,614 2.2 % Other 12,306 5.2 % 7,302 10.1 % Total patient service revenues $ 234,799 100.0 % $ 72,757 100.0 % Other service revenues: Optical service revenues $ 3,621 $ 3,546 Other revenues 1,179 — Total net revenues $ 239,599 $ 76,303 Nine Months Ended September 30, 2015 2014 Amount % Amount % Patient service revenues: Private insurance $ 368,003 54.0 % $ 114,361 53.8 % Government 264,731 38.8 % 72,000 33.8 % Self-pay 12,519 1.8 % 5,509 2.6 % Other 37,007 5.4 % 20,787 9.8 % Total patient service revenues $ 682,260 100.0 % $ 212,657 100.0 % Other service revenues: Optical service revenues $ 11,112 $ 10,817 Other revenues 3,197 124 Total net revenues $ 696,569 $ 223,598 |
Schedule of Prepaid Expenses and Other Current Assets | A summary of prepaid expenses and other current assets follows (in thousands): September 30, 2015 December 31, Prepaid expenses $ 8,122 $ 7,050 Receivables - optical product purchasing organization 8,894 7,556 Other current assets 9,662 9,399 Total $ 26,678 $ 24,005 |
Schedule of Property and Equipment | A summary of property and equipment follows (in thousands): September 30, 2015 December 31, Land $ 6,790 $ 6,790 Buildings and improvements 102,557 100,574 Furniture and equipment 13,932 13,662 Computer and software 22,127 20,622 Medical equipment 91,772 86,132 Construction in progress 2,445 2,923 Property and equipment, at cost 239,623 230,703 Less: Accumulated depreciation (65,810 ) (55,697 ) Property and equipment, net $ 173,813 $ 175,006 |
Schedule of Finite-Lived Intangible Assets | A summary of the activity related to intangible assets for the nine months ended September 30, 2015 follows (in thousands): Physician Income Guarantees Management Rights Non-Compete Agreements Certificates of Need Customer Relationships Other Total Intangible Assets Balance at December 31, 2014 $ 973 $ 24,757 $ 16,590 $ 3,711 $ 6,274 $ 2,583 $ 54,888 Additions 800 — 4,621 — — — 5,421 Recruitment expense (500 ) — — — — — (500 ) Amortization — (1,298 ) (4,017 ) — (1,003 ) (354 ) (6,672 ) Balance at September 30, 2015 $ 1,273 $ 23,459 $ 17,194 $ 3,711 $ 5,271 $ 2,229 $ 53,137 |
Schedule of Indefinite-Lived Intangible Assets | A summary of the activity related to intangible assets for the nine months ended September 30, 2015 follows (in thousands): Physician Income Guarantees Management Rights Non-Compete Agreements Certificates of Need Customer Relationships Other Total Intangible Assets Balance at December 31, 2014 $ 973 $ 24,757 $ 16,590 $ 3,711 $ 6,274 $ 2,583 $ 54,888 Additions 800 — 4,621 — — — 5,421 Recruitment expense (500 ) — — — — — (500 ) Amortization — (1,298 ) (4,017 ) — (1,003 ) (354 ) (6,672 ) Balance at September 30, 2015 $ 1,273 $ 23,459 $ 17,194 $ 3,711 $ 5,271 $ 2,229 $ 53,137 |
Schedule of Rollforward of Goodwill | A summary of activity related to goodwill for the nine months ended September 30, 2015 follows (in thousands): Balance at December 31, 2014 $ 1,298,753 Acquisitions 40,649 Divestitures (8,399 ) Purchase price adjustments (953 ) Balance at September 30, 2015 $ 1,330,050 |
Schedule of Other Long-Term Assets | A summary of other long-term assets follows (in thousands): September 30, 2015 December 31, Notes receivable $ 222 $ 182 Deposits 2,405 2,196 Assets of SERP 1,522 1,402 Other 3,361 2,099 Total $ 7,510 $ 5,879 |
Schedule of Other Current Liabilities | A summary of other current liabilities follows (in thousands): September 30, 2015 December 31, Interest payable $ 6,744 $ 7,027 Current taxes payable 3,370 3,189 Insurance liabilities 4,897 5,552 Third-party settlements 6,921 11,708 Acquisition consideration payable 16,768 — Amounts due to patients and payors 10,570 9,476 Other accrued expenses 20,977 16,918 Total $ 70,247 $ 53,870 |
Schedule of Other Long-Term Liabilities | A summary of other long-term liabilities follows (in thousands): September 30, 2015 December 31, Facility lease obligations $ 54,220 $ 50,749 Medical malpractice liability 4,253 4,253 Liability of SERP 1,522 1,415 Contingent consideration obligation 13,789 13,009 Acquisition consideration payable — 16,768 Unfavorable lease liability 2,104 2,427 Other long-term liabilities 7,890 1,989 Total $ 83,778 $ 90,610 |
Acquisitions and Developments (
Acquisitions and Developments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Schedule of recognized identified assets acquired and liabilities assumed | The purchase price amount has been preliminarily allocated to the related assets acquired and liabilities assumed based upon their respective fair values as follows: Cash consideration $ 298,857 Acquisition consideration payable 16,768 Fair value of non-controlling interests 395,663 Fair value of Symbion 711,288 Net assets acquired: Cash 40,374 Accounts receivable, net 79,830 Inventories 18,389 Prepaid expenses and other current assets 9,876 Property and equipment 153,179 Investments in and advances to affiliates 32,728 Intangible assets 31,534 Restricted invested assets 316 Other long-term assets 6,239 Accounts payable (20,419 ) Accrued payroll and benefits (14,300 ) Other current liabilities (44,272 ) Current maturities of long-term debt (83,805 ) Long-term debt, less current maturities (376,395 ) Long-term deferred tax liabilities (17,895 ) Other long-term liabilities (60,500 ) Net assets acquired (245,121 ) Excess of fair value over identifiable net assets acquired $ 956,409 |
Business acquisition, pro forma information | The unaudited consolidated pro forma results for three and nine months ended September 30, 2014 , assuming the Symbion acquisition had been consummated on January 1, 2014, are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2014 2014 Net revenues $ 218,595 $ 642,065 Net income 3,646 23,401 Less: net income attributable to non-controlling interests (16,158 ) (48,445 ) Net loss attributable to Surgery Partners, Inc. $ (12,512 ) $ (25,044 ) |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | A summary of long-term debt follows (in thousands): September 30, 2015 December 31, 2014 Revolver Loan $ 35,250 $ — 2014 First Lien Credit Agreement, dated November 3, 2014, maturing November 3, 2020, net of debt issuance and discount of $21,143 and $23,818 at September 30, 2015 and December 31, 2014, respectively 842,332 846,183 2014 Second Lien Credit Agreement, dated November 3, 2014, maturing November 3, 2021, net of debt issuance and discount of $16,700 and $18,184 at September 30, 2015 and December 31, 2014, respectively 473,300 471,816 Subordinated Notes 1,000 1,000 Notes payable and secured loans 36,445 31,600 Capital lease obligations 10,342 10,755 Total debt 1,398,669 1,361,354 Less: Current maturities 27,678 22,088 Total long-term debt $ 1,370,991 $ 1,339,266 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following is a reconciliation of the numerator and denominator of basic and diluted earnings per share for the three and nine months ended September 30, 2015 and 2014 (in thousands except share and per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Numerator: Net loss attributable to Surgery Partners, Inc. $ (3,122 ) $ (6,908 ) $ (15,310 ) $ (11,633 ) Denominator: Weighted average shares outstanding- basic (1) 32,054,089 31,698,638 32,054,089 31,698,638 Effect of dilutive securities (2) — — — — Weighted average shares outstanding- diluted 32,054,089 31,698,638 32,054,089 31,698,638 Earnings per share: Basic earnings per share $ (0.10 ) $ (0.22 ) $ (0.48 ) $ (0.37 ) Diluted earnings per share (2) $ (0.10 ) $ (0.22 ) $ (0.48 ) $ (0.37 ) (1) Effect of the Reorganization has been retrospectively applied to all periods presented. (2) The impact of potentially dilutive securities for the three and nine months ended September 30, 2015 and September 30, 2014 was not considered because the effect would be anti-dilutive in each of those periods. |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Reconciliation of Revenue from Segments to Consolidated | The following tables present financial information for each reportable segment (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Net Revenues: Surgical facility services $ 219,631 $ 59,245 $ 643,900 $ 173,730 Ancillary services 16,347 13,512 41,557 39,051 Optical services 3,621 3,546 11,112 10,817 Total $ 239,599 $ 76,303 $ 696,569 $ 223,598 |
Reconciliation of Operating Income from Segments to Consolidated | Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Segment Operating Income: Surgical facility services $ 54,223 $ 21,509 $ 160,795 $ 61,647 Ancillary services 4,115 4,937 11,730 14,487 Optical services 525 525 1,900 1,726 Total $ 58,863 $ 26,971 $ 174,425 $ 77,860 General and administrative $ (12,179 ) $ (7,000 ) $ (37,424 ) $ (20,859 ) (Loss) gain on disposal or impairment of long-lived assets, net (1,161 ) 8 1,522 (110 ) Loss on debt extinguishment — — — (1,975 ) Merger transaction and integration costs (1,249 ) (325 ) (14,897 ) (442 ) Operating income $ 44,274 $ 19,654 $ 123,626 $ 54,474 |
Schedule of Other Segment Reporting Information | Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Supplemental Information: Depreciation and amortization: Surgical facility services $ 6,714 $ 1,705 $ 20,620 $ 5,158 Ancillary services 550 458 1,219 1,352 Optical services 404 409 1,219 1,226 Total $ 7,668 $ 2,572 $ 23,058 $ 7,736 General and administrative $ 943 $ 262 $ 2,480 $ 821 Total depreciation and amortization $ 8,611 $ 2,834 $ 25,538 $ 8,557 Nine Months Ended September 30, 2015 2014 Supplemental Information: Cash purchases of property and equipment, net: Surgical facility services $ 13,300 $ 1,391 Ancillary services 561 765 Optical services 89 315 Total $ 13,950 $ 2,471 General and administrative $ 4,165 $ 966 Total cash purchases of property and equipment, net $ 18,115 $ 3,437 |
Reconciliation of Assets from Segment to Consolidated | September 30, 2015 December 31, 2014 Assets: Surgical facility services $ 1,656,762 $ 1,638,874 Ancillary services 104,072 70,370 Optical services 26,561 25,876 Total 1,787,395 1,735,120 General and administrative $ 104,127 $ 123,674 Total assets $ 1,891,522 $ 1,858,794 |
Organization (Details)
Organization (Details) | Nov. 03, 2014USD ($)surgical_facility | Jun. 13, 2014USD ($) | Sep. 30, 2015surgical_facilitystateshares | Dec. 31, 2014shares | Jan. 27, 2014USD ($) |
Product Information [Line Items] | |||||
Common stock, shares issued (shares) | shares | 33,871,990 | 1,000 | |||
Number of surgical facilities owned | 99 | ||||
Number of surgical facilities owned, majority interest | 71 | ||||
Number of surgical facilities owned, consolidated | 88 | ||||
Number of States in which entity operates | state | 28 | ||||
Facilities, Ambulatory Surgery Centers | |||||
Product Information [Line Items] | |||||
Number of surgical facilities owned | 94 | ||||
Number of surgical facilities managed | 6 | ||||
Facilities, Surgical Hospitals | |||||
Product Information [Line Items] | |||||
Number of surgical facilities owned | 5 | ||||
Facilities, Physician Clinics | |||||
Product Information [Line Items] | |||||
Number of surgical facilities owned | 43 | ||||
Surgery Center Holdings, LLC | |||||
Product Information [Line Items] | |||||
Common stock, shares issued (shares) | shares | 33,871,990 | ||||
Symbion Holdings Corporation | |||||
Product Information [Line Items] | |||||
Number of business entities acquired | 55 | ||||
Business acquisition total purchase price | $ | $ 298,857,000 | $ 792,000,000 | |||
Symbion Holdings Corporation | Facilities, Ambulatory Surgery Centers | |||||
Product Information [Line Items] | |||||
Number of business entities acquired | 49 | ||||
Symbion Holdings Corporation | Facilities, Surgical Hospitals | |||||
Product Information [Line Items] | |||||
Number of business entities acquired | 6 | ||||
Line of Credit | |||||
Product Information [Line Items] | |||||
Debt maximum borrowing capacity | $ | $ 1,440,000,000 | $ 90,000,000 |
Significant Accounting Polici25
Significant Accounting Policies - Schedule of Non-Controlling Interests - Redeemable (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Non-Controlling Interests - Redeemable [Roll Forward] | |
Balance at December 31, 2014 | $ 192,589 |
Net income attributable to non-controlling interests—redeemable | 12,727 |
Acquisition and disposal of shares of non-controlling interests, net—redeemable | (6,264) |
Distributions to non-controlling interest —redeemable holders | (15,471) |
Balance at September 30, 2015 | $ 183,581 |
Significant Accounting Polici26
Significant Accounting Policies - Variable Interest Entities (Details) - Variable Interest Entity, Primary Beneficiary, Aggregated Disclosure $ in Millions | 9 Months Ended | ||
Sep. 30, 2015USD ($)Anesthesia_Practice | Sep. 30, 2015USD ($)surgical_facility | Dec. 31, 2014USD ($) | |
Variable Interest Entity [Line Items] | |||
Number of facilities included in VIE | 1 | 3 | |
Total assets related to VIE | $ 23 | $ 23 | $ 24.7 |
Total liabilities related to VIE | $ 2 | $ 2 | $ 1.7 |
Significant Accounting Polici27
Significant Accounting Policies - Equity Method Investments (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Investments in and advances to affiliates | $ 33,877 | $ 33,441 |
Significant Accounting Polici28
Significant Accounting Policies - Schedule of Carrying Amount and Fair Value of Financial Instruments (Details) - Line of Credit - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
2014 First Lien Credit Agreement | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | $ 842,332 | $ 846,183 |
Debt issuance and discount | 21,143 | 23,818 |
2014 First Lien Credit Agreement | Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 842,332 | 846,183 |
2014 First Lien Credit Agreement | Fair Value | Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 841,809 | 820,799 |
2014 Second Lien Credit Agreement | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 473,300 | 471,816 |
Debt issuance and discount | 16,700 | 18,184 |
2014 Second Lien Credit Agreement | Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 473,300 | 471,816 |
2014 Second Lien Credit Agreement | Fair Value | Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | $ 476,258 | $ 452,943 |
Significant Accounting Polici29
Significant Accounting Policies - Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets of SERP | $ 1,522 | $ 1,402 |
Liability of SERP | 1,522 | 1,415 |
Fair Value, Inputs, Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets of SERP | 1,500 | 1,400 |
Liability of SERP | $ 1,500 | $ 1,400 |
Significant Accounting Polici30
Significant Accounting Policies - Schedule of Revenues by Type, Healthcare Organization (Details) - Revenue Source - Revenue | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenue from External Customer [Line Items] | ||||
Revenue by service type as a percentage of total revenues | 100.00% | 100.00% | 100.00% | 100.00% |
Healthcare Organization, Patient Service | ||||
Revenue from External Customer [Line Items] | ||||
Revenue by service type as a percentage of total revenues | 98.00% | 95.40% | 97.90% | 95.20% |
Surgical Facility Services | ||||
Revenue from External Customer [Line Items] | ||||
Revenue by service type as a percentage of total revenues | 91.20% | 77.70% | 92.00% | 77.70% |
Ancillary Services | ||||
Revenue from External Customer [Line Items] | ||||
Revenue by service type as a percentage of total revenues | 6.80% | 17.70% | 5.90% | 17.50% |
Healthcare Organization, Other Service | ||||
Revenue from External Customer [Line Items] | ||||
Revenue by service type as a percentage of total revenues | 2.00% | 4.60% | 2.10% | 4.80% |
Optical Services | ||||
Revenue from External Customer [Line Items] | ||||
Revenue by service type as a percentage of total revenues | 1.50% | 4.60% | 1.60% | 4.80% |
Other | ||||
Revenue from External Customer [Line Items] | ||||
Revenue by service type as a percentage of total revenues | 0.50% | 0.00% | 0.50% | 0.00% |
Significant Accounting Polici31
Significant Accounting Policies - Schedule of Revenues by Sources (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)surgical_facility | Sep. 30, 2014USD ($) | |
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||
Increase of revenue as result of changes in estimates to third-party settlements related to prior years | $ 1,800 | $ 1,500 | ||
Number of surgical facilities related to revenue adjustment | surgical_facility | 2 | |||
Total net revenues | 239,599 | $ 76,303 | $ 696,569 | $ 223,598 |
Healthcare Organization, Patient Service | ||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||
Patient service revenues | $ 234,799 | $ 72,757 | $ 682,260 | $ 212,657 |
Healthcare Organization, Patient Service | Customer | Revenue | ||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||
Revenue by service type as a percentage of total revenues | 100.00% | 100.00% | 100.00% | 100.00% |
Optical Services | ||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||
Other service revenues | $ 3,621 | $ 3,546 | $ 11,112 | $ 10,817 |
Other | ||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||
Other service revenues | 1,179 | 0 | 3,197 | 124 |
Private insurance | Healthcare Organization, Patient Service | ||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||
Patient service revenues | $ 124,107 | $ 38,160 | $ 368,003 | $ 114,361 |
Private insurance | Healthcare Organization, Patient Service | Customer | Revenue | ||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||
Revenue by service type as a percentage of total revenues | 52.90% | 52.40% | 54.00% | 53.80% |
Government | Healthcare Organization, Patient Service | ||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||
Patient service revenues | $ 95,050 | $ 25,681 | $ 264,731 | $ 72,000 |
Government | Healthcare Organization, Patient Service | Customer | Revenue | ||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||
Revenue by service type as a percentage of total revenues | 40.50% | 35.30% | 38.80% | 33.80% |
Self-pay | Healthcare Organization, Patient Service | ||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||
Patient service revenues | $ 3,336 | $ 1,614 | $ 12,519 | $ 5,509 |
Self-pay | Healthcare Organization, Patient Service | Customer | Revenue | ||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||
Revenue by service type as a percentage of total revenues | 1.40% | 2.20% | 1.80% | 2.60% |
Other | Healthcare Organization, Patient Service | ||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||
Patient service revenues | $ 12,306 | $ 7,302 | $ 37,007 | $ 20,787 |
Other | Healthcare Organization, Patient Service | Customer | Revenue | ||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||
Revenue by service type as a percentage of total revenues | 5.20% | 10.10% | 5.40% | 9.80% |
Significant Accounting Polici32
Significant Accounting Policies - Accounts Receivable (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Third-Party Medicaid settlements | $ 6,921 | $ 11,708 |
Optical products receivable | $ 8,894 | $ 7,556 |
Significant Accounting Polici33
Significant Accounting Policies - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Prepaid expenses | $ 8,122 | $ 7,050 |
Receivables - optical product purchasing organization | 8,894 | 7,556 |
Other current assets | 9,662 | 9,399 |
Total | $ 26,678 | $ 24,005 |
Significant Accounting Polici34
Significant Accounting Policies - Property and Equipment (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Schedule of Property, Plant and Equipment | ||
Property and equipment, gross | $ 239,623 | $ 230,703 |
Less: accumulated depreciation | (65,810) | (55,697) |
Property and equipment, net | 173,813 | 175,006 |
Carrying value of assets under capital lease | 11,300 | 13,300 |
Accumulated depreciation of assets under capital lease | 9,700 | 6,800 |
Land | ||
Schedule of Property, Plant and Equipment | ||
Property and equipment, gross | 6,790 | 6,790 |
Buildings and improvements | ||
Schedule of Property, Plant and Equipment | ||
Property and equipment, gross | 102,557 | 100,574 |
Furniture and equipment | ||
Schedule of Property, Plant and Equipment | ||
Property and equipment, gross | $ 13,932 | 13,662 |
Furniture and equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Property, and equipment useful life | 5 years | |
Furniture and equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Property, and equipment useful life | 7 years | |
Computer and software | ||
Schedule of Property, Plant and Equipment | ||
Property and equipment, gross | $ 22,127 | 20,622 |
Computer and software | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Property, and equipment useful life | 3 years | |
Computer and software | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Property, and equipment useful life | 5 years | |
Medical equipment | ||
Schedule of Property, Plant and Equipment | ||
Property and equipment, gross | $ 91,772 | 86,132 |
Construction in progress | ||
Schedule of Property, Plant and Equipment | ||
Property and equipment, gross | $ 2,445 | $ 2,923 |
Significant Accounting Polici35
Significant Accounting Policies - Schedule of Intangible Assets (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Intangible Assets [Roll Forward] | |
Balance at December 31, 2014 | $ 54,888 |
Additions | 5,421 |
Recruitment expense | (500) |
Amortization | (6,672) |
Balance at September 30, 2015 | 53,137 |
Certificates of Need | |
Intangible Assets [Roll Forward] | |
Balance at December 31, 2014 | 3,711 |
Balance at September 30, 2015 | 3,711 |
Physician Income Guarantees | |
Intangible Assets [Roll Forward] | |
Balance at December 31, 2014 | 973 |
Additions | 800 |
Recruitment expense | (500) |
Balance at September 30, 2015 | $ 1,273 |
Physician Income Guarantees | Minimum | |
Intangible Assets [Line Items] | |
Intangible asset useful life | 3 years |
Physician Income Guarantees | Maximum | |
Intangible Assets [Line Items] | |
Intangible asset useful life | 4 years |
Management Rights | |
Intangible Assets [Line Items] | |
Intangible asset useful life | 15 years |
Intangible Assets [Roll Forward] | |
Balance at December 31, 2014 | $ 24,757 |
Amortization | (1,298) |
Balance at September 30, 2015 | 23,459 |
Non-Compete Agreements | |
Intangible Assets [Roll Forward] | |
Balance at December 31, 2014 | 16,590 |
Additions | 4,621 |
Amortization | (4,017) |
Balance at September 30, 2015 | $ 17,194 |
Non-Compete Agreements | Minimum | |
Intangible Assets [Line Items] | |
Intangible asset useful life | 2 years |
Non-Compete Agreements | Maximum | |
Intangible Assets [Line Items] | |
Intangible asset useful life | 20 years |
Customer Relationships | |
Intangible Assets [Roll Forward] | |
Balance at December 31, 2014 | $ 6,274 |
Amortization | (1,003) |
Balance at September 30, 2015 | $ 5,271 |
Customer Relationships | Minimum | |
Intangible Assets [Line Items] | |
Intangible asset useful life | 3 years |
Customer Relationships | Maximum | |
Intangible Assets [Line Items] | |
Intangible asset useful life | 10 years |
Other | |
Intangible Assets [Roll Forward] | |
Balance at December 31, 2014 | $ 2,583 |
Amortization | (354) |
Balance at September 30, 2015 | $ 2,229 |
Significant Accounting Polici36
Significant Accounting Policies - Schedule of Rollforward of Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning of period | $ 1,298,753 |
Acquisitions | 40,649 |
Divestitures | (8,399) |
Purchase price adjustments | (953) |
Goodwill, end of period | $ 1,330,050 |
Significant Accounting Polici37
Significant Accounting Policies - Restricted Invested Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Restricted Cash and Cash Equivalents Items [Line Items] | ||
Restricted invested assets | $ 316 | $ 316 |
Chesterfield, Missouri facility | ||
Restricted Cash and Cash Equivalents Items [Line Items] | ||
Restricted invested assets | $ 316 | $ 316 |
Significant Accounting Polici38
Significant Accounting Policies - Schedule of Other Long-Term Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Notes receivable | $ 222 | $ 182 |
Deposits | 2,405 | 2,196 |
Assets of SERP | 1,522 | 1,402 |
Other | 3,361 | 2,099 |
Total | $ 7,510 | $ 5,879 |
Significant Accounting Polici39
Significant Accounting Policies - Schedule of Other Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Other Liabilities, Current [Abstract] | ||
Interest payable | $ 6,744 | $ 7,027 |
Current taxes payable | 3,370 | 3,189 |
Insurance liabilities | 4,897 | 5,552 |
Third-party settlements | 6,921 | 11,708 |
Acquisition consideration payable | 16,768 | 0 |
Amounts due to patients and payors | 10,570 | 9,476 |
Other accrued expenses | 20,977 | 16,918 |
Total | $ 70,247 | $ 53,870 |
Significant Accounting Polici40
Significant Accounting Policies - Schedule of Other Long-Term Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Facility lease obligations | $ 54,220 | $ 50,749 |
Medical malpractice liability | 4,253 | 4,253 |
Liability of SERP | 1,522 | 1,415 |
Contingent consideration obligation | 13,789 | 13,009 |
Acquisition consideration payable | 0 | 16,768 |
Unfavorable lease liability | 2,104 | 2,427 |
Other long-term liabilities | 7,890 | 1,989 |
Total | 83,778 | 90,610 |
Capital Leased Assets [Line Items] | ||
Capital lease obligations | 10,342 | 10,755 |
Idaho Falls, Idaho, Surgical Hospital | ||
Capital Leased Assets [Line Items] | ||
Current portion of lease obligation | 729 | 568 |
Capital lease obligations | 51,000 | $ 51,300 |
Ocala, Florida | ||
Capital Leased Assets [Line Items] | ||
Current portion of lease obligation | 165 | |
Capital lease obligations | 4,200 | |
Transaction value of business disposition | 4,200 | |
Capital Lease Obligations, Noncurrent | $ 4,000 |
Significant Accounting Polici41
Significant Accounting Policies - Operating Leases (Details) $ in Millions | Sep. 30, 2015USD ($)Lease |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of leases ceased use | 4 |
Accrued liability related to leases ceased use | $ | $ 4.6 |
Significant Accounting Polici42
Significant Accounting Policies - Professional, General and Workers' Compensation Insurance (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Other Current Liabilities | ||
Significant Accounting Policies [Line Items] | ||
Professional, general and workers' compensation insurance reserve | $ 2.9 | $ 3.1 |
Other Long-term Liabilities | ||
Significant Accounting Policies [Line Items] | ||
Professional, general and workers' compensation insurance reserve | 4.3 | 4.3 |
Prepaid Expenses and Other Current Assets | ||
Significant Accounting Policies [Line Items] | ||
Estimated insurance recoveries | 2.2 | 2.2 |
Other Long-term Assets | ||
Significant Accounting Policies [Line Items] | ||
Estimated insurance recoveries | $ 2.8 | $ 2.8 |
Significant Accounting Polici43
Significant Accounting Policies - Electronic Health Record Incentives (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Electronic records incentives | $ 57 | $ 0 | $ 107 | $ 0 |
Significant Accounting Polici44
Significant Accounting Policies - Income Taxes and Tax Receivable Agreement (Details) - Tax Receivable Agreement $ in Millions | Sep. 30, 2015USD ($) |
Income Tax Contingency [Line Items] | |
Percentage of cash savings requited to pay Tax Receivables Agreement | 85.00% |
Estimated required payment provided termination | $ 116 |
LIBOR | |
Income Tax Contingency [Line Items] | |
Interest accrued on payment under Tax Receivable Agreement, basis spread on variable rate | 3.00% |
Minimum | |
Income Tax Contingency [Line Items] | |
Estimated Tax Receivable Agreement payable | $ 110 |
Maximum | |
Income Tax Contingency [Line Items] | |
Estimated Tax Receivable Agreement payable | $ 115 |
Acquisitions and Developments -
Acquisitions and Developments - 2015 Transactions (Details) - 9 months ended Sep. 30, 2015 $ in Millions | Anesthesia_Practice | surgical_facility | Practice | Physician | USD ($) |
Business Acquisition [Line Items] | |||||
Number of physicians added to network | Physician | 14 | ||||
Surgical Facility Controlling Interest Acquisition | |||||
Business Acquisition [Line Items] | |||||
Number of businesses acquired in new market | surgical_facility | 1 | ||||
Number of businesses acquired in existing market | 2 | 1 | |||
Business acquisition total purchase price | $ 20.2 | ||||
Surgical Facility Incremental Ownership Acquisition | |||||
Business Acquisition [Line Items] | |||||
Business acquisition total purchase price | 7.7 | ||||
Number of business entities acquired | surgical_facility | 2 | ||||
Ancillary Services Acquisition | |||||
Business Acquisition [Line Items] | |||||
Business acquisition total purchase price | $ 30.4 | ||||
Number of business entities acquired | Practice | 11 |
Acquisitions and Developments46
Acquisitions and Developments - Acquisition of Symbion Narrative (Details) - USD ($) | Nov. 03, 2014 | Jun. 13, 2014 | Jun. 30, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | Jan. 27, 2014 |
Business Acquisition [Line Items] | ||||||
Capitalized deferred financing costs | $ 4,816,000 | $ 5,630,000 | ||||
Symbion Holdings Corporation | ||||||
Business Acquisition [Line Items] | ||||||
Business acquisition total purchase price | $ 298,857,000 | $ 792,000,000 | ||||
Payments to acquire business | 300,100,000 | |||||
Acquisition escrow deposit funded | 16,200,000 | |||||
Debt assumed for acquiree | 472,400,000 | |||||
Acquisition escrow deposit balance | 14,054,000 | |||||
Escrow disbursement received | 1,200,000 | |||||
Escrow amount payable | 30,900,000 | |||||
Liabilities incurred to acquire business | 16,768,000 | |||||
Escrow amount distributed | $ 2,100,000 | |||||
Acquisition related costs | 93,300,000 | |||||
Capitalized deferred financing costs | 5,300,000 | |||||
Business acquisition transaction costs | 21,700,000 | |||||
Debt instrument unamortized discount | 42,900,000 | |||||
Debt extinguishment costs | 23,400,000 | |||||
Goodwill, expected tax deductible amount | 142,500,000 | |||||
Expected additional escrow account | 16,800,000 | |||||
Payment in Kind (PIK) Note | Symbion Holdings Corporation | ||||||
Business Acquisition [Line Items] | ||||||
Debt instrument, stated rate | 8.00% | |||||
Line of Credit | ||||||
Business Acquisition [Line Items] | ||||||
Debt maximum borrowing capacity | 1,440,000,000 | $ 90,000,000 | ||||
2014 First Lien Credit Agreement | Line of Credit | ||||||
Business Acquisition [Line Items] | ||||||
Debt maximum borrowing capacity | 870,000,000 | |||||
Debt instrument unamortized discount | 21,143,000 | 23,818,000 | ||||
2014 Second Lien Credit Agreement | Line of Credit | ||||||
Business Acquisition [Line Items] | ||||||
Debt maximum borrowing capacity | 490,000,000 | |||||
Debt instrument unamortized discount | $ 16,700,000 | $ 18,184,000 | ||||
2014 Revolver Loan | Line of Credit | ||||||
Business Acquisition [Line Items] | ||||||
Debt maximum borrowing capacity | $ 80,000,000 |
Acquisitions and Developments47
Acquisitions and Developments - Acquisition of Symbion Purchase Price Allocation (Details) - USD ($) $ in Thousands | Nov. 03, 2014 | Jun. 13, 2014 | Sep. 30, 2015 | Dec. 31, 2014 |
Net assets acquired: | ||||
Excess of fair value over identifiable net assets acquired | $ 1,330,050 | $ 1,298,753 | ||
Symbion Holdings Corporation | ||||
Business Acquisition [Line Items] | ||||
Cash consideration | $ 298,857 | $ 792,000 | ||
Acquisition consideration payable | 16,768 | |||
Fair value of non-controlling interests | 395,663 | |||
Fair value of Symbion | 711,288 | |||
Net assets acquired: | ||||
Cash | 40,374 | |||
Accounts receivable, net | 79,830 | |||
Inventories | 18,389 | |||
Prepaid expenses and other current assets | 9,876 | |||
Property and equipment | 153,179 | |||
Investments in and advances to affiliates | 32,728 | |||
Intangible assets | 31,534 | |||
Restricted invested assets | 316 | |||
Other long-term assets | 6,239 | |||
Accounts payable | (20,419) | |||
Accrued payroll and benefits | (14,300) | |||
Other current liabilities | (44,272) | |||
Current maturities of long-term debt | (83,805) | |||
Long-term debt, less current maturities | (376,395) | |||
Long-term deferred tax liabilities | (17,895) | |||
Other long-term liabilities | (60,500) | |||
Net assets acquired | (245,121) | |||
Excess of fair value over identifiable net assets acquired | $ 956,409 |
Acquisitions and Developments48
Acquisitions and Developments - Pro Forma Results (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Business Acquisition, Pro Forma Information [Abstract] | ||||
Loss on debt extinguishment | $ 0 | $ 0 | $ 0 | $ 1,975 |
Symbion Holdings Corporation | ||||
Business Acquisition, Pro Forma Information [Abstract] | ||||
Net revenues | 218,595 | 642,065 | ||
Net income | 3,646 | 23,401 | ||
Business acquisition cost expensed | 702 | 3,100 | ||
Symbion Holdings Corporation | Noncontrolling Interest | ||||
Business Acquisition, Pro Forma Information [Abstract] | ||||
Net income | 16,158 | 48,445 | ||
Symbion Holdings Corporation | Parent | ||||
Business Acquisition, Pro Forma Information [Abstract] | ||||
Net income | $ (12,512) | $ (25,044) |
Divestitures - Narrative (Detai
Divestitures - Narrative (Details) - Disposed of by Sale $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($)surgical_facility | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Number of surgical facilities sold | surgical_facility | 3 |
Transaction value of business disposition | $ 10,900 |
Gain (loss) on disposition of business | $ 2,900 |
Long-Term Debt - Summary of Lon
Long-Term Debt - Summary of Long-Term Debt (Details) - USD ($) | Nov. 03, 2014 | Sep. 30, 2015 | Dec. 31, 2014 | Jan. 27, 2014 | Apr. 11, 2013 | Apr. 10, 2013 |
Debt Instrument [Line Items] | ||||||
Capital lease obligations | $ 10,342,000 | $ 10,755,000 | ||||
Debt and capital lease obligations | 1,398,669,000 | 1,361,354,000 | ||||
Less: Current maturities | (27,678,000) | (22,088,000) | ||||
Total long-term debt | 1,370,991,000 | 1,339,266,000 | ||||
Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Debt maximum borrowing capacity | $ 1,440,000,000 | $ 90,000,000 | ||||
Subordinated Notes | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | 1,000,000 | 1,000,000 | ||||
Debt maximum borrowing capacity | $ 1,000,000 | $ 53,800,000 | ||||
Notes payable and secured loans | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | 36,445,000 | 31,600,000 | ||||
2014 Revolver Loan | Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | 35,250,000 | 0 | ||||
Debt maximum borrowing capacity | 80,000,000 | |||||
2014 First Lien Credit Agreement | Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | 842,332,000 | 846,183,000 | ||||
Debt issuance and discount | 21,143,000 | 23,818,000 | ||||
Debt maximum borrowing capacity | 870,000,000 | |||||
2014 Second Lien Credit Agreement | Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | 473,300,000 | 471,816,000 | ||||
Debt issuance and discount | $ 16,700,000 | $ 18,184,000 | ||||
Debt maximum borrowing capacity | 490,000,000 | |||||
Symbion Holdings Corporation | ||||||
Debt Instrument [Line Items] | ||||||
Debt issuance and discount | 42,900,000 | |||||
Repayments of debt | $ 440,000,000 |
Long-Term Debt - 2014 Revolver
Long-Term Debt - 2014 Revolver Loan (Details) - USD ($) | Nov. 03, 2014 | Jan. 27, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 |
Debt Instrument [Line Items] | |||||
Payments of debt issuance costs | $ 0 | $ 2,120,000 | |||
Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt maximum borrowing capacity | $ 1,440,000,000 | $ 90,000,000 | |||
Payments of debt issuance costs | 20,000,000 | $ 2,900,000 | 1,900,000 | ||
Accumulated amortization of deferred financing costs | 237,000 | $ 41,000 | |||
2014 Revolver Loan | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt maximum borrowing capacity | 80,000,000 | ||||
Debt remaining borrowing capacity | 41,600,000 | ||||
Payments of debt issuance costs | 2,300,000 | ||||
Accumulated amortization of deferred financing costs | $ 417,000 | 76,000 | |||
Quarterly commitment fee percentage | 0.50% | ||||
2014 Revolver Loan | Alternate Base Rate Loan | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, margin in addition to base rate | 3.25% | ||||
2014 Revolver Loan | Alternate Base Rate Loan | Line of Credit | Federal Funds Effective Rate | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 0.50% | ||||
2014 Revolver Loan | Alternate Base Rate Loan | Line of Credit | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 1.00% | ||||
2014 Revolver Loan | Eurodollar Loan | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, margin in addition to base rate | 4.25% | ||||
2014 First Lien Credit Agreement | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt maximum borrowing capacity | 870,000,000 | ||||
2014 First Lien Credit Agreement | Alternate Base Rate Loan | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, margin in addition to base rate | 3.25% | ||||
2014 First Lien Credit Agreement | Alternate Base Rate Loan | Line of Credit | Federal Funds Effective Rate | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 0.50% | ||||
2014 First Lien Credit Agreement | Alternate Base Rate Loan | Line of Credit | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 1.00% | ||||
2014 First Lien Credit Agreement | Eurodollar Loan | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, margin in addition to base rate | 4.25% | ||||
2014 Second Lien Credit Agreement | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt maximum borrowing capacity | 490,000,000 | ||||
Payments of debt issuance costs | $ 13,600,000 | $ 1,100,000 | |||
Accumulated amortization of deferred financing costs | $ 84,000 | $ 14,000 | |||
2014 Second Lien Credit Agreement | Alternate Base Rate Loan | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, margin in addition to base rate | 6.50% | ||||
2014 Second Lien Credit Agreement | Alternate Base Rate Loan | Line of Credit | Federal Funds Effective Rate | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 0.50% | ||||
2014 Second Lien Credit Agreement | Alternate Base Rate Loan | Line of Credit | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 1.00% | ||||
2014 Second Lien Credit Agreement | Eurodollar Loan | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, margin in addition to base rate | 7.50% |
Long-Term Debt - 2014 First Lie
Long-Term Debt - 2014 First Lien Credit Agreement (Details) - USD ($) $ in Thousands | Nov. 03, 2014 | Jan. 27, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 |
Debt Instrument [Line Items] | |||||
Payments of debt issuance costs | $ 0 | $ 2,120 | |||
Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, threshold business days in certain condition to make mandatory interest payment | 5 days | ||||
Debt Instrument, number of days after each fiscal year in certain condition to make mandatory interest payment | 90 days | ||||
Debt issuance and discount | $ 4,400 | $ 1,400 | |||
Payments of debt issuance costs | $ 20,000 | $ 2,900 | $ 1,900 | ||
Debt interest expense | 2,700 | $ 300 | |||
Accumulated amortization of deferred financing costs | $ 237 | $ 41 | |||
2014 First Lien Credit Agreement | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, threshold business days in certain condition to make mandatory interest payment | 5 days | ||||
Debt Instrument, number of days after each fiscal year in certain condition to make mandatory interest payment | 90 days | ||||
2014 First Lien Credit Agreement | Alternate Base Rate Loan | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, maximum base rate condition | 2.00% | ||||
2014 First Lien Credit Agreement | Alternate Base Rate Loan | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, margin in addition to base rate | 3.25% | ||||
2014 First Lien Credit Agreement | Alternate Base Rate Loan | Line of Credit | Federal Funds Effective Rate | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 0.50% | ||||
2014 First Lien Credit Agreement | Alternate Base Rate Loan | Line of Credit | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 1.00% | ||||
2014 First Lien Credit Agreement | Eurodollar Loan | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, maximum base rate condition | 1.00% | ||||
2014 First Lien Credit Agreement | Eurodollar Loan | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, maximum base rate condition | 1.00% | ||||
Debt instrument, margin in addition to base rate | 4.25% | ||||
Debt instrument, effective interest rate | 5.25% |
Long-Term Debt - 2014 Second Li
Long-Term Debt - 2014 Second Lien Credit Agreement (Details) - USD ($) | Nov. 03, 2014 | Jan. 27, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 |
Debt Instrument [Line Items] | |||||
Payments of debt issuance costs | $ 0 | $ 2,120,000 | |||
Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, period prepayment integral amount | 500,000 | ||||
Debt instrument, minimum required periodic payment | $ 1,000,000 | ||||
Debt maximum borrowing capacity | $ 1,440,000,000 | $ 90,000,000 | |||
Debt instrument, threshold business days in certain condition to make mandatory interest payment | 5 days | ||||
Debt Instrument, number of days after each fiscal year in certain condition to make mandatory interest payment | 90 days | ||||
Debt issuance and discount | 4,400,000 | 1,400,000 | |||
Payments of debt issuance costs | 20,000,000 | $ 2,900,000 | $ 1,900,000 | ||
Debt interest expense | 2,700,000 | $ 300,000 | |||
Accumulated amortization of deferred financing costs | 237,000 | $ 41,000 | |||
2014 Second Lien Credit Agreement | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt maximum borrowing capacity | 490,000,000 | ||||
Debt issuance and discount | 4,900,000 | ||||
Payments of debt issuance costs | $ 13,600,000 | 1,100,000 | |||
Debt interest expense | 1,500,000 | ||||
Accumulated amortization of deferred financing costs | $ 84,000 | $ 14,000 | |||
2014 Second Lien Credit Agreement | Alternate Base Rate Loan | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, maximum base rate condition | 2.00% | ||||
Debt instrument, margin in addition to base rate | 6.50% | ||||
2014 Second Lien Credit Agreement | Alternate Base Rate Loan | Line of Credit | Federal Funds Effective Rate | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 0.50% | ||||
2014 Second Lien Credit Agreement | Alternate Base Rate Loan | Line of Credit | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 1.00% | ||||
2014 Second Lien Credit Agreement | Eurodollar Loan | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, maximum base rate condition | 1.00% | ||||
Debt instrument, margin in addition to base rate | 7.50% | ||||
Debt instrument, effective interest rate | 8.50% |
Long-Term Debt - Additional (De
Long-Term Debt - Additional (Details) | Nov. 03, 2014USD ($) | Jan. 27, 2014USD ($) | Sep. 30, 2015USD ($)surgical_facilityPracticeLetters_of_Credit | Sep. 30, 2014USD ($) | May. 31, 2015USD ($) | Dec. 31, 2014USD ($)Letters_of_Credit | Jan. 01, 2014 | Apr. 11, 2013USD ($) | Apr. 10, 2013USD ($) |
Debt Instrument [Line Items] | |||||||||
Payments of debt issuance costs | $ 0 | $ 2,120,000 | |||||||
Number of surgical facilities owned | surgical_facility | 99 | ||||||||
Capital leased assets | $ 11,300,000 | $ 13,300,000 | |||||||
Line of Credit | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt maximum borrowing capacity | $ 1,440,000,000 | $ 90,000,000 | |||||||
Debt issuance and discount | 4,400,000 | 1,400,000 | |||||||
Payments of debt issuance costs | $ 20,000,000 | $ 2,900,000 | 1,900,000 | ||||||
Debt interest expense | 2,700,000 | $ 300,000 | |||||||
Subordinated Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt maximum borrowing capacity | $ 1,000,000 | $ 53,800,000 | |||||||
Debt instrument, stated rate | 17.00% | ||||||||
Long-term debt, carrying value | 1,000,000 | 1,000,000 | |||||||
Notes payable and secured loans | |||||||||
Debt Instrument [Line Items] | |||||||||
Long-term debt, carrying value | $ 36,445,000 | $ 31,600,000 | |||||||
Optical Services | Line of Credit | |||||||||
Debt Instrument [Line Items] | |||||||||
Number of line of credit facility | Letters_of_Credit | 2 | ||||||||
Optical Services | Line of Credit | Letter of Credit One | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt maximum borrowing capacity | $ 500,000 | $ 200,000 | |||||||
Optical Services | Line of Credit | Letter of Credit Two | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt maximum borrowing capacity | $ 730,000 | ||||||||
Surgical Facility Services | |||||||||
Debt Instrument [Line Items] | |||||||||
Number of surgical facilities owned | Practice | 2 | ||||||||
Surgical Facility Services | Line of Credit | |||||||||
Debt Instrument [Line Items] | |||||||||
Number of line of credit facility | Letters_of_Credit | 2 | ||||||||
Surgical Facility Services | Line of Credit | Letter of Credit Related to Workers Compensation Self-insured Plan | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt maximum borrowing capacity | $ 835,000 | ||||||||
Number of line of credit facility | Letters_of_Credit | 1 | ||||||||
Orlando, Florida | Surgical Facility Services | Line of Credit | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt maximum borrowing capacity | $ 100,000 | ||||||||
Lubbock, Texas | Surgical Facility Services | Line of Credit | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt maximum borrowing capacity | $ 1,000,000 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||
Numerator: | |||||
Net loss attributable to Surgery Partners, Inc. | $ (3,122) | $ (6,908) | $ (15,310) | $ (11,633) | |
Denominator: | |||||
Weighted average shares outstanding- basic | [1] | 32,054,089 | 31,698,638 | 32,054,089 | 31,698,638 |
Effect of dilutive securities | 0 | 0 | 0 | 0 | |
Weighted average shares outstanding- diluted | [1],[2] | 32,054,089 | 31,698,638 | 32,054,089 | 31,698,638 |
Earnings per share: | |||||
Basic earnings per share | $ (0.10) | $ (0.22) | $ (0.48) | $ (0.37) | |
Diluted earnings per share (in USD per share) | [2] | $ (0.10) | $ (0.22) | $ (0.48) | $ (0.37) |
[1] | Effect of the Reorganization, as defined in Note 1, has been retrospectively applied to all periods presented. | ||||
[2] | The impact of potentially dilutive securities for the three and nine months ended September 30, 2015 and September 30, 2014 was not considered because the effect would be anti-dilutive in each of those periods. |
Related Party Transactions (Det
Related Party Transactions (Details) - Management and Investment Advisory Services Agreement - Bayside Capital, Inc. - USD ($) $ in Millions | Oct. 06, 2015 | Sep. 30, 2015 |
Related Party Transaction [Line Items] | ||
Annual management fee per agreement with related party | $ 3 | |
Subsequent Event | ||
Related Party Transaction [Line Items] | ||
Expenses from transactions with related party | $ 5.4 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | Dec. 24, 2009USD ($)Entity | Dec. 31, 2010USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Dec. 31, 2010USD ($) | Dec. 31, 2014USD ($) | Jan. 01, 2014 | Jun. 10, 2013USD ($) | Aug. 04, 2011 |
Guarantor Obligations [Line Items] | |||||||||||
Interest expense | $ (26,573) | $ (11,263) | $ (78,507) | $ (32,718) | |||||||
Indemnification receivable due from seller | 1,072 | 1,072 | $ 1,072 | ||||||||
Business combination, accounts receivable recorded in excess of fair value | $ 14,000 | ||||||||||
Amount entitle to receive for overstated net accounts receivable | 10,800 | ||||||||||
2009 Acquisition | |||||||||||
Guarantor Obligations [Line Items] | |||||||||||
Number of business entities acquired | Entity | 36 | ||||||||||
Amount awarded to settle acquisition price adjustment | $ 589 | ||||||||||
Maximum potential contingent consideration | $ 10,000 | ||||||||||
Fair value of contingent consideration liability | 13,800 | 13,800 | 13,000 | ||||||||
Escrow account | $ 2,900 | ||||||||||
Amount of withdrawal notice to escrow deposit | $ 4,400 | ||||||||||
Indemnification receivable due from seller | 1,100 | ||||||||||
Indemnification amount due to payor | 1,800 | 1,800 | 1,800 | ||||||||
Amount entitle to recover for the indemnification claims | 454 | ||||||||||
Amount offsetting contingent consideration | $ 8,300 | ||||||||||
Subordinated Notes | |||||||||||
Guarantor Obligations [Line Items] | |||||||||||
Promissory Note stated interest rate | 17.00% | ||||||||||
Subordinated Notes | Promissory Notes | 2009 Acquisition | |||||||||||
Guarantor Obligations [Line Items] | |||||||||||
Promissory Note stated interest rate | 8.00% | ||||||||||
Interest expense | (781) | $ (723) | |||||||||
Operating Leases | Financial Guarantee | |||||||||||
Guarantor Obligations [Line Items] | |||||||||||
Guaranteed operating lease payments | $ 196 | $ 196 | $ 539 | ||||||||
Operating lease term | 10 years | 10 years |
Segment Reporting - Revenues by
Segment Reporting - Revenues by Reportable Segment (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)segment | Sep. 30, 2014USD ($) | |
Segment Reporting Information [Line Items] | ||||
Number of operating segments | segment | 3 | |||
Revenues | $ 239,599 | $ 76,303 | $ 696,569 | $ 223,598 |
Surgical Facility Services | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 219,631 | 59,245 | 643,900 | 173,730 |
Ancillary Services | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 16,347 | 13,512 | 41,557 | 39,051 |
Optical Services | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | $ 3,621 | $ 3,546 | $ 11,112 | $ 10,817 |
Segment Reporting - Segment Ope
Segment Reporting - Segment Operating Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Reporting Information [Line Items] | ||||
General and administrative expenses | $ (11,236) | $ (6,738) | $ (34,944) | $ (20,038) |
(Loss) gain on disposal or impairment of long-lived assets, net | (1,161) | 8 | 1,522 | (110) |
Loss on debt extinguishment | 0 | 0 | 0 | 1,975 |
Merger transaction and integration costs | (1,249) | (325) | (14,897) | (442) |
Operating income | 44,274 | 19,654 | 123,626 | 54,474 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Segment operating income | 58,863 | 26,971 | 174,425 | 77,860 |
Operating Segments | Surgical Facility Services | ||||
Segment Reporting Information [Line Items] | ||||
Segment operating income | 54,223 | 21,509 | 160,795 | 61,647 |
Operating Segments | Ancillary Services | ||||
Segment Reporting Information [Line Items] | ||||
Segment operating income | 4,115 | 4,937 | 11,730 | 14,487 |
Operating Segments | Optical Services | ||||
Segment Reporting Information [Line Items] | ||||
Segment operating income | 525 | 525 | 1,900 | 1,726 |
Corporate, Non-Segment | ||||
Segment Reporting Information [Line Items] | ||||
General and administrative expenses | $ (12,179) | $ (7,000) | $ (37,424) | $ (20,859) |
Segment Reporting - Supplementa
Segment Reporting - Supplemental Information by Reportable Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Reporting Information [Line Items] | ||||
Depreciation and amortization | $ 8,611 | $ 2,834 | $ 25,538 | $ 8,557 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation and amortization | 7,668 | 2,572 | 23,058 | 7,736 |
Operating Segments | Surgical Facility Services | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation and amortization | 6,714 | 1,705 | 20,620 | 5,158 |
Operating Segments | Ancillary Services | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation and amortization | 550 | 458 | 1,219 | 1,352 |
Operating Segments | Optical Services | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation and amortization | 404 | 409 | 1,219 | 1,226 |
Corporate, Non-Segment | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation and amortization | $ 943 | $ 262 | $ 2,480 | $ 821 |
Segment Reporting - Assets by O
Segment Reporting - Assets by Operating Segment (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Segment Reporting Information [Line Items] | ||
Assets | $ 1,891,522 | $ 1,858,794 |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Assets | 1,787,395 | 1,735,120 |
Operating Segments | Surgical Facility Services | ||
Segment Reporting Information [Line Items] | ||
Assets | 1,656,762 | 1,638,874 |
Operating Segments | Ancillary Services | ||
Segment Reporting Information [Line Items] | ||
Assets | 104,072 | 70,370 |
Operating Segments | Optical Services | ||
Segment Reporting Information [Line Items] | ||
Assets | 26,561 | 25,876 |
Corporate, Non-Segment | ||
Segment Reporting Information [Line Items] | ||
Assets | $ 104,127 | $ 123,674 |
Segment Reporting - Cash Purcha
Segment Reporting - Cash Purchases of Property and Equipment (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Reporting Information [Line Items] | ||
Purchases of property and equipment, net | $ 18,115 | $ 3,437 |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Purchases of property and equipment, net | 13,950 | 2,471 |
Operating Segments | Surgical Facility Services | ||
Segment Reporting Information [Line Items] | ||
Purchases of property and equipment, net | 13,300 | 1,391 |
Operating Segments | Ancillary Services | ||
Segment Reporting Information [Line Items] | ||
Purchases of property and equipment, net | 561 | 765 |
Operating Segments | Optical Services | ||
Segment Reporting Information [Line Items] | ||
Purchases of property and equipment, net | 89 | 315 |
Corporate, Non-Segment | ||
Segment Reporting Information [Line Items] | ||
Purchases of property and equipment, net | $ 4,165 | $ 966 |
Subsequent Events - Narrative (
Subsequent Events - Narrative (Details) - USD ($) | Oct. 06, 2015 | Oct. 01, 2015 | Oct. 07, 2015 | Nov. 03, 2014 | Jan. 27, 2014 |
Bayside Capital, Inc. | Management and Investment Advisory Services Agreement | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Expenses from transactions with related party | $ 5,400,000 | ||||
IPO | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Stock issued during period, shares | 14,285,000 | ||||
Share price (in dollars per share) | $ 19 | ||||
Proceeds from issuance initial public offering | 255,800,000 | ||||
Underwriting discounts and fees | 15,600,000 | ||||
Line of Credit | |||||
Subsequent Event [Line Items] | |||||
Debt maximum borrowing capacity | $ 1,440,000,000 | $ 90,000,000 | |||
2014 Second Lien Credit Agreement | Line of Credit | |||||
Subsequent Event [Line Items] | |||||
Debt maximum borrowing capacity | 490,000,000 | ||||
2014 Second Lien Credit Agreement | Line of Credit | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Debt instrument, prepayment of principal | 243,500,000 | ||||
Debt instrument, prepayment of discounts and issuance costs | 8,300,000 | ||||
Debt instrument, accrued interest | $ 65,000 | ||||
Debt instrument, prepayment penalty as percentage of aggregate principal | 3.00% | ||||
Debt instrument, prepayment penalty amount | $ 7,300,000 | ||||
2014 Revolver Loan | Line of Credit | |||||
Subsequent Event [Line Items] | |||||
Debt maximum borrowing capacity | $ 80,000,000 | ||||
2014 Revolver Loan | Line of Credit | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Debt maximum borrowing capacity | $ 150,000,000 |