Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 04, 2020 | Jun. 28, 2019 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Surgery Partners, Inc. | ||
Entity Central Index Key | 0001638833 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | false | ||
Entity Common Stock, Shares Outstanding | 49,289,926 | ||
Entity Shell Company | false | ||
Entity Well-known seasoned issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 174.7 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 92.7 | $ 184.3 |
Accounts receivable | 326.9 | 307.6 |
Inventories | 46.3 | 43.4 |
Prepaid expenses | 17.8 | 16.2 |
Other current assets | 41.8 | 36.8 |
Total current assets | 525.5 | 588.3 |
Property and equipment, net | 523.3 | |
Property and equipment, net | 426.3 | |
Intangible assets, net | 47.3 | 54.3 |
Goodwill | 3,402.4 | 3,382.8 |
Investments in and advances to affiliates | 93.2 | 78.5 |
Long-term deferred tax assets | 98.7 | 109.2 |
Other long-term assets | 328.5 | 36.9 |
Total assets | 5,018.9 | 4,676.3 |
Current liabilities: | ||
Accounts payable | 96.7 | 83.3 |
Accrued payroll and benefits | 54.2 | 55.2 |
Other current liabilities | 191.2 | 155.2 |
Current maturities of long-term debt | 56 | 55.6 |
Total current liabilities | 398.1 | 349.3 |
Long-term debt, less current maturities | 2,524.7 | 2,270.9 |
Other long-term liabilities | 396.7 | 271.3 |
Non-controlling interests—redeemable | 321 | 326.6 |
Redeemable preferred stock - Series A; shares authorized, issued and outstanding - 310,000; redemption value - $395.0 and $359.3, respectively | 395 | 359.3 |
Stockholders' equity: | ||
Preferred stock, $0.01 par value; shares authorized - 20,000,000; shares issued or outstanding - none | 0 | 0 |
Common stock, $0.01 par value; shares authorized - 300,000,000; shares issued and outstanding - 49,298,940 and 48,869,204, respectively | 0.5 | 0.5 |
Additional paid-in capital | 662.7 | 673.5 |
Accumulated other comprehensive loss | (50.7) | (22.4) |
Retained deficit | (315.7) | (247) |
Total Surgery Partners, Inc. stockholders' equity | 296.8 | 404.6 |
Non-controlling interests—non-redeemable | 686.6 | 694.3 |
Total stockholders' equity | 983.4 | 1,098.9 |
Total liabilities and stockholders' equity | 5,018.9 | 4,676.3 |
Redeemable Preferred Stock | ||
Current liabilities: | ||
Redeemable preferred stock - Series A; shares authorized, issued and outstanding - 310,000; redemption value - $395.0 and $359.3, respectively | $ 395 | $ 359.3 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Preferred stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, shares issued (in shares) | 49,298,940 | 48,869,204 |
Common stock, shares outstanding (in shares) | 49,298,940 | 48,869,204 |
Redeemable Preferred Stock | ||
Redeemable preferred stock, shares authorized (in shares) | 310,000 | 310,000 |
Redeemable preferred stock, shares issued (in shares) | 310,000 | 310,000 |
Redeemable preferred stock, shares outstanding (in shares) | 310,000 | 310,000 |
Redeemable preferred stock, redemption value | $ 395 | $ 359.3 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Millions | 4 Months Ended | 8 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Aug. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | ||
Income Statement [Abstract] | |||||
Revenues | $ 592.6 | $ 748.6 | $ 1,831.4 | $ 1,771.5 | |
Operating expenses: | |||||
Salaries and benefits | 175.4 | 241.1 | 550 | 534.7 | |
Supplies | 161 | 193.3 | 507.9 | 490.3 | |
Professional and medical fees | 45.1 | 57.9 | 154.8 | 145.5 | |
Lease expense | 27.9 | 36.5 | 85.6 | 86.7 | |
Other operating expenses | 32.2 | 43.4 | 109.3 | 104.2 | |
Cost of revenues | 441.6 | 572.2 | 1,407.6 | 1,361.4 | |
Total operating expenses | 500.3 | 682.6 | 1,595.5 | 1,693.7 | |
General and administrative expenses | 29.2 | 46.8 | 88.6 | 93.6 | |
Depreciation and amortization | 21.8 | 30.1 | 76.5 | 67.4 | |
Provision for doubtful accounts (see Note 1) | 12.5 | 16.3 | 0 | 0 | |
Income from equity investments | (3.3) | (3.1) | (10.2) | (8.9) | |
(Gain) loss on disposals and deconsolidations, net | 0 | 1.7 | (4.4) | 31.8 | |
Transaction and integration costs | 7.5 | 5.6 | 19 | 31.7 | |
Impairment charges | 0 | 0 | 7.9 | 74.4 | |
Loss on debt extinguishment | 0 | 18.2 | 11.7 | 0 | |
Loss (gain) on litigation settlements | (8.7) | (3.8) | 0.2 | 46 | |
Gain on acquisition escrow release | (0.2) | (1) | 0 | 0 | |
Other income | (0.1) | (0.4) | (1.4) | (3.7) | |
Operating income | 92.3 | 66 | 235.9 | 77.8 | |
Gain on amendment to tax receivable agreement | 1.1 | 15.3 | 0 | 0 | |
Tax receivable agreement (expense) benefit | 25.3 | 0 | (2.4) | 0 | |
Interest expense, net | (48.7) | (69) | (178.9) | (147) | |
Income (loss) before income taxes | 70 | 12.3 | 54.6 | (69.2) | |
Income tax expense (benefit) | 71.7 | (18.1) | 9.5 | 26.4 | |
Net income (loss) | (1.7) | 30.4 | 45.1 | (95.6) | |
Less: Net income attributable to non-controlling interests | (39.6) | (42.1) | (119.9) | (110.1) | |
Net loss attributable to Surgery Partners, Inc. | (41.3) | (11.7) | (74.8) | (205.7) | |
Less: Amounts attributable to participating securities | (26.1) | 0 | (35.7) | (32.4) | |
Net loss attributable to common stockholders | $ (67.4) | $ (11.7) | $ (110.5) | $ (238.1) | |
Net loss per share attributable to common stockholders - basic and diluted (in USD per share) | [1] | $ (1.39) | $ (0.24) | $ (2.29) | $ (4.96) |
Weighted average common shares outstanding - basic and diluted (shares) | [1] | 48,319 | 48,121 | 48,280 | 48,028 |
[1] | The impact of potentially dilutive securities for all periods were not considered because the effect would be anti-dilutive in those periods. |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions | 4 Months Ended | 8 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Aug. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ (1.7) | $ 30.4 | $ 45.1 | $ (95.6) |
Derivative activity | 0 | 0 | (28.3) | (22.4) |
Comprehensive income (loss) | (1.7) | 30.4 | 16.8 | (118) |
Less: Comprehensive income attributable to non-controlling interests | (39.6) | (42.1) | (119.9) | (110.1) |
Comprehensive loss attributable to Surgery Partners, Inc. | $ (41.3) | $ (11.7) | $ (103.1) | $ (228.1) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Millions | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Deficit | Non-Controlling Interests— Non-Redeemable | |
Beginning Balance, stockholders' equity (in shares) at Dec. 31, 2016 | 48,489,000 | ||||||
Beginning Balance, stockholders' equity at Dec. 31, 2016 | $ 324.7 | $ 0.5 | $ 320.5 | $ 0 | $ (311.3) | $ 315 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | 20.8 | (11.7) | 32.5 | ||||
Equity-based compensation (in shares) | 321,000 | ||||||
Equity-based compensation | 2.9 | 2.9 | |||||
Acquisition of NSH | 172.6 | 172.6 | |||||
Acquisition and disposal of shares of non-controlling interests, net | [1] | (2.1) | 3.5 | (5.6) | |||
Distributions to non-controlling interests—non-redeemable holders | (38.9) | (38.9) | |||||
Ending Balance, stockholders' equity (in shares) at Aug. 31, 2017 | 48,810,000 | ||||||
Ending Balance, stockholders' equity at Aug. 31, 2017 | 480 | $ 0.5 | 326.9 | 0 | (323) | 475.6 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | (14.6) | (41.3) | 26.7 | ||||
Equity-based compensation (in shares) | 58,000 | ||||||
Equity-based compensation | 1.3 | 1.3 | |||||
Preferred dividends | (10.5) | (10.5) | |||||
Mark to redemption adjustment | (15.6) | (15.6) | |||||
Repurchase of shares (in shares) | (181,000) | ||||||
Repurchase of shares | (2) | $ 0 | (2) | ||||
Acquisition and disposal of shares of non-controlling interests, net | [1] | (1.8) | 2.2 | (4) | |||
Distributions to non-controlling interests—non-redeemable holders | (25.3) | (25.3) | |||||
Ending Balance, stockholders' equity (in shares) at Dec. 31, 2017 | 48,687,000 | ||||||
Ending Balance, stockholders' equity at Dec. 31, 2017 | 1,336.6 | $ 0.5 | 695.5 | 0 | (41.3) | 681.9 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | (130.2) | (205.7) | 75.5 | ||||
Equity-based compensation (in shares) | 339,000 | ||||||
Equity-based compensation | 8.1 | 8.1 | |||||
Preferred dividends | (32.4) | (32.4) | |||||
Other comprehensive loss | (22.4) | (22.4) | |||||
Repurchase of shares (in shares) | (157,000) | ||||||
Repurchase of shares | (2) | $ 0 | (2) | ||||
Acquisition and disposal of shares of non-controlling interests, net | [1] | 20.1 | 4.3 | 15.8 | |||
Distributions to non-controlling interests—non-redeemable holders | (78.3) | (78.3) | |||||
Other | $ (0.6) | (0.6) | |||||
Ending Balance, stockholders' equity (in shares) at Dec. 31, 2018 | 48,869,204 | 48,869,000 | |||||
Ending Balance, stockholders' equity at Dec. 31, 2018 | $ 1,098.9 | $ 0.5 | 673.5 | (22.4) | (247) | 694.3 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | 6 | (74.8) | 80.8 | ||||
Equity-based compensation (in shares) | 430,000 | ||||||
Equity-based compensation | 9.2 | 9.2 | |||||
Preferred dividends | (35.7) | (35.7) | |||||
Other comprehensive loss | (28.3) | (28.3) | |||||
Acquisition and disposal of shares of non-controlling interests, net | [1] | 8.3 | 15.7 | (7.4) | |||
Distributions to non-controlling interests—non-redeemable holders | (81.2) | (81.2) | |||||
Other | $ 0.1 | 0.1 | |||||
Ending Balance, stockholders' equity (in shares) at Dec. 31, 2019 | 49,298,940 | 49,299,000 | |||||
Ending Balance, stockholders' equity at Dec. 31, 2019 | $ 983.4 | $ 0.5 | $ 662.7 | $ (50.7) | $ (315.7) | $ 686.6 | |
[1] | Includes post acquisition date adjustments in all periods, including reallocation in application of pushdown accounting in the 2017 successor period. |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 4 Months Ended | 8 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Aug. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities: | ||||
Net income (loss) | $ (1.7) | $ 30.4 | $ 45.1 | $ (95.6) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||
Depreciation and amortization | 21.8 | 30.1 | 76.5 | 67.4 |
Non-cash interest expense (income), net | (0.8) | 4.9 | 2.5 | (1.4) |
Equity-based compensation expense | 1.9 | 3.7 | 10.2 | 9.3 |
(Gain) loss on disposals and deconsolidations, net | 0 | 1.7 | (4.4) | 31.8 |
Deferred income taxes | 71 | (18.7) | 8.5 | 25.3 |
Income from equity investments, net of distributions received | 0.7 | 0.5 | 0.3 | 0.2 |
Loss on debt extinguishment | 0 | 18.2 | 11.7 | 0 |
Non-cash lease expense | 0 | 0 | 40 | 0 |
Impairment charges | 0 | 0 | 7.9 | 74.4 |
Gain on legal settlements | (8.7) | 0 | 0 | 0 |
Gain on amendment to tax receivable agreement | (1.1) | (15.3) | 0 | 0 |
Tax receivable agreement benefit | (25.3) | 0 | 0 | 0 |
Provision for doubtful accounts (see Note 1) | 12.5 | 16.3 | 0 | 0 |
Changes in operating assets and liabilities, net of acquisitions and divestitures: | ||||
Accounts receivable | (31.5) | 8.8 | (23.5) | (22.8) |
Other operating assets and liabilities | 14.4 | (12.9) | (45.3) | 56 |
Net cash provided by operating activities | 53.2 | 67.7 | 129.5 | 144.6 |
Cash flows from investing activities: | ||||
Purchases of property and equipment, net | (10.8) | (18.8) | (73.6) | (39.8) |
Payments for acquisitions, net of cash acquired | (29.2) | (725.9) | (13.8) | (106.8) |
Purchase of equity investments | 0 | 0 | (15.2) | 0 |
Proceeds from divestitures | 1.2 | 0.1 | 17.6 | 19.2 |
Other investing activities | 0 | 0 | (0.2) | (1.5) |
Net cash used in investing activities | (38.8) | (744.6) | (85.2) | (128.9) |
Cash flows from financing activities: | ||||
Principal payments on long-term debt | (18.6) | (1,164.2) | (490.8) | (157.6) |
Borrowings of long-term debt | 0.4 | 1,806 | 506.9 | 282.7 |
Payments of debt issuance costs | 0 | (58.6) | (8.9) | (3) |
Penalty on prepayment of debt | 0 | 0 | (17.8) | 0 |
Distributions to non-controlling interest holders | (33.5) | (50.3) | (121.2) | (109) |
(Payments) proceeds related to ownership transactions with non-controlling interest holders, net | 1 | (1.5) | (3.2) | (2.2) |
Proceeds from preferred stock issuance | 0 | 310 | 0 | 0 |
Payments of stock issuance costs | 0 | (18.3) | 0 | 0 |
Payments of preferred dividends | (1.3) | 0 | 0 | (7.8) |
Repurchase of shares | (2) | 0 | 0 | (2) |
Other financing activities | 0.3 | (1.7) | (0.9) | (7.4) |
Net cash (used in) provided by financing activities | (53.7) | 821.4 | (135.9) | (6.3) |
Net (decrease) increase in cash, cash equivalents and restricted cash | (39.3) | 144.5 | (91.6) | 9.4 |
Cash, cash equivalents and restricted cash at beginning of period | 214.5 | 70 | 184.6 | 175.2 |
Cash, cash equivalents and restricted cash at end of period | 175.2 | 214.5 | 93 | 184.6 |
Supplemental cash flow information: | ||||
Interest paid, net of interest income received | 40.9 | 68.6 | 180.3 | 145.4 |
Cash paid for income taxes | 0.5 | 0.6 | 1.6 | 2.2 |
Non-cash purchases of property and equipment | $ 14.9 | $ 8.5 | $ 30.7 | $ 61 |
Organization and Summary of Acc
Organization and Summary of Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Summary of Accounting Policies | Organization and Summary of Accounting Policies Organization Surgery Partners, Inc., a Delaware corporation (together with its subsidiaries, the "Company"), was formed April 2, 2015. On August 31, 2017, a fund advised by an affiliate of Bain Capital Private Equity ("Bain Capital"), purchased approximately 54.2% of the Company’s outstanding common stock. As a result, Bain Capital became the controlling stockholder of the Company, holding Series A Preferred Stock (as defined in Note 7. "Redeemable Preferred Stock") and common stock that collectively represent approximately 67.0% of the voting power of all classes of capital stock of the Company. As of December 31, 2019 , the Company owned and operated a national network of surgical facilities and ancillary services in 30 states. The surgical facilities, which include ambulatory surgery centers ("ASCs") and surgical hospitals, primarily provide non-emergency surgical procedures across many specialties, including, among others, gastroenterology, general surgery, ophthalmology, orthopedics and pain management. The Company's surgical hospitals also provide 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 and optical services. As of December 31, 2019 , the Company owned or operated a portfolio of 128 surgical facilities, comprised of 112 ASCs and 16 surgical hospitals. The Company owns these facilities in partnership with physicians and, in some cases, health care systems in the markets and communities it serves. The Company owned a majority interest in 85 of the surgical facilities and consolidated 107 of the facilities for financial reporting purposes. Basis of Presentation The preparation of financial statements in conformity with generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the 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. Actual results could differ from those estimates. The 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. In connection with the change of control effective August 31, 2017, the Company elected to apply "pushdown" accounting by applying the guidance in Financial Accounting Standards Board ("FASB") Accounting Standards Codification Topic 805, Business Combinations . Accordingly, the consolidated financial statements of the Company for periods before and after August 31, 2017 reflect different bases of accounting, and the results of operations, changes in stockholders' equity and cash flows of those periods are not comparable. Throughout the Company's consolidated financial statements and the accompanying notes herein, periods prior to August 31, 2017 (the date of the change of control) are identified as "Predecessor" and periods after the date of the change of control are identified as "Successor." Variable Interest Entities The consolidated financial statements include the accounts of variable interest entities ("VIE") in which the Company is the primary beneficiary under the provisions of Accounting Standards Codification 810, Consolidation . The Company has the power to direct the activities that most significantly impact a variable interest entity's economic performance. Additionally, the Company would absorb the majority of the expected losses from any of these entities should such expected losses occur. At December 31, 2019 , the variable interest entities include four surgical facilities, three anesthesia practices and three physician practices. The total assets (excluding goodwill and intangible assets, net) of the consolidated VIEs included in the accompanying consolidated balance sheets as of December 31, 2019 and 2018 , were $36.2 million and $11.2 million , respectively, and the total liabilities of the consolidated VIEs were $25.2 million and $3.6 million , respectively. 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 inputs classified into the following hierarchy: • Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities. • Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These may include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. • Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, depending on the nature of the item being valued. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, restricted invested assets and accounts payable approximate their fair values under Level 3 calculations. A summary of the carrying amounts and fair values of the Company's long-term debt follows (in millions): Carrying Amount Fair Value December 31, December 31, 2019 2018 2019 2018 Senior secured term loan $ 1,434.1 $ 1,447.9 $ 1,434.1 $ 1,382.7 8.875% senior unsecured notes due 2021 $ — $ 406.7 $ — $ 407.2 6.750% senior unsecured notes due 2025 $ 370.0 $ 370.0 $ 368.2 $ 320.5 10.000% senior unsecured notes due 2027 $ 430.0 $ — $ 471.4 $ — The fair values in the table above were based on a Level 2 inputs using quoted prices for identical liabilities in inactive markets. The carrying amounts related to the Company's other long-term debt obligations, including finance lease obligations, approximate their fair values under Level 3 calculations. The Company has entered into certain interest rate swap agreements (see Note 8. Derivatives and Hedging Activity). At December 31, 2019 and 2018 , the fair value of these derivative instruments was $50.7 million and $22.4 million , respectively, and was included in other long-term liabilities in the consolidated balance sheets. The fair value of these derivative financial instruments was based on a quoted market price, or a Level 2 input. Revenues In May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers . The Company adopted the new standard effective January 1, 2018, using the modified retrospective method. The presentation of the amount of earnings from operations and net earnings were unchanged upon adoption of the new standard; however, during the year of adoption, the Company determined that amounts historically considered to be bad debt should be considered an implicit price concession, as defined in FASB Accounting Standards Codification 606, " Revenue From Contracts With Customers" . This resulted in changes to the presentation of revenues and the provision for bad debts in the consolidated statements of operations. Previously, the estimate for unrealizable amounts was recorded to the provision for bad debts and presented as a component of operating expenses. Upon reassessment during the year of adoption, the estimate for unrealizable amounts is now reflected as an implicit price concession as a reduction to arrive at net revenue. The Company's revenues generally relate to contracts with patients in which the performance obligations are to provide health care services. The Company recognizes revenues in the period in which our obligations to provide health care services are satisfied and reports the amount that reflects the consideration the Company expects to be entitled to receive. The contractual relationships with patients, in most cases, also involve a third-party payor (e.g., Medicare, Medicaid and private insurance organizations, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by or negotiated with the third-party payors. The payment arrangements with third-party payors for the services provided to the related patients typically specify payments at amounts less than the Company's standard charges. The Company continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals. A summary of revenues by service type as a percentage of total revenues follows: Successor Predecessor Year Ended December 31, September 1 to January 1 to 2019 2018 2017 2017 Patient service revenues: Surgical facilities revenues 94.1 % 93.6 % 94.3 % 91.4 % Ancillary services revenues 4.3 % 4.5 % 4.2 % 7.0 % 98.4 % 98.1 % 98.5 % 98.4 % Other service revenues: Optical services revenues 0.2 % 0.5 % 0.6 % 1.0 % Other 1.4 % 1.4 % 0.9 % 0.6 % 1.6 % 1.9 % 1.5 % 1.6 % Total revenues 100.0 % 100.0 % 100.0 % 100.0 % Patient service revenues. This revenue is related to charging facility fees in exchange for providing patient care. The fee charged for health care 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 as performance obligations are satisfied. Performance obligations are based on the nature of services provided. Typically, the Company recognizes revenue at a point in time in which services are rendered and the Company has no obligation to provide further patient services. As the Company primarily performs outpatient procedures, performance obligations are generally satisfied same day and revenue is recognized on the date of service. The Company determines the transaction price based on gross charges for services provided, net of estimated contractual adjustments, discounts from third-party payors. The Company estimates its contractual adjustments and discounts based on contractual agreements, its discount policies and historical experience. Changes in estimated contractual adjustments and discounts are recorded in the period of change. Other service revenues. Optical service revenues consist of handling charges billed to the members of the Company's optical products purchasing organization. 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. The Company satisfies the performance obligation and recognizes revenue when the 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. 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. These agreements typically require the Company to provide recurring management services over a multi-year period which are billed and collected on a monthly basis. 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 management services are rendered and billed. 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 millions): Successor Predecessor Year Ended December 31, Year Ended December 31, September 1 to January 1 to 2019 2018 2017 2017 Amount % Amount % Amount % Amount % Patient service revenues: Private insurance $ 970.5 53.8 % $ 948.9 54.6 % $ 347.8 59.6 % $ 360.1 48.9 % Government 701.9 38.9 % 653.3 37.6 % 196.9 33.7 % 309.0 42.0 % Self-pay 46.1 2.6 % 50.0 2.9 % 15.2 2.6 % 15.9 2.2 % Other (1) 84.6 4.7 % 84.8 4.9 % 23.9 4.1 % 51.4 6.9 % Total patient service revenues 1,803.1 100.0 % 1,737.0 100.0 % 583.8 100.0 % 736.4 100.0 % Other service revenues: Optical service revenues 3.8 9.5 3.5 7.6 Other revenues 24.5 25.0 5.3 4.6 Total revenues $ 1,831.4 $ 1,771.5 $ 592.6 $ 748.6 (1) Other is comprised of anesthesia service agreements, auto liability, letters of protection and other payor types. The increase in other revenues from 2017 to 2018 is primarily due to an increase in management and administrative service fees due to the acquisitions completed in 2017. Total net revenues in 2018 additionally reflect the impact of the Company's adoption of ASU 2014-09 as discussed above. Subsequent to the transactions on August 31, 2017 (Predecessor), the Company, as part of a review of operations undertaken to create a solid foundation to support the Company's long-term growth objectives, incurred a non-recurring adjustment to revenue of $15.6 million , which was attributable to an increase in reserves for certain accounts receivable during the eight months ended August 31, 2017 (Predecessor). The increase in reserves resulted from certain known events and actions during the eight months ended August 31, 2017 (Predecessor) related to select payors primarily in the Company’s ancillary services segment. Upon consideration of such additional information, related receivables were determined to have a low likelihood of collection. The majority of this adjustment related to receivables with balances from the first quarter of 2016 and prior. Cash, Cash Equivalents and Restricted Cash 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. Cash, cash equivalents and restricted cash reported within the consolidated statement of cash flows includes $0.3 million of restricted investments, which are reflected in other long-term assets in the consolidated balance sheet at both December 31, 2019 and 2018 . These restricted investments represent restricted cash held in accordance with the provisions of a long-term operating lease agreement held as security for performance under the Company's covenants and obligations within the agreement through January 2024. Accounts Receivable Accounts receivable from third-party payors are recorded net of estimated implicit price concessions, which are estimated based on the historical trend of the Company's surgical facilities’ cash collections and contractual write-offs, established fee schedules, relationships with payors and procedure statistics. While changes in estimated reimbursement from third-party payors remain a possibility, the Company expects that any such changes would be minimal and, therefore, would not have a material effect on its financial condition or results of operations. Accounts receivable consists of receivables from federal and state agencies (under the Medicare and Medicaid programs), private insurance organizations, 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 December 31, 2019 and December 31, 2018 , the Company had a net third-party Medicaid settlements liability of $5.6 million and $4.8 million , respectively. 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 considered significant. Amounts are classified outside of self-pay if the Company has an agreement with the third-party payor or has verified a patient’s coverage prior to services rendered. The Company's policy is to collect co-payments and deductibles prior to providing medical services. 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's collection policies and procedures are based on the type of payor, size of claim and estimated collection percentage for each patient account. The operating systems used to manage patient accounts provide for an aging schedule in 30-day increments, by payor, physician and patient. The Company analyzes accounts receivable at each of its surgical facilities to ensure the proper collection and aged category. The operating systems generate reports that assist in the collection efforts by prioritizing patient accounts. Collection efforts include direct contact with third-party payors or patients, written correspondence and the use of legal or collection agency assistance, as required. A summary of the changes in the allowance for doubtful accounts receivable follows (in millions): Balance at Beginning of Period Provision for Doubtful Accounts Accounts Written off, Net of Recoveries Impact of adoption of ASC 606 Balance at End of Period Predecessor Eight months ended August 31, 2017 $ 29.9 $ 16.3 $ (14.1 ) $ — $ 32.1 Successor Four months ended December 31, 2017 — 12.5 (10.5 ) — 2.0 Year ended December 31, 2018 2.0 — — (2.0 ) — The receivables related to the Company's optical products purchasing organization are recognized separately from patient accounts receivable and are included in other current assets in the consolidated balance sheets. Such receivables were $8.6 million and $8.5 million at December 31, 2019 and 2018 , respectively. 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. 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. For discussion on impairment for goodwill and indefinite-lived intangible assets, refer to Note 4. "Goodwill and Intangible Assets." Professional and 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. The Company also maintains workers' compensation insurance, subject to a deductible. 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 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 consolidated balance sheets. Derivative Instruments and Hedging Activities In accordance with Accounting Standards Codification 815, Derivatives and Hedging , the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. In accordance with the FASB’s fair value measurement guidance in ASU 2011-04, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. Investments in Unconsolidated Affiliates Investments in unconsolidated affiliates in which the Company exerts significant influence but does not control or otherwise consolidate are accounted for using the equity method. Equity method investments are initially recorded at cost, unless the investments are a result of the Company losing control of a previously controlled entity, but still retaining a non-controlling interest. Transactions that result in the deconsolidation of a previously consolidated entity, are measured at fair value. The fair value measurement utilizes Level 3 inputs, which include unobservable data, to measure the fair value of the retained non-controlling interest. The fair value determination is generally based on a combination of multiple valuation methods, which can include discounted cash flow, income approach, or market value approach which incorporates estimates of future earnings and market valuation multiples for certain guideline companies. These investments are included as investments in and advances to affiliates in the accompanying consolidated balance sheets. The Company’s share of the profits and losses from these investments is reported in income from equity investments in the accompanying consolidated statements of operations. The Company monitors its investments for other-than-temporary impairment by considering factors such as current economic and market conditions and the operating performance of the investees and records reductions in carrying values when necessary. Summarized financial information for these equity method investees is included in the following tables (in millions): December 31, 2019 2018 Current assets $ 51.8 $ 41.2 Noncurrent assets $ 47.4 $ 27.8 Current liabilities $ 25.5 $ 21.8 Noncurrent liabilities $ 5.8 $ 3.8 Year Ended December 31, 2019 2018 Net revenues $ 188.5 $ 169.8 Cost of revenues $ 132.0 $ 118.5 Net income $ 51.1 $ 48.2 The results of operations for the Company's equity method investees was not considered material for the four months ended December 31, 2017 (Successor) and the eight months ended August 31, 2017 (Predecessor). During the year ended December 31, 2019 , the Company acquired non-controlling interests, primarily in four surgical facilities, for a cash investment of $15.2 million . The non-controlling interests were accounted for as equity method investments. During the year ended December 31, 2018, the Company sold a portion of its interest in one surgery center for net cash proceeds of $0.5 million . As a result of this transaction, the Company lost control of the previously controlled entity but retains a non-controlling interest, resulting in the deconsolidation of the previously consolidated entity. The remaining non-controlling interest was accounted for as an equity method investment, and initially measured and recorded at fair value as of the date of the transaction. The transaction resulted in a pretax gain on deconsolidation of $1.1 million , which is included in loss on disposals and deconsolidations, net, in the accompanying consolidated statement of operations for the year ended December 31, 2018. The gain was determined based on the difference between the fair value of the Company's retained interest in the entity and the carrying value of both the tangible and intangible assets of the entity immediately prior to the transaction less cash proceeds received. The fair value of the investment of $2.0 million was recorded as a component of investments in and advances to affiliates in the accompanying consolidated balance sheets. 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 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 consolidated statements of operations; changes in ownership interests in which the Company retains a controlling interest are accounted for as equity transactions assuming the Company continues to consolidate related entities. Certain transactions with non-controlling interests are classified within financing activities in the consolidated statements of cash flows. The 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 partnership and limited liability company through which the Company owns and operates its surgical facilities is governed by a partnership or operating agreement. In certain circumstances, the applicable partnership or operating agreements for the Company's surgical facilities provide that the facilities will purchase all of the physician limited partners’ or physician minority members', as applicable, ownership if certain adverse regulatory events occur, such as it becoming illegal for the physician(s) 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 consolidated balance sheets. A summary of activity related to the non-controlling interests—redeemable follows (in millions): December 31, 2019 2018 Balance at beginning of period $ 326.6 $ 299.3 Net income attributable to non-controlling interests—redeemable 39.1 34.6 (Disposal) and acquisition of shares of non-controlling interests, net—redeemable (1) (4.7 ) 23.7 Distributions to non-controlling interest —redeemable holders (40.0 ) (30.7 ) Other — (0.3 ) Balance at end of period $ 321.0 $ 326.6 (1) Includes post acquisition date adjustments in all periods. 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. Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, "Leases" (the "Lease Accounting Standard"). The Company adopted the Lease Accounting Standard effective January 1, 2019, using a modified retrospective transition approach. The most prominent among the changes from this ASU is the recognition of right-of-use assets and lease liabilities by lessees for those leases classified as operating leases. The Company’s accounting for finance leases remained substantially unchanged from its prior accounting for capital leases. Upon adoption of the Lease Accounting Standard, the Company recorded $294.0 million of operating lease liabilities and right-of-use assets on January 1, 2019. The cumulative effect of the accounting change recognized upon adoption was $6.1 million reflected as an adjustment to retained deficit in our consolidated balance sheets. See Note 6. "Leases" for further discussion. In June 2016, the FASB issued ASU 2016-13, which introduced a new model for recognizing credit losses on financial instruments based on an estimate of the current expected credit losses. The new current expected credit losses ("CECL") model generally calls for the immediate recognition of all expected credit losses and applies to financial instruments and other assets, including accounts receivable and other financial assets measured at amortized cost, debt securities and other financial assets. This guidance replaces the current incurred loss model for measuring expected credit losses, requires expected losses on available-for-sale debt securities to be recognized through an allowance for credit losses rather than as reductions in the amortized cost of the securities, and provides for additional disclosure requirements. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company adopted this ASU on January 1, 2020, and does not expect the adoption of this ASU will have a material impact on its consolidated financial position and results of operations. |
Acquisitions and Disposals
Acquisitions and Disposals | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations And Disposals [Abstract] | |
Acquisitions and Disposals | Acquisitions and Disposals The Company accounts for 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. Any goodwill recognized is determined as the excess of the fair value of the consideration conveyed plus the fair value of any non-controlling interests in the acquisition over the fair value of the net assets acquired. Acquisitions in which the Company is able to exert significant influence but does not have control are accounted for using the equity method. Acquired assets and assumed liabilities typically 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. Fair value attributable to non-controlling interests is 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 is 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 is based on Level 3 computations using key inputs such as the Company's internally-prepared financial projections. Fair values assigned to acquired working capital are based on carrying amounts reported by the acquiree at the date of acquisition, which approximate their fair values. Acquisitions During the year ended December 31, 2019 , the Company acquired a controlling interest in one surgical facility, a clinic that was merged into an existing facility and a physician practice for total aggregate consideration of $26.7 million , including cash consideration of $20.1 million , net of cash acquired. The remainder of the consideration related to the forgiveness of certain amounts due to the Company from the acquired clinic. The cash consideration was funded through cash from operations. The total consideration was allocated to the assets acquired and liabilities assumed based upon the respective acquisition date fair values. During the year ended December 31, 2018, the Company acquired a controlling interest in five surgical facilities in new markets, two surgical facilities in existing markets, one of which was merged into an existing facility and multiple physician practices for a combined cash purchase price of $105.6 million , net of cash acquired. The 2018 acquisitions were funded through cash from operations. The total consideration related to these acquisitions was allocated to the assets acquired and liabilities assumed based upon their respective acquisition date fair values. Preliminary or final amounts recognized for each major class of assets acquired and liabilities assumed for acquisitions completed during the years ended December 31, 2019 and 2018 , including post acquisition date adjustments, are as follows (in millions): 2019 2018 Cash consideration (1) $ 26.7 $ 106.4 Fair value of non-controlling interests 8.3 63.8 Aggregate acquisition date fair value $ 35.0 $ 170.2 Net assets acquired: Current Assets $ 5.4 $ 12.6 Property and equipment 1.8 5.3 Intangible assets — 0.4 Goodwill 22.6 155.9 Other long-term assets (2) 37.7 6.6 Current liabilities (4.1 ) (6.5 ) Long-term debt (0.2 ) — Long-term liabilities (28.2 ) (4.1 ) Aggregate acquisition date fair value $ 35.0 $ 170.2 (1) In connection with the clinic acquisition in 2019, the Company acquired the remaining non-controlling interests in one of its existing consolidated surgical facilities. As such, $6.3 million of the cash consideration for the clinic acquisition was classified as a financing activity and presented in payments related to ownership transactions with non-controlling interest holders in the Consolidated Statements of Cash Flows. (2) The assets acquired in 2019 includes the fair value of a non-controlling investment held by the acquired clinic in one of the Company's consolidated surgical facilities of $8.8 million . This investment asset was subsequently eliminated in consolidation. The fair values assigned to certain assets acquired and liabilities assumed by the Company in 2019 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. During the year ended December 31, 2019 , no significant changes were made to the purchase price allocation of assets and liabilities, existing at the date of acquisition, related to individual acquisitions completed in 2018 . The goodwill acquired in connection with the 2019 acquisitions was allocated to the Company's reportable segments as follows: $14.1 million to surgical facility services and $8.5 million to ancillary services. The results of operations of the 2019 acquisitions are included in the Company’s results of operations beginning on the dates of acquisitions, and were not considered significant for the year ended December 31, 2019 . Disposals During the year ended December 31, 2019 , the Company disposed of previously owned real property associated with one of its existing non-consolidated surgical facilities. In connection with the sale, the Company recognized a $10.9 million pretax gain included in loss (gain) on disposals and deconsolidations, net in the accompanying consolidated statements of operations. The sale did not impact the Company's investment in the surgical facility, which continues to be accounted for as an equity method investment. During the year ended December 31, 2018, the Company disposed of four surgery centers, two surgical hospitals and its optical laboratory for net cash proceeds of $18.7 million , and recognized a net pretax loss of $21.2 million included in loss on disposals and deconsolidations, net in the consolidated statement of operations for the year ended December 31, 2018 . This non-cash loss was primarily a result of the write-off of the net assets of the facility (net of proceeds received) and was primarily driven by the write-off of the associated goodwill. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
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 20 to 40 years for buildings and building improvements, 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 finance leases. Assets held under finance leases are stated at the present value of lease payments at the inception of the related lease. Such assets are amortized on a straight-line basis over the lesser of the lease term or the remaining useful life of the leased asset. A summary of property and equipment follows (in millions): December 31, 2019 2018 Land $ 11.0 $ 19.5 Buildings and improvements 106.6 200.4 Furniture and equipment 23.1 24.1 Computer and software 59.8 33.9 Medical equipment 148.3 139.6 Right-of-use finance lease asset 259.3 — Construction in progress 25.9 64.9 Property and equipment, at cost 634.0 482.4 Less: Accumulated depreciation (110.7 ) (56.1 ) Property and equipment, net $ 523.3 $ 426.3 At December 31, 2018, the Company had certain land, buildings and improvements that arose solely as a result of the Company being the deemed accounting owner under the build-to-suit guidance in in effect prior to the adoption of the Lease Accounting Standard. Upon adoption of the Lease Accounting Standard on January 1, 2019, the Company derecognized the build-to-suit assets and related liabilities and concluded the leases should be recognized on the balance sheet as finance leases under the new guidance. Further the Company had an ongoing development agreement to construct a new hospital, which costs were recognized as incurred as construction in progress at December 31, 2018. Upon reevaluation, the Company concluded that it did not control the assets under construction and therefore the obligation and related asset were derecognized from the balance sheets upon adoption of the Lease Accounting Standard. The lease related to this new hospital commenced in November 2019, and is recognized as a finance lease at December 31, 2019 (see Note. 6 "Leases"). Depreciation expense was $71.9 million and $62.5 million for the years ended December 31, 2019 and 2018 (Successor), respectively, $20.0 million for the four months ended December 31, 2017 (Successor) and $24.1 million for the eight months ended August 31, 2017 (Predecessor). |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill represents the fair value of the consideration provided in an acquisition over the fair value of net assets acquired and is not amortized. The Company has indefinite-lived intangible assets related to the certificates of need held in jurisdictions where certain of its surgical facilities are located, Medicare licenses and certain management rights agreements. The Company also has finite-lived intangible assets related to physician guarantee agreements, non-compete agreements, management rights agreements and customer relationships. Physician income guarantees are amortized into salaries and benefits costs in the 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 consolidated statements of operations over the service lives of the agreements, typically ranging from two to five years for non-compete agreements and 15 years for the management rights agreements. Customer relationships are amortized into depreciation and amortization expense in the consolidated statements of operations over the estimated lives of the relationships, ranging from three to ten years . The Company tests its goodwill and indefinite-lived intangible assets for impairment at least annually, as of October 1, or more frequently if certain indicators arise. The Company tests for goodwill impairment at the reporting unit level, which is defined as one level below an operating segment. As of October 1, 2019, the Company has identified three reporting units, which include the following: 1) Surgical Facilities, 2) Ancillary Services, and 3) Alliance, which is a component of the Optical Services operating segment. In 2018, the Company disposed of two previously identified reporting units, Midwest Labs and Family Vision Care. The Company compares the carrying value of the net assets of the reporting unit to the estimated fair value of the reporting unit. To determine the fair value of the reporting units, the Company obtained valuations at the reporting unit level prepared by third-party valuation specialists which utilized a combination of the income and market approaches. The discounted cash flow model is projected based on a year-by-year assessment that considers historical results, estimated market conditions, internal projections, and relevant publicly available statistics. Determining fair value requires the exercise of significant judgment, including assumptions about appropriate discount rates, perpetual growth rates and the amount and timing of expected future cash flows. The significant judgments are typically based upon Level 3 inputs, generally defined as unobservable inputs representing the Company's own assumptions. The cash flows employed in the discounted cash flow analysis are based on the Company's most recent budgets and business plans aligned with provided guidance and, when applicable, various growth rates are assumed for years beyond the current business plan period. Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting units. The variables within the discount rate, many of which are outside of the Company's control, provide the best estimate of all assumptions applied within the DCF model. There can be no assurance that operations will achieve the future cash flows reflected in the projections. In determining the fair value under the market approaches, the analysis includes a control premium, which was based on observable market data and a review of selected transactions of companies that operate in the Company's sector. While the Company believes that all assumptions utilized in the testing were appropriate, they may not reflect actual outcomes that could occur. Specific factors that could negatively impact the assumptions used include changes to the discount and growth rates and a change in the equity and enterprise premiums being realized in the market. As of October 1, 2019, prior to impairment testing, the Company had three reporting units with allocated goodwill as follows: 1) Surgical Facilities - $3.4 billion , 2) Ancillary Services - $28.6 million , and 3) Alliance - $11.6 million . As of the October 1, 2019 valuation, the fair value for both the Surgical Facilities and Ancillary Services reporting units was substantially in excess of its carrying value. For the Alliance reporting unit, the carrying value exceeded the fair value, resulting in non-cash impairment charges of $2.5 million in accordance with ASU No. 2017-04. As a result of the impairment charges, the fair value equaled carrying value as of October 1, 2019 for the Alliance reporting unit, any future adverse events or changes in the assumptions could require additional impairment. Subsequent to the date of our annual impairment test, the Company considered its operating results for the fourth quarter of 2019, macroeconomic, industry and market conditions, and other market indicators including its market capitalization. Based on its evaluation of all such factors, the Company concluded that an event had not occurred or circumstances had not changed that would more likely than not reduce the fair value of its reporting units below their carrying values. During the year ended December 31, 2018, as a result of its impairment testing, the Company recorded non-cash impairment charges of $60.7 million and $13.7 million related to the Ancillary Services and Alliance reporting units, respectively. A summary of the changes in the carrying amount of goodwill follows (in millions): December 31, 2019 2018 Balance at beginning of period $ 3,382.8 $ 3,346.8 Acquisitions, including post acquisition adjustments 22.3 143.5 Disposals and deconsolidations (0.2 ) (33.1 ) Impairment (2.5 ) (74.4 ) Balance at end of period $ 3,402.4 $ 3,382.8 A summary of the Company's acquisitions and disposals for the years ended December 31, 2019 and 2018 is included in Note 2. "Acquisitions and Disposals." A summary of the components of intangible assets follows (in millions): December 31, 2019 December 31, 2018 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Finite-lived intangible assets: Management rights agreements $ 31.1 $ (7.3 ) $ 23.8 $ 41.6 $ (4.2 ) $ 37.4 Other 8.8 (4.5 ) 4.3 6.4 (2.8 ) 3.6 Total finite-lived intangible assets 39.9 (11.8 ) 28.1 48.0 (7.0 ) 41.0 Indefinite-lived intangible assets 19.2 — 19.2 13.3 — 13.3 Total intangible assets $ 59.1 $ (11.8 ) $ 47.3 $ 61.3 $ (7.0 ) $ 54.3 During the year ended December 31, 2019, the Company acquired a clinic that was previously managed by the Company. As a result of the transaction, the Company determined the management rights agreement related to the acquired clinic no longer provided a future benefit. As such, the Company recorded non-cash impairment charges of $5.4 million , which was included as a component of impairment charges on the accompanying consolidated statement of operations. Amortization expense for intangible assets was $4.6 million and $4.9 million for the years ended December 31, 2019 and 2018 (Successor), respectively, $1.8 million for the four months ended December 31, 2017 (Successor) and $6.0 million for the eight months ended August 31, 2017 (Predecessor). Total estimated amortization expense for the next five years and thereafter related to intangible assets follows (in millions): 2020 $ 4.5 2021 4.1 2022 3.2 2023 2.1 2024 1.8 Thereafter 12.4 Total $ 28.1 |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt A summary of long-term debt follows (in millions): December 31, 2019 2018 Senior secured term loan (1) $ 1,434.1 $ 1,447.9 Senior secured revolving credit facility — — 8.875% senior unsecured notes due 2021 (2) — 406.7 6.750% senior unsecured notes due 2025 370.0 370.0 10.000% senior unsecured notes due 2027 430.0 — Notes payable and other secured loans 104.0 79.3 Finance lease obligations (3) 253.4 25.4 Less: unamortized debt issuance costs (10.8 ) (2.8 ) Total debt 2,580.7 2,326.5 Less: Current maturities 56.0 55.6 Total long-term debt $ 2,524.7 $ 2,270.9 (1) Includes unamortized fair value discount of $4.6 million and $5.5 million as of December 31, 2019 and 2018 , respectively. (2) Includes unamortized fair value premium of $6.7 million as of December 31, 2018 . The premium was written-off upon redemption as discussed below. (3) In connection with the adoption of the Lease Accounting Standard, the Company's capital lease obligations that existed as of December 31, 2018 were derecognized and included as a component of the finance lease obligations included in the table shown above. See Note 6. "Leases" for further discussion on the adoption of the Lease Accounting Standard. The increase in finance lease obligations upon adoption of the Lease Accounting Standard is due to the inclusion of certain financing obligations that were previously recognized as a component of other current and long-term liabilities as discussed further in Note 13. "Other Assets and Liabilities." The increase also includes the addition of a new finance lease associated with a new de novo hospital, which began operations in the fourth quarter of 2019. Senior Secured Credit Facilities The Company has a credit agreement (the "Credit Agreement") providing for a $1.44 billion senior secured term loan (the "Term Loan") and a $120.0 million senior secured revolving credit facility (the "Revolver" and, together with the Term Loan, the "Senior Secured Credit Facilities"). The Revolver may be utilized for working capital, capital expenditures and general corporate purposes. Subject to certain conditions and requirements set forth in the Credit Agreement, the Company may request one or more additional incremental term loan facilities or one or more increases in the commitments under the Revolver. During 2019, in connection with the completion of the issuance of the 2027 Unsecured Notes (defined below), the outstanding commitments under the Company's Revolver were increased by $45.0 million pursuant to an incremental amendment to the credit agreement governing its revolving credit facility. As of both December 31, 2019 and 2018, the Company had no outstanding borrowing on the Revolver. As of December 31, 2019 , the Company's availability on the Revolver was $112.9 million (including outstanding letters of credit of $7.1 million ). The Term Loan will mature on August 31, 2024 and the Revolver will mature on August 31, 2022. The Senior Secured Credit Facilities bear interest at a rate per annum equal to (x) LIBOR plus a margin ranging from 3.00% to 3.25% per annum, depending on the Company's first lien net leverage ratio or (y) an alternate base rate (which will be the highest of (i) the prime rate, (ii) 0.5% per annum above the federal funds effective rate and (iii) one-month LIBOR plus 1.00% per annum (solely with respect to the Term Loan, the alternate base rate shall not be less than 2.00% per annum)) plus a margin ranging from 2.00% to 2.25% per annum. In addition, the Company is required to pay a commitment fee of 0.50% per annum in respect of unused commitments under the Revolver. The Term Loan amortizes in equal quarterly installments of 0.25% of the aggregate original principal amount of the Term Loan. The Term Loan is subject to mandatory prepayments based on excess cash flow for the applicable fiscal year that will depend on the first lien net leverage ratio as of the last day of the applicable fiscal year, as well as upon the occurrence of certain other events, as described in the Credit Agreement. There were no excess cash flow payments required as of December 31, 2019 . With respect to the Revolver, the Company is required to comply with a maximum consolidated total net leverage ratio of 9.50 : 1.00 , which covenant will be tested quarterly on a trailing four quarter basis only if, as of the last day of the applicable fiscal quarter the Revolver is drawn in an aggregate amount greater than 35% of the total commitments under the Revolver. Such financial maintenance covenant is subject to an equity cure. The Credit Agreement includes customary negative covenants restricting or limiting the ability of the Company and its restricted subsidiaries, to, among other things, sell assets, alter its business, engage in mergers, acquisitions and other business combinations, declare dividends or redeem or repurchase equity interests, incur additional indebtedness or guarantees, make loans and investments, incur liens, enter into transactions with affiliates, prepay certain junior debt, and modify or waive certain material agreements and organizational documents, in each case, subject to customary and other agreed upon exceptions. The Credit Agreement also contains customary affirmative covenants and events of default. As of December 31, 2019 , the Company was in compliance with the covenants contained in the Credit Agreement. The Senior Secured Credit Facilities are guaranteed, on a joint and several basis, by SP Holdco I, Inc. and each of Surgery Center Holdings, Inc.'s current and future wholly-owned domestic restricted subsidiaries (subject to certain exceptions) (the "Subsidiary Guarantors") and are secured by a first priority security interest in substantially all of Surgery Center Holdings, Inc.'s, SP Holdco I, Inc.'s and the Subsidiary Guarantors’ assets (subject to certain exceptions). In connection with the Term Loan and Revolver, in 2017 the Company repaid its then-existing 2014 First Lien Credit Agreement, resulting in a debt extinguishment loss of $18.2 million , included in the loss on debt refinancing in the consolidated statement of operations for the eight months ending August 31, 2017 (Predecessor). The loss includes the partial write-off of unamortized debt issuance costs and discount related to the 2014 Revolver Loan and 2014 First Lien Credit Agreement and a portion of costs incurred with the Senior Secured Credit Facilities. In connection with the application of pushdown accounting, the Company remeasured and recorded the Term Loan at fair value using a measurement date of August 31, 2017 (Predecessor). The fair value was based on a Level 2 computation using quoted prices for identical liabilities in inactive markets. As a result, the Company recorded a fair value discount of $6.5 million as of the measurement date, which is reported in the consolidated balance sheets as a direct deduction from the face amount the Term Loan. The Company amortizes the fair value discount to interest expense over the life of the Term Loan. In connection with incremental Term Loan borrowings in 2018, the Company recorded debt issuance costs and discount of $3.0 million . 6.750% Senior Unsecured Notes due 2025 Effective June 30, 2017 (Predecessor), the Company issued $370.0 million in gross proceeds of senior unsecured notes due July 1, 2025 (the "2025 Unsecured Notes"). The 2025 Unsecured Notes bear interest at the rate of 6.750% per year, payable semi-annually on January 1 and July 1 of each year. The 2025 Unsecured Notes are a senior unsecured obligation of Surgery Center Holdings, Inc. and are guaranteed on a senior unsecured basis by each of Surgery Center Holdings, Inc.'s existing and future domestic wholly-owned restricted subsidiaries that guarantees the Senior Secured Credit Facilities (subject to certain exceptions). The Company may redeem up to 40% of the aggregate principal amount of the 2025 Unsecured Notes at any time prior to July 1, 2020, with the net cash proceeds of certain equity issuances at a redemption price equal to 106.75% of the principal amount to be redeemed, plus accrued and unpaid interest to, but excluding, the date of redemption, provided that at least 50% of the aggregate principal amount of the 2025 Unsecured Notes remain outstanding immediately after the occurrence of such redemption and such redemption occurs within 180 days of the date of the closing of the applicable equity offering. The Company may redeem the 2025 Unsecured Notes, in whole or in part, at any time prior to July 1, 2020, at a price equal to 100% of the principal amount to be redeemed plus the applicable premium, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. The Company may redeem the 2025 Unsecured Notes, in whole or in part, at any time on or after July 1, 2020, at the redemption prices set forth below (expressed as a percentage of the principal amount to be redeemed), plus accrued and unpaid interest, if any, up to, but excluding, the date of redemption: July 1, 2020 to June 30, 2021 103.375 % July 1, 2021 to June 30, 2022 101.688 % July 1, 2022 and thereafter 100.000 % If Surgery Center Holdings, Inc. experiences a change in control under certain circumstances, it must offer to purchase the 2025 Unsecured Notes at a purchase price equal to 101.000% of the principal amount, plus accrued and unpaid interest, if any, up to, but excluding, the date of repurchase. The 2025 Unsecured Notes contain customary affirmative and negative covenants, which, among other things, limit the Company’s ability to incur additional debt, pay dividends, create or assume liens, effect transactions with its affiliates, guarantee payment of certain debt securities, sell assets, merge, consolidate, enter into acquisitions and effect sale and leaseback transactions. In connection with the offering of the 2025 Unsecured Notes, the Company recorded debt issuance costs of $17.3 million in the Predecessor period, which were eliminated with the application of pushdown accounting. 10.000% Senior Unsecured Notes due 2027 Effective April 11, 2019, the Company issued the 2027 Unsecured Notes in an aggregate principal amount of $430.0 million due April 15, 2027. The 2027 Unsecured Notes bear interest at the rate of 10.000% per annum, payable semi-annually on April 15 and October 15 of each year, beginning on October 15, 2019. The 2027 Unsecured Notes are a senior unsecured obligation of Surgery Center Holdings, Inc. and are guaranteed on a senior unsecured basis by each of Surgery Center Holdings, Inc.'s existing and future domestic wholly-owned restricted subsidiaries that guarantees the Senior Secured Credit Facilities (subject to certain exceptions). The Company may redeem up to 40% of the aggregate principal amount of the 2027 Unsecured Notes at any time prior to April 15, 2022, with the net cash proceeds of certain equity issuances at a redemption price equal to 110.000% of the principal amount of notes to be redeemed, plus accrued and unpaid interest to, but excluding, the date of redemption. The Company may redeem the 2027 Unsecured Notes, in whole or in part, at any time prior to April 15, 2022, at a redemption price equal to 100% of the principal amount of notes to be redeemed plus the applicable premium, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. The Company may redeem the 2027 Unsecured Notes, in whole or in part, at any time on or after April 15, 2022, at the redemption prices set forth below (expressed as a percentage of the principal amount of notes to be redeemed), plus accrued and unpaid interest, if any, up to, but excluding, the date of redemption: April 15, 2022 to April 14, 2023 105.000 % April 15, 2023 to April 14, 2024 102.500 % April 15, 2024 and thereafter 100.000 % If Surgery Center Holdings, Inc. experiences a change of control under certain circumstances, it must offer to purchase the 2027 Unsecured Notes at a purchase price equal to 101.000% of the aggregate principal amount of notes, plus accrued and unpaid interest, if any, up to, but excluding, the date of repurchase. The indenture governing the 2027 Unsecured Notes contains customary affirmative and negative covenants, which, among other things, limit the Company’s ability to incur additional debt, pay dividends, create or assume liens, effect transactions with its affiliates, guarantee payment of certain debt securities, sell assets, merge, consolidate, enter into acquisitions and effect sale and leaseback transactions. In connection with the offering of the 2027 Unsecured Notes, the Company recorded debt issuance costs of $8.8 million . 8.875% Senior Unsecured Notes due 2021 In connection with issuance of the 2027 Unsecured Notes as discussed above, the Company redeemed all of the then existing senior unsecured notes due 2021 ("2021 Unsecured Notes"). The redemption price was equal to 104.438% of the outstanding principal amount plus accrued and unpaid interest. In connection with the redemption, the Company recorded a debt extinguishment loss of $11.7 million , included in loss on debt extinguishment in the consolidated statements of operations for the year ended December 31, 2019. The loss includes the redemption premium paid partially offset by the write-off of the unamortized fair value premium as of the redemption date. Other Debt Certain of the Company’s subsidiaries have outstanding indebtedness under notes payable and other secured loans, which is collateralized by the real estate and equipment owned by the surgical facilities to which the loans were made, and right-of-use finance lease obligations for which we are liable to various vendors for several property and equipment leases classified as finance leases. 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 December 31, 2019 , the Company was in compliance with its covenants contained in the credit agreements. Maturities A summary of maturities for the Company's long-term debt, excluding unamortized debt issuance costs and the unamortized fair value discount discussed above, for the next five years and thereafter as of December 31, 2019 follows (in millions): 2020 $ 56.0 2021 55.2 2022 42.0 2023 36.7 2024 1,396.7 Thereafter 1,009.5 Total $ 2,596.1 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Leases | Leases On January 1, 2019, the Company adopted the Lease Accounting Standard using the modified retrospective transition approach by applying the new standard to all leases existing at that date. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under the new guidance, while prior period amounts have not been adjusted. The Company elected the package of practical expedients permitted under the transition guidance, which allowed the Company to carryforward its historical lease identification, lease classification and initial direct costs for any leases that existed prior to January 1, 2019. The Company also elected the accounting policy practical expedient to exclude leases with an initial term of twelve months or less from the balance sheet. Certain of the Company’s lease agreements have lease and non-lease components, which for the majority of leases the Company accounts for separately when the actual lease and non-lease components are determinable. The Company determines if an arrangement is a lease at inception. Right-of-use assets represent the right to use the underlying assets for the lease term and the lease liabilities represent the obligation to make lease payments arising from the leases. Right-of-use assets and liabilities are recognized at commencement date based on the present value of future lease payments over the lease term, which includes only payments that are fixed and determinable at the time of commencement. When readily determinable, the Company uses the interest rate implicit in a lease to determine the present value of future lease payments. For leases where the implicit rate is not readily determinable, the Company's incremental borrowing rate is used. The Company calculates its incremental borrowing rate on a periodic basis using a third-party financial model that estimates the rate of interest the Company would have to pay to borrow an amount equal to the total lease payments on a collateralized basis over a term similar to the lease. The Company applies its incremental borrowing rate using a portfolio approach. The right-of-use asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company's operating leases are primarily for real estate, including medical office buildings, and corporate and other administrative offices. The Company's finance leases are primarily for medical equipment and information technology and telecommunications assets. The Company's finance leases also include certain land, buildings and improvements as discussed in Note 3. "Property and Equipment." Real estate lease agreements typically have initial terms of ten years and may include one or more options to renew. Certain leases also include options to purchase the leased property. The useful life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The majority of the Company's medical equipment leases have a bargain purchase option that is reasonably certain of exercise, so these assets are depreciated over their useful life. The Company's lease agreements do not contain any material residual value guarantees, restrictions or covenants. Certain of the Company's lease agreements require the Company to pay common area maintenance, repairs, property taxes and insurance costs, which are variable amounts based on actual costs incurred during each applicable period. Certain lease agreements also include escalating rent payments that are not fixed at commencement but are based on an index that is determined in future periods over the lease term based on changes in the Consumer Price Index or other measure of cost inflation. These variable components of lease payments are expensed as incurred and are not included in the determination of the right-of-use asset or lease liability. The following table presents the components of the Company's right-of-use assets and liabilities related to leases and their classification in the consolidated balance sheets at December 31, 2019 (in millions): Classification in Consolidated Balance Sheets December 31, 2019 Assets: Operating lease assets Other long-term assets $ 297.7 Finance lease assets Property and equipment, net of accumulated depreciation 237.1 Total leased assets $ 534.8 Liabilities: Operating lease liabilities: Current Other current liabilities $ 37.3 Long-term Other long-term liabilities 283.1 Total operating lease liabilities 320.4 Finance lease liabilities: Current Current maturities of long-term debt 15.8 Long-term Long-term debt, less current maturities 237.6 Total finance lease liabilities 253.4 Total lease liabilities $ 573.8 The following table presents the weighted-average lease terms and discount rates at December 31, 2019 (in millions): Operating Leases Finance Leases Weighted-average remaining lease term 8.9 years 16.6 years Weight average discount rate 10.4 % 8.7 % The following table presents the components of the Company's lease expense and their classification in the consolidated statement of operations for the year ended December 31, 2019 (in millions): December 31, 2019 Operating lease costs $ 70.4 Finance lease costs: Amortization of leased assets 22.2 Interest on lease liabilities 13.0 Total finance lease costs 35.2 Variable and short-term lease costs 13.2 Total lease costs $ 118.8 During the year ended December 31, 2019 , the Company incurred lease costs of $20.6 million under operating lease agreements with physician investors who are related parties. During the year ended December 31, 2019 , the Company paid rent of $6.7 million under a finance lease agreement with a lessor who is a related party. One of the Company's surgical facilities has a non-controlling ownership interest in the lessor. Payments are allocated to principal adjustments of the finance lease liability and interest expense. The following table presents supplemental cash flow information for the year ended December 31, 2019 (dollars in millions): December 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 67.3 Operating cash outflows from finance leases $ 13.0 Financing cash outflows from finance leases $ 13.4 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 56.2 Finance leases $ 133.3 Future maturities of lease liabilities at December 31, 2019 are presented in the following table (in millions): Operating Leases Finance Leases 2020 $ 67.9 $ 35.5 2021 62.3 35.5 2022 57.0 32.8 2023 53.8 30.5 2024 50.5 25.6 Thereafter 208.1 348.7 Total lease payments 499.6 508.6 Less: imputed interest (179.2 ) (255.2 ) Total lease obligations $ 320.4 $ 253.4 Future maturities of lease liabilities at December 31, 2018, prior to the adoption of the Lease Accounting Standard, are presented in the following table (in millions): Operating Leases (1) Capital Leases 2019 $ 81.5 $ 8.8 2020 75.6 6.7 2021 66.7 4.7 2022 61.3 2.9 2023 57.2 1.5 Thereafter 470.2 4.3 Total lease payments $ 812.5 28.9 Less: imputed interest (3.5 ) Total lease obligations $ 25.4 (1) Includes financing obligations payable to the lessors of certain land, buildings and improvements that arose due to the Company's continued involvement with the leased assets under the sale-leaseback guidance in effect prior to the adoption of the Lease Accounting Standard. As of December 31, 2018, the current portion of the financing obligations was $7.0 million and was included in other current liabilities in the consolidated balance sheets. The long-term portion of the finance obligations was $149.8 million and was included as other long-term liabilities in the consolidated balance sheets. As of December 31, 2018, the Company had various non-cancellable sub-lease arrangements. The total future minimum rentals to be received under these arrangements as of December 31, 2018 is estimated to be $3.4 million . Rental expense for operating leases was $83.5 million for the year ended December 31, 2018 (Successor), $27.8 million for the four months ended December 31, 2017 (Successor) and $39.2 million for the eight months ended August 31, 2017 (Predecessor). Included in these amounts, the Company incurred lease expense under operating lease agreements with physician investors who are related parties of $20.2 million for the year ended December 31, 2018 (Successor), $7.5 million for the four months ended December 31, 2017 (Successor) and $9.8 million for the eight months ended August 31, 2017 (Predecessor). |
Leases | Leases On January 1, 2019, the Company adopted the Lease Accounting Standard using the modified retrospective transition approach by applying the new standard to all leases existing at that date. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under the new guidance, while prior period amounts have not been adjusted. The Company elected the package of practical expedients permitted under the transition guidance, which allowed the Company to carryforward its historical lease identification, lease classification and initial direct costs for any leases that existed prior to January 1, 2019. The Company also elected the accounting policy practical expedient to exclude leases with an initial term of twelve months or less from the balance sheet. Certain of the Company’s lease agreements have lease and non-lease components, which for the majority of leases the Company accounts for separately when the actual lease and non-lease components are determinable. The Company determines if an arrangement is a lease at inception. Right-of-use assets represent the right to use the underlying assets for the lease term and the lease liabilities represent the obligation to make lease payments arising from the leases. Right-of-use assets and liabilities are recognized at commencement date based on the present value of future lease payments over the lease term, which includes only payments that are fixed and determinable at the time of commencement. When readily determinable, the Company uses the interest rate implicit in a lease to determine the present value of future lease payments. For leases where the implicit rate is not readily determinable, the Company's incremental borrowing rate is used. The Company calculates its incremental borrowing rate on a periodic basis using a third-party financial model that estimates the rate of interest the Company would have to pay to borrow an amount equal to the total lease payments on a collateralized basis over a term similar to the lease. The Company applies its incremental borrowing rate using a portfolio approach. The right-of-use asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company's operating leases are primarily for real estate, including medical office buildings, and corporate and other administrative offices. The Company's finance leases are primarily for medical equipment and information technology and telecommunications assets. The Company's finance leases also include certain land, buildings and improvements as discussed in Note 3. "Property and Equipment." Real estate lease agreements typically have initial terms of ten years and may include one or more options to renew. Certain leases also include options to purchase the leased property. The useful life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The majority of the Company's medical equipment leases have a bargain purchase option that is reasonably certain of exercise, so these assets are depreciated over their useful life. The Company's lease agreements do not contain any material residual value guarantees, restrictions or covenants. Certain of the Company's lease agreements require the Company to pay common area maintenance, repairs, property taxes and insurance costs, which are variable amounts based on actual costs incurred during each applicable period. Certain lease agreements also include escalating rent payments that are not fixed at commencement but are based on an index that is determined in future periods over the lease term based on changes in the Consumer Price Index or other measure of cost inflation. These variable components of lease payments are expensed as incurred and are not included in the determination of the right-of-use asset or lease liability. The following table presents the components of the Company's right-of-use assets and liabilities related to leases and their classification in the consolidated balance sheets at December 31, 2019 (in millions): Classification in Consolidated Balance Sheets December 31, 2019 Assets: Operating lease assets Other long-term assets $ 297.7 Finance lease assets Property and equipment, net of accumulated depreciation 237.1 Total leased assets $ 534.8 Liabilities: Operating lease liabilities: Current Other current liabilities $ 37.3 Long-term Other long-term liabilities 283.1 Total operating lease liabilities 320.4 Finance lease liabilities: Current Current maturities of long-term debt 15.8 Long-term Long-term debt, less current maturities 237.6 Total finance lease liabilities 253.4 Total lease liabilities $ 573.8 The following table presents the weighted-average lease terms and discount rates at December 31, 2019 (in millions): Operating Leases Finance Leases Weighted-average remaining lease term 8.9 years 16.6 years Weight average discount rate 10.4 % 8.7 % The following table presents the components of the Company's lease expense and their classification in the consolidated statement of operations for the year ended December 31, 2019 (in millions): December 31, 2019 Operating lease costs $ 70.4 Finance lease costs: Amortization of leased assets 22.2 Interest on lease liabilities 13.0 Total finance lease costs 35.2 Variable and short-term lease costs 13.2 Total lease costs $ 118.8 During the year ended December 31, 2019 , the Company incurred lease costs of $20.6 million under operating lease agreements with physician investors who are related parties. During the year ended December 31, 2019 , the Company paid rent of $6.7 million under a finance lease agreement with a lessor who is a related party. One of the Company's surgical facilities has a non-controlling ownership interest in the lessor. Payments are allocated to principal adjustments of the finance lease liability and interest expense. The following table presents supplemental cash flow information for the year ended December 31, 2019 (dollars in millions): December 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 67.3 Operating cash outflows from finance leases $ 13.0 Financing cash outflows from finance leases $ 13.4 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 56.2 Finance leases $ 133.3 Future maturities of lease liabilities at December 31, 2019 are presented in the following table (in millions): Operating Leases Finance Leases 2020 $ 67.9 $ 35.5 2021 62.3 35.5 2022 57.0 32.8 2023 53.8 30.5 2024 50.5 25.6 Thereafter 208.1 348.7 Total lease payments 499.6 508.6 Less: imputed interest (179.2 ) (255.2 ) Total lease obligations $ 320.4 $ 253.4 Future maturities of lease liabilities at December 31, 2018, prior to the adoption of the Lease Accounting Standard, are presented in the following table (in millions): Operating Leases (1) Capital Leases 2019 $ 81.5 $ 8.8 2020 75.6 6.7 2021 66.7 4.7 2022 61.3 2.9 2023 57.2 1.5 Thereafter 470.2 4.3 Total lease payments $ 812.5 28.9 Less: imputed interest (3.5 ) Total lease obligations $ 25.4 (1) Includes financing obligations payable to the lessors of certain land, buildings and improvements that arose due to the Company's continued involvement with the leased assets under the sale-leaseback guidance in effect prior to the adoption of the Lease Accounting Standard. As of December 31, 2018, the current portion of the financing obligations was $7.0 million and was included in other current liabilities in the consolidated balance sheets. The long-term portion of the finance obligations was $149.8 million and was included as other long-term liabilities in the consolidated balance sheets. As of December 31, 2018, the Company had various non-cancellable sub-lease arrangements. The total future minimum rentals to be received under these arrangements as of December 31, 2018 is estimated to be $3.4 million . Rental expense for operating leases was $83.5 million for the year ended December 31, 2018 (Successor), $27.8 million for the four months ended December 31, 2017 (Successor) and $39.2 million for the eight months ended August 31, 2017 (Predecessor). Included in these amounts, the Company incurred lease expense under operating lease agreements with physician investors who are related parties of $20.2 million for the year ended December 31, 2018 (Successor), $7.5 million for the four months ended December 31, 2017 (Successor) and $9.8 million for the eight months ended August 31, 2017 (Predecessor). |
Redeemable Preferred Stock
Redeemable Preferred Stock | 12 Months Ended |
Dec. 31, 2019 | |
Temporary Equity Disclosure [Abstract] | |
Redeemable Preferred Stock | Redeemable Preferred Stock On August 31, 2017 (Predecessor), the Company completed the sale issuance of 310,000 shares of the Company's preferred stock, par value $0.01 per share, designated as 10.00% Series A Convertible Perpetual Participating Preferred Stock (the "Series A Preferred Stock") to Bain Capital at a purchase price of $1,000 per share for an aggregate purchase price of $310.0 million (the "Preferred Private Placement"). The accrued value of the Series A Preferred Stock is convertible into shares of common stock at a price per share of common stock equal to $19.00 , subject to certain adjustments as provided in the Certificate of Designations, Preferences, Rights and Limitations of the 10.00% Series A Convertible Perpetual Participating Preferred Stock of Surgery Partners, Inc. (the "Series A Certificate of Designation"), at any time at the option of the holder. In addition, the Company may require the conversion of all, but not less than all, of the Series A Preferred Stock pursuant to the terms and conditions of the Series A Certificate of Designation, after the second anniversary of the date of issuance, if the volume weighted average closing price of the Common Stock for any 20 out of 30 consecutive trading days prior to such date, equals or exceeds $42.00 per share. The Company cannot redeem the Series A Preferred Stock prior to the fifth anniversary of its issuance and thereafter, may redeem all, but not less than all, of the Series A Preferred Stock for cash pursuant to and subject to the terms and conditions of the Series A Certificate of Designation. The holders of Series A Preferred Stock may cause the Company to redeem the Series A Preferred Stock upon the occurrence of certain change of control transactions of the Company or the common stock ceasing to be listed or quoted on a trading market. The Company adjusts the carrying amount of the Series A Preferred Stock to equal the redemption value at the end of each reporting period as if it were also the redemption date. Changes in the redemption value are recognized immediately as they occur. The Series A Preferred Stock ranks senior to the common stock and any other capital stock of the Company with respect to dividends, redemption and any other rights upon the liquidation, dissolution or winding up of the Company, and the holders thereof are entitled to vote with the holders of common stock, together as a single class, on all matters submitted to a vote of the Company’s stockholders. In addition to participating in any dividends that may be declared with respect to the common stock on an as-converted basis, each share of Series A Preferred Stock accrues dividends daily at a dividend rate of 10.00% , compounding quarterly, and in any given quarter, subject to certain conditions, the Board of Directors of the Company may declare a cash dividend in an amount up to 50% of the amount of the dividend that has accrued and accumulated during such quarter through the end of such quarter, and the amount of any quarterly dividend paid in cash shall not compound on the applicable date and shall not be included in the accrued value of the Series A Preferred Stock. In the event of the Company’s liquidation, dissolution or winding-up (whether voluntary of involuntary), holders of Series A Preferred Stock will be entitled to receive out of the assets of the Company available for distribution to shareholders, after satisfaction of any liabilities and obligations to creditors of the Company, with respect to each Series A Preferred Share, an amount equal to the greater of (i) $1,000.00 per share, plus dividends compounded to date, plus dividends accrued but not yet compounded and (ii) the amount that a holder of one share of common stock would receive, assuming the Series A Preferred Stock had converted into shares of common stock. In connection with the issuance of Series A Preferred Stock, the Company incurred issuance costs of $18.3 million in the eight months ended August 31, 2017 (Predecessor), which were eliminated with the application of pushdown accounting. The following table presents a summary of activity related to the redeemable preferred stock for the years ended December 31, 2019 and 2018 (in millions): December 31, 2019 2018 Balance at beginning of period $ 359.3 $ 330.8 Dividends accrued 35.7 32.4 Cash dividends declared — (3.9 ) Balance at end of period $ 395.0 $ 359.3 There were no unpaid cash dividends declared at December 31, 2019 and 2018 . The aggregate and per share amounts of unpaid cumulative preferred dividends as of December 31, 2019 and 2018 were $69.5 million and $224.09 , and $33.8 million and $108.97 , respectively. |
Derivatives and Hedging Activit
Derivatives and Hedging Activities | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives and Hedging Activities | Derivatives and Hedging Activities The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. During 2019 and 2018, such derivatives have been used to hedge the variable cash flows associated with existing variable-rate debt. For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings, as documented at hedge inception in accordance with the Company’s accounting policy election. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. Over the next 12 months, the Company estimates that $14.6 million will be reclassified as an increase to interest expense. As of December 31, 2019 , the Company had four interest rate swaps with a current notional amount of $1.2 billion and a termination date of November 30, 2023. The derivatives are recorded at fair value (see Note 1. "Organization and Summary of Accounting Policies") and classified as a long-term liability included in other long-term liabilities in the consolidated balance sheets as of December 31, 2019 and 2018 . As of December 31, 2018 , the Company had three interest rate swaps with a notional amount of $900.0 million . The following table presents the pre-tax effect of the interest rate swaps on the Company's accumulated other comprehensive income ("OCI") and statement of operations (in millions): Successor Predecessor Year Ended December 31, September 1 to January 1 to 2019 2018 2017 (1) 2017 (1) Derivatives in cash flow hedging relationships Loss recognized in OCI (effective portion) $ 35.8 $ 23.1 $ — $ — Loss reclassified from accumulated OCI to interest expense (effective portion) 7.5 0.6 — — (1) There were no derivatives outstanding for the comparative periods in 2017. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic and diluted earnings per share are calculated 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 Company computes basic and diluted earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation method that determines earnings per share for common shares and participating securities according to their participation rights in dividends and undistributed earnings. A reconciliation of the numerator and denominator of basic and diluted earnings per share follows (dollars in millions, except per share amounts; shares in thousands): Successor Predecessor Year Ended December 31, September 1 to January 1 to 2019 2018 2017 2017 Numerator: Net loss attributable to Surgery Partners, Inc. $ (74.8 ) $ (205.7 ) $ (41.3 ) $ (11.7 ) Less: Amounts allocated to participating securities (1) (35.7 ) (32.4 ) (10.5 ) — Less: Mark to redemption adjustment — — (15.6 ) — Net loss attributable to common stockholders $ (110.5 ) $ (238.1 ) $ (67.4 ) $ (11.7 ) Denominator: Weighted average shares outstanding- basic and diluted (2) 48,280 48,028 48,319 48,121 Basic and diluted loss per share (2) $ (2.29 ) $ (4.96 ) $ (1.39 ) $ (0.24 ) Dilutive securities outstanding not included in the computation of diluted loss per share as their effect is antidilutive: Stock options — 83 — — Restricted shares 67 198 63 106 (1) Includes dividends accrued during the Successor periods for the Series A Preferred Stock. The Series A Preferred Stock does not participate in undistributed losses. There were no participating securities during the Predecessor periods. (2) The impact of potentially dilutive securities for all periods were not considered because the effect would be anti-dilutive in each of those periods. Share Repurchase Transactions On December 15, 2017, the Company's Board of Directors authorized a share repurchase program of up to $50.0 million of the Company's issued and outstanding common stock from time to time. The timing and size of repurchases will be determined based on market conditions and other factors. The authorization does not obligate the repurchase of any shares and the Company may repurchase shares of common stock at any time without prior notice. The share repurchases will be made in accordance with applicable securities laws in open market or privately negotiated transactions. The authorization does not have a specified expiration date, and the share repurchase program may be suspended, recommenced or discontinued at any time or from time to time without prior notice. In December 2017, the Company repurchased 180,664 shares of its common stock at an average price of $11.12 per share through market purchases. In 2018, the Company repurchased 156,818 shares of its common stock at an average price of $12.64 per share through market purchases. At December 31, 2019, the Company had $46.0 million of repurchase authorization available under the December 2017 authorization. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income Taxes 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. Any change in tax rates that could impact deferred tax assets or liabilities are recognized in the same period the change occurs. If a net operating loss ("NOL") carryforward exists, the Company makes a determination as to whether that NOL 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 income tax examinations for years prior to 2016 or state income tax examinations for years prior to 2015. The Company and certain of its subsidiaries file a consolidated federal income tax return. The partnerships, limited liability companies, and certain non-consolidated physician practice corporations also file separate income tax returns. The Company's allocable portion of each partnership's and limited liability company's income or loss is included in taxable income of the Company. The remaining income or loss of each partnership and limited liability company is allocated to the other owners. The Company made income tax payments of $1.6 million and $2.2 million for the years ended December 31, 2019 and 2018 (Successor), $0.5 million for the four months ended December 31, 2017 (Successor) and $0.6 million for the eight months ended August 31, 2017 (Predecessor). Income tax expense (benefit) is comprised of the following (in millions): Successor Predecessor Year Ended December 31, September 1 to January 1 to 2019 2018 2017 2017 Current: Federal $ (0.2 ) $ (0.3 ) $ (0.1 ) $ — State 1.7 1.5 1.0 0.6 Deferred: Federal 3.2 16.5 77.5 (17.3 ) State 4.8 8.7 (6.7 ) (1.4 ) Total income tax expense (benefit) $ 9.5 $ 26.4 $ 71.7 $ (18.1 ) A reconciliation of the provision for income taxes as reported in the consolidated statements of operations and the amount of income tax expense (benefit) computed by multiplying consolidated income (loss) in each year by the U.S. federal statutory rate of 21% (2019 and 2018) and 35% (2017) follows (in millions): Successor Predecessor Year Ended December 31, September 1 to January 1 to 2019 2018 2017 2017 Tax expense (benefit) at U.S.federal statutory rate $ 11.5 $ (14.5 ) $ 24.5 $ 4.3 State income tax, net of U.S. federal tax benefit 5.7 10.0 1.7 (0.5 ) Change in valuation allowance 13.6 26.9 0.6 1.3 Net income attributable to non-controlling interests (25.2 ) (23.1 ) (13.9 ) (14.7 ) Changes in measurement of uncertain tax positions (0.1 ) (0.1 ) (0.2 ) — Stock option compensation 1.3 0.5 0.3 — Differences related to divested facilities 0.1 6.0 (0.4 ) (1.7 ) Nondeductible transaction costs — — 2.1 (1.0 ) Tax return reconciling differences 1.1 1.7 — (0.3 ) Change in effective tax rate 0.3 0.5 64.3 (0.8 ) Tax Receivable Agreement liability 1.6 0.9 (7.4 ) (4.8 ) Goodwill impairment 0.5 8.9 — — Litigation settlement — 8.6 — — Other (0.9 ) 0.1 0.1 0.1 Total income tax expense (benefit) $ 9.5 $ 26.4 $ 71.7 $ (18.1 ) The components of temporary differences and the approximate tax effects that give rise to the Company’s net deferred tax asset are as follows (in millions): December 31, 2019 2018 Deferred tax assets: Medical malpractice liability $ 3.5 $ 3.5 Accrued vacation and incentive compensation 2.3 2.9 Net operating loss carryforwards 143.0 139.4 Allowance for bad debts 2.2 2.5 Capital loss carryforwards 2.0 3.7 Deferred rent 1.7 1.9 Amortization of intangible assets 0.3 2.4 Deferred financing costs 9.5 14.6 Section 163(j) interest 54.7 27.3 Interest rate swap liability 12.9 5.4 TRA liability 1.2 1.2 Right of use 52.1 — Affiliate indebtedness receivable 6.8 — Other deferred assets 7.3 7.1 Total gross deferred tax assets 299.5 211.9 Less: Valuation allowance (77.9 ) (50.4 ) Total deferred tax assets 221.6 161.5 Deferred tax liabilities: Depreciation on property and equipment (2.8 ) (3.9 ) Basis differences of partnerships and joint ventures (67.5 ) (47.8 ) Right of use (51.5 ) — Other deferred liabilities (1.1 ) (0.6 ) Total deferred tax liabilities (122.9 ) (52.3 ) Net deferred tax assets $ 98.7 $ 109.2 The Company had federal NOL carryforwards of $530.6 million as of December 31, 2019 , of which $516.2 million expire between 2025 and 2037 . The remaining federal NOL carryforwards, which were generated subsequent to 2017, do not expire. The Company had state NOL carryforwards of $596.7 million as of December 31, 2019 , which expire between 2020 and 2039 . The Company had capital loss carryforwards of $7.6 million as of December 31, 2019 , which expire between 2020 and 2023 . The Company had federal and state credit carryforwards of $1.1 million as of December 31, 2019 . The federal credits do not expire, and the state credits expire between 2020 and 2030 . The Company had IRC Section 163(j) interest limitation carryforwards of $222.7 million as of December 31, 2019, which do not expire. The Company has recorded a valuation allowance against deferred tax assets at December 31, 2019 and 2018 totaling $77.9 million and $50.4 million , respectively, which represents an increase of $27.5 million . The valuation allowance continues to be provided for certain deferred tax assets for which the Company believes it is more likely than not that the tax benefits will not be realized, which are primarily Section 163(j) interest carryforwards, certain state NOLs and capital loss carryforwards. The Company has evaluated the realizability of its deferred tax assets based on sources of positive and negative evidence, and determined that it is more likely than not that the NOL carryforwards will be realized. The determination was made based upon projections of future book and taxable income. If the Company's expectations for future operating results on a consolidated basis or at the state jurisdiction level vary from actual results due to changes in health care regulations, general economic conditions, or other factors, the Company may need to adjust the valuation allowance, for all or a portion of its deferred tax assets. The Company's income tax expense in future periods will be reduced or increased to the extent of offsetting decreases or increases, respectively, in its valuation allowance in the period when the change in circumstances occurs. These changes could have a significant impact on the Company's future earnings. Included in the increase in the valuation allowance for the year ended December 31, 2019 was an increase of approximately $7.0 million that was recorded to additional-paid-in-capital as the result of the tax effect of the interest rate swap liability. Approximately $14.2 million of the valuation allowance as of December 31, 2019 is recorded against deferred tax assets that, if subsequently recognized, will be credited directly to contributed capital. A reconciliation of the beginning and ending liability for gross unrecognized tax benefits for the years ended December 31, 2019 and 2018 is as follows (in millions): December 31, 2019 2018 Unrecognized tax benefits at beginning of year $ 0.1 $ 0.7 Reductions for tax positions of prior year — (0.6 ) Unrecognized tax benefits at end of year $ 0.1 $ 0.1 The Company recognizes interest and penalties related to uncertain tax positions in its provision for income taxes in the consolidated statements of operations. For both the years ended December 31, 2019 and 2018 , the Company had approximately $0.1 million of accrued interest and penalties related to uncertain tax positions. The total amount of accrued liabilities related to uncertain tax positions that would affect the Company's effective tax rate, if recognized, is $0.1 million and $0.1 million as of December 31, 2019 and 2018 , respectively. The reserves are included in long-term taxes payable and long-term deferred tax assets in the consolidated balance sheet as of December 31, 2019 . The Tax Cuts and Jobs Act (the "Tax Act") was enacted on December 22, 2017. The Tax Act reduces the U.S. federal corporate tax rate from 35% to 21%, allows for 100% expensing of certain capital expenditures, and limits interest expense deductions beginning in 2018. The Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 ("SAB 118"), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under Accounting Standards Codification 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under Accounting Standards Codification 740 is complete. The Company's accounting for elements of the Tax Act is complete as of December 31, 2018, including a reduction of the U.S. federal corporate tax rate from 35% to 21%, 100% expensing of capital expenditures, and the interest expense limitation under Section 163(j). |
Equity-Based Compensation
Equity-Based Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Equity-Based Compensation | Equity-Based Compensation Transactions in which the Company receives employee and non-employee services in exchange for the Company’s equity instruments or liabilities that are based on the fair value of the Company’s equity securities or may be settled by the issuance of these securities are accounted for using a fair value method. 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 Surgery Partners, Inc. 2015 Omnibus Incentive Plan, as amended ("2015 Omnibus Incentive Plan") from which all equity-based awards will be granted. Under this plan, the Company can grant stock options, SARs, restricted stock, unrestricted stock, stock units, performance awards, cash awards and other awards convertible into or otherwise based on shares of its common stock. As of December 31, 2019 , 8,315,700 shares were authorized to be granted under the 2015 Omnibus Incentive Plan and 6,448,187 were available for future equity grants. Restricted Share-Based Awards During the years ended December 31, 2019 and 2018 , the Company granted 556,450 and 519,605 restricted stock awards ("RSAs") to certain officers, employees and non-employee directors in accordance with the 2015 Omnibus Incentive Plan, respectively. Vesting and payment of these RSAs are generally subject to continuing service of the employee or non-employee director over the ratable vesting periods beginning one year from the date of grant to three or five years after the date of grant. The fair values of these RSAs were determined based on the closing price of the Company’s common stock on the trading date immediately prior to the grant date. During the years ended December 31, 2019 and 2018 , the Company granted 389,972 and 335,074 performance-based restricted stock units ("PSUs") subject to the achievement of a combination of performance conditions, respectively. In addition to the achievement of the performance conditions, these PSUs are generally subject to the continuing service of the employee over the ratable vesting period from the earned date continuing for two years. For these restricted stock units, the number of shares payable at the end of the performance periods ranges from 0% to 150% of the targeted units based on the Company’s actual performance and/or market conditions results as compared to the targets. These stock units are not considered outstanding until earned. During the year ended December 31, 2019 , 245,301 of the PSUs granted in 2018 were deemed to have been earned. During the year ended December 31, 2018, none of the PSUs previously granted were deemed to have been earned. Additionally, during the year ended December 31, 2018 , the Company granted 127,292 leverage performance restricted stock units ("LPUs") subject to the achievement of a combination of market conditions. The Company did not grant any LPUs during the year ended December 31, 2019 . The market condition for the LPUs granted during the year ended December 31, 2018 is based on the compound annual growth rate of the Company’s total stockholder return, considered both alone and relative to that of the companies making up the S&P Composite 1500 Health Care Companies, over a three-year performance period. In addition to the achievement of the market conditions, these LPUs are generally subject to the continuing service of the employee over the ratable vesting period from the performance period end date continuing for two years. These stock units are not considered outstanding until earned. During the years ended December 31, 2019 and 2018, none of the LPUs granted were deemed to have been earned. For LPUs, the number of shares payable at the end of the vesting periods ranges from 0% to 500% of the targeted units based on the Company’s actual performance and/or market conditions results as compared to the targets. The fair values of these restricted stock units were determined based on a combination, where applicable, of the closing price of the Company’s common stock on the trading date immediately prior to the grant date for units subject to performance conditions, or at its Monte-Carlo simulation value for units subject to market conditions. The Company recognizes compensation expense for the portion of the targeted performance-based restricted stock units subject to market conditions even if the condition is never satisfied. However, if the performance conditions are not met for the portion of the targeted performance-based restricted stock units subject to such performance conditions, no compensation expense will be recognized, and any previously recognized compensation expense will be reversed. Forfeitures are recognized as incurred. In early 2019, after analysis and consideration by the Company's Compensation Committee, including consultation with Frederic W. Cook & Co., Inc., an independent compensation consulting firm, the Compensation Committee determined that the terms of the LPUs were not appropriate to incentivize and retain the Company’s current executive management team. In March 2019, the Compensation Committee permitted certain named executive officers to exchange their previously granted LPUs for new stock option awards. As a result, 190,538 LPUs were voluntarily exchanged for 1,756,500 new stock option awards. Restricted Share-Based Activity A summary of non-vested restricted share-based activity for the years ended December 31, 2019 , 2018 , and 2017 follows: Unvested Shares Weighted Average Grant Date Fair Value Predecessor Outstanding at December 31, 2016 462,242 $ 3.72 Granted/Earned 388,454 18.40 Forfeited/Cancelled (67,771 ) 18.01 Vested (169,881 ) 10.29 Outstanding at August 31, 2017 613,044 $ 16.02 Successor Outstanding at September 1, 2017 613,044 $ 16.02 Granted/Earned 112,107 11.15 Forfeited/Cancelled (54,622 ) 10.94 Vested (96,073 ) 17.03 Outstanding at December 31, 2017 574,456 $ 15.95 Granted/Earned 519,605 16.10 Forfeited/Cancelled (180,719 ) 15.09 Vested (210,318 ) 16.31 Outstanding at December 31, 2018 703,024 $ 16.18 Granted/Earned 801,751 12.70 Forfeited/Cancelled (272,706 ) 12.97 Vested (456,183 ) 16.20 Outstanding at December 31, 2019 775,886 $ 13.78 Stock Options and Stock Appreciation Rights The Company granted 2,256,500 and 700,000 stock options during the years ended December 31, 2019 and 2018 , respectively. The Company did not grant any stock options during either the four months ended December 31, 2017 (Successor) or the eight months ended August 31, 2017 (Predecessor). Options to purchase shares are granted with an exercise price equal to the fair market value of the Company’s common stock on the day of grant, based on the closing price of the Company’s common stock on the trading date immediately prior to the grant date. The stock options granted during the year ended December 31, 2019 are subject to the following performance and vesting criteria: (i) one-third ( 33.3% ) of the award will vest in three equal annual installments on each of the first three anniversaries of December 31, 2019, (ii) one-third ( 33.3% ) of the award will vest based on satisfaction of the time condition and the achievement by the Company of an average closing price of a share of Common Stock on the Nasdaq Stock Market of $25.00 over a period of thirty ( 30 ) consecutive trading days, and (iii) one-third ( 33.3% ) of the award will vest based on satisfaction of the time condition and the achievement by the Company of an average closing price of a share of Common Stock on the Nasdaq Stock Market of $35.00 over a period of thirty ( 30 ) consecutive trading days, in each case, generally subject to continued employment on each vesting date. Forfeitures are recognized as incurred. The stock options granted during the year ended December 31, 2018 are subject to the following performance and vesting criteria: (i) fifty percent ( 50% ) of the stock option awards will vest in five equal annual installments on each of the first five anniversaries of the date of grant, (ii) twenty-five percent ( 25% ) of the award will vest based on satisfaction of the time condition and the achievement by the Company of an average closing price of a share of Common Stock on the Nasdaq Stock Market of $25.00 over a period of sixty ( 60 ) consecutive trading days, and (iii) twenty-five percent ( 25% ) of the award will vest based on satisfaction of the time condition and the achievement by the Company of an average closing price of a share of Common Stock on the Nasdaq Stock Market of $35.00 over a period of sixty ( 60 ) consecutive trading days, in each case, generally subject to continued employment on each vesting date. Forfeitures are recognized as incurred. On December 16, 2018, the Company cancelled 200,000 stock options and replaced them with 200,000 stock-settled stock appreciation right awards (the "SAR Awards"). These were the only SAR Awards granted as of December 31, 2019 . The SAR Awards had a base price equal to the exercise price of the cancelled stock options. Fifty percent ( 50% ) of the SAR Awards will vest in five equal annual installments on each of the first five anniversaries of the date of grant, generally subject to continued employment on each vesting date. Twenty-five percent ( 25% ) of the award will vest based on satisfaction of the time condition and the achievement by the Company of an average closing price of a share of Common Stock on the Nasdaq Stock Market of $25.00 over a period of sixty ( 60 ) consecutive trading days, and twenty-five percent ( 25% ) of the award will vest based on satisfaction of the time condition and the achievement by the Company of an average closing price of a share of Common Stock on the Nasdaq Stock Market of $35.00 over a period of sixty ( 60 ) consecutive trading days, in each case, generally subject to continued employment on each vesting date. Forfeitures are recognized as incurred. Option/SAR Valuation In applying the Monte Carlo simulation model to value both the stock options and SAR Awards, the Company used the following assumptions: ▪ Risk-free interest rate . The risk-free interest rate is used as a component of the fair value of stock options to take into account the time value of money. For the risk-free interest rate, the Company uses the implied yield on United States Treasury zero-coupon issues with a remaining term equal to the expected life, in years, of the options granted. ▪ Expected volatility . Volatility, for the purpose of share-based compensation, is a measurement of the amount that a share price has fluctuated. Expected volatility involves reviewing historical volatility and determining what, if any, change the share price will have in the future. The Company used historical stock price information of certain peer group companies for a period of time equal to the expected option life period to determine estimated volatility. ▪ Expected life, in years . A clear distinction is made between the expected life of an option and the contractual term of the option. The expected life of an option is considered the amount of time, in years, that an option is expected to be outstanding before it is exercised. Whereas, the contractual term of the stock option is the term an option is valid before it expires. ▪ Expected dividend yield . Since issuing dividends will affect the fair value of a stock option, GAAP requires companies to estimate future dividend yields or payments. The Company has not historically issued dividends and does not intend to issue dividends in the future. As a result, the Company does not apply a dividend yield component to its valuation. The following table sets forth the assumptions used by the Company to estimate the fair value of options and SAR Awards granted during the years ended December 31, 2019 and 2018: 2019 2018 Expected volatility 60 % 60% - 65% Risk-free interest rate 2.30% - 2.40% 2.50% - 2.90% Expected dividends — — Average expected term (years) 4 10 Fair value of stock options granted $4.83 - $6.41 $8.48 - $9.44 The estimated fair value of options is amortized to expense on a straight-line basis over the options’ vesting period. Stock Option and Stock Appreciation Rights Activity A summary of stock option and SAR Award activity for the years ended December 31, 2019 , 2018 , and 2017 follows: Options/SARs Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Predecessor Outstanding at December 31, 2016 16,267 $ 19.05 1.8 Granted — Exercised (3,580 ) 15.36 Forfeited/Cancelled — Outstanding at August 31, 2017 12,687 $ 20.10 1.5 Successor Outstanding at September 1, 2017 12,687 $ 20.10 1.5 Granted — Exercised — Forfeited/Cancelled — Outstanding at December 31, 2017 12,687 $ 20.10 1.2 Granted 700,000 12.90 10.0 Exercised — Forfeited/Cancelled (200,000 ) 12.90 10.0 Outstanding at December 31, 2018 512,687 $ 13.03 9.8 Granted 2,256,500 13.00 9.2 Exercised — Forfeited/Cancelled — Outstanding at December 31, 2019 (1) 2,769,187 $ 13.02 9.0 (1) Of the outstanding options, 153,409 were exercisable as of December 31, 2019 . Other information pertaining to equity-based compensation At December 31, 2019 , unrecognized compensation cost related to unvested shares was approximately $ 24.2 million . Unrecognized compensation cost will be expensed annually based on the number of shares that vest during the year. The Company records equity-based compensation expense to recognize the fair value of the restricted shares that vest and stock options granted. The Company recorded equity-based compensation expense of $10.2 million and $9.3 million for the years ended December 31, 2019 and 2018 (Successor), respectively, $1.9 million for the four months ended December 31, 2017 (Successor) and $3.7 million for the eight months ended August 31, 2017 (Predecessor). |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2019 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans Surgery Partners 401(k) Plan The Surgery Partners 401(k) Plan is a defined contribution plan whereby certain employees who have completed at least one month of service, including at least one hour of service during that period of time, are eligible to participate. Employees may enroll in the plan immediately upon completion of the minimum service requirement. The Surgery Partners 401(k) Plan allows eligible employees to make contributions of varying percentages or flat dollar amounts of their annual compensation, up to the maximum allowable amounts by the Internal Revenue Service ("IRS"). Eligible employees may or may not receive a match by the Company of their contributions. Employer contributions vest incrementally over a period of five years. The Company's contributions were $7.6 million for each of the years ended December 31, 2019 and 2018 (Successor), $2.3 million for the four months ended December 31, 2017 (Successor) and $2.8 million for the eight months ended August 31, 2017 (Predecessor). |
Other Assets and Liabilities
Other Assets and Liabilities | 12 Months Ended |
Dec. 31, 2019 | |
Other Liabilities Disclosure [Abstract] | |
Other Assets and Liabilities | Other Assets and Liabilities Other Long-Term Assets A summary of other long-term assets is as follows (in millions): December 31, 2019 2018 Right-of-use operating lease assets $ 297.7 $ — Other 30.8 36.9 Total $ 328.5 $ 36.9 Other Current Liabilities A summary of other current liabilities is as follows (in millions): December 31, 2019 2018 Interest payable $ 21.8 $ 20.8 Amounts due to patients and payors 16.5 20.0 Accrued legal settlement 35.1 42.3 Right-of-use operating lease liabilities 37.3 — Accrued expenses and other 80.5 72.1 Total $ 191.2 $ 155.2 Other Long-Term Liabilities A summary of other long-term liabilities is as follows (in millions): December 31, 2019 2018 Right-of-use operating lease liabilities $ 283.1 $ — Facility lease obligations — 149.8 Other 113.6 121.5 Total $ 396.7 $ 271.3 At December 31, 2018, the Company had financing obligations payable to the lessors of certain land, buildings and improvements that arose solely as a result of the Company being the deemed accounting owner under the build-to-suit guidance in effect prior to the adoption of the Lease Accounting Standard. These obligations were included as facility lease obligations in other long-term liabilities at December 31, 2018 in the table above. Upon adoption of the Lease Accounting Standard on January 1, 2019, the Company derecognized the build-to-suit liabilities and related assets and concluded the leases should be recognized on the balance sheet as finance leases under the new guidance. Further, the Company had an ongoing development agreement to construct a new hospital, which costs were recognized as incurred as a deferred financing obligation included in facility lease obligations at December 31, 2018. Upon reevaluation, the Company concluded that it did not control the assets under construction and therefore the obligation and related asset were derecognized from the balance sheets upon adoption of the Lease Accounting Standard. The lease related to this new hospital commenced in November 2019, and is recognized as a component of finance lease assets and liabilities at December 31, 2019 (see Note. 6 "Leases"). |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies 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. The Company maintains professional, general and workers' compensation liability insurance in excess of self-insured retentions, through third party commercial insurance carriers. Although management believes the coverage is sufficient for the Company's operations, some claims may potentially exceed the scope of coverage in effect. 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 are reasonably possible to have a material adverse effect on the Company's business, financial position, results of operations or liquidity. Total professional, general and workers' compensation claim liabilities as of December 31, 2019 and 2018 were $19.4 million and $18.2 million , respectively. The balance includes expected insurance recoveries of $12.1 million and $12.0 million as of December 31, 2019 and 2018 , respectively. 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 health care 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. On October 23, 2017, the Company received several civil investigative demands ("CIDs") from the federal government under the FCA for documents and information dating back to January 1, 2010 relating to the medical necessity of certain drug tests conducted by the Company’s physicians and submitted to laboratories owned and operated by the Company. In addition, the Company was informed by CMS that payments to its diagnostic laboratory, Logan Laboratories, were suspended for a period of time, pending further investigations by CMS. CMS lifted the suspension as of December 18, 2019. On January 23, 2020, the United States District Court for the Middle District of Florida unsealed the Complaint in the case of Cho et al. ex rel. United States v. Surgery Partners et al., which we understand to be related to the investigation that gave rise to the CIDs. The Company has been providing information to the government in response to the CIDs and currently has a non-binding agreement in principle with the United States Department of Justice on the financial terms of a settlement with the goal of resolving these matters. The Company previously recorded a litigation-related charge of $46.0 million relating to these matters on the consolidated statements of operations for the year ended December 31, 2018. The Company continues to believe that this reserve is sufficient to cover a potential resolution with the government relating to these matters, including legal expenses relating to the settlement that have not previously been recorded in operating expenses. The ultimate timing, amount and/or final terms of any such resolution may differ materially from those anticipated or the Company may not be able to reach a resolution at all. It is reasonably possible that the Company will incur additional losses above the amount reserved, but the Company is not able to estimate such amounts at this time. See Item 1A "Risk Factors" included elsewhere in this Annual Report under the heading "Risk Factors - Risks Related to Government Regulation - Companies within the health care industry, including us, continue to be the subject of federal and state audits and investigations, including actions for false and other improper claims ." 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 health care 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 health care 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. Tax Receivable Agreement On May 9, 2017, the Company entered into an agreement to amend that certain Income Tax Receivable Agreement, dated September 30, 2015 (as amended, the "TRA"), by and between the Company, and the other parties referred to therein, which amendment became effective on August 31, 2017. Pursuant to the amendment to the TRA, the Company agreed to make payments to H.I.G., the Company's former controlling shareholder, in its capacity as the stockholders representative pursuant to a fixed payment schedule. The amounts payable under the TRA are calculated as the product of (i) an annual base amount and (ii) the maximum corporate federal income tax rate for the applicable year plus three percent. The amounts payable under the TRA are related to the Company’s projected realized tax savings over the next five years and are not dependent on the Company’s actual tax savings over such period. The calculation of amounts payable pursuant to the TRA is thus dependent on the maximum corporate federal income tax rate. To the extent that the Company is unable to make payments under the TRA, such payments will be deferred and will accrue interest at a rate of LIBOR plus 500 basis points until paid. If the terms of credit agreements and other debt documents cause the Company to be unable to make payments under the TRA and such terms are not materially more restrictive than those existing as of September 30, 2015, such payments will be deferred and will accrue interest at a rate of LIBOR plus 300 basis points until paid. As a result of the amendment to the TRA, the Company was required to value the liability under the TRA by discounting the fixed payment schedule using the Company’s incremental borrowing rate. During the eight months ended August 31, 2017 (Predecessor), the Company recognized a reduction in the carrying value of the liability under the TRA of $43.9 million , with $15.3 million of the reduction recorded to a gain on amendment of TRA and $28.6 million recorded as a reduction to the goodwill recorded in connection with the application of pushdown accounting related to the change of control. As a result of the reduction in the corporate tax rate from the Tax Cuts and Jobs Act, the Company remeasured the value of the liability under the TRA pursuant to the calculation terms as described above. During the four months ended December 31, 2017 (Successor), the Company recognized a reduction in the carrying value of the liability under the TRA of $25.3 million , included as a tax receivable agreement benefit in the consolidated statement of operations. Assuming the Company's tax rate is 24% , calculated as the maximum corporate federal tax rate plus three percent, throughout the remaining term of the TRA, the Company estimates the total remaining amounts payable under the TRA was approximately $60.1 million and $64.6 million as of December 31, 2019 and 2018 , respectively. The carrying value of the liability under the TRA, reflecting the discount as discussed above, was $48.7 million and $48.5 million as of December 31, 2019 and 2018 , respectively. The current portion of the liability was $16.9 million and $7.6 million as of December 31, 2019 and 2018 , respectively, and is included as a component of other current liabilities in the consolidated balance sheet. The long-term portion is included as a component of other long-term liabilities in the consolidate balance sheet. Contingent Consideration In connection with certain prior period acquisitions, pursuant to the applicable purchase agreements, the Company was required to pay consideration to the prior owners of the applicable facilities should the requirements for continuing employment agreed to in the purchase agreements be met. In accordance with Accounting Standards Codification 805, Business Combinations , contingent consideration with a continuing employment provision is recognized ratably over the defined performance period as compensation expense. The Company recognized contingent acquisition compensation expense of $1.5 million for the year ended December 31, 2018 (Successor), $1.9 million for the four months ended December 31, 2017 (Successor) and $5.1 million for the eight months ended August 31, 2017 (Predecessor). There was no contingent acquisition compensation expense during the year ended December 31, 2019 (Successor). The Company recorded the expense as a component of general and administrative expenses in the consolidated statement of operations. The Company has no further contingent acquisition compensation expense obligations. Other In connection with the Company's integration of the corporate office functions related to the acquisition of NSH, the Company closed its Chicago, Illinois office on September 30, 2018. As a result, the Company recognized a cease-use liability of $1.4 million , representing the estimated costs that will continue to be incurred under the office lease for its remaining term. The estimated costs were included as transaction and integration costs in the consolidated statement of operations for the year ended December 31, 2018 and as a component of other current liabilities and other long-term liabilities in the consolidated balance sheet as of December 31, 2018. In 2018, the Company recognized a liability of $4.5 million for estimated severance costs in connection with the corporate office integration. The estimated costs were included as transaction and integration costs in the consolidated statement of operations for the year ended December 31, 2018. There were no unpaid severance costs remaining as of December 31, 2019. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting 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 ancillary services and the operation of optical services. The surgical facility services segment consists of the operation of ASCs and surgical hospitals, and includes anesthesia services. The ancillary services segment consists of a diagnostic laboratory and multi-specialty physician practices. The optical services segment consists of an optical products group purchasing organization, and until October 2018, an optical laboratory that manufactured eyewear. "All other" primarily consists of the Company's corporate general and administrative functions. The following tables present financial information for each reportable segment (in millions): Successor Predecessor Year Ended December 31, September 1 to January 1 to 2019 2018 2017 2017 Revenues: Surgical facility services $ 1,748.2 $ 1,682.4 $ 564.4 $ 688.7 Ancillary services 79.4 79.6 24.7 52.3 Optical services 3.8 9.5 3.5 7.6 Total $ 1,831.4 $ 1,771.5 $ 592.6 $ 748.6 Adjusted EBITDA: Surgical facility services $ 328.9 $ 309.5 $ 103.8 $ 125.9 Ancillary services 2.6 3.0 (2.3 ) (6.5 ) Optical services 1.4 2.5 0.7 2.2 All other (74.3 ) (80.2 ) (23.5 ) (36.0 ) Total $ 258.6 $ 234.8 $ 78.7 $ 85.6 Adjusted EBITDA: $ 258.6 $ 234.8 $ 78.7 $ 85.6 Net income attributable to non-controlling interests 119.9 110.1 39.6 42.1 Depreciations and amortization (76.5 ) (67.4 ) (21.8 ) (30.1 ) Interest expense, net (178.9 ) (147.0 ) (48.7 ) (69.0 ) Equity-based compensation expense (10.2 ) (9.3 ) (1.9 ) (3.7 ) Transaction, integration and acquisition costs (1) (36.1 ) (34.0 ) (9.2 ) (7.7 ) Gain (loss) on disposals and deconsolidation, net 4.4 (31.8 ) — (1.7 ) (Loss) gain on litigation settlements and other litigation costs (2) (4.6 ) (46.0 ) 8.7 3.8 Loss on debt extinguishment (11.7 ) — — (18.2 ) Tax receivable agreement (expense) benefit (2.4 ) — 25.3 — Impairment charges (7.9 ) (74.4 ) — — Reserve adjustments (3) — (2.7 ) — — Contingent acquisition compensation expense — (1.5 ) (2.0 ) (5.1 ) Gain on acquisition escrow release — — 0.2 1.0 Gain on amendment to tax receivable agreement — — 1.1 15.3 (Loss) income before income taxes $ 54.6 $ (69.2 ) $ 70.0 $ 12.3 (1) For the years ended December 31, 2019 and 2018 (Successor), this amount includes transaction and integration costs of $19.0 million and $31.7 million , respectively, and acquisition costs of $2.8 million and $2.2 million , respectively. This amount further includes start-up costs related to a de novo surgical hospital of $14.3 million for the year ended December 31, 2019 (Successor), with no comparable costs in the 2018 period (Successor). For the four months ended December 31, 2017 (Successor) and the eight months ended August 31, 2017 (Predecessor), this amount includes transaction and integration costs of $7.5 million and $5.6 million , respectively, and acquisition costs of $1.8 million and $2.1 million , respectively. There were no start-up costs related to the de novo surgical hospital in the 2017 periods. (2) For the years ended December 31, 2019 and 2018 (Successor), this amount includes a loss on litigation settlements of $0.2 million and $46.0 million , respectively. This amount further includes other litigation costs of $4.4 million for the year ended December 31, 2019 (Successor), with no comparable costs in the 2018 period (Successor). For the four months ended December 31, 2017 (Successor) and the eight months ended August 31, 2017 (Predecessor), this amount includes a gain on litigation settlements of $8.7 million and $3.8 million , respectively. (3) This amount represents adjustments to revenue in connection with applying consistent policies across the combined company as a result of the integration of Surgery Partners and a previously acquired entity. December 31, 2019 2018 Assets: Surgical facility services $ 4,580.4 $ 4,204.4 Ancillary services 69.6 52.7 Optical services 17.7 20.1 All other 351.2 399.1 Total assets $ 5,018.9 $ 4,676.3 Successor Predecessor Year Ended December 31, September 1 to January 1 to 2019 2018 2017 2017 Cash purchases of property and equipment, net: Surgical facility services $ 65.9 $ 34.2 $ 9.3 $ 14.6 Ancillary services 1.1 0.4 0.2 1.9 Optical services — — 0.1 0.1 All other 6.6 5.2 1.2 2.2 Total $ 73.6 $ 39.8 $ 10.8 $ 18.8 |
Quarterly Financial Information
Quarterly Financial Information (Unaudited) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Information (Unaudited) | Quarterly Financial Information (Unaudited) The following tables include a summary of certain information related to the Company's quarterly consolidated results of operations for each of the four quarters in the years ended December 31, 2019 and 2018 . The timing of acquisitions and divestitures completed during the years presented affects the comparability of the quarterly financial information. The following should be read in conjunction with the audited consolidated financial statements included herein. The amounts are as follows (in millions except per share amounts): 2019 Q1 Q2 Q3 Q4 Revenues $ 416.8 $ 445.4 $ 452.0 $ 517.2 Cost of revenues $ 326.1 $ 340.4 $ 353.1 $ 388.0 Net income (loss) $ 3.5 $ 8.1 $ 10.9 $ 22.6 Net income attributable to non-controlling interests $ (23.6 ) $ (27.9 ) $ (26.6 ) $ (41.8 ) Net loss attributable to Surgery Partners, Inc. $ (20.1 ) $ (19.8 ) $ (15.7 ) $ (19.2 ) Basic net loss per share attributable to common stockholders $ (0.60 ) $ (0.59 ) $ (0.51 ) $ (0.59 ) Diluted net loss per share attributable to common stockholders $ (0.60 ) $ (0.59 ) $ (0.51 ) $ (0.59 ) 2018 Q1 Q2 Q3 Q4 Revenues $ 411.3 $ 436.6 $ 432.4 $ 491.2 Cost of revenues $ 327.3 $ 340.1 $ 334.3 $ 359.7 Net income (loss) $ 5.1 $ 4.3 $ 2.0 $ (107.0 ) Net income attributable to non-controlling interests $ (22.6 ) $ (23.8 ) $ (23.0 ) $ (40.7 ) Net loss attributable to Surgery Partners, Inc. $ (17.5 ) $ (19.5 ) $ (21.0 ) $ (147.7 ) Basic net loss per share attributable to common stockholders $ (0.53 ) $ (0.57 ) $ (0.61 ) $ (3.25 ) Diluted net loss per share attributable to common stockholders $ (0.53 ) $ (0.57 ) $ (0.61 ) $ (3.25 ) |
Organization and Summary of A_2
Organization and Summary of Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The preparation of financial statements in conformity with generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the 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. Actual results could differ from those estimates. |
Principles of Consolidation | The 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. |
Pushdown Accounting | In connection with the change of control effective August 31, 2017, the Company elected to apply "pushdown" accounting by applying the guidance in Financial Accounting Standards Board ("FASB") Accounting Standards Codification Topic 805, Business Combinations . Accordingly, the consolidated financial statements of the Company for periods before and after August 31, 2017 reflect different bases of accounting, and the results of operations, changes in stockholders' equity and cash flows of those periods are not comparable. Throughout the Company's consolidated financial statements and the accompanying notes herein, periods prior to August 31, 2017 (the date of the change of control) are identified as "Predecessor" and periods after the date of the change of control are identified as "Successor. |
Variable Interest Entities | Variable Interest Entities The consolidated financial statements include the accounts of variable interest entities ("VIE") in which the Company is the primary beneficiary under the provisions of Accounting Standards Codification 810, Consolidation . The Company has the power to direct the activities that most significantly impact a variable interest entity's economic performance. Additionally, the Company would absorb the majority of the expected losses from any of these entities should such expected losses occur. At December 31, 2019 , the variable interest entities include four surgical facilities, three anesthesia practices and three physician practices. |
Fair Value of Financial Instruments | 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 inputs classified into the following hierarchy: • Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities. • Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These may include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. • Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, depending on the nature of the item being valued. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, restricted invested assets and accounts payable approximate their fair values under Level 3 calculations. The fair value of these derivative financial instruments was based on a quoted market price, or a Level 2 input. The fair values in the table above were based on a Level 2 inputs using quoted prices for identical liabilities in inactive markets. The carrying amounts related to the Company's other long-term debt obligations, including finance lease obligations, approximate their fair values under Level 3 calculations. |
Revenues | The increase in other revenues from 2017 to 2018 is primarily due to an increase in management and administrative service fees due to the acquisitions completed in 2017. Total net revenues in 2018 additionally reflect the impact of the Company's adoption of ASU 2014-09 as discussed above. Subsequent to the transactions on August 31, 2017 (Predecessor), the Company, as part of a review of operations undertaken to create a solid foundation to support the Company's long-term growth objectives, incurred a non-recurring adjustment to revenue of $15.6 million , which was attributable to an increase in reserves for certain accounts receivable during the eight months ended August 31, 2017 (Predecessor). The increase in reserves resulted from certain known events and actions during the eight months ended August 31, 2017 (Predecessor) related to select payors primarily in the Company’s ancillary services segment. Upon consideration of such additional information, related receivables were determined to have a low likelihood of collection. The majority of this adjustment related to receivables with balances from the first quarter of 2016 and prior. Patient service revenues. This revenue is related to charging facility fees in exchange for providing patient care. The fee charged for health care 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 as performance obligations are satisfied. Performance obligations are based on the nature of services provided. Typically, the Company recognizes revenue at a point in time in which services are rendered and the Company has no obligation to provide further patient services. As the Company primarily performs outpatient procedures, performance obligations are generally satisfied same day and revenue is recognized on the date of service. The Company determines the transaction price based on gross charges for services provided, net of estimated contractual adjustments, discounts from third-party payors. The Company estimates its contractual adjustments and discounts based on contractual agreements, its discount policies and historical experience. Changes in estimated contractual adjustments and discounts are recorded in the period of change. Other service revenues. Optical service revenues consist of handling charges billed to the members of the Company's optical products purchasing organization. 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. The Company satisfies the performance obligation and recognizes revenue when the 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. 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. These agreements typically require the Company to provide recurring management services over a multi-year period which are billed and collected on a monthly basis. 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 management services are rendered and billed. Revenues In May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers . The Company adopted the new standard effective January 1, 2018, using the modified retrospective method. The presentation of the amount of earnings from operations and net earnings were unchanged upon adoption of the new standard; however, during the year of adoption, the Company determined that amounts historically considered to be bad debt should be considered an implicit price concession, as defined in FASB Accounting Standards Codification 606, " Revenue From Contracts With Customers" . This resulted in changes to the presentation of revenues and the provision for bad debts in the consolidated statements of operations. Previously, the estimate for unrealizable amounts was recorded to the provision for bad debts and presented as a component of operating expenses. Upon reassessment during the year of adoption, the estimate for unrealizable amounts is now reflected as an implicit price concession as a reduction to arrive at net revenue. The Company's revenues generally relate to contracts with patients in which the performance obligations are to provide health care services. The Company recognizes revenues in the period in which our obligations to provide health care services are satisfied and reports the amount that reflects the consideration the Company expects to be entitled to receive. The contractual relationships with patients, in most cases, also involve a third-party payor (e.g., Medicare, Medicaid and private insurance organizations, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by or negotiated with the third-party payors. The payment arrangements with third-party payors for the services provided to the related patients typically specify payments at amounts less than the Company's standard charges. The Company continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash 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. Cash, cash equivalents and restricted cash reported within the consolidated statement of cash flows includes $0.3 million of restricted investments, which are reflected in other long-term assets in the consolidated balance sheet at both December 31, 2019 and 2018 . These restricted investments represent restricted cash held in accordance with the provisions of a long-term operating lease agreement held as security for performance under the Company's covenants and obligations within the agreement through January 2024. |
Accounts Receivable and Allowances for Contractual Adjustments and Doubtful Accounts | Accounts Receivable Accounts receivable from third-party payors are recorded net of estimated implicit price concessions, which are estimated based on the historical trend of the Company's surgical facilities’ cash collections and contractual write-offs, established fee schedules, relationships with payors and procedure statistics. While changes in estimated reimbursement from third-party payors remain a possibility, the Company expects that any such changes would be minimal and, therefore, would not have a material effect on its financial condition or results of operations. Accounts receivable consists of receivables from federal and state agencies (under the Medicare and Medicaid programs), private insurance organizations, 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 December 31, 2019 and December 31, 2018 , the Company had a net third-party Medicaid settlements liability of $5.6 million and $4.8 million , respectively. 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 considered significant. Amounts are classified outside of self-pay if the Company has an agreement with the third-party payor or has verified a patient’s coverage prior to services rendered. The Company's policy is to collect co-payments and deductibles prior to providing medical services. 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's collection policies and procedures are based on the type of payor, size of claim and estimated collection percentage for each patient account. The operating systems used to manage patient accounts provide for an aging schedule in 30-day increments, by payor, physician and patient. The Company analyzes accounts receivable at each of its surgical facilities to ensure the proper collection and aged category. The operating systems generate reports that assist in the collection efforts by prioritizing patient accounts. Collection efforts include direct contact with third-party payors or patients, written correspondence and the use of legal or collection agency assistance, as required. |
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. 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. For discussion on impairment for goodwill and indefinite-lived intangible assets, refer to Note 4. "Goodwill and Intangible Assets." |
Professional, General and Workers' Compensation Insurance | Professional and 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. The Company also maintains workers' compensation insurance, subject to a deductible. 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 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 consolidated balance sheets. |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities In accordance with Accounting Standards Codification 815, Derivatives and Hedging , the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. In accordance with the FASB’s fair value measurement guidance in ASU 2011-04, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. During 2019 and 2018, such derivatives have been used to hedge the variable cash flows associated with existing variable-rate debt. For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings, as documented at hedge inception in accordance with the Company’s accounting policy election. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. |
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 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 consolidated statements of operations; changes in ownership interests in which the Company retains a controlling interest are accounted for as equity transactions assuming the Company continues to consolidate related entities. Certain transactions with non-controlling interests are classified within financing activities in the consolidated statements of cash flows. The 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 partnership and limited liability company through which the Company owns and operates its surgical facilities is governed by a partnership or operating agreement. In certain circumstances, the applicable partnership or operating agreements for the Company's surgical facilities provide that the facilities will purchase all of the physician limited partners’ or physician minority members', as applicable, ownership if certain adverse regulatory events occur, such as it becoming illegal for the physician(s) 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 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. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, "Leases" (the "Lease Accounting Standard"). The Company adopted the Lease Accounting Standard effective January 1, 2019, using a modified retrospective transition approach. The most prominent among the changes from this ASU is the recognition of right-of-use assets and lease liabilities by lessees for those leases classified as operating leases. The Company’s accounting for finance leases remained substantially unchanged from its prior accounting for capital leases. Upon adoption of the Lease Accounting Standard, the Company recorded $294.0 million of operating lease liabilities and right-of-use assets on January 1, 2019. The cumulative effect of the accounting change recognized upon adoption was $6.1 million reflected as an adjustment to retained deficit in our consolidated balance sheets. See Note 6. "Leases" for further discussion. In June 2016, the FASB issued ASU 2016-13, which introduced a new model for recognizing credit losses on financial instruments based on an estimate of the current expected credit losses. The new current expected credit losses ("CECL") model generally calls for the immediate recognition of all expected credit losses and applies to financial instruments and other assets, including accounts receivable and other financial assets measured at amortized cost, debt securities and other financial assets. This guidance replaces the current incurred loss model for measuring expected credit losses, requires expected losses on available-for-sale debt securities to be recognized through an allowance for credit losses rather than as reductions in the amortized cost of the securities, and provides for additional disclosure requirements. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company adopted this ASU on January 1, 2020, and does not expect the adoption of this ASU will have a material impact on its consolidated financial position and results of operations. |
Business Combinations | Acquisitions and Disposals The Company accounts for 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. Any goodwill recognized is determined as the excess of the fair value of the consideration conveyed plus the fair value of any non-controlling interests in the acquisition over the fair value of the net assets acquired. Acquisitions in which the Company is able to exert significant influence but does not have control are accounted for using the equity method. Acquired assets and assumed liabilities typically 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. Fair value attributable to non-controlling interests is 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 is 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 is based on Level 3 computations using key inputs such as the Company's internally-prepared financial projections. Fair values assigned to acquired working capital are based on carrying amounts reported by the acquiree at the date of acquisition, which approximate their fair values. |
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 20 to 40 years for buildings and building improvements, 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 finance leases. Assets held under finance leases are stated at the present value of lease payments at the inception of the related lease. Such assets are amortized 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 | Goodwill and Intangible Assets Goodwill represents the fair value of the consideration provided in an acquisition over the fair value of net assets acquired and is not amortized. The Company has indefinite-lived intangible assets related to the certificates of need held in jurisdictions where certain of its surgical facilities are located, Medicare licenses and certain management rights agreements. The Company also has finite-lived intangible assets related to physician guarantee agreements, non-compete agreements, management rights agreements and customer relationships. Physician income guarantees are amortized into salaries and benefits costs in the 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 consolidated statements of operations over the service lives of the agreements, typically ranging from two to five years for non-compete agreements and 15 years for the management rights agreements. Customer relationships are amortized into depreciation and amortization expense in the consolidated statements of operations over the estimated lives of the relationships, ranging from three to ten years . The Company tests its goodwill and indefinite-lived intangible assets for impairment at least annually, as of October 1, or more frequently if certain indicators arise. The Company tests for goodwill impairment at the reporting unit level, which is defined as one level below an operating segment. As of October 1, 2019, the Company has identified three reporting units, which include the following: 1) Surgical Facilities, 2) Ancillary Services, and 3) Alliance, which is a component of the Optical Services operating segment. In 2018, the Company disposed of two previously identified reporting units, Midwest Labs and Family Vision Care. The Company compares the carrying value of the net assets of the reporting unit to the estimated fair value of the reporting unit. To determine the fair value of the reporting units, the Company obtained valuations at the reporting unit level prepared by third-party valuation specialists which utilized a combination of the income and market approaches. The discounted cash flow model is projected based on a year-by-year assessment that considers historical results, estimated market conditions, internal projections, and relevant publicly available statistics. Determining fair value requires the exercise of significant judgment, including assumptions about appropriate discount rates, perpetual growth rates and the amount and timing of expected future cash flows. The significant judgments are typically based upon Level 3 inputs, generally defined as unobservable inputs representing the Company's own assumptions. The cash flows employed in the discounted cash flow analysis are based on the Company's most recent budgets and business plans aligned with provided guidance and, when applicable, various growth rates are assumed for years beyond the current business plan period. Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting units. The variables within the discount rate, many of which are outside of the Company's control, provide the best estimate of all assumptions applied within the DCF model. There can be no assurance that operations will achieve the future cash flows reflected in the projections. In determining the fair value under the market approaches, the analysis includes a control premium, which was based on observable market data and a review of selected transactions of companies that operate in the Company's sector. While the Company believes that all assumptions utilized in the testing were appropriate, they may not reflect actual outcomes that could occur. Specific factors that could negatively impact the assumptions used include changes to the discount and growth rates and a change in the equity and enterprise premiums being realized in the market. |
Leases | Leases On January 1, 2019, the Company adopted the Lease Accounting Standard using the modified retrospective transition approach by applying the new standard to all leases existing at that date. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under the new guidance, while prior period amounts have not been adjusted. The Company elected the package of practical expedients permitted under the transition guidance, which allowed the Company to carryforward its historical lease identification, lease classification and initial direct costs for any leases that existed prior to January 1, 2019. The Company also elected the accounting policy practical expedient to exclude leases with an initial term of twelve months or less from the balance sheet. Certain of the Company’s lease agreements have lease and non-lease components, which for the majority of leases the Company accounts for separately when the actual lease and non-lease components are determinable. The Company determines if an arrangement is a lease at inception. Right-of-use assets represent the right to use the underlying assets for the lease term and the lease liabilities represent the obligation to make lease payments arising from the leases. Right-of-use assets and liabilities are recognized at commencement date based on the present value of future lease payments over the lease term, which includes only payments that are fixed and determinable at the time of commencement. When readily determinable, the Company uses the interest rate implicit in a lease to determine the present value of future lease payments. For leases where the implicit rate is not readily determinable, the Company's incremental borrowing rate is used. The Company calculates its incremental borrowing rate on a periodic basis using a third-party financial model that estimates the rate of interest the Company would have to pay to borrow an amount equal to the total lease payments on a collateralized basis over a term similar to the lease. The Company applies its incremental borrowing rate using a portfolio approach. The right-of-use asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company's operating leases are primarily for real estate, including medical office buildings, and corporate and other administrative offices. The Company's finance leases are primarily for medical equipment and information technology and telecommunications assets. The Company's finance leases also include certain land, buildings and improvements as discussed in Note 3. "Property and Equipment." Real estate lease agreements typically have initial terms of ten years and may include one or more options to renew. Certain leases also include options to purchase the leased property. The useful life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The majority of the Company's medical equipment leases have a bargain purchase option that is reasonably certain of exercise, so these assets are depreciated over their useful life. |
Earnings Per Share | Earnings Per Share Basic and diluted earnings per share are calculated 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 Company computes basic and diluted earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation method that determines earnings per share for common shares and participating securities according to their participation rights in dividends and undistributed earnings. |
Income Taxes | Income Taxes 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. Any change in tax rates that could impact deferred tax assets or liabilities are recognized in the same period the change occurs. If a net operating loss ("NOL") carryforward exists, the Company makes a determination as to whether that NOL 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 income tax examinations for years prior to 2016 or state income tax examinations for years prior to 2015. The Company and certain of its subsidiaries file a consolidated federal income tax return. The partnerships, limited liability companies, and certain non-consolidated physician practice corporations also file separate income tax returns. The Company's allocable portion of each partnership's and limited liability company's income or loss is included in taxable income of the Company. The remaining income or loss of each partnership and limited liability company is allocated to the other owners. |
Equity-Based Compensation | Equity-Based Compensation Transactions in which the Company receives employee and non-employee services in exchange for the Company’s equity instruments or liabilities that are based on the fair value of the Company’s equity securities or may be settled by the issuance of these securities are accounted for using a fair value method. 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. |
Organization and Summary of A_3
Organization and Summary of Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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 millions): Carrying Amount Fair Value December 31, December 31, 2019 2018 2019 2018 Senior secured term loan $ 1,434.1 $ 1,447.9 $ 1,434.1 $ 1,382.7 8.875% senior unsecured notes due 2021 $ — $ 406.7 $ — $ 407.2 6.750% senior unsecured notes due 2025 $ 370.0 $ 370.0 $ 368.2 $ 320.5 10.000% senior unsecured notes due 2027 $ 430.0 $ — $ 471.4 $ — |
Schedule of Revenues by Service Type | A summary of revenues by service type as a percentage of total revenues follows: Successor Predecessor Year Ended December 31, September 1 to January 1 to 2019 2018 2017 2017 Patient service revenues: Surgical facilities revenues 94.1 % 93.6 % 94.3 % 91.4 % Ancillary services revenues 4.3 % 4.5 % 4.2 % 7.0 % 98.4 % 98.1 % 98.5 % 98.4 % Other service revenues: Optical services revenues 0.2 % 0.5 % 0.6 % 1.0 % Other 1.4 % 1.4 % 0.9 % 0.6 % 1.6 % 1.9 % 1.5 % 1.6 % Total revenues 100.0 % 100.0 % 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 millions): Successor Predecessor Year Ended December 31, Year Ended December 31, September 1 to January 1 to 2019 2018 2017 2017 Amount % Amount % Amount % Amount % Patient service revenues: Private insurance $ 970.5 53.8 % $ 948.9 54.6 % $ 347.8 59.6 % $ 360.1 48.9 % Government 701.9 38.9 % 653.3 37.6 % 196.9 33.7 % 309.0 42.0 % Self-pay 46.1 2.6 % 50.0 2.9 % 15.2 2.6 % 15.9 2.2 % Other (1) 84.6 4.7 % 84.8 4.9 % 23.9 4.1 % 51.4 6.9 % Total patient service revenues 1,803.1 100.0 % 1,737.0 100.0 % 583.8 100.0 % 736.4 100.0 % Other service revenues: Optical service revenues 3.8 9.5 3.5 7.6 Other revenues 24.5 25.0 5.3 4.6 Total revenues $ 1,831.4 $ 1,771.5 $ 592.6 $ 748.6 (1) Other is comprised of anesthesia service agreements, auto liability, letters of protection and other payor types. |
Allowance for Credit Losses on Financing Receivables | A summary of the changes in the allowance for doubtful accounts receivable follows (in millions): Balance at Beginning of Period Provision for Doubtful Accounts Accounts Written off, Net of Recoveries Impact of adoption of ASC 606 Balance at End of Period Predecessor Eight months ended August 31, 2017 $ 29.9 $ 16.3 $ (14.1 ) $ — $ 32.1 Successor Four months ended December 31, 2017 — 12.5 (10.5 ) — 2.0 Year ended December 31, 2018 2.0 — — (2.0 ) — |
Schedule of Equity Method Investments | Summarized financial information for these equity method investees is included in the following tables (in millions): December 31, 2019 2018 Current assets $ 51.8 $ 41.2 Noncurrent assets $ 47.4 $ 27.8 Current liabilities $ 25.5 $ 21.8 Noncurrent liabilities $ 5.8 $ 3.8 Year Ended December 31, 2019 2018 Net revenues $ 188.5 $ 169.8 Cost of revenues $ 132.0 $ 118.5 Net income $ 51.1 $ 48.2 |
Schedule of Rollforward of Non-Controlling Interests - Redeemable | A summary of activity related to the non-controlling interests—redeemable follows (in millions): December 31, 2019 2018 Balance at beginning of period $ 326.6 $ 299.3 Net income attributable to non-controlling interests—redeemable 39.1 34.6 (Disposal) and acquisition of shares of non-controlling interests, net—redeemable (1) (4.7 ) 23.7 Distributions to non-controlling interest —redeemable holders (40.0 ) (30.7 ) Other — (0.3 ) Balance at end of period $ 321.0 $ 326.6 (1) Includes post acquisition date adjustments in all periods. |
Acquisitions and Disposals (Tab
Acquisitions and Disposals (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations And Disposals [Abstract] | |
Schedule of recognized identified assets acquired and liabilities assumed | Preliminary or final amounts recognized for each major class of assets acquired and liabilities assumed for acquisitions completed during the years ended December 31, 2019 and 2018 , including post acquisition date adjustments, are as follows (in millions): 2019 2018 Cash consideration (1) $ 26.7 $ 106.4 Fair value of non-controlling interests 8.3 63.8 Aggregate acquisition date fair value $ 35.0 $ 170.2 Net assets acquired: Current Assets $ 5.4 $ 12.6 Property and equipment 1.8 5.3 Intangible assets — 0.4 Goodwill 22.6 155.9 Other long-term assets (2) 37.7 6.6 Current liabilities (4.1 ) (6.5 ) Long-term debt (0.2 ) — Long-term liabilities (28.2 ) (4.1 ) Aggregate acquisition date fair value $ 35.0 $ 170.2 (1) In connection with the clinic acquisition in 2019, the Company acquired the remaining non-controlling interests in one of its existing consolidated surgical facilities. As such, $6.3 million of the cash consideration for the clinic acquisition was classified as a financing activity and presented in payments related to ownership transactions with non-controlling interest holders in the Consolidated Statements of Cash Flows. (2) The assets acquired in 2019 includes the fair value of a non-controlling investment held by the acquired clinic in one of the Company's consolidated surgical facilities of $8.8 million . This investment asset was subsequently eliminated in consolidation. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | A summary of property and equipment follows (in millions): December 31, 2019 2018 Land $ 11.0 $ 19.5 Buildings and improvements 106.6 200.4 Furniture and equipment 23.1 24.1 Computer and software 59.8 33.9 Medical equipment 148.3 139.6 Right-of-use finance lease asset 259.3 — Construction in progress 25.9 64.9 Property and equipment, at cost 634.0 482.4 Less: Accumulated depreciation (110.7 ) (56.1 ) Property and equipment, net $ 523.3 $ 426.3 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of activity related to goodwill | A summary of the changes in the carrying amount of goodwill follows (in millions): December 31, 2019 2018 Balance at beginning of period $ 3,382.8 $ 3,346.8 Acquisitions, including post acquisition adjustments 22.3 143.5 Disposals and deconsolidations (0.2 ) (33.1 ) Impairment (2.5 ) (74.4 ) Balance at end of period $ 3,402.4 $ 3,382.8 |
Summary of components of intangible assets | A summary of the components of intangible assets follows (in millions): December 31, 2019 December 31, 2018 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Finite-lived intangible assets: Management rights agreements $ 31.1 $ (7.3 ) $ 23.8 $ 41.6 $ (4.2 ) $ 37.4 Other 8.8 (4.5 ) 4.3 6.4 (2.8 ) 3.6 Total finite-lived intangible assets 39.9 (11.8 ) 28.1 48.0 (7.0 ) 41.0 Indefinite-lived intangible assets 19.2 — 19.2 13.3 — 13.3 Total intangible assets $ 59.1 $ (11.8 ) $ 47.3 $ 61.3 $ (7.0 ) $ 54.3 |
Summary of components and activity related to intangible assets | A summary of the components of intangible assets follows (in millions): December 31, 2019 December 31, 2018 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Finite-lived intangible assets: Management rights agreements $ 31.1 $ (7.3 ) $ 23.8 $ 41.6 $ (4.2 ) $ 37.4 Other 8.8 (4.5 ) 4.3 6.4 (2.8 ) 3.6 Total finite-lived intangible assets 39.9 (11.8 ) 28.1 48.0 (7.0 ) 41.0 Indefinite-lived intangible assets 19.2 — 19.2 13.3 — 13.3 Total intangible assets $ 59.1 $ (11.8 ) $ 47.3 $ 61.3 $ (7.0 ) $ 54.3 |
Summary of scheduled amortization | Total estimated amortization expense for the next five years and thereafter related to intangible assets follows (in millions): 2020 $ 4.5 2021 4.1 2022 3.2 2023 2.1 2024 1.8 Thereafter 12.4 Total $ 28.1 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | A summary of long-term debt follows (in millions): December 31, 2019 2018 Senior secured term loan (1) $ 1,434.1 $ 1,447.9 Senior secured revolving credit facility — — 8.875% senior unsecured notes due 2021 (2) — 406.7 6.750% senior unsecured notes due 2025 370.0 370.0 10.000% senior unsecured notes due 2027 430.0 — Notes payable and other secured loans 104.0 79.3 Finance lease obligations (3) 253.4 25.4 Less: unamortized debt issuance costs (10.8 ) (2.8 ) Total debt 2,580.7 2,326.5 Less: Current maturities 56.0 55.6 Total long-term debt $ 2,524.7 $ 2,270.9 (1) Includes unamortized fair value discount of $4.6 million and $5.5 million as of December 31, 2019 and 2018 , respectively. (2) Includes unamortized fair value premium of $6.7 million as of December 31, 2018 . The premium was written-off upon redemption as discussed below. (3) In connection with the adoption of the Lease Accounting Standard, the Company's capital lease obligations that existed as of December 31, 2018 were derecognized and included as a component of the finance lease obligations included in the table shown above. See Note 6. "Leases" for further discussion on the adoption of the Lease Accounting Standard. The increase in finance lease obligations upon adoption of the Lease Accounting Standard is due to the inclusion of certain financing obligations that were previously recognized as a component of other current and long-term liabilities as discussed further in Note 13. "Other Assets and Liabilities." The increase also includes the addition of a new finance lease associated with a new de novo hospital, which began operations in the fourth quarter of 2019. |
Debt redemption percentages | The Company may redeem the 2027 Unsecured Notes, in whole or in part, at any time on or after April 15, 2022, at the redemption prices set forth below (expressed as a percentage of the principal amount of notes to be redeemed), plus accrued and unpaid interest, if any, up to, but excluding, the date of redemption: April 15, 2022 to April 14, 2023 105.000 % April 15, 2023 to April 14, 2024 102.500 % April 15, 2024 and thereafter 100.000 % The Company may redeem the 2025 Unsecured Notes, in whole or in part, at any time on or after July 1, 2020, at the redemption prices set forth below (expressed as a percentage of the principal amount to be redeemed), plus accrued and unpaid interest, if any, up to, but excluding, the date of redemption: July 1, 2020 to June 30, 2021 103.375 % July 1, 2021 to June 30, 2022 101.688 % July 1, 2022 and thereafter 100.000 % |
Summary of scheduled maturities of debt | A summary of maturities for the Company's long-term debt, excluding unamortized debt issuance costs and the unamortized fair value discount discussed above, for the next five years and thereafter as of December 31, 2019 follows (in millions): 2020 $ 56.0 2021 55.2 2022 42.0 2023 36.7 2024 1,396.7 Thereafter 1,009.5 Total $ 2,596.1 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Schedule of Components of Right-of-use Assets and Liabilities Related to Leases | Operating Leases Finance Leases Weighted-average remaining lease term 8.9 years 16.6 years Weight average discount rate 10.4 % 8.7 % The following table presents the components of the Company's right-of-use assets and liabilities related to leases and their classification in the consolidated balance sheets at December 31, 2019 (in millions): Classification in Consolidated Balance Sheets December 31, 2019 Assets: Operating lease assets Other long-term assets $ 297.7 Finance lease assets Property and equipment, net of accumulated depreciation 237.1 Total leased assets $ 534.8 Liabilities: Operating lease liabilities: Current Other current liabilities $ 37.3 Long-term Other long-term liabilities 283.1 Total operating lease liabilities 320.4 Finance lease liabilities: Current Current maturities of long-term debt 15.8 Long-term Long-term debt, less current maturities 237.6 Total finance lease liabilities 253.4 Total lease liabilities $ 573.8 |
Schedule of Lease Expense and Cash Flow Information | The following table presents the components of the Company's lease expense and their classification in the consolidated statement of operations for the year ended December 31, 2019 (in millions): December 31, 2019 Operating lease costs $ 70.4 Finance lease costs: Amortization of leased assets 22.2 Interest on lease liabilities 13.0 Total finance lease costs 35.2 Variable and short-term lease costs 13.2 Total lease costs $ 118.8 The following table presents supplemental cash flow information for the year ended December 31, 2019 (dollars in millions): December 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 67.3 Operating cash outflows from finance leases $ 13.0 Financing cash outflows from finance leases $ 13.4 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 56.2 Finance leases $ 133.3 |
Maturity of Operating Leases | Future maturities of lease liabilities at December 31, 2019 are presented in the following table (in millions): Operating Leases Finance Leases 2020 $ 67.9 $ 35.5 2021 62.3 35.5 2022 57.0 32.8 2023 53.8 30.5 2024 50.5 25.6 Thereafter 208.1 348.7 Total lease payments 499.6 508.6 Less: imputed interest (179.2 ) (255.2 ) Total lease obligations $ 320.4 $ 253.4 |
Maturity of Finance Leases | Future maturities of lease liabilities at December 31, 2019 are presented in the following table (in millions): Operating Leases Finance Leases 2020 $ 67.9 $ 35.5 2021 62.3 35.5 2022 57.0 32.8 2023 53.8 30.5 2024 50.5 25.6 Thereafter 208.1 348.7 Total lease payments 499.6 508.6 Less: imputed interest (179.2 ) (255.2 ) Total lease obligations $ 320.4 $ 253.4 |
Maturity of Leases Prior to Adoption of 842 | Future maturities of lease liabilities at December 31, 2018, prior to the adoption of the Lease Accounting Standard, are presented in the following table (in millions): Operating Leases (1) Capital Leases 2019 $ 81.5 $ 8.8 2020 75.6 6.7 2021 66.7 4.7 2022 61.3 2.9 2023 57.2 1.5 Thereafter 470.2 4.3 Total lease payments $ 812.5 28.9 Less: imputed interest (3.5 ) Total lease obligations $ 25.4 (1) Includes financing obligations payable to the lessors of certain land, buildings and improvements that arose due to the Company's continued involvement with the leased assets under the sale-leaseback guidance in effect prior to the adoption of the Lease Accounting Standard. As of December 31, 2018, the current portion of the financing obligations was $7.0 million and was included in other current liabilities in the consolidated balance sheets. The long-term portion of the finance obligations was $149.8 million and was included as other long-term liabilities in the consolidated balance sheets. |
Maturity of Leases Prior to Adoption of 842 | Future maturities of lease liabilities at December 31, 2018, prior to the adoption of the Lease Accounting Standard, are presented in the following table (in millions): Operating Leases (1) Capital Leases 2019 $ 81.5 $ 8.8 2020 75.6 6.7 2021 66.7 4.7 2022 61.3 2.9 2023 57.2 1.5 Thereafter 470.2 4.3 Total lease payments $ 812.5 28.9 Less: imputed interest (3.5 ) Total lease obligations $ 25.4 (1) Includes financing obligations payable to the lessors of certain land, buildings and improvements that arose due to the Company's continued involvement with the leased assets under the sale-leaseback guidance in effect prior to the adoption of the Lease Accounting Standard. As of December 31, 2018, the current portion of the financing obligations was $7.0 million and was included in other current liabilities in the consolidated balance sheets. The long-term portion of the finance obligations was $149.8 million and was included as other long-term liabilities in the consolidated balance sheets. |
Redeemable Preferred Stock (Tab
Redeemable Preferred Stock (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Temporary Equity Disclosure [Abstract] | |
Activity Related to Redeemable Preferred Stock | The following table presents a summary of activity related to the redeemable preferred stock for the years ended December 31, 2019 and 2018 (in millions): December 31, 2019 2018 Balance at beginning of period $ 359.3 $ 330.8 Dividends accrued 35.7 32.4 Cash dividends declared — (3.9 ) Balance at end of period $ 395.0 $ 359.3 |
Derivatives and Hedging Activ_2
Derivatives and Hedging Activities Derivatives and Hedging Activities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Effect of Interest Rate Swaps | The following table presents the pre-tax effect of the interest rate swaps on the Company's accumulated other comprehensive income ("OCI") and statement of operations (in millions): Successor Predecessor Year Ended December 31, September 1 to January 1 to 2019 2018 2017 (1) 2017 (1) Derivatives in cash flow hedging relationships Loss recognized in OCI (effective portion) $ 35.8 $ 23.1 $ — $ — Loss reclassified from accumulated OCI to interest expense (effective portion) 7.5 0.6 — — (1) There were no derivatives outstanding for the comparative periods in 2017. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Reconciliation of numerator and denominator of basic and diluted EPS | A reconciliation of the numerator and denominator of basic and diluted earnings per share follows (dollars in millions, except per share amounts; shares in thousands): Successor Predecessor Year Ended December 31, September 1 to January 1 to 2019 2018 2017 2017 Numerator: Net loss attributable to Surgery Partners, Inc. $ (74.8 ) $ (205.7 ) $ (41.3 ) $ (11.7 ) Less: Amounts allocated to participating securities (1) (35.7 ) (32.4 ) (10.5 ) — Less: Mark to redemption adjustment — — (15.6 ) — Net loss attributable to common stockholders $ (110.5 ) $ (238.1 ) $ (67.4 ) $ (11.7 ) Denominator: Weighted average shares outstanding- basic and diluted (2) 48,280 48,028 48,319 48,121 Basic and diluted loss per share (2) $ (2.29 ) $ (4.96 ) $ (1.39 ) $ (0.24 ) Dilutive securities outstanding not included in the computation of diluted loss per share as their effect is antidilutive: Stock options — 83 — — Restricted shares 67 198 63 106 (1) Includes dividends accrued during the Successor periods for the Series A Preferred Stock. The Series A Preferred Stock does not participate in undistributed losses. There were no participating securities during the Predecessor periods. (2) The impact of potentially dilutive securities for all periods were not considered because the effect would be anti-dilutive in each of those periods. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Expense (Benefit) | Income tax expense (benefit) is comprised of the following (in millions): Successor Predecessor Year Ended December 31, September 1 to January 1 to 2019 2018 2017 2017 Current: Federal $ (0.2 ) $ (0.3 ) $ (0.1 ) $ — State 1.7 1.5 1.0 0.6 Deferred: Federal 3.2 16.5 77.5 (17.3 ) State 4.8 8.7 (6.7 ) (1.4 ) Total income tax expense (benefit) $ 9.5 $ 26.4 $ 71.7 $ (18.1 ) |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the provision for income taxes as reported in the consolidated statements of operations and the amount of income tax expense (benefit) computed by multiplying consolidated income (loss) in each year by the U.S. federal statutory rate of 21% (2019 and 2018) and 35% (2017) follows (in millions): Successor Predecessor Year Ended December 31, September 1 to January 1 to 2019 2018 2017 2017 Tax expense (benefit) at U.S.federal statutory rate $ 11.5 $ (14.5 ) $ 24.5 $ 4.3 State income tax, net of U.S. federal tax benefit 5.7 10.0 1.7 (0.5 ) Change in valuation allowance 13.6 26.9 0.6 1.3 Net income attributable to non-controlling interests (25.2 ) (23.1 ) (13.9 ) (14.7 ) Changes in measurement of uncertain tax positions (0.1 ) (0.1 ) (0.2 ) — Stock option compensation 1.3 0.5 0.3 — Differences related to divested facilities 0.1 6.0 (0.4 ) (1.7 ) Nondeductible transaction costs — — 2.1 (1.0 ) Tax return reconciling differences 1.1 1.7 — (0.3 ) Change in effective tax rate 0.3 0.5 64.3 (0.8 ) Tax Receivable Agreement liability 1.6 0.9 (7.4 ) (4.8 ) Goodwill impairment 0.5 8.9 — — Litigation settlement — 8.6 — — Other (0.9 ) 0.1 0.1 0.1 Total income tax expense (benefit) $ 9.5 $ 26.4 $ 71.7 $ (18.1 ) |
Schedule of Deferred Tax Assets and Liabilities | The components of temporary differences and the approximate tax effects that give rise to the Company’s net deferred tax asset are as follows (in millions): December 31, 2019 2018 Deferred tax assets: Medical malpractice liability $ 3.5 $ 3.5 Accrued vacation and incentive compensation 2.3 2.9 Net operating loss carryforwards 143.0 139.4 Allowance for bad debts 2.2 2.5 Capital loss carryforwards 2.0 3.7 Deferred rent 1.7 1.9 Amortization of intangible assets 0.3 2.4 Deferred financing costs 9.5 14.6 Section 163(j) interest 54.7 27.3 Interest rate swap liability 12.9 5.4 TRA liability 1.2 1.2 Right of use 52.1 — Affiliate indebtedness receivable 6.8 — Other deferred assets 7.3 7.1 Total gross deferred tax assets 299.5 211.9 Less: Valuation allowance (77.9 ) (50.4 ) Total deferred tax assets 221.6 161.5 Deferred tax liabilities: Depreciation on property and equipment (2.8 ) (3.9 ) Basis differences of partnerships and joint ventures (67.5 ) (47.8 ) Right of use (51.5 ) — Other deferred liabilities (1.1 ) (0.6 ) Total deferred tax liabilities (122.9 ) (52.3 ) Net deferred tax assets $ 98.7 $ 109.2 |
Schedule of Unrecognized Tax Benefits Roll Forward | A reconciliation of the beginning and ending liability for gross unrecognized tax benefits for the years ended December 31, 2019 and 2018 is as follows (in millions): December 31, 2019 2018 Unrecognized tax benefits at beginning of year $ 0.1 $ 0.7 Reductions for tax positions of prior year — (0.6 ) Unrecognized tax benefits at end of year $ 0.1 $ 0.1 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Restricted Stock Activity | A summary of non-vested restricted share-based activity for the years ended December 31, 2019 , 2018 , and 2017 follows: Unvested Shares Weighted Average Grant Date Fair Value Predecessor Outstanding at December 31, 2016 462,242 $ 3.72 Granted/Earned 388,454 18.40 Forfeited/Cancelled (67,771 ) 18.01 Vested (169,881 ) 10.29 Outstanding at August 31, 2017 613,044 $ 16.02 Successor Outstanding at September 1, 2017 613,044 $ 16.02 Granted/Earned 112,107 11.15 Forfeited/Cancelled (54,622 ) 10.94 Vested (96,073 ) 17.03 Outstanding at December 31, 2017 574,456 $ 15.95 Granted/Earned 519,605 16.10 Forfeited/Cancelled (180,719 ) 15.09 Vested (210,318 ) 16.31 Outstanding at December 31, 2018 703,024 $ 16.18 Granted/Earned 801,751 12.70 Forfeited/Cancelled (272,706 ) 12.97 Vested (456,183 ) 16.20 Outstanding at December 31, 2019 775,886 $ 13.78 |
Schedule of Stock Options, Valuation Assumptions | 2019 2018 Expected volatility 60 % 60% - 65% Risk-free interest rate 2.30% - 2.40% 2.50% - 2.90% Expected dividends — — Average expected term (years) 4 10 Fair value of stock options granted $4.83 - $6.41 $8.48 - $9.44 |
Schedule of Stock Options Activity | A summary of stock option and SAR Award activity for the years ended December 31, 2019 , 2018 , and 2017 follows: Options/SARs Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Predecessor Outstanding at December 31, 2016 16,267 $ 19.05 1.8 Granted — Exercised (3,580 ) 15.36 Forfeited/Cancelled — Outstanding at August 31, 2017 12,687 $ 20.10 1.5 Successor Outstanding at September 1, 2017 12,687 $ 20.10 1.5 Granted — Exercised — Forfeited/Cancelled — Outstanding at December 31, 2017 12,687 $ 20.10 1.2 Granted 700,000 12.90 10.0 Exercised — Forfeited/Cancelled (200,000 ) 12.90 10.0 Outstanding at December 31, 2018 512,687 $ 13.03 9.8 Granted 2,256,500 13.00 9.2 Exercised — Forfeited/Cancelled — Outstanding at December 31, 2019 (1) 2,769,187 $ 13.02 9.0 (1) Of the outstanding options, 153,409 were exercisable as of December 31, 2019 . |
Other Assets and Liabilities -
Other Assets and Liabilities - (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Other Long-term Assets | A summary of other long-term assets is as follows (in millions): December 31, 2019 2018 Right-of-use operating lease assets $ 297.7 $ — Other 30.8 36.9 Total $ 328.5 $ 36.9 |
Summary of Other Current Liabilities | A summary of other current liabilities is as follows (in millions): December 31, 2019 2018 Interest payable $ 21.8 $ 20.8 Amounts due to patients and payors 16.5 20.0 Accrued legal settlement 35.1 42.3 Right-of-use operating lease liabilities 37.3 — Accrued expenses and other 80.5 72.1 Total $ 191.2 $ 155.2 |
Summary of Other Long-term Liabilities | A summary of other long-term liabilities is as follows (in millions): December 31, 2019 2018 Right-of-use operating lease liabilities $ 283.1 $ — Facility lease obligations — 149.8 Other 113.6 121.5 Total $ 396.7 $ 271.3 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Segment Revenue and Operating Income | The following tables present financial information for each reportable segment (in millions): Successor Predecessor Year Ended December 31, September 1 to January 1 to 2019 2018 2017 2017 Revenues: Surgical facility services $ 1,748.2 $ 1,682.4 $ 564.4 $ 688.7 Ancillary services 79.4 79.6 24.7 52.3 Optical services 3.8 9.5 3.5 7.6 Total $ 1,831.4 $ 1,771.5 $ 592.6 $ 748.6 Adjusted EBITDA: Surgical facility services $ 328.9 $ 309.5 $ 103.8 $ 125.9 Ancillary services 2.6 3.0 (2.3 ) (6.5 ) Optical services 1.4 2.5 0.7 2.2 All other (74.3 ) (80.2 ) (23.5 ) (36.0 ) Total $ 258.6 $ 234.8 $ 78.7 $ 85.6 Adjusted EBITDA: $ 258.6 $ 234.8 $ 78.7 $ 85.6 Net income attributable to non-controlling interests 119.9 110.1 39.6 42.1 Depreciations and amortization (76.5 ) (67.4 ) (21.8 ) (30.1 ) Interest expense, net (178.9 ) (147.0 ) (48.7 ) (69.0 ) Equity-based compensation expense (10.2 ) (9.3 ) (1.9 ) (3.7 ) Transaction, integration and acquisition costs (1) (36.1 ) (34.0 ) (9.2 ) (7.7 ) Gain (loss) on disposals and deconsolidation, net 4.4 (31.8 ) — (1.7 ) (Loss) gain on litigation settlements and other litigation costs (2) (4.6 ) (46.0 ) 8.7 3.8 Loss on debt extinguishment (11.7 ) — — (18.2 ) Tax receivable agreement (expense) benefit (2.4 ) — 25.3 — Impairment charges (7.9 ) (74.4 ) — — Reserve adjustments (3) — (2.7 ) — — Contingent acquisition compensation expense — (1.5 ) (2.0 ) (5.1 ) Gain on acquisition escrow release — — 0.2 1.0 Gain on amendment to tax receivable agreement — — 1.1 15.3 (Loss) income before income taxes $ 54.6 $ (69.2 ) $ 70.0 $ 12.3 (1) For the years ended December 31, 2019 and 2018 (Successor), this amount includes transaction and integration costs of $19.0 million and $31.7 million , respectively, and acquisition costs of $2.8 million and $2.2 million , respectively. This amount further includes start-up costs related to a de novo surgical hospital of $14.3 million for the year ended December 31, 2019 (Successor), with no comparable costs in the 2018 period (Successor). For the four months ended December 31, 2017 (Successor) and the eight months ended August 31, 2017 (Predecessor), this amount includes transaction and integration costs of $7.5 million and $5.6 million , respectively, and acquisition costs of $1.8 million and $2.1 million , respectively. There were no start-up costs related to the de novo surgical hospital in the 2017 periods. (2) For the years ended December 31, 2019 and 2018 (Successor), this amount includes a loss on litigation settlements of $0.2 million and $46.0 million , respectively. This amount further includes other litigation costs of $4.4 million for the year ended December 31, 2019 (Successor), with no comparable costs in the 2018 period (Successor). For the four months ended December 31, 2017 (Successor) and the eight months ended August 31, 2017 (Predecessor), this amount includes a gain on litigation settlements of $8.7 million and $3.8 million , respectively. (3) This amount represents adjustments to revenue in connection with applying consistent policies across the combined company as a result of the integration of Surgery Partners and a previously acquired entity. |
Reconciliation of Assets from Segment to Consolidated | December 31, 2019 2018 Assets: Surgical facility services $ 4,580.4 $ 4,204.4 Ancillary services 69.6 52.7 Optical services 17.7 20.1 All other 351.2 399.1 Total assets $ 5,018.9 $ 4,676.3 |
Schedule of Financial Information by Reportable Segment | Successor Predecessor Year Ended December 31, September 1 to January 1 to 2019 2018 2017 2017 Cash purchases of property and equipment, net: Surgical facility services $ 65.9 $ 34.2 $ 9.3 $ 14.6 Ancillary services 1.1 0.4 0.2 1.9 Optical services — — 0.1 0.1 All other 6.6 5.2 1.2 2.2 Total $ 73.6 $ 39.8 $ 10.8 $ 18.8 |
Quarterly Financial Informati_2
Quarterly Financial Information (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | The following tables include a summary of certain information related to the Company's quarterly consolidated results of operations for each of the four quarters in the years ended December 31, 2019 and 2018 . The timing of acquisitions and divestitures completed during the years presented affects the comparability of the quarterly financial information. The following should be read in conjunction with the audited consolidated financial statements included herein. The amounts are as follows (in millions except per share amounts): 2019 Q1 Q2 Q3 Q4 Revenues $ 416.8 $ 445.4 $ 452.0 $ 517.2 Cost of revenues $ 326.1 $ 340.4 $ 353.1 $ 388.0 Net income (loss) $ 3.5 $ 8.1 $ 10.9 $ 22.6 Net income attributable to non-controlling interests $ (23.6 ) $ (27.9 ) $ (26.6 ) $ (41.8 ) Net loss attributable to Surgery Partners, Inc. $ (20.1 ) $ (19.8 ) $ (15.7 ) $ (19.2 ) Basic net loss per share attributable to common stockholders $ (0.60 ) $ (0.59 ) $ (0.51 ) $ (0.59 ) Diluted net loss per share attributable to common stockholders $ (0.60 ) $ (0.59 ) $ (0.51 ) $ (0.59 ) 2018 Q1 Q2 Q3 Q4 Revenues $ 411.3 $ 436.6 $ 432.4 $ 491.2 Cost of revenues $ 327.3 $ 340.1 $ 334.3 $ 359.7 Net income (loss) $ 5.1 $ 4.3 $ 2.0 $ (107.0 ) Net income attributable to non-controlling interests $ (22.6 ) $ (23.8 ) $ (23.0 ) $ (40.7 ) Net loss attributable to Surgery Partners, Inc. $ (17.5 ) $ (19.5 ) $ (21.0 ) $ (147.7 ) Basic net loss per share attributable to common stockholders $ (0.53 ) $ (0.57 ) $ (0.61 ) $ (3.25 ) Diluted net loss per share attributable to common stockholders $ (0.53 ) $ (0.57 ) $ (0.61 ) $ (3.25 ) |
Organization and Summary of A_4
Organization and Summary of Accounting Policies - Organization (Details) | Dec. 31, 2019surgical_facilitystate | Aug. 31, 2017 |
Product Information [Line Items] | ||
Number of States in which entity operates | state | 30 | |
Number of surgical facilities owned | 128 | |
Number of surgical facilities owned, majority interest | 85 | |
Number of surgical facilities owned, consolidated | 107 | |
Facilities, Ambulatory Surgery Centers | ||
Product Information [Line Items] | ||
Number of surgical facilities owned | 112 | |
Facilities, Surgical Hospitals | ||
Product Information [Line Items] | ||
Number of surgical facilities owned | 16 | |
BCPE Seminole Holdings LP | Majority Shareholder | ||
Product Information [Line Items] | ||
Percentage of voting interest acquired | 67.00% | |
BCPE Seminole Holdings LP | Majority Shareholder | Common Stock | ||
Product Information [Line Items] | ||
Percentage of voting interest acquired | 54.20% |
Organization and Summary of A_5
Organization and Summary of Accounting Policies - Variable Interest Entities (Details) $ in Millions | Dec. 31, 2019Anesthesia_Practice | Dec. 31, 2019surgical_facility | Dec. 31, 2019physician_practice | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
Variable Interest Entity [Line Items] | |||||
Number of facilities included in VIE | 3 | 4 | 3 | ||
Variable Interest Entity Primary Beneficiary | |||||
Variable Interest Entity [Line Items] | |||||
Total assets related to VIE | $ 36.2 | $ 11.2 | |||
Total liabilities related to VIE | $ 25.2 | $ 3.6 |
Organization and Summary of A_6
Organization and Summary of Accounting Policies - Schedule of Carrying Amount and Fair Value of Financial Instruments (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | $ 2,596.1 | |
2017 Term Loan, Maturing 2024 | Senior Notes | Revolving Credit Facility | Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 1,434.1 | $ 1,447.9 |
2017 Term Loan, Maturing 2024 | Senior Notes | Revolving Credit Facility | Fair Value | Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 1,434.1 | 1,382.7 |
Senior Unsecured Notes Due 2021 | Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 0 | 406.7 |
Senior Unsecured Notes Due 2021 | Senior Notes | Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 0 | 406.7 |
Senior Unsecured Notes Due 2021 | Senior Notes | Fair Value | Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 0 | 407.2 |
6.750% senior unsecured notes due 2025 | Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 370 | 370 |
6.750% senior unsecured notes due 2025 | Senior Notes | Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 370 | 370 |
6.750% senior unsecured notes due 2025 | Senior Notes | Fair Value | Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 368.2 | 320.5 |
10.000% senior unsecured notes due 2027 | Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 430 | 0 |
10.000% senior unsecured notes due 2027 | Senior Notes | Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 430 | 0 |
10.000% senior unsecured notes due 2027 | Senior Notes | Fair Value | Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | $ 471.4 | $ 0 |
Organization and Summary of A_7
Organization and Summary of Accounting Policies - Fair Value of Financial Instruments (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Interest rate swap agreement | $ 50.7 | $ 22.4 |
Organization and Summary of A_8
Organization and Summary of Accounting Policies - Schedule of Revenues by Service Type (Details) - Revenue Source - Revenue | 4 Months Ended | 8 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Aug. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | |
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 | 98.50% | 98.40% | 98.40% | 98.10% |
Surgical facility services | ||||
Revenue from External Customer [Line Items] | ||||
Revenue by service type as a percentage of total revenues | 94.30% | 91.40% | 94.10% | 93.60% |
Ancillary services | ||||
Revenue from External Customer [Line Items] | ||||
Revenue by service type as a percentage of total revenues | 4.20% | 7.00% | 4.30% | 4.50% |
Healthcare Organization, Other Service | ||||
Revenue from External Customer [Line Items] | ||||
Revenue by service type as a percentage of total revenues | 1.50% | 1.60% | 1.60% | 1.90% |
Optical services | ||||
Revenue from External Customer [Line Items] | ||||
Revenue by service type as a percentage of total revenues | 0.60% | 1.00% | 0.20% | 0.50% |
Other | ||||
Revenue from External Customer [Line Items] | ||||
Revenue by service type as a percentage of total revenues | 0.90% | 0.60% | 1.40% | 1.40% |
Organization and Summary of A_9
Organization and Summary of Accounting Policies - Schedule of Revenues by Sources (Details) - USD ($) $ in Millions | 3 Months Ended | 4 Months Ended | 8 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Aug. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | |
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||||||||||
Total revenues | $ 517.2 | $ 452 | $ 445.4 | $ 416.8 | $ 491.2 | $ 432.4 | $ 436.6 | $ 411.3 | $ 592.6 | $ 748.6 | $ 1,831.4 | $ 1,771.5 |
Increase in reserves for accounts receivable | 15.6 | |||||||||||
Healthcare Organization, Patient Service | ||||||||||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||||||||||
Total revenues | $ 583.8 | $ 736.4 | $ 1,803.1 | $ 1,737 | ||||||||
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% | ||||||||
Private insurance | ||||||||||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||||||||||
Total revenues | $ 347.8 | $ 360.1 | $ 970.5 | $ 948.9 | ||||||||
Private insurance | Customer | Revenue | ||||||||||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||||||||||
Revenue by service type as a percentage of total revenues | 59.60% | 48.90% | 53.80% | 54.60% | ||||||||
Government | ||||||||||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||||||||||
Total revenues | $ 196.9 | $ 309 | $ 701.9 | $ 653.3 | ||||||||
Government | Customer | Revenue | ||||||||||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||||||||||
Revenue by service type as a percentage of total revenues | 33.70% | 42.00% | 38.90% | 37.60% | ||||||||
Self-pay | ||||||||||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||||||||||
Total revenues | $ 15.2 | $ 15.9 | $ 46.1 | $ 50 | ||||||||
Self-pay | Customer | Revenue | ||||||||||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||||||||||
Revenue by service type as a percentage of total revenues | 2.60% | 2.20% | 2.60% | 2.90% | ||||||||
Other | ||||||||||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||||||||||
Total revenues | $ 23.9 | $ 51.4 | $ 84.6 | $ 84.8 | ||||||||
Other | Customer | Revenue | ||||||||||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||||||||||
Revenue by service type as a percentage of total revenues | 4.10% | 6.90% | 4.70% | 4.90% | ||||||||
Optical services | ||||||||||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||||||||||
Total revenues | $ 3.5 | $ 7.6 | $ 3.8 | $ 9.5 | ||||||||
Other | ||||||||||||
Health Care Organization, Receivable and Revenue Disclosures [Line Items] | ||||||||||||
Total revenues | $ 5.3 | $ 4.6 | $ 24.5 | $ 25 |
Organization and Summary of _10
Organization and Summary of Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Restricted invested assets included in other long-term assets | $ 0.3 | $ 0.3 |
Organization and Summary of _11
Organization and Summary of Accounting Policies - Accounts Receivable and Allowances for Contractual Adjustments and Doubtful Accounts (Details) - USD ($) $ in Millions | 4 Months Ended | 8 Months Ended | 12 Months Ended | ||||
Dec. 31, 2017 | Aug. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2018 | Sep. 01, 2017 | Dec. 31, 2016 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Third-Party Medicaid settlements liability | $ 5.6 | $ 4.8 | |||||
Optical products receivable | 8.6 | 8.5 | |||||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||||||
Balance at Beginning of Period | $ 2 | $ 32.1 | $ 0 | $ 0 | $ 0 | $ 29.9 | |
Provision for Doubtful Accounts | 12.5 | 16.3 | $ 0 | 0 | |||
Accounts Written off, Net of Recoveries | (10.5) | (14.1) | 0 | ||||
Balance at End of Period | 2 | 32.1 | 0 | ||||
Accounting Standards Update 2014-09 | |||||||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||||||
Impact of adoption of ASC 606 | $ 0 | $ 0 | $ (2) |
Organization and Summary of _12
Organization and Summary of Accounting Policies - Investments in Unconsolidated Affiliates (Details) $ in Millions | 4 Months Ended | 8 Months Ended | 12 Months Ended | |
Dec. 31, 2017USD ($) | Aug. 31, 2017USD ($) | Dec. 31, 2019USD ($)surgical_facility | Dec. 31, 2018USD ($)surgical_facility | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Current assets | $ 51.8 | $ 41.2 | ||
Noncurrent assets | 47.4 | 27.8 | ||
Current liabilities | 25.5 | 21.8 | ||
Noncurrent liabilities | 5.8 | 3.8 | ||
Income Statement | ||||
Net revenues | 188.5 | 169.8 | ||
Cost of revenues | 132 | 118.5 | ||
Net income | $ 51.1 | 48.2 | ||
Number of surgical facilities acquired | surgical_facility | 4 | |||
Purchase of equity investments | $ 0 | $ 0 | $ (15.2) | $ 0 |
Number of surgery facilities sold | surgical_facility | 1 | |||
Proceeds from sale of equity method investments | $ 0.5 | |||
Gain (loss) deconsolidation | 1.1 | |||
Fair value | $ 2 |
Organization and Summary of _13
Organization and Summary of Accounting Policies - Schedule of Non-Controlling Interests - Redeemable (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Non-Controlling Interests - Redeemable [Roll Forward] | ||
Non-controlling interest, beginning balance | $ 326.6 | $ 299.3 |
Net income attributable to non-controlling interests—redeemable | 39.1 | 34.6 |
Acquisition and disposal of shares of non-controlling interests, net—redeemable | (4.7) | 23.7 |
Distributions to non-controlling interest —redeemable holders | (40) | (30.7) |
Other | 0 | (0.3) |
Non-controlling interest, ending balance | $ 321 | $ 326.6 |
Organization and Summary of _14
Organization and Summary of Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | Sep. 30, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Operating lease, liability | $ 320.4 | $ 1.4 | ||
Operating lease assets | $ 297.7 | $ 0 | ||
Lease Accounting Standard | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Operating lease, liability | $ 294 | |||
Operating lease assets | 294 | |||
Cumulative effect of accounting change, adjustment to retained deficit | 6.1 | |||
Lease Accounting Standard | Retained Deficit | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect of accounting change, adjustment to retained deficit | $ 6.1 |
Acquisitions and Disposals - Ad
Acquisitions and Disposals - Additional Information (Details) $ in Millions | 4 Months Ended | 8 Months Ended | 12 Months Ended | ||||
Dec. 31, 2017USD ($) | Aug. 31, 2017USD ($) | Dec. 31, 2019USD ($)surgical_facility | Dec. 31, 2018USD ($)surgical_facility | Dec. 31, 2018USD ($) | Dec. 31, 2018USD ($)surgical_hospital | Dec. 31, 2018USD ($)surgery_center | |
Business Acquisition [Line Items] | |||||||
Total cash consideration, net of cash acquired | $ 29.2 | $ 725.9 | $ 13.8 | $ 106.8 | |||
Goodwill | 3,346.8 | 3,402.4 | $ 3,382.8 | 3,382.8 | $ 3,382.8 | $ 3,382.8 | |
Gain (loss) on disposals and deconsolidation, net | $ 0 | $ (1.7) | $ 4.4 | (31.8) | |||
Disposal Group One | |||||||
Business Acquisition [Line Items] | |||||||
Number of interests sold | 2 | 4 | |||||
Net cash proceeds from sale of interests | 18.7 | ||||||
Net pre-tax gain (loss) on sale of interests | 21.2 | ||||||
Surgical Facility | |||||||
Business Acquisition [Line Items] | |||||||
Number of business entities acquired | surgical_facility | 1 | 5 | |||||
Surgical Facility | |||||||
Business Acquisition [Line Items] | |||||||
Cash consideration | $ 26.7 | 106.4 | |||||
Total cash consideration, net of cash acquired | 20.1 | 105.6 | |||||
Goodwill | 22.6 | $ 155.9 | $ 155.9 | $ 155.9 | $ 155.9 | ||
Surgical facility services | Total Acquisitions In 2018 | |||||||
Business Acquisition [Line Items] | |||||||
Goodwill | 14.1 | ||||||
Ancillary services | Total Acquisitions In 2018 | |||||||
Business Acquisition [Line Items] | |||||||
Goodwill | 8.5 | ||||||
Disposed of by Sale | |||||||
Business Acquisition [Line Items] | |||||||
Gain (loss) on disposals and deconsolidation, net | $ 10.9 |
Acquisitions and Disposals - As
Acquisitions and Disposals - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Net assets acquired: | |||
Goodwill | $ 3,402.4 | $ 3,382.8 | $ 3,346.8 |
Surgical Facility | |||
Business Acquisition [Line Items] | |||
Cash consideration | 26.7 | 106.4 | |
Fair value of non-controlling interests | 8.3 | 63.8 | |
Aggregate fair value of acquisition | 35 | 170.2 | |
Net assets acquired: | |||
Current assets | 5.4 | 12.6 | |
Property and equipment | 1.8 | 5.3 | |
Intangible assets | 0 | 0.4 | |
Goodwill | 22.6 | 155.9 | |
Other long-term assets | 37.7 | 6.6 | |
Current liabilities | (4.1) | (6.5) | |
Long-term debt | (0.2) | 0 | |
Long-term liabilities | (28.2) | (4.1) | |
Aggregate acquisition date fair value | 35 | $ 170.2 | |
Surgical Facility | |||
Business Acquisition [Line Items] | |||
Fair value of non-controlling interests | 8.8 | ||
Net assets acquired: | |||
Proceeds from noncontrolling interests | $ 6.3 |
Property and Equipment - Additi
Property and Equipment - Additional Information (Details) - USD ($) $ in Millions | 4 Months Ended | 8 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Aug. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Line Items] | ||||
Depreciation | $ 20 | $ 24.1 | $ 71.9 | $ 62.5 |
Buildings and improvements | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, and equipment useful life | 20 years | |||
Buildings and improvements | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, and equipment useful life | 40 years | |||
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 | |||
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 |
Property and Equipment - Summar
Property and Equipment - Summary of Property and Equipment (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | $ 482.4 | |
Right-of-use finance lease asset | $ 259.3 | |
Property and equipment, at cost | 634 | |
Less: Accumulated depreciation | (110.7) | |
Less: Accumulated depreciation | (56.1) | |
Property and equipment, net | 523.3 | |
Property and equipment, net | 426.3 | |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | 11 | 19.5 |
Buildings and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | 106.6 | 200.4 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | 23.1 | 24.1 |
Computer and software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | 59.8 | 33.9 |
Medical equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | 148.3 | 139.6 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | $ 25.9 | $ 64.9 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Additional Information (Details) $ in Millions | Oct. 01, 2019USD ($)reporting_unit | Dec. 31, 2017USD ($) | Aug. 31, 2017USD ($) | Dec. 31, 2019USD ($)reporting_unit | Dec. 31, 2018USD ($) |
Finite-Lived Intangible Assets [Line Items] | |||||
Number of reporting units | reporting_unit | 3 | ||||
Number of reporting units disposed of in 2018 | reporting_unit | 2 | ||||
Goodwill | $ 3,346.8 | $ 3,402.4 | $ 3,382.8 | ||
Goodwill impairment loss | (5.4) | (60.7) | |||
Amortization expense | $ 1.8 | $ 6 | $ 4.6 | 4.9 | |
Physician income guarantees | Minimum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful lives of intangible assets | 3 years | ||||
Physician income guarantees | Maximum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful lives of intangible assets | 4 years | ||||
Non-compete agreements | Minimum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful lives of intangible assets | 2 years | ||||
Non-compete agreements | Maximum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful lives of intangible assets | 5 years | ||||
Management rights agreements | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful lives of intangible assets | 15 years | ||||
Customer relationships | Minimum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful lives of intangible assets | 3 years | ||||
Customer relationships | Maximum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful lives of intangible assets | 10 years | ||||
Reporting Unit, Surgical Facilities | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill | $ 3,400 | ||||
Reporting Unit, Ancillary Services | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill | 28.6 | ||||
Goodwill impairment loss | $ (13.7) | ||||
Reporting Unit, The Alliance | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill | 11.6 | ||||
Goodwill impairment loss | $ (2.5) |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Changes in Carrying Amount of Goodwill (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill [Roll Forward] | ||
Goodwill, beginning of period | $ 3,382.8 | $ 3,346.8 |
Acquisitions, including post acquisition adjustments | 22.3 | 143.5 |
Disposals and deconsolidations | (0.2) | (33.1) |
Impairment | (2.5) | (74.4) |
Goodwill, end of period | $ 3,402.4 | $ 3,382.8 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Summary of Components of Intangible Assets (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross carrying amount | $ 39.9 | $ 48 |
Finite-lived intangible assets, accumulated amortization | (11.8) | (7) |
Total | 28.1 | 41 |
Indefinite-lived intangible assets | 19.2 | 13.3 |
Total intangible assets, gross | 59.1 | 61.3 |
Total intangible assets, net | 47.3 | 54.3 |
Management rights agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross carrying amount | 31.1 | 41.6 |
Finite-lived intangible assets, accumulated amortization | (7.3) | (4.2) |
Total | 23.8 | 37.4 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross carrying amount | 8.8 | 6.4 |
Finite-lived intangible assets, accumulated amortization | (4.5) | (2.8) |
Total | $ 4.3 | $ 3.6 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Future Amortization of Intangible Assets (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2020 | $ 4.5 | |
2021 | 4.1 | |
2022 | 3.2 | |
2023 | 2.1 | |
2024 | 1.8 | |
Thereafter | 12.4 | |
Total | $ 28.1 | $ 41 |
Long-Term Debt - Summary of Lon
Long-Term Debt - Summary of Long-Term Debt (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 2,596.1 | |
Total lease obligations | 253.4 | $ 25.4 |
Less: unamortized debt issuance costs | (10.8) | (2.8) |
Total debt | 2,580.7 | 2,326.5 |
Less: Current maturities | 56 | 55.6 |
Total long-term debt | 2,524.7 | 2,270.9 |
Notes payable and other secured loans | ||
Debt Instrument [Line Items] | ||
Long-term debt | 104 | 79.3 |
Senior secured term loan | Secured Debt | ||
Debt Instrument [Line Items] | ||
Long-term debt | 1,434.1 | 1,447.9 |
Less: unamortized debt issuance costs | (3) | |
2017 Senior Secured Credit Facility | ||
Debt Instrument [Line Items] | ||
Long-term debt | 0 | 0 |
8.875% senior unsecured notes due 2021 | Senior Notes | ||
Debt Instrument [Line Items] | ||
Long-term debt | 0 | 406.7 |
Unamortized fair value discount | (4.6) | (5.5) |
Unamortized fair value premium | 6.7 | |
6.750% senior unsecured notes due 2025 | Senior Notes | ||
Debt Instrument [Line Items] | ||
Long-term debt | 370 | 370 |
10.000% senior unsecured notes due 2027 | Senior Notes | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 430 | $ 0 |
Long-Term Debt - 2017 Senior Se
Long-Term Debt - 2017 Senior Secured Credit Facilities (Details) - USD ($) | 4 Months Ended | 8 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Aug. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | |
Debt Instrument [Line Items] | ||||
Loss on debt extinguishment | $ 0 | $ (18,200,000) | $ (11,700,000) | $ 0 |
Debt issuance costs and discount | 10,800,000 | 2,800,000 | ||
Revolving Credit Facility | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Outstanding balance on debt | 112,900,000 | |||
Letter of Credit | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Outstanding balance on debt | 7,100,000 | |||
2017 Term Loan, Maturing 2024 | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Original balance of debt | $ 1,440,000,000 | |||
Quarterly installment of original principal | 0.25% | |||
Debt issuance costs and discount | $ 3,000,000 | |||
2017 Term Loan, Maturing 2024 | Fair Value, Inputs, Level 2 | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Debt discount | 6,500,000 | |||
2017 Revolver Loan, Maturing 2022 | Revolving Credit Facility | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Original balance of debt | 120,000,000 | |||
Long-term line of credit | $ 45,000,000 | |||
Commitment fee | 0.50% | |||
Net leverage ratio | 9.50 | |||
Commitment threshold | 35.00% | |||
Senior Unsecured Notes Due 2021 | Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Loss on debt extinguishment | $ (11,700,000) | |||
Debt discount | $ 4,600,000 | $ 5,500,000 | ||
FIrst Lien Credit Agreement, 2014 | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Loss on debt extinguishment | $ 18,200,000 | |||
Federal Funds Effective Swap Rate | 2017 Senior Secured Credit Facility | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, basis spread on variable rate | 0.50% | |||
One Month LIBOR | 2017 Senior Secured Credit Facility | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, basis spread on variable rate | 1.00% | |||
Base Rate | 2017 Senior Secured Credit Facility | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, basis spread on variable rate | 2.00% | |||
Minimum | LIBOR | 2017 Senior Secured Credit Facility | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, basis spread on variable rate | 3.00% | |||
Minimum | Base Rate | 2017 Senior Secured Credit Facility | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, margin in addition to base rate | 2.00% | |||
Maximum | LIBOR | 2017 Senior Secured Credit Facility | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, basis spread on variable rate | 3.25% | |||
Maximum | Base Rate | 2017 Senior Secured Credit Facility | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, margin in addition to base rate | 2.25% |
Long-Term Debt - Senior Unsecur
Long-Term Debt - Senior Unsecured Notes due 2025 (Details) - Senior Notes - 6.750% senior unsecured notes due 2025 - USD ($) | Jun. 30, 2017 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Debt instrument, stated rate | 6.75% | |
Original balance of debt | $ 370,000,000 | |
Debt issuance costs | $ 17,300,000 | |
Redemption Period One | ||
Debt Instrument [Line Items] | ||
Amount of principal available to be redeemed, percentage | 40.00% | |
Cash proceeds of principal amount, percentage | 106.75% | |
Minimum principal remaining, percentage | 50.00% | |
Period after equity offering | 180 days | |
Redemption price, percentage | 100.00% | |
Redemption Period Two | ||
Debt Instrument [Line Items] | ||
Redemption price, percentage | 103.375% | |
Redemption Period Three | ||
Debt Instrument [Line Items] | ||
Redemption price, percentage | 101.688% | |
Redemption Period Four | ||
Debt Instrument [Line Items] | ||
Redemption price, percentage | 100.00% | |
Redemption Period Five | ||
Debt Instrument [Line Items] | ||
Redemption price, percentage | 101.00% |
Long-Term Debt - Senior Unsec_2
Long-Term Debt - Senior Unsecured Notes due 2027 (Details) - Senior Notes - 10.000% senior unsecured notes due 2027 - USD ($) | Apr. 11, 2019 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Debt instrument, stated rate | 10.00% | |
Face value of debt issued | $ 430,000,000 | |
Percentage of debt principal redeemable | 40.00% | |
Debt issuance costs | $ 8,800,000 | |
Redemption Period One | ||
Debt Instrument [Line Items] | ||
Redemption price of debt | 110.00% | |
Redemption Period Two | ||
Debt Instrument [Line Items] | ||
Redemption price of debt | 100.00% | |
Redemption Period Three | ||
Debt Instrument [Line Items] | ||
Redemption price of debt | 105.00% | |
Redemption Period Four | ||
Debt Instrument [Line Items] | ||
Redemption price of debt | 102.50% | |
Redemption Period Five | ||
Debt Instrument [Line Items] | ||
Redemption price of debt | 100.00% | |
Redemption Period Six | ||
Debt Instrument [Line Items] | ||
Redemption price of debt | 101.00% |
Long-Term Debt - Senior Unsec_3
Long-Term Debt - Senior Unsecured Notes due 2021 (Details) - USD ($) $ in Millions | Apr. 11, 2019 | Dec. 31, 2017 | Aug. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | |||||
Loss on debt extinguishment | $ 0 | $ 18.2 | $ 11.7 | $ 0 | |
Senior Notes | Senior Unsecured Notes Due 2021 | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, stated rate | 8.875% | ||||
Redemption price, percentage | 104.438% | ||||
Loss on debt extinguishment | $ 11.7 |
Long-Term Debt - Summary of Sch
Long-Term Debt - Summary of Scheduled Maturities of Debt Obligations (Details) $ in Millions | Dec. 31, 2019USD ($) |
Debt Disclosure [Abstract] | |
2020 | $ 56 |
2021 | 55.2 |
2022 | 42 |
2023 | 36.7 |
2024 | 1,396.7 |
Thereafter | 1,009.5 |
Total | $ 2,596.1 |
Leases - Components of Right-of
Leases - Components of Right-of-us Assets and Liabilities Related to Leases (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019USD ($)option_to_renew | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | |
Operating Leased Assets [Line Items] | |||
Operating lease costs | $ 70.4 | ||
Initial term of operating leases | 10 years | ||
Number of options to renew operating leases | option_to_renew | 1 | ||
Assets: | |||
Operating lease assets | $ 297.7 | $ 0 | |
Finance lease assets | 237.1 | ||
Total leased assets | 534.8 | ||
Operating lease liabilities: | |||
Current | 37.3 | 0 | |
Long-term | 283.1 | 0 | |
Total operating lease liabilities | 320.4 | $ 1.4 | |
Finance lease liabilities: | |||
Current | 15.8 | 7 | |
Long-term | 237.6 | 149.8 | |
Total finance lease liabilities | 253.4 | $ 25.4 | |
Total lease liabilities | $ 573.8 | ||
Weighted-average remaining lease term, operating leases | 8 years 10 months 20 days | ||
Weighted-average remaining lease term, finance leases | 16 years 7 months 2 days | ||
Weighted-average discount rate, operating leases | 10.40% | ||
Weighted-average discount rate, finance leases | 8.70% | ||
Investor | |||
Operating Leased Assets [Line Items] | |||
Operating lease costs | $ 20.6 |
Leases - Lease Expense and Cash
Leases - Lease Expense and Cash Flow Information (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Lessee, Lease, Description [Line Items] | |
Operating lease costs | $ 70.4 |
Finance lease costs: | |
Amortization of leased assets | 22.2 |
Interest on lease liabilities | 13 |
Total finance lease costs | 35.2 |
Variable and short-term lease costs | 13.2 |
Total lease costs | 118.8 |
Operating cash outflows from operating leases | 67.3 |
Operating cash outflows from finance leases | 13 |
Financing cash outflows from finance leases | 13.4 |
Operating leases | 56.2 |
Finance leases | 133.3 |
Noncontrolling Interest | |
Finance lease costs: | |
Rent paid under finance lease agreement, allocated to principal and interest | $ 6.7 |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 |
Operating Leases | |||
2020 | $ 67.9 | ||
2021 | 62.3 | ||
2022 | 57 | ||
2023 | 53.8 | ||
2024 | 50.5 | ||
Thereafter | 208.1 | ||
Total lease payments | 499.6 | ||
Less: imputed interest | (179.2) | ||
Total lease obligations | 320.4 | $ 1.4 | |
Finance Leases | |||
2020 | 35.5 | ||
2021 | 35.5 | ||
2022 | 32.8 | ||
2023 | 30.5 | ||
2024 | 25.6 | ||
Thereafter | 348.7 | ||
Total lease payments | 508.6 | ||
Less: imputed interest | (255.2) | ||
Total lease obligations | $ 253.4 | $ 25.4 |
Leases - Maturities of Leases P
Leases - Maturities of Leases Prior to Adoption of 842 (Details) - USD ($) $ in Millions | 4 Months Ended | 8 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Aug. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2019 | |
Operating Leases | ||||
2019 | $ 81.5 | |||
2020 | 75.6 | |||
2021 | 66.7 | |||
2022 | 61.3 | |||
2023 | 57.2 | |||
Thereafter | 470.2 | |||
Total lease payments | 812.5 | |||
Capital Leases | ||||
2019 | 8.8 | |||
2020 | 6.7 | |||
2021 | 4.7 | |||
2022 | 2.9 | |||
2023 | 1.5 | |||
Thereafter | 4.3 | |||
Total lease payments | 28.9 | |||
Less: imputed interest | (3.5) | |||
Total lease obligations | 25.4 | |||
Current portion of finance lease | 7 | $ 15.8 | ||
Current portion of finance lease | 149.8 | $ 237.6 | ||
Operating Leased Assets [Line Items] | ||||
Total future minimum rental payments to be received | 3.4 | |||
Operating lease, expense | $ 27.8 | $ 39.2 | 83.5 | |
Operating Lease Agreements, Physician Investors, Related Parties | ||||
Operating Leased Assets [Line Items] | ||||
Operating lease, expense | $ 7.5 | $ 9.8 | $ 20.2 |
Redeemable Preferred Stock - A
Redeemable Preferred Stock - Additional Information (Details) | Aug. 31, 2017USD ($)trading_day$ / sharesshares | Dec. 31, 2019USD ($)$ / shares | Dec. 31, 2018USD ($)$ / shares |
Temporary Equity [Line Items] | |||
Preferred stock, par value (USD per share) | $ / shares | $ 0.01 | $ 0.01 | |
Dividends declared but unpaid | $ 0 | ||
Cumulative preferred dividends | $ 69,500,000 | $ 33,800,000 | |
Cumulative preferred dividends (in USD per share) | $ / shares | $ 224.09 | $ 108.97 | |
Increase (Decrease) in Temporary Equity [Roll Forward] | |||
Balance at beginning of period | $ 359,300,000 | $ 330,800,000 | |
Dividends accrued | 35,700,000 | 32,400,000 | |
Cash dividends declared | 0 | (3,900,000) | |
Balance at end of period | $ 395,000,000 | $ 359,300,000 | |
Series A Preferred Stock | |||
Temporary Equity [Line Items] | |||
Preferred stock dividend rate | 10.00% | ||
Trading days | trading_day | 20 | ||
Consecutive trading days | trading_day | 30 | ||
Threshold share price (in USD per share) | $ / shares | $ 42 | ||
Maximum cash dividend declarable | 50.00% | ||
Redemption price (in USD per share) | $ / shares | $ 1,000 | ||
Deferred equity issuance costs | $ 18,300,000 | ||
Series A Preferred Stock | Common Stock | |||
Temporary Equity [Line Items] | |||
Share price (in USD per share) | $ / shares | $ 19 | ||
Majority Shareholder | Series A Preferred Stock | |||
Temporary Equity [Line Items] | |||
Stock issued during period (in shares) | shares | 310,000 | ||
Preferred stock, par value (USD per share) | $ / shares | $ 0.01 | ||
Purchase price per share (in USD per share) | $ / shares | $ 1,000 | ||
Initial public offering | $ 310,000,000 |
Derivatives and Hedging Activ_3
Derivatives and Hedging Activities (Details) $ in Millions | 4 Months Ended | 8 Months Ended | 12 Months Ended | |
Dec. 31, 2017USD ($) | Aug. 31, 2017USD ($) | Dec. 31, 2019USD ($)swap | Dec. 31, 2018USD ($) | |
Derivative [Line Items] | ||||
Amount estimated to be reclassified as a reduction to interest expense over next 12 months | $ 14.6 | |||
Number of interest rate swaps held | swap | 4 | |||
Loss recognized in OCI (effective portion) | $ 35.8 | |||
Loss recognized in OCI (effective portion) | $ 0 | $ 0 | $ 23.1 | |
Loss reclassified from accumulated OCI to interest expense (effective portion) | 7.5 | |||
Loss reclassified from accumulated OCI to interest expense (effective portion) | $ 0 | $ 0 | 0.6 | |
Interest Rate Swap | ||||
Derivative [Line Items] | ||||
Current notional amount | $ 1,200 | $ 900 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 4 Months Ended | 8 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2017 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Aug. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 15, 2017 | ||
Numerator: | |||||||||||||||
Net loss attributable to Surgery Partners, Inc. | $ (19,200,000) | $ (15,700,000) | $ (19,800,000) | $ (20,100,000) | $ (147,700,000) | $ (21,000,000) | $ (19,500,000) | $ (17,500,000) | $ (41,300,000) | $ (11,700,000) | $ (74,800,000) | $ (205,700,000) | |||
Less: amounts allocated to participating securities | (10,500,000) | 0 | (35,700,000) | (32,400,000) | |||||||||||
Less: Mark to redemption adjustment | (15,600,000) | 0 | 0 | 0 | |||||||||||
Net loss attributable to common stockholders | $ (67,400,000) | $ (11,700,000) | $ (110,500,000) | $ (238,100,000) | |||||||||||
Denominator: | |||||||||||||||
Weighted average common shares outstanding - basic and diluted (shares) | [1] | 48,319,000 | 48,121,000 | 48,280,000 | 48,028,000 | ||||||||||
Net loss per share attributable to common stockholders - basic and diluted (in USD per share) | [1] | $ (1.39) | $ (0.24) | $ (2.29) | $ (4.96) | ||||||||||
Stock repurchase program, authorized amount | $ 50,000,000 | ||||||||||||||
Shares repurchased (in shares) | 180,664 | 156,818 | |||||||||||||
Shares repurchased, average price per share (in dollars per share) | $ 11.12 | $ 12.64 | |||||||||||||
Stock repurchase program, remaining authorized repurchase amount | $ 46,000,000 | $ 46,000,000 | |||||||||||||
Stock options | |||||||||||||||
Denominator: | |||||||||||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 0 | 0 | 83,000 | |||||||||||
Restricted shares | |||||||||||||||
Denominator: | |||||||||||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 63,000 | 106,000 | 67,000 | 198,000 | |||||||||||
[1] | The impact of potentially dilutive securities for all periods were not considered because the effect would be anti-dilutive in those periods. |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 4 Months Ended | 8 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Aug. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Contingency [Line Items] | ||||
Cash paid for income taxes | $ 0.5 | $ 0.6 | $ 1.6 | $ 2.2 |
Valuation allowance | 77.9 | 50.4 | ||
Increase in valuation allowance | 27.5 | |||
Valuation allowance that if recognized, would credit directly to contributed capital | 14.2 | |||
Accrued interest and penalties related to uncertain tax positions | 0.1 | |||
Uncertain tax positions that would impact effective tax rate | 0.1 | $ 0.1 | ||
Additional Paid-in Capital | ||||
Income Tax Contingency [Line Items] | ||||
Additional-paid-in-capital increase, due to tax effect of disposals of shares of noncontrolling interests | 7 | |||
Domestic Tax Authority | ||||
Income Tax Contingency [Line Items] | ||||
Net operating loss carryforwards | 530.6 | |||
Subject to expiration | 516.2 | |||
State and Local Jurisdiction | ||||
Income Tax Contingency [Line Items] | ||||
Net operating loss carryforwards | 596.7 | |||
Capital Loss Carryforward | ||||
Income Tax Contingency [Line Items] | ||||
Capital loss carryforwards | 7.6 | |||
General Business Tax Credit Carryforward | ||||
Income Tax Contingency [Line Items] | ||||
Capital loss carryforwards | 1.1 | |||
Interest Limitation | ||||
Income Tax Contingency [Line Items] | ||||
Capital loss carryforwards | $ 222.7 |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense (Details) - USD ($) $ in Millions | 4 Months Ended | 8 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Aug. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | |
Current: | ||||
Federal | $ (0.1) | $ 0 | $ (0.2) | $ (0.3) |
State | 1 | 0.6 | 1.7 | 1.5 |
Deferred: | ||||
Federal | 77.5 | (17.3) | 3.2 | 16.5 |
State | (6.7) | (1.4) | 4.8 | 8.7 |
Total income tax expense (benefit) | $ 71.7 | $ (18.1) | $ 9.5 | $ 26.4 |
Income Taxes - Income Tax Rate
Income Taxes - Income Tax Rate Reconciliation (Details) - USD ($) $ in Millions | 4 Months Ended | 8 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Aug. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | |
Effective Income Tax Rate Reconciliation, Amount [Abstract] | ||||
Tax expense (benefit) at U.S.federal statutory rate | $ 24.5 | $ 4.3 | $ 11.5 | $ (14.5) |
State income tax, net of U.S. federal tax benefit | 1.7 | (0.5) | 5.7 | 10 |
Change in valuation allowance | 0.6 | 1.3 | 13.6 | 26.9 |
Net income attributable to non-controlling interests | (13.9) | (14.7) | (25.2) | (23.1) |
Changes in measurement of uncertain tax positions | (0.2) | 0 | (0.1) | (0.1) |
Stock option compensation | 0.3 | 0 | 1.3 | 0.5 |
Differences related to divested facilities | (0.4) | (1.7) | 0.1 | 6 |
Nondeductible transaction costs | 2.1 | (1) | 0 | 0 |
Tax return reconciling differences | 0 | (0.3) | 1.1 | 1.7 |
Change in effective tax rate | 64.3 | (0.8) | 0.3 | 0.5 |
Tax Receivable Agreement liability | (7.4) | (4.8) | 1.6 | 0.9 |
Goodwill impairment | 0 | 0 | 0.5 | 8.9 |
Litigation settlement | 0 | 0 | 0 | 8.6 |
Other | 0.1 | 0.1 | (0.9) | 0.1 |
Total income tax expense (benefit) | $ 71.7 | $ (18.1) | $ 9.5 | $ 26.4 |
Income Taxes - Approx. Tax Effe
Income Taxes - Approx. Tax Effects of Temporary Differences, Deferred Tax Asset and Liability (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
Medical malpractice liability | $ 3.5 | $ 3.5 |
Accrued vacation and incentive compensation | 2.3 | 2.9 |
Net operating loss carryforwards | 143 | 139.4 |
Allowance for bad debts | 2.2 | 2.5 |
Capital loss carryforwards | 2 | 3.7 |
Deferred rent | 1.7 | 1.9 |
Amortization of intangible assets | 0.3 | 2.4 |
Deferred financing costs | 9.5 | 14.6 |
Section 163(j) interest | 54.7 | 27.3 |
Interest rate swap liability | 12.9 | 5.4 |
TRA liability | 1.2 | 1.2 |
Right of use | 52.1 | |
Affiliate indebtedness receivable | 6.8 | 0 |
Other deferred assets | 7.3 | 7.1 |
Total gross deferred tax assets | 299.5 | 211.9 |
Less: Valuation allowance | (77.9) | (50.4) |
Total deferred tax assets | 221.6 | 161.5 |
Deferred tax liabilities: | ||
Depreciation on property and equipment | (2.8) | (3.9) |
Basis differences of partnerships and joint ventures | (67.5) | (47.8) |
Right of use | (51.5) | |
Other deferred liabilities | (1.1) | (0.6) |
Total deferred tax liabilities | (122.9) | (52.3) |
Net deferred tax assets | $ 98.7 | $ 109.2 |
Income Taxes - Schedule of Gros
Income Taxes - Schedule of Gross Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Unrecognized tax benefits at beginning of year | $ 0.1 | $ 0.7 |
Reductions for tax positions of prior year | 0 | (0.6) |
Unrecognized tax benefits at end of year | $ 0.1 | $ 0.1 |
Equity-Based Compensation - Add
Equity-Based Compensation - Additional Information (Details) $ / shares in Units, $ in Millions | Dec. 16, 2018trading_dayinstallment$ / sharesshares | Mar. 31, 2019shares | Dec. 31, 2017USD ($)shares | Aug. 31, 2017USD ($)shares | Dec. 31, 2019USD ($)trading_dayinstallment$ / sharesshares | Dec. 31, 2018USD ($)trading_dayinstallment$ / sharesshares | Dec. 31, 2017shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options and rights granted (in shares) | 0 | 0 | 2,256,500 | 700,000 | |||
Unrecognized compensation cost | $ | $ 24.2 | ||||||
Equity-based compensation | $ | $ 1.9 | $ 3.7 | $ 10.2 | $ 9.3 | |||
Executive Officer | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options and rights granted (in shares) | 1,756,500 | ||||||
Restricted Stock Awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Awards granted during period (in shares) | 556,450 | 519,605 | |||||
Performance Restricted Stock Units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Awards granted during period (in shares) | 389,972 | 335,074 | |||||
Vesting period | 2 years | ||||||
Restricted units granted, earned during period (in shares) | 245,301 | ||||||
Leverage Performance Restricted Stock Units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Awards granted during period (in shares) | 127,292 | ||||||
Vesting period | 2 years | ||||||
Leverage Performance Restricted Stock Units | Executive Officer | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Awards exchanged (in shares) | 190,538 | ||||||
Stock Option | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options and rights granted (in shares) | 2,256,500 | 700,000 | 0 | ||||
Vesting percentage | 33.30% | 25.00% | |||||
Stock Option | Tranche One | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting percentage | 33.30% | 50.00% | |||||
Number of annual installments | installment | 3 | 5 | |||||
Stock Option | Tranche Two | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting percentage | 33.30% | 25.00% | |||||
Share price (in USD per share) | $ / shares | $ 25 | $ 25 | |||||
Number of consecutive trading days, threshold | trading_day | 30 | 60 | |||||
Stock Option | Tranche Three | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share price (in USD per share) | $ / shares | $ 35 | $ 35 | |||||
Number of consecutive trading days, threshold | trading_day | 30 | 60 | |||||
SAR Awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options and rights granted (in shares) | 200,000 | 0 | |||||
Options cancelled (in shares) | 200,000 | ||||||
SAR Awards | Tranche One | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting percentage | 50.00% | ||||||
Number of annual installments | installment | 5 | ||||||
SAR Awards | Tranche Two | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting percentage | 25.00% | ||||||
Share price (in USD per share) | $ / shares | $ 25 | ||||||
Number of consecutive trading days, threshold | trading_day | 60 | ||||||
SAR Awards | Tranche Three | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting percentage | 25.00% | ||||||
Share price (in USD per share) | $ / shares | $ 35 | ||||||
Number of consecutive trading days, threshold | trading_day | 60 | ||||||
2015 Omnibus Incentive Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares authorized under plan (in shares) | 8,315,700 | ||||||
Shares available for future grant (in shares) | 6,448,187 | ||||||
Minimum | Restricted Stock Awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 3 years | ||||||
Minimum | Performance Restricted Stock Units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Payable at end of period | 0.00% | ||||||
Minimum | Leverage Performance Restricted Stock Units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Payable at end of period | 0.00% | ||||||
Maximum | Restricted Stock Awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 5 years | ||||||
Maximum | Performance Restricted Stock Units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Payable at end of period | 150.00% | ||||||
Maximum | Leverage Performance Restricted Stock Units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Payable at end of period | 500.00% |
Equity-Based Compensation - Sum
Equity-Based Compensation - Summary of Restricted Share Activity (Details) - Restricted Shares - $ / shares | 4 Months Ended | 8 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Aug. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | |
Unvested Shares | ||||
Outstanding, beginning of the period (in shares) | 613,044 | 462,242 | 703,024 | 574,456 |
Granted (in shares) | 112,107 | 388,454 | 801,751 | 519,605 |
Forfeited/Cancelled (in shares) | (54,622) | (67,771) | (272,706) | (180,719) |
Vested (in shares) | (96,073) | (169,881) | (456,183) | (210,318) |
Outstanding, end of the period (in shares) | 574,456 | 613,044 | 775,886 | 703,024 |
Weighted Average Grant Date Fair Value | ||||
Outstanding, beginning of the period (in USD per share) | $ 16.02 | $ 3.72 | $ 16.18 | $ 15.95 |
Granted (in USD per share) | 11.15 | 18.40 | 12.70 | 16.10 |
Forfeited/Cancelled (in USD per share) | 10.94 | 18.01 | 12.97 | 15.09 |
Vested (in USD per share) | 17.03 | 10.29 | 16.20 | 16.31 |
Outstanding, end of the period (in USD per share) | $ 15.95 | $ 16.02 | $ 13.78 | $ 16.18 |
Equity-Based Compensation - Fai
Equity-Based Compensation - Fair Value Assumptions (Details) - Granted in 2018 - Employee Stock Options and Stock Appreciation Rights - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||
Expected volatility | 60.00% | |
Expected dividends | 0.00% | 0.00% |
Average expected term (years) | 4 years | 10 years |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||
Expected volatility | 60.00% | |
Risk-free interest rate | 2.30% | 2.50% |
Fair value of stock options granted (in USD per share) | $ 4.83 | $ 8.48 |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||
Expected volatility | 65.00% | |
Risk-free interest rate | 2.40% | 2.90% |
Fair value of stock options granted (in USD per share) | $ 6.41 | $ 9.44 |
Equity-Based Compensation - S_2
Equity-Based Compensation - Summary of Options Activity (Details) - $ / shares | 4 Months Ended | 8 Months Ended | 12 Months Ended | |||
Dec. 31, 2017 | Aug. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Options/SARs | ||||||
Outstanding, beginning of period (in shares) | 12,687 | 16,267 | 512,687 | 12,687 | 16,267 | |
Granted (in shares) | 0 | 0 | 2,256,500 | 700,000 | ||
Exercised (in shares) | 0 | (3,580) | 0 | 0 | ||
Forfeited/Cancelled (in shares) | 0 | 0 | 0 | (200,000) | ||
Outstanding, end of period (in shares) | 12,687 | 12,687 | 2,769,187 | 512,687 | 12,687 | 16,267 |
Weighted Average Exercise Price | ||||||
Outstanding, beginning of period (in USD per share) | $ 19.05 | $ 13.03 | $ 20.10 | $ 19.05 | ||
Granted (in USD per share) | 13 | 12.90 | ||||
Exercised (in USD per share) | $ 15.36 | |||||
Forfeited/Cancelled (in USD per share) | 12.90 | |||||
Outstanding, end of period (in USD per share) | $ 20.10 | $ 13.02 | $ 13.03 | $ 20.10 | $ 19.05 | |
Weighted Average Remaining Contractual Term (years) | ||||||
Outstanding | 1 year 2 months 12 days | 1 year 6 months | 9 years | 9 years 9 months 18 days | 1 year 9 months 18 days | |
Granted | 9 years 2 months 12 days | 10 years | ||||
Forfeited/Cancelled | 10 years | |||||
Outstanding options, exercisable (in shares) | 153,409 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 4 Months Ended | 8 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Aug. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | |
Retirement Benefits [Abstract] | ||||
Vesting period | 5 years | |||
Matching contribution expense | $ 2.3 | $ 2.8 | $ 7.6 | $ 7.6 |
Other Assets and Liabilities _2
Other Assets and Liabilities - Other Long-term Assets (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Other Liabilities Disclosure [Abstract] | ||
Right-of-use operating lease assets | $ 297.7 | $ 0 |
Other | 30.8 | 36.9 |
Total | $ 328.5 | $ 36.9 |
Other Assets and Liabilities _3
Other Assets and Liabilities - Schedule of Other Current Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Other Liabilities Disclosure [Abstract] | ||
Interest payable | $ 21.8 | $ 20.8 |
Amounts due to patients and payors | 16.5 | 20 |
Amounts due to patients and payors | 35.1 | 42.3 |
Right-of-use operating lease liabilities | 37.3 | 0 |
Accrued expenses and other | 80.5 | 72.1 |
Total | $ 191.2 | $ 155.2 |
Other Assets and Liabilities _4
Other Assets and Liabilities - Schedule of Other Long-Term Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Other Liabilities Disclosure [Abstract] | ||
Right-of-use operating lease liabilities | $ 283.1 | $ 0 |
Facility lease obligations | 0 | 149.8 |
Other | 113.6 | 121.5 |
Total | $ 396.7 | $ 271.3 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | 4 Months Ended | 8 Months Ended | 12 Months Ended | |||
Dec. 31, 2017 | Aug. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Oct. 23, 2017 | |
Guarantor Obligations [Line Items] | ||||||
Professional, general and workers' compensation insurance reserve | $ 19.4 | $ 18.2 | ||||
Estimated insurance recoveries | 12.1 | 12 | ||||
Litigation-related charges related to CIDs | $ 46 | |||||
Reduction in carrying value of TRA | $ 43.9 | |||||
Gain on amendment to tax receivable agreement | $ 1.1 | 15.3 | 0 | 0 | ||
Goodwill impairment loss | 5.4 | 60.7 | ||||
Tax receivable agreement benefit | 25.3 | 0 | $ (2.4) | 0 | ||
Tax rate | 24.00% | |||||
Remaining amounts payable under TRA | $ 60.1 | 64.6 | ||||
Carrying value of liability, net of discount | 48.7 | 48.5 | ||||
Deferred tax liabilities, current | 16.9 | 7.6 | ||||
Contingent acquisition compensation expense | $ 1.9 | 5.1 | 1.5 | |||
Total lease obligations | $ 320.4 | $ 1.4 | ||||
Estimated severance costs | $ 4.5 | |||||
Pushdown Accounting | ||||||
Guarantor Obligations [Line Items] | ||||||
Goodwill impairment loss | $ 28.6 | |||||
LIBOR | ||||||
Guarantor Obligations [Line Items] | ||||||
Interest accrued on payment under Tax Receivable Agreement, basis spread on variable rate | 3.00% | |||||
Materially More Restrictive | LIBOR | ||||||
Guarantor Obligations [Line Items] | ||||||
Debt instrument, basis spread on variable rate | 5.00% | |||||
Not Materially More Restrictive | LIBOR | ||||||
Guarantor Obligations [Line Items] | ||||||
Debt instrument, basis spread on variable rate | 3.00% |
Segment Reporting - Revenues an
Segment Reporting - Revenues and Operating Income by Reportable Segment (Details) $ in Millions | 3 Months Ended | 4 Months Ended | 8 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Aug. 31, 2017USD ($) | Dec. 31, 2019USD ($)segment | Dec. 31, 2018USD ($) | |
Segment Reporting [Abstract] | ||||||||||||
Number of operating segments | segment | 3 | |||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | $ 517.2 | $ 452 | $ 445.4 | $ 416.8 | $ 491.2 | $ 432.4 | $ 436.6 | $ 411.3 | $ 592.6 | $ 748.6 | $ 1,831.4 | $ 1,771.5 |
Adjusted EBITDA | 78.7 | 85.6 | 258.6 | 234.8 | ||||||||
Net income attributable to non-controlling interests | $ (41.8) | $ (26.6) | $ (27.9) | $ (23.6) | $ (40.7) | $ (23) | $ (23.8) | $ (22.6) | (39.6) | (42.1) | (119.9) | (110.1) |
Depreciation and amortization | (21.8) | (30.1) | (76.5) | (67.4) | ||||||||
Interest expense, net | (48.7) | (69) | (178.9) | (147) | ||||||||
Equity-based compensation expense | (1.9) | (3.7) | (10.2) | (9.3) | ||||||||
Transaction, integration and acquisition costs | (9.2) | (7.7) | (36.1) | (34) | ||||||||
Gain (loss) on disposals and deconsolidation, net | 0 | (1.7) | 4.4 | (31.8) | ||||||||
(Loss) gain on litigation settlements and other litigation costs | 8.7 | 3.8 | (4.6) | (46) | ||||||||
Loss on debt extinguishment | 0 | (18.2) | (11.7) | 0 | ||||||||
Tax receivable agreement benefit (expense) | (25.3) | 0 | 2.4 | 0 | ||||||||
Impairment charges | 0 | 0 | (7.9) | (74.4) | ||||||||
Reserve adjustments | 0 | 0 | 0 | (2.7) | ||||||||
Contingent acquisition compensation expense | (2) | (5.1) | 0 | (1.5) | ||||||||
Gain on acquisition escrow release | (0.2) | (1) | 0 | 0 | ||||||||
Gain on amendment to tax receivable agreement | 1.1 | 15.3 | 0 | 0 | ||||||||
(Loss) income before income taxes | 70 | 12.3 | 54.6 | (69.2) | ||||||||
Transaction and integration costs | 7.5 | 5.6 | 19 | 31.7 | ||||||||
Acquisition costs | 1.8 | 2.1 | 2.8 | 2.2 | ||||||||
Start-up costs related to de novo surgical hospital | 14.3 | |||||||||||
Other litigation costs | 4.4 | |||||||||||
Corporate, Non-Segment | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Adjusted EBITDA | (23.5) | (36) | (74.3) | (80.2) | ||||||||
Surgical facility services | Operating Segments | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 564.4 | 688.7 | 1,748.2 | 1,682.4 | ||||||||
Adjusted EBITDA | 103.8 | 125.9 | 328.9 | 309.5 | ||||||||
Ancillary services | Operating Segments | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 24.7 | 52.3 | 79.4 | 79.6 | ||||||||
Adjusted EBITDA | (2.3) | (6.5) | 2.6 | 3 | ||||||||
Optical services | Operating Segments | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 3.5 | 7.6 | 3.8 | 9.5 | ||||||||
Adjusted EBITDA | $ 0.7 | $ 2.2 | $ 1.4 | $ 2.5 |
Segment Reporting - Assets and
Segment Reporting - Assets and Cash Purchases of Property and Equipment by Operating Segment (Details) - USD ($) $ in Millions | 4 Months Ended | 8 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Aug. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | |
Segment Reporting Information [Line Items] | ||||
Total assets | $ 5,018.9 | $ 4,676.3 | ||
Cash purchases of property and equipment, net | $ 10.8 | $ 18.8 | 73.6 | 39.8 |
Operating Segments | Surgical facility services | ||||
Segment Reporting Information [Line Items] | ||||
Total assets | 4,580.4 | 4,204.4 | ||
Cash purchases of property and equipment, net | 9.3 | 14.6 | 65.9 | 34.2 |
Operating Segments | Ancillary services | ||||
Segment Reporting Information [Line Items] | ||||
Total assets | 69.6 | 52.7 | ||
Cash purchases of property and equipment, net | 0.2 | 1.9 | 1.1 | 0.4 |
Operating Segments | Optical services | ||||
Segment Reporting Information [Line Items] | ||||
Total assets | 17.7 | 20.1 | ||
Cash purchases of property and equipment, net | 0.1 | 0.1 | 0 | 0 |
All other | ||||
Segment Reporting Information [Line Items] | ||||
Total assets | 351.2 | 399.1 | ||
Cash purchases of property and equipment, net | $ 1.2 | $ 2.2 | $ 6.6 | $ 5.2 |
Quarterly Financial Informati_3
Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 4 Months Ended | 8 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Aug. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||
Revenues | $ 517.2 | $ 452 | $ 445.4 | $ 416.8 | $ 491.2 | $ 432.4 | $ 436.6 | $ 411.3 | $ 592.6 | $ 748.6 | $ 1,831.4 | $ 1,771.5 |
Cost of revenues | 388 | 353.1 | 340.4 | 326.1 | 359.7 | 334.3 | 340.1 | 327.3 | 441.6 | 572.2 | 1,407.6 | 1,361.4 |
Net income (loss) | 22.6 | 10.9 | 8.1 | 3.5 | (107) | 2 | 4.3 | 5.1 | (1.7) | 30.4 | 45.1 | (95.6) |
Net income attributable to non-controlling interests | (41.8) | (26.6) | (27.9) | (23.6) | (40.7) | (23) | (23.8) | (22.6) | (39.6) | (42.1) | (119.9) | (110.1) |
Net loss attributable to Surgery Partners, Inc. | $ (19.2) | $ (15.7) | $ (19.8) | $ (20.1) | $ (147.7) | $ (21) | $ (19.5) | $ (17.5) | $ (41.3) | $ (11.7) | $ (74.8) | $ (205.7) |
Basic net (loss) income per share (in USD per share) | $ (0.59) | $ (0.51) | $ (0.59) | $ (0.60) | $ (3.25) | $ (0.61) | $ (0.57) | $ (0.53) | ||||
Diluted net (loss) income per share (in USD per share) | $ (0.59) | $ (0.51) | $ (0.59) | $ (0.60) | $ (3.25) | $ (0.61) | $ (0.57) | $ (0.53) |
Uncategorized Items - sgry-2019
Label | Element | Value |
Noncontrolling Interest [Member] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest | $ 684,500,000 |
Common Stock [Member] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest | $ 500,000 |
Common Stock, Shares, Outstanding | us-gaap_CommonStockSharesOutstanding | 48,810,000 |
AOCI Including Portion Attributable to Noncontrolling Interest [Member] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest | $ 0 |
Retained Earnings [Member] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest | 0 |
Additional Paid-in Capital [Member] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest | $ 720,100,000 |