Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2016 | |
Document and Entity Information | |
Entity Registrant Name | Cotiviti Holdings, Inc. |
Entity Central Index Key | 1,657,197 |
Document Type | S-1/A |
Document Period End Date | Sep. 30, 2016 |
Amendment Flag | false |
Entity Filer Category | Non-accelerated Filer |
Pre-Effective Amendment Number | 1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Current assets | |||||
Cash and cash equivalents | $ 43,770 | $ 149,365 | $ 130,830 | $ 118,612 | $ 89,062 |
Restricted cash | 10,202 | 10,741 | 20,227 | ||
Accounts receivable, net of allowance for doubtful accounts of $1,561 and $1,053 at September 30, 2016 and December 31, 2015, respectively; and net of estimated allowance for refunds and appeals of $31,887 and $33,406 at September 30, 2016 and December 31, 2015, respectively | 83,345 | 78,856 | 60,215 | ||
Prepaid expenses and other current assets | 23,313 | 24,044 | 12,180 | ||
Deferred tax assets | 33,346 | 32,919 | 32,319 | ||
Total current assets | 193,976 | 295,925 | 243,553 | ||
Property and equipment, net | 63,768 | 57,452 | 34,919 | ||
Goodwill | 1,196,350 | 1,197,044 | 1,197,353 | ||
Intangible assets, net | 548,593 | 594,410 | 683,890 | ||
Other long-term assets | 2,866 | 2,176 | 1,376 | ||
TOTAL ASSETS | 2,005,553 | 2,147,007 | 2,161,091 | ||
Current liabilities: | |||||
Current maturities of long-term debt | 18,000 | 21,099 | 8,100 | ||
Customer deposits | 10,202 | 10,741 | 20,227 | ||
Accounts payable and accrued other expenses | 28,331 | 29,521 | 36,350 | ||
Accrued compensation costs | 41,520 | 42,902 | 42,639 | ||
Estimated liability for refunds and appeals | 70,596 | 67,775 | 74,941 | ||
Total current liabilities | 168,649 | 172,038 | 182,257 | ||
Long-term liabilities: | |||||
Long-term debt | 766,042 | 1,012,971 | 1,025,838 | ||
Other long-term liabilities | 9,454 | 12,199 | 4,597 | ||
Deferred tax liabilities | 152,967 | 162,203 | 175,266 | ||
Total long-term liabilities | 928,463 | 1,187,373 | 1,205,701 | ||
Total liabilities | 1,097,112 | 1,359,411 | 1,387,958 | ||
Commitments and contingencies (Note 6) | |||||
Stockholders' equity: | |||||
Common stock ($0.001 par value; 600,000,000 and 122,000,000 shares authorized, 90,177,862 and 77,237,711 issued, and 90,170,462 and 77,230,311 outstanding at September 30, 2016 and December 31, 2015, respectively) | 90 | 77 | 77 | ||
Additional paid-in capital | 905,963 | 807,419 | 803,810 | ||
Retained earnings (deficit) | 8,625 | (14,935) | (28,798) | ||
Accumulated other comprehensive loss | (6,139) | (4,867) | (1,858) | ||
Treasury stock, at cost (7,400 shares at September 30, 2016 and December 31, 2015) | (98) | (98) | (98) | ||
Total stockholders' equity | 908,441 | 787,596 | 773,133 | $ 363,223 | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 2,005,553 | $ 2,147,007 | $ 2,161,091 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Sep. 30, 2016 | May 13, 2016 | May 12, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Consolidated Balance Sheets | |||||
Allowance for doubtful accounts | $ 1,561 | $ 1,053 | $ 655 | ||
Estimated allowance for refunds and appeals | $ 31,887 | $ 33,406 | $ 23,216 | ||
Common stock, par value per share | $ 0.001 | $ 0.001 | $ 0.001 | ||
Common stock, shares authorized | 600,000,000 | 600,000,000 | 122,000,000 | 122,000,000 | 122,000,000 |
Common stock, shares issued | 90,177,862 | 77,237,711 | 77,212,091 | ||
Common stock, shares outstanding | 90,170,462 | 77,230,311 | 77,204,691 | ||
Treasury stock, shares | 7,400 | 7,400 | 7,400 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||
Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated Statements of Comprehensive Income (Loss) | |||||||||||||
Net revenue | $ 156,241 | $ 151,463 | $ 136,936 | $ 133,306 | $ 119,638 | $ 122,765 | $ 126,622 | $ 108,294 | $ 83,691 | $ 457,250 | $ 389,880 | $ 541,343 | $ 441,372 |
Cost of revenue (exclusive of depreciation and amortization, stated separately below): | |||||||||||||
Compensation | 58,517 | 46,424 | 167,263 | 132,928 | 183,817 | 164,552 | |||||||
Other costs of revenue | 6,658 | 5,646 | 17,331 | 14,629 | 20,800 | 14,536 | |||||||
Total cost of revenue | 65,175 | 52,070 | 184,594 | 147,557 | 204,617 | 179,088 | |||||||
Selling, general and administrative expenses (exclusive of depreciation and amortization, stated separately below): | |||||||||||||
Compensation | 32,496 | 16,997 | 74,782 | 52,586 | 70,802 | 49,777 | |||||||
Other selling, general and administrative expenses | 13,978 | 16,351 | 44,152 | 44,423 | 65,943 | 42,760 | |||||||
Total selling, general and administrative expenses | 46,474 | 33,348 | 118,934 | 97,009 | 136,745 | 92,537 | |||||||
Depreciation and amortization of property and equipment | 5,218 | 3,773 | 14,864 | 9,270 | 12,695 | 7,416 | |||||||
Amortization of intangible assets | 15,203 | 15,437 | 45,618 | 46,256 | 61,467 | 52,355 | |||||||
Transaction-related expenses | 16 | 354 | 909 | 354 | 1,469 | 5,745 | |||||||
Impairment of intangible assets | 27,826 | 27,826 | 27,826 | 74,034 | |||||||||
Total operating expenses | 132,086 | 132,808 | 364,919 | 328,272 | 444,819 | 411,175 | |||||||
Operating income | 24,155 | 34,916 | 4,128 | 33,773 | 23,707 | (47,680) | 33,128 | 27,726 | 17,023 | 92,331 | 61,608 | 96,524 | 30,197 |
Other expense (income): | |||||||||||||
Interest expense | 9,625 | 16,180 | 40,345 | 49,855 | 65,561 | 51,717 | |||||||
Loss on extinguishment of debt | 9,349 | 16,417 | 4,084 | 4,084 | 21,524 | ||||||||
Other non-operating (income) expense | (113) | (187) | (771) | (384) | (826) | (415) | |||||||
Total other expense (income) | 18,861 | 15,993 | 55,991 | 53,555 | 68,819 | 72,826 | |||||||
Income (loss) from continuing operations before income taxes | 5,294 | (11,865) | 36,340 | 8,053 | 27,705 | (42,629) | |||||||
Income tax expense (benefit) | 711 | (4,571) | 12,780 | 3,932 | 14,401 | (16,804) | |||||||
Income (loss) from continuing operations | 4,583 | 9,183 | (7,294) | 7,780 | 3,635 | (38,967) | 9,534 | 3,949 | (341) | 23,560 | 4,121 | 13,304 | (25,825) |
Gain on discontinued operations, net of tax | 559 | 559 | |||||||||||
Net income (loss) | 4,583 | $ 9,183 | (7,294) | $ 7,780 | $ 4,194 | $ (38,967) | $ 9,534 | $ 3,949 | $ (341) | 23,560 | 4,680 | 13,863 | (25,825) |
Other comprehensive (loss) income, net of tax: | |||||||||||||
Foreign currency translation adjustments | 14 | (1,045) | (657) | (1,284) | (667) | (1,293) | |||||||
Change in fair value of derivative instruments | (49) | (1,061) | (615) | (2,629) | (2,345) | (623) | |||||||
Total other comprehensive (loss) income | (35) | (2,106) | (1,272) | (3,913) | (3,009) | (1,916) | |||||||
Comprehensive income (loss) | $ 4,548 | $ (9,400) | $ 22,288 | $ 767 | $ 10,854 | $ (27,741) | |||||||
Earnings (loss) per share from continuing operations: | |||||||||||||
Basic (in dollars per share) | $ 0.05 | $ 0.12 | $ (0.09) | $ 0.10 | $ 0.04 | $ 0.28 | $ 0.05 | $ 0.17 | $ (0.40) | ||||
Diluted (in dollars per share) | 0.05 | 0.12 | (0.09) | 0.10 | 0.04 | 0.27 | 0.05 | 0.17 | (0.40) | ||||
Earnings per share from discontinued operations: | |||||||||||||
Basic (in dollars per share) | 0.01 | 0.01 | 0.01 | ||||||||||
Diluted (in dollars per share) | 0.01 | 0.01 | 0.01 | ||||||||||
Total earnings (loss) per share: | |||||||||||||
Basic (in dollars per share) | 0.05 | 0.12 | (0.09) | 0.10 | 0.05 | $ (0.50) | $ 0.12 | $ 0.06 | $ (0.01) | 0.28 | 0.06 | 0.18 | (0.40) |
Diluted (in dollars per share) | $ 0.05 | $ 0.12 | $ (0.09) | $ 0.10 | $ 0.05 | $ (0.50) | $ 0.12 | $ 0.06 | $ (0.01) | $ 0.27 | $ 0.06 | $ 0.18 | $ (0.40) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Cash flows from operating activities: | |
Net income | $ 23,560 |
Adjustments to reconcile net income to net cash provided by operating activities: | |
Deferred income taxes | (8,682) |
Depreciation and amortization | 60,482 |
Stock-based compensation expense | 21,544 |
Amortization of debt issuance costs | 3,618 |
Accretion of asset retirement obligations | 138 |
Loss on extinguishment of debt | 16,417 |
Changes in operating assets and liabilities: | |
Restricted cash | 539 |
Accounts receivable | (4,489) |
Other current assets | (451) |
Other long-term assets | (690) |
Customer deposits | (539) |
Accrued compensation | (1,382) |
Accounts payable and accrued other expenses | (4,352) |
Estimated liability for refunds and appeals | 2,821 |
Other long-term liabilities | 146 |
Other | (335) |
Net cash provided by operating activities | 108,345 |
Cash flows from investing activities: | |
Expenditures for property and equipment | (22,578) |
Other investing activities | 1,181 |
Net cash provided by (used in) investing activities | (21,397) |
Cash flows from financing activities: | |
Net proceeds from issuance of common stock | 226,963 |
Proceeds from exercise of stock options | 56 |
Proceeds from issuance of debt | 800,000 |
Dividends paid | (150,000) |
Payment of debt issuance costs | (6,327) |
Repayment of debt | (1,062,850) |
Net cash (used in) provided by financing activities | (192,158) |
Effect of foreign exchanges on cash and cash equivalents | (385) |
Net (decrease) increase in cash and cash equivalents | (105,595) |
Cash and cash equivalents at beginning of period | 149,365 |
Cash and cash equivalents at end of the period | 43,770 |
Supplemental disclosures of cash flow information: | |
Cash paid for income taxes | 24,377 |
Cash paid for interest | 35,927 |
Noncash investing activities (accrued property and equipment purchases) | 12,000 |
Noncash financing activities (accrued debt issuance costs) | $ 979 |
Description of Business
Description of Business | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Description of Business | Note 1. Description of Business Cotiviti Holdings, Inc. (collectively with its subsidiaries, “we,” “our,” “Cotiviti” or the “Company”) is a leading provider of analytics‑driven payment accuracy solutions, focused primarily on the healthcare sector. Our integrated solutions help clients enhance payment accuracy in an increasingly complex healthcare environment. We leverage our robust technology platform, configurable analytics, proprietary information assets and expertise in healthcare reimbursement to help our clients enhance their claims payment accuracy. We help our healthcare clients identify and correct payment inaccuracies. We work with over 40 healthcare organizations, including eight of the ten largest U.S. commercial, Medicaid and Medicare managed health plans, as well as the Centers for Medicare and Medicaid Services (“CMS”). We are also a leading provider of payment accuracy solutions to over 35 retail clients, including eight of the ten largest retailers in the United States. | Note 1. Description of Business Cotiviti Holdings, Inc. (collectively with its subsidiaries, “we,” “our,” “Cotiviti” or the “Company”) is a leading provider of analytics‑driven payment accuracy solutions, focused primarily on the healthcare sector. Our integrated solutions help clients enhance payment accuracy in an increasingly complex healthcare environment. We leverage our robust technology platform, configurable analytics, proprietary information assets and expertise in healthcare reimbursement to help our clients enhance their claims payment accuracy. We help our healthcare clients identify and correct payment inaccuracies. We work with over 40 healthcare organizations, including eight of the ten largest U.S. commercial, Medicaid and Medicare managed health plans, as well as the Centers for Medicare and Medicaid Services (“CMS”). We are also a leading provider of payment accuracy solutions to over 40 retail clients, including eight of the ten largest retailers in the United States. We were incorporated in Delaware on June 4, 2012, under the name “Husky‑C&W Superholdings, Inc.” On July 26, 2012, we changed our name to “Strident Superholdings, Inc.,” and on January 28, 2014, we changed our name to “Connolly Superholdings, Inc.” (“Connolly”). On May 14, 2014, we merged (the “Connolly iHealth Merger”) with iHealth Technologies, Inc. (“iHT”). At the time of the merger, Connolly was a leading provider of retrospective payment accuracy solutions to U.S. healthcare providers and retailers and iHT was a leading provider of prospective payment accuracy solutions to U.S. healthcare providers. As a result of the Connolly iHealth Merger, iHT and all of its wholly‑owned subsidiaries became our wholly‑owned subsidiaries. The results of operations for iHT are included in our consolidated financial statements as of and since May 14, 2014. Accordingly, comparability to other periods presented is impacted by the timing of the Connolly iHealth Merger. We have adopted a holding company structure and our primary domestic operations are performed through our wholly‑owned operating subsidiaries. We have international operations in Canada, the United Kingdom, and India. We rebranded our company as “Cotiviti” in September 2015. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Summary of Significant Accounting Policies | ||
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Basis of Presentation Our accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). All significant intercompany balances and transactions have been eliminated in consolidation. These consolidated financial statements are unaudited and have been prepared by us following the rules and regulations of the U.S. Securities and Exchange Commission. In our opinion they reflect all adjustments, including normal recurring items, that are necessary to present fairly the results of interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations; however, we believe that the disclosures are adequate to make the information presented not misleading. Operating results for the periods presented herein are not necessarily indicative of the results that may be expected for other interim periods or the entire fiscal year. Certain prior year amounts have been reclassified to conform to the current year presentation. Revenue Recognition, Unbilled Receivables and Estimated Liability for Refunds and Appeals We provide services under contracts that contain various fee structures, including performance fee‑based contracts and fixed fee arrangements. Revenue is recognized when a contract exists, services have been provided to the client, the fee is fixed and determinable and collectability is reasonably assured. We recognize revenue on performance fee-based contracts based upon the specific terms of the underlying contract. The contract terms generally specify: (a) time periods covered by the work to be performed; (b) nature and extent of services we are to provide; (c) the client’s duties in assisting and cooperating with us; and (d) fees payable to us. Our fees are most often expressed as a percentage of our findings. Generally, our services are rendered when our clients realize the economic benefits from our services. Our clients realize economic benefits when they take credits against their existing accounts payable based on when we identify cost savings, when they receive refund checks based on overpayments, or when they acknowledge payment reductions based on cost savings. We derive a relatively small portion of revenue on contracts with fixed fee arrangements. We recognize revenue on these contracts ratably over the contract term and once all of the above criteria have been satisfied. Historically, there has been a certain amount of revenue with respect to which, even though we had met the requirements of our revenue recognition policy, the claim is ultimately rejected. In such cases, our clients may request a refund or offset if their providers or vendors ultimately reject the payment inaccuracies we find or if our clients determine not to pursue reimbursement from their providers or vendors even though we may have collected fees. We record any such refund as a reduction of revenue. We record an estimate for refund liabilities at any given time based on actual historical refund data by client type. We satisfy such refund liabilities either by offsets to accounts receivable or by cash payments to clients. In addition to the refund liabilities, we calculate client specific reserves when we determine an additional reserve may be necessary. The estimated liability for refunds and appeals representing our estimate of claims that may be overturned related to revenue which had already been received was $70,596 and $67,775 at September 30, 2016 and December 31, 2015, respectively. The estimated allowance for refunds and appeals representing our estimate of claims that may be overturned related to amounts in accounts receivable was $31,887 and $33,406 at September 30, 2016 and December 31, 2015, respectively. Under the Medicare Recovery Audit Program, in which we are one of the four Recovery Audit Contractors (“Medicare RAC”) for CMS, healthcare providers have the right to appeal a claim and may pursue additional appeals if the initial appeal is found in favor of CMS. We accrue an estimated liability for appeals based on the amount of fees that are subject to appeals, closures or other adjustments and those which we estimate are probable of being returned to CMS following a successful appeal by the providers. Our estimates are based on our historical experience with the Medicare RAC appeal process. This estimated liability for Medicare RAC appeals is an offset to revenue in our Consolidated Statements of Comprehensive Income. The liability is included in the estimated liability for refunds and appeals on our Consolidated Balance Sheets. See Note 6 for further information regarding the estimated liability for appeals related to the Medicare RAC program. Unbilled receivables represent revenue recognized related to claims for which clients have received economic value that were not invoiced at the balance sheet date. Unbilled receivables were approximately $51,762 and $51,799 as of September 30, 2016 and December 31, 2015, respectively and are included in accounts receivable on our Consolidated Balance Sheets. Certain unbilled receivables arise when a portion of our earned fee is deferred at the time of the initial invoice. At a later date (which can be up to a year after original invoice, and at other times during the year after completion of the audit period based on contractual terms or as agreed with our client), we invoice the unbilled receivable amount. Notwithstanding the deferred due date, our clients acknowledge we have earned this unbilled receivable at the time of the original invoice, but we have agreed to defer billing the client for the related services. Unbilled receivables of this nature were approximately $5,828 and $6,431 as of September 30, 2016 and December 31, 2015, respectively, and are included in accounts receivable on our Consolidated Balance Sheets. We record periodic changes in unbilled receivables and refund liabilities as adjustments to revenue. Recently Issued Accounting Standards In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”) which addresses eight specific cash flow issues in order to reduce diversity in practice. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted. We are evaluating this guidance and its impact on our consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”) which simplifies several aspects of the accounting for share based compensation. ASU 2016-09 changes several aspects of the accounting for share based payment award transactions, including 1) accounting for income taxes, 2) classification of excess tax benefits on the statement of cash flows, 3) forfeitures, 4) minimum statutory tax withholding requirements and 5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes. We early adopted ASU 2016-09 on a prospective basis during the third quarter of 2016, which did not result in any significant changes to our current or prior period consolidated financial statements. In conjunction with adopting ASU 2016-09, we made an accounting policy election to account for forfeitures as they occur. In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”) which changes the accounting recognition, measurement and disclosure for leases in order to increase transparency. ASU 2016-02 requires lease assets and liabilities to be recognized on the balance sheet and key information about leasing arrangements to be disclosed. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We are evaluating this new guidance and its impact on our consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”) which changes the current financial instruments model primarily impacting the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. We are evaluating this new guidance and do not believe it will have a material impact on our consolidated financial statements and related disclosures. In November 2015, the FASB issued ASU 2015‑17, Balance Sheet Classification of Deferred Taxes , (“ASU 2015‑17”) which requires entities with a classified balance sheet to present all deferred tax assets and liabilities as noncurrent. The guidance is effective for public companies with annual and interim periods beginning after December 15, 2016. Early adoption is permitted. We are evaluating this new guidance and its impact on our consolidated balance sheets and related disclosures and expect the adoption of this ASU will reduce our total current assets and net working capital. In April 2015, the FASB issued ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (“ASU 2015-05”) which established guidance regarding the accounting for software licenses. ASU 2015-05 is effective for annual reporting periods, including interim periods, beginning after December 15, 2015. We prospectively adopted the provisions of ASU 2015-05 as of January 1, 2016 and have not yet had any material contracts that were impacted by this new guidance. In April 2015, the FASB issued ASU 2015‑03, Simplifying the Presentation of Debt and Issuance Costs (“ASU 2015‑03”) which establishes guidance to simplify the presentation of debt issuance costs by requiring debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that liability, consistent with debt discounts. Prior to the issuance of ASU 2015-03, debt issuance costs were required to be presented as an asset in the balance sheet. The guidance is effective for annual reporting periods beginning after December 15, 2015, and interim periods within that reporting period. We adopted the provisions of ASU 2015-03 as of January 1, 2016 and prior period amounts have been reclassified to conform to the current period presentation. As of December 31, 2015, $20,975 of debt issuance costs were reclassified in the consolidated balance sheet from debt issuance costs, net to long-term debt. The adoption of ASU 2015-03 did not materially impact our consolidated financial position, results of operations or cash flows. In May 2014, the FASB issued ASU No. 2014‑09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014‑09”) which supersedes existing revenue recognition guidance and provides clarification of principles for recognizing revenue from contracts with customers. The guidance is effective for public companies with annual periods beginning after December 15, 2017 and interim periods within that reporting period. We are evaluating this new guidance, the method of adoption we will take and the impact, if any, on our consolidated financial statements and related disclosures. | Note 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements include our accounts and our wholly‑owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions affecting the reported amounts in our consolidated financial statements and accompanying notes. These estimates are based on information available as of the date of the Consolidated Financial Statements; therefore, actual results could differ from those estimates. Foreign Currency Translation Assets and liabilities of our foreign subsidiaries with a functional currency other than the U.S. Dollar are translated into U.S. Dollars using applicable exchange rates at the balance sheet date. Revenue and expenses are translated at average exchange rates effective during the year. The resulting foreign currency translation gains and losses are included as a component of accumulated other comprehensive (loss) income within stockholders’ equity on our Consolidated Balance Sheets. Assets and liabilities of our foreign subsidiaries for which the functional currency is the U.S. Dollar are re‑measured into U.S. Dollars using applicable exchange rates at the balance sheet date, except nonmonetary assets and liabilities, which are re‑measured at the historical exchange rates prevailing when acquired. Revenue and expenses are re‑measured at average exchange rates effective during the year. Foreign currency translation gains and losses from re‑measurement are included in other non‑operating (income) expense in the accompanying Consolidated Statements of Comprehensive Income (Loss). The amounts of net gain (loss) on foreign currency re‑measurement recognized were immaterial for all periods presented. Revenue Recognition, Unbilled Receivables and Estimated Liability for Refunds and Appeals We provide services under contracts that contain various fee structures, including performance fee‑based contracts and fixed fee arrangements. Revenue is recognized when a contract exists, services have been provided to the client, the fee is fixed and determinable and collectability is reasonably assured. We recognize revenue on performance fee based contracts based upon the specific terms of the underlying contract. The contract terms generally specify: (a) time periods covered by the work to be performed; (b) nature and extent of services we are to provide; (c) the client’s duties in assisting and cooperating with us; and (d) fees payable to us. Our fees are most often expressed as a percentage of our findings. Generally, our services are rendered when our clients realize the economic benefits from our services. Our clients realize economic benefits when they take credits against their existing accounts payable based on when we identify cost savings, when they receive refund checks based on overpayments, or when they acknowledge payment reductions based on cost savings. We derive a relatively small portion of revenue on contracts with fixed‑fee arrangements. We recognize revenue on these contracts ratably over the contract term and once all of the above criteria have been satisfied. Historically, there has been a certain amount of revenue with respect to which, even though we had met the requirements of our revenue recognition policy, the claim is ultimately rejected. In such cases, our clients may request a refund or offset if their providers or vendors ultimately reject the payment inaccuracies we find or if our clients determine not to pursue reimbursement from their providers or vendors even though we may have collected fees. We record any such refund as a reduction of revenue. We record an estimate for refund liabilities at any given time based on actual historical refund data by client type. We satisfy such refund liabilities either by offsets to accounts receivable or by cash payments to clients. In addition to the refund liabilities, we calculate client specific reserves when we determine an additional reserve may be necessary. The estimated liability for refunds and appeals representing our estimate of claims that may be overturned related to revenue which had already been received was $67,775 and $74,941 at December 31, 2015 and 2014, respectively. The estimated allowance for refunds and appeals representing our estimate of claims that may be overturned related to amounts in accounts receivable was $33,406 and $23,216 at December 31, 2015 and 2014, respectively. Under the Medicare Recovery Program, in which we are one of the four Recovery Audit Contractors (“Medicare RAC”) with CMS, healthcare providers have the right to appeal a claim and may pursue additional appeals if the initial appeal is found in favor of CMS. We accrue an estimated liability for appeals based on the amount of fees that are subject to appeals, closures or other adjustments and those which we estimate are probable of being returned to CMS following a successful appeal by the providers. Our estimates are based on our historical experience with the Medicare RAC appeal process. This estimated liability for Medicare RAC appeals is an offset to revenue in our Consolidated Statements of Comprehensive Income (Loss). The liability is included in the estimated liability for refunds and appeals on our Consolidated Balance Sheets. See Note 8 for further information regarding the estimated liability for appeals related to the Medicare RAC program. Unbilled receivables represent revenue recognized related to claims for which clients have received economic value that were not invoiced at the balance sheet date. Unbilled receivables were approximately $51,799 and $42,433 as of December 31, 2015 and 2014, respectively and are included in accounts receivable on our Consolidated Balance Sheets. Certain unbilled receivables arise when a portion of our earned fee is deferred at the time of the initial invoice. At a later date (which can be up to a year after original invoice, and at other times during the year after completion of the audit period based on contractual terms or as agreed with our client), we invoice the unbilled receivable amount. Notwithstanding the deferred due date, our clients acknowledge we have earned this unbilled receivable at the time of the original invoice, but we have agreed to defer billing the client for the related services. Unbilled receivables of this nature were approximately $6,431 and $7,519 as of December 31, 2015 and 2014, respectively, and are included in accounts receivable on our Consolidated Balance Sheets. We record periodic changes in unbilled receivables and refund liabilities as adjustments to revenue. Cost of Revenue Cost of revenue is a direct cost associated with generating revenue. Cost of revenue related to compensation includes the total cost of payroll, related benefits and stock compensation expense for employees in roles that serve to provide direct revenue generating services to clients. Other cost of revenue primarily includes expenses related to the use of certain subcontractors, costs associated with the retrieval of medical records and facilities‑related costs associated with locations that are used strictly for revenue generating activities. Cost of revenue does not include any depreciation and amortization, which is stated separately in our Consolidated Statements of Comprehensive Income (Loss). Selling, General and Administrative (“SG&A”) Compensation within SG&A includes the total cost of payroll, related benefits and stock compensation expense for employees who do not have a direct role associated with revenue generation including those involved with developing new service offerings. Other SG&A operating expenses include all general operating costs. These costs include, but are not limited to, rent and occupancy costs for facilities associated with locations that are used for employees not serving in revenue generating roles, telecommunications costs, IT infrastructure costs, software licensing costs, advertising and marketing expenses, costs associated with developing new service offerings and expenses related to the use of certain subcontractors and professional services firms. Selling, general and administrative expenses do not include any depreciation and amortization, which is stated separately in our Consolidated Statements of Comprehensive Income (Loss). Advertising Costs Advertising costs are expensed as incurred and included in other selling, general and administrative expenses on our Consolidated Statements of Comprehensive Income (Loss). Advertising expense was $1,241 and $1,294 for the years ended December 31, 2015 and 2014, respectively. Cash and Cash Equivalents Cash and cash equivalents include all cash balances and highly liquid investments with an original maturity of 90 days or less from the date of purchase. Restricted Cash In connection with providing services to certain clients, we maintain a series of lockbox accounts with certain financial institutions. These lockbox accounts exist to receive funds we collect on behalf of our clients resulting from services provided. When client funds are received and deposited into the lockbox accounts, we record a corresponding customer deposit liability. These funds are included as both restricted cash in current assets and customer deposits in current liabilities on our Consolidated Balance Sheets. Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. We accrue an allowance against accounts receivable related to fees yet to be collected, based on historical losses adjusted for current market conditions, our clients’ financial condition, the amount of any receivables in dispute, the current receivables aging and current payment patterns. We record changes in our estimate to the allowance for doubtful accounts through bad debt expense and relieve the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Write‑offs for all periods presented have not been significant. We do not have any off‑balance‑sheet credit exposure related to our clients. Investments Investments, which are primarily purchased on behalf of our nonqualified profit sharing incentive compensation plan (See Note 19), consist of money market securities, which have been classified as available‑for‑sale securities. Available‑for‑sale securities are reported at fair values (based primarily on quoted prices and market observable inputs) using the specific identification method, with the unrealized gains and losses included in accumulated other comprehensive income (loss) on our Consolidated Balance Sheets. Investments are included in prepaid expenses and other current assets on our Consolidated Balance Sheets. Realized gains and losses and interest and dividends on available‑for‑sale securities are included in other non‑operating (income) expense on the Consolidated Statements of Comprehensive Income (Loss). Property and Equipment Property and equipment is stated at cost, net of accumulated depreciation. Depreciation on property and equipment is calculated using the straight‑line method over the estimated useful lives of the assets and is included in depreciation and amortization of property and equipment in our Consolidated Statements of Comprehensive Income (Loss). The estimated useful lives of our property and equipment are as follows: Computer equipment 3 ‑ 5 years Software 2 ‑ 5 years Furniture and fixtures 7 years Leasehold improvements Lesser of remaining lease term or expected service life of improvement Asset Retirement Obligations We have asset retirement obligations (“AROs”) arising from contractual requirements to perform specified activities at the time of disposition of certain leasehold improvements and equipment at some of our facilities. We record a liability for the estimated costs of these AROs. The liabilities are included in other long‑term liabilities on our Consolidated Balance Sheets and are initially measured at fair value and subsequently are adjusted for accretion expense and any changes in the amount or timing of the estimated cash flows. Internally Developed Software Costs Capitalization of costs incurred in connection with software developed for internal use commences when both the preliminary project stage is completed and management has authorized further funding for the project, based on a determination that it is probable the project will be completed and used to perform the function intended. Capitalized costs are limited to (i) external direct costs of materials and services consumed in developing or obtaining internal‑use software and (ii) payroll and payroll‑related costs for employees who are directly associated with and devote time to the internal‑use software project. Capitalization of such costs ceases no later than the point at which the project is substantially complete and ready for its intended use. All other costs to develop software for internal use are expensed as incurred. We capitalized approximately $2,764 and $3,254 for the years ended December 31, 2015 and 2014, respectively. Amortization of software and software development costs is calculated on a straight‑line basis over the expected economic life of the software, generally estimated to be five years and is included in depreciation and amortization of property and equipment on our Consolidated Statements of Comprehensive Income (Loss). Amortization expense for internal‑use software was $2,257 and $722 for the years ended December 31, 2015 and 2014, respectively. Amortization expense for the year ended December 31, 2015 includes the write‑off of approximately $975 related to software that is no longer being used. Intangible Assets Our intangible assets with definite lives include customer relationships and acquired software. Intangible assets with indefinite lives include a trademark, which is not being amortized and are tested for impairment on an annual basis or when events or changes in circumstances necessitate an evaluation for impairment. Intangible assets with definite lives are initially recorded at fair value and are amortized on a basis consistent with the timing and pattern of expected cash flows used to value the intangibles, generally on a straight‑line basis over useful lives ranging from 6 to 14 years. Amortization expense is included in amortization of intangible assets in our Consolidated Statements of Comprehensive Income (Loss). Impairment of Long‑Lived Assets Long‑lived assets, including property and equipment and intangible assets with definite lives, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. If circumstances require the asset or asset group be tested for possible impairment, we first compare undiscounted cash flows expected to be generated by the asset or asset group to its carrying value. If the carrying value of the asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment loss is recognized to the extent the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third‑party independent appraisals, as necessary. Intangible assets with indefinite lives are tested for impairment on an annual basis as of October 1, of each year or more frequently whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is measured by a comparison of the carrying amounts to the future discounted cash flows the assets are expected to generate. We recognized a $27,826 impairment charge on our trademark assets during the year ended December 31, 2015 due to a change in the estimated fair value of the trademark. We recognized a $74,034 impairment charge for the year ended December 31, 2014 due to the change in the estimated fair value of our CMS customer relationship intangible asset associated with the Medicare RAC. See Note 6 for further detail. Goodwill Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination which are not individually identified and separately recognized. We do not amortize goodwill. Goodwill is reviewed for impairment on an annual basis as of October 1, of each year or more frequently if a triggering event occurs. These tests are performed at the reporting unit level. We have two reporting units, Healthcare and Global Retail and Other. We are permitted to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two‑step impairment test as required in ASC 350, Intangibles—Goodwill and Other . If we can support the conclusion that it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then we would not need to perform the two‑step impairment test. If we cannot support such a conclusion, or we do not elect to perform the qualitative assessment, then the first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The fair value of each reporting unit is determined using a discounted cash flow analysis. Acquisitions We account for acquisitions using the accounting for business combinations. In each case, we allocated the purchase price to the identifiable net assets acquired, including intangible assets and liabilities assumed, based on estimated fair values at the date of the acquisition. The excess of the purchase price over the amount allocated to the identifiable assets and liabilities, if any, is recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires significant judgment, including the selection of valuation methodologies, estimates of future revenue and cash flows and discount rates. Under the acquisition method of accounting for business combinations, any changes to acquired balances in tax accounts, including adjustments to deferred tax asset valuation allowances or liabilities related to uncertain tax positions, which are recorded during the measurement period, and are determined to be attributable to facts and circumstances that existed as of the acquisition date, are considered a measurement period adjustment and will result in an offsetting increase or decrease to goodwill. All other changes to deferred tax asset valuation allowances and liabilities related to uncertain tax positions will result in an increase or decrease to income tax expense. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred 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, as well as for tax attributes such as operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We recognize net deferred tax assets to the extent that we believe these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax‑planning strategies, and results of recent operations. In the event we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we reduce the deferred tax asset valuation allowance and record a benefit in our provision for income taxes in our Consolidated Statements of Comprehensive Income (Loss). We record liabilities related to uncertain tax positions in accordance with ASC 740, Income Taxes (“ASC 740”) on the basis of a two‑step process whereby (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more‑likely‑than‑not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. We recognize interest and penalties related to unrecognized tax benefits within the income tax provision in the accompanying Consolidated Statements of Comprehensive Income (Loss). Accrued interest and penalties are included within accounts payable and accrued other expenses in the Consolidated Balance Sheets. Derivative Instruments Our derivative instruments consist entirely of interest rate cap agreements, are stated at fair value and are included in accounts payable and accrued other expenses and other long‑term liabilities on our Consolidated Balance Sheets. Changes in the fair value of derivatives that are designated as cash flow hedges are deferred in accumulated other comprehensive income (loss) on our Consolidated Balance Sheets until the underlying hedged transactions are recognized in earnings, at which time any deferred hedging gains or losses are also recorded in earnings. See Note 10 for more information. Stock‑Based Compensation Our policy is to issue new shares for purchases under our stock‑based award plan as described in Note 15. Stock‑based compensation expense is estimated at the grant date based on an award’s fair value as calculated by the Black‑Scholes‑Merton option pricing model. The determination of the stock‑based compensation expense is affected by our estimated stock price, expected stock price volatility over the term of the awards, expected term, risk‑free interest rate and expected dividends. We estimate a forfeiture rate based on historical experience and adjust the rate as necessary to reflect changes in facts and circumstances, if any. We recognize stock‑based compensation expense for service‑based equity awards using the straight‑line attribution method over the requisite service period. We have awarded performance‑based equity awards to certain employees and directors. These awards vest based on a series of criteria triggered upon a qualifying change of control event. Consistent with the service‑based equity awards, the vesting of performance‑based equity awards is dependent upon the participant’s continued employment through the date the performance criteria have been achieved. No stock‑based compensation expense has been recorded for performance‑based equity awards because the qualifying events have not occurred as of December 31, 2015. At the consummation of a change in control event or an initial public offering, we will record stock‑based compensation expense net of forfeitures based on the grant date fair value of the awards. Commitments and Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. See Note 8 for further detail on loss contingency related to the Medicare RAC. Fair Value of Financial Instruments The carrying values for cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and other accrued liabilities reasonably approximate fair market value due to their nature and the short term maturity of these financial instruments. We measure assets and liabilities at fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, we use a consistent fair value hierarchy framework as defined in ASC 820, Fair Value Measurement . Refer to Note 11 for more information regarding management’s fair value estimates. Recently Issued Accounting Standards In February 2016, the FASB issued ASU 2016‑02, Leases (“ASU 2016‑02”) which changes the accounting recognition, measurement and disclosure for leases in order to increase transparency. ASU 2016‑02 requires lease assets and liabilities to be recognized on the balance sheet and key information about leasing arrangements to be disclosed. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We are evaluating this new guidance and its impact on our consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU 2016‑01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016‑01”) which changes the current financial instruments model primarily impacting the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. We are evaluating this new guidance and do not believe it will have a material impact on our consolidated financial statements and related disclosures. In November 2015, the FASB issued ASU 2015‑17, Balance Sheet Classification of Deferred Taxes , (“ASU 2015‑17”) which requires entities with a classified balance sheet to present all deferred tax assets and liabilities as noncurrent. The guidance is effective for public companies with annual and interim periods beginning after December 15, 2016. Early adoption is permitted. We are evaluating this new guidance and its impact on our consolidated balance sheets and related disclosures and expect the adoption of this ASU will reduce our total current assets and net working capital. In September 2015, the FASB issued ASU 2015‑16, Simplifying the Accounting for Measurement‑Period Adjustments (“ASU 2015‑16”) which requires an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. We early adopted this guidance in 2015 and it did not have a material impact to our consolidated financial statements and related disclosures. In April 2015, the FASB issued ASU 2015‑05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (“ASU 2015‑05”) which established guidance regarding the accounting for software licenses. ASU 2015‑05 is effective for annual reporting periods, including interim periods, beginning after December 15, 2015. We are evaluating this new guidance and do not believe it will have a material impact on our consolidated financial statements and related disclosures. In April 2015, the FASB issued ASU 2015‑03, Simplifying the Presentation of Debt and Issuance Costs (“ASU 2015‑03”) which establishes guidance to simplify the presentation of debt issuance costs by requiring debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that liability, consistent with debt discounts. The guidance is effective for annual reporting periods beginning after December 15, 2015, and interim periods within that reporting period. Early adoption is permitted. We are evaluating this new guidance and do not believe it will have a material impact on our consolidated financial statements and related disclosures. In June 2014, FASB issued ASU 2014‑12, Accounting for Share‑Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (“ASU 2014‑12”). ASU 2014‑12 brings consistency to the accounting for share‑based payment awards that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards. ASU 2014‑12 is effective for annual reporting periods beginning after December 15, 2015, and interim periods within that reporting period. Early adoption is permitted. We are evaluating this new guidance and do not believe it will have a material impact on our consolidated financial statement disclosures. In May 2014, the FASB issued ASU No. 2014‑09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014‑09”) which supersedes existing revenue recognition guidance and provides clarification of principles for recognizing revenue from contracts with customers. ASU 2014‑09 is effective for annual periods beginning after December 15, 2017 and interim periods within that reporting period. We are evaluating this new guidance, the method of adoption we will take and the impact, if any, on our consolidated financial statements and related disclosures. |
Property and Equipment
Property and Equipment | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Property and Equipment | ||
Property and Equipment | Note 3. Property and Equipment Property and equipment by major asset class for the periods presented consisted of the following: September 30, December 31, 2016 2015 Computer equipment $ $ Software Furniture and fixtures Leasehold improvements Projects in progress Property and equipment, gross $ $ Less: Accumulated depreciation and amortization Property and equipment, net $ $ In December 2015, we purchased a perpetual software license, which is included in the software total above. We will pay for this software over a two year period. As such there is approximately $3,318 included in accounts payable and accrued other expenses and $3,193 included in other long-term liabilities on our Consolidated Balance Sheets as of September 30, 2016. The amount included in other long-term liabilities represents the present value of payments that will ultimately be made. Total depreciation and amortization expense related to property and equipment, including capitalized software costs, was $5,218 and $3,773 for the three months ended September 30, 2016 and 2015, respectively and $14,864 and $9,270 for the nine months ended September 30, 2016 and 2015, respectively. | Note 5. Property and Equipment Property and equipment by major asset class for the periods presented consisted of the following: December 31, 2015 2014 Computer equipment $ $ Software Furniture and fixtures Leasehold improvements Projects in progress Property and equipment, gross $ $ Less: Accumulated depreciation and amortization Property and equipment, net $ $ In December 2015, we purchased a perpetual software license, which is included in the software total above as of December 31, 2015. We will pay for this software over the next three years. As such there is approximately $2,952 included in accounts payable and accrued other expenses and $6,340 included in other long‑term liabilities on our Consolidated Balance Sheets as of December 31, 2015. The amount included in other long‑term liabilities represents the present value of payments that will ultimately be made. Total depreciation and amortization expense related to property and equipment, including capitalized software costs, was $12,695 and $7,416 for the years ended December 31, 2015 and 2014, respectively. |
Intangible Assets
Intangible Assets | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Intangible Assets | ||
Intangible Assets | Note 4. Intangible Assets Intangible asset balances by major asset class for the periods presented were as follows: Weighted Gross Net Average Carrying Accumulated Carrying Amortization Amount Amortization Impairment Amount Period September 30, 2016: Customer relationships $ $ $ — $ years Acquired software — years Connolly trademark — — indefinite-lived Total $ $ $ — $ years December 31, 2015: Customer relationships $ $ $ — $ years Acquired software — years Connolly trademark — indefinite-lived iHealth trademark — years Total $ $ $ $ years Amortization expense was $15,203 and $15,437 for the three months ended September 30, 2016 and 2015, respectively and $45,618 and $46,256 for the nine months ended September 30, 2016 and 2015, respectively. As a result of our rebranding in September 2015, we recorded an impairment of intangible assets of $27,826 related to our legacy trademarks during the three and nine months ended September 30, 2015. The remaining trademark value as of September 30, 2016 of $4,200 is related to our retail business that we continue to operate as Connolly, a division of Cotiviti. As of September 30, 2016 amortization expense for the next 5 years is expected to be: Remainder of 2016 $ 2017 2018 2019 2020 | Note 6. Intangible Assets Intangible asset balances by major asset class for the periods presented were as follows: Gross Accumulated Impairment Net Carrying Weighted Average December 31, 2014: Customer relationships $ $ $ $ 13.7 years Acquired software — 6.2 years Connolly trademark — — indefinite‑lived iHealth trademark — 11.0 years Total $ $ $ $ 12.8 years December 31, 2015: Customer relationships $ $ $ — $ 13.7 years Acquired software — 6.2 years Connolly trademark — indefinite‑lived iHealth trademark — 11.0 years Total $ $ $ $ 12.8 years Amortization expense was $61,467 and $52,355 for the years ended December 31, 2015 and 2014, respectively. As a result of our rebranding in September 2015 as discussed in Note 1, we recorded an impairment of intangible assets of $27,826 related to our trademarks. The remaining trademark value as of December 31, 2015 of $4,200 is related to our retail business that will continue to operate as Connolly, a division of Cotiviti. Based on the facts and circumstances surrounding our Medicare RAC contract, including continued delays with the contract renewal process, as well as scope reductions that have resulted in a decrease to future revenue projections (see Note 8), we performed an impairment review of our customer relationship intangible asset related to our Medicare RAC contract with CMS during the year ended December 31, 2014. As a result of this review, we recognized a $74,034 impairment charge for the year ended December 31, 2014 due to a change in the estimated fair value of this customer relationship intangible asset associated with the Medicare RAC contract. As of December 31, 2015 amortization expense for the next 5 years was: 2016 $ 2017 2018 2019 2020 |
Goodwill
Goodwill | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Goodwill | ||
Goodwill | Note 5. Goodwill Total goodwill in our Consolidated Balance Sheets was $1,196,350 and $1,197,044 as of September 30, 2016 and December 31, 2015, respectively. Changes in the carrying amount of goodwill by our Healthcare and Global Retail and Other segments for the nine months ended September 30, 2016 were as follows: Global Retail Healthcare and Other December 31, 2015 $ $ Foreign currency translation and other — September 30, 2016 $ $ There was no impairment related to goodwill for any period presented. | Note 7. Goodwill We recorded total goodwill in our Consolidated Balance Sheets of $1,197,044 and $1,197,353 as of December 31, 2015 and 2014, respectively. Changes in the carrying amount of goodwill, which has been allocated to our Healthcare and Global Retail and Other segments, for the periods presented were as follows: December 31, 2015 December 31, 2014 Healthcare Global Retail Healthcare Global Retail Beginning balance $ $ $ $ Acquisitions — — — Purchase price adjustments — — — Foreign currency translation and other — Ending balance $ $ $ $ There was no impairment related to goodwill for any period presented. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Commitments and Contingencies | ||
Commitments and Contingencies | Note 6. Commitments and Contingencies We may be involved in various legal proceedings and litigation arising in the ordinary course of business. While any legal proceeding or litigation has an element of uncertainty, management believes the ultimate disposition of these matters will not have a material adverse effect on our consolidated financial position, results of operations, or liquidity. Medicare RAC Contract Contingency In August 2014, CMS announced it would allow providers to remove all eligible claims currently pending in the appeals process by offering to pay hospitals 68% of the original claim amount. This settlement was offered to the providers and it was unknown what, if any, impact there would be for the Medicare RACs. On July 1, 2015, CMS issued a Technical Direction Letter to the Medicare RACs, including ourselves, indicating that Medicare RACs will only be entitled to the contract contingency fee on the settled amounts of the claims, or 32% of the original inpatient claim amounts. Based on the initial lists of finalized settlements provided by CMS, we would be required to refund CMS approximately $22,308 due to the related adjustments in Medicare RAC contingency fees. CMS further advised that as the hospital settlement project continues, additional settlement lists will be matched to Medicare RAC claims which may result in updated refund amounts to those initially provided. While there are uncertainties in any dispute resolution and results are uncertain, we have disputed CMS’s findings based on our interpretation of the terms of the Medicare RAC contract and our belief that the backup data provided by CMS is inaccurate and/or incomplete. Our liability for estimated refunds and appeals includes amounts for these settled claims based on our best estimates of the amount we believe will be ultimately payable to CMS based on our interpretation of the terms of the Medicare RAC contract. We believe that it is possible that we could be required to pay an additional amount up to approximately $11,800 in excess of the amount we accrued as of September 30, 2016 based on the claims data we have received from CMS to date. As CMS completes its settlement process with the providers and updated files are provided to us, the potential amount owed by us may change. On September 28, 2016, CMS announced a second settlement process to allow eligible providers to settle their inpatient claims currently under appeal beginning December 1, 2016. This second settlement process could result in additional amounts owed to CMS. The amount of any such additional claims cannot presently be determined. | Note 8. Commitments and Contingencies Operating Leases We are obligated under non‑cancellable lease agreements for certain facilities and equipment, which frequently include renewal options and escalation clauses. For leases that contain predetermined fixed escalations, we recognize the related rent expense on a straight‑line basis and record the difference between the recognized rent expense and amounts payable under the lease as lease obligations. Lease obligations due within one year are included in accounts payable and accrued other expenses on our Consolidated Balance Sheets. We lease certain facilities and equipment under non‑cancelable leases that expire at various points through 2026. Rent expense was $8,826 and $7,202 for the years ended December 31, 2015 and 2014, respectively. Future minimum payments under non‑cancelable operating lease agreements as of December 31, 2015 were as follows: Year ending December 31: 2016 $ 2017 2018 2019 2020 2021 ‑ 2026 Total minimum lease payments $ Legal and Other Matters We may be involved in various legal proceedings and litigation arising in the ordinary course of business. While any proceeding or litigation has an element of uncertainty, management believes the ultimate disposition of these matters will not have a material adverse effect on our consolidated financial position, results of operations, or liquidity. Medicare RAC Contract Contingency In August 2014, CMS announced it would allow providers to remove all eligible claims currently pending in the appeals process by offering to pay hospitals 68% of the original claim amount. This settlement was offered to the providers and it was unknown what, if any, impact there would be for the Medicare RACs. On July 1, 2015, CMS issued a Technical Direction Letter to the Medicare RACs, including ourselves, indicating that Medicare RACs will only be entitled to the contract contingency fee on the settled amounts of the claims, or 32% of the original inpatient claim amounts. Based on the initial lists of finalized settlements provided by CMS, we would be required to refund CMS approximately $22,308 due to the related adjustments in Medicare RAC contingency fees. CMS further advised that as the hospital settlement project continues, additional settlement lists will be matched to Medicare RAC claims which may result in updated refund amounts to those initially provided. While there are uncertainties in any dispute resolution and results are uncertain, we have disputed CMS’s findings based on our interpretation of the terms of the Medicare RAC contract and our belief that the backup data provided by CMS is inaccurate and/or incomplete. Our liability for estimated refunds and appeals includes amounts for these settled claims based on our best estimates of the amount we believe will be ultimately payable to CMS based on our interpretation of the terms of the Medicare RAC contract. We believe that it is possible that we could be required to pay an additional amount up to approximately $12,400 in excess of the amount we accrued as of December 31, 2015 based on the claims data we have received from CMS to date. As CMS completes its settlement process with the providers and updated files are provided to us, the potential amount owed by us may change. Asset Retirement Obligations We have AROs arising from contractual requirements to perform specified activities at the time of disposition of certain leasehold improvements and equipment at some of our facilities. Changes in the carrying amount of AROs were as follows: Year ended 2015 2014 Balance beginning of period $ $ Additional ARO Liability Accretion expense Balance at end of period $ $ |
Long-term Debt
Long-term Debt | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Long-term Debt | ||
Long-term Debt | Note 7. Long‑term Debt In September 2016, in order to benefit from favorable market conditions, we entered into and executed the Amended and Restated First Lien Credit Agreement (the “Restated Credit Agreement”), which replaced our then outstanding first and second lien credit facilities, lowered total debt outstanding by $22,700 and provides for lower applicable interest rates. The Restated Credit Agreement consists of (a) a Term Loan A in the amount of $250,000 (the “Term Loan A”), (b) a Term Loan B in the amount of $550,000 (the “Term Loan B”) and (c) a revolving credit facility (the “Revolver”) in the amount of up to $100,000. As a result of this refinancing, we recognized a loss on extinguishment of debt of $9,349 during the three and nine months ended September 30, 2016, which is included in our Consolidated Statements of Comprehensive Income. In June 2016, we repaid $223,000 in outstanding principal under our then outstanding second lien credit facility (the “May 2014 Second Lien”) using proceeds from our Initial Public Offering (“IPO”). We also made a voluntary prepayment of $13,100 of outstanding principal under the May 2014 Second Lien. As a result of these repayments, we recognized a loss on extinguishment of debt of $7,068 during the nine months ended September 30, 2016, which is included in our Consolidated Statements of Comprehensive Income. In May 2015, in order to benefit from favorable market conditions, we entered into and executed the First and Second Amendments to the then outstanding first lien credit facilities (the “May 2014 First Lien”), which, among other things, provide for lower applicable interest rates associated with the May 2014 First Lien by 50 basis points. As a result, we recorded a loss on extinguishment of debt of $4,084 during the nine months ended September 30, 2015, which is included in our Consolidated Statements of Comprehensive Income. Long‑term debt for the periods presented was as follows: September 30, December 31, 2016 2015 Term Loan A (a) $ $ — Term Loan B (b) — Revolver (c) — — May 2014 First Lien — May 2014 Second Lien — May 2014 Revolver — — Total debt Less: debt issuance costs Less: current portion Total long-term debt $ $ (a) The Term Loan A matures on September 28, 2021 and requires quarterly principal payments of $3,125 for the fourth quarter of 2016, $3,125 per quarter in 2017 and 2018, $4,688 per quarter in 2019, $6,250 per quarter in 2020 and $9,375 per quarter for the first two quarters of 2021. The remainder of the outstanding Term Loan A borrowings are due on September 28, 2021. Any mandatory or voluntary prepayment will be applied against the remaining scheduled installments of principal payments in direct order of maturity, unless other direction of application is provided by us. Based on our periodic election, borrowings under the Term Loan A bear interest at either (a) the Alternate Base Rate (“ABR”) plus, based on our Secured Leverage Ratio (as defined in the Restated Credit Agreement), 1.25% - 2.00% for ABR loans or (b) the LIBO Rate (“LIBOR”) plus, based on our Secured Leverage Ratio, 2.25% to 3.00% for LIBOR loans. The ABR is equal to the highest of (i) the New York Federal Reserve Bank rate in effect on such date plus 0.50%, (ii) the LIBOR plus 1.00% and (iii) the prime commercial lending rate of the administrative agent as in effect on the relevant day. The interest period applicable to any LIBOR borrowing is one, two, three or six months, at the election of the borrower. Interest on LIBOR loans is payable the last day of the applicable interest period and, in the case of an interest period of more than three months’ duration, each day on which interest would have been payable had successive interest periods of three months’s duration been applicable to such borrowing. The interest rate in effect was 3.6% at September 28, 2016. (b) The Term Loan B matures September 28, 2023 and requires quarterly principal payments of $1,375 with all remaining borrowings due on September 28, 2023. Based on our periodic election, borrowings under the Term Loan B bear interest at either (a) the ABR plus 1.75% for ABR loans or (b) the LIBOR plus 2.75% for LIBOR loans. The ABR is equal to the highest of (i) the New York Federal Reserve Bank rate in effect on such date plus 0.50%, (ii) LIBOR plus 1.00%, (iii) the prime commercial lending rate of the administrative agent as in effect on the relevant day and (iv) 1.75%. LIBOR is equal to the higher of (a) the published LIBOR or (b) 0.75%. If our corporate credit rating from Moody’s Investor Service, Inc. is Ba3 or better and our corporate family rating from Standard & Poor’s Financial Services, LLC is BB- or better, the margin will be reduced by 0.25% per annum for as long as such ratings are maintained. The interest period applicable to any LIBOR borrowing is one, two, three or six months, at the election of the borrower. Interest on LIBOR loans is payable the last day of the applicable interest period and, in the case of an interest period of more than three months’ duration, each day on which interest would have been payable had successive interest periods of three months’s duration been applicable to such borrowing.The interest rate in effect was 3.6% at September 28, 2016. (c) The Revolver expires September 28, 2021. Interest for any borrowings under the Revolver is payable over one, two, three or six months at our election. A commitment fee is payable quarterly based on the unused portion of the Revolver commitment which ranges from 0.30% to 0.50% per annum based on certain financial tests. Based on our periodic election, borrowings under the Revolver bear interest at either (a) ABR plus, based on our Secured Leverage Ratio, 1.25% - 2.00% for ABR loans or (b) LIBOR plus, based on our Secured Leverage Ratio, 2.25% to 3.00% for LIBOR loans. The ABR is equal to the highest of (i) the New York Federal Reserve Bank rate in effect on such date plus 0.50%, (ii) the LIBOR plus 1.00% and (iii) the prime commercial lending rate of the administrative agent as in effect on the relevant day. There were no borrowings outstanding under the Revolver as of September 30, 2016. The interest rate in effect was 3.6% at September 28, 2016. The Restated Credit Agreement includes certain binding affirmative and negative covenants, including delivery of financial statements and other reports, maintenance of existence and transactions with affiliates. The negative covenants restrict our ability, among other things, to incur indebtedness, grant liens, make investments, sell or otherwise dispose of assets or enter into a merger, pay dividends or repurchase stock. Beginning December 31, 2016, there is a required financial covenant applicable only to the Revolver and the Term Loan A, pursuant to which we agree not to permit our Secured Leverage Ratio to exceed 5.50:1.00 through September 2018, 5.25:1.00 through September 2019 and 5.00:1.00 through June 2021. In addition, the Restated Credit Agreement includes certain events of default including payment defaults, failure to perform affirmative covenants, failure to refrain from actions or omissions prohibited by negative covenants, the inaccuracy of representations or warranties, bankruptcy and insolvency related defaults and a change of control default. We were in compliance with all such covenants as of September 30, 2016 and similar affirmative and negative covenants applicable to our then outstanding credit facilities as of December 31, 2015. The Restated Credit Agreement requires mandatory prepayments based upon annual excess cash flows commencing with the year ended December 31, 2017. The mandatory prepayment is contingently payable based on an annual excess cash flow calculation as defined within the Restated Credit Agreement. As of September 30, 2016, the aggregate maturities of long‑term debt for each of the next five years are expected to be $4,500 for the remainder of 2016, $18,000 in 2017 and 2018, $24,250 in 2019 and $30,500 in 2020. | Note 9. Long‑term Debt In May 2015, in order to benefit from favora1ble market conditions, we entered into and executed the First and Second Amendments (collectively, “the May 2015 Re‑pricing”) to the May 2014 First Lien, which, among other things, provide for lower applicable interest rates associated with the May 2014 First Lien by 50 basis points. As a result, we recorded a loss on extinguishment of debt of $4,084 which is included on our Consolidated Statements of Comprehensive Income (Loss). On May 14, 2014, in connection with the Connolly iHealth Merger, we entered into a First Lien — Credit Agreement which consisted of an $810,000 term loan (“May 2014 First Lien”) and a $75,000 revolving credit facility (“Revolver”) which also permits the issuance of letters of credit. We also entered into a Second Lien—Credit Agreement which consists of a $265,000 term loan (“May 2014 Second Lien”). Proceeds from the May 2014 Credit Agreements were used to repay the balance then outstanding on our January 2014 Credit Agreement as well as fund a portion of the Connolly iHealth Merger. The May 2014 First Lien and May 2014 Second Lien (collectively, the “May 2014 Credit Agreements”) are guaranteed by our subsidiaries and secured by substantially all of our assets. As a result of entering into the May 2014 Credit Agreements, we recognized a loss on extinguishment of debt totaling $9,855 for the year ended December 31, 2014 which is included on our Consolidated Statements of Comprehensive Income (Loss). In January 2014, we entered into a credit facility, which consisted of a $320,000 Term Loan with a maturity in January 2021 (“January 2014 Term Loan”) and a $30,000 Revolving Credit Facility with a maturity in January 2019 (collectively, “January 2014 Credit Agreement”). Proceeds from this January 2014 Credit Agreement were used to repay the balances then outstanding on our original July 2012 Credit Agreements. The January 2014 Term Loan bore interest at LIBOR plus 4.00%. The January 2014 Term Loan required compliance with a financial covenant only if we exceeded certain borrowing thresholds. The mandatory prepayment, which would have been payable based upon an excess cash flow calculation for the year ended December 31, 2014 under our original Credit Agreements, was no longer applicable due to the May 2014 refinancing. As a result of entering into this January 2014 Credit Agreement, we recognized a loss on extinguishment of debt totaling $11,669 for the year ended December 31, 2014 which is included on our Consolidated Statements of Comprehensive Income (Loss). Long‑term debt for the periods presented was as follows: December 31, 2015 2014 May 2014 First Lien (a) $ $ May 2014 Second Lien (b) May 2014 Revolver (c) — — Total debt Less: debt issuance costs Less: current portion Total long‑term debt $ $ (a) The May 2014 First Lien, as amended, expires May 2021 and requires quarterly principal payments of $2,025. The quarterly principal payment may be reduced by any amounts of mandatory or voluntary prepayment. Any mandatory or voluntary prepayment shall be applied against the remaining scheduled installments of principal payments in direct order of maturity, unless other direction of application is provided by us. Interest on the May 2014 First Lien is payable over periods of one, two, three or six months at the election of the borrower. Based on our periodic election, borrowings under the May 2014 First Lien bear interest at either (a) the Alternate Base Rate (ABR) plus 2.50% for ABR Loans, or (b) the LIBO Rate (“LIBOR”) plus 3.50% for LIBOR Loans. The ABR is equal to the higher of (a) the Federal Funds Effective Rate plus 0.50%; (b) the published one month LIBOR plus 1.00%; (c) the Prime Rate; or (d) 2.00%. The LIBOR is equal to the higher of (a) the LIBOR or (b) 1.00%. The interest rate in effect was 4.50% at December 31, 2015 and 5.00% at December 31, 2014. Following a qualified IPO, borrowings under the May 2014 First Lien bear interest at either (a) the ABR plus 2.25%, or (b) the LIBOR plus 3.25%. (b) The May 2014 Second Lien expires May 2022 with the total principal balance due at maturity. Interest on the May 2014 Second Lien is payable over periods of one, two, three, or six months at the election of the borrower. Based on our periodic election, borrowings under the May 2014 Second Lien bear interest at either (a) the ABR plus 6.00% for ABR Loans or (b) LIBOR plus 7.00% for LIBOR Loans. The ABR is equal to the higher of (a) the Federal Funds Effective Rate plus 0.50% (b) the published one month LIBOR plus 1.00%; (c) the Prime Rate; or (d) 2.00%. The LIBOR is equal to the higher of (a) the LIBOR or (b) 1.00%. The interest rate in effect was 8.00% at December 31, 2015 and December 31, 2014. Following a qualified IPO, borrowings under the May 2014 Second Lien bear interest at either (a) the ABR plus 5.75% for ABR Loans, or (b) the LIBOR plus 6.75% for LIBOR Loans. (c) The May 2014 Revolver expires May 2019 with interest payable over periods of one, two, three or six months at the election of the borrower. A commitment fee is payable quarterly based on the daily unused portion of the Revolver balance which ranges from an annual rate of 0.375% to 0.50% based on certain financial tests. The commitment fee was 0.375% and 0.50% at December 31, 2015 and 2014, respectively. Based on our periodic election, borrowings under the Revolver bear interest at either (a) the ABR plus 1.75% to 2.25% for ABR Loans based on certain financial tests or (b) the LIBOR plus 2.75% to 3.25% for LIBOR Loans based on certain financial tests. The ABR is equal to the higher of (a) the Federal Funds Effective Rate plus 0.50%; (b) the published one month LIBOR plus 1.00%; or (c) the Prime Rate. The LIBOR is equal to the higher of (a) the LIBOR or (b) 1.00%. The interest rate in effect was 4.00% and 4.25% at December 31, 2015 and December 31, 2014, respectively. At December 31, 2015 and December 31, 2014, we had $3,526 and $150 of letters of credit outstanding, respectively, which reduce the amount available for borrowing. There were no borrowings outstanding under the May 2014 Revolver as of December 31, 2015 or December 31, 2014. The May 2014 Credit Agreements include certain binding affirmative and negative covenants, including delivery of financial statements and other reports, maintenance of existence and transactions with affiliates. The negative covenants limit our ability, among other things, to incur debt, incur liens, make investments, sell assets or declare or pay dividends. As a result of these restrictions, approximately 90% of the subsidiary net assets are deemed restricted as of December 31, 2015. Refer to Schedule I Condensed Financial Information of Parent. The financial covenant setting forth a maximum leverage ratio which is included in the May 2014 Credit Agreements is only applicable if we exceed certain borrowing thresholds. These borrowing thresholds are based upon 35% of our total revolving credit commitments with certain exceptions, which were not exceeded as of December 31, 2015 and 2014. In addition, the May 2014 Credit Agreements include certain events of default including payment defaults, failure to perform affirmative covenants, failure to refrain from actions or omissions prohibited by negative covenants, the inaccuracy of representations or warranties, bankruptcy and insolvency related defaults and a change of control default. We were in compliance with all such covenants as December 31, 2015 and 2014. The May 2014 Credit Agreements require mandatory prepayments based upon annual excess cash flows commencing with the year ended December 31, 2015. The mandatory prepayment is contingently payable based on an annual excess cash flow calculation as defined within the Credit Agreements. We did not meet the annual excess cash flow calculation requirement as of December 31, 2015. We expect to pay a voluntary prepayment of approximately $13,099 in the second quarter of 2016, and as such this amount is included in current maturities of long‑term debt as of December 31, 2015. As of December 31, 2015, the aggregate maturities of long‑term debt for each of the next five years are expected to $21,099 in 2016 and $7,967 in each of 2017 through 2020. |
Derivative Instruments
Derivative Instruments | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Derivative Instruments | ||
Derivative Instruments | Note 8. Derivative Instruments We are exposed to fluctuations in interest rates on our long‑term debt. We manage our exposure to fluctuations in the 3‑month LIBOR through the use of interest rate cap agreements designated as cash flow hedges. We are meeting our objective by hedging the risk of changes in cash flows related to changes in LIBOR by capping the interest on our floating rate debt linked to LIBOR to approximately 3%. We do not utilize derivatives for speculative or trading purposes. As of September 30, 2016 and December 31, 2015, we had $630,000 in notional debt outstanding related to these interest rate caps, which cover quarterly interest payments through September 2019. The notional amount decreases over time. All of our outstanding interest rate cap contracts qualify for cash flow hedge accounting treatment in accordance with ASC 815, Derivatives and Hedging . Cash flow hedge accounting treatment allows for gains and losses on the effective portion of qualifying hedges to be deferred in accumulated other comprehensive (loss) income until the underlying transaction occurs, rather than recognizing the gains and losses on these instruments in earnings during each period they are outstanding. When the actual interest payments are made on our variable rate debt and the related derivate contract settles, any effective portion of realized interest rate hedging derivative gains and losses previously recorded in accumulated other comprehensive (loss) income is recognized in interest expense. We recognized interest expense of $56 and $23 related to interest rate caps during the three months ended September 30, 2016 and 2015, respectively and $200 and $55 during the nine months ended September 30, 2016 and 2015, respectively. Ineffectiveness results, in certain circumstances, when the change in total fair value of the derivative instrument differs from the change in the fair value of our expected future cash outlays for the related interest payment and is recognized immediately in interest expense. There was no ineffectiveness recorded during the three and nine months ended September 30, 2016 and 2015, respectively. Likewise, if the hedge does not qualify for hedge accounting, the periodic changes in its fair value are recognized in the period of the change in interest expense. All cash flows related to our interest rate cap agreements are classified as operating cash flows. Any outstanding derivative instruments expose us to credit loss in the event of nonperformance by the counterparties to the agreements, but we do not expect that the counterparty will fail to meet their obligations. The amount of such credit exposure is generally the positive fair value of our outstanding contracts. To manage credit risks, we select counterparties based on credit assessments, limit our overall exposure to any single counterparty and monitor the market position of any counterparty. The table below reflects quantitative information related to the fair value of our derivative instruments and where these amounts are recorded in our consolidated financial statements as of the period presented: September 30, December 31, 2016 2015 Liability fair value recorded in other long-term liabilities $ $ Liability fair value recorded in accounts payable and accrued other expenses Estimated amount of existing losses expected to be reclassified into earnings in the next 12 months We record deferred hedge premiums which are being paid over the life of the hedge in accumulated other comprehensive (loss) income until the related hedge ultimately settles and interest payments are made on the underlying debt. As of September 30, 2016, we have made payments of $2,204 related to these deferred premiums. We expect to pay an additional $4,190 in deferred premiums through 2019 related to our outstanding interest rate cap agreements which is reflected in the fair value of these derivatives in the table above. Comprehensive income includes changes in the fair value of our interest rate cap agreements which qualify for hedge accounting. Changes in other comprehensive income for the periods presented related to derivative instruments classified as cash flow hedges were as follows: Three Months Ended September 30, 2016 2015 Balance at beginning of period, July 1 $ $ Reclassifications in earnings, net of tax of $21 and $9, respectively Change in fair value of derivative instrument, net of tax of $45 and $483, respectively Balance at end of period, September 30 $ $ Nine Months Ended September 30, 2016 2015 Balance at beginning of period, January 1 $ $ Reclassifications in earnings, net of tax of $76 and $22, respectively Change in fair value of derivative instrument, net of tax of $463 and $1,015, respectively Balance at end of period, September 30 $ $ | Note 10. Derivative Instruments We are exposed to fluctuations in interest rates on our long‑term debt. We manage our exposure to fluctuations in the 3‑month LIBOR through the use of interest rate cap agreements designated as cash flow hedges. We are meeting our objective by hedging the risk of changes in cash flows related to changes in LIBOR by capping the interest on our floating rate debt linked to LIBOR to approximately 3%. We do not utilize derivatives for speculative or trading purposes. As of December 31, 2015 and 2014, we had $630,000 and $700,000, respectively, in notional debt outstanding related to these interest rate caps, which cover quarterly interest payments through September 2019. The notional amount decreases over time. Refer to Note 9 for more information regarding the debt outstanding related to these agreements. All of our outstanding interest rate cap contracts qualify for cash flow hedge accounting treatment in accordance with ASC 815, Derivatives and Hedging . Cash flow hedge accounting treatment allows for gains and losses on the effective portion of qualifying hedges to be deferred in accumulated other comprehensive (loss) income until the underlying transaction occurs, rather than recognizing the gains and losses on these instruments in earnings during each period they are outstanding. When the actual interest payments are made on our variable rate debt as described in Note 9 and the related derivate contract settles, any effective portion of realized interest rate hedging derivative gains and losses previously recorded in accumulated other comprehensive (loss) income is recognized in interest expense. We recognized interest expense of $105 related to interest rate caps during the year ended December 31, 2015. We did not recognize any interest expense related to interest rate caps during the year ended December 31, 2014. Ineffectiveness results, in certain circumstances, when the change in total fair value of the derivative instrument differs from the change in the fair value of our expected future cash outlays for the related interest payment and is recognized immediately in interest expense. There was no ineffectiveness recorded during the years ended December 31, 2015 and 2014. Likewise, if the hedge does not qualify for hedge accounting, the periodic changes in its fair value are recognized in the period of the change in interest expense. All cash flows related to our interest rate cap agreements are classified as operating cash flows. Any outstanding derivative instruments expose us to credit loss in the event of nonperformance by the counterparties to the agreements, but we do not expect that the counterparty will fail to meet their obligations. The amount of such credit exposure is generally the positive fair value of our outstanding contracts. To manage credit risks, we select counterparties based on credit assessments, limit our overall exposure to any single counterparty and monitor the market position of any counterparty. The table below reflects quantitative information related to the fair value of our derivative instruments and where these amounts are recorded in our consolidated financial statements as of the period presented: December 31, 2015 2014 Liability fair value recorded in other long‑term liabilities $ $ Liability fair value recorded in accounts payable and accrued other expenses — Estimated amount of existing losses expected to be reclassified into earnings in the next 12 months We record deferred hedge premiums which are being paid over the life of the hedge in accumulated other comprehensive income until the related hedge ultimately settles and interest payments are made on the underlying debt. As of December 31, 2015, we have made payments of $1,103 related to these deferred premiums. We expect to pay an additional $5,291 in deferred premiums through 2019 related to our outstanding interest rate cap agreements which is reflected in the fair value of these derivatives in the table above. Comprehensive income includes changes in the fair value of our interest rate cap agreements which qualify for hedge accounting. Changes in other comprehensive income for the periods presented related to derivative instruments classified as cash flow hedges were as follows: Balance, January 1, 2014 $ — Reclassifications in earnings — Change in fair value of derivative instrument, net of tax of $476 Balance, December 31, 2014 Reclassifications in earnings, net of tax of $40 Change in fair value of derivative instrument, net of tax of $1,360 Balance, December 31, 2015 $ |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Fair Value Measurements | ||
Fair Value Measurements | Note 9. Fair Value Measurements We measure assets and liabilities at fair value based on assumptions market participants would use in pricing an asset or liability in the principal or most advantageous market. Authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value whereby inputs are assigned a hierarchical level. The hierarchical levels are: Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. Level 2: Observable prices, other than quoted prices included in Level 1 inputs for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. Level 3: Unobservable inputs for the asset or liability used to measure fair value to the extent observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. The following table summarizes our financial instruments measured at fair value within the Consolidated Balance Sheets: September 30, 2016 December 31, 2015 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets: Available-for-sale securities $ — $ — $ — $ $ — $ — Liabilities Long-term debt — — — — Interest rate cap agreements — — — — Total $ — $ $ $ $ $ Investments are classified as available‑for‑sale and carried at fair value in the accompanying Consolidated Balance Sheets. As of December 31, 2015, our investments consisted of money market securities valued using quoted market prices for identical assets in active markets. As of September 30, 2016, we no longer hold any available-for-sale securities. The fair value of our private debt is determined based on fluctuations in current interest rates, the trends in market yields of debt instruments with similar credit ratings, general economic conditions and other quantitative and qualitative factors. The carrying value of our debt approximates its fair value. The fair value of the interest rate cap agreements is determined using the market standard methodology of discounting the future expected variable cash receipts that would occur if interest rates rose above the strike rate of the caps. The analysis reflects the contractual terms of the derivatives, including period to maturity and remaining deferred premium payments, and uses observable market‑based inputs, including interest rates and implied volatilities. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rates. As such, the estimated fair values of these liabilities are classified as Level 2 in the fair value hierarchy. | Note 11. Fair Value Measurements We measure assets and liabilities at fair value based on assumptions market participants would use in pricing an asset or liability in the principal or most advantageous market. Authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value whereby inputs are assigned a hierarchical level. The hierarchical levels are: Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. Level 2: Observable prices, other than quoted prices included in Level 1 inputs for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. Level 3: Unobservable inputs for the asset or liability used to measure fair value to the extent observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. The following table summarizes our financial instruments measured at fair value within the Consolidated Balance Sheets: December 31, 2015 December 31, 2014 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets: Available‑for‑sale securities $ $ — $ — $ $ — $ — Liabilities Long‑term debt — — — — Interest rate cap agreements — — — — Total $ — $ $ $ — $ $ Investments are classified as available‑for‑sale and carried at fair value in the accompanying Consolidated Balance Sheets. Our investments consist of money market securities valued using quoted market prices for identical assets in active markets. The fair value of the interest rate cap agreements is determined using the market standard methodology of discounting the future expected variable cash receipts that would occur if interest rates rose above the strike rate of the caps. The analysis reflects the contractual terms of the derivatives, including period to maturity and remaining deferred premium payments, and uses observable market‑based inputs, including interest rates and implied volatilities. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rates. As such, the estimated fair values of these liabilities are classified as Level 2 in the fair value hierarchy. The fair value of our private debt is determined based on fluctuations in current interest rates, the trends in market yields of debt instruments with similar credit ratings, general economic conditions and other quantitative and qualitative factors. The carrying value of our debt approximates its fair value. |
Income Taxes
Income Taxes | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Income Taxes | ||
Income Taxes | Note 10. Income Taxes The following table presents our income tax provision and effective income tax rate: Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Income tax provision $ $ $ $ Effective income tax rate % % % % Our effective income tax rate from continuing operations was 13.4% and 38.5% for the three months ended September 30, 2016 and September 30, 2015, respectively. During the three months ended September 30, 2016, we recorded a $1,300 tax benefit primarily related to the settlement of an uncertain tax position recorded in a prior period. The impact of this tax benefit relative to the pre-tax income for the three months ended September 30, 2016 resulted in the decrease to the effective tax rate. Our effective income tax rate from continuing operations was 35.2% and 48.8% for the nine months ended September 30, 2016 and September 30, 2015, respectively. The decrease in the effective tax rate is primarily due to a $1,300 tax benefit related to the settlement of an uncertain tax position recorded in a prior period. We are currently under audit with the Internal Revenue Service for the tax year ended December 31, 2014. In addition we are currently under audit for iHealth Technologies, Inc. for the tax years ended December 31, 2012, December 31, 2013 and May 13, 2014. As a result, it is reasonably possible that the audits will conclude or reach the stage where a change in unrecognized income tax benefits may occur within the next twelve months. At that time, we will record any adjustment to income tax expense as required. | Note 12. Income Taxes Total income tax expense (benefit) for the years ended December 31, 2015 and 2014 was as follows: Year ended 2015 2014 Income tax expense (benefit) from continuing operations $ $ Income tax expense from discontinued operations — Total income tax expense (benefit) $ $ For the years ended December 31, 2015 and 2014, income (loss) before income taxes from continuing operations includes the following components: Year ended 2015 2014 U.S. operations $ $ Foreign operations Income (loss) before income taxes $ $ The income tax expense (benefit) that is attributable to income (loss) from continuing operations before income taxes included in our Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2015 and 2014 consisted of the following: Year ended 2015 2014 Current: U.S. federal $ $ State and local Foreign Current income tax expense Deferred U.S. federal State and local Foreign — Deferred income tax benefit Total income tax expense (benefit) $ $ The factors accounting for the variation in our overall effective tax rates from continuing operations compared to U.S. statutory income tax rates for the years ended December 31, 2015 and 2014 were as follows: Year ended 2015 2014 Federal income tax expense (benefit) at the statutory rate $ $ State and local taxes, net of federal benefit Non‑deductible costs (permanent differences) Unrecognized tax positions Other Total income tax expense (benefit) $ $ The effective tax rate from continuing operations for the year ended December 31, 2015 was 52.0%, as compared to 39.4% for the year ended December 31, 2014. The variance is primarily due to changes in uncertain tax positions, an increase in non‑deductible costs, an increase in the valuation allowance and the impact of a state deferred tax remeasurement as a result of new statutory regulations. In general, it is our practice and intention to reinvest the earnings of our non‑branch foreign subsidiaries in those operations on an indefinite basis. Such amounts may become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances. Due to our intent to reinvest such amounts indefinitely, the taxation of these amounts in the U.S. is not expected to occur in the foreseeable future and therefore no deferred tax liability has been recorded. For the years ended December 31, 2015 and 2014, the amounts considered indefinitely reinvested were $5,910 and $4,610, respectively. If the earnings were not considered indefinitely reinvested under current law, the tax on such earnings would be approximately $1,386 and $1,081 for the years ended December 31, 2015 and 2014, respectively. The net deferred taxes below are included on our Consolidated Balance Sheets as a current net deferred tax asset of $32,919 and a long‑term net deferred tax liability of $162,203 at December 31, 2015 and a current net deferred tax asset of $32,319 and a long‑term net deferred tax liability of $175,266 at December 31, 2014. The components of our deferred tax assets and liabilities as of December 31, 2015 and 2014 are as follows: Year ended December 31, 2015 2014 Deferred tax assets: Allowance for doubtful accounts and estimated allowance for refunds and appeals $ $ Accrued compensation Deferred rent Stock compensation Tax credit and net operating loss carryforward Deferred debt issuance costs — Other deductible temporary differences Gross deferred tax assets Less: valuation allowance Total deferred tax assets Deferred tax liabilities: Unbilled receivables and other liabilities Intangibles and goodwill Property and equipment Software development costs Other taxable temporary differences Total gross deferred tax liabilities Net deferred tax liability $ $ We have federal net operating loss carryforwards of $1,397 which will expire in 2029. In addition, we have a foreign net operating loss of $2,316 with an unlimited carryforward. All state net operating losses were utilized in the current year. As of December 31, 2015 and 2014, a valuation allowance of $440 and $51, respectively has been recorded to reflect the portion of the deferred tax asset that is not more likely than not to be realized. The increase in the valuation allowance relates to a cumulative foreign net operating loss for 2015. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth. Due to change of ownership provisions in the Internal Revenue Code, use of a portion of our domestic net operating loss and tax credit carryforwards will be limited in future periods. Further, a portion of the carryforwards may expire before being applied to reduce future income tax liabilities. ASC 740 clarifies the accounting and reporting for uncertainties in income tax law. This interpretation prescribes a comprehensive model for financial statement recognition measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. ASC 740 requires that the tax effects of an uncertain tax position be recognized only if it is “more‑likely‑than‑not” to be sustained by the taxing authority as of the reporting date. A reconciliation of the beginning and ending amount of unrecognized tax benefits at December 31, 2015 and 2014 is as follows: Year ended December 31, 2015 2014 Unrecognized tax benefits — January 1 $ $ Increase for tax positions of acquired entities — Increase for tax positions taken in prior period — Increase for tax positions taken in current period Decrease for tax positions taken in prior period — Decrease for tax positions taken in current period — Decrease related to lapse in statute of limitations Unrecognized tax benefits — December 31 $ $ The majority of the balance of unrecognized tax benefits as of December 31, 2015 and 2014, would affect the effective tax rate if recognized. The total uncertain tax positions expected to reverse in the next 12 months is approximately $194 and $603 as of December 31, 2015 and 2014, respectively. The change in uncertain tax positions is primarily the result of the completion of a federal tax examination in the fourth quarter of 2015. The total penalty and interest incurred, relating to uncertain tax positions, for years ended December 31, 2015 and 2014 was $920 and $583, respectively. We are subject to U.S. federal income tax examinations for tax years ended subsequent to December 31, 2012 and income tax examinations for state, local, and foreign jurisdictions for tax years ended subsequent to December 31, 2011. We are currently not under examination by any U.S. federal, state and local or foreign jurisdiction. Should an examination arise, we do not anticipate any adjustments that will result in a material adverse effect on our financial condition, results of operations, or cash flows. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Stockholders' Equity | ||
Stockholders' Equity | Note 11. Stockholders’ Equity Issuance of Common Stock On May 13, 2016 our Certificate of Incorporation was amended and the number of shares of common stock authorized to be issued by the Company was increased from 122,000,000 to 600,000,000. On May 25, 2016 we consummated our IPO in which we issued and sold a total of 12,936,038 shares of common stock, including a portion of the underwriter overallotment, at a public offering price of $19.00 per share. We received net proceeds of approximately $226,963 after deducting underwriting discounts and commissions and other offering expenses of approximately $18,822. A summary of the current rights and preferences of holders of our common stock are as follows: Voting Common stockholders are entitled to one vote per share of common stock held on all matters on which such common stockholder is entitled to vote. Dividends Common stockholders are eligible to receive dividends on common stock held when funds are available and as approved by the Board of Directors. The Restated Credit Agreement contains negative covenants that limit our ability to pay dividends. Liquidation Rights In the event of liquidation or dissolution, common stockholders are entitled to receive all assets available for distribution to stockholders. Registration Rights The Second Amended and Restated Stockholders Agreement contains (i) demand registration rights for Advent, subject to a cap of two requests in any 12 month period; (ii) piggy-back registration rights for any stockholder holding at least $500,000 worth of shares (each, a “Holder”), subject to a pro rata reduction if the total amount of shares requested to be included exceeds the amount of securities which in the opinion of the underwriters can be sold; and (iii) shelf registration rights for Holders, subject to a required anticipated aggregate offering price, net of selling expenses, of $5.0 million, subject to a cap of two requests for shelf registrations, for all Holders in the aggregate, in any 12 month period. Holders that are capable of selling all of their registrable securities pursuant to Rule 144 under the Securities Act in a single transaction without timing or volume limitations will not have piggy-back registration rights. We will be responsible for fees and expenses in connection with the registration rights, other than underwriters’ discounts and brokers’ commissions, if any, relating to any such registration and offering. Common Stock Split On May 13, 2016 we effected a 6.1-for-1 stock split of all outstanding shares of our common stock. All share, option and per share information presented in the accompanying consolidated financial statements and notes thereto have been adjusted to reflect the stock split on a retroactive basis for all periods presented and all share information is rounded up to the nearest whole share after reflecting the stock split. Common Stock Dividends On May 25, 2016 we paid a special cash dividend of $150,000, or $1.94 per share of common stock outstanding prior to the IPO, to holders of record of our common stock on the dividend record date. In connection with the special cash dividend we lowered the exercise price of then outstanding stock options by $1.94 per share in order to preserve the intrinsic value of the options giving effect to the special cash dividend. | Note 13. Stockholders’ Equity Issuance of Common Stock In May 2014, a total of 32,790,321 shares were issued for a total fair value of $435,144 in connection with the Connolly iHealth Merger. Of this amount, $365,187 was received in cash and $69,957 was issued to certain members of the former iHT management as they either rolled over a portion of their former equity interests in iHT or received equity in lieu of incentive compensation that was owed to them as of the date of the merger. A summary of the current rights and preferences of holders of our common stock are as follows: Voting Common stockholders are entitled to one vote per share of common stock held on all matters on which such common stockholder is entitled to vote. Dividends Common stockholders are eligible to receive dividends on common stock held when funds are available and as approved by the Board of Directors. Liquidation Rights In the event of liquidation or dissolution, common stockholders are entitled to receive all assets available for distribution to stockholders. |
Earnings per Share
Earnings per Share | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Earnings per Share | ||
Earnings per Share | Note 12. Earnings per Share Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period. For all periods presented, potentially dilutive outstanding shares consisted solely of our common stock options. Our potential common shares consist of the incremental common shares issuable upon the exercise of the options. The dilutive effect of outstanding stock options is reflected in diluted earnings per share by application of the treasury stock method. For all periods presented, all outstanding common stock consisted of a single‑class. Basic and diluted earnings per share are computed as follows: Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Net income available to common stockholders $ $ $ $ Weighted average outstanding shares of common stock Dilutive effect of stock-based awards — Adjusted weighted average outstanding and assumed conversions for diluted EPS Earnings (loss) per share from continuing operations: Basic $ $ $ $ Diluted Earnings per share from discontinued operations: Basic $ — $ — $ — $ Diluted — — — Total earnings (loss) per share: Basic $ $ $ $ Diluted Employee stock options and restricted stock units (“RSUs”) that were excluded from the calculation of diluted earnings per share because their effect is anti‑dilutive for the periods presented were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Employee stock-based awards The criteria associated with all of our outstanding performance-based stock options as defined in the terms of the applicable award agreements, were satisfied as of September 30, 2016 and, as a result, 2,746,592 performance-based stock options were included in the calculation of diluted earnings per share for the three and nine months ended September 30, 2016. Performance-based stock options of 2,234,217 were not included in the calculation of diluted earnings per share for the three and nine months ended September 30, 2015 as the vesting conditions had not yet been satisfied. | Note 14. Earnings per Share Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period. For all periods presented, potentially dilutive outstanding shares consisted solely of our common stock options. Our potential common shares consist of the incremental common shares issuable upon the exercise of the options. The dilutive effect of outstanding stock options is reflected in diluted earnings per share by application of the treasury stock method. For all periods presented, all outstanding common stock consisted of a single‑class. Basic and diluted earnings (loss) per share and adjusted earnings per share are computed as follows: Year ended December 31, 2015 2014 Net income (loss) available to common stockholders $ $ Weighted average outstanding shares of common stock Dilutive effect of stock‑based awards — Adjusted weighted average outstanding and assumed conversions for diluted EPS Earnings (loss) per share from continuing operations: Basic $ $ Diluted Earnings per share from discontinued operations: Basic $ $ — Diluted — Total earnings (loss) per share: Basic $ $ Diluted Employee stock options that were excluded from the calculation of diluted earnings (loss) per share because their effect is anti‑dilutive for the periods presented were as follows: Year ended December 31, 2015 2014 Employee stock options Performance‑based stock options of 2,794,910 and 2,487,275 as of December 31, 2015 and 2014, respectively, have not been included as the vesting conditions as described in Note 15 have not been satisfied as of the respective period end. Unaudited Pro Forma Earnings Per Share We have declared, and, prior to the consummation of our initial public offering, we intend to pay the Special Cash Dividend of $150.0 million in the aggregate, or $1.94 per share of common stock outstanding prior to the offering, to holders of record of our common stock on the dividend record date. Staff Accounting Bulletin Topic 1.B.3 requires that pro forma basic and diluted earnings per share be presented giving effect to the number of shares whose proceeds would be used to replace capital when dividends exceed current year earnings. The pro forma as adjusted earnings per share and pro forma as adjusted equivalent shares which give effect to the deemed issuance of the number of shares that would be required to generate net proceeds sufficient to make the Special Cash Dividend payment of $150.0 million in the aggregate to our pre‑IPO stockholders. The number of incremental shares that would be required to be issued to pay the dividend is based on the initial public offering price of $19.00 per share, after deducting the estimated underwriting discounts and estimated offering expenses payable by us, resulting in net proceeds of $17.45 per share. The following is a computation of pro forma basic and diluted earnings per share for the year ended December 31, 2015: Weighted average outstanding shares of common stock Additional pro forma shares required to be issued in offering necessary to pay dividend Pro forma weighted average shares of common stock — basic Adjusted weighted average outstanding and assumed conversions for diluted EPS Additional pro forma shares required to be issued in offering necessary to pay dividend Pro forma weighted average shares of common stock — diluted Pro forma earnings per share from continuing operations: Basic $ Diluted Pro forma earnings per share from discontinued operations: Basic $ Diluted Pro forma earnings per share: Basic $ Diluted |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Stock-Based Compensation | ||
Stock-Based Compensation | Note 13. Stock‑Based Compensation Equity Incentive Plans In 2012, we adopted an equity incentive plan (“2012 Plan”) pursuant to which our Board of Directors (or committee as designated by the Board of Directors) may grant options to purchase shares of our stock, restricted stock and certain other equity awards to directors, officers and key employees. We only granted stock options that can be settled in shares of our common stock under the 2012 Plan. The 2012 Plan had a total of 7,243,330 shares authorized for issuance. Upon completion of the IPO in May 2016, issuances under the 2012 Plan were suspended. At that time we adopted the 2016 Equity Incentive Plan (“2016 Plan” and collectively with the 2012 Plan, the “Plans”), pursuant to which our Board of Directors (or a committee or sub-committee designated by the Board of Directors) may grant options to purchase shares of our stock, restricted stock and certain other equity awards to directors, officers and key employees. The 2016 Plan was established with the authorization for grants of up to 5,490,000 shares of authorized but unissued shares of common stock. No stock options were granted under the 2012 Plan after December 31, 2015. Awards granted under the 2012 Plan will remain outstanding until the earlier of exercise, forfeiture, cancellation or expiration. To the extent outstanding options under the 2012 Plan are forfeited, cancelled or terminated, the common stock subject to such options will be available for future issuance under the 2016 Plan. As of September 30, 2016, there are no shares available for future issuance under the 2012 Plan as the 776,839 shares that were available were discontinued upon adoption of the 2016 Plan. As of September 30, 2016 the total number of shares available for future issuance under the Plans is 5,248,202. Stock Options Under the terms of the 2016 Plan, we may issue options to purchase shares of our common stock at a price equal to 100% of the market price on the date of grant. Issuances under the 2012 Plan, prior to its suspension, were under terms similar to issuances under the 2016 Plan. Stock options granted are subject to either time of service (service-based awards) or performance (performance-based awards) criteria. Service-based awards typically vest ratably over a five year service period from the date of grant under the 2012 Plan and typically vest ratably over a four year service period from the date of grant under the 2016 Plan. In the event of a change in control, any outstanding, unvested service-based awards will vest immediately. Performance-based awards vest in accordance with the specific performance criteria espoused in the executed award agreements. The term of any stock option shall not exceed ten years from the date of grant. However, an incentive stock option granted to an employee who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of our stock may not have a term exceeding five years from the date of grant. The following is a summary of stock option activity under the Plans: Nine Months Ended September 30, 2016 2015 Weighted Weighted average average exercise exercise Shares price Shares price Outstanding at beginning of period $ $ Granted Exercised Forfeited Expired — — Outstanding at end of period $ $ Average Weighted Weighted Remaining Service- average Performance- average Contractual Aggregate based exercise based exercise Term Intrinsic Shares price Shares price (in years) Value Stock options outstanding as of September 30, 2016 $ $ $ Stock options vested and exercisable as of September 30, 2016 $ $ $ The criteria associated with 2,746,592 of our outstanding performance-based stock options as defined in the terms of the award agreements, was satisfied as of September 30, 2016 and therefore these stock options all became vested and exercisable. Aggregate intrinsic value represents the difference between our estimated fair value of common stock and the exercise price of outstanding in‑the‑money options. The fair value per share of common stock was $33.53 as of September 30, 2016 based upon the closing price of our common stock on the NYSE. The total intrinsic value of options exercised for the three and nine months ended September 30, 2016 and 2015 was insignificant. The total fair value of stock options vested was $19,153 and $1,831 during the three months ended September 30, 2016 and 2015, respectively, and $22,159 and $2,014 during the nine months ended September 30, 2016 and 2015, respectively. Restricted Stock Units Restricted stock units provide participants the right to receive a payment based on the value of a share of common stock. RSUs may be subject to vesting requirements, restrictions and conditions to payment. Such requirements may be based on the continued service for a specified time period or on the attainment of specified performance goals as specified in the award agreements. RSUs are payable in cash or in shares or a combination of both. Under the terms of the Plans, RSUs have a grant date fair value equal to the closing price of our stock on the grant date. The units typically vest ratably over a four year service period. We began issuing RSUs upon adoption of the 2016 Plan; no RSUs were issued under the 2012 Plan. The following is a summary of RSU activity under the 2016 Plan: Nine Months Ended September 30, 2016 Weighted average grant date Shares fair value Nonvested at beginning of period — $ — Granted Vested — — Forfeited — — Nonvested at end of period $ Stock Compensation Expense The fair value of each stock option award is estimated on the date of grant using a Black-Scholes-Merton option pricing model. The expected term of the option represents the period the stock-based awards are expected to be outstanding. We use the simplified method under the provisions of ASC 718, Stock Based Compensation for estimating the expected term of the options. Since our shares were not publicly traded until May 2016 and were rarely traded privately, at the time of each grant, there was insufficient volatility data available. Accordingly, we calculate expected volatility using comparable peer companies with publicly traded shares over a term similar to the expected term of the options issued. We do not intend to pay dividends on our common shares, therefore, the dividend yield percentage is zero. The risk-free interest rate is based on the U.S. Treasury constant maturity interest rate whose term is consistent with the expected life of our stock options. We used the following weighted average assumptions to estimate the fair value of stock options granted for the periods presented as follows: Nine Months Ended September 30, 2016 2015 Expected term (years) Expected volatility % % Expected dividend yield % % Weighted average risk-free interest rate % % Weighted average grant date fair value $ $ We recorded total stock‑based compensation expense of $17,042 and $405 for the three months ended September 30, 2016 and 2015, respectively, and $21,544 and $1,624 for the nine months ended September 30, 2016 and 2015, respectively. Stock-based compensation expense during the three and nine months ended September 30, 2016 includes $15,898 related to the vesting of substantially all outstanding performance based stock options. Stock-based compensation expense during the nine months ended September 30, 2016 also includes $2,257 related to the accelerated vesting of certain stock options as the result of the IPO. We had not previously adjusted stock-based compensation expense for estimated forfeitures as there has been insignificant forfeiture activity to date. Based on the adoption of ASU 2016-09, we will account for forfeitures as they occur. As of September 30, 2016, we had total unrecognized compensation cost related to 1,857,783 unvested service‑based stock options and RSUs under the Plans of $15,081 which we expect to recognize over the next 3.2 years. | Note 15. Stock‑Based Compensation Equity Incentive Plan In 2012, we adopted an equity incentive plan (the “Plan”) pursuant to which our Board of Directors (or committee as designated by the Board of Directors) may grant options to purchase shares of our stock, restricted stock and certain other equity awards to directors, officers and key employees. To date, we have only granted stock options that can be settled in shares of our common stock. The Plan was initially established with the authorization for grants to purchase up to 4,392,000 shares of authorized but unissued common stock. In May 2014, in connection with the Connolly iHealth Merger, the number of shares authorized under the Plan increased by 2,851,329 shares bringing the total number of shares authorized under the Plan for stock option grants to 7,243,329. As of December 31, 2015, the total number of shares available under the Plan is 762,421. The term of any stock option shall not exceed ten years from the date of grant. However, an incentive stock option granted to an employee who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of our stock may not have a term exceeding five years from the date of grant. Stock options granted are subject to either time of service (service‑based awards) or performance (performance‑based awards) criteria. Service‑based awards vest ratably over a five year service period from the grant date. In the event of a change in control, any outstanding, unvested service‑based awards will vest immediately. Performance‑based awards vest in accordance with the specific performance criteria espoused in the executed award agreements. At December 31, 2015, there are 458,182 unvested performance‑based awards outstanding, whose vesting terms are contingent upon the amount of cash proceeds received in an initial public offering. Stock‑based Compensation Expense The fair value of each stock option award is estimated on the date of grant using a Black‑Scholes‑Merton option pricing model. The expected term of the option represents the period the stock‑based awards are expected to be outstanding. We use the simplified method under the provisions of ASC 718, Stock Based Compensation for estimating the expected term of the options. Since our shares have not been publicly traded and are rarely traded privately, there is insufficient volatility data available. Accordingly, we calculate expected volatility using comparable peer companies with publicly traded shares over a term similar to the expected term of the options issued. We do not intend to pay dividends on our common shares, therefore, the dividend yield percentage is zero. The risk‑free interest rate is based on the U.S. Treasury constant maturity interest rate whose term is consistent with the expected life of our stock options. We used the following weighted average assumptions to estimate the fair value of stock options granted for the periods presented as follows: Year ended 2015 2014 Expected term (years) Expected volatility % % Expected dividend yield % % Weighted average risk‑free interest rate % % Weighted average grant date fair value $ $ We recorded stock‑based compensation expense of $3,399 and $2,492 for the years ended December 31, 2015 and 2014, respectively. We do not currently adjust compensation expense for forfeitures as there has been insignificant forfeiture activity to date. As of December 31, 2015, we had total unrecognized compensation cost related to 2,540,534 unvested service‑based awards under the Plan of $15,088 which we expect to recognize over the next 3.9 years. As the criteria associated with the performance‑based awards are based on a future event as defined in the terms of the award agreements, including a change in control or initial public offering, which as of December 31, 2015 has not yet occurred, no compensation expense has been recorded for these stock options. The estimated unrecognized compensation associated with the 2,794,910 outstanding stock options subject to performance criteria was approximately $16,185 at December 31, 2015. Stock Option Activity The following is a summary of stock option activity under the Plan: Year Ended December 31, 2015 2014 Summary stock option activity Shares Weighted Shares Weighted Outstanding at beginning of year $ $ Granted Exercised Forfeited Expired Outstanding at end of period $ $ Service‑ Weighted Performance‑ Weighted Weighted‑ Aggregate Stock options outstanding as of December 31, 2015 $ $ $ Stock options vested and exercisable as of December 31, 2015 $ — $ — $ Aggregate intrinsic value represents the difference between our estimated fair value of common stock and the exercise price of outstanding in‑the‑money options. The estimated fair value of common stock was $15.73 as of December 31, 2015. The total intrinsic value of options exercised for the year ended December 31, 2015 and 2014 was insignificant. The total fair value of stock options vested was $2,450 and $2,000 during the years ended December 31, 2015 and 2014, respectively. |
Segment Information
Segment Information | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Segment Information | ||
Segment Information | Note 14. Segment Information Operating segments are components of an enterprise for which separate financial information is available that is evaluated regularly by our Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing financial performance. We conduct our business through two reportable business segments: Healthcare and Global Retail and Other. The Healthcare segment provides claims accuracy solutions to health insurance payers and payer‑related entities. All of our healthcare service offerings focus on generating economic benefits for our clients by identifying errors, reducing improper payments and improving efficiency of business process related to healthcare industry payment networks. The Global Retail and Other segment primarily provides retrospective claims accuracy solutions to large and mid‑size retailers. Our services primarily result in cost recoveries based on the audit of our clients’ supply chain information as well as improved efficiency and effectiveness of our clients’ payment networks. We evaluate the performance of each segment based on segment net revenue and segment operating income. Operating income is calculated as net revenue less operating expenses and is not affected by other expense (income) or by income taxes. Indirect costs are generally allocated to the segments based on the segments’ proportionate share of revenue and expenses directly related to the operation of the segment. We do not allocate interest expense, other non‑operating (income) expense or the provision for income taxes, since these items are not considered in evaluating the segment’s overall operating performance. Our CODM does not receive or utilize asset information to evaluate performance of operating segments. Accordingly, asset‑related information has not been presented. Our operating segment results for the periods presented were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 (unaudited) (unaudited) Net Revenue Healthcare $ $ $ $ Global Retail and Other Consolidated net revenue $ $ $ $ Operating Income Healthcare $ $ $ $ Global Retail and Other Consolidated operating income $ $ $ $ Operating segment net revenue by product type for the periods presented was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2016 % 2015 % 2016 % 2015 % (unaudited) (unaudited) Healthcare Retrospective claims accuracy $ $ $ $ Prospective claims accuracy Transaction services Total Healthcare Retail Retrospective claims accuracy Other Total Global Retail and Other Consolidated net revenue $ $ $ $ | Note 17. Segment and Geographic Information Segment Information Operating segments are components of an enterprise for which separate financial information is available that is evaluated regularly by our Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing financial performance. We conduct our business through two reportable business segments: Healthcare and Global Retail and Other. The Healthcare segment provides claims accuracy solutions to health insurance payers and payer‑related entities. All of our healthcare service offerings focus on generating economic benefits for our clients by identifying errors, reducing improper payments and improving efficiency of business process related to healthcare industry payment networks. The Global Retail and Other segment primarily provides retrospective claims accuracy solutions to large and mid‑size retailers. Our services primarily result in cost recoveries based on the audit of our clients’ supply chain information as well as improved efficiency and effectiveness of our clients’ payment networks. We evaluate the performance of each segment based on segment net revenue and segment operating income. Operating income is calculated as net revenue less operating expenses and is not affected by other income (expense) or by income taxes. Indirect costs are generally allocated to the segments based on the segments’ proportionate share of revenue and expenses directly related to the operation of the segment. We do not allocate interest expense, other non‑operating (income) expense or the provision for income taxes, since these items are not considered in evaluating the segment’s overall operating performance. Our CODM does not receive or utilize asset information to evaluate performance of operating segments. Accordingly, asset‑related information has not been presented. Our operating segment results for the periods presented were as follows: Year ended 2015 2014 Net Revenue Healthcare $ $ Global Retail and Other Consolidated net revenue $ $ Operating Income Healthcare $ $ Global Retail and Other Consolidated operating income $ $ Operating segment net revenue by product type for the periods presented was as follows: Year ended December 31, 2015 2014 Retrospective claims accuracy $ % $ % Prospective claims accuracy % % Transaction services % % Total Healthcare % % Retrospective claims accuracy % % Other % % Total Global Retail and Other % % Consolidated net revenue $ % $ % Geographic Information Geographic net revenue and long‑lived assets are attributed to the geographic regions based on the geographic location of each of our subsidiaries/locations. Our operations are primarily within the continental United States. We also operate in Canada and the United Kingdom. Net revenue generated in the United States accounted for approximately 98% and 95% of total net revenue for the years ended December 31, 2015 and 2014, respectively. Remaining net revenue was generated in the rest of the world. Long‑lived assets are primarily based in the United States with over 99% of total consolidated long‑lived assets. Less than 1% of total consolidated long‑lived assets are foreign. |
Employee Benefit Plans
Employee Benefit Plans | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Employee Benefit Plans | ||
Employee Benefit Plans | Note 15. Employee Benefit Plans Contributions expensed and included in compensation on our Consolidated Statements of Comprehensive Income for employee benefit plans are detailed below: Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 401(k) Plan (a) $ $ $ $ Profit Share Plan (b) — Provident Plan (c) Total $ $ $ $ (a) We sponsor defined contribution retirement plans in accordance with Section 401(k) of the Internal Revenue Code, which cover substantially all U.S. employees, subject to certain minimum age and service requirements. The plans provide for a contribution based on a percentage of eligible employee contributions. (b) We had a nonqualified profit sharing incentive compensation plan for certain eligible employees. Contributions were made within 90 days following the last day of the plan to a brokerage account in an amount determined at our discretion for employees who had completed 1,000 hours of service and were employed at the time of the contribution. This plan was discontinued after the 2014 plan year, with the final payout occurring in June 2016 and therefore we did not have a liability under the plan as of September 30, 2016. Our liability under the plan was $893 at December 31, 2015, which is included in accrued compensation costs in the accompanying Consolidated Balance Sheets. (c) Eligible employees of our subsidiary located in India are covered by the Provident Fund, contributions which are based on a percentage of eligible employees’ salaries, and the Payment of Gratuity Act, which provides for benefits to be paid to eligible employees upon termination of employment (collectively, the “India Plan”). Benefits under the Plan are administered by the Indian Government. As of September 30, 2016 and December 31, 2015 we had an accrued benefit obligation relating to the India Plan of $714 and $535, respectively. | Note 19. Employee Benefit Plans Contributions expensed and included in compensation on our Consolidated Statements of Comprehensive Income (Loss) for employee benefit plans are detailed below: Year ended 2015 2014 401(k) Plan (a) $ $ Profit Share Plan (b) Provident Plan (c) Total $ $ (a) We sponsor defined contribution retirement plans in accordance with Section 401(k) of the Internal Revenue Code, which cover substantially all U.S. employees, subject to certain minimum age and service requirements. The plans provide for a contribution based on a percentage of eligible employee contributions. (b) In connection with the Connolly iHealth Merger, we inherited a nonqualified profit sharing incentive compensation plan for certain eligible employees. Contributions are made within 90 days following the last day of the plan to a brokerage account in an amount determined at our discretion for employees who have completed 1,000 hours of service and are employed at the time of the contribution. Our liability under the plan totaled $893 and $1,171 at December 31, 2015 and 2014, respectively, which is included in accrued compensation costs in the accompanying Consolidated Balance Sheets. (c) Eligible employees of our subsidiaries located in India, acquired as part of the Connolly iHealth Merger, are covered by the Provident Fund, contributions which are based on a percentage of eligible employees’ salaries, and the Payment of Gratuity Act, which provides for benefits to be paid to eligible employees upon termination of employment (collectively, the “India Plans”). Benefits under the Plan are administered by the Indian Government. As of December 31, 2015 and 2014 we had an accrued benefit obligation relating to the India Plans of $535 and $441, respectively. |
Discontinued Operations
Discontinued Operations | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Discontinued Operations | ||
Discontinued Operations | Note 16. Discontinued Operations In February 2015, we received payment on a $900 note receivable related to a business that was disposed of in 2012. Since the date of sale, we had elected to fully reserve the note receivable as the collectability was determined to be uncertain. This gain from the collection of the note receivable, net of tax, is reflected as a gain on discontinued operations on our Consolidated Statements of Comprehensive Income. The estimated impact to diluted EPS as a result of this gain on discontinued operations was $0.01 per diluted share for the nine months ended September 30, 2015. | Note 20. Discontinued Operations In February 2015, we received payment on a $900 note receivable related to a business that was disposed of in 2012. Since the date of sale, we had elected to fully reserve the note receivable as the collectability was determined to be uncertain. This gain from the collection of the note receivable, net of tax, is reflected as a gain on discontinued operations on our Consolidated Statements of Comprehensive Income (Loss). The estimated impact to diluted EPS as a result of this gain on discontinued operations is $0.01 per diluted share for the year ended December 31, 2015. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Summary of Significant Accounting Policies | ||
Description of Business | Basis of Presentation Our accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). All significant intercompany balances and transactions have been eliminated in consolidation. These consolidated financial statements are unaudited and have been prepared by us following the rules and regulations of the U.S. Securities and Exchange Commission. In our opinion they reflect all adjustments, including normal recurring items, that are necessary to present fairly the results of interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations; however, we believe that the disclosures are adequate to make the information presented not misleading. Operating results for the periods presented herein are not necessarily indicative of the results that may be expected for other interim periods or the entire fiscal year. Certain prior year amounts have been reclassified to conform to the current year presentation. | Basis of Presentation The accompanying consolidated financial statements include our accounts and our wholly‑owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation. |
Revenue Recognition, Unbilled Receivables and Estimated Liability for Refunds and Appeals | Revenue Recognition, Unbilled Receivables and Estimated Liability for Refunds and Appeals We provide services under contracts that contain various fee structures, including performance fee‑based contracts and fixed fee arrangements. Revenue is recognized when a contract exists, services have been provided to the client, the fee is fixed and determinable and collectability is reasonably assured. We recognize revenue on performance fee-based contracts based upon the specific terms of the underlying contract. The contract terms generally specify: (a) time periods covered by the work to be performed; (b) nature and extent of services we are to provide; (c) the client’s duties in assisting and cooperating with us; and (d) fees payable to us. Our fees are most often expressed as a percentage of our findings. Generally, our services are rendered when our clients realize the economic benefits from our services. Our clients realize economic benefits when they take credits against their existing accounts payable based on when we identify cost savings, when they receive refund checks based on overpayments, or when they acknowledge payment reductions based on cost savings. We derive a relatively small portion of revenue on contracts with fixed fee arrangements. We recognize revenue on these contracts ratably over the contract term and once all of the above criteria have been satisfied. Historically, there has been a certain amount of revenue with respect to which, even though we had met the requirements of our revenue recognition policy, the claim is ultimately rejected. In such cases, our clients may request a refund or offset if their providers or vendors ultimately reject the payment inaccuracies we find or if our clients determine not to pursue reimbursement from their providers or vendors even though we may have collected fees. We record any such refund as a reduction of revenue. We record an estimate for refund liabilities at any given time based on actual historical refund data by client type. We satisfy such refund liabilities either by offsets to accounts receivable or by cash payments to clients. In addition to the refund liabilities, we calculate client specific reserves when we determine an additional reserve may be necessary. The estimated liability for refunds and appeals representing our estimate of claims that may be overturned related to revenue which had already been received was $70,596 and $67,775 at September 30, 2016 and December 31, 2015, respectively. The estimated allowance for refunds and appeals representing our estimate of claims that may be overturned related to amounts in accounts receivable was $31,887 and $33,406 at September 30, 2016 and December 31, 2015, respectively. Under the Medicare Recovery Audit Program, in which we are one of the four Recovery Audit Contractors (“Medicare RAC”) for CMS, healthcare providers have the right to appeal a claim and may pursue additional appeals if the initial appeal is found in favor of CMS. We accrue an estimated liability for appeals based on the amount of fees that are subject to appeals, closures or other adjustments and those which we estimate are probable of being returned to CMS following a successful appeal by the providers. Our estimates are based on our historical experience with the Medicare RAC appeal process. This estimated liability for Medicare RAC appeals is an offset to revenue in our Consolidated Statements of Comprehensive Income. The liability is included in the estimated liability for refunds and appeals on our Consolidated Balance Sheets. See Note 6 for further information regarding the estimated liability for appeals related to the Medicare RAC program. Unbilled receivables represent revenue recognized related to claims for which clients have received economic value that were not invoiced at the balance sheet date. Unbilled receivables were approximately $51,762 and $51,799 as of September 30, 2016 and December 31, 2015, respectively and are included in accounts receivable on our Consolidated Balance Sheets. Certain unbilled receivables arise when a portion of our earned fee is deferred at the time of the initial invoice. At a later date (which can be up to a year after original invoice, and at other times during the year after completion of the audit period based on contractual terms or as agreed with our client), we invoice the unbilled receivable amount. Notwithstanding the deferred due date, our clients acknowledge we have earned this unbilled receivable at the time of the original invoice, but we have agreed to defer billing the client for the related services. Unbilled receivables of this nature were approximately $5,828 and $6,431 as of September 30, 2016 and December 31, 2015, respectively, and are included in accounts receivable on our Consolidated Balance Sheets. We record periodic changes in unbilled receivables and refund liabilities as adjustments to revenue. | Revenue Recognition, Unbilled Receivables and Estimated Liability for Refunds and Appeals We provide services under contracts that contain various fee structures, including performance fee‑based contracts and fixed fee arrangements. Revenue is recognized when a contract exists, services have been provided to the client, the fee is fixed and determinable and collectability is reasonably assured. We recognize revenue on performance fee based contracts based upon the specific terms of the underlying contract. The contract terms generally specify: (a) time periods covered by the work to be performed; (b) nature and extent of services we are to provide; (c) the client’s duties in assisting and cooperating with us; and (d) fees payable to us. Our fees are most often expressed as a percentage of our findings. Generally, our services are rendered when our clients realize the economic benefits from our services. Our clients realize economic benefits when they take credits against their existing accounts payable based on when we identify cost savings, when they receive refund checks based on overpayments, or when they acknowledge payment reductions based on cost savings. We derive a relatively small portion of revenue on contracts with fixed‑fee arrangements. We recognize revenue on these contracts ratably over the contract term and once all of the above criteria have been satisfied. Historically, there has been a certain amount of revenue with respect to which, even though we had met the requirements of our revenue recognition policy, the claim is ultimately rejected. In such cases, our clients may request a refund or offset if their providers or vendors ultimately reject the payment inaccuracies we find or if our clients determine not to pursue reimbursement from their providers or vendors even though we may have collected fees. We record any such refund as a reduction of revenue. We record an estimate for refund liabilities at any given time based on actual historical refund data by client type. We satisfy such refund liabilities either by offsets to accounts receivable or by cash payments to clients. In addition to the refund liabilities, we calculate client specific reserves when we determine an additional reserve may be necessary. The estimated liability for refunds and appeals representing our estimate of claims that may be overturned related to revenue which had already been received was $67,775 and $74,941 at December 31, 2015 and 2014, respectively. The estimated allowance for refunds and appeals representing our estimate of claims that may be overturned related to amounts in accounts receivable was $33,406 and $23,216 at December 31, 2015 and 2014, respectively. Under the Medicare Recovery Program, in which we are one of the four Recovery Audit Contractors (“Medicare RAC”) with CMS, healthcare providers have the right to appeal a claim and may pursue additional appeals if the initial appeal is found in favor of CMS. We accrue an estimated liability for appeals based on the amount of fees that are subject to appeals, closures or other adjustments and those which we estimate are probable of being returned to CMS following a successful appeal by the providers. Our estimates are based on our historical experience with the Medicare RAC appeal process. This estimated liability for Medicare RAC appeals is an offset to revenue in our Consolidated Statements of Comprehensive Income (Loss). The liability is included in the estimated liability for refunds and appeals on our Consolidated Balance Sheets. See Note 8 for further information regarding the estimated liability for appeals related to the Medicare RAC program. Unbilled receivables represent revenue recognized related to claims for which clients have received economic value that were not invoiced at the balance sheet date. Unbilled receivables were approximately $51,799 and $42,433 as of December 31, 2015 and 2014, respectively and are included in accounts receivable on our Consolidated Balance Sheets. Certain unbilled receivables arise when a portion of our earned fee is deferred at the time of the initial invoice. At a later date (which can be up to a year after original invoice, and at other times during the year after completion of the audit period based on contractual terms or as agreed with our client), we invoice the unbilled receivable amount. Notwithstanding the deferred due date, our clients acknowledge we have earned this unbilled receivable at the time of the original invoice, but we have agreed to defer billing the client for the related services. Unbilled receivables of this nature were approximately $6,431 and $7,519 as of December 31, 2015 and 2014, respectively, and are included in accounts receivable on our Consolidated Balance Sheets. We record periodic changes in unbilled receivables and refund liabilities as adjustments to revenue. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”) which addresses eight specific cash flow issues in order to reduce diversity in practice. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted. We are evaluating this guidance and its impact on our consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”) which simplifies several aspects of the accounting for share based compensation. ASU 2016-09 changes several aspects of the accounting for share based payment award transactions, including 1) accounting for income taxes, 2) classification of excess tax benefits on the statement of cash flows, 3) forfeitures, 4) minimum statutory tax withholding requirements and 5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes. We early adopted ASU 2016-09 on a prospective basis during the third quarter of 2016, which did not result in any significant changes to our current or prior period consolidated financial statements. In conjunction with adopting ASU 2016-09, we made an accounting policy election to account for forfeitures as they occur. In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”) which changes the accounting recognition, measurement and disclosure for leases in order to increase transparency. ASU 2016-02 requires lease assets and liabilities to be recognized on the balance sheet and key information about leasing arrangements to be disclosed. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We are evaluating this new guidance and its impact on our consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”) which changes the current financial instruments model primarily impacting the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. We are evaluating this new guidance and do not believe it will have a material impact on our consolidated financial statements and related disclosures. In November 2015, the FASB issued ASU 2015‑17, Balance Sheet Classification of Deferred Taxes , (“ASU 2015‑17”) which requires entities with a classified balance sheet to present all deferred tax assets and liabilities as noncurrent. The guidance is effective for public companies with annual and interim periods beginning after December 15, 2016. Early adoption is permitted. We are evaluating this new guidance and its impact on our consolidated balance sheets and related disclosures and expect the adoption of this ASU will reduce our total current assets and net working capital. In April 2015, the FASB issued ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (“ASU 2015-05”) which established guidance regarding the accounting for software licenses. ASU 2015-05 is effective for annual reporting periods, including interim periods, beginning after December 15, 2015. We prospectively adopted the provisions of ASU 2015-05 as of January 1, 2016 and have not yet had any material contracts that were impacted by this new guidance. In April 2015, the FASB issued ASU 2015‑03, Simplifying the Presentation of Debt and Issuance Costs (“ASU 2015‑03”) which establishes guidance to simplify the presentation of debt issuance costs by requiring debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that liability, consistent with debt discounts. Prior to the issuance of ASU 2015-03, debt issuance costs were required to be presented as an asset in the balance sheet. The guidance is effective for annual reporting periods beginning after December 15, 2015, and interim periods within that reporting period. We adopted the provisions of ASU 2015-03 as of January 1, 2016 and prior period amounts have been reclassified to conform to the current period presentation. As of December 31, 2015, $20,975 of debt issuance costs were reclassified in the consolidated balance sheet from debt issuance costs, net to long-term debt. The adoption of ASU 2015-03 did not materially impact our consolidated financial position, results of operations or cash flows. In May 2014, the FASB issued ASU No. 2014‑09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014‑09”) which supersedes existing revenue recognition guidance and provides clarification of principles for recognizing revenue from contracts with customers. The guidance is effective for public companies with annual periods beginning after December 15, 2017 and interim periods within that reporting period. We are evaluating this new guidance, the method of adoption we will take and the impact, if any, on our consolidated financial statements and related disclosures. | Recently Issued Accounting Standards In February 2016, the FASB issued ASU 2016‑02, Leases (“ASU 2016‑02”) which changes the accounting recognition, measurement and disclosure for leases in order to increase transparency. ASU 2016‑02 requires lease assets and liabilities to be recognized on the balance sheet and key information about leasing arrangements to be disclosed. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We are evaluating this new guidance and its impact on our consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU 2016‑01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016‑01”) which changes the current financial instruments model primarily impacting the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. We are evaluating this new guidance and do not believe it will have a material impact on our consolidated financial statements and related disclosures. In November 2015, the FASB issued ASU 2015‑17, Balance Sheet Classification of Deferred Taxes , (“ASU 2015‑17”) which requires entities with a classified balance sheet to present all deferred tax assets and liabilities as noncurrent. The guidance is effective for public companies with annual and interim periods beginning after December 15, 2016. Early adoption is permitted. We are evaluating this new guidance and its impact on our consolidated balance sheets and related disclosures and expect the adoption of this ASU will reduce our total current assets and net working capital. In September 2015, the FASB issued ASU 2015‑16, Simplifying the Accounting for Measurement‑Period Adjustments (“ASU 2015‑16”) which requires an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. We early adopted this guidance in 2015 and it did not have a material impact to our consolidated financial statements and related disclosures. In April 2015, the FASB issued ASU 2015‑05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (“ASU 2015‑05”) which established guidance regarding the accounting for software licenses. ASU 2015‑05 is effective for annual reporting periods, including interim periods, beginning after December 15, 2015. We are evaluating this new guidance and do not believe it will have a material impact on our consolidated financial statements and related disclosures. In April 2015, the FASB issued ASU 2015‑03, Simplifying the Presentation of Debt and Issuance Costs (“ASU 2015‑03”) which establishes guidance to simplify the presentation of debt issuance costs by requiring debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that liability, consistent with debt discounts. The guidance is effective for annual reporting periods beginning after December 15, 2015, and interim periods within that reporting period. Early adoption is permitted. We are evaluating this new guidance and do not believe it will have a material impact on our consolidated financial statements and related disclosures. In June 2014, FASB issued ASU 2014‑12, Accounting for Share‑Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (“ASU 2014‑12”). ASU 2014‑12 brings consistency to the accounting for share‑based payment awards that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards. ASU 2014‑12 is effective for annual reporting periods beginning after December 15, 2015, and interim periods within that reporting period. Early adoption is permitted. We are evaluating this new guidance and do not believe it will have a material impact on our consolidated financial statement disclosures. In May 2014, the FASB issued ASU No. 2014‑09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014‑09”) which supersedes existing revenue recognition guidance and provides clarification of principles for recognizing revenue from contracts with customers. ASU 2014‑09 is effective for annual periods beginning after December 15, 2017 and interim periods within that reporting period. We are evaluating this new guidance, the method of adoption we will take and the impact, if any, on our consolidated financial statements and related disclosures. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Property and Equipment | ||
Schedule of property and equipment by major asset class | September 30, December 31, 2016 2015 Computer equipment $ $ Software Furniture and fixtures Leasehold improvements Projects in progress Property and equipment, gross $ $ Less: Accumulated depreciation and amortization Property and equipment, net $ $ | December 31, 2015 2014 Computer equipment $ $ Software Furniture and fixtures Leasehold improvements Projects in progress Property and equipment, gross $ $ Less: Accumulated depreciation and amortization Property and equipment, net $ $ |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Intangible Assets | ||
Schedule of intangible asset balances by major asset class | Weighted Gross Net Average Carrying Accumulated Carrying Amortization Amount Amortization Impairment Amount Period September 30, 2016: Customer relationships $ $ $ — $ years Acquired software — years Connolly trademark — — indefinite-lived Total $ $ $ — $ years December 31, 2015: Customer relationships $ $ $ — $ years Acquired software — years Connolly trademark — indefinite-lived iHealth trademark — years Total $ $ $ $ years | Gross Accumulated Impairment Net Carrying Weighted Average December 31, 2014: Customer relationships $ $ $ $ 13.7 years Acquired software — 6.2 years Connolly trademark — — indefinite‑lived iHealth trademark — 11.0 years Total $ $ $ $ 12.8 years December 31, 2015: Customer relationships $ $ $ — $ 13.7 years Acquired software — 6.2 years Connolly trademark — indefinite‑lived iHealth trademark — 11.0 years Total $ $ $ $ 12.8 years |
Schedule of intangible asset amortization expense | Remainder of 2016 $ 2017 2018 2019 2020 | As of December 31, 2015 amortization expense for the next 5 years was: 2016 $ 2017 2018 2019 2020 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Goodwill | ||
Schedule of changes in the carrying amount of goodwill by segment | Global Retail Healthcare and Other December 31, 2015 $ $ Foreign currency translation and other — September 30, 2016 $ $ | December 31, 2015 December 31, 2014 Healthcare Global Retail Healthcare Global Retail Beginning balance $ $ $ $ Acquisitions — — — Purchase price adjustments — — — Foreign currency translation and other — Ending balance $ $ $ $ |
Long-term Debt (Tables)
Long-term Debt (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Long-term Debt | ||
Schedule of long-term debt | September 30, December 31, 2016 2015 Term Loan A (a) $ $ — Term Loan B (b) — Revolver (c) — — May 2014 First Lien — May 2014 Second Lien — May 2014 Revolver — — Total debt Less: debt issuance costs Less: current portion Total long-term debt $ $ (a) The Term Loan A matures on September 28, 2021 and requires quarterly principal payments of $3,125 for the fourth quarter of 2016, $3,125 per quarter in 2017 and 2018, $4,688 per quarter in 2019, $6,250 per quarter in 2020 and $9,375 per quarter for the first two quarters of 2021. The remainder of the outstanding Term Loan A borrowings are due on September 28, 2021. Any mandatory or voluntary prepayment will be applied against the remaining scheduled installments of principal payments in direct order of maturity, unless other direction of application is provided by us. Based on our periodic election, borrowings under the Term Loan A bear interest at either (a) the Alternate Base Rate (“ABR”) plus, based on our Secured Leverage Ratio (as defined in the Restated Credit Agreement), 1.25% - 2.00% for ABR loans or (b) the LIBO Rate (“LIBOR”) plus, based on our Secured Leverage Ratio, 2.25% to 3.00% for LIBOR loans. The ABR is equal to the highest of (i) the New York Federal Reserve Bank rate in effect on such date plus 0.50%, (ii) the LIBOR plus 1.00% and (iii) the prime commercial lending rate of the administrative agent as in effect on the relevant day. The interest period applicable to any LIBOR borrowing is one, two, three or six months, at the election of the borrower. Interest on LIBOR loans is payable the last day of the applicable interest period and, in the case of an interest period of more than three months’ duration, each day on which interest would have been payable had successive interest periods of three months’s duration been applicable to such borrowing. The interest rate in effect was 3.6% at September 28, 2016. (b) The Term Loan B matures September 28, 2023 and requires quarterly principal payments of $1,375 with all remaining borrowings due on September 28, 2023. Based on our periodic election, borrowings under the Term Loan B bear interest at either (a) the ABR plus 1.75% for ABR loans or (b) the LIBOR plus 2.75% for LIBOR loans. The ABR is equal to the highest of (i) the New York Federal Reserve Bank rate in effect on such date plus 0.50%, (ii) LIBOR plus 1.00%, (iii) the prime commercial lending rate of the administrative agent as in effect on the relevant day and (iv) 1.75%. LIBOR is equal to the higher of (a) the published LIBOR or (b) 0.75%. If our corporate credit rating from Moody’s Investor Service, Inc. is Ba3 or better and our corporate family rating from Standard & Poor’s Financial Services, LLC is BB- or better, the margin will be reduced by 0.25% per annum for as long as such ratings are maintained. The interest period applicable to any LIBOR borrowing is one, two, three or six months, at the election of the borrower. Interest on LIBOR loans is payable the last day of the applicable interest period and, in the case of an interest period of more than three months’ duration, each day on which interest would have been payable had successive interest periods of three months’s duration been applicable to such borrowing.The interest rate in effect was 3.6% at September 28, 2016. (c) The Revolver expires September 28, 2021. Interest for any borrowings under the Revolver is payable over one, two, three or six months at our election. A commitment fee is payable quarterly based on the unused portion of the Revolver commitment which ranges from 0.30% to 0.50% per annum based on certain financial tests. Based on our periodic election, borrowings under the Revolver bear interest at either (a) ABR plus, based on our Secured Leverage Ratio, 1.25% - 2.00% for ABR loans or (b) LIBOR plus, based on our Secured Leverage Ratio, 2.25% to 3.00% for LIBOR loans. The ABR is equal to the highest of (i) the New York Federal Reserve Bank rate in effect on such date plus 0.50%, (ii) the LIBOR plus 1.00% and (iii) the prime commercial lending rate of the administrative agent as in effect on the relevant day. There were no borrowings outstanding under the Revolver as of September 30, 2016. The interest rate in effect was 3.6% at September 28, 2016. | December 31, 2015 2014 May 2014 First Lien (a) $ $ May 2014 Second Lien (b) May 2014 Revolver (c) — — Total debt Less: debt issuance costs Less: current portion Total long‑term debt $ $ (a) The May 2014 First Lien, as amended, expires May 2021 and requires quarterly principal payments of $2,025. The quarterly principal payment may be reduced by any amounts of mandatory or voluntary prepayment. Any mandatory or voluntary prepayment shall be applied against the remaining scheduled installments of principal payments in direct order of maturity, unless other direction of application is provided by us. Interest on the May 2014 First Lien is payable over periods of one, two, three or six months at the election of the borrower. Based on our periodic election, borrowings under the May 2014 First Lien bear interest at either (a) the Alternate Base Rate (ABR) plus 2.50% for ABR Loans, or (b) the LIBO Rate (“LIBOR”) plus 3.50% for LIBOR Loans. The ABR is equal to the higher of (a) the Federal Funds Effective Rate plus 0.50%; (b) the published one month LIBOR plus 1.00%; (c) the Prime Rate; or (d) 2.00%. The LIBOR is equal to the higher of (a) the LIBOR or (b) 1.00%. The interest rate in effect was 4.50% at December 31, 2015 and 5.00% at December 31, 2014. Following a qualified IPO, borrowings under the May 2014 First Lien bear interest at either (a) the ABR plus 2.25%, or (b) the LIBOR plus 3.25%. (b) The May 2014 Second Lien expires May 2022 with the total principal balance due at maturity. Interest on the May 2014 Second Lien is payable over periods of one, two, three, or six months at the election of the borrower. Based on our periodic election, borrowings under the May 2014 Second Lien bear interest at either (a) the ABR plus 6.00% for ABR Loans or (b) LIBOR plus 7.00% for LIBOR Loans. The ABR is equal to the higher of (a) the Federal Funds Effective Rate plus 0.50% (b) the published one month LIBOR plus 1.00%; (c) the Prime Rate; or (d) 2.00%. The LIBOR is equal to the higher of (a) the LIBOR or (b) 1.00%. The interest rate in effect was 8.00% at December 31, 2015 and December 31, 2014. Following a qualified IPO, borrowings under the May 2014 Second Lien bear interest at either (a) the ABR plus 5.75% for ABR Loans, or (b) the LIBOR plus 6.75% for LIBOR Loans. (c) The May 2014 Revolver expires May 2019 with interest payable over periods of one, two, three or six months at the election of the borrower. A commitment fee is payable quarterly based on the daily unused portion of the Revolver balance which ranges from an annual rate of 0.375% to 0.50% based on certain financial tests. The commitment fee was 0.375% and 0.50% at December 31, 2015 and 2014, respectively. Based on our periodic election, borrowings under the Revolver bear interest at either (a) the ABR plus 1.75% to 2.25% for ABR Loans based on certain financial tests or (b) the LIBOR plus 2.75% to 3.25% for LIBOR Loans based on certain financial tests. The ABR is equal to the higher of (a) the Federal Funds Effective Rate plus 0.50%; (b) the published one month LIBOR plus 1.00%; or (c) the Prime Rate. The LIBOR is equal to the higher of (a) the LIBOR or (b) 1.00%. The interest rate in effect was 4.00% and 4.25% at December 31, 2015 and December 31, 2014, respectively. At December 31, 2015 and December 31, 2014, we had $3,526 and $150 of letters of credit outstanding, respectively, which reduce the amount available for borrowing. There were no borrowings outstanding under the May 2014 Revolver as of December 31, 2015 or December 31, 2014. |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Derivative Instruments | ||
Schedule of fair value and location of derivative instruments | September 30, December 31, 2016 2015 Liability fair value recorded in other long-term liabilities $ $ Liability fair value recorded in accounts payable and accrued other expenses Estimated amount of existing losses expected to be reclassified into earnings in the next 12 months | December 31, 2015 2014 Liability fair value recorded in other long‑term liabilities $ $ Liability fair value recorded in accounts payable and accrued other expenses — Estimated amount of existing losses expected to be reclassified into earnings in the next 12 months |
Schedule of changes in other comprehensive income related to derivative instruments classified as cash flow hedges | Three Months Ended September 30, 2016 2015 Balance at beginning of period, July 1 $ $ Reclassifications in earnings, net of tax of $21 and $9, respectively Change in fair value of derivative instrument, net of tax of $45 and $483, respectively Balance at end of period, September 30 $ $ Nine Months Ended September 30, 2016 2015 Balance at beginning of period, January 1 $ $ Reclassifications in earnings, net of tax of $76 and $22, respectively Change in fair value of derivative instrument, net of tax of $463 and $1,015, respectively Balance at end of period, September 30 $ $ | Balance, January 1, 2014 $ — Reclassifications in earnings — Change in fair value of derivative instrument, net of tax of $476 Balance, December 31, 2014 Reclassifications in earnings, net of tax of $40 Change in fair value of derivative instrument, net of tax of $1,360 Balance, December 31, 2015 $ |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Fair Value Measurements | ||
Summary of financial instruments measured at fair value | September 30, 2016 December 31, 2015 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets: Available-for-sale securities $ — $ — $ — $ $ — $ — Liabilities Long-term debt — — — — Interest rate cap agreements — — — — Total $ — $ $ $ $ $ | December 31, 2015 December 31, 2014 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets: Available‑for‑sale securities $ $ — $ — $ $ — $ — Liabilities Long‑term debt — — — — Interest rate cap agreements — — — — Total $ — $ $ $ — $ $ |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Income Taxes | ||
Schedule of income tax provision and effective income tax rate | Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Income tax provision $ $ $ $ Effective income tax rate % % % % | Year ended 2015 2014 Current: U.S. federal $ $ State and local Foreign Current income tax expense Deferred U.S. federal State and local Foreign — Deferred income tax benefit Total income tax expense (benefit) $ $ |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Earnings per Share | ||
Schedule of computation of basic and diluted earnings per share | Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Net income available to common stockholders $ $ $ $ Weighted average outstanding shares of common stock Dilutive effect of stock-based awards — Adjusted weighted average outstanding and assumed conversions for diluted EPS Earnings (loss) per share from continuing operations: Basic $ $ $ $ Diluted Earnings per share from discontinued operations: Basic $ — $ — $ — $ Diluted — — — Total earnings (loss) per share: Basic $ $ $ $ Diluted | Year ended December 31, 2015 2014 Net income (loss) available to common stockholders $ $ Weighted average outstanding shares of common stock Dilutive effect of stock‑based awards — Adjusted weighted average outstanding and assumed conversions for diluted EPS Earnings (loss) per share from continuing operations: Basic $ $ Diluted Earnings per share from discontinued operations: Basic $ $ — Diluted — Total earnings (loss) per share: Basic $ $ Diluted |
Schedule of antidilutive securities excluded from earnings per share | Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Employee stock-based awards | Year ended December 31, 2015 2014 Employee stock options |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Stock-Based Compensation | ||
Summary of stock option activity | Nine Months Ended September 30, 2016 2015 Weighted Weighted average average exercise exercise Shares price Shares price Outstanding at beginning of period $ $ Granted Exercised Forfeited Expired — — Outstanding at end of period $ $ | Year Ended December 31, 2015 2014 Summary stock option activity Shares Weighted Shares Weighted Outstanding at beginning of year $ $ Granted Exercised Forfeited Expired Outstanding at end of period $ $ |
Summary of stock options outstanding, vested and exercisable | Average Weighted Weighted Remaining Service- average Performance- average Contractual Aggregate based exercise based exercise Term Intrinsic Shares price Shares price (in years) Value Stock options outstanding as of September 30, 2016 $ $ $ Stock options vested and exercisable as of September 30, 2016 $ $ $ | Service‑ Weighted Performance‑ Weighted Weighted‑ Aggregate Stock options outstanding as of December 31, 2015 $ $ $ Stock options vested and exercisable as of December 31, 2015 $ — $ — $ |
Summary of restricted stock units activity | Nine Months Ended September 30, 2016 Weighted average grant date Shares fair value Nonvested at beginning of period — $ — Granted Vested — — Forfeited — — Nonvested at end of period $ | |
Schedule of weighted average assumptions to estimate the fair value of stock options granted | Nine Months Ended September 30, 2016 2015 Expected term (years) Expected volatility % % Expected dividend yield % % Weighted average risk-free interest rate % % Weighted average grant date fair value $ $ | Year ended 2015 2014 Expected term (years) Expected volatility % % Expected dividend yield % % Weighted average risk‑free interest rate % % Weighted average grant date fair value $ $ |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Segment Information | ||
Schedule of operating segment results | Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 (unaudited) (unaudited) Net Revenue Healthcare $ $ $ $ Global Retail and Other Consolidated net revenue $ $ $ $ Operating Income Healthcare $ $ $ $ Global Retail and Other Consolidated operating income $ $ $ $ | Year ended 2015 2014 Net Revenue Healthcare $ $ Global Retail and Other Consolidated net revenue $ $ Operating Income Healthcare $ $ Global Retail and Other Consolidated operating income $ $ |
Schedule of operating segment net revenue by product type | Three Months Ended September 30, Nine Months Ended September 30, 2016 % 2015 % 2016 % 2015 % (unaudited) (unaudited) Healthcare Retrospective claims accuracy $ $ $ $ Prospective claims accuracy Transaction services Total Healthcare Retail Retrospective claims accuracy Other Total Global Retail and Other Consolidated net revenue $ $ $ $ | Year ended December 31, 2015 2014 Retrospective claims accuracy $ % $ % Prospective claims accuracy % % Transaction services % % Total Healthcare % % Retrospective claims accuracy % % Other % % Total Global Retail and Other % % Consolidated net revenue $ % $ % |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Employee Benefit Plans | ||
Schedule of contributions expensed and included in compensation for employee benefit plans | Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 401(k) Plan (a) $ $ $ $ Profit Share Plan (b) — Provident Plan (c) Total $ $ $ $ (a) We sponsor defined contribution retirement plans in accordance with Section 401(k) of the Internal Revenue Code, which cover substantially all U.S. employees, subject to certain minimum age and service requirements. The plans provide for a contribution based on a percentage of eligible employee contributions. (b) We had a nonqualified profit sharing incentive compensation plan for certain eligible employees. Contributions were made within 90 days following the last day of the plan to a brokerage account in an amount determined at our discretion for employees who had completed 1,000 hours of service and were employed at the time of the contribution. This plan was discontinued after the 2014 plan year, with the final payout occurring in June 2016 and therefore we did not have a liability under the plan as of September 30, 2016. Our liability under the plan was $893 at December 31, 2015, which is included in accrued compensation costs in the accompanying Consolidated Balance Sheets. (c) Eligible employees of our subsidiary located in India are covered by the Provident Fund, contributions which are based on a percentage of eligible employees’ salaries, and the Payment of Gratuity Act, which provides for benefits to be paid to eligible employees upon termination of employment (collectively, the “India Plan”). Benefits under the Plan are administered by the Indian Government. As of September 30, 2016 and December 31, 2015 we had an accrued benefit obligation relating to the India Plan of $714 and $535, respectively. | Year ended 2015 2014 401(k) Plan (a) $ $ Profit Share Plan (b) Provident Plan (c) Total $ $ (a) We sponsor defined contribution retirement plans in accordance with Section 401(k) of the Internal Revenue Code, which cover substantially all U.S. employees, subject to certain minimum age and service requirements. The plans provide for a contribution based on a percentage of eligible employee contributions. (b) In connection with the Connolly iHealth Merger, we inherited a nonqualified profit sharing incentive compensation plan for certain eligible employees. Contributions are made within 90 days following the last day of the plan to a brokerage account in an amount determined at our discretion for employees who have completed 1,000 hours of service and are employed at the time of the contribution. Our liability under the plan totaled $893 and $1,171 at December 31, 2015 and 2014, respectively, which is included in accrued compensation costs in the accompanying Consolidated Balance Sheets. (c) Eligible employees of our subsidiaries located in India, acquired as part of the Connolly iHealth Merger, are covered by the Provident Fund, contributions which are based on a percentage of eligible employees’ salaries, and the Payment of Gratuity Act, which provides for benefits to be paid to eligible employees upon termination of employment (collectively, the “India Plans”). Benefits under the Plan are administered by the Indian Government. As of December 31, 2015 and 2014 we had an accrued benefit obligation relating to the India Plans of $535 and $441, respectively. |
Description of Business (Detail
Description of Business (Details) | Sep. 30, 2016companycustomer | Dec. 31, 2015companycustomer |
Healthcare | Minimum | ||
Description of business | ||
Number of clients | 40 | 40 |
Commercial, Medicaid and Medicare managed health plans | United States | ||
Description of business | ||
Number of largest companies in the industry sector that are customers | 8 | 8 |
Number of largest companies in the industry sector | company | 10 | 10 |
Retail | Minimum | ||
Description of business | ||
Number of clients | 35 | 40 |
Retail | United States | ||
Description of business | ||
Number of largest companies in the industry sector that are customers | 8 | 8 |
Number of largest companies in the industry sector | company | 10 | 10 |
Summary of Significant Accoun35
Summary of Significant Accounting Policies - Revenue Recognition, Unbilled Receivables, and Estimated Liability for Refunds and Appeals (Details) $ in Thousands | Sep. 30, 2016USD ($)company | Dec. 31, 2015USD ($)company | Dec. 31, 2014USD ($) |
Summary of Significant Accounting Policies | |||
Estimated liability for refunds and appeals | $ 70,596 | $ 67,775 | $ 74,941 |
Estimated allowance for refunds and appeals | $ 31,887 | $ 33,406 | 23,216 |
Number of Recovery Audit Contractors under Medicare Recovery Program | company | 4 | 4 | |
Accounts receivable | |||
Summary of Significant Accounting Policies | |||
Unbilled receivables | $ 51,762 | $ 51,799 | 42,433 |
Unbilled receivables arising from deferred billing | $ 5,828 | $ 6,431 | $ 7,519 |
Summary of Significant Accoun36
Summary of Significant Accounting Policies - Recently Issued Accounting Standards (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
New accounting pronouncements | |||
Debt issuance costs, net | $ 11,322 | $ 20,975 | $ 27,227 |
ASU 2015-03 | Adjustment | |||
New accounting pronouncements | |||
Debt issuance costs, net | (20,975) | ||
Long-term debt | $ (20,975) |
Property and Equipment - Balanc
Property and Equipment - Balances by Major Asset Class (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Property and equipment | |||
Property and equipment, gross | $ 99,459 | $ 79,746 | $ 46,084 |
Less: Accumulated depreciation and amortization | 35,691 | 22,294 | 11,165 |
Property and equipment, net | 63,768 | 57,452 | 34,919 |
Computer equipment | |||
Property and equipment | |||
Property and equipment, gross | 38,492 | 31,496 | 21,562 |
Software | |||
Property and equipment | |||
Property and equipment, gross | 33,607 | 26,412 | 13,190 |
Furniture and fixtures | |||
Property and equipment | |||
Property and equipment, gross | 8,201 | 7,916 | 6,654 |
Leasehold improvements | |||
Property and equipment | |||
Property and equipment, gross | 4,051 | 3,488 | 2,343 |
Projects in progress | |||
Property and equipment | |||
Property and equipment, gross | $ 15,108 | $ 10,434 | $ 2,335 |
Property and Equipment - Perpet
Property and Equipment - Perpetual Software License (Details) - Perpetual software license - USD ($) $ in Thousands | 1 Months Ended | |
Dec. 31, 2015 | Sep. 30, 2016 | |
Recorded obligation | ||
Remaining payment period | 2 years | |
Accounts payable and accrued other expenses | ||
Recorded obligation | ||
Current portion of obligation | $ 2,952 | $ 3,318 |
Other long-term liabilities | ||
Recorded obligation | ||
Long-term portion of obligation | $ 6,340 | $ 3,193 |
Property and Equipment - Deprec
Property and Equipment - Depreciation and Amortization Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property and Equipment | ||||||
Depreciation and amortization expense related to property and equipment | $ 5,218 | $ 3,773 | $ 14,864 | $ 9,270 | $ 12,695 | $ 7,416 |
Intangible Assets - Balances by
Intangible Assets - Balances by Major Asset Class and Amortization Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Intangible assets with definite lives | |||||||
Accumulated Amortization | $ 178,203 | $ 91,886 | $ 178,203 | $ 133,767 | $ 91,886 | ||
Amortization period | 11 years | ||||||
Amortization expense | 15,203 | $ 15,437 | 45,618 | $ 46,256 | 61,467 | $ 52,355 | |
Intangible assets | |||||||
Gross Carrying Amount | 726,796 | 849,810 | 726,796 | 756,003 | 849,810 | ||
Impairment of intangible assets | $ 27,826 | $ 27,826 | 27,826 | 74,034 | |||
Net Carrying Amount | 548,593 | 683,890 | $ 548,593 | $ 594,410 | 683,890 | ||
Weighted average | |||||||
Intangible assets with definite lives | |||||||
Amortization period | 12 years 9 months 18 days | 12 years 9 months 18 days | |||||
Trademark | |||||||
Intangible assets with indefinite lives | |||||||
Gross Carrying Amount | 4,200 | 24,500 | $ 4,200 | $ 24,500 | 24,500 | ||
Impairment | 20,300 | ||||||
Net Carrying Amount | 4,200 | 24,500 | 4,200 | 4,200 | 24,500 | ||
Customer relationships | |||||||
Intangible assets with definite lives | |||||||
Gross Carrying Amount | 640,196 | 734,310 | 640,196 | 640,503 | 734,310 | ||
Accumulated Amortization | 133,059 | 70,298 | 133,059 | 97,857 | 70,298 | ||
Impairment | 74,034 | 74,034 | |||||
Net Carrying Amount | 507,137 | 589,978 | $ 507,137 | $ 542,646 | $ 589,978 | ||
Customer relationships | Weighted average | |||||||
Intangible assets with definite lives | |||||||
Amortization period | 13 years 8 months 12 days | 13 years 8 months 12 days | 13 years 8 months 12 days | ||||
Acquired software | |||||||
Intangible assets with definite lives | |||||||
Gross Carrying Amount | 82,400 | 82,400 | $ 82,400 | $ 82,400 | $ 82,400 | ||
Accumulated Amortization | 45,144 | 21,094 | 45,144 | 34,836 | 21,094 | ||
Net Carrying Amount | $ 37,256 | 61,306 | $ 37,256 | $ 47,564 | $ 61,306 | ||
Acquired software | Weighted average | |||||||
Intangible assets with definite lives | |||||||
Amortization period | 6 years 2 months 12 days | 6 years 2 months 12 days | 6 years 2 months 12 days | ||||
Trademark | |||||||
Intangible assets with definite lives | |||||||
Gross Carrying Amount | 8,600 | $ 8,600 | $ 8,600 | ||||
Accumulated Amortization | 494 | 1,074 | 494 | ||||
Impairment | $ 7,526 | ||||||
Net Carrying Amount | $ 8,106 | $ 8,106 | |||||
Amortization period | 12 years 9 months 18 days | ||||||
Trademark | Weighted average | |||||||
Intangible assets with definite lives | |||||||
Amortization period | 11 years |
Intangible Assets - Balances 41
Intangible Assets - Balances by Major Asset Class - Future Amortization Expense (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | |
Amortization expense for the next 5 years | |||||
Remainder of 2016 | $ 15,202,000 | ||||
2,017 | $ 60,835,000 | 57,837,000 | |||
2,018 | 57,865,000 | 53,908,000 | |||
2,019 | 53,935,000 | 53,908,000 | |||
2,020 | 53,935,000 | 53,908,000 | |||
Other information | |||||
Impairment of intangible assets | $ 27,826,000 | $ 27,826,000 | 27,826,000 | $ 74,034,000 | |
Trademark | |||||
Other information | |||||
Connolly trademark | $ 4,200,000 | $ 24,500,000 | $ 4,200,000 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Changes in the carrying amount of goodwill | ||||||
Balance | $ 1,197,044 | $ 1,197,353 | $ 1,197,353 | |||
Balance | $ 1,196,350 | 1,196,350 | 1,197,044 | $ 1,197,353 | ||
Impairment related to goodwill | 0 | $ 0 | 0 | 0 | 0 | 0 |
Healthcare | ||||||
Changes in the carrying amount of goodwill | ||||||
Balance | 1,147,771 | 1,147,396 | 1,147,396 | 319,234 | ||
Foreign currency translation and other | (604) | |||||
Balance | 1,147,771 | 1,147,771 | 1,147,771 | 1,147,396 | ||
Global Retail and Other | ||||||
Changes in the carrying amount of goodwill | ||||||
Balance | 49,273 | $ 49,957 | 49,957 | 50,570 | ||
Foreign currency translation and other | (694) | (684) | (613) | |||
Balance | $ 48,579 | $ 48,579 | $ 49,273 | $ 49,957 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - Unfavorable action - Centers for Medicare and Medicaid Services (CMS) - USD ($) $ in Thousands | Jul. 01, 2015 | Aug. 31, 2014 | Sep. 30, 2016 | Jun. 30, 2015 |
Loss contingency | ||||
Settlement on original claim amount offered by CMS to allow providers to remove eligible claims pending in appeals process (as a percent) | 68.00% | |||
RAC contract contingency fee on original amount of settled claims under CMS July 1, 2015 Technical Direction Letter (as a percent) | 32.00% | |||
Maximum possible additional amount of refund payable in excess of amount accrued | $ 11,800 | $ 12,400 | ||
Estimated liability for refunds and appeals | ||||
Loss contingency | ||||
Estimated refund liability on settled claims | $ 22,308 | $ 22,308 |
Long-term Debt - Summary of Com
Long-term Debt - Summary of Components (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2016 | Jun. 30, 2016 | May 31, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | May 14, 2014 | |
Long-term debt | ||||||||||
Decrease in total debt outstanding | $ 22,700 | |||||||||
Loss on extinguishment of debt | $ 9,349 | $ 16,417 | $ 4,084 | $ 4,084 | $ 21,524 | |||||
Long-term debt components | ||||||||||
Total debt | 795,364 | 795,364 | 795,364 | 1,055,045 | 1,061,165 | |||||
Less: debt issuance costs | 11,322 | 11,322 | 11,322 | 20,975 | 27,227 | |||||
Less: current portion | 18,000 | 18,000 | 18,000 | 21,099 | 8,100 | |||||
Total long-term debt | 766,042 | 766,042 | 766,042 | 1,012,971 | 1,025,838 | |||||
May 2014 First Lien and Second Lien Facilities | ||||||||||
Long-term debt | ||||||||||
Loss on extinguishment of debt | 9,349 | 9,349 | ||||||||
May 2014 Second Lien | ||||||||||
Long-term debt | ||||||||||
Loss on extinguishment of debt | 7,068 | |||||||||
Outstanding borrowings repaid | $ 223,000 | |||||||||
Voluntary prepayment of borrowings | $ 13,100 | |||||||||
May 2014 First Lien | ||||||||||
Long-term debt | ||||||||||
Loss on extinguishment of debt | $ 4,084 | |||||||||
Decrease in applicable interest rates (as a percent) | 0.50% | |||||||||
Long-term debt components | ||||||||||
Total debt | 792,167 | 798,605 | ||||||||
Term Loan A | Restated Credit Agreement | ||||||||||
Long-term debt | ||||||||||
Maximum borrowing capacity | 250,000 | 250,000 | 250,000 | |||||||
Long-term debt components | ||||||||||
Total debt | 249,808 | 249,808 | 249,808 | |||||||
Term Loan B | Restated Credit Agreement | ||||||||||
Long-term debt | ||||||||||
Maximum borrowing capacity | 550,000 | 550,000 | 550,000 | |||||||
Long-term debt components | ||||||||||
Total debt | 545,556 | 545,556 | 545,556 | |||||||
Term loan | May 2014 Second Lien | ||||||||||
Long-term debt | ||||||||||
Maximum borrowing capacity | $ 265,000 | |||||||||
Long-term debt components | ||||||||||
Total debt | 262,878 | 262,560 | ||||||||
Term loan | May 2014 First Lien | ||||||||||
Long-term debt | ||||||||||
Maximum borrowing capacity | 810,000 | |||||||||
Long-term debt components | ||||||||||
Total debt | 792,167 | |||||||||
Revolver | Restated Credit Agreement | ||||||||||
Long-term debt | ||||||||||
Maximum borrowing capacity | $ 100,000 | $ 100,000 | $ 100,000 | |||||||
Revolver | May 2014 Second Lien | ||||||||||
Long-term debt components | ||||||||||
Total debt | $ 0 | $ 0 | ||||||||
Revolver | May 2014 First Lien | ||||||||||
Long-term debt | ||||||||||
Maximum borrowing capacity | $ 75,000 |
Long-term Debt - Term Loan A (D
Long-term Debt - Term Loan A (Details) - Restated Credit Agreement - Term Loan A - USD ($) $ in Thousands | 1 Months Ended | |
Sep. 30, 2016 | Sep. 28, 2016 | |
Debt covenants | ||
Interest rate in effect at end of period (as a percent) | 3.60% | |
ABR Loans | Alternate Base Rate | Minimum | ||
Debt covenants | ||
Variable rate, description of rate | Alternate Base Rate | |
Basis spread on variable rate (as a percent) | 1.25% | |
ABR Loans | Alternate Base Rate | Maximum | ||
Debt covenants | ||
Basis spread on variable rate (as a percent) | 2.00% | |
ABR Loans | LIBOR | ||
Debt covenants | ||
Variable rate, description of rate | LIBOR | |
Basis spread on variable rate (as a percent) | 1.00% | |
ABR Loans | New York Federal Reserve Bank Rate | ||
Debt covenants | ||
Variable rate, description of rate | New York Federal Reserve Bank | |
Basis spread on variable rate (as a percent) | 0.50% | |
LIBOR Loans | ||
Debt covenants | ||
Frequency of interest payments, option one | 1 month | |
Frequency of interest payments, option two | 2 months | |
Frequency of interest payments, option three | 3 months | |
Frequency of interest payments, option four | 6 months | |
Interest payable, threshold period | 3 months | |
LIBOR Loans | Minimum | ||
Debt covenants | ||
Basis spread on variable rate (as a percent) | 2.25% | |
LIBOR Loans | LIBOR | Maximum | ||
Debt covenants | ||
Basis spread on variable rate (as a percent) | 3.00% | |
2,016 | ||
Debt covenants | ||
Frequency of payment | quarterly | |
Principal payment | $ 3,125 | |
2017 and 2018 | ||
Debt covenants | ||
Frequency of payment | quarter | |
Principal payment | $ 3,125 | |
2,019 | ||
Debt covenants | ||
Frequency of payment | quarter | |
Principal payment | $ 4,688 | |
2,020 | ||
Debt covenants | ||
Frequency of payment | quarter | |
Principal payment | $ 6,250 | |
2,021 | ||
Debt covenants | ||
Frequency of payment | quarter | |
Principal payment | $ 9,375 | |
Number of quarters in redemption period | two |
Long-term Debt - Term Loan B (D
Long-term Debt - Term Loan B (Details) - Restated Credit Agreement - Term Loan B - USD ($) | 1 Months Ended | |
Sep. 30, 2016 | Sep. 28, 2016 | |
Debt covenants | ||
Frequency of payment | quarterly | |
Principal payment | $ 1,375,000 | |
Interest rate in effect at end of period (as a percent) | 3.60% | |
ABR Loans | Alternate Base Rate | ||
Debt covenants | ||
Basis spread on variable rate (as a percent) | 1.75% | |
Stated interest rate (as a percent) | 1.75% | |
ABR Loans | LIBOR | ||
Debt covenants | ||
Variable rate, description of rate | LIBOR | |
Basis spread on variable rate (as a percent) | 1.00% | |
ABR Loans | New York Federal Reserve Bank Rate | ||
Debt covenants | ||
Variable rate, description of rate | New York Federal Reserve Bank rate | |
Basis spread on variable rate (as a percent) | 0.50% | |
LIBOR Loans | ||
Debt covenants | ||
Stated interest rate (as a percent) | 0.75% | |
Frequency of interest payments, option one | 1 month | |
Frequency of interest payments, option two | 2 months | |
Frequency of interest payments, option three | 3 months | |
Frequency of interest payments, option four | 6 months | |
Interest payable, threshold period | 3 months | |
LIBOR Loans | LIBOR | ||
Debt covenants | ||
Variable rate, description of rate | LIBOR | |
Basis spread on variable rate (as a percent) | 2.75% | |
Standard & Poor's, BB Rating | Moody's, Ba3 Rating | Minimum | ||
Debt covenants | ||
Margin reduction per annum if ratings met (as a percent) | $ 0.25 |
Long-term Debt - Revolver (Deta
Long-term Debt - Revolver (Details) - Restated Credit Agreement - Revolver | 1 Months Ended | |
Sep. 30, 2016 | Sep. 28, 2016 | |
Debt covenants | ||
Frequency of interest payments, option one | 1 month | |
Frequency of interest payments, option two | 2 months | |
Frequency of interest payments, option three | 3 months | |
Frequency of interest payments, option four | 6 months | |
Interest rate in effect at end of period (as a percent) | 3.60% | |
Minimum | ||
Debt covenants | ||
Commitment fee on unused capacity (as a percentate) | 0.30% | |
Maximum | ||
Debt covenants | ||
Commitment fee on unused capacity (as a percentate) | 0.50% | |
ABR Loans | Alternate Base Rate | Minimum | ||
Debt covenants | ||
Basis spread on variable rate (as a percent) | 1.25% | |
ABR Loans | Alternate Base Rate | Maximum | ||
Debt covenants | ||
Basis spread on variable rate (as a percent) | 2.00% | |
ABR Loans | LIBOR | ||
Debt covenants | ||
Variable rate, description of rate | LIBOR | |
Basis spread on variable rate (as a percent) | 1.00% | |
ABR Loans | New York Federal Reserve Bank Rate | ||
Debt covenants | ||
Variable rate, description of rate | New York Federal Reserve Bank | |
Basis spread on variable rate (as a percent) | 0.50% | |
LIBOR Loans | LIBOR | Minimum | ||
Debt covenants | ||
Basis spread on variable rate (as a percent) | 2.25% | |
LIBOR Loans | LIBOR | Maximum | ||
Debt covenants | ||
Basis spread on variable rate (as a percent) | 3.00% |
Long-term Debt - Other Covenant
Long-term Debt - Other Covenant Terms (Details) - Restated Credit Agreement - Maximum | 1 Months Ended |
Sep. 30, 2016 | |
Term Loan A | |
Ratio requirements | |
Secured Leverage Ratio covenant, through September 2018 | 5.50 |
Secured Leverage Ratio covenant, through September 2019 | 5.25 |
Secured Leverage Ratio covenant, through June 2021 | 5 |
Revolver | |
Ratio requirements | |
Secured Leverage Ratio covenant, through September 2018 | 5.50 |
Secured Leverage Ratio covenant, through September 2019 | 5.25 |
Secured Leverage Ratio covenant, through June 2021 | 5 |
Long-term Debt - Aggregate Matu
Long-term Debt - Aggregate Maturities (Details) $ in Thousands | Sep. 30, 2016USD ($) |
Aggregate maturities of long term debt | |
Remainder of 2016 | $ 4,500 |
2,017 | 18,000 |
2,018 | 18,000 |
2,019 | 24,250 |
2,020 | $ 30,500 |
Derivative Instruments - Intere
Derivative Instruments - Interest Rate Cap Contracts (Details) - Interest rate cap agreements - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
LIBOR | ||||||
Interest rate derivatives | ||||||
Interest rate cap on floating rate debt (as a percent) | 3.00% | 3.00% | 3.00% | |||
Cash flow hedge | ||||||
Cash flow hedge activity | ||||||
Ineffectiveness recorded | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Cash flow hedge | Interest expense | ||||||
Cash flow hedge activity | ||||||
Expense recognized | 56 | $ 23 | 200 | $ 55 | 105 | 0 |
Designated as Hedge | ||||||
Interest rate derivatives | ||||||
Notional amount | $ 630,000 | $ 630,000 | $ 630,000 | $ 700,000 |
Derivative Instruments - Quanti
Derivative Instruments - Quantitative Information Related to Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Interest rate cash flow hedges | |||
Estimated amount of existing losses expected to be reclassified into earnings in the next 12 months | $ (1,287) | $ (283) | $ (71) |
Interest rate cap agreements | |||
Interest rate cash flow hedges | |||
Deferred hedge premiums paid and recorded in accumulated other comprehensive (loss) income | 2,204 | 1,103 | |
Expected additional payments of deferred premiums | 4,190 | 5,291 | |
Designated as Hedge | Interest rate cap agreements | Other long-term liabilities | |||
Interest rate cash flow hedges | |||
Derivative liability | 2,428 | 2,310 | $ 1,099 |
Designated as Hedge | Interest rate cap agreements | Accounts payable and accrued other expenses | |||
Interest rate cash flow hedges | |||
Derivative liability | $ 1,070 | $ 1,086 |
Derivative Instruments - Change
Derivative Instruments - Changes in Other Comprehensive Income Related to Cash Flow Hedges (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Changes in other comprehensive income related to derivative instruments classified as cash flow hedges | ||||||
Balance at beginning of period | $ (3,534) | $ (2,191) | $ (2,968) | $ (623) | $ (623) | |
Reclassifications in earnings, net of tax of $21 and $76 for the three and nine months ended September 30, 2016, and $9 and $22 for the three and nine months ended September 30, 2015 | 35 | 14 | 124 | 33 | 65 | |
Change in fair value of derivative instrument, net of tax of $45 and $463 for the three and nine months ended September 30, 2016, and $483 and $1,015 for the three and nine months ended September 30, 2015 | (84) | (1,075) | (739) | (2,662) | (2,410) | $ (623) |
Balance at end of period | (3,583) | (3,252) | (3,583) | (3,252) | $ (2,968) | $ (623) |
Other comprehensive income, tax effect | ||||||
Reclassifications in earnings, tax | 21 | 9 | 76 | 22 | ||
Change in fair value of derivative instrument, tax | $ 45 | $ 483 | $ 463 | $ 1,015 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Level 1 | |||
Assets: | |||
Available-for-sale securities | $ 0 | $ 1,181 | $ 1,582 |
Total | 1,181 | ||
Level 2 | |||
Assets: | |||
Available-for-sale securities | 0 | 0 | |
Liabilities | |||
Interest rate cap agreements | 3,498 | 3,396 | 1,099 |
Total | 3,498 | 3,396 | 1,099 |
Level 3 | |||
Assets: | |||
Available-for-sale securities | 0 | 0 | |
Liabilities | |||
Long-term debt | 795,364 | 1,055,045 | 1,061,165 |
Total | $ 795,364 | $ 1,055,045 | $ 1,061,165 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Taxes | ||||||
Income tax provision | $ 711 | $ (4,571) | $ 12,780 | $ 3,932 | $ 14,401 | $ (16,804) |
Effective income tax rate (as a percent) | 13.40% | 38.50% | 35.20% | 48.80% | 52.00% | 39.40% |
Decrease in effective tax rate due to settlement of an uncertain tax position recorded in prior period | $ 1,300 | $ 1,300 | $ 8 |
Stockholders' Equity - Issuance
Stockholders' Equity - Issuance of Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | May 25, 2016 | Sep. 30, 2016 | Dec. 31, 2014 | May 13, 2016 | May 12, 2016 | Dec. 31, 2015 |
Issuance of stock | ||||||
Common stock, shares authorized | 600,000,000 | 122,000,000 | 600,000,000 | 122,000,000 | 122,000,000 | |
Net proceeds received from common stock issued and sold | $ 226,963 | $ 365,187 | ||||
Common stock | ||||||
Issuance of stock | ||||||
Stock issued and sold (in shares) | 32,790,321 | |||||
IPO | ||||||
Issuance of stock | ||||||
Net proceeds received from common stock issued and sold | $ 226,963 | |||||
Offering expenses | $ 18,822 | |||||
IPO | Common stock | ||||||
Issuance of stock | ||||||
Stock issued and sold (in shares) | 12,936,038 | |||||
Offering price (in dollars per share) | $ 19 |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stockholder Rights and Preferences (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016USD ($)VoteRight | Dec. 31, 2015Vote | |
Registration rights | ||
Number of votes a share of common stock entitles the holder | Vote | 1 | 1 |
Demand registration rights | ||
Registration rights | ||
Cap period | 12 months | |
Demand registration rights | Maximum | ||
Registration rights | ||
Number of requests in any 12 month period | Right | 2 | |
Piggyback registration rights | Minimum | ||
Registration rights | ||
Value of shares owned by Holder (in dollars) | $ | $ 500,000 | |
Shelf registration rights | ||
Registration rights | ||
Cap period | 12 months | |
Shelf registration rights | Maximum | ||
Registration rights | ||
Number of requests in any 12 month period | Right | 2 | |
Shelf registration rights | Minimum | ||
Registration rights | ||
Anticipated aggregate offering price, net of selling expenses (in dollars) | $ | $ 5,000,000 |
Stockholders' Equity - Common57
Stockholders' Equity - Common Stock Split and Dividends (Details) $ / shares in Units, $ in Thousands | May 25, 2016USD ($)$ / shares | May 13, 2016 |
Common stock | ||
Common stock dividends paid (in dollars) | $ | $ 150,000 | |
Common stock dividends paid (in dollars per share) | $ 1.94 | |
Reduction in stock option exercise price (in dollars per share) | $ 1.94 | |
Common stock | ||
Common stock | ||
Stock split ratio | 6.1 |
Earnings per Share - Basic and
Earnings per Share - Basic and Diluted Computation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||
Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Basic and diluted earnings per share computation | |||||||||||||
Net income available to common stockholders | $ 4,583 | $ 9,183 | $ (7,294) | $ 7,780 | $ 4,194 | $ (38,967) | $ 9,534 | $ 3,949 | $ (341) | $ 23,560 | $ 4,680 | $ 13,863 | $ (25,825) |
Weighted average outstanding shares of common stock | 90,170,462 | 77,224,463 | 83,275,206 | 77,211,354 | 77,216,133 | 65,253,954 | |||||||
Dilutive effect of stock-based awards | 3,783,441 | 3,582,720 | 503,591 | 425,255 | |||||||||
Adjusted weighted average outstanding and assumed conversions for diluted EPS | 93,953,903 | 77,224,463 | 86,857,926 | 77,714,945 | 77,641,388 | 65,253,954 | |||||||
Earnings (loss) per share from continuing operations: | |||||||||||||
Basic (in dollars per share) | $ 0.05 | $ 0.12 | $ (0.09) | $ 0.10 | $ 0.04 | $ 0.28 | $ 0.05 | $ 0.17 | $ (0.40) | ||||
Diluted (in dollars per share) | 0.05 | 0.12 | (0.09) | 0.10 | 0.04 | 0.27 | 0.05 | 0.17 | (0.40) | ||||
Earnings per share from discontinued operations: | |||||||||||||
Basic (in dollars per share) | 0.01 | 0.01 | 0.01 | ||||||||||
Diluted (in dollars per share) | 0.01 | 0.01 | 0.01 | ||||||||||
Total earnings (loss) per share: | |||||||||||||
Basic (in dollars per share) | 0.05 | 0.12 | (0.09) | 0.10 | 0.05 | $ (0.50) | $ 0.12 | $ 0.06 | $ (0.01) | 0.28 | 0.06 | 0.18 | (0.40) |
Diluted (in dollars per share) | $ 0.05 | $ 0.12 | $ (0.09) | $ 0.10 | $ 0.05 | $ (0.50) | $ 0.12 | $ 0.06 | $ (0.01) | $ 0.27 | $ 0.06 | $ 0.18 | $ (0.40) |
Earnings per Share - Awards Exc
Earnings per Share - Awards Excluded from Diluted Calculation (Details) - shares | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Anti-dilutive securities and other information | ||||||
Dilutive effect of stock-based awards | 3,783,441 | 3,582,720 | 503,591 | 425,255 | ||
Performance-based stock options | ||||||
Anti-dilutive securities and other information | ||||||
Dilutive effect of stock-based awards | 2,746,592 | 2,746,592 | ||||
Vesting conditions not satisfied | 2,234,217 | 2,234,217 | 2,794,910 | 2,487,275 | ||
Employee stock options and RSUs | ||||||
Anti-dilutive securities and other information | ||||||
Stock-based awards excluded from calculation of diluted earnings per share (in shares) | 35,737 | 12,292 | 327,880 | 672,617 |
Stock-Based Compensation - Equi
Stock-Based Compensation - Equity Incentive Plans (Details) - shares | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | May 24, 2016 | May 31, 2014 | Dec. 31, 2012 | |
Equity Incentive Plans | |||||||
Granted (in shares) | 1,997,964 | 1,961,150 | |||||
Stock options | |||||||
Equity Incentive Plans | |||||||
Granted (in shares) | 264,976 | 24,584 | |||||
Amended 2012 Equity Incentive Plan | |||||||
Equity Incentive Plans | |||||||
Shares authorized for issuance | 7,243,330 | 7,243,329 | 4,392,000 | ||||
Shares available for future issuance | 0 | 762,421 | 776,839 | ||||
Amended 2012 Equity Incentive Plan | Stock options | |||||||
Equity Incentive Plans | |||||||
Granted (in shares) | 0 | ||||||
2016 Equity Incentive Plan | |||||||
Equity Incentive Plans | |||||||
Shares authorized for issuance | 5,490,000 | ||||||
Shares available for future issuance | 5,248,202 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Terms (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Stock options | Maximum | ||
Stock Options | ||
Term of award | 10 years | 10 years |
Stock options | Owner of more than 10 percent of voting stock | ||
Stock Options | ||
Percentage of total combined voting power | 10.00% | |
Term of award | 5 years | |
Stock options | Owner of more than 10 percent of voting stock | Maximum | ||
Stock Options | ||
Term of award | 5 years | |
Service-based stock options | ||
Stock Options | ||
Vesting period | 5 years | |
2016 Equity Incentive Plan | Stock options | ||
Stock Options | ||
Percentage of market price to purchase shares of common stock (as a percent) | 100.00% | |
2016 Equity Incentive Plan | Service-based stock options | ||
Stock Options | ||
Vesting period | 4 years | |
Amended 2012 Equity Incentive Plan | Service-based stock options | ||
Stock Options | ||
Vesting period | 5 years |
Stock-Based Compensation - St62
Stock-Based Compensation - Stock Option Activity (Details) - $ / shares | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Shares | ||||
Outstanding at beginning of period (in shares) | 6,441,527 | 5,024,235 | 5,024,235 | 3,312,666 |
Granted (in shares) | 1,997,964 | 1,961,150 | ||
Exercised (in shares) | (25,620) | (13,762) | ||
Forfeited (in shares) | (555,051) | (235,820) | ||
Outstanding at end of period (in shares) | 6,441,527 | 5,024,235 | ||
Weighted average exercise price | ||||
Outstanding at beginning of period (in dollars per share) | $ 11.53 | $ 9.92 | $ 9.92 | $ 8.20 |
Granted (in dollars per share) | 15.70 | 12.61 | ||
Exercised (in dollars per share) | 8.20 | 8.20 | ||
Forfeited (in dollars per share) | 12.10 | 8.20 | ||
Outstanding at end of period (in dollars per share) | $ 11.53 | $ 9.92 | ||
Stock options | ||||
Shares | ||||
Outstanding at beginning of period (in shares) | 6,441,573 | 5,012,034 | 5,012,034 | |
Granted (in shares) | 264,976 | 24,584 | ||
Exercised (in shares) | (4,113) | (25,620) | ||
Forfeited (in shares) | (99,326) | (492,880) | ||
Expired (in shares) | (1,220) | |||
Outstanding at end of period (in shares) | 6,601,890 | 4,518,118 | 6,441,573 | 5,012,034 |
Weighted average exercise price | ||||
Outstanding at beginning of period (in dollars per share) | $ 9.59 | $ 7.97 | $ 7.97 | |
Granted (in dollars per share) | 19.14 | 11.33 | ||
Exercised (in dollars per share) | 13.06 | 6.26 | ||
Forfeited (in dollars per share) | 12.91 | 10.09 | ||
Expired (in dollars per share) | (11.33) | |||
Outstanding at end of period (in dollars per share) | $ 9.92 | $ 7.77 | $ 9.59 | $ 7.97 |
Stock-Based Compensation - St63
Stock-Based Compensation - Stock Options Outstanding (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Shares | |||||||
Outstanding (in shares) | 6,441,527 | 5,024,235 | 3,312,666 | ||||
Weighted average exercise price | |||||||
Outstanding (in dollars per share) | $ 11.53 | $ 9.92 | $ 8.20 | ||||
Aggregate Intrinsic Value | |||||||
Total fair value of options vested | $ 2,450 | $ 2,000 | |||||
Stock options | |||||||
Shares | |||||||
Outstanding (in shares) | 6,601,890 | 4,518,118 | 6,601,890 | 4,518,118 | 6,441,573 | 5,012,034 | |
Weighted average exercise price | |||||||
Outstanding (in dollars per share) | $ 9.92 | $ 7.77 | $ 9.92 | $ 7.77 | $ 9.59 | $ 7.97 | |
Average Remaining Contractual Term | |||||||
Outstanding | 7 years 6 months | 8 years 2 months 12 days | |||||
Vested and exercisable | 7 years 2 months 12 days | 7 years 2 months 12 days | |||||
Aggregate Intrinsic Value | |||||||
Outstanding | $ 155,844 | $ 155,844 | $ 27,042 | ||||
Vested and exercisable | 117,257 | 117,257 | $ 7,764 | ||||
Total fair value of options vested | $ 19,153 | $ 1,831 | $ 22,159 | $ 2,014 | |||
Service-based stock options | |||||||
Shares | |||||||
Outstanding (in shares) | 3,840,828 | 3,840,828 | 3,646,617 | ||||
Vested and exercisable (in shares) | 2,031,919 | 2,031,919 | 1,120,113 | ||||
Weighted average exercise price | |||||||
Outstanding (in dollars per share) | $ 10.55 | $ 10.55 | $ 11.95 | ||||
Vested and exercisable (in dollars per share) | $ 8.95 | $ 8.95 | $ 8.80 | ||||
Performance-based stock options | |||||||
Shares | |||||||
Outstanding (in shares) | 2,761,062 | 2,761,062 | 2,794,910 | ||||
Vested and exercisable (in shares) | 2,746,592 | 2,746,592 | |||||
Weighted average exercise price | |||||||
Outstanding (in dollars per share) | $ 9.05 | $ 9.05 | $ 10.99 | ||||
Vested and exercisable (in dollars per share) | 9.02 | 9.02 | |||||
Common stock | |||||||
Aggregate Intrinsic Value | |||||||
Fair value of stock (in dollars per share) | $ 33.53 | $ 33.53 | $ 15.73 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Units Vesting and Activity (Details) - $ / shares | 9 Months Ended | 53 Months Ended |
Sep. 30, 2016 | May 24, 2016 | |
Amended 2012 Equity Incentive Plan | ||
Shares | ||
Granted (in shares) | 0 | |
2016 Equity Incentive Plan | Restricted stock units | ||
Equity Incentive Plans | ||
Vesting period | 4 years | |
Shares | ||
Nonvested at beginning of period (in shares) | 0 | |
Granted (in shares) | 62,904 | |
Vested (in shares) | 0 | |
Forfeited (in shares) | 0 | |
Nonvested at end of period (in shares) | 62,904 | |
Weighted average grant date fair value | ||
Nonvested at beginning of period (in dollars per share) | $ 0 | |
Granted (in dollars per share) | 25.38 | |
Vested (in dollars per share) | 0 | |
Forfeited (in dollars per share) | 0 | |
Nonvested at end of period (in dollars per share) | $ 25.38 |
Stock-Based Compensation - Weig
Stock-Based Compensation - Weighted Average Assumptions to Estimate Fair Value of Stock Options (Details) - Stock options - $ / shares | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Assumptions used to estimate fair value of stock options granted | ||||
Expected term | 6 years 3 months | 6 years 3 months | ||
Expected volatility (as a percent) | 50.00% | 50.00% | ||
Expected dividend yield (as a percent) | 0.00% | 0.00% | 0.00% | |
Risk-free interest rate (as a percent) | 1.70% | 1.80% | ||
Weighted average grant date fair value (in dollars per share) | $ 9.39 | $ 5.49 | $ 7.77 | $ 5.70 |
Weighted average | ||||
Assumptions used to estimate fair value of stock options granted | ||||
Expected term | 6 years 3 months | 6 years 3 months | ||
Expected volatility (as a percent) | 50.00% | 50.00% | ||
Expected dividend yield (as a percent) | 0.00% | 0.00% | ||
Risk-free interest rate (as a percent) | 1.34% | 1.61% |
Stock-Based Compensation - Expe
Stock-Based Compensation - Expense Recorded (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Stock-based compensation expense | ||||||
Stock-based compensation expense | $ 17,042 | $ 405 | $ 21,544 | $ 1,624 | $ 3,399 | $ 2,492 |
Unrecognized compensation cost | $ 15,088 | |||||
Period of recognition of unrecognized compensation cost | 3 years 10 months 24 days | |||||
Stock options | ||||||
Stock-based compensation expense | ||||||
Stock-based compensation expense related to accelerated vesting | 2,257 | |||||
Performance-based stock options | ||||||
Stock-based compensation expense | ||||||
Stock-based compensation expense | $ 15,898 | $ 15,898 | $ 0 | |||
Unrecognized compensation cost | $ 16,185 | |||||
Employee stock options and RSUs | ||||||
Stock-based compensation expense | ||||||
Unvested awards (in shares) | 1,857,783 | 1,857,783 | ||||
Unrecognized compensation cost | $ 15,081 | $ 15,081 | ||||
Period of recognition of unrecognized compensation cost | 3 years 2 months 12 days |
Segment Information - Operating
Segment Information - Operating Segment Results (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||
Sep. 30, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2014USD ($) | Jun. 30, 2014USD ($) | Mar. 31, 2014USD ($) | Sep. 30, 2016USD ($)segment | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($)segment | Dec. 31, 2014USD ($) | |
Segment information | |||||||||||||
Number of reportable segments | segment | 2 | 2 | |||||||||||
Net Revenue | $ 156,241 | $ 151,463 | $ 136,936 | $ 133,306 | $ 119,638 | $ 122,765 | $ 126,622 | $ 108,294 | $ 83,691 | $ 457,250 | $ 389,880 | $ 541,343 | $ 441,372 |
Operating Income | 24,155 | $ 34,916 | 4,128 | $ 33,773 | $ 23,707 | $ (47,680) | $ 33,128 | $ 27,726 | $ 17,023 | 92,331 | 61,608 | 96,524 | 30,197 |
Healthcare | |||||||||||||
Segment information | |||||||||||||
Net Revenue | 138,470 | 119,127 | 403,643 | 336,683 | 467,044 | 359,842 | |||||||
Operating Income | 22,544 | 4,288 | 85,879 | 55,812 | 84,240 | 23,713 | |||||||
Global Retail and Other | |||||||||||||
Segment information | |||||||||||||
Net Revenue | 17,771 | 17,809 | 53,607 | 53,197 | 74,299 | 81,530 | |||||||
Operating Income | $ 1,611 | $ (160) | $ 6,452 | $ 5,796 | $ 12,284 | $ 6,484 |
Segment Information - Operati68
Segment Information - Operating Segment Net Revenue by Product Type (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||
Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Net revenue by product type | |||||||||||||
Net revenue | $ 156,241 | $ 151,463 | $ 136,936 | $ 133,306 | $ 119,638 | $ 122,765 | $ 126,622 | $ 108,294 | $ 83,691 | $ 457,250 | $ 389,880 | $ 541,343 | $ 441,372 |
Product | Consolidated net revenue | |||||||||||||
Net revenue by product type | |||||||||||||
Net revenue | $ 156,241 | $ 136,936 | $ 457,250 | $ 389,880 | $ 541,343 | $ 441,372 | |||||||
Proportionate share of total (as a percent) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | |||||||
Healthcare | |||||||||||||
Net revenue by product type | |||||||||||||
Net revenue | $ 138,470 | $ 119,127 | $ 403,643 | $ 336,683 | $ 467,044 | $ 359,842 | |||||||
Healthcare | Product | Consolidated net revenue | |||||||||||||
Net revenue by product type | |||||||||||||
Net revenue | $ 138,470 | $ 119,127 | $ 403,643 | $ 336,683 | $ 467,044 | $ 359,842 | |||||||
Proportionate share of total (as a percent) | 88.60% | 87.00% | 88.30% | 86.40% | 86.30% | 81.60% | |||||||
Healthcare | Retrospective claims accuracy | Product | Consolidated net revenue | |||||||||||||
Net revenue by product type | |||||||||||||
Net revenue | $ 78,133 | $ 62,369 | $ 224,335 | $ 178,818 | $ 251,288 | $ 240,544 | |||||||
Proportionate share of total (as a percent) | 50.00% | 45.50% | 49.10% | 45.90% | 46.40% | 54.50% | |||||||
Healthcare | Prospective claims accuracy | Product | Consolidated net revenue | |||||||||||||
Net revenue by product type | |||||||||||||
Net revenue | $ 57,233 | $ 53,419 | $ 169,632 | $ 147,335 | $ 201,899 | $ 108,828 | |||||||
Proportionate share of total (as a percent) | 36.60% | 39.10% | 37.10% | 37.80% | 37.30% | 24.70% | |||||||
Healthcare | Transaction services | Product | Consolidated net revenue | |||||||||||||
Net revenue by product type | |||||||||||||
Net revenue | $ 3,104 | $ 3,339 | $ 9,676 | $ 10,530 | $ 13,857 | $ 10,470 | |||||||
Proportionate share of total (as a percent) | 2.00% | 2.40% | 2.10% | 2.70% | 2.60% | 2.40% | |||||||
Global Retail and Other | |||||||||||||
Net revenue by product type | |||||||||||||
Net revenue | $ 17,771 | $ 17,809 | $ 53,607 | $ 53,197 | $ 74,299 | $ 81,530 | |||||||
Global Retail and Other | Product | Consolidated net revenue | |||||||||||||
Net revenue by product type | |||||||||||||
Net revenue | $ 17,771 | $ 17,809 | $ 53,607 | $ 53,197 | $ 74,299 | $ 81,530 | |||||||
Proportionate share of total (as a percent) | 11.40% | 13.00% | 11.70% | 13.60% | 13.70% | 18.40% | |||||||
Global Retail and Other | Retrospective claims accuracy | Product | Consolidated net revenue | |||||||||||||
Net revenue by product type | |||||||||||||
Net revenue | $ 17,039 | $ 17,292 | $ 51,730 | $ 51,546 | $ 72,060 | $ 80,075 | |||||||
Proportionate share of total (as a percent) | 10.90% | 12.60% | 11.30% | 13.20% | 13.30% | 18.10% | |||||||
Global Retail and Other | Other | Product | Consolidated net revenue | |||||||||||||
Net revenue by product type | |||||||||||||
Net revenue | $ 732 | $ 517 | $ 1,877 | $ 1,651 | $ 2,239 | $ 1,455 | |||||||
Proportionate share of total (as a percent) | 0.50% | 0.40% | 0.40% | 0.40% | 0.40% | 0.30% |
Employee Benefit Plans - Contri
Employee Benefit Plans - Contributions Expensed (Details) - Compensation - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Employee benefit plans | ||||||
Contributions expensed | $ 1,142 | $ 825 | $ 3,384 | $ 3,140 | $ 4,019 | $ 2,199 |
401(k) Plan | ||||||
Employee benefit plans | ||||||
Contributions expensed | 1,010 | 651 | 2,768 | 2,386 | 3,053 | 1,604 |
Profit Share Plan | ||||||
Employee benefit plans | ||||||
Contributions expensed | 62 | 220 | 438 | 539 | 416 | |
Provident Plan | ||||||
Employee benefit plans | ||||||
Contributions expensed | $ 132 | $ 112 | $ 396 | $ 316 | $ 427 | $ 179 |
Employee Benefit Plans - Nonqua
Employee Benefit Plans - Nonqualified Profit Sharing Incentive Compensation Plan (Details) - Profit Share Plan - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2014 | Sep. 30, 2016 | Dec. 31, 2015 | |
Employee benefit plans | |||
Accrued employee benefits | $ 441 | $ 535 | |
Maximum | |||
Employee benefit plans | |||
Period following last day of plan year that contributions are made | 90 days | ||
Service period required for eligibility | 1000 hours | ||
Minimum | |||
Employee benefit plans | |||
Period following last day of plan year that contributions are made | 90 days | ||
Service period required for eligibility | 1000 hours | ||
Accrued compensation costs | |||
Employee benefit plans | |||
Accrued employee benefits | $ 1,171 | $ 0 | $ 893 |
Employee Benefit Plans - India
Employee Benefit Plans - India Plan (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Subsidiary | India | ||
Employee benefit plans | ||
Accrued benefit obligation | $ 714 | $ 535 |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Feb. 28, 2015 | Mar. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2015 | |
Discontinued operations | ||||
Gain from collection of fully reserved note receivable | $ 900 | $ 900 | ||
Estimated impact to diluted EPS as a result of gain on discontinued operations (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | |
Discontinued operations sold | Business disposed of in 2012 | ||||
Discontinued operations | ||||
Gain from collection of fully reserved note receivable | $ 900 | $ 900 | ||
Estimated impact to diluted EPS as a result of gain on discontinued operations (in dollars per share) | $ 0.01 | $ 0.01 |
Consolidated Balance Sheets73
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Current assets | |||||
Cash and cash equivalents | $ 43,770 | $ 149,365 | $ 130,830 | $ 118,612 | $ 89,062 |
Restricted cash | 10,202 | 10,741 | 20,227 | ||
Accounts receivable, net of allowance for doubtful accounts of $1,053 and $655 at December 31, 2015 and 2014, respectively; and net of estimated allowance for refunds and appeals of $33,406 and $23,216 at December 31, 2015 and 2014, respectively | 83,345 | 78,856 | 60,215 | ||
Prepaid expenses and other current assets | 23,313 | 24,044 | 12,180 | ||
Deferred income taxes | 33,346 | 32,919 | 32,319 | ||
Total current assets | 193,976 | 295,925 | 243,553 | ||
Property and equipment, net | 63,768 | 57,452 | 34,919 | ||
Goodwill | 1,196,350 | 1,197,044 | 1,197,353 | ||
Intangible assets, net | 548,593 | 594,410 | 683,890 | ||
Other long-term assets | 2,866 | 2,176 | 1,376 | ||
TOTAL ASSETS | 2,005,553 | 2,147,007 | 2,161,091 | ||
Current liabilities: | |||||
Current maturities of long-term debt | 18,000 | 21,099 | 8,100 | ||
Customer deposits | 10,202 | 10,741 | 20,227 | ||
Accounts payable and accrued other expenses | 28,331 | 29,521 | 36,350 | ||
Accrued compensation costs | 41,520 | 42,902 | 42,639 | ||
Estimated liability for refunds and appeals | 70,596 | 67,775 | 74,941 | ||
Total current liabilities | 168,649 | 172,038 | 182,257 | ||
Long-term liabilities: | |||||
Long-term debt | 766,042 | 1,012,971 | 1,025,838 | ||
Other long-term liabilities | 9,454 | 12,199 | 4,597 | ||
Deferred tax liabilities | 152,967 | 162,203 | 175,266 | ||
Total long-term liabilities | 928,463 | 1,187,373 | 1,205,701 | ||
Total liabilities | 1,097,112 | 1,359,411 | 1,387,958 | ||
Commitments and contingencies (Note 6) | |||||
Stockholders' equity: | |||||
Common stock ($0.001 par value; 122,000,000 and 122,000,000 shares authorized, 77,237,711 and 77,212,091 issued, and 77,230,311 and 77,204,691 outstanding at December 31, 2015 and 2014, respectively | 90 | 77 | 77 | ||
Additional paid-in capital | 905,963 | 807,419 | 803,810 | ||
Retained earnings (deficit) | 8,625 | (14,935) | (28,798) | ||
Accumulated other comprehensive loss | (6,139) | (4,867) | (1,858) | ||
Treasury stock, at cost (7,400 shares at December 31, 2015 and 2014) | (98) | (98) | (98) | ||
Total stockholders' equity | 908,441 | 787,596 | 773,133 | $ 363,223 | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 2,005,553 | $ 2,147,007 | $ 2,161,091 |
Consolidated Balance Sheets (74
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Sep. 30, 2016 | May 13, 2016 | May 12, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Consolidated Balance Sheets | |||||
Allowance for doubtful accounts | $ 1,561 | $ 1,053 | $ 655 | ||
Estimated allowance for refunds and appeals | $ 31,887 | $ 33,406 | $ 23,216 | ||
Common stock, par value per share | $ 0.001 | $ 0.001 | $ 0.001 | ||
Common stock, shares authorized | 600,000,000 | 600,000,000 | 122,000,000 | 122,000,000 | 122,000,000 |
Common stock, shares issued | 90,177,862 | 77,237,711 | 77,212,091 | ||
Common stock, shares outstanding | 90,170,462 | 77,230,311 | 77,204,691 | ||
Treasury stock, shares | 7,400 | 7,400 | 7,400 |
Consolidated Statements of Co75
Consolidated Statements of Comprehensive Income (Loss) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($)$ / shares | |
Consolidated Statements of Comprehensive Income (Loss) | |
Net revenue | $ 541,343 |
Cost of revenue (exclusive of depreciation and amortization, stated separately below): | |
Compensation | 183,817 |
Other costs of revenue | 20,800 |
Total cost of revenue | 204,617 |
Selling, general and administrative expenses (exclusive of depreciation and amortization, stated separately below): | |
Compensation | 70,802 |
Other selling, general and administrative expenses | 65,943 |
Total selling, general and administrative expenses | 136,745 |
Depreciation and amortization of property and equipment | 12,695 |
Amortization of intangible assets | 61,467 |
Transaction-related expenses | 1,469 |
Impairment of intangible assets | 27,826 |
Total operating expenses | 444,819 |
Operating income | 96,524 |
Other expense (income): | |
Interest expense | 65,561 |
Loss on extinguishment of debt | 4,084 |
Other non-operating (income) expense | (826) |
Total other expense (income) | 68,819 |
Income (loss) from continuing operations before income taxes | 27,705 |
Income tax expense (benefit) | 14,401 |
Income (loss) from continuing operations | 13,304 |
Gain on discontinued operations, net of tax | 559 |
Net income (loss) | 13,863 |
Other comprehensive (loss) income, net of tax: | |
Foreign currency translation adjustments | (667) |
Change in available for sale securities | 3 |
Change in fair value of derivative instruments (net of related taxes of $1,320 and $476 for the years ended December 31, 2015 and 2014, respectively) | (2,345) |
Total other comprehensive (loss) income | (3,009) |
Comprehensive income (loss) | $ 10,854 |
Earnings per share from continuing operations: | |
Basic (in dollars per share) | $ / shares | $ 0.17 |
Diluted (in dollars per share) | $ / shares | 0.17 |
Earnings per share from discontinued operations: | |
Basic (in dollars per share) | $ / shares | 0.01 |
Diluted (in dollars per share) | $ / shares | 0.01 |
Total earnings per share: | |
Basic (in dollars per share) | $ / shares | 0.18 |
Diluted (in dollars per share) | $ / shares | 0.18 |
Pro forma earnings per share from continuing operations: | |
Basic (in dollars per share) | $ / shares | 0.15 |
Diluted (in dollars per share) | $ / shares | 0.15 |
Pro forma earnings per share from discontinued operations: | |
Basic (in dollars per share) | $ / shares | 0.01 |
Diluted (in dollars per share) | $ / shares | 0.01 |
Pro forma earnings per share | |
Basic (in dollars per share) | $ / shares | 0.16 |
Diluted (in dollars per share) | $ / shares | $ 0.16 |
Consolidated Statements of Co76
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Other comprehensive income (loss), tax: | ||
Change in fair value of derivative instruments, related taxes | $ 1,320 | $ 476 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income/(Loss) | Treasury Stock | Total |
Balance at beginning of period at Dec. 31, 2013 | $ 44 | $ 366,094 | $ (2,973) | $ 58 | $ 363,223 | |
Balance at beginning of period (in shares) at Dec. 31, 2013 | 44,408,008 | |||||
Change in Stockholders' Equity | ||||||
Net loss | (25,825) | (25,825) | ||||
Stock-based compensation expense | 2,492 | 2,492 | ||||
Exercise of stock options | 113 | $ (98) | $ 15 | |||
Exercise of stock options (in shares) | 6,362 | 7,400 | 13,762 | |||
Proceeds from issuance of common stock | $ 33 | 435,111 | $ 435,144 | |||
Proceeds from issuance of common stock (in shares) | 32,790,321 | |||||
Other comprehensive loss, net | (1,916) | $ (1,916) | ||||
Balance at end of period (in shares) at Dec. 31, 2014 | 77,204,691 | 7,400 | 77,204,691 | |||
Balance at end of period at Dec. 31, 2014 | $ 77 | 803,810 | (28,798) | (1,858) | $ (98) | $ 773,133 |
Change in Stockholders' Equity | ||||||
Net loss | 13,863 | 13,863 | ||||
Stock-based compensation expense | 3,399 | 3,399 | ||||
Exercise of stock options | 210 | $ 210 | ||||
Exercise of stock options (in shares) | 25,620 | 25,620 | ||||
Other comprehensive loss, net | (3,009) | $ (3,009) | ||||
Balance at end of period (in shares) at Dec. 31, 2015 | 77,230,311 | 7,400 | 77,230,311 | |||
Balance at end of period at Dec. 31, 2015 | $ 77 | $ 807,419 | $ (14,935) | $ (4,867) | $ (98) | $ 787,596 |
Change in Stockholders' Equity | ||||||
Net loss | 23,560 | |||||
Other comprehensive loss, net | $ (1,272) | |||||
Balance at end of period (in shares) at Sep. 30, 2016 | 90,170,462 | |||||
Balance at end of period at Sep. 30, 2016 | $ 908,441 |
Consolidated Statements of Ca78
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | ||
Net income | $ 13,863 | $ (25,825) |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Deferred income taxes | (11,832) | (46,873) |
Depreciation and amortization | 74,162 | 59,771 |
Stock-based compensation expense | 3,399 | 2,492 |
Amortization of debt issuance costs | 5,565 | 4,398 |
Accretion of asset retirement obligations | 166 | 131 |
Loss on impairment of intangible assets | 27,826 | 74,034 |
Loss on extinguishment of debt | 4,084 | 21,524 |
Gain on discontinued operations | (900) | |
Changes in operating assets and liabilities: | ||
Restricted cash | 9,486 | (6,020) |
Accounts receivable | (18,641) | 6,709 |
Other current assets | (12,265) | (1,167) |
Other long-term assets | 98 | 160 |
Customer deposits | (9,486) | 6,020 |
Accrued compensation | 263 | (38,844) |
Accounts payable and accrued other expenses | (14,831) | 5,694 |
Estimated liability for refunds and appeals | (7,166) | 33,303 |
Other long-term liabilities | (115) | 105 |
Other | (522) | 116 |
Net cash provided by operating activities | 63,154 | 95,728 |
Cash flows from investing activities: | ||
Expenditures for property and equipment | (22,982) | (19,014) |
Business combinations, net of cash acquired | (1,072,614) | |
Other investing activities | 401 | 108 |
Net cash provided by (used in) investing activities | (22,581) | (1,091,520) |
Cash flows from financing activities: | ||
Net proceeds from issuance of common stock | 365,187 | |
Proceeds from exercise of stock options | 210 | 32 |
Purchase of treasury shares | (18) | |
Proceeds from issuance of debt | 1,395,000 | |
Payment of contingent consideration | (750) | |
Payment of debt issuance costs | (1,086) | (49,635) |
Repayment of debt | (8,100) | (683,944) |
Net cash (used in) provided by financing activities | (8,976) | 1,025,872 |
Effect of foreign exchanges on cash and cash equivalents | (844) | (530) |
Net (decrease) increase in cash and cash equivalents | 30,753 | 29,550 |
Cash and cash equivalents at beginning of period | 118,612 | 89,062 |
Cash and cash equivalents at end of the period | 149,365 | 118,612 |
Supplemental disclosures of cash flow information: | ||
Cash paid for income taxes | 41,119 | 27,433 |
Cash paid for interest | 60,238 | 46,530 |
Noncash investing activities (accrued property and equipment purchases) | $ 12,949 | 947 |
Noncash financing activities (issuance of common stock) | 69,957 | |
Noncash acquisition of treasury stock | $ 98 |
Description of Business79
Description of Business | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Description of Business | Note 1. Description of Business Cotiviti Holdings, Inc. (collectively with its subsidiaries, “we,” “our,” “Cotiviti” or the “Company”) is a leading provider of analytics‑driven payment accuracy solutions, focused primarily on the healthcare sector. Our integrated solutions help clients enhance payment accuracy in an increasingly complex healthcare environment. We leverage our robust technology platform, configurable analytics, proprietary information assets and expertise in healthcare reimbursement to help our clients enhance their claims payment accuracy. We help our healthcare clients identify and correct payment inaccuracies. We work with over 40 healthcare organizations, including eight of the ten largest U.S. commercial, Medicaid and Medicare managed health plans, as well as the Centers for Medicare and Medicaid Services (“CMS”). We are also a leading provider of payment accuracy solutions to over 35 retail clients, including eight of the ten largest retailers in the United States. | Note 1. Description of Business Cotiviti Holdings, Inc. (collectively with its subsidiaries, “we,” “our,” “Cotiviti” or the “Company”) is a leading provider of analytics‑driven payment accuracy solutions, focused primarily on the healthcare sector. Our integrated solutions help clients enhance payment accuracy in an increasingly complex healthcare environment. We leverage our robust technology platform, configurable analytics, proprietary information assets and expertise in healthcare reimbursement to help our clients enhance their claims payment accuracy. We help our healthcare clients identify and correct payment inaccuracies. We work with over 40 healthcare organizations, including eight of the ten largest U.S. commercial, Medicaid and Medicare managed health plans, as well as the Centers for Medicare and Medicaid Services (“CMS”). We are also a leading provider of payment accuracy solutions to over 40 retail clients, including eight of the ten largest retailers in the United States. We were incorporated in Delaware on June 4, 2012, under the name “Husky‑C&W Superholdings, Inc.” On July 26, 2012, we changed our name to “Strident Superholdings, Inc.,” and on January 28, 2014, we changed our name to “Connolly Superholdings, Inc.” (“Connolly”). On May 14, 2014, we merged (the “Connolly iHealth Merger”) with iHealth Technologies, Inc. (“iHT”). At the time of the merger, Connolly was a leading provider of retrospective payment accuracy solutions to U.S. healthcare providers and retailers and iHT was a leading provider of prospective payment accuracy solutions to U.S. healthcare providers. As a result of the Connolly iHealth Merger, iHT and all of its wholly‑owned subsidiaries became our wholly‑owned subsidiaries. The results of operations for iHT are included in our consolidated financial statements as of and since May 14, 2014. Accordingly, comparability to other periods presented is impacted by the timing of the Connolly iHealth Merger. We have adopted a holding company structure and our primary domestic operations are performed through our wholly‑owned operating subsidiaries. We have international operations in Canada, the United Kingdom, and India. We rebranded our company as “Cotiviti” in September 2015. |
Summary of Significant Accoun80
Summary of Significant Accounting Policies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Summary of Significant Accounting Policies | ||
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Basis of Presentation Our accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). All significant intercompany balances and transactions have been eliminated in consolidation. These consolidated financial statements are unaudited and have been prepared by us following the rules and regulations of the U.S. Securities and Exchange Commission. In our opinion they reflect all adjustments, including normal recurring items, that are necessary to present fairly the results of interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations; however, we believe that the disclosures are adequate to make the information presented not misleading. Operating results for the periods presented herein are not necessarily indicative of the results that may be expected for other interim periods or the entire fiscal year. Certain prior year amounts have been reclassified to conform to the current year presentation. Revenue Recognition, Unbilled Receivables and Estimated Liability for Refunds and Appeals We provide services under contracts that contain various fee structures, including performance fee‑based contracts and fixed fee arrangements. Revenue is recognized when a contract exists, services have been provided to the client, the fee is fixed and determinable and collectability is reasonably assured. We recognize revenue on performance fee-based contracts based upon the specific terms of the underlying contract. The contract terms generally specify: (a) time periods covered by the work to be performed; (b) nature and extent of services we are to provide; (c) the client’s duties in assisting and cooperating with us; and (d) fees payable to us. Our fees are most often expressed as a percentage of our findings. Generally, our services are rendered when our clients realize the economic benefits from our services. Our clients realize economic benefits when they take credits against their existing accounts payable based on when we identify cost savings, when they receive refund checks based on overpayments, or when they acknowledge payment reductions based on cost savings. We derive a relatively small portion of revenue on contracts with fixed fee arrangements. We recognize revenue on these contracts ratably over the contract term and once all of the above criteria have been satisfied. Historically, there has been a certain amount of revenue with respect to which, even though we had met the requirements of our revenue recognition policy, the claim is ultimately rejected. In such cases, our clients may request a refund or offset if their providers or vendors ultimately reject the payment inaccuracies we find or if our clients determine not to pursue reimbursement from their providers or vendors even though we may have collected fees. We record any such refund as a reduction of revenue. We record an estimate for refund liabilities at any given time based on actual historical refund data by client type. We satisfy such refund liabilities either by offsets to accounts receivable or by cash payments to clients. In addition to the refund liabilities, we calculate client specific reserves when we determine an additional reserve may be necessary. The estimated liability for refunds and appeals representing our estimate of claims that may be overturned related to revenue which had already been received was $70,596 and $67,775 at September 30, 2016 and December 31, 2015, respectively. The estimated allowance for refunds and appeals representing our estimate of claims that may be overturned related to amounts in accounts receivable was $31,887 and $33,406 at September 30, 2016 and December 31, 2015, respectively. Under the Medicare Recovery Audit Program, in which we are one of the four Recovery Audit Contractors (“Medicare RAC”) for CMS, healthcare providers have the right to appeal a claim and may pursue additional appeals if the initial appeal is found in favor of CMS. We accrue an estimated liability for appeals based on the amount of fees that are subject to appeals, closures or other adjustments and those which we estimate are probable of being returned to CMS following a successful appeal by the providers. Our estimates are based on our historical experience with the Medicare RAC appeal process. This estimated liability for Medicare RAC appeals is an offset to revenue in our Consolidated Statements of Comprehensive Income. The liability is included in the estimated liability for refunds and appeals on our Consolidated Balance Sheets. See Note 6 for further information regarding the estimated liability for appeals related to the Medicare RAC program. Unbilled receivables represent revenue recognized related to claims for which clients have received economic value that were not invoiced at the balance sheet date. Unbilled receivables were approximately $51,762 and $51,799 as of September 30, 2016 and December 31, 2015, respectively and are included in accounts receivable on our Consolidated Balance Sheets. Certain unbilled receivables arise when a portion of our earned fee is deferred at the time of the initial invoice. At a later date (which can be up to a year after original invoice, and at other times during the year after completion of the audit period based on contractual terms or as agreed with our client), we invoice the unbilled receivable amount. Notwithstanding the deferred due date, our clients acknowledge we have earned this unbilled receivable at the time of the original invoice, but we have agreed to defer billing the client for the related services. Unbilled receivables of this nature were approximately $5,828 and $6,431 as of September 30, 2016 and December 31, 2015, respectively, and are included in accounts receivable on our Consolidated Balance Sheets. We record periodic changes in unbilled receivables and refund liabilities as adjustments to revenue. Recently Issued Accounting Standards In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”) which addresses eight specific cash flow issues in order to reduce diversity in practice. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted. We are evaluating this guidance and its impact on our consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”) which simplifies several aspects of the accounting for share based compensation. ASU 2016-09 changes several aspects of the accounting for share based payment award transactions, including 1) accounting for income taxes, 2) classification of excess tax benefits on the statement of cash flows, 3) forfeitures, 4) minimum statutory tax withholding requirements and 5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes. We early adopted ASU 2016-09 on a prospective basis during the third quarter of 2016, which did not result in any significant changes to our current or prior period consolidated financial statements. In conjunction with adopting ASU 2016-09, we made an accounting policy election to account for forfeitures as they occur. In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”) which changes the accounting recognition, measurement and disclosure for leases in order to increase transparency. ASU 2016-02 requires lease assets and liabilities to be recognized on the balance sheet and key information about leasing arrangements to be disclosed. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We are evaluating this new guidance and its impact on our consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”) which changes the current financial instruments model primarily impacting the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. We are evaluating this new guidance and do not believe it will have a material impact on our consolidated financial statements and related disclosures. In November 2015, the FASB issued ASU 2015‑17, Balance Sheet Classification of Deferred Taxes , (“ASU 2015‑17”) which requires entities with a classified balance sheet to present all deferred tax assets and liabilities as noncurrent. The guidance is effective for public companies with annual and interim periods beginning after December 15, 2016. Early adoption is permitted. We are evaluating this new guidance and its impact on our consolidated balance sheets and related disclosures and expect the adoption of this ASU will reduce our total current assets and net working capital. In April 2015, the FASB issued ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (“ASU 2015-05”) which established guidance regarding the accounting for software licenses. ASU 2015-05 is effective for annual reporting periods, including interim periods, beginning after December 15, 2015. We prospectively adopted the provisions of ASU 2015-05 as of January 1, 2016 and have not yet had any material contracts that were impacted by this new guidance. In April 2015, the FASB issued ASU 2015‑03, Simplifying the Presentation of Debt and Issuance Costs (“ASU 2015‑03”) which establishes guidance to simplify the presentation of debt issuance costs by requiring debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that liability, consistent with debt discounts. Prior to the issuance of ASU 2015-03, debt issuance costs were required to be presented as an asset in the balance sheet. The guidance is effective for annual reporting periods beginning after December 15, 2015, and interim periods within that reporting period. We adopted the provisions of ASU 2015-03 as of January 1, 2016 and prior period amounts have been reclassified to conform to the current period presentation. As of December 31, 2015, $20,975 of debt issuance costs were reclassified in the consolidated balance sheet from debt issuance costs, net to long-term debt. The adoption of ASU 2015-03 did not materially impact our consolidated financial position, results of operations or cash flows. In May 2014, the FASB issued ASU No. 2014‑09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014‑09”) which supersedes existing revenue recognition guidance and provides clarification of principles for recognizing revenue from contracts with customers. The guidance is effective for public companies with annual periods beginning after December 15, 2017 and interim periods within that reporting period. We are evaluating this new guidance, the method of adoption we will take and the impact, if any, on our consolidated financial statements and related disclosures. | Note 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements include our accounts and our wholly‑owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions affecting the reported amounts in our consolidated financial statements and accompanying notes. These estimates are based on information available as of the date of the Consolidated Financial Statements; therefore, actual results could differ from those estimates. Foreign Currency Translation Assets and liabilities of our foreign subsidiaries with a functional currency other than the U.S. Dollar are translated into U.S. Dollars using applicable exchange rates at the balance sheet date. Revenue and expenses are translated at average exchange rates effective during the year. The resulting foreign currency translation gains and losses are included as a component of accumulated other comprehensive (loss) income within stockholders’ equity on our Consolidated Balance Sheets. Assets and liabilities of our foreign subsidiaries for which the functional currency is the U.S. Dollar are re‑measured into U.S. Dollars using applicable exchange rates at the balance sheet date, except nonmonetary assets and liabilities, which are re‑measured at the historical exchange rates prevailing when acquired. Revenue and expenses are re‑measured at average exchange rates effective during the year. Foreign currency translation gains and losses from re‑measurement are included in other non‑operating (income) expense in the accompanying Consolidated Statements of Comprehensive Income (Loss). The amounts of net gain (loss) on foreign currency re‑measurement recognized were immaterial for all periods presented. Revenue Recognition, Unbilled Receivables and Estimated Liability for Refunds and Appeals We provide services under contracts that contain various fee structures, including performance fee‑based contracts and fixed fee arrangements. Revenue is recognized when a contract exists, services have been provided to the client, the fee is fixed and determinable and collectability is reasonably assured. We recognize revenue on performance fee based contracts based upon the specific terms of the underlying contract. The contract terms generally specify: (a) time periods covered by the work to be performed; (b) nature and extent of services we are to provide; (c) the client’s duties in assisting and cooperating with us; and (d) fees payable to us. Our fees are most often expressed as a percentage of our findings. Generally, our services are rendered when our clients realize the economic benefits from our services. Our clients realize economic benefits when they take credits against their existing accounts payable based on when we identify cost savings, when they receive refund checks based on overpayments, or when they acknowledge payment reductions based on cost savings. We derive a relatively small portion of revenue on contracts with fixed‑fee arrangements. We recognize revenue on these contracts ratably over the contract term and once all of the above criteria have been satisfied. Historically, there has been a certain amount of revenue with respect to which, even though we had met the requirements of our revenue recognition policy, the claim is ultimately rejected. In such cases, our clients may request a refund or offset if their providers or vendors ultimately reject the payment inaccuracies we find or if our clients determine not to pursue reimbursement from their providers or vendors even though we may have collected fees. We record any such refund as a reduction of revenue. We record an estimate for refund liabilities at any given time based on actual historical refund data by client type. We satisfy such refund liabilities either by offsets to accounts receivable or by cash payments to clients. In addition to the refund liabilities, we calculate client specific reserves when we determine an additional reserve may be necessary. The estimated liability for refunds and appeals representing our estimate of claims that may be overturned related to revenue which had already been received was $67,775 and $74,941 at December 31, 2015 and 2014, respectively. The estimated allowance for refunds and appeals representing our estimate of claims that may be overturned related to amounts in accounts receivable was $33,406 and $23,216 at December 31, 2015 and 2014, respectively. Under the Medicare Recovery Program, in which we are one of the four Recovery Audit Contractors (“Medicare RAC”) with CMS, healthcare providers have the right to appeal a claim and may pursue additional appeals if the initial appeal is found in favor of CMS. We accrue an estimated liability for appeals based on the amount of fees that are subject to appeals, closures or other adjustments and those which we estimate are probable of being returned to CMS following a successful appeal by the providers. Our estimates are based on our historical experience with the Medicare RAC appeal process. This estimated liability for Medicare RAC appeals is an offset to revenue in our Consolidated Statements of Comprehensive Income (Loss). The liability is included in the estimated liability for refunds and appeals on our Consolidated Balance Sheets. See Note 8 for further information regarding the estimated liability for appeals related to the Medicare RAC program. Unbilled receivables represent revenue recognized related to claims for which clients have received economic value that were not invoiced at the balance sheet date. Unbilled receivables were approximately $51,799 and $42,433 as of December 31, 2015 and 2014, respectively and are included in accounts receivable on our Consolidated Balance Sheets. Certain unbilled receivables arise when a portion of our earned fee is deferred at the time of the initial invoice. At a later date (which can be up to a year after original invoice, and at other times during the year after completion of the audit period based on contractual terms or as agreed with our client), we invoice the unbilled receivable amount. Notwithstanding the deferred due date, our clients acknowledge we have earned this unbilled receivable at the time of the original invoice, but we have agreed to defer billing the client for the related services. Unbilled receivables of this nature were approximately $6,431 and $7,519 as of December 31, 2015 and 2014, respectively, and are included in accounts receivable on our Consolidated Balance Sheets. We record periodic changes in unbilled receivables and refund liabilities as adjustments to revenue. Cost of Revenue Cost of revenue is a direct cost associated with generating revenue. Cost of revenue related to compensation includes the total cost of payroll, related benefits and stock compensation expense for employees in roles that serve to provide direct revenue generating services to clients. Other cost of revenue primarily includes expenses related to the use of certain subcontractors, costs associated with the retrieval of medical records and facilities‑related costs associated with locations that are used strictly for revenue generating activities. Cost of revenue does not include any depreciation and amortization, which is stated separately in our Consolidated Statements of Comprehensive Income (Loss). Selling, General and Administrative (“SG&A”) Compensation within SG&A includes the total cost of payroll, related benefits and stock compensation expense for employees who do not have a direct role associated with revenue generation including those involved with developing new service offerings. Other SG&A operating expenses include all general operating costs. These costs include, but are not limited to, rent and occupancy costs for facilities associated with locations that are used for employees not serving in revenue generating roles, telecommunications costs, IT infrastructure costs, software licensing costs, advertising and marketing expenses, costs associated with developing new service offerings and expenses related to the use of certain subcontractors and professional services firms. Selling, general and administrative expenses do not include any depreciation and amortization, which is stated separately in our Consolidated Statements of Comprehensive Income (Loss). Advertising Costs Advertising costs are expensed as incurred and included in other selling, general and administrative expenses on our Consolidated Statements of Comprehensive Income (Loss). Advertising expense was $1,241 and $1,294 for the years ended December 31, 2015 and 2014, respectively. Cash and Cash Equivalents Cash and cash equivalents include all cash balances and highly liquid investments with an original maturity of 90 days or less from the date of purchase. Restricted Cash In connection with providing services to certain clients, we maintain a series of lockbox accounts with certain financial institutions. These lockbox accounts exist to receive funds we collect on behalf of our clients resulting from services provided. When client funds are received and deposited into the lockbox accounts, we record a corresponding customer deposit liability. These funds are included as both restricted cash in current assets and customer deposits in current liabilities on our Consolidated Balance Sheets. Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. We accrue an allowance against accounts receivable related to fees yet to be collected, based on historical losses adjusted for current market conditions, our clients’ financial condition, the amount of any receivables in dispute, the current receivables aging and current payment patterns. We record changes in our estimate to the allowance for doubtful accounts through bad debt expense and relieve the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Write‑offs for all periods presented have not been significant. We do not have any off‑balance‑sheet credit exposure related to our clients. Investments Investments, which are primarily purchased on behalf of our nonqualified profit sharing incentive compensation plan (See Note 19), consist of money market securities, which have been classified as available‑for‑sale securities. Available‑for‑sale securities are reported at fair values (based primarily on quoted prices and market observable inputs) using the specific identification method, with the unrealized gains and losses included in accumulated other comprehensive income (loss) on our Consolidated Balance Sheets. Investments are included in prepaid expenses and other current assets on our Consolidated Balance Sheets. Realized gains and losses and interest and dividends on available‑for‑sale securities are included in other non‑operating (income) expense on the Consolidated Statements of Comprehensive Income (Loss). Property and Equipment Property and equipment is stated at cost, net of accumulated depreciation. Depreciation on property and equipment is calculated using the straight‑line method over the estimated useful lives of the assets and is included in depreciation and amortization of property and equipment in our Consolidated Statements of Comprehensive Income (Loss). The estimated useful lives of our property and equipment are as follows: Computer equipment 3 ‑ 5 years Software 2 ‑ 5 years Furniture and fixtures 7 years Leasehold improvements Lesser of remaining lease term or expected service life of improvement Asset Retirement Obligations We have asset retirement obligations (“AROs”) arising from contractual requirements to perform specified activities at the time of disposition of certain leasehold improvements and equipment at some of our facilities. We record a liability for the estimated costs of these AROs. The liabilities are included in other long‑term liabilities on our Consolidated Balance Sheets and are initially measured at fair value and subsequently are adjusted for accretion expense and any changes in the amount or timing of the estimated cash flows. Internally Developed Software Costs Capitalization of costs incurred in connection with software developed for internal use commences when both the preliminary project stage is completed and management has authorized further funding for the project, based on a determination that it is probable the project will be completed and used to perform the function intended. Capitalized costs are limited to (i) external direct costs of materials and services consumed in developing or obtaining internal‑use software and (ii) payroll and payroll‑related costs for employees who are directly associated with and devote time to the internal‑use software project. Capitalization of such costs ceases no later than the point at which the project is substantially complete and ready for its intended use. All other costs to develop software for internal use are expensed as incurred. We capitalized approximately $2,764 and $3,254 for the years ended December 31, 2015 and 2014, respectively. Amortization of software and software development costs is calculated on a straight‑line basis over the expected economic life of the software, generally estimated to be five years and is included in depreciation and amortization of property and equipment on our Consolidated Statements of Comprehensive Income (Loss). Amortization expense for internal‑use software was $2,257 and $722 for the years ended December 31, 2015 and 2014, respectively. Amortization expense for the year ended December 31, 2015 includes the write‑off of approximately $975 related to software that is no longer being used. Intangible Assets Our intangible assets with definite lives include customer relationships and acquired software. Intangible assets with indefinite lives include a trademark, which is not being amortized and are tested for impairment on an annual basis or when events or changes in circumstances necessitate an evaluation for impairment. Intangible assets with definite lives are initially recorded at fair value and are amortized on a basis consistent with the timing and pattern of expected cash flows used to value the intangibles, generally on a straight‑line basis over useful lives ranging from 6 to 14 years. Amortization expense is included in amortization of intangible assets in our Consolidated Statements of Comprehensive Income (Loss). Impairment of Long‑Lived Assets Long‑lived assets, including property and equipment and intangible assets with definite lives, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. If circumstances require the asset or asset group be tested for possible impairment, we first compare undiscounted cash flows expected to be generated by the asset or asset group to its carrying value. If the carrying value of the asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment loss is recognized to the extent the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third‑party independent appraisals, as necessary. Intangible assets with indefinite lives are tested for impairment on an annual basis as of October 1, of each year or more frequently whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is measured by a comparison of the carrying amounts to the future discounted cash flows the assets are expected to generate. We recognized a $27,826 impairment charge on our trademark assets during the year ended December 31, 2015 due to a change in the estimated fair value of the trademark. We recognized a $74,034 impairment charge for the year ended December 31, 2014 due to the change in the estimated fair value of our CMS customer relationship intangible asset associated with the Medicare RAC. See Note 6 for further detail. Goodwill Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination which are not individually identified and separately recognized. We do not amortize goodwill. Goodwill is reviewed for impairment on an annual basis as of October 1, of each year or more frequently if a triggering event occurs. These tests are performed at the reporting unit level. We have two reporting units, Healthcare and Global Retail and Other. We are permitted to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two‑step impairment test as required in ASC 350, Intangibles—Goodwill and Other . If we can support the conclusion that it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then we would not need to perform the two‑step impairment test. If we cannot support such a conclusion, or we do not elect to perform the qualitative assessment, then the first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The fair value of each reporting unit is determined using a discounted cash flow analysis. Acquisitions We account for acquisitions using the accounting for business combinations. In each case, we allocated the purchase price to the identifiable net assets acquired, including intangible assets and liabilities assumed, based on estimated fair values at the date of the acquisition. The excess of the purchase price over the amount allocated to the identifiable assets and liabilities, if any, is recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires significant judgment, including the selection of valuation methodologies, estimates of future revenue and cash flows and discount rates. Under the acquisition method of accounting for business combinations, any changes to acquired balances in tax accounts, including adjustments to deferred tax asset valuation allowances or liabilities related to uncertain tax positions, which are recorded during the measurement period, and are determined to be attributable to facts and circumstances that existed as of the acquisition date, are considered a measurement period adjustment and will result in an offsetting increase or decrease to goodwill. All other changes to deferred tax asset valuation allowances and liabilities related to uncertain tax positions will result in an increase or decrease to income tax expense. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred 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, as well as for tax attributes such as operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We recognize net deferred tax assets to the extent that we believe these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax‑planning strategies, and results of recent operations. In the event we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we reduce the deferred tax asset valuation allowance and record a benefit in our provision for income taxes in our Consolidated Statements of Comprehensive Income (Loss). We record liabilities related to uncertain tax positions in accordance with ASC 740, Income Taxes (“ASC 740”) on the basis of a two‑step process whereby (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more‑likely‑than‑not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. We recognize interest and penalties related to unrecognized tax benefits within the income tax provision in the accompanying Consolidated Statements of Comprehensive Income (Loss). Accrued interest and penalties are included within accounts payable and accrued other expenses in the Consolidated Balance Sheets. Derivative Instruments Our derivative instruments consist entirely of interest rate cap agreements, are stated at fair value and are included in accounts payable and accrued other expenses and other long‑term liabilities on our Consolidated Balance Sheets. Changes in the fair value of derivatives that are designated as cash flow hedges are deferred in accumulated other comprehensive income (loss) on our Consolidated Balance Sheets until the underlying hedged transactions are recognized in earnings, at which time any deferred hedging gains or losses are also recorded in earnings. See Note 10 for more information. Stock‑Based Compensation Our policy is to issue new shares for purchases under our stock‑based award plan as described in Note 15. Stock‑based compensation expense is estimated at the grant date based on an award’s fair value as calculated by the Black‑Scholes‑Merton option pricing model. The determination of the stock‑based compensation expense is affected by our estimated stock price, expected stock price volatility over the term of the awards, expected term, risk‑free interest rate and expected dividends. We estimate a forfeiture rate based on historical experience and adjust the rate as necessary to reflect changes in facts and circumstances, if any. We recognize stock‑based compensation expense for service‑based equity awards using the straight‑line attribution method over the requisite service period. We have awarded performance‑based equity awards to certain employees and directors. These awards vest based on a series of criteria triggered upon a qualifying change of control event. Consistent with the service‑based equity awards, the vesting of performance‑based equity awards is dependent upon the participant’s continued employment through the date the performance criteria have been achieved. No stock‑based compensation expense has been recorded for performance‑based equity awards because the qualifying events have not occurred as of December 31, 2015. At the consummation of a change in control event or an initial public offering, we will record stock‑based compensation expense net of forfeitures based on the grant date fair value of the awards. Commitments and Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. See Note 8 for further detail on loss contingency related to the Medicare RAC. Fair Value of Financial Instruments The carrying values for cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and other accrued liabilities reasonably approximate fair market value due to their nature and the short term maturity of these financial instruments. We measure assets and liabilities at fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, we use a consistent fair value hierarchy framework as defined in ASC 820, Fair Value Measurement . Refer to Note 11 for more information regarding management’s fair value estimates. Recently Issued Accounting Standards In February 2016, the FASB issued ASU 2016‑02, Leases (“ASU 2016‑02”) which changes the accounting recognition, measurement and disclosure for leases in order to increase transparency. ASU 2016‑02 requires lease assets and liabilities to be recognized on the balance sheet and key information about leasing arrangements to be disclosed. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We are evaluating this new guidance and its impact on our consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU 2016‑01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016‑01”) which changes the current financial instruments model primarily impacting the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. We are evaluating this new guidance and do not believe it will have a material impact on our consolidated financial statements and related disclosures. In November 2015, the FASB issued ASU 2015‑17, Balance Sheet Classification of Deferred Taxes , (“ASU 2015‑17”) which requires entities with a classified balance sheet to present all deferred tax assets and liabilities as noncurrent. The guidance is effective for public companies with annual and interim periods beginning after December 15, 2016. Early adoption is permitted. We are evaluating this new guidance and its impact on our consolidated balance sheets and related disclosures and expect the adoption of this ASU will reduce our total current assets and net working capital. In September 2015, the FASB issued ASU 2015‑16, Simplifying the Accounting for Measurement‑Period Adjustments (“ASU 2015‑16”) which requires an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. We early adopted this guidance in 2015 and it did not have a material impact to our consolidated financial statements and related disclosures. In April 2015, the FASB issued ASU 2015‑05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (“ASU 2015‑05”) which established guidance regarding the accounting for software licenses. ASU 2015‑05 is effective for annual reporting periods, including interim periods, beginning after December 15, 2015. We are evaluating this new guidance and do not believe it will have a material impact on our consolidated financial statements and related disclosures. In April 2015, the FASB issued ASU 2015‑03, Simplifying the Presentation of Debt and Issuance Costs (“ASU 2015‑03”) which establishes guidance to simplify the presentation of debt issuance costs by requiring debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that liability, consistent with debt discounts. The guidance is effective for annual reporting periods beginning after December 15, 2015, and interim periods within that reporting period. Early adoption is permitted. We are evaluating this new guidance and do not believe it will have a material impact on our consolidated financial statements and related disclosures. In June 2014, FASB issued ASU 2014‑12, Accounting for Share‑Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (“ASU 2014‑12”). ASU 2014‑12 brings consistency to the accounting for share‑based payment awards that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards. ASU 2014‑12 is effective for annual reporting periods beginning after December 15, 2015, and interim periods within that reporting period. Early adoption is permitted. We are evaluating this new guidance and do not believe it will have a material impact on our consolidated financial statement disclosures. In May 2014, the FASB issued ASU No. 2014‑09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014‑09”) which supersedes existing revenue recognition guidance and provides clarification of principles for recognizing revenue from contracts with customers. ASU 2014‑09 is effective for annual periods beginning after December 15, 2017 and interim periods within that reporting period. We are evaluating this new guidance, the method of adoption we will take and the impact, if any, on our consolidated financial statements and related disclosures. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2015 | |
Investments | |
Investments | Note 3. Investments Investments in marketable securities, all of which are classified as available‑for‑sale and included in prepaid expenses and other current assets, were as follows: December 31, 2015 December 31, 2014 Amortized Gross Gross Fair Amortized Gross Gross Fair Money market securities $ $ $ — $ $ $ — $ — $ |
Acquisition
Acquisition | 12 Months Ended |
Dec. 31, 2015 | |
Acquisition | |
Acquisition | Note 4. Acquisition On May 14, 2014, we acquired the stock of iHT resulting in the Connolly iHealth Merger. The Connolly iHealth Merger brought two market leaders together to offer clients a broad suite of claims accuracy solutions. This merger and related transaction expenses were funded through a cash investment by us and our stockholders as well as by borrowings as described in Note 9. In addition to the cash funding related to the Connolly iHealth Merger, certain members of management received $69,957 in equity by rolling over a portion of their former equity interests in iHT or incentive compensation that was owed to them as of the date of the merger. As part of the Connolly iHealth Merger, we allocated the purchase price to the identifiable net assets acquired, including intangible assets and liabilities assumed, based on the estimated fair values at the date of acquisition. The excess of the purchase price over the amount allocated to the identifiable assets and liabilities was recorded as goodwill. Goodwill represents the value of the acquired assembled workforce, specialized processes and procedures and operating synergies, none of which qualify as separate intangible assets. We believe these specialized processes and procedures and operating synergies will enhance our long history of innovation in improving our existing solutions, developing new solutions and expanding the scope of our services at both legacy companies. As a result of the Connolly iHealth Merger, we have cross‑sell opportunities across more than 70% of our healthcare client base and are actively engaging with existing clients to cross‑sell our solutions. We determined the estimated fair values of intangible assets acquired using estimates of future discounted cash flows to be generated by the business over the estimated duration of those cash flows. We based the estimated cash flows on our projections of future revenue, operating expenses, capital expenditures, working capital needs and tax rates. We estimated the duration of the cash flows based on the projected useful lives of the assets acquired. The discount rate was determined based on specific business risk, cost of capital and other factors. The estimated fair values of the assets acquired and liabilities assumed, after the effect of final adjustments related to the accounting for business combinations within the measurement period as described below, at the date of the Connolly iHealth Merger were as follows: May 14, 2014 Cash $ Accounts receivable Prepaid expenses and other assets Other long‑term assets Property and equipment Intangible assets Total identifiable assets acquired Accounts payable and accrued liabilities Deferred tax liabilities Other long‑term liabilities Total liabilities assumed Net identifiable assets acquired Goodwill Net assets acquired $ The $543,200 of acquired intangible assets are subject to a weighted‑average useful life of approximately 13.3 years. These definite‑lived intangible assets include a registered trademark of $8,600 (11 year useful life), customer relationships of $486,700 (14 year useful life) and acquired software of $47,900 (7 year useful life). For federal income tax purposes, the Connolly iHealth Merger was treated as a stock acquisition. The goodwill recognized is not deductible for income tax purposes. In connection with the acquisition, a preliminary liability of $21,291 was recorded in accounts payable and accrued other expenses on the Consolidated Balance Sheets as of December 31, 2014 for payments due to the former stockholders of iHT. These amounts were finalized and no other adjustments were made to the estimated fair values of the assets acquired and liabilities assumed during the measurement period in 2015 as additional information was received by management resulting in a total liability due to the former stockholders of iHT of $22,270 and a corresponding increase to goodwill of $979. The payment in full was made to the former stockholders during the year ended December 31, 2015. We recorded $5,745 of transaction costs primarily related to professional services associated with the Connolly iHealth Merger as transaction‑related expenses within our Consolidated Statements of Comprehensive Income (Loss) during the year ended December 31, 2014. We consolidated the results of operations of the acquired business as of and from May 14, 2014. The following are unaudited pro forma results of operations for the year ended December 31, 2014 as if the acquisition had occurred on January 1, 2014, and does not give effect to any estimated and potential cost savings or other operating efficiencies that may result from the Connolly iHealth Merger. These unaudited pro forma results are for comparative purposes only and may not be indicative of the results that would have occurred had this acquisition been completed on January 1, 2014 or the results that would be attained in the future. Year Ended (unaudited) Net revenue $ Operating income Net loss Basic loss per share $ Diluted loss per share $ |
Property and Equipment83
Property and Equipment | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Property and Equipment | ||
Property and Equipment | Note 3. Property and Equipment Property and equipment by major asset class for the periods presented consisted of the following: September 30, December 31, 2016 2015 Computer equipment $ $ Software Furniture and fixtures Leasehold improvements Projects in progress Property and equipment, gross $ $ Less: Accumulated depreciation and amortization Property and equipment, net $ $ In December 2015, we purchased a perpetual software license, which is included in the software total above. We will pay for this software over a two year period. As such there is approximately $3,318 included in accounts payable and accrued other expenses and $3,193 included in other long-term liabilities on our Consolidated Balance Sheets as of September 30, 2016. The amount included in other long-term liabilities represents the present value of payments that will ultimately be made. Total depreciation and amortization expense related to property and equipment, including capitalized software costs, was $5,218 and $3,773 for the three months ended September 30, 2016 and 2015, respectively and $14,864 and $9,270 for the nine months ended September 30, 2016 and 2015, respectively. | Note 5. Property and Equipment Property and equipment by major asset class for the periods presented consisted of the following: December 31, 2015 2014 Computer equipment $ $ Software Furniture and fixtures Leasehold improvements Projects in progress Property and equipment, gross $ $ Less: Accumulated depreciation and amortization Property and equipment, net $ $ In December 2015, we purchased a perpetual software license, which is included in the software total above as of December 31, 2015. We will pay for this software over the next three years. As such there is approximately $2,952 included in accounts payable and accrued other expenses and $6,340 included in other long‑term liabilities on our Consolidated Balance Sheets as of December 31, 2015. The amount included in other long‑term liabilities represents the present value of payments that will ultimately be made. Total depreciation and amortization expense related to property and equipment, including capitalized software costs, was $12,695 and $7,416 for the years ended December 31, 2015 and 2014, respectively. |
Intangible Assets84
Intangible Assets | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Intangible Assets | ||
Intangible Assets | Note 4. Intangible Assets Intangible asset balances by major asset class for the periods presented were as follows: Weighted Gross Net Average Carrying Accumulated Carrying Amortization Amount Amortization Impairment Amount Period September 30, 2016: Customer relationships $ $ $ — $ years Acquired software — years Connolly trademark — — indefinite-lived Total $ $ $ — $ years December 31, 2015: Customer relationships $ $ $ — $ years Acquired software — years Connolly trademark — indefinite-lived iHealth trademark — years Total $ $ $ $ years Amortization expense was $15,203 and $15,437 for the three months ended September 30, 2016 and 2015, respectively and $45,618 and $46,256 for the nine months ended September 30, 2016 and 2015, respectively. As a result of our rebranding in September 2015, we recorded an impairment of intangible assets of $27,826 related to our legacy trademarks during the three and nine months ended September 30, 2015. The remaining trademark value as of September 30, 2016 of $4,200 is related to our retail business that we continue to operate as Connolly, a division of Cotiviti. As of September 30, 2016 amortization expense for the next 5 years is expected to be: Remainder of 2016 $ 2017 2018 2019 2020 | Note 6. Intangible Assets Intangible asset balances by major asset class for the periods presented were as follows: Gross Accumulated Impairment Net Carrying Weighted Average December 31, 2014: Customer relationships $ $ $ $ 13.7 years Acquired software — 6.2 years Connolly trademark — — indefinite‑lived iHealth trademark — 11.0 years Total $ $ $ $ 12.8 years December 31, 2015: Customer relationships $ $ $ — $ 13.7 years Acquired software — 6.2 years Connolly trademark — indefinite‑lived iHealth trademark — 11.0 years Total $ $ $ $ 12.8 years Amortization expense was $61,467 and $52,355 for the years ended December 31, 2015 and 2014, respectively. As a result of our rebranding in September 2015 as discussed in Note 1, we recorded an impairment of intangible assets of $27,826 related to our trademarks. The remaining trademark value as of December 31, 2015 of $4,200 is related to our retail business that will continue to operate as Connolly, a division of Cotiviti. Based on the facts and circumstances surrounding our Medicare RAC contract, including continued delays with the contract renewal process, as well as scope reductions that have resulted in a decrease to future revenue projections (see Note 8), we performed an impairment review of our customer relationship intangible asset related to our Medicare RAC contract with CMS during the year ended December 31, 2014. As a result of this review, we recognized a $74,034 impairment charge for the year ended December 31, 2014 due to a change in the estimated fair value of this customer relationship intangible asset associated with the Medicare RAC contract. As of December 31, 2015 amortization expense for the next 5 years was: 2016 $ 2017 2018 2019 2020 |
Goodwill85
Goodwill | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Goodwill | ||
Goodwill | Note 5. Goodwill Total goodwill in our Consolidated Balance Sheets was $1,196,350 and $1,197,044 as of September 30, 2016 and December 31, 2015, respectively. Changes in the carrying amount of goodwill by our Healthcare and Global Retail and Other segments for the nine months ended September 30, 2016 were as follows: Global Retail Healthcare and Other December 31, 2015 $ $ Foreign currency translation and other — September 30, 2016 $ $ There was no impairment related to goodwill for any period presented. | Note 7. Goodwill We recorded total goodwill in our Consolidated Balance Sheets of $1,197,044 and $1,197,353 as of December 31, 2015 and 2014, respectively. Changes in the carrying amount of goodwill, which has been allocated to our Healthcare and Global Retail and Other segments, for the periods presented were as follows: December 31, 2015 December 31, 2014 Healthcare Global Retail Healthcare Global Retail Beginning balance $ $ $ $ Acquisitions — — — Purchase price adjustments — — — Foreign currency translation and other — Ending balance $ $ $ $ There was no impairment related to goodwill for any period presented. |
Commitments and Contingencies86
Commitments and Contingencies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Commitments and Contingencies | ||
Commitments and Contingencies | Note 6. Commitments and Contingencies We may be involved in various legal proceedings and litigation arising in the ordinary course of business. While any legal proceeding or litigation has an element of uncertainty, management believes the ultimate disposition of these matters will not have a material adverse effect on our consolidated financial position, results of operations, or liquidity. Medicare RAC Contract Contingency In August 2014, CMS announced it would allow providers to remove all eligible claims currently pending in the appeals process by offering to pay hospitals 68% of the original claim amount. This settlement was offered to the providers and it was unknown what, if any, impact there would be for the Medicare RACs. On July 1, 2015, CMS issued a Technical Direction Letter to the Medicare RACs, including ourselves, indicating that Medicare RACs will only be entitled to the contract contingency fee on the settled amounts of the claims, or 32% of the original inpatient claim amounts. Based on the initial lists of finalized settlements provided by CMS, we would be required to refund CMS approximately $22,308 due to the related adjustments in Medicare RAC contingency fees. CMS further advised that as the hospital settlement project continues, additional settlement lists will be matched to Medicare RAC claims which may result in updated refund amounts to those initially provided. While there are uncertainties in any dispute resolution and results are uncertain, we have disputed CMS’s findings based on our interpretation of the terms of the Medicare RAC contract and our belief that the backup data provided by CMS is inaccurate and/or incomplete. Our liability for estimated refunds and appeals includes amounts for these settled claims based on our best estimates of the amount we believe will be ultimately payable to CMS based on our interpretation of the terms of the Medicare RAC contract. We believe that it is possible that we could be required to pay an additional amount up to approximately $11,800 in excess of the amount we accrued as of September 30, 2016 based on the claims data we have received from CMS to date. As CMS completes its settlement process with the providers and updated files are provided to us, the potential amount owed by us may change. On September 28, 2016, CMS announced a second settlement process to allow eligible providers to settle their inpatient claims currently under appeal beginning December 1, 2016. This second settlement process could result in additional amounts owed to CMS. The amount of any such additional claims cannot presently be determined. | Note 8. Commitments and Contingencies Operating Leases We are obligated under non‑cancellable lease agreements for certain facilities and equipment, which frequently include renewal options and escalation clauses. For leases that contain predetermined fixed escalations, we recognize the related rent expense on a straight‑line basis and record the difference between the recognized rent expense and amounts payable under the lease as lease obligations. Lease obligations due within one year are included in accounts payable and accrued other expenses on our Consolidated Balance Sheets. We lease certain facilities and equipment under non‑cancelable leases that expire at various points through 2026. Rent expense was $8,826 and $7,202 for the years ended December 31, 2015 and 2014, respectively. Future minimum payments under non‑cancelable operating lease agreements as of December 31, 2015 were as follows: Year ending December 31: 2016 $ 2017 2018 2019 2020 2021 ‑ 2026 Total minimum lease payments $ Legal and Other Matters We may be involved in various legal proceedings and litigation arising in the ordinary course of business. While any proceeding or litigation has an element of uncertainty, management believes the ultimate disposition of these matters will not have a material adverse effect on our consolidated financial position, results of operations, or liquidity. Medicare RAC Contract Contingency In August 2014, CMS announced it would allow providers to remove all eligible claims currently pending in the appeals process by offering to pay hospitals 68% of the original claim amount. This settlement was offered to the providers and it was unknown what, if any, impact there would be for the Medicare RACs. On July 1, 2015, CMS issued a Technical Direction Letter to the Medicare RACs, including ourselves, indicating that Medicare RACs will only be entitled to the contract contingency fee on the settled amounts of the claims, or 32% of the original inpatient claim amounts. Based on the initial lists of finalized settlements provided by CMS, we would be required to refund CMS approximately $22,308 due to the related adjustments in Medicare RAC contingency fees. CMS further advised that as the hospital settlement project continues, additional settlement lists will be matched to Medicare RAC claims which may result in updated refund amounts to those initially provided. While there are uncertainties in any dispute resolution and results are uncertain, we have disputed CMS’s findings based on our interpretation of the terms of the Medicare RAC contract and our belief that the backup data provided by CMS is inaccurate and/or incomplete. Our liability for estimated refunds and appeals includes amounts for these settled claims based on our best estimates of the amount we believe will be ultimately payable to CMS based on our interpretation of the terms of the Medicare RAC contract. We believe that it is possible that we could be required to pay an additional amount up to approximately $12,400 in excess of the amount we accrued as of December 31, 2015 based on the claims data we have received from CMS to date. As CMS completes its settlement process with the providers and updated files are provided to us, the potential amount owed by us may change. Asset Retirement Obligations We have AROs arising from contractual requirements to perform specified activities at the time of disposition of certain leasehold improvements and equipment at some of our facilities. Changes in the carrying amount of AROs were as follows: Year ended 2015 2014 Balance beginning of period $ $ Additional ARO Liability Accretion expense Balance at end of period $ $ |
Long-term Debt87
Long-term Debt | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Long-term Debt | ||
Long-term Debt | Note 7. Long‑term Debt In September 2016, in order to benefit from favorable market conditions, we entered into and executed the Amended and Restated First Lien Credit Agreement (the “Restated Credit Agreement”), which replaced our then outstanding first and second lien credit facilities, lowered total debt outstanding by $22,700 and provides for lower applicable interest rates. The Restated Credit Agreement consists of (a) a Term Loan A in the amount of $250,000 (the “Term Loan A”), (b) a Term Loan B in the amount of $550,000 (the “Term Loan B”) and (c) a revolving credit facility (the “Revolver”) in the amount of up to $100,000. As a result of this refinancing, we recognized a loss on extinguishment of debt of $9,349 during the three and nine months ended September 30, 2016, which is included in our Consolidated Statements of Comprehensive Income. In June 2016, we repaid $223,000 in outstanding principal under our then outstanding second lien credit facility (the “May 2014 Second Lien”) using proceeds from our Initial Public Offering (“IPO”). We also made a voluntary prepayment of $13,100 of outstanding principal under the May 2014 Second Lien. As a result of these repayments, we recognized a loss on extinguishment of debt of $7,068 during the nine months ended September 30, 2016, which is included in our Consolidated Statements of Comprehensive Income. In May 2015, in order to benefit from favorable market conditions, we entered into and executed the First and Second Amendments to the then outstanding first lien credit facilities (the “May 2014 First Lien”), which, among other things, provide for lower applicable interest rates associated with the May 2014 First Lien by 50 basis points. As a result, we recorded a loss on extinguishment of debt of $4,084 during the nine months ended September 30, 2015, which is included in our Consolidated Statements of Comprehensive Income. Long‑term debt for the periods presented was as follows: September 30, December 31, 2016 2015 Term Loan A (a) $ $ — Term Loan B (b) — Revolver (c) — — May 2014 First Lien — May 2014 Second Lien — May 2014 Revolver — — Total debt Less: debt issuance costs Less: current portion Total long-term debt $ $ (a) The Term Loan A matures on September 28, 2021 and requires quarterly principal payments of $3,125 for the fourth quarter of 2016, $3,125 per quarter in 2017 and 2018, $4,688 per quarter in 2019, $6,250 per quarter in 2020 and $9,375 per quarter for the first two quarters of 2021. The remainder of the outstanding Term Loan A borrowings are due on September 28, 2021. Any mandatory or voluntary prepayment will be applied against the remaining scheduled installments of principal payments in direct order of maturity, unless other direction of application is provided by us. Based on our periodic election, borrowings under the Term Loan A bear interest at either (a) the Alternate Base Rate (“ABR”) plus, based on our Secured Leverage Ratio (as defined in the Restated Credit Agreement), 1.25% - 2.00% for ABR loans or (b) the LIBO Rate (“LIBOR”) plus, based on our Secured Leverage Ratio, 2.25% to 3.00% for LIBOR loans. The ABR is equal to the highest of (i) the New York Federal Reserve Bank rate in effect on such date plus 0.50%, (ii) the LIBOR plus 1.00% and (iii) the prime commercial lending rate of the administrative agent as in effect on the relevant day. The interest period applicable to any LIBOR borrowing is one, two, three or six months, at the election of the borrower. Interest on LIBOR loans is payable the last day of the applicable interest period and, in the case of an interest period of more than three months’ duration, each day on which interest would have been payable had successive interest periods of three months’s duration been applicable to such borrowing. The interest rate in effect was 3.6% at September 28, 2016. (b) The Term Loan B matures September 28, 2023 and requires quarterly principal payments of $1,375 with all remaining borrowings due on September 28, 2023. Based on our periodic election, borrowings under the Term Loan B bear interest at either (a) the ABR plus 1.75% for ABR loans or (b) the LIBOR plus 2.75% for LIBOR loans. The ABR is equal to the highest of (i) the New York Federal Reserve Bank rate in effect on such date plus 0.50%, (ii) LIBOR plus 1.00%, (iii) the prime commercial lending rate of the administrative agent as in effect on the relevant day and (iv) 1.75%. LIBOR is equal to the higher of (a) the published LIBOR or (b) 0.75%. If our corporate credit rating from Moody’s Investor Service, Inc. is Ba3 or better and our corporate family rating from Standard & Poor’s Financial Services, LLC is BB- or better, the margin will be reduced by 0.25% per annum for as long as such ratings are maintained. The interest period applicable to any LIBOR borrowing is one, two, three or six months, at the election of the borrower. Interest on LIBOR loans is payable the last day of the applicable interest period and, in the case of an interest period of more than three months’ duration, each day on which interest would have been payable had successive interest periods of three months’s duration been applicable to such borrowing.The interest rate in effect was 3.6% at September 28, 2016. (c) The Revolver expires September 28, 2021. Interest for any borrowings under the Revolver is payable over one, two, three or six months at our election. A commitment fee is payable quarterly based on the unused portion of the Revolver commitment which ranges from 0.30% to 0.50% per annum based on certain financial tests. Based on our periodic election, borrowings under the Revolver bear interest at either (a) ABR plus, based on our Secured Leverage Ratio, 1.25% - 2.00% for ABR loans or (b) LIBOR plus, based on our Secured Leverage Ratio, 2.25% to 3.00% for LIBOR loans. The ABR is equal to the highest of (i) the New York Federal Reserve Bank rate in effect on such date plus 0.50%, (ii) the LIBOR plus 1.00% and (iii) the prime commercial lending rate of the administrative agent as in effect on the relevant day. There were no borrowings outstanding under the Revolver as of September 30, 2016. The interest rate in effect was 3.6% at September 28, 2016. The Restated Credit Agreement includes certain binding affirmative and negative covenants, including delivery of financial statements and other reports, maintenance of existence and transactions with affiliates. The negative covenants restrict our ability, among other things, to incur indebtedness, grant liens, make investments, sell or otherwise dispose of assets or enter into a merger, pay dividends or repurchase stock. Beginning December 31, 2016, there is a required financial covenant applicable only to the Revolver and the Term Loan A, pursuant to which we agree not to permit our Secured Leverage Ratio to exceed 5.50:1.00 through September 2018, 5.25:1.00 through September 2019 and 5.00:1.00 through June 2021. In addition, the Restated Credit Agreement includes certain events of default including payment defaults, failure to perform affirmative covenants, failure to refrain from actions or omissions prohibited by negative covenants, the inaccuracy of representations or warranties, bankruptcy and insolvency related defaults and a change of control default. We were in compliance with all such covenants as of September 30, 2016 and similar affirmative and negative covenants applicable to our then outstanding credit facilities as of December 31, 2015. The Restated Credit Agreement requires mandatory prepayments based upon annual excess cash flows commencing with the year ended December 31, 2017. The mandatory prepayment is contingently payable based on an annual excess cash flow calculation as defined within the Restated Credit Agreement. As of September 30, 2016, the aggregate maturities of long‑term debt for each of the next five years are expected to be $4,500 for the remainder of 2016, $18,000 in 2017 and 2018, $24,250 in 2019 and $30,500 in 2020. | Note 9. Long‑term Debt In May 2015, in order to benefit from favora1ble market conditions, we entered into and executed the First and Second Amendments (collectively, “the May 2015 Re‑pricing”) to the May 2014 First Lien, which, among other things, provide for lower applicable interest rates associated with the May 2014 First Lien by 50 basis points. As a result, we recorded a loss on extinguishment of debt of $4,084 which is included on our Consolidated Statements of Comprehensive Income (Loss). On May 14, 2014, in connection with the Connolly iHealth Merger, we entered into a First Lien — Credit Agreement which consisted of an $810,000 term loan (“May 2014 First Lien”) and a $75,000 revolving credit facility (“Revolver”) which also permits the issuance of letters of credit. We also entered into a Second Lien—Credit Agreement which consists of a $265,000 term loan (“May 2014 Second Lien”). Proceeds from the May 2014 Credit Agreements were used to repay the balance then outstanding on our January 2014 Credit Agreement as well as fund a portion of the Connolly iHealth Merger. The May 2014 First Lien and May 2014 Second Lien (collectively, the “May 2014 Credit Agreements”) are guaranteed by our subsidiaries and secured by substantially all of our assets. As a result of entering into the May 2014 Credit Agreements, we recognized a loss on extinguishment of debt totaling $9,855 for the year ended December 31, 2014 which is included on our Consolidated Statements of Comprehensive Income (Loss). In January 2014, we entered into a credit facility, which consisted of a $320,000 Term Loan with a maturity in January 2021 (“January 2014 Term Loan”) and a $30,000 Revolving Credit Facility with a maturity in January 2019 (collectively, “January 2014 Credit Agreement”). Proceeds from this January 2014 Credit Agreement were used to repay the balances then outstanding on our original July 2012 Credit Agreements. The January 2014 Term Loan bore interest at LIBOR plus 4.00%. The January 2014 Term Loan required compliance with a financial covenant only if we exceeded certain borrowing thresholds. The mandatory prepayment, which would have been payable based upon an excess cash flow calculation for the year ended December 31, 2014 under our original Credit Agreements, was no longer applicable due to the May 2014 refinancing. As a result of entering into this January 2014 Credit Agreement, we recognized a loss on extinguishment of debt totaling $11,669 for the year ended December 31, 2014 which is included on our Consolidated Statements of Comprehensive Income (Loss). Long‑term debt for the periods presented was as follows: December 31, 2015 2014 May 2014 First Lien (a) $ $ May 2014 Second Lien (b) May 2014 Revolver (c) — — Total debt Less: debt issuance costs Less: current portion Total long‑term debt $ $ (a) The May 2014 First Lien, as amended, expires May 2021 and requires quarterly principal payments of $2,025. The quarterly principal payment may be reduced by any amounts of mandatory or voluntary prepayment. Any mandatory or voluntary prepayment shall be applied against the remaining scheduled installments of principal payments in direct order of maturity, unless other direction of application is provided by us. Interest on the May 2014 First Lien is payable over periods of one, two, three or six months at the election of the borrower. Based on our periodic election, borrowings under the May 2014 First Lien bear interest at either (a) the Alternate Base Rate (ABR) plus 2.50% for ABR Loans, or (b) the LIBO Rate (“LIBOR”) plus 3.50% for LIBOR Loans. The ABR is equal to the higher of (a) the Federal Funds Effective Rate plus 0.50%; (b) the published one month LIBOR plus 1.00%; (c) the Prime Rate; or (d) 2.00%. The LIBOR is equal to the higher of (a) the LIBOR or (b) 1.00%. The interest rate in effect was 4.50% at December 31, 2015 and 5.00% at December 31, 2014. Following a qualified IPO, borrowings under the May 2014 First Lien bear interest at either (a) the ABR plus 2.25%, or (b) the LIBOR plus 3.25%. (b) The May 2014 Second Lien expires May 2022 with the total principal balance due at maturity. Interest on the May 2014 Second Lien is payable over periods of one, two, three, or six months at the election of the borrower. Based on our periodic election, borrowings under the May 2014 Second Lien bear interest at either (a) the ABR plus 6.00% for ABR Loans or (b) LIBOR plus 7.00% for LIBOR Loans. The ABR is equal to the higher of (a) the Federal Funds Effective Rate plus 0.50% (b) the published one month LIBOR plus 1.00%; (c) the Prime Rate; or (d) 2.00%. The LIBOR is equal to the higher of (a) the LIBOR or (b) 1.00%. The interest rate in effect was 8.00% at December 31, 2015 and December 31, 2014. Following a qualified IPO, borrowings under the May 2014 Second Lien bear interest at either (a) the ABR plus 5.75% for ABR Loans, or (b) the LIBOR plus 6.75% for LIBOR Loans. (c) The May 2014 Revolver expires May 2019 with interest payable over periods of one, two, three or six months at the election of the borrower. A commitment fee is payable quarterly based on the daily unused portion of the Revolver balance which ranges from an annual rate of 0.375% to 0.50% based on certain financial tests. The commitment fee was 0.375% and 0.50% at December 31, 2015 and 2014, respectively. Based on our periodic election, borrowings under the Revolver bear interest at either (a) the ABR plus 1.75% to 2.25% for ABR Loans based on certain financial tests or (b) the LIBOR plus 2.75% to 3.25% for LIBOR Loans based on certain financial tests. The ABR is equal to the higher of (a) the Federal Funds Effective Rate plus 0.50%; (b) the published one month LIBOR plus 1.00%; or (c) the Prime Rate. The LIBOR is equal to the higher of (a) the LIBOR or (b) 1.00%. The interest rate in effect was 4.00% and 4.25% at December 31, 2015 and December 31, 2014, respectively. At December 31, 2015 and December 31, 2014, we had $3,526 and $150 of letters of credit outstanding, respectively, which reduce the amount available for borrowing. There were no borrowings outstanding under the May 2014 Revolver as of December 31, 2015 or December 31, 2014. The May 2014 Credit Agreements include certain binding affirmative and negative covenants, including delivery of financial statements and other reports, maintenance of existence and transactions with affiliates. The negative covenants limit our ability, among other things, to incur debt, incur liens, make investments, sell assets or declare or pay dividends. As a result of these restrictions, approximately 90% of the subsidiary net assets are deemed restricted as of December 31, 2015. Refer to Schedule I Condensed Financial Information of Parent. The financial covenant setting forth a maximum leverage ratio which is included in the May 2014 Credit Agreements is only applicable if we exceed certain borrowing thresholds. These borrowing thresholds are based upon 35% of our total revolving credit commitments with certain exceptions, which were not exceeded as of December 31, 2015 and 2014. In addition, the May 2014 Credit Agreements include certain events of default including payment defaults, failure to perform affirmative covenants, failure to refrain from actions or omissions prohibited by negative covenants, the inaccuracy of representations or warranties, bankruptcy and insolvency related defaults and a change of control default. We were in compliance with all such covenants as December 31, 2015 and 2014. The May 2014 Credit Agreements require mandatory prepayments based upon annual excess cash flows commencing with the year ended December 31, 2015. The mandatory prepayment is contingently payable based on an annual excess cash flow calculation as defined within the Credit Agreements. We did not meet the annual excess cash flow calculation requirement as of December 31, 2015. We expect to pay a voluntary prepayment of approximately $13,099 in the second quarter of 2016, and as such this amount is included in current maturities of long‑term debt as of December 31, 2015. As of December 31, 2015, the aggregate maturities of long‑term debt for each of the next five years are expected to $21,099 in 2016 and $7,967 in each of 2017 through 2020. |
Derivative Instruments88
Derivative Instruments | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Derivative Instruments | ||
Derivative Instruments | Note 8. Derivative Instruments We are exposed to fluctuations in interest rates on our long‑term debt. We manage our exposure to fluctuations in the 3‑month LIBOR through the use of interest rate cap agreements designated as cash flow hedges. We are meeting our objective by hedging the risk of changes in cash flows related to changes in LIBOR by capping the interest on our floating rate debt linked to LIBOR to approximately 3%. We do not utilize derivatives for speculative or trading purposes. As of September 30, 2016 and December 31, 2015, we had $630,000 in notional debt outstanding related to these interest rate caps, which cover quarterly interest payments through September 2019. The notional amount decreases over time. All of our outstanding interest rate cap contracts qualify for cash flow hedge accounting treatment in accordance with ASC 815, Derivatives and Hedging . Cash flow hedge accounting treatment allows for gains and losses on the effective portion of qualifying hedges to be deferred in accumulated other comprehensive (loss) income until the underlying transaction occurs, rather than recognizing the gains and losses on these instruments in earnings during each period they are outstanding. When the actual interest payments are made on our variable rate debt and the related derivate contract settles, any effective portion of realized interest rate hedging derivative gains and losses previously recorded in accumulated other comprehensive (loss) income is recognized in interest expense. We recognized interest expense of $56 and $23 related to interest rate caps during the three months ended September 30, 2016 and 2015, respectively and $200 and $55 during the nine months ended September 30, 2016 and 2015, respectively. Ineffectiveness results, in certain circumstances, when the change in total fair value of the derivative instrument differs from the change in the fair value of our expected future cash outlays for the related interest payment and is recognized immediately in interest expense. There was no ineffectiveness recorded during the three and nine months ended September 30, 2016 and 2015, respectively. Likewise, if the hedge does not qualify for hedge accounting, the periodic changes in its fair value are recognized in the period of the change in interest expense. All cash flows related to our interest rate cap agreements are classified as operating cash flows. Any outstanding derivative instruments expose us to credit loss in the event of nonperformance by the counterparties to the agreements, but we do not expect that the counterparty will fail to meet their obligations. The amount of such credit exposure is generally the positive fair value of our outstanding contracts. To manage credit risks, we select counterparties based on credit assessments, limit our overall exposure to any single counterparty and monitor the market position of any counterparty. The table below reflects quantitative information related to the fair value of our derivative instruments and where these amounts are recorded in our consolidated financial statements as of the period presented: September 30, December 31, 2016 2015 Liability fair value recorded in other long-term liabilities $ $ Liability fair value recorded in accounts payable and accrued other expenses Estimated amount of existing losses expected to be reclassified into earnings in the next 12 months We record deferred hedge premiums which are being paid over the life of the hedge in accumulated other comprehensive (loss) income until the related hedge ultimately settles and interest payments are made on the underlying debt. As of September 30, 2016, we have made payments of $2,204 related to these deferred premiums. We expect to pay an additional $4,190 in deferred premiums through 2019 related to our outstanding interest rate cap agreements which is reflected in the fair value of these derivatives in the table above. Comprehensive income includes changes in the fair value of our interest rate cap agreements which qualify for hedge accounting. Changes in other comprehensive income for the periods presented related to derivative instruments classified as cash flow hedges were as follows: Three Months Ended September 30, 2016 2015 Balance at beginning of period, July 1 $ $ Reclassifications in earnings, net of tax of $21 and $9, respectively Change in fair value of derivative instrument, net of tax of $45 and $483, respectively Balance at end of period, September 30 $ $ Nine Months Ended September 30, 2016 2015 Balance at beginning of period, January 1 $ $ Reclassifications in earnings, net of tax of $76 and $22, respectively Change in fair value of derivative instrument, net of tax of $463 and $1,015, respectively Balance at end of period, September 30 $ $ | Note 10. Derivative Instruments We are exposed to fluctuations in interest rates on our long‑term debt. We manage our exposure to fluctuations in the 3‑month LIBOR through the use of interest rate cap agreements designated as cash flow hedges. We are meeting our objective by hedging the risk of changes in cash flows related to changes in LIBOR by capping the interest on our floating rate debt linked to LIBOR to approximately 3%. We do not utilize derivatives for speculative or trading purposes. As of December 31, 2015 and 2014, we had $630,000 and $700,000, respectively, in notional debt outstanding related to these interest rate caps, which cover quarterly interest payments through September 2019. The notional amount decreases over time. Refer to Note 9 for more information regarding the debt outstanding related to these agreements. All of our outstanding interest rate cap contracts qualify for cash flow hedge accounting treatment in accordance with ASC 815, Derivatives and Hedging . Cash flow hedge accounting treatment allows for gains and losses on the effective portion of qualifying hedges to be deferred in accumulated other comprehensive (loss) income until the underlying transaction occurs, rather than recognizing the gains and losses on these instruments in earnings during each period they are outstanding. When the actual interest payments are made on our variable rate debt as described in Note 9 and the related derivate contract settles, any effective portion of realized interest rate hedging derivative gains and losses previously recorded in accumulated other comprehensive (loss) income is recognized in interest expense. We recognized interest expense of $105 related to interest rate caps during the year ended December 31, 2015. We did not recognize any interest expense related to interest rate caps during the year ended December 31, 2014. Ineffectiveness results, in certain circumstances, when the change in total fair value of the derivative instrument differs from the change in the fair value of our expected future cash outlays for the related interest payment and is recognized immediately in interest expense. There was no ineffectiveness recorded during the years ended December 31, 2015 and 2014. Likewise, if the hedge does not qualify for hedge accounting, the periodic changes in its fair value are recognized in the period of the change in interest expense. All cash flows related to our interest rate cap agreements are classified as operating cash flows. Any outstanding derivative instruments expose us to credit loss in the event of nonperformance by the counterparties to the agreements, but we do not expect that the counterparty will fail to meet their obligations. The amount of such credit exposure is generally the positive fair value of our outstanding contracts. To manage credit risks, we select counterparties based on credit assessments, limit our overall exposure to any single counterparty and monitor the market position of any counterparty. The table below reflects quantitative information related to the fair value of our derivative instruments and where these amounts are recorded in our consolidated financial statements as of the period presented: December 31, 2015 2014 Liability fair value recorded in other long‑term liabilities $ $ Liability fair value recorded in accounts payable and accrued other expenses — Estimated amount of existing losses expected to be reclassified into earnings in the next 12 months We record deferred hedge premiums which are being paid over the life of the hedge in accumulated other comprehensive income until the related hedge ultimately settles and interest payments are made on the underlying debt. As of December 31, 2015, we have made payments of $1,103 related to these deferred premiums. We expect to pay an additional $5,291 in deferred premiums through 2019 related to our outstanding interest rate cap agreements which is reflected in the fair value of these derivatives in the table above. Comprehensive income includes changes in the fair value of our interest rate cap agreements which qualify for hedge accounting. Changes in other comprehensive income for the periods presented related to derivative instruments classified as cash flow hedges were as follows: Balance, January 1, 2014 $ — Reclassifications in earnings — Change in fair value of derivative instrument, net of tax of $476 Balance, December 31, 2014 Reclassifications in earnings, net of tax of $40 Change in fair value of derivative instrument, net of tax of $1,360 Balance, December 31, 2015 $ |
Fair Value Measurements89
Fair Value Measurements | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Fair Value Measurements | ||
Fair Value Measurements | Note 9. Fair Value Measurements We measure assets and liabilities at fair value based on assumptions market participants would use in pricing an asset or liability in the principal or most advantageous market. Authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value whereby inputs are assigned a hierarchical level. The hierarchical levels are: Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. Level 2: Observable prices, other than quoted prices included in Level 1 inputs for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. Level 3: Unobservable inputs for the asset or liability used to measure fair value to the extent observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. The following table summarizes our financial instruments measured at fair value within the Consolidated Balance Sheets: September 30, 2016 December 31, 2015 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets: Available-for-sale securities $ — $ — $ — $ $ — $ — Liabilities Long-term debt — — — — Interest rate cap agreements — — — — Total $ — $ $ $ $ $ Investments are classified as available‑for‑sale and carried at fair value in the accompanying Consolidated Balance Sheets. As of December 31, 2015, our investments consisted of money market securities valued using quoted market prices for identical assets in active markets. As of September 30, 2016, we no longer hold any available-for-sale securities. The fair value of our private debt is determined based on fluctuations in current interest rates, the trends in market yields of debt instruments with similar credit ratings, general economic conditions and other quantitative and qualitative factors. The carrying value of our debt approximates its fair value. The fair value of the interest rate cap agreements is determined using the market standard methodology of discounting the future expected variable cash receipts that would occur if interest rates rose above the strike rate of the caps. The analysis reflects the contractual terms of the derivatives, including period to maturity and remaining deferred premium payments, and uses observable market‑based inputs, including interest rates and implied volatilities. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rates. As such, the estimated fair values of these liabilities are classified as Level 2 in the fair value hierarchy. | Note 11. Fair Value Measurements We measure assets and liabilities at fair value based on assumptions market participants would use in pricing an asset or liability in the principal or most advantageous market. Authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value whereby inputs are assigned a hierarchical level. The hierarchical levels are: Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. Level 2: Observable prices, other than quoted prices included in Level 1 inputs for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. Level 3: Unobservable inputs for the asset or liability used to measure fair value to the extent observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. The following table summarizes our financial instruments measured at fair value within the Consolidated Balance Sheets: December 31, 2015 December 31, 2014 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets: Available‑for‑sale securities $ $ — $ — $ $ — $ — Liabilities Long‑term debt — — — — Interest rate cap agreements — — — — Total $ — $ $ $ — $ $ Investments are classified as available‑for‑sale and carried at fair value in the accompanying Consolidated Balance Sheets. Our investments consist of money market securities valued using quoted market prices for identical assets in active markets. The fair value of the interest rate cap agreements is determined using the market standard methodology of discounting the future expected variable cash receipts that would occur if interest rates rose above the strike rate of the caps. The analysis reflects the contractual terms of the derivatives, including period to maturity and remaining deferred premium payments, and uses observable market‑based inputs, including interest rates and implied volatilities. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rates. As such, the estimated fair values of these liabilities are classified as Level 2 in the fair value hierarchy. The fair value of our private debt is determined based on fluctuations in current interest rates, the trends in market yields of debt instruments with similar credit ratings, general economic conditions and other quantitative and qualitative factors. The carrying value of our debt approximates its fair value. |
Income Taxes90
Income Taxes | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Income Taxes | ||
Income Taxes | Note 10. Income Taxes The following table presents our income tax provision and effective income tax rate: Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Income tax provision $ $ $ $ Effective income tax rate % % % % Our effective income tax rate from continuing operations was 13.4% and 38.5% for the three months ended September 30, 2016 and September 30, 2015, respectively. During the three months ended September 30, 2016, we recorded a $1,300 tax benefit primarily related to the settlement of an uncertain tax position recorded in a prior period. The impact of this tax benefit relative to the pre-tax income for the three months ended September 30, 2016 resulted in the decrease to the effective tax rate. Our effective income tax rate from continuing operations was 35.2% and 48.8% for the nine months ended September 30, 2016 and September 30, 2015, respectively. The decrease in the effective tax rate is primarily due to a $1,300 tax benefit related to the settlement of an uncertain tax position recorded in a prior period. We are currently under audit with the Internal Revenue Service for the tax year ended December 31, 2014. In addition we are currently under audit for iHealth Technologies, Inc. for the tax years ended December 31, 2012, December 31, 2013 and May 13, 2014. As a result, it is reasonably possible that the audits will conclude or reach the stage where a change in unrecognized income tax benefits may occur within the next twelve months. At that time, we will record any adjustment to income tax expense as required. | Note 12. Income Taxes Total income tax expense (benefit) for the years ended December 31, 2015 and 2014 was as follows: Year ended 2015 2014 Income tax expense (benefit) from continuing operations $ $ Income tax expense from discontinued operations — Total income tax expense (benefit) $ $ For the years ended December 31, 2015 and 2014, income (loss) before income taxes from continuing operations includes the following components: Year ended 2015 2014 U.S. operations $ $ Foreign operations Income (loss) before income taxes $ $ The income tax expense (benefit) that is attributable to income (loss) from continuing operations before income taxes included in our Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2015 and 2014 consisted of the following: Year ended 2015 2014 Current: U.S. federal $ $ State and local Foreign Current income tax expense Deferred U.S. federal State and local Foreign — Deferred income tax benefit Total income tax expense (benefit) $ $ The factors accounting for the variation in our overall effective tax rates from continuing operations compared to U.S. statutory income tax rates for the years ended December 31, 2015 and 2014 were as follows: Year ended 2015 2014 Federal income tax expense (benefit) at the statutory rate $ $ State and local taxes, net of federal benefit Non‑deductible costs (permanent differences) Unrecognized tax positions Other Total income tax expense (benefit) $ $ The effective tax rate from continuing operations for the year ended December 31, 2015 was 52.0%, as compared to 39.4% for the year ended December 31, 2014. The variance is primarily due to changes in uncertain tax positions, an increase in non‑deductible costs, an increase in the valuation allowance and the impact of a state deferred tax remeasurement as a result of new statutory regulations. In general, it is our practice and intention to reinvest the earnings of our non‑branch foreign subsidiaries in those operations on an indefinite basis. Such amounts may become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances. Due to our intent to reinvest such amounts indefinitely, the taxation of these amounts in the U.S. is not expected to occur in the foreseeable future and therefore no deferred tax liability has been recorded. For the years ended December 31, 2015 and 2014, the amounts considered indefinitely reinvested were $5,910 and $4,610, respectively. If the earnings were not considered indefinitely reinvested under current law, the tax on such earnings would be approximately $1,386 and $1,081 for the years ended December 31, 2015 and 2014, respectively. The net deferred taxes below are included on our Consolidated Balance Sheets as a current net deferred tax asset of $32,919 and a long‑term net deferred tax liability of $162,203 at December 31, 2015 and a current net deferred tax asset of $32,319 and a long‑term net deferred tax liability of $175,266 at December 31, 2014. The components of our deferred tax assets and liabilities as of December 31, 2015 and 2014 are as follows: Year ended December 31, 2015 2014 Deferred tax assets: Allowance for doubtful accounts and estimated allowance for refunds and appeals $ $ Accrued compensation Deferred rent Stock compensation Tax credit and net operating loss carryforward Deferred debt issuance costs — Other deductible temporary differences Gross deferred tax assets Less: valuation allowance Total deferred tax assets Deferred tax liabilities: Unbilled receivables and other liabilities Intangibles and goodwill Property and equipment Software development costs Other taxable temporary differences Total gross deferred tax liabilities Net deferred tax liability $ $ We have federal net operating loss carryforwards of $1,397 which will expire in 2029. In addition, we have a foreign net operating loss of $2,316 with an unlimited carryforward. All state net operating losses were utilized in the current year. As of December 31, 2015 and 2014, a valuation allowance of $440 and $51, respectively has been recorded to reflect the portion of the deferred tax asset that is not more likely than not to be realized. The increase in the valuation allowance relates to a cumulative foreign net operating loss for 2015. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth. Due to change of ownership provisions in the Internal Revenue Code, use of a portion of our domestic net operating loss and tax credit carryforwards will be limited in future periods. Further, a portion of the carryforwards may expire before being applied to reduce future income tax liabilities. ASC 740 clarifies the accounting and reporting for uncertainties in income tax law. This interpretation prescribes a comprehensive model for financial statement recognition measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. ASC 740 requires that the tax effects of an uncertain tax position be recognized only if it is “more‑likely‑than‑not” to be sustained by the taxing authority as of the reporting date. A reconciliation of the beginning and ending amount of unrecognized tax benefits at December 31, 2015 and 2014 is as follows: Year ended December 31, 2015 2014 Unrecognized tax benefits — January 1 $ $ Increase for tax positions of acquired entities — Increase for tax positions taken in prior period — Increase for tax positions taken in current period Decrease for tax positions taken in prior period — Decrease for tax positions taken in current period — Decrease related to lapse in statute of limitations Unrecognized tax benefits — December 31 $ $ The majority of the balance of unrecognized tax benefits as of December 31, 2015 and 2014, would affect the effective tax rate if recognized. The total uncertain tax positions expected to reverse in the next 12 months is approximately $194 and $603 as of December 31, 2015 and 2014, respectively. The change in uncertain tax positions is primarily the result of the completion of a federal tax examination in the fourth quarter of 2015. The total penalty and interest incurred, relating to uncertain tax positions, for years ended December 31, 2015 and 2014 was $920 and $583, respectively. We are subject to U.S. federal income tax examinations for tax years ended subsequent to December 31, 2012 and income tax examinations for state, local, and foreign jurisdictions for tax years ended subsequent to December 31, 2011. We are currently not under examination by any U.S. federal, state and local or foreign jurisdiction. Should an examination arise, we do not anticipate any adjustments that will result in a material adverse effect on our financial condition, results of operations, or cash flows. |
Stockholders' Equity91
Stockholders' Equity | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Stockholders' Equity | ||
Stockholders' Equity | Note 11. Stockholders’ Equity Issuance of Common Stock On May 13, 2016 our Certificate of Incorporation was amended and the number of shares of common stock authorized to be issued by the Company was increased from 122,000,000 to 600,000,000. On May 25, 2016 we consummated our IPO in which we issued and sold a total of 12,936,038 shares of common stock, including a portion of the underwriter overallotment, at a public offering price of $19.00 per share. We received net proceeds of approximately $226,963 after deducting underwriting discounts and commissions and other offering expenses of approximately $18,822. A summary of the current rights and preferences of holders of our common stock are as follows: Voting Common stockholders are entitled to one vote per share of common stock held on all matters on which such common stockholder is entitled to vote. Dividends Common stockholders are eligible to receive dividends on common stock held when funds are available and as approved by the Board of Directors. The Restated Credit Agreement contains negative covenants that limit our ability to pay dividends. Liquidation Rights In the event of liquidation or dissolution, common stockholders are entitled to receive all assets available for distribution to stockholders. Registration Rights The Second Amended and Restated Stockholders Agreement contains (i) demand registration rights for Advent, subject to a cap of two requests in any 12 month period; (ii) piggy-back registration rights for any stockholder holding at least $500,000 worth of shares (each, a “Holder”), subject to a pro rata reduction if the total amount of shares requested to be included exceeds the amount of securities which in the opinion of the underwriters can be sold; and (iii) shelf registration rights for Holders, subject to a required anticipated aggregate offering price, net of selling expenses, of $5.0 million, subject to a cap of two requests for shelf registrations, for all Holders in the aggregate, in any 12 month period. Holders that are capable of selling all of their registrable securities pursuant to Rule 144 under the Securities Act in a single transaction without timing or volume limitations will not have piggy-back registration rights. We will be responsible for fees and expenses in connection with the registration rights, other than underwriters’ discounts and brokers’ commissions, if any, relating to any such registration and offering. Common Stock Split On May 13, 2016 we effected a 6.1-for-1 stock split of all outstanding shares of our common stock. All share, option and per share information presented in the accompanying consolidated financial statements and notes thereto have been adjusted to reflect the stock split on a retroactive basis for all periods presented and all share information is rounded up to the nearest whole share after reflecting the stock split. Common Stock Dividends On May 25, 2016 we paid a special cash dividend of $150,000, or $1.94 per share of common stock outstanding prior to the IPO, to holders of record of our common stock on the dividend record date. In connection with the special cash dividend we lowered the exercise price of then outstanding stock options by $1.94 per share in order to preserve the intrinsic value of the options giving effect to the special cash dividend. | Note 13. Stockholders’ Equity Issuance of Common Stock In May 2014, a total of 32,790,321 shares were issued for a total fair value of $435,144 in connection with the Connolly iHealth Merger. Of this amount, $365,187 was received in cash and $69,957 was issued to certain members of the former iHT management as they either rolled over a portion of their former equity interests in iHT or received equity in lieu of incentive compensation that was owed to them as of the date of the merger. A summary of the current rights and preferences of holders of our common stock are as follows: Voting Common stockholders are entitled to one vote per share of common stock held on all matters on which such common stockholder is entitled to vote. Dividends Common stockholders are eligible to receive dividends on common stock held when funds are available and as approved by the Board of Directors. Liquidation Rights In the event of liquidation or dissolution, common stockholders are entitled to receive all assets available for distribution to stockholders. |
Earnings per Share92
Earnings per Share | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Earnings per Share | ||
Earnings per Share | Note 12. Earnings per Share Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period. For all periods presented, potentially dilutive outstanding shares consisted solely of our common stock options. Our potential common shares consist of the incremental common shares issuable upon the exercise of the options. The dilutive effect of outstanding stock options is reflected in diluted earnings per share by application of the treasury stock method. For all periods presented, all outstanding common stock consisted of a single‑class. Basic and diluted earnings per share are computed as follows: Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Net income available to common stockholders $ $ $ $ Weighted average outstanding shares of common stock Dilutive effect of stock-based awards — Adjusted weighted average outstanding and assumed conversions for diluted EPS Earnings (loss) per share from continuing operations: Basic $ $ $ $ Diluted Earnings per share from discontinued operations: Basic $ — $ — $ — $ Diluted — — — Total earnings (loss) per share: Basic $ $ $ $ Diluted Employee stock options and restricted stock units (“RSUs”) that were excluded from the calculation of diluted earnings per share because their effect is anti‑dilutive for the periods presented were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Employee stock-based awards The criteria associated with all of our outstanding performance-based stock options as defined in the terms of the applicable award agreements, were satisfied as of September 30, 2016 and, as a result, 2,746,592 performance-based stock options were included in the calculation of diluted earnings per share for the three and nine months ended September 30, 2016. Performance-based stock options of 2,234,217 were not included in the calculation of diluted earnings per share for the three and nine months ended September 30, 2015 as the vesting conditions had not yet been satisfied. | Note 14. Earnings per Share Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period. For all periods presented, potentially dilutive outstanding shares consisted solely of our common stock options. Our potential common shares consist of the incremental common shares issuable upon the exercise of the options. The dilutive effect of outstanding stock options is reflected in diluted earnings per share by application of the treasury stock method. For all periods presented, all outstanding common stock consisted of a single‑class. Basic and diluted earnings (loss) per share and adjusted earnings per share are computed as follows: Year ended December 31, 2015 2014 Net income (loss) available to common stockholders $ $ Weighted average outstanding shares of common stock Dilutive effect of stock‑based awards — Adjusted weighted average outstanding and assumed conversions for diluted EPS Earnings (loss) per share from continuing operations: Basic $ $ Diluted Earnings per share from discontinued operations: Basic $ $ — Diluted — Total earnings (loss) per share: Basic $ $ Diluted Employee stock options that were excluded from the calculation of diluted earnings (loss) per share because their effect is anti‑dilutive for the periods presented were as follows: Year ended December 31, 2015 2014 Employee stock options Performance‑based stock options of 2,794,910 and 2,487,275 as of December 31, 2015 and 2014, respectively, have not been included as the vesting conditions as described in Note 15 have not been satisfied as of the respective period end. Unaudited Pro Forma Earnings Per Share We have declared, and, prior to the consummation of our initial public offering, we intend to pay the Special Cash Dividend of $150.0 million in the aggregate, or $1.94 per share of common stock outstanding prior to the offering, to holders of record of our common stock on the dividend record date. Staff Accounting Bulletin Topic 1.B.3 requires that pro forma basic and diluted earnings per share be presented giving effect to the number of shares whose proceeds would be used to replace capital when dividends exceed current year earnings. The pro forma as adjusted earnings per share and pro forma as adjusted equivalent shares which give effect to the deemed issuance of the number of shares that would be required to generate net proceeds sufficient to make the Special Cash Dividend payment of $150.0 million in the aggregate to our pre‑IPO stockholders. The number of incremental shares that would be required to be issued to pay the dividend is based on the initial public offering price of $19.00 per share, after deducting the estimated underwriting discounts and estimated offering expenses payable by us, resulting in net proceeds of $17.45 per share. The following is a computation of pro forma basic and diluted earnings per share for the year ended December 31, 2015: Weighted average outstanding shares of common stock Additional pro forma shares required to be issued in offering necessary to pay dividend Pro forma weighted average shares of common stock — basic Adjusted weighted average outstanding and assumed conversions for diluted EPS Additional pro forma shares required to be issued in offering necessary to pay dividend Pro forma weighted average shares of common stock — diluted Pro forma earnings per share from continuing operations: Basic $ Diluted Pro forma earnings per share from discontinued operations: Basic $ Diluted Pro forma earnings per share: Basic $ Diluted |
Stock-Based Compensation93
Stock-Based Compensation | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Stock-Based Compensation | ||
Stock-Based Compensation | Note 13. Stock‑Based Compensation Equity Incentive Plans In 2012, we adopted an equity incentive plan (“2012 Plan”) pursuant to which our Board of Directors (or committee as designated by the Board of Directors) may grant options to purchase shares of our stock, restricted stock and certain other equity awards to directors, officers and key employees. We only granted stock options that can be settled in shares of our common stock under the 2012 Plan. The 2012 Plan had a total of 7,243,330 shares authorized for issuance. Upon completion of the IPO in May 2016, issuances under the 2012 Plan were suspended. At that time we adopted the 2016 Equity Incentive Plan (“2016 Plan” and collectively with the 2012 Plan, the “Plans”), pursuant to which our Board of Directors (or a committee or sub-committee designated by the Board of Directors) may grant options to purchase shares of our stock, restricted stock and certain other equity awards to directors, officers and key employees. The 2016 Plan was established with the authorization for grants of up to 5,490,000 shares of authorized but unissued shares of common stock. No stock options were granted under the 2012 Plan after December 31, 2015. Awards granted under the 2012 Plan will remain outstanding until the earlier of exercise, forfeiture, cancellation or expiration. To the extent outstanding options under the 2012 Plan are forfeited, cancelled or terminated, the common stock subject to such options will be available for future issuance under the 2016 Plan. As of September 30, 2016, there are no shares available for future issuance under the 2012 Plan as the 776,839 shares that were available were discontinued upon adoption of the 2016 Plan. As of September 30, 2016 the total number of shares available for future issuance under the Plans is 5,248,202. Stock Options Under the terms of the 2016 Plan, we may issue options to purchase shares of our common stock at a price equal to 100% of the market price on the date of grant. Issuances under the 2012 Plan, prior to its suspension, were under terms similar to issuances under the 2016 Plan. Stock options granted are subject to either time of service (service-based awards) or performance (performance-based awards) criteria. Service-based awards typically vest ratably over a five year service period from the date of grant under the 2012 Plan and typically vest ratably over a four year service period from the date of grant under the 2016 Plan. In the event of a change in control, any outstanding, unvested service-based awards will vest immediately. Performance-based awards vest in accordance with the specific performance criteria espoused in the executed award agreements. The term of any stock option shall not exceed ten years from the date of grant. However, an incentive stock option granted to an employee who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of our stock may not have a term exceeding five years from the date of grant. The following is a summary of stock option activity under the Plans: Nine Months Ended September 30, 2016 2015 Weighted Weighted average average exercise exercise Shares price Shares price Outstanding at beginning of period $ $ Granted Exercised Forfeited Expired — — Outstanding at end of period $ $ Average Weighted Weighted Remaining Service- average Performance- average Contractual Aggregate based exercise based exercise Term Intrinsic Shares price Shares price (in years) Value Stock options outstanding as of September 30, 2016 $ $ $ Stock options vested and exercisable as of September 30, 2016 $ $ $ The criteria associated with 2,746,592 of our outstanding performance-based stock options as defined in the terms of the award agreements, was satisfied as of September 30, 2016 and therefore these stock options all became vested and exercisable. Aggregate intrinsic value represents the difference between our estimated fair value of common stock and the exercise price of outstanding in‑the‑money options. The fair value per share of common stock was $33.53 as of September 30, 2016 based upon the closing price of our common stock on the NYSE. The total intrinsic value of options exercised for the three and nine months ended September 30, 2016 and 2015 was insignificant. The total fair value of stock options vested was $19,153 and $1,831 during the three months ended September 30, 2016 and 2015, respectively, and $22,159 and $2,014 during the nine months ended September 30, 2016 and 2015, respectively. Restricted Stock Units Restricted stock units provide participants the right to receive a payment based on the value of a share of common stock. RSUs may be subject to vesting requirements, restrictions and conditions to payment. Such requirements may be based on the continued service for a specified time period or on the attainment of specified performance goals as specified in the award agreements. RSUs are payable in cash or in shares or a combination of both. Under the terms of the Plans, RSUs have a grant date fair value equal to the closing price of our stock on the grant date. The units typically vest ratably over a four year service period. We began issuing RSUs upon adoption of the 2016 Plan; no RSUs were issued under the 2012 Plan. The following is a summary of RSU activity under the 2016 Plan: Nine Months Ended September 30, 2016 Weighted average grant date Shares fair value Nonvested at beginning of period — $ — Granted Vested — — Forfeited — — Nonvested at end of period $ Stock Compensation Expense The fair value of each stock option award is estimated on the date of grant using a Black-Scholes-Merton option pricing model. The expected term of the option represents the period the stock-based awards are expected to be outstanding. We use the simplified method under the provisions of ASC 718, Stock Based Compensation for estimating the expected term of the options. Since our shares were not publicly traded until May 2016 and were rarely traded privately, at the time of each grant, there was insufficient volatility data available. Accordingly, we calculate expected volatility using comparable peer companies with publicly traded shares over a term similar to the expected term of the options issued. We do not intend to pay dividends on our common shares, therefore, the dividend yield percentage is zero. The risk-free interest rate is based on the U.S. Treasury constant maturity interest rate whose term is consistent with the expected life of our stock options. We used the following weighted average assumptions to estimate the fair value of stock options granted for the periods presented as follows: Nine Months Ended September 30, 2016 2015 Expected term (years) Expected volatility % % Expected dividend yield % % Weighted average risk-free interest rate % % Weighted average grant date fair value $ $ We recorded total stock‑based compensation expense of $17,042 and $405 for the three months ended September 30, 2016 and 2015, respectively, and $21,544 and $1,624 for the nine months ended September 30, 2016 and 2015, respectively. Stock-based compensation expense during the three and nine months ended September 30, 2016 includes $15,898 related to the vesting of substantially all outstanding performance based stock options. Stock-based compensation expense during the nine months ended September 30, 2016 also includes $2,257 related to the accelerated vesting of certain stock options as the result of the IPO. We had not previously adjusted stock-based compensation expense for estimated forfeitures as there has been insignificant forfeiture activity to date. Based on the adoption of ASU 2016-09, we will account for forfeitures as they occur. As of September 30, 2016, we had total unrecognized compensation cost related to 1,857,783 unvested service‑based stock options and RSUs under the Plans of $15,081 which we expect to recognize over the next 3.2 years. | Note 15. Stock‑Based Compensation Equity Incentive Plan In 2012, we adopted an equity incentive plan (the “Plan”) pursuant to which our Board of Directors (or committee as designated by the Board of Directors) may grant options to purchase shares of our stock, restricted stock and certain other equity awards to directors, officers and key employees. To date, we have only granted stock options that can be settled in shares of our common stock. The Plan was initially established with the authorization for grants to purchase up to 4,392,000 shares of authorized but unissued common stock. In May 2014, in connection with the Connolly iHealth Merger, the number of shares authorized under the Plan increased by 2,851,329 shares bringing the total number of shares authorized under the Plan for stock option grants to 7,243,329. As of December 31, 2015, the total number of shares available under the Plan is 762,421. The term of any stock option shall not exceed ten years from the date of grant. However, an incentive stock option granted to an employee who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of our stock may not have a term exceeding five years from the date of grant. Stock options granted are subject to either time of service (service‑based awards) or performance (performance‑based awards) criteria. Service‑based awards vest ratably over a five year service period from the grant date. In the event of a change in control, any outstanding, unvested service‑based awards will vest immediately. Performance‑based awards vest in accordance with the specific performance criteria espoused in the executed award agreements. At December 31, 2015, there are 458,182 unvested performance‑based awards outstanding, whose vesting terms are contingent upon the amount of cash proceeds received in an initial public offering. Stock‑based Compensation Expense The fair value of each stock option award is estimated on the date of grant using a Black‑Scholes‑Merton option pricing model. The expected term of the option represents the period the stock‑based awards are expected to be outstanding. We use the simplified method under the provisions of ASC 718, Stock Based Compensation for estimating the expected term of the options. Since our shares have not been publicly traded and are rarely traded privately, there is insufficient volatility data available. Accordingly, we calculate expected volatility using comparable peer companies with publicly traded shares over a term similar to the expected term of the options issued. We do not intend to pay dividends on our common shares, therefore, the dividend yield percentage is zero. The risk‑free interest rate is based on the U.S. Treasury constant maturity interest rate whose term is consistent with the expected life of our stock options. We used the following weighted average assumptions to estimate the fair value of stock options granted for the periods presented as follows: Year ended 2015 2014 Expected term (years) Expected volatility % % Expected dividend yield % % Weighted average risk‑free interest rate % % Weighted average grant date fair value $ $ We recorded stock‑based compensation expense of $3,399 and $2,492 for the years ended December 31, 2015 and 2014, respectively. We do not currently adjust compensation expense for forfeitures as there has been insignificant forfeiture activity to date. As of December 31, 2015, we had total unrecognized compensation cost related to 2,540,534 unvested service‑based awards under the Plan of $15,088 which we expect to recognize over the next 3.9 years. As the criteria associated with the performance‑based awards are based on a future event as defined in the terms of the award agreements, including a change in control or initial public offering, which as of December 31, 2015 has not yet occurred, no compensation expense has been recorded for these stock options. The estimated unrecognized compensation associated with the 2,794,910 outstanding stock options subject to performance criteria was approximately $16,185 at December 31, 2015. Stock Option Activity The following is a summary of stock option activity under the Plan: Year Ended December 31, 2015 2014 Summary stock option activity Shares Weighted Shares Weighted Outstanding at beginning of year $ $ Granted Exercised Forfeited Expired Outstanding at end of period $ $ Service‑ Weighted Performance‑ Weighted Weighted‑ Aggregate Stock options outstanding as of December 31, 2015 $ $ $ Stock options vested and exercisable as of December 31, 2015 $ — $ — $ Aggregate intrinsic value represents the difference between our estimated fair value of common stock and the exercise price of outstanding in‑the‑money options. The estimated fair value of common stock was $15.73 as of December 31, 2015. The total intrinsic value of options exercised for the year ended December 31, 2015 and 2014 was insignificant. The total fair value of stock options vested was $2,450 and $2,000 during the years ended December 31, 2015 and 2014, respectively. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions | |
Related Party Transactions | Note 16. Related Party Transactions In connection with the Connolly iHealth Merger, a preliminary liability of $21,291 was recorded in accounts payable and accrued other expenses on the Consolidated Balance Sheets as of December 31, 2014 for payments due to the former stockholders of iHT. See Note 4 for more information regarding the Connolly iHealth Merger. These amounts were finalized during 2015 and $22,270 was paid to the former stockholders of iHT in September 2015. |
Segment and Geographic Informat
Segment and Geographic Information | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Segment Information | ||
Segment Information | Note 14. Segment Information Operating segments are components of an enterprise for which separate financial information is available that is evaluated regularly by our Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing financial performance. We conduct our business through two reportable business segments: Healthcare and Global Retail and Other. The Healthcare segment provides claims accuracy solutions to health insurance payers and payer‑related entities. All of our healthcare service offerings focus on generating economic benefits for our clients by identifying errors, reducing improper payments and improving efficiency of business process related to healthcare industry payment networks. The Global Retail and Other segment primarily provides retrospective claims accuracy solutions to large and mid‑size retailers. Our services primarily result in cost recoveries based on the audit of our clients’ supply chain information as well as improved efficiency and effectiveness of our clients’ payment networks. We evaluate the performance of each segment based on segment net revenue and segment operating income. Operating income is calculated as net revenue less operating expenses and is not affected by other expense (income) or by income taxes. Indirect costs are generally allocated to the segments based on the segments’ proportionate share of revenue and expenses directly related to the operation of the segment. We do not allocate interest expense, other non‑operating (income) expense or the provision for income taxes, since these items are not considered in evaluating the segment’s overall operating performance. Our CODM does not receive or utilize asset information to evaluate performance of operating segments. Accordingly, asset‑related information has not been presented. Our operating segment results for the periods presented were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 (unaudited) (unaudited) Net Revenue Healthcare $ $ $ $ Global Retail and Other Consolidated net revenue $ $ $ $ Operating Income Healthcare $ $ $ $ Global Retail and Other Consolidated operating income $ $ $ $ Operating segment net revenue by product type for the periods presented was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2016 % 2015 % 2016 % 2015 % (unaudited) (unaudited) Healthcare Retrospective claims accuracy $ $ $ $ Prospective claims accuracy Transaction services Total Healthcare Retail Retrospective claims accuracy Other Total Global Retail and Other Consolidated net revenue $ $ $ $ | Note 17. Segment and Geographic Information Segment Information Operating segments are components of an enterprise for which separate financial information is available that is evaluated regularly by our Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing financial performance. We conduct our business through two reportable business segments: Healthcare and Global Retail and Other. The Healthcare segment provides claims accuracy solutions to health insurance payers and payer‑related entities. All of our healthcare service offerings focus on generating economic benefits for our clients by identifying errors, reducing improper payments and improving efficiency of business process related to healthcare industry payment networks. The Global Retail and Other segment primarily provides retrospective claims accuracy solutions to large and mid‑size retailers. Our services primarily result in cost recoveries based on the audit of our clients’ supply chain information as well as improved efficiency and effectiveness of our clients’ payment networks. We evaluate the performance of each segment based on segment net revenue and segment operating income. Operating income is calculated as net revenue less operating expenses and is not affected by other income (expense) or by income taxes. Indirect costs are generally allocated to the segments based on the segments’ proportionate share of revenue and expenses directly related to the operation of the segment. We do not allocate interest expense, other non‑operating (income) expense or the provision for income taxes, since these items are not considered in evaluating the segment’s overall operating performance. Our CODM does not receive or utilize asset information to evaluate performance of operating segments. Accordingly, asset‑related information has not been presented. Our operating segment results for the periods presented were as follows: Year ended 2015 2014 Net Revenue Healthcare $ $ Global Retail and Other Consolidated net revenue $ $ Operating Income Healthcare $ $ Global Retail and Other Consolidated operating income $ $ Operating segment net revenue by product type for the periods presented was as follows: Year ended December 31, 2015 2014 Retrospective claims accuracy $ % $ % Prospective claims accuracy % % Transaction services % % Total Healthcare % % Retrospective claims accuracy % % Other % % Total Global Retail and Other % % Consolidated net revenue $ % $ % Geographic Information Geographic net revenue and long‑lived assets are attributed to the geographic regions based on the geographic location of each of our subsidiaries/locations. Our operations are primarily within the continental United States. We also operate in Canada and the United Kingdom. Net revenue generated in the United States accounted for approximately 98% and 95% of total net revenue for the years ended December 31, 2015 and 2014, respectively. Remaining net revenue was generated in the rest of the world. Long‑lived assets are primarily based in the United States with over 99% of total consolidated long‑lived assets. Less than 1% of total consolidated long‑lived assets are foreign. |
Client Concentration
Client Concentration | 12 Months Ended |
Dec. 31, 2015 | |
Client Concentration | |
Client Concentration | Note 18. Client Concentration The list of our largest clients changes periodically and was further impacted by the Connolly iHealth Merger. However, our significant clients accounted for the following percentages of total net revenue: Year Ended 2015 2014 Customer A % % Customer B % % Customer C % % In many instances, we provide our services pursuant to agreements which have auto‑renewal clauses and may be periodically subject to a competitive reprocurement process. |
Employee Benefit Plans97
Employee Benefit Plans | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Employee Benefit Plans | ||
Employee Benefit Plans | Note 15. Employee Benefit Plans Contributions expensed and included in compensation on our Consolidated Statements of Comprehensive Income for employee benefit plans are detailed below: Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 401(k) Plan (a) $ $ $ $ Profit Share Plan (b) — Provident Plan (c) Total $ $ $ $ (a) We sponsor defined contribution retirement plans in accordance with Section 401(k) of the Internal Revenue Code, which cover substantially all U.S. employees, subject to certain minimum age and service requirements. The plans provide for a contribution based on a percentage of eligible employee contributions. (b) We had a nonqualified profit sharing incentive compensation plan for certain eligible employees. Contributions were made within 90 days following the last day of the plan to a brokerage account in an amount determined at our discretion for employees who had completed 1,000 hours of service and were employed at the time of the contribution. This plan was discontinued after the 2014 plan year, with the final payout occurring in June 2016 and therefore we did not have a liability under the plan as of September 30, 2016. Our liability under the plan was $893 at December 31, 2015, which is included in accrued compensation costs in the accompanying Consolidated Balance Sheets. (c) Eligible employees of our subsidiary located in India are covered by the Provident Fund, contributions which are based on a percentage of eligible employees’ salaries, and the Payment of Gratuity Act, which provides for benefits to be paid to eligible employees upon termination of employment (collectively, the “India Plan”). Benefits under the Plan are administered by the Indian Government. As of September 30, 2016 and December 31, 2015 we had an accrued benefit obligation relating to the India Plan of $714 and $535, respectively. | Note 19. Employee Benefit Plans Contributions expensed and included in compensation on our Consolidated Statements of Comprehensive Income (Loss) for employee benefit plans are detailed below: Year ended 2015 2014 401(k) Plan (a) $ $ Profit Share Plan (b) Provident Plan (c) Total $ $ (a) We sponsor defined contribution retirement plans in accordance with Section 401(k) of the Internal Revenue Code, which cover substantially all U.S. employees, subject to certain minimum age and service requirements. The plans provide for a contribution based on a percentage of eligible employee contributions. (b) In connection with the Connolly iHealth Merger, we inherited a nonqualified profit sharing incentive compensation plan for certain eligible employees. Contributions are made within 90 days following the last day of the plan to a brokerage account in an amount determined at our discretion for employees who have completed 1,000 hours of service and are employed at the time of the contribution. Our liability under the plan totaled $893 and $1,171 at December 31, 2015 and 2014, respectively, which is included in accrued compensation costs in the accompanying Consolidated Balance Sheets. (c) Eligible employees of our subsidiaries located in India, acquired as part of the Connolly iHealth Merger, are covered by the Provident Fund, contributions which are based on a percentage of eligible employees’ salaries, and the Payment of Gratuity Act, which provides for benefits to be paid to eligible employees upon termination of employment (collectively, the “India Plans”). Benefits under the Plan are administered by the Indian Government. As of December 31, 2015 and 2014 we had an accrued benefit obligation relating to the India Plans of $535 and $441, respectively. |
Discontinued Operations98
Discontinued Operations | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Employee Benefit Plans | ||
Discontinued Operations | Note 16. Discontinued Operations In February 2015, we received payment on a $900 note receivable related to a business that was disposed of in 2012. Since the date of sale, we had elected to fully reserve the note receivable as the collectability was determined to be uncertain. This gain from the collection of the note receivable, net of tax, is reflected as a gain on discontinued operations on our Consolidated Statements of Comprehensive Income. The estimated impact to diluted EPS as a result of this gain on discontinued operations was $0.01 per diluted share for the nine months ended September 30, 2015. | Note 20. Discontinued Operations In February 2015, we received payment on a $900 note receivable related to a business that was disposed of in 2012. Since the date of sale, we had elected to fully reserve the note receivable as the collectability was determined to be uncertain. This gain from the collection of the note receivable, net of tax, is reflected as a gain on discontinued operations on our Consolidated Statements of Comprehensive Income (Loss). The estimated impact to diluted EPS as a result of this gain on discontinued operations is $0.01 per diluted share for the year ended December 31, 2015. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2015 | |
Selected Quarterly Financial Data (Unaudited) | |
Selected Quarterly Financial Data (Unaudited) | Note 21. Selected Quarterly Financial Data (Unaudited) The following table summarizes our unaudited quarterly operating results for the last two years: Year Ended December 31, 2015 First Second Third Fourth Revenue $ $ $ $ Operating income Income (loss) from continuing operations (1)(2) Net income (loss) (1)(2)(3) Earnings (loss) per share from continuing operations—Basic $ $ $ $ Earnings (loss) per share from continuing operations—Diluted $ $ $ $ Earnings per share from discontinued operations (3) $ — — — Total earnings (loss) per share—Basic $ $ $ $ Total earnings (loss) per share—Diluted $ $ $ $ Year Ended December 31, 2014 First (4) Second (4) Third Fourth Revenue $ $ $ $ Operating income (loss) (5) Income (loss) from continuing operations (6) Net income (loss) Earnings (loss) per share—Basic $ $ $ $ Earnings (loss) per share—Diluted $ $ $ $ (1) During the second quarter 2015, as a result of repricing our May 2014 First Lien, we recorded a loss on extinguishment of debt of $4,084 (see Note 9). (2) As a result of our rebranding in September 2015, as discussed in Note 1, we recorded an impairment of intangible assets of $27,826 related to our trademarks (see Note 6). (3) During the first quarter 2015, we received payment on a $900 note receivable related to a business that was disposed of in 2012. Since the date of sale, we had elected to fully reserve the note receivable as the collectability was determined to be uncertain. This collection of the note receivable resulted in a gain on discontinued operations, net of tax, of $559 (see Note 20). (4) On May 14, 2014, we merged with iHT (see Note 1). The results of operations for iHT are included in our consolidated financial statements as of and since May 14, 2014. Accordingly, comparability to other periods presented is impacted by the timing of the Connolly iHealth Merger. (5) During the fourth quarter 2014, we recognized a $74,034 impairment of intangible assets related to our CMS customer relationship (see Note 6). Based on the facts and circumstances surrounding our Medicare RAC contract, including continued delays with the contract renewal process, as well as scope reductions that have resulted in a decrease to future revenue projections (see Note 8), the decrease in the estimated fair value of the customer relationship intangible asset associated with the Medicare RAC contract resulted in this impairment. (6) During the first quarter 2014, as a result of entering into the January 2014 Credit Agreement, we recognized a loss on extinguishment of debt totaling $11,669. During the second quarter 2014, as a result of entering in the May 2014 Credit Agreements, we recognized a loss on extinguishment of debt totaling $9,855 (see Note 9).. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events | |
Subsequent Events | Note 22. Subsequent Events We adopted the provisions of ASU 2015‑03, Simplifying the Presentation of Debt and Issuance Costs , as of January 1, 2016. Net debt issuance costs have been reclassified as a direct reduction from the carrying amounts of our long‑term debt in the accompanying consolidated balance sheets as of December 31, 2015 and 2014 and in the schedule of long‑term debt in Note 9. On May 13, 2016, we effected a 6.1 ‑for‑1 stock split of all outstanding shares of our common stock. All share, option, and per share information presented in the accompanying consolidated financial statements have been adjusted to reflect the stock split on a retroactive basis for all periods presented and all share information is rounded up to the nearest whole share after reflecting the stock split. |
Summary of Significant Accou101
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Summary of Significant Accounting Policies | ||
Basis of Presentation | Basis of Presentation Our accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). All significant intercompany balances and transactions have been eliminated in consolidation. These consolidated financial statements are unaudited and have been prepared by us following the rules and regulations of the U.S. Securities and Exchange Commission. In our opinion they reflect all adjustments, including normal recurring items, that are necessary to present fairly the results of interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations; however, we believe that the disclosures are adequate to make the information presented not misleading. Operating results for the periods presented herein are not necessarily indicative of the results that may be expected for other interim periods or the entire fiscal year. Certain prior year amounts have been reclassified to conform to the current year presentation. | Basis of Presentation The accompanying consolidated financial statements include our accounts and our wholly‑owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions affecting the reported amounts in our consolidated financial statements and accompanying notes. These estimates are based on information available as of the date of the Consolidated Financial Statements; therefore, actual results could differ from those estimates. | |
Foreign Currency Translation | Foreign Currency Translation Assets and liabilities of our foreign subsidiaries with a functional currency other than the U.S. Dollar are translated into U.S. Dollars using applicable exchange rates at the balance sheet date. Revenue and expenses are translated at average exchange rates effective during the year. The resulting foreign currency translation gains and losses are included as a component of accumulated other comprehensive (loss) income within stockholders’ equity on our Consolidated Balance Sheets. Assets and liabilities of our foreign subsidiaries for which the functional currency is the U.S. Dollar are re‑measured into U.S. Dollars using applicable exchange rates at the balance sheet date, except nonmonetary assets and liabilities, which are re‑measured at the historical exchange rates prevailing when acquired. Revenue and expenses are re‑measured at average exchange rates effective during the year. Foreign currency translation gains and losses from re‑measurement are included in other non‑operating (income) expense in the accompanying Consolidated Statements of Comprehensive Income (Loss). The amounts of net gain (loss) on foreign currency re‑measurement recognized were immaterial for all periods presented. | |
Revenue Recognition, Unbilled Receivables and Estimated Liability for Refunds and Appeals | Revenue Recognition, Unbilled Receivables and Estimated Liability for Refunds and Appeals We provide services under contracts that contain various fee structures, including performance fee‑based contracts and fixed fee arrangements. Revenue is recognized when a contract exists, services have been provided to the client, the fee is fixed and determinable and collectability is reasonably assured. We recognize revenue on performance fee-based contracts based upon the specific terms of the underlying contract. The contract terms generally specify: (a) time periods covered by the work to be performed; (b) nature and extent of services we are to provide; (c) the client’s duties in assisting and cooperating with us; and (d) fees payable to us. Our fees are most often expressed as a percentage of our findings. Generally, our services are rendered when our clients realize the economic benefits from our services. Our clients realize economic benefits when they take credits against their existing accounts payable based on when we identify cost savings, when they receive refund checks based on overpayments, or when they acknowledge payment reductions based on cost savings. We derive a relatively small portion of revenue on contracts with fixed fee arrangements. We recognize revenue on these contracts ratably over the contract term and once all of the above criteria have been satisfied. Historically, there has been a certain amount of revenue with respect to which, even though we had met the requirements of our revenue recognition policy, the claim is ultimately rejected. In such cases, our clients may request a refund or offset if their providers or vendors ultimately reject the payment inaccuracies we find or if our clients determine not to pursue reimbursement from their providers or vendors even though we may have collected fees. We record any such refund as a reduction of revenue. We record an estimate for refund liabilities at any given time based on actual historical refund data by client type. We satisfy such refund liabilities either by offsets to accounts receivable or by cash payments to clients. In addition to the refund liabilities, we calculate client specific reserves when we determine an additional reserve may be necessary. The estimated liability for refunds and appeals representing our estimate of claims that may be overturned related to revenue which had already been received was $70,596 and $67,775 at September 30, 2016 and December 31, 2015, respectively. The estimated allowance for refunds and appeals representing our estimate of claims that may be overturned related to amounts in accounts receivable was $31,887 and $33,406 at September 30, 2016 and December 31, 2015, respectively. Under the Medicare Recovery Audit Program, in which we are one of the four Recovery Audit Contractors (“Medicare RAC”) for CMS, healthcare providers have the right to appeal a claim and may pursue additional appeals if the initial appeal is found in favor of CMS. We accrue an estimated liability for appeals based on the amount of fees that are subject to appeals, closures or other adjustments and those which we estimate are probable of being returned to CMS following a successful appeal by the providers. Our estimates are based on our historical experience with the Medicare RAC appeal process. This estimated liability for Medicare RAC appeals is an offset to revenue in our Consolidated Statements of Comprehensive Income. The liability is included in the estimated liability for refunds and appeals on our Consolidated Balance Sheets. See Note 6 for further information regarding the estimated liability for appeals related to the Medicare RAC program. Unbilled receivables represent revenue recognized related to claims for which clients have received economic value that were not invoiced at the balance sheet date. Unbilled receivables were approximately $51,762 and $51,799 as of September 30, 2016 and December 31, 2015, respectively and are included in accounts receivable on our Consolidated Balance Sheets. Certain unbilled receivables arise when a portion of our earned fee is deferred at the time of the initial invoice. At a later date (which can be up to a year after original invoice, and at other times during the year after completion of the audit period based on contractual terms or as agreed with our client), we invoice the unbilled receivable amount. Notwithstanding the deferred due date, our clients acknowledge we have earned this unbilled receivable at the time of the original invoice, but we have agreed to defer billing the client for the related services. Unbilled receivables of this nature were approximately $5,828 and $6,431 as of September 30, 2016 and December 31, 2015, respectively, and are included in accounts receivable on our Consolidated Balance Sheets. We record periodic changes in unbilled receivables and refund liabilities as adjustments to revenue. | Revenue Recognition, Unbilled Receivables and Estimated Liability for Refunds and Appeals We provide services under contracts that contain various fee structures, including performance fee‑based contracts and fixed fee arrangements. Revenue is recognized when a contract exists, services have been provided to the client, the fee is fixed and determinable and collectability is reasonably assured. We recognize revenue on performance fee based contracts based upon the specific terms of the underlying contract. The contract terms generally specify: (a) time periods covered by the work to be performed; (b) nature and extent of services we are to provide; (c) the client’s duties in assisting and cooperating with us; and (d) fees payable to us. Our fees are most often expressed as a percentage of our findings. Generally, our services are rendered when our clients realize the economic benefits from our services. Our clients realize economic benefits when they take credits against their existing accounts payable based on when we identify cost savings, when they receive refund checks based on overpayments, or when they acknowledge payment reductions based on cost savings. We derive a relatively small portion of revenue on contracts with fixed‑fee arrangements. We recognize revenue on these contracts ratably over the contract term and once all of the above criteria have been satisfied. Historically, there has been a certain amount of revenue with respect to which, even though we had met the requirements of our revenue recognition policy, the claim is ultimately rejected. In such cases, our clients may request a refund or offset if their providers or vendors ultimately reject the payment inaccuracies we find or if our clients determine not to pursue reimbursement from their providers or vendors even though we may have collected fees. We record any such refund as a reduction of revenue. We record an estimate for refund liabilities at any given time based on actual historical refund data by client type. We satisfy such refund liabilities either by offsets to accounts receivable or by cash payments to clients. In addition to the refund liabilities, we calculate client specific reserves when we determine an additional reserve may be necessary. The estimated liability for refunds and appeals representing our estimate of claims that may be overturned related to revenue which had already been received was $67,775 and $74,941 at December 31, 2015 and 2014, respectively. The estimated allowance for refunds and appeals representing our estimate of claims that may be overturned related to amounts in accounts receivable was $33,406 and $23,216 at December 31, 2015 and 2014, respectively. Under the Medicare Recovery Program, in which we are one of the four Recovery Audit Contractors (“Medicare RAC”) with CMS, healthcare providers have the right to appeal a claim and may pursue additional appeals if the initial appeal is found in favor of CMS. We accrue an estimated liability for appeals based on the amount of fees that are subject to appeals, closures or other adjustments and those which we estimate are probable of being returned to CMS following a successful appeal by the providers. Our estimates are based on our historical experience with the Medicare RAC appeal process. This estimated liability for Medicare RAC appeals is an offset to revenue in our Consolidated Statements of Comprehensive Income (Loss). The liability is included in the estimated liability for refunds and appeals on our Consolidated Balance Sheets. See Note 8 for further information regarding the estimated liability for appeals related to the Medicare RAC program. Unbilled receivables represent revenue recognized related to claims for which clients have received economic value that were not invoiced at the balance sheet date. Unbilled receivables were approximately $51,799 and $42,433 as of December 31, 2015 and 2014, respectively and are included in accounts receivable on our Consolidated Balance Sheets. Certain unbilled receivables arise when a portion of our earned fee is deferred at the time of the initial invoice. At a later date (which can be up to a year after original invoice, and at other times during the year after completion of the audit period based on contractual terms or as agreed with our client), we invoice the unbilled receivable amount. Notwithstanding the deferred due date, our clients acknowledge we have earned this unbilled receivable at the time of the original invoice, but we have agreed to defer billing the client for the related services. Unbilled receivables of this nature were approximately $6,431 and $7,519 as of December 31, 2015 and 2014, respectively, and are included in accounts receivable on our Consolidated Balance Sheets. We record periodic changes in unbilled receivables and refund liabilities as adjustments to revenue. |
Cost of Revenue | Cost of Revenue Cost of revenue is a direct cost associated with generating revenue. Cost of revenue related to compensation includes the total cost of payroll, related benefits and stock compensation expense for employees in roles that serve to provide direct revenue generating services to clients. Other cost of revenue primarily includes expenses related to the use of certain subcontractors, costs associated with the retrieval of medical records and facilities‑related costs associated with locations that are used strictly for revenue generating activities. Cost of revenue does not include any depreciation and amortization, which is stated separately in our Consolidated Statements of Comprehensive Income (Loss). | |
Selling, General and Administrative ("SG&A") | Selling, General and Administrative (“SG&A”) Compensation within SG&A includes the total cost of payroll, related benefits and stock compensation expense for employees who do not have a direct role associated with revenue generation including those involved with developing new service offerings. Other SG&A operating expenses include all general operating costs. These costs include, but are not limited to, rent and occupancy costs for facilities associated with locations that are used for employees not serving in revenue generating roles, telecommunications costs, IT infrastructure costs, software licensing costs, advertising and marketing expenses, costs associated with developing new service offerings and expenses related to the use of certain subcontractors and professional services firms. Selling, general and administrative expenses do not include any depreciation and amortization, which is stated separately in our Consolidated Statements of Comprehensive Income (Loss). | |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred and included in other selling, general and administrative expenses on our Consolidated Statements of Comprehensive Income (Loss). Advertising expense was $1,241 and $1,294 for the years ended December 31, 2015 and 2014, respectively. | |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include all cash balances and highly liquid investments with an original maturity of 90 days or less from the date of purchase. | |
Restricted Cash | Restricted Cash In connection with providing services to certain clients, we maintain a series of lockbox accounts with certain financial institutions. These lockbox accounts exist to receive funds we collect on behalf of our clients resulting from services provided. When client funds are received and deposited into the lockbox accounts, we record a corresponding customer deposit liability. These funds are included as both restricted cash in current assets and customer deposits in current liabilities on our Consolidated Balance Sheets. | |
Accounts Receivable | Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. We accrue an allowance against accounts receivable related to fees yet to be collected, based on historical losses adjusted for current market conditions, our clients’ financial condition, the amount of any receivables in dispute, the current receivables aging and current payment patterns. We record changes in our estimate to the allowance for doubtful accounts through bad debt expense and relieve the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Write‑offs for all periods presented have not been significant. We do not have any off‑balance‑sheet credit exposure related to our clients. | |
Investments | Investments Investments, which are primarily purchased on behalf of our nonqualified profit sharing incentive compensation plan (See Note 19), consist of money market securities, which have been classified as available‑for‑sale securities. Available‑for‑sale securities are reported at fair values (based primarily on quoted prices and market observable inputs) using the specific identification method, with the unrealized gains and losses included in accumulated other comprehensive income (loss) on our Consolidated Balance Sheets. Investments are included in prepaid expenses and other current assets on our Consolidated Balance Sheets. Realized gains and losses and interest and dividends on available‑for‑sale securities are included in other non‑operating (income) expense on the Consolidated Statements of Comprehensive Income (Loss). | |
Property and Equipment | Property and Equipment Property and equipment is stated at cost, net of accumulated depreciation. Depreciation on property and equipment is calculated using the straight‑line method over the estimated useful lives of the assets and is included in depreciation and amortization of property and equipment in our Consolidated Statements of Comprehensive Income (Loss). The estimated useful lives of our property and equipment are as follows: Computer equipment 3 ‑ 5 years Software 2 ‑ 5 years Furniture and fixtures 7 years Leasehold improvements Lesser of remaining lease term or expected service life of improvement | |
Asset Retirement Obligations | Asset Retirement Obligations We have asset retirement obligations (“AROs”) arising from contractual requirements to perform specified activities at the time of disposition of certain leasehold improvements and equipment at some of our facilities. We record a liability for the estimated costs of these AROs. The liabilities are included in other long‑term liabilities on our Consolidated Balance Sheets and are initially measured at fair value and subsequently are adjusted for accretion expense and any changes in the amount or timing of the estimated cash flows. | |
Internally Developed Software Costs | Internally Developed Software Costs Capitalization of costs incurred in connection with software developed for internal use commences when both the preliminary project stage is completed and management has authorized further funding for the project, based on a determination that it is probable the project will be completed and used to perform the function intended. Capitalized costs are limited to (i) external direct costs of materials and services consumed in developing or obtaining internal‑use software and (ii) payroll and payroll‑related costs for employees who are directly associated with and devote time to the internal‑use software project. Capitalization of such costs ceases no later than the point at which the project is substantially complete and ready for its intended use. All other costs to develop software for internal use are expensed as incurred. We capitalized approximately $2,764 and $3,254 for the years ended December 31, 2015 and 2014, respectively. Amortization of software and software development costs is calculated on a straight‑line basis over the expected economic life of the software, generally estimated to be five years and is included in depreciation and amortization of property and equipment on our Consolidated Statements of Comprehensive Income (Loss). Amortization expense for internal‑use software was $2,257 and $722 for the years ended December 31, 2015 and 2014, respectively. Amortization expense for the year ended December 31, 2015 includes the write‑off of approximately $975 related to software that is no longer being used. | |
Intangible Assets | Intangible Assets Our intangible assets with definite lives include customer relationships and acquired software. Intangible assets with indefinite lives include a trademark, which is not being amortized and are tested for impairment on an annual basis or when events or changes in circumstances necessitate an evaluation for impairment. Intangible assets with definite lives are initially recorded at fair value and are amortized on a basis consistent with the timing and pattern of expected cash flows used to value the intangibles, generally on a straight‑line basis over useful lives ranging from 6 to 14 years. Amortization expense is included in amortization of intangible assets in our Consolidated Statements of Comprehensive Income (Loss). | |
Impairment of Long-Lived Assets | Impairment of Long‑Lived Assets Long‑lived assets, including property and equipment and intangible assets with definite lives, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. If circumstances require the asset or asset group be tested for possible impairment, we first compare undiscounted cash flows expected to be generated by the asset or asset group to its carrying value. If the carrying value of the asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment loss is recognized to the extent the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third‑party independent appraisals, as necessary. Intangible assets with indefinite lives are tested for impairment on an annual basis as of October 1, of each year or more frequently whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is measured by a comparison of the carrying amounts to the future discounted cash flows the assets are expected to generate. We recognized a $27,826 impairment charge on our trademark assets during the year ended December 31, 2015 due to a change in the estimated fair value of the trademark. We recognized a $74,034 impairment charge for the year ended December 31, 2014 due to the change in the estimated fair value of our CMS customer relationship intangible asset associated with the Medicare RAC. See Note 6 for further detail. | |
Goodwill | Goodwill Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination which are not individually identified and separately recognized. We do not amortize goodwill. Goodwill is reviewed for impairment on an annual basis as of October 1, of each year or more frequently if a triggering event occurs. These tests are performed at the reporting unit level. We have two reporting units, Healthcare and Global Retail and Other. We are permitted to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two‑step impairment test as required in ASC 350, Intangibles—Goodwill and Other . If we can support the conclusion that it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then we would not need to perform the two‑step impairment test. If we cannot support such a conclusion, or we do not elect to perform the qualitative assessment, then the first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The fair value of each reporting unit is determined using a discounted cash flow analysis. | |
Acquisitions | Acquisitions We account for acquisitions using the accounting for business combinations. In each case, we allocated the purchase price to the identifiable net assets acquired, including intangible assets and liabilities assumed, based on estimated fair values at the date of the acquisition. The excess of the purchase price over the amount allocated to the identifiable assets and liabilities, if any, is recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires significant judgment, including the selection of valuation methodologies, estimates of future revenue and cash flows and discount rates. Under the acquisition method of accounting for business combinations, any changes to acquired balances in tax accounts, including adjustments to deferred tax asset valuation allowances or liabilities related to uncertain tax positions, which are recorded during the measurement period, and are determined to be attributable to facts and circumstances that existed as of the acquisition date, are considered a measurement period adjustment and will result in an offsetting increase or decrease to goodwill. All other changes to deferred tax asset valuation allowances and liabilities related to uncertain tax positions will result in an increase or decrease to income tax expense. | |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred 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, as well as for tax attributes such as operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We recognize net deferred tax assets to the extent that we believe these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax‑planning strategies, and results of recent operations. In the event we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we reduce the deferred tax asset valuation allowance and record a benefit in our provision for income taxes in our Consolidated Statements of Comprehensive Income (Loss). We record liabilities related to uncertain tax positions in accordance with ASC 740, Income Taxes (“ASC 740”) on the basis of a two‑step process whereby (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more‑likely‑than‑not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. We recognize interest and penalties related to unrecognized tax benefits within the income tax provision in the accompanying Consolidated Statements of Comprehensive Income (Loss). Accrued interest and penalties are included within accounts payable and accrued other expenses in the Consolidated Balance Sheets. | |
Derivative Instruments | Derivative Instruments Our derivative instruments consist entirely of interest rate cap agreements, are stated at fair value and are included in accounts payable and accrued other expenses and other long‑term liabilities on our Consolidated Balance Sheets. Changes in the fair value of derivatives that are designated as cash flow hedges are deferred in accumulated other comprehensive income (loss) on our Consolidated Balance Sheets until the underlying hedged transactions are recognized in earnings, at which time any deferred hedging gains or losses are also recorded in earnings. See Note 10 for more information. | |
Stock-Based Compensation | Stock‑Based Compensation Our policy is to issue new shares for purchases under our stock‑based award plan as described in Note 15. Stock‑based compensation expense is estimated at the grant date based on an award’s fair value as calculated by the Black‑Scholes‑Merton option pricing model. The determination of the stock‑based compensation expense is affected by our estimated stock price, expected stock price volatility over the term of the awards, expected term, risk‑free interest rate and expected dividends. We estimate a forfeiture rate based on historical experience and adjust the rate as necessary to reflect changes in facts and circumstances, if any. We recognize stock‑based compensation expense for service‑based equity awards using the straight‑line attribution method over the requisite service period. We have awarded performance‑based equity awards to certain employees and directors. These awards vest based on a series of criteria triggered upon a qualifying change of control event. Consistent with the service‑based equity awards, the vesting of performance‑based equity awards is dependent upon the participant’s continued employment through the date the performance criteria have been achieved. No stock‑based compensation expense has been recorded for performance‑based equity awards because the qualifying events have not occurred as of December 31, 2015. At the consummation of a change in control event or an initial public offering, we will record stock‑based compensation expense net of forfeitures based on the grant date fair value of the awards. | |
Commitments and Contingencies | Commitments and Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. See Note 8 for further detail on loss contingency related to the Medicare RAC. | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying values for cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and other accrued liabilities reasonably approximate fair market value due to their nature and the short term maturity of these financial instruments. We measure assets and liabilities at fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, we use a consistent fair value hierarchy framework as defined in ASC 820, Fair Value Measurement . Refer to Note 11 for more information regarding management’s fair value estimates. | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”) which addresses eight specific cash flow issues in order to reduce diversity in practice. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted. We are evaluating this guidance and its impact on our consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”) which simplifies several aspects of the accounting for share based compensation. ASU 2016-09 changes several aspects of the accounting for share based payment award transactions, including 1) accounting for income taxes, 2) classification of excess tax benefits on the statement of cash flows, 3) forfeitures, 4) minimum statutory tax withholding requirements and 5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes. We early adopted ASU 2016-09 on a prospective basis during the third quarter of 2016, which did not result in any significant changes to our current or prior period consolidated financial statements. In conjunction with adopting ASU 2016-09, we made an accounting policy election to account for forfeitures as they occur. In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”) which changes the accounting recognition, measurement and disclosure for leases in order to increase transparency. ASU 2016-02 requires lease assets and liabilities to be recognized on the balance sheet and key information about leasing arrangements to be disclosed. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We are evaluating this new guidance and its impact on our consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”) which changes the current financial instruments model primarily impacting the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. We are evaluating this new guidance and do not believe it will have a material impact on our consolidated financial statements and related disclosures. In November 2015, the FASB issued ASU 2015‑17, Balance Sheet Classification of Deferred Taxes , (“ASU 2015‑17”) which requires entities with a classified balance sheet to present all deferred tax assets and liabilities as noncurrent. The guidance is effective for public companies with annual and interim periods beginning after December 15, 2016. Early adoption is permitted. We are evaluating this new guidance and its impact on our consolidated balance sheets and related disclosures and expect the adoption of this ASU will reduce our total current assets and net working capital. In April 2015, the FASB issued ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (“ASU 2015-05”) which established guidance regarding the accounting for software licenses. ASU 2015-05 is effective for annual reporting periods, including interim periods, beginning after December 15, 2015. We prospectively adopted the provisions of ASU 2015-05 as of January 1, 2016 and have not yet had any material contracts that were impacted by this new guidance. In April 2015, the FASB issued ASU 2015‑03, Simplifying the Presentation of Debt and Issuance Costs (“ASU 2015‑03”) which establishes guidance to simplify the presentation of debt issuance costs by requiring debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that liability, consistent with debt discounts. Prior to the issuance of ASU 2015-03, debt issuance costs were required to be presented as an asset in the balance sheet. The guidance is effective for annual reporting periods beginning after December 15, 2015, and interim periods within that reporting period. We adopted the provisions of ASU 2015-03 as of January 1, 2016 and prior period amounts have been reclassified to conform to the current period presentation. As of December 31, 2015, $20,975 of debt issuance costs were reclassified in the consolidated balance sheet from debt issuance costs, net to long-term debt. The adoption of ASU 2015-03 did not materially impact our consolidated financial position, results of operations or cash flows. In May 2014, the FASB issued ASU No. 2014‑09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014‑09”) which supersedes existing revenue recognition guidance and provides clarification of principles for recognizing revenue from contracts with customers. The guidance is effective for public companies with annual periods beginning after December 15, 2017 and interim periods within that reporting period. We are evaluating this new guidance, the method of adoption we will take and the impact, if any, on our consolidated financial statements and related disclosures. | Recently Issued Accounting Standards In February 2016, the FASB issued ASU 2016‑02, Leases (“ASU 2016‑02”) which changes the accounting recognition, measurement and disclosure for leases in order to increase transparency. ASU 2016‑02 requires lease assets and liabilities to be recognized on the balance sheet and key information about leasing arrangements to be disclosed. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We are evaluating this new guidance and its impact on our consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU 2016‑01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016‑01”) which changes the current financial instruments model primarily impacting the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. We are evaluating this new guidance and do not believe it will have a material impact on our consolidated financial statements and related disclosures. In November 2015, the FASB issued ASU 2015‑17, Balance Sheet Classification of Deferred Taxes , (“ASU 2015‑17”) which requires entities with a classified balance sheet to present all deferred tax assets and liabilities as noncurrent. The guidance is effective for public companies with annual and interim periods beginning after December 15, 2016. Early adoption is permitted. We are evaluating this new guidance and its impact on our consolidated balance sheets and related disclosures and expect the adoption of this ASU will reduce our total current assets and net working capital. In September 2015, the FASB issued ASU 2015‑16, Simplifying the Accounting for Measurement‑Period Adjustments (“ASU 2015‑16”) which requires an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. We early adopted this guidance in 2015 and it did not have a material impact to our consolidated financial statements and related disclosures. In April 2015, the FASB issued ASU 2015‑05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (“ASU 2015‑05”) which established guidance regarding the accounting for software licenses. ASU 2015‑05 is effective for annual reporting periods, including interim periods, beginning after December 15, 2015. We are evaluating this new guidance and do not believe it will have a material impact on our consolidated financial statements and related disclosures. In April 2015, the FASB issued ASU 2015‑03, Simplifying the Presentation of Debt and Issuance Costs (“ASU 2015‑03”) which establishes guidance to simplify the presentation of debt issuance costs by requiring debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that liability, consistent with debt discounts. The guidance is effective for annual reporting periods beginning after December 15, 2015, and interim periods within that reporting period. Early adoption is permitted. We are evaluating this new guidance and do not believe it will have a material impact on our consolidated financial statements and related disclosures. In June 2014, FASB issued ASU 2014‑12, Accounting for Share‑Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (“ASU 2014‑12”). ASU 2014‑12 brings consistency to the accounting for share‑based payment awards that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards. ASU 2014‑12 is effective for annual reporting periods beginning after December 15, 2015, and interim periods within that reporting period. Early adoption is permitted. We are evaluating this new guidance and do not believe it will have a material impact on our consolidated financial statement disclosures. In May 2014, the FASB issued ASU No. 2014‑09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014‑09”) which supersedes existing revenue recognition guidance and provides clarification of principles for recognizing revenue from contracts with customers. ASU 2014‑09 is effective for annual periods beginning after December 15, 2017 and interim periods within that reporting period. We are evaluating this new guidance, the method of adoption we will take and the impact, if any, on our consolidated financial statements and related disclosures. |
Summary of Significant Accou102
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies | |
Schedule of useful lives | Computer equipment 3 ‑ 5 years Software 2 ‑ 5 years Furniture and fixtures 7 years Leasehold improvements Lesser of remaining lease term or expected service life of improvement |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Investments | |
Schedule of reconciliation of available-for-sale securities | December 31, 2015 December 31, 2014 Amortized Gross Gross Fair Amortized Gross Gross Fair Money market securities $ $ $ — $ $ $ — $ — $ |
Acquisition (Tables)
Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Acquisition | |
Schedule of estimated fair values of the assets acquired and liabilities assumed | May 14, 2014 Cash $ Accounts receivable Prepaid expenses and other assets Other long‑term assets Property and equipment Intangible assets Total identifiable assets acquired Accounts payable and accrued liabilities Deferred tax liabilities Other long‑term liabilities Total liabilities assumed Net identifiable assets acquired Goodwill Net assets acquired $ |
Schedule of unaudited pro forma results | Year Ended (unaudited) Net revenue $ Operating income Net loss Basic loss per share $ Diluted loss per share $ |
Property and Equipment (Tabl105
Property and Equipment (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Property and Equipment | ||
Schedule of property and equipment by major asset class | September 30, December 31, 2016 2015 Computer equipment $ $ Software Furniture and fixtures Leasehold improvements Projects in progress Property and equipment, gross $ $ Less: Accumulated depreciation and amortization Property and equipment, net $ $ | December 31, 2015 2014 Computer equipment $ $ Software Furniture and fixtures Leasehold improvements Projects in progress Property and equipment, gross $ $ Less: Accumulated depreciation and amortization Property and equipment, net $ $ |
Intangible Assets (Tables)106
Intangible Assets (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Intangible Assets | ||
Schedule of intangible asset balances by major asset class | Weighted Gross Net Average Carrying Accumulated Carrying Amortization Amount Amortization Impairment Amount Period September 30, 2016: Customer relationships $ $ $ — $ years Acquired software — years Connolly trademark — — indefinite-lived Total $ $ $ — $ years December 31, 2015: Customer relationships $ $ $ — $ years Acquired software — years Connolly trademark — indefinite-lived iHealth trademark — years Total $ $ $ $ years | Gross Accumulated Impairment Net Carrying Weighted Average December 31, 2014: Customer relationships $ $ $ $ 13.7 years Acquired software — 6.2 years Connolly trademark — — indefinite‑lived iHealth trademark — 11.0 years Total $ $ $ $ 12.8 years December 31, 2015: Customer relationships $ $ $ — $ 13.7 years Acquired software — 6.2 years Connolly trademark — indefinite‑lived iHealth trademark — 11.0 years Total $ $ $ $ 12.8 years |
Schedule of intangible asset amortization expense | Remainder of 2016 $ 2017 2018 2019 2020 | As of December 31, 2015 amortization expense for the next 5 years was: 2016 $ 2017 2018 2019 2020 |
Goodwill (Tables)107
Goodwill (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Goodwill | ||
Schedule of changes in the carrying amount of goodwill by segment | Global Retail Healthcare and Other December 31, 2015 $ $ Foreign currency translation and other — September 30, 2016 $ $ | December 31, 2015 December 31, 2014 Healthcare Global Retail Healthcare Global Retail Beginning balance $ $ $ $ Acquisitions — — — Purchase price adjustments — — — Foreign currency translation and other — Ending balance $ $ $ $ |
Commitments and Contingencie108
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies | |
Schedule of future minimum payments under non-cancelable operating lease agreements | Year ending December 31: 2016 $ 2017 2018 2019 2020 2021 ‑ 2026 Total minimum lease payments $ |
Schedule of changes in the carrying amount of AROs | Year ended 2015 2014 Balance beginning of period $ $ Additional ARO Liability Accretion expense Balance at end of period $ $ |
Long-term Debt (Tables)109
Long-term Debt (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Long-term Debt | ||
Schedule of long-term debt | September 30, December 31, 2016 2015 Term Loan A (a) $ $ — Term Loan B (b) — Revolver (c) — — May 2014 First Lien — May 2014 Second Lien — May 2014 Revolver — — Total debt Less: debt issuance costs Less: current portion Total long-term debt $ $ (a) The Term Loan A matures on September 28, 2021 and requires quarterly principal payments of $3,125 for the fourth quarter of 2016, $3,125 per quarter in 2017 and 2018, $4,688 per quarter in 2019, $6,250 per quarter in 2020 and $9,375 per quarter for the first two quarters of 2021. The remainder of the outstanding Term Loan A borrowings are due on September 28, 2021. Any mandatory or voluntary prepayment will be applied against the remaining scheduled installments of principal payments in direct order of maturity, unless other direction of application is provided by us. Based on our periodic election, borrowings under the Term Loan A bear interest at either (a) the Alternate Base Rate (“ABR”) plus, based on our Secured Leverage Ratio (as defined in the Restated Credit Agreement), 1.25% - 2.00% for ABR loans or (b) the LIBO Rate (“LIBOR”) plus, based on our Secured Leverage Ratio, 2.25% to 3.00% for LIBOR loans. The ABR is equal to the highest of (i) the New York Federal Reserve Bank rate in effect on such date plus 0.50%, (ii) the LIBOR plus 1.00% and (iii) the prime commercial lending rate of the administrative agent as in effect on the relevant day. The interest period applicable to any LIBOR borrowing is one, two, three or six months, at the election of the borrower. Interest on LIBOR loans is payable the last day of the applicable interest period and, in the case of an interest period of more than three months’ duration, each day on which interest would have been payable had successive interest periods of three months’s duration been applicable to such borrowing. The interest rate in effect was 3.6% at September 28, 2016. (b) The Term Loan B matures September 28, 2023 and requires quarterly principal payments of $1,375 with all remaining borrowings due on September 28, 2023. Based on our periodic election, borrowings under the Term Loan B bear interest at either (a) the ABR plus 1.75% for ABR loans or (b) the LIBOR plus 2.75% for LIBOR loans. The ABR is equal to the highest of (i) the New York Federal Reserve Bank rate in effect on such date plus 0.50%, (ii) LIBOR plus 1.00%, (iii) the prime commercial lending rate of the administrative agent as in effect on the relevant day and (iv) 1.75%. LIBOR is equal to the higher of (a) the published LIBOR or (b) 0.75%. If our corporate credit rating from Moody’s Investor Service, Inc. is Ba3 or better and our corporate family rating from Standard & Poor’s Financial Services, LLC is BB- or better, the margin will be reduced by 0.25% per annum for as long as such ratings are maintained. The interest period applicable to any LIBOR borrowing is one, two, three or six months, at the election of the borrower. Interest on LIBOR loans is payable the last day of the applicable interest period and, in the case of an interest period of more than three months’ duration, each day on which interest would have been payable had successive interest periods of three months’s duration been applicable to such borrowing.The interest rate in effect was 3.6% at September 28, 2016. (c) The Revolver expires September 28, 2021. Interest for any borrowings under the Revolver is payable over one, two, three or six months at our election. A commitment fee is payable quarterly based on the unused portion of the Revolver commitment which ranges from 0.30% to 0.50% per annum based on certain financial tests. Based on our periodic election, borrowings under the Revolver bear interest at either (a) ABR plus, based on our Secured Leverage Ratio, 1.25% - 2.00% for ABR loans or (b) LIBOR plus, based on our Secured Leverage Ratio, 2.25% to 3.00% for LIBOR loans. The ABR is equal to the highest of (i) the New York Federal Reserve Bank rate in effect on such date plus 0.50%, (ii) the LIBOR plus 1.00% and (iii) the prime commercial lending rate of the administrative agent as in effect on the relevant day. There were no borrowings outstanding under the Revolver as of September 30, 2016. The interest rate in effect was 3.6% at September 28, 2016. | December 31, 2015 2014 May 2014 First Lien (a) $ $ May 2014 Second Lien (b) May 2014 Revolver (c) — — Total debt Less: debt issuance costs Less: current portion Total long‑term debt $ $ (a) The May 2014 First Lien, as amended, expires May 2021 and requires quarterly principal payments of $2,025. The quarterly principal payment may be reduced by any amounts of mandatory or voluntary prepayment. Any mandatory or voluntary prepayment shall be applied against the remaining scheduled installments of principal payments in direct order of maturity, unless other direction of application is provided by us. Interest on the May 2014 First Lien is payable over periods of one, two, three or six months at the election of the borrower. Based on our periodic election, borrowings under the May 2014 First Lien bear interest at either (a) the Alternate Base Rate (ABR) plus 2.50% for ABR Loans, or (b) the LIBO Rate (“LIBOR”) plus 3.50% for LIBOR Loans. The ABR is equal to the higher of (a) the Federal Funds Effective Rate plus 0.50%; (b) the published one month LIBOR plus 1.00%; (c) the Prime Rate; or (d) 2.00%. The LIBOR is equal to the higher of (a) the LIBOR or (b) 1.00%. The interest rate in effect was 4.50% at December 31, 2015 and 5.00% at December 31, 2014. Following a qualified IPO, borrowings under the May 2014 First Lien bear interest at either (a) the ABR plus 2.25%, or (b) the LIBOR plus 3.25%. (b) The May 2014 Second Lien expires May 2022 with the total principal balance due at maturity. Interest on the May 2014 Second Lien is payable over periods of one, two, three, or six months at the election of the borrower. Based on our periodic election, borrowings under the May 2014 Second Lien bear interest at either (a) the ABR plus 6.00% for ABR Loans or (b) LIBOR plus 7.00% for LIBOR Loans. The ABR is equal to the higher of (a) the Federal Funds Effective Rate plus 0.50% (b) the published one month LIBOR plus 1.00%; (c) the Prime Rate; or (d) 2.00%. The LIBOR is equal to the higher of (a) the LIBOR or (b) 1.00%. The interest rate in effect was 8.00% at December 31, 2015 and December 31, 2014. Following a qualified IPO, borrowings under the May 2014 Second Lien bear interest at either (a) the ABR plus 5.75% for ABR Loans, or (b) the LIBOR plus 6.75% for LIBOR Loans. (c) The May 2014 Revolver expires May 2019 with interest payable over periods of one, two, three or six months at the election of the borrower. A commitment fee is payable quarterly based on the daily unused portion of the Revolver balance which ranges from an annual rate of 0.375% to 0.50% based on certain financial tests. The commitment fee was 0.375% and 0.50% at December 31, 2015 and 2014, respectively. Based on our periodic election, borrowings under the Revolver bear interest at either (a) the ABR plus 1.75% to 2.25% for ABR Loans based on certain financial tests or (b) the LIBOR plus 2.75% to 3.25% for LIBOR Loans based on certain financial tests. The ABR is equal to the higher of (a) the Federal Funds Effective Rate plus 0.50%; (b) the published one month LIBOR plus 1.00%; or (c) the Prime Rate. The LIBOR is equal to the higher of (a) the LIBOR or (b) 1.00%. The interest rate in effect was 4.00% and 4.25% at December 31, 2015 and December 31, 2014, respectively. At December 31, 2015 and December 31, 2014, we had $3,526 and $150 of letters of credit outstanding, respectively, which reduce the amount available for borrowing. There were no borrowings outstanding under the May 2014 Revolver as of December 31, 2015 or December 31, 2014. |
Derivative Instruments (Tabl110
Derivative Instruments (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Derivative Instruments | ||
Schedule of fair value and location of derivative instruments | September 30, December 31, 2016 2015 Liability fair value recorded in other long-term liabilities $ $ Liability fair value recorded in accounts payable and accrued other expenses Estimated amount of existing losses expected to be reclassified into earnings in the next 12 months | December 31, 2015 2014 Liability fair value recorded in other long‑term liabilities $ $ Liability fair value recorded in accounts payable and accrued other expenses — Estimated amount of existing losses expected to be reclassified into earnings in the next 12 months |
Schedule of changes in other comprehensive income related to derivative instruments classified as cash flow hedges | Three Months Ended September 30, 2016 2015 Balance at beginning of period, July 1 $ $ Reclassifications in earnings, net of tax of $21 and $9, respectively Change in fair value of derivative instrument, net of tax of $45 and $483, respectively Balance at end of period, September 30 $ $ Nine Months Ended September 30, 2016 2015 Balance at beginning of period, January 1 $ $ Reclassifications in earnings, net of tax of $76 and $22, respectively Change in fair value of derivative instrument, net of tax of $463 and $1,015, respectively Balance at end of period, September 30 $ $ | Balance, January 1, 2014 $ — Reclassifications in earnings — Change in fair value of derivative instrument, net of tax of $476 Balance, December 31, 2014 Reclassifications in earnings, net of tax of $40 Change in fair value of derivative instrument, net of tax of $1,360 Balance, December 31, 2015 $ |
Fair Value Measurements (Tab111
Fair Value Measurements (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Fair Value Measurements | ||
Summary of financial instruments measured at fair value | September 30, 2016 December 31, 2015 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets: Available-for-sale securities $ — $ — $ — $ $ — $ — Liabilities Long-term debt — — — — Interest rate cap agreements — — — — Total $ — $ $ $ $ $ | December 31, 2015 December 31, 2014 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets: Available‑for‑sale securities $ $ — $ — $ $ — $ — Liabilities Long‑term debt — — — — Interest rate cap agreements — — — — Total $ — $ $ $ — $ $ |
Income Taxes (Tables)112
Income Taxes (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Income Taxes | ||
Schedule of total income tax expense (benefit) | Year ended 2015 2014 Income tax expense (benefit) from continuing operations $ $ Income tax expense from discontinued operations — Total income tax expense (benefit) $ $ | |
Schedule of income (loss) before income taxes from continuing operations | Year ended 2015 2014 U.S. operations $ $ Foreign operations Income (loss) before income taxes $ $ | |
Schedule of income tax provision and effective income tax rate | Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Income tax provision $ $ $ $ Effective income tax rate % % % % | Year ended 2015 2014 Current: U.S. federal $ $ State and local Foreign Current income tax expense Deferred U.S. federal State and local Foreign — Deferred income tax benefit Total income tax expense (benefit) $ $ |
Schedule of the factors accounting for the variation in our overall effective tax rates from continuing operations compared to U.S. statutory income tax rates | Year ended 2015 2014 Federal income tax expense (benefit) at the statutory rate $ $ State and local taxes, net of federal benefit Non‑deductible costs (permanent differences) Unrecognized tax positions Other Total income tax expense (benefit) $ $ | |
Schedule of the components of our deferred tax assets and liabilities | Year ended December 31, 2015 2014 Deferred tax assets: Allowance for doubtful accounts and estimated allowance for refunds and appeals $ $ Accrued compensation Deferred rent Stock compensation Tax credit and net operating loss carryforward Deferred debt issuance costs — Other deductible temporary differences Gross deferred tax assets Less: valuation allowance Total deferred tax assets Deferred tax liabilities: Unbilled receivables and other liabilities Intangibles and goodwill Property and equipment Software development costs Other taxable temporary differences Total gross deferred tax liabilities Net deferred tax liability $ $ | |
Schedule of the reconciliation of the beginning and ending amount of unrecognized tax benefits | Year ended December 31, 2015 2014 Unrecognized tax benefits — January 1 $ $ Increase for tax positions of acquired entities — Increase for tax positions taken in prior period — Increase for tax positions taken in current period Decrease for tax positions taken in prior period — Decrease for tax positions taken in current period — Decrease related to lapse in statute of limitations Unrecognized tax benefits — December 31 $ $ |
Earnings per Share (Tables)113
Earnings per Share (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Earnings per Share | ||
Schedule of computation of basic and diluted earnings per share | Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Net income available to common stockholders $ $ $ $ Weighted average outstanding shares of common stock Dilutive effect of stock-based awards — Adjusted weighted average outstanding and assumed conversions for diluted EPS Earnings (loss) per share from continuing operations: Basic $ $ $ $ Diluted Earnings per share from discontinued operations: Basic $ — $ — $ — $ Diluted — — — Total earnings (loss) per share: Basic $ $ $ $ Diluted | Year ended December 31, 2015 2014 Net income (loss) available to common stockholders $ $ Weighted average outstanding shares of common stock Dilutive effect of stock‑based awards — Adjusted weighted average outstanding and assumed conversions for diluted EPS Earnings (loss) per share from continuing operations: Basic $ $ Diluted Earnings per share from discontinued operations: Basic $ $ — Diluted — Total earnings (loss) per share: Basic $ $ Diluted |
Schedule of antidilutive securities excluded from earnings per share | Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Employee stock-based awards | Year ended December 31, 2015 2014 Employee stock options |
Schedule of the computation of pro forma basic and diluted earnings per share | Weighted average outstanding shares of common stock Additional pro forma shares required to be issued in offering necessary to pay dividend Pro forma weighted average shares of common stock — basic Adjusted weighted average outstanding and assumed conversions for diluted EPS Additional pro forma shares required to be issued in offering necessary to pay dividend Pro forma weighted average shares of common stock — diluted Pro forma earnings per share from continuing operations: Basic $ Diluted Pro forma earnings per share from discontinued operations: Basic $ Diluted Pro forma earnings per share: Basic $ Diluted |
Stock-Based Compensation (Ta114
Stock-Based Compensation (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Stock-Based Compensation | ||
Schedule of weighted average assumptions to estimate the fair value of stock options granted | Nine Months Ended September 30, 2016 2015 Expected term (years) Expected volatility % % Expected dividend yield % % Weighted average risk-free interest rate % % Weighted average grant date fair value $ $ | Year ended 2015 2014 Expected term (years) Expected volatility % % Expected dividend yield % % Weighted average risk‑free interest rate % % Weighted average grant date fair value $ $ |
Summary of stock option activity | Nine Months Ended September 30, 2016 2015 Weighted Weighted average average exercise exercise Shares price Shares price Outstanding at beginning of period $ $ Granted Exercised Forfeited Expired — — Outstanding at end of period $ $ | Year Ended December 31, 2015 2014 Summary stock option activity Shares Weighted Shares Weighted Outstanding at beginning of year $ $ Granted Exercised Forfeited Expired Outstanding at end of period $ $ |
Summary of stock options outstanding, vested and exercisable | Average Weighted Weighted Remaining Service- average Performance- average Contractual Aggregate based exercise based exercise Term Intrinsic Shares price Shares price (in years) Value Stock options outstanding as of September 30, 2016 $ $ $ Stock options vested and exercisable as of September 30, 2016 $ $ $ | Service‑ Weighted Performance‑ Weighted Weighted‑ Aggregate Stock options outstanding as of December 31, 2015 $ $ $ Stock options vested and exercisable as of December 31, 2015 $ — $ — $ |
Segment and Geographic Infor115
Segment and Geographic Information (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Segment Information | ||
Schedule of operating segment results | Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 (unaudited) (unaudited) Net Revenue Healthcare $ $ $ $ Global Retail and Other Consolidated net revenue $ $ $ $ Operating Income Healthcare $ $ $ $ Global Retail and Other Consolidated operating income $ $ $ $ | Year ended 2015 2014 Net Revenue Healthcare $ $ Global Retail and Other Consolidated net revenue $ $ Operating Income Healthcare $ $ Global Retail and Other Consolidated operating income $ $ |
Schedule of operating segment net revenue by product type | Three Months Ended September 30, Nine Months Ended September 30, 2016 % 2015 % 2016 % 2015 % (unaudited) (unaudited) Healthcare Retrospective claims accuracy $ $ $ $ Prospective claims accuracy Transaction services Total Healthcare Retail Retrospective claims accuracy Other Total Global Retail and Other Consolidated net revenue $ $ $ $ | Year ended December 31, 2015 2014 Retrospective claims accuracy $ % $ % Prospective claims accuracy % % Transaction services % % Total Healthcare % % Retrospective claims accuracy % % Other % % Total Global Retail and Other % % Consolidated net revenue $ % $ % |
Client Concentration (Tables)
Client Concentration (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Client Concentration | |
Schedule of significant clients accounted for the following percentages of total net revenue | Year Ended 2015 2014 Customer A % % Customer B % % Customer C % % |
Employee Benefit Plans (Tabl117
Employee Benefit Plans (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Employee Benefit Plans | ||
Schedule of contributions expensed and included in compensation for employee benefit plans | Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 401(k) Plan (a) $ $ $ $ Profit Share Plan (b) — Provident Plan (c) Total $ $ $ $ (a) We sponsor defined contribution retirement plans in accordance with Section 401(k) of the Internal Revenue Code, which cover substantially all U.S. employees, subject to certain minimum age and service requirements. The plans provide for a contribution based on a percentage of eligible employee contributions. (b) We had a nonqualified profit sharing incentive compensation plan for certain eligible employees. Contributions were made within 90 days following the last day of the plan to a brokerage account in an amount determined at our discretion for employees who had completed 1,000 hours of service and were employed at the time of the contribution. This plan was discontinued after the 2014 plan year, with the final payout occurring in June 2016 and therefore we did not have a liability under the plan as of September 30, 2016. Our liability under the plan was $893 at December 31, 2015, which is included in accrued compensation costs in the accompanying Consolidated Balance Sheets. (c) Eligible employees of our subsidiary located in India are covered by the Provident Fund, contributions which are based on a percentage of eligible employees’ salaries, and the Payment of Gratuity Act, which provides for benefits to be paid to eligible employees upon termination of employment (collectively, the “India Plan”). Benefits under the Plan are administered by the Indian Government. As of September 30, 2016 and December 31, 2015 we had an accrued benefit obligation relating to the India Plan of $714 and $535, respectively. | Year ended 2015 2014 401(k) Plan (a) $ $ Profit Share Plan (b) Provident Plan (c) Total $ $ (a) We sponsor defined contribution retirement plans in accordance with Section 401(k) of the Internal Revenue Code, which cover substantially all U.S. employees, subject to certain minimum age and service requirements. The plans provide for a contribution based on a percentage of eligible employee contributions. (b) In connection with the Connolly iHealth Merger, we inherited a nonqualified profit sharing incentive compensation plan for certain eligible employees. Contributions are made within 90 days following the last day of the plan to a brokerage account in an amount determined at our discretion for employees who have completed 1,000 hours of service and are employed at the time of the contribution. Our liability under the plan totaled $893 and $1,171 at December 31, 2015 and 2014, respectively, which is included in accrued compensation costs in the accompanying Consolidated Balance Sheets. (c) Eligible employees of our subsidiaries located in India, acquired as part of the Connolly iHealth Merger, are covered by the Provident Fund, contributions which are based on a percentage of eligible employees’ salaries, and the Payment of Gratuity Act, which provides for benefits to be paid to eligible employees upon termination of employment (collectively, the “India Plans”). Benefits under the Plan are administered by the Indian Government. As of December 31, 2015 and 2014 we had an accrued benefit obligation relating to the India Plans of $535 and $441, respectively. |
Selected Quarterly Financial118
Selected Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Selected Quarterly Financial Data (Unaudited) | |
Schedule summarizes our unaudited quarterly operating results | Year Ended December 31, 2015 First Second Third Fourth Revenue $ $ $ $ Operating income Income (loss) from continuing operations (1)(2) Net income (loss) (1)(2)(3) Earnings (loss) per share from continuing operations—Basic $ $ $ $ Earnings (loss) per share from continuing operations—Diluted $ $ $ $ Earnings per share from discontinued operations (3) $ — — — Total earnings (loss) per share—Basic $ $ $ $ Total earnings (loss) per share—Diluted $ $ $ $ Year Ended December 31, 2014 First (4) Second (4) Third Fourth Revenue $ $ $ $ Operating income (loss) (5) Income (loss) from continuing operations (6) Net income (loss) Earnings (loss) per share—Basic $ $ $ $ Earnings (loss) per share—Diluted $ $ $ $ (1) During the second quarter 2015, as a result of repricing our May 2014 First Lien, we recorded a loss on extinguishment of debt of $4,084 (see Note 9). (2) As a result of our rebranding in September 2015, as discussed in Note 1, we recorded an impairment of intangible assets of $27,826 related to our trademarks (see Note 6). (3) During the first quarter 2015, we received payment on a $900 note receivable related to a business that was disposed of in 2012. Since the date of sale, we had elected to fully reserve the note receivable as the collectability was determined to be uncertain. This collection of the note receivable resulted in a gain on discontinued operations, net of tax, of $559 (see Note 20). (4) On May 14, 2014, we merged with iHT (see Note 1). The results of operations for iHT are included in our consolidated financial statements as of and since May 14, 2014. Accordingly, comparability to other periods presented is impacted by the timing of the Connolly iHealth Merger. (5) During the fourth quarter 2014, we recognized a $74,034 impairment of intangible assets related to our CMS customer relationship (see Note 6). Based on the facts and circumstances surrounding our Medicare RAC contract, including continued delays with the contract renewal process, as well as scope reductions that have resulted in a decrease to future revenue projections (see Note 8), the decrease in the estimated fair value of the customer relationship intangible asset associated with the Medicare RAC contract resulted in this impairment. (6) During the first quarter 2014, as a result of entering into the January 2014 Credit Agreement, we recognized a loss on extinguishment of debt totaling $11,669. During the second quarter 2014, as a result of entering in the May 2014 Credit Agreements, we recognized a loss on extinguishment of debt totaling $9,855 (see Note 9). |
Description of Business (Det119
Description of Business (Details) | Sep. 30, 2016companycustomer | Dec. 31, 2015companycustomer |
Healthcare | Minimum | ||
Description of business | ||
Number of clients | 40 | 40 |
Commercial, Medicaid and Medicare managed health plans | United States | ||
Description of business | ||
Number of largest companies in the industry sector that are customers | 8 | 8 |
Number of largest companies in the industry sector | company | 10 | 10 |
Retail | Minimum | ||
Description of business | ||
Number of clients | 35 | 40 |
Retail | United States | ||
Description of business | ||
Number of largest companies in the industry sector that are customers | 8 | 8 |
Number of largest companies in the industry sector | company | 10 | 10 |
Summary of Significant Accou120
Summary of Significant Accounting Policies - Revenue Recognition, Unbilled Receivables, and Estimated Liability for Refunds and Appeals (Details) $ in Thousands | Sep. 30, 2016USD ($)company | Dec. 31, 2015USD ($)company | Dec. 31, 2014USD ($) |
Summary of Significant Accounting Policies | |||
Estimated liability for refunds and appeals | $ 70,596 | $ 67,775 | $ 74,941 |
Estimated allowance for refunds and appeals | $ 31,887 | $ 33,406 | 23,216 |
Number of Recovery Audit Contractors under Medicare Recovery Program | company | 4 | 4 | |
Accounts receivable | |||
Summary of Significant Accounting Policies | |||
Unbilled receivables | $ 51,762 | $ 51,799 | 42,433 |
Unbilled receivables arising from deferred billing | $ 5,828 | $ 6,431 | $ 7,519 |
Summary of Significant Accou121
Summary of Significant Accounting Policies - Advertising Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Selling, general and administrative expenses | ||
Advertising Expense | ||
Advertising expense | $ 1,241 | $ 1,294 |
Summary of Significant Accou122
Summary of Significant Accounting Policies - Useful Lives (Details) | 12 Months Ended |
Dec. 31, 2015 | |
Minimum | |
Property and equipment | |
Estimated useful lives (in years) | 6 years |
Maximum | |
Property and equipment | |
Estimated useful lives (in years) | 14 years |
Computer equipment | Minimum | |
Property and equipment | |
Estimated useful lives (in years) | 3 years |
Computer equipment | Maximum | |
Property and equipment | |
Estimated useful lives (in years) | 5 years |
Software | |
Property and equipment | |
Estimated useful lives (in years) | 5 years |
Software | Minimum | |
Property and equipment | |
Estimated useful lives (in years) | 2 years |
Software | Maximum | |
Property and equipment | |
Estimated useful lives (in years) | 5 years |
Furniture and fixtures | |
Property and equipment | |
Estimated useful lives (in years) | 7 years |
Summary of Significant Accou123
Summary of Significant Accounting Policies - Internally Developed Software Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Internally Developed Software Costs | ||||
Internally developed software costs capitalized during the period | $ 2,764 | $ 3,254 | ||
Amortization expense | 2,257 | 722 | ||
Software written off | 975 | |||
Impairment of intangible assets | $ 27,826 | $ 27,826 | $ 27,826 | $ 74,034 |
Summary of Significant Accou124
Summary of Significant Accounting Policies - Stock-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Stock-based compensation expense | ||||||
Stock-based compensation expense | $ 17,042 | $ 405 | $ 21,544 | $ 1,624 | $ 3,399 | $ 2,492 |
Performance-based stock options | ||||||
Stock-based compensation expense | ||||||
Stock-based compensation expense | $ 15,898 | $ 15,898 | $ 0 |
Investments (Details)
Investments (Details) - Money market securities - Prepaid expenses and other current assets - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Investments in available-for-sale marketable securities | ||
Available-for-sale Securities, Amortized Cost Basis, Total | $ 1,178 | $ 1,582 |
Gross Unrealized Gains | 3 | |
Fair Value | $ 1,181 | $ 1,582 |
Acquisition - Net Assets Acquir
Acquisition - Net Assets Acquired (Details) - USD ($) $ in Thousands | May 14, 2014 | Sep. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Estimated fair values of assets acquired and liabilities assumed | ||||
Goodwill | $ 1,196,350 | $ 1,197,044 | $ 1,197,353 | |
Connolly iHealth Merger | ||||
Acquisition | ||||
Equity interests issued | $ 69,957 | |||
Percentage of current healthcare client base where cross-sell opportunities exist as a result of the merger | 70.00% | |||
Estimated fair values of assets acquired and liabilities assumed | ||||
Cash | $ 62,218 | |||
Accounts receivable | 34,830 | |||
Prepaid expenses and other assets | 5,516 | |||
Other long-term assets | 1,237 | |||
Property and equipment | 7,594 | |||
Intangible assets | 543,200 | |||
Total identifiable assets acquired | 654,595 | |||
Accounts payable and accrued liabilities | 82,095 | |||
Deferred tax liabilities | 195,948 | |||
Other long-term liabilites | 904 | |||
Total liabilities assumed | 278,947 | |||
Net identifiable assets acquired | 375,648 | |||
Goodwill | 829,141 | |||
Net assets acquired | $ 1,204,789 |
Acquisition - Acquired Intangib
Acquisition - Acquired Intangible Assets (Details) - USD ($) $ in Thousands | May 14, 2014 | Dec. 31, 2014 |
Definite-Lived Intangible Assets | ||
Estimated useful life | 11 years | |
Trademark | ||
Definite-Lived Intangible Assets | ||
Estimated useful life | 12 years 9 months 18 days | |
Connolly iHealth Merger | ||
Definite-Lived Intangible Assets | ||
Definite-lived intangible assets acquired | $ 543,200 | |
Weighted-average useful life of acquired intangible assets | 13 years 3 months 18 days | |
Connolly iHealth Merger | Trademark | ||
Definite-Lived Intangible Assets | ||
Definite-lived intangible assets acquired | $ 8,600 | |
Estimated useful life | 11 years | |
Connolly iHealth Merger | Customer relationships | ||
Definite-Lived Intangible Assets | ||
Definite-lived intangible assets acquired | $ 486,700 | |
Estimated useful life | 14 years | |
Connolly iHealth Merger | Acquired software | ||
Definite-Lived Intangible Assets | ||
Definite-lived intangible assets acquired | $ 47,900 | |
Estimated useful life | 7 years |
Acquisition - Other Acquisition
Acquisition - Other Acquisition Related Disclosures (Details) - Connolly iHealth Merger - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Payment made | $ 22,270 | |
Increase in goodwill | $ 979 | |
Transaction costs | $ 5,745 | |
Accounts payable and accrued other expenses | ||
Preliminary liability | $ 21,291 |
Acquisition - Pro Forma Results
Acquisition - Pro Forma Results (Details) $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2014USD ($)$ / shares | |
Pro Forma Results | |
Net revenue | $ 505,961 |
Operating income | 57,533 |
Net loss | $ (18,752) |
Basic loss per share | $ / shares | $ (0.24) |
Diluted loss per share | $ / shares | $ (0.24) |
Property and Equipment - Bal130
Property and Equipment - Balances by Major Asset Class (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Property and equipment | |||
Property and equipment, gross | $ 99,459 | $ 79,746 | $ 46,084 |
Less: Accumulated depreciation and amortization | 35,691 | 22,294 | 11,165 |
Property and equipment, net | 63,768 | 57,452 | 34,919 |
Computer equipment | |||
Property and equipment | |||
Property and equipment, gross | 38,492 | 31,496 | 21,562 |
Software | |||
Property and equipment | |||
Property and equipment, gross | 33,607 | 26,412 | 13,190 |
Furniture and fixtures | |||
Property and equipment | |||
Property and equipment, gross | 8,201 | 7,916 | 6,654 |
Leasehold improvements | |||
Property and equipment | |||
Property and equipment, gross | 4,051 | 3,488 | 2,343 |
Projects in progress | |||
Property and equipment | |||
Property and equipment, gross | $ 15,108 | $ 10,434 | $ 2,335 |
Property and Equipment - Per131
Property and Equipment - Perpetual Software License (Details) - Perpetual software license - USD ($) $ in Thousands | 1 Months Ended | |
Dec. 31, 2015 | Sep. 30, 2016 | |
Recorded obligation | ||
Remaining payment period | 2 years | |
Accounts payable and accrued other expenses | ||
Recorded obligation | ||
Current portion of obligation | $ 2,952 | $ 3,318 |
Other long-term liabilities | ||
Recorded obligation | ||
Long-term portion of obligation | $ 6,340 | $ 3,193 |
Property and Equipment - Dep132
Property and Equipment - Depreciation and Amortization Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property and Equipment | ||||||
Depreciation and amortization expense related to property and equipment | $ 5,218 | $ 3,773 | $ 14,864 | $ 9,270 | $ 12,695 | $ 7,416 |
Intangible Assets - Balances133
Intangible Assets - Balances by Major Asset Class and Amortization Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Intangible assets with definite lives | |||||||
Accumulated Amortization | $ 178,203 | $ 91,886 | $ 178,203 | $ 133,767 | $ 91,886 | ||
Amortization period | 11 years | ||||||
Amortization expense | 15,203 | $ 15,437 | 45,618 | $ 46,256 | 61,467 | $ 52,355 | |
Intangible assets | |||||||
Gross Carrying Amount | 726,796 | 849,810 | 726,796 | 756,003 | 849,810 | ||
Loss on impairment of intangible assets | $ 27,826 | $ 27,826 | 27,826 | 74,034 | |||
Net Carrying Amount | 548,593 | 683,890 | $ 548,593 | $ 594,410 | 683,890 | ||
Weighted average | |||||||
Intangible assets with definite lives | |||||||
Amortization period | 12 years 9 months 18 days | 12 years 9 months 18 days | |||||
Trademark | |||||||
Intangible assets with indefinite lives | |||||||
Gross Carrying Amount | 4,200 | 24,500 | $ 4,200 | $ 24,500 | 24,500 | ||
Impairment | 20,300 | ||||||
Net Carrying Amount | 4,200 | 24,500 | 4,200 | 4,200 | 24,500 | ||
Customer relationships | |||||||
Intangible assets with definite lives | |||||||
Gross Carrying Amount | 640,196 | 734,310 | 640,196 | 640,503 | 734,310 | ||
Accumulated Amortization | 133,059 | 70,298 | 133,059 | 97,857 | 70,298 | ||
Impairment | 74,034 | 74,034 | |||||
Net Carrying Amount | 507,137 | 589,978 | $ 507,137 | $ 542,646 | $ 589,978 | ||
Customer relationships | Weighted average | |||||||
Intangible assets with definite lives | |||||||
Amortization period | 13 years 8 months 12 days | 13 years 8 months 12 days | 13 years 8 months 12 days | ||||
Acquired software | |||||||
Intangible assets with definite lives | |||||||
Gross Carrying Amount | 82,400 | 82,400 | $ 82,400 | $ 82,400 | $ 82,400 | ||
Accumulated Amortization | 45,144 | 21,094 | 45,144 | 34,836 | 21,094 | ||
Net Carrying Amount | $ 37,256 | 61,306 | $ 37,256 | $ 47,564 | $ 61,306 | ||
Acquired software | Weighted average | |||||||
Intangible assets with definite lives | |||||||
Amortization period | 6 years 2 months 12 days | 6 years 2 months 12 days | 6 years 2 months 12 days | ||||
Trademark | |||||||
Intangible assets with definite lives | |||||||
Gross Carrying Amount | 8,600 | $ 8,600 | $ 8,600 | ||||
Accumulated Amortization | 494 | 1,074 | 494 | ||||
Impairment | $ 7,526 | ||||||
Net Carrying Amount | $ 8,106 | $ 8,106 | |||||
Amortization period | 12 years 9 months 18 days | ||||||
Trademark | Weighted average | |||||||
Intangible assets with definite lives | |||||||
Amortization period | 11 years |
Intangible Assets - Balances134
Intangible Assets - Balances by Major Asset Class - Future Amortization Expense (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Amortization expense for the next 5 years | ||
2,016 | $ 57,837,000 | $ 60,835,000 |
2,017 | 53,908,000 | 57,865,000 |
2,018 | 53,908,000 | 53,935,000 |
2,019 | $ 53,908,000 | 53,935,000 |
2,020 | $ 53,935,000 |
Goodwill (Details)135
Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Changes in the carrying amount of goodwill | ||||||
Balance | $ 1,197,044 | $ 1,197,353 | $ 1,197,353 | |||
Balance | $ 1,196,350 | 1,196,350 | 1,197,044 | $ 1,197,353 | ||
Impairment related to goodwill | 0 | $ 0 | 0 | 0 | 0 | 0 |
Healthcare | ||||||
Changes in the carrying amount of goodwill | ||||||
Balance | 1,147,771 | 1,147,396 | 1,147,396 | 319,234 | ||
Acquisitions | 828,162 | |||||
Purchase price adjustments | 979 | |||||
Foreign currency translation and other | (604) | |||||
Balance | 1,147,771 | 1,147,771 | 1,147,771 | 1,147,396 | ||
Global Retail and Other | ||||||
Changes in the carrying amount of goodwill | ||||||
Balance | 49,273 | $ 49,957 | 49,957 | 50,570 | ||
Foreign currency translation and other | (694) | (684) | (613) | |||
Balance | $ 48,579 | $ 48,579 | $ 49,273 | $ 49,957 |
Commitments and Contingencie136
Commitments and Contingencies (Details) - USD ($) $ in Thousands | Jul. 01, 2015 | Aug. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2015 |
Minimum rental commitments under non cancellable operating leases | |||||||
2,016 | $ 7,583 | ||||||
2,017 | 7,170 | ||||||
2,018 | 5,473 | ||||||
2,019 | 2,585 | ||||||
2,020 | 1,301 | ||||||
2021 - 2026 | 1,732 | ||||||
Total minimum lease payments | 25,844 | ||||||
Rental expense relating to operating leases | 8,826 | $ 7,202 | |||||
Asset Retirement Obligations | |||||||
Balance beginning of period | $ 2,415 | $ 2,055 | 2,055 | 1,770 | |||
Additional ARO Liability | 207 | 154 | |||||
Accretion expense | 138 | $ 108 | 153 | 131 | |||
Balance at end of period | $ 2,415 | $ 2,055 | |||||
Unfavorable action | Centers for Medicare and Medicaid Services (CMS) | |||||||
Loss contingency | |||||||
Settlement on original claim amount offered by CMS to allow providers to remove eligible claims pending in appeals process (as a percent) | 68.00% | ||||||
RAC contract contingency fee on original amount of settled claims under CMS July 1, 2015 Technical Direction Letter (as a percent) | 32.00% | ||||||
Maximum possible additional amount of refund payable in excess of amount accrued | 11,800 | $ 12,400 | |||||
Unfavorable action | Centers for Medicare and Medicaid Services (CMS) | Estimated liability for refunds and appeals | |||||||
Loss contingency | |||||||
Estimated refund liability on settled claims | $ 22,308 | $ 22,308 |
Long-term Debt - General Inform
Long-term Debt - General Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
May 31, 2015 | Jan. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | May 14, 2014 | |
Long-term debt | |||||||||
Loss on extinguishment of debt | $ 9,349 | $ 16,417 | $ 4,084 | $ 4,084 | $ 21,524 | ||||
May 2014 First Lien | |||||||||
Long-term debt | |||||||||
Decrease in applicable interest rates (as a percent) | 0.50% | ||||||||
Loss on extinguishment of debt | $ 4,084 | ||||||||
May 2014 Second Lien | |||||||||
Long-term debt | |||||||||
Loss on extinguishment of debt | $ 7,068 | ||||||||
January 2014 Credit Agreement | |||||||||
Long-term debt | |||||||||
Loss on extinguishment of debt | 9,855 | ||||||||
July 2012 Credit Agreements | |||||||||
Long-term debt | |||||||||
Loss on extinguishment of debt | $ 11,669 | ||||||||
Term loan | First Lien Credit Agreement, First and Second Amendments | |||||||||
Long-term debt | |||||||||
Loss on extinguishment of debt | $ 4,084 | ||||||||
Term loan | May 2014 First Lien | |||||||||
Long-term debt | |||||||||
Maximum borrowing capacity | $ 810,000 | ||||||||
Term loan | May 2014 Second Lien | |||||||||
Long-term debt | |||||||||
Maximum borrowing capacity | 265,000 | ||||||||
Term loan | January 2014 Credit Agreement | |||||||||
Long-term debt | |||||||||
Maximum borrowing capacity | $ 320,000 | ||||||||
Term loan | January 2014 Credit Agreement | LIBOR | |||||||||
Long-term debt | |||||||||
Variable rate, basis spread (as a percent) | 4.00% | ||||||||
Revolver | May 2014 First Lien | |||||||||
Long-term debt | |||||||||
Maximum borrowing capacity | $ 75,000 | ||||||||
Revolver | January 2014 Credit Agreement | |||||||||
Long-term debt | |||||||||
Maximum borrowing capacity | $ 30,000 |
Long-term Debt - Components (De
Long-term Debt - Components (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Long-term debt components | |||
Total debt | $ 795,364 | $ 1,055,045 | $ 1,061,165 |
Less: debt issuance costs | 11,322 | 20,975 | 27,227 |
Less: current portion | 18,000 | 21,099 | 8,100 |
Total long-term debt | $ 766,042 | 1,012,971 | 1,025,838 |
May 2014 First Lien | |||
Long-term debt components | |||
Total debt | 792,167 | 798,605 | |
Term loan | May 2014 First Lien | |||
Long-term debt components | |||
Total debt | 792,167 | ||
Term loan | May 2014 Second Lien | |||
Long-term debt components | |||
Total debt | 262,878 | 262,560 | |
Revolver | May 2014 Second Lien | |||
Long-term debt components | |||
Total debt | $ 0 | $ 0 |
Long-term Debt- Credit Agreemen
Long-term Debt- Credit Agreements - Terms (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Sep. 30, 2016 |
Payment terms | ||||
Long-term debt | $ 1,055,045 | $ 1,061,165 | $ 1,055,045 | $ 795,364 |
May 2014 First Lien | ||||
Payment terms | ||||
Frequency of periodic payment | quarterly | |||
Principal payments | $ 2,025 | |||
Elective interest payments, monthly frequency | 1 month | |||
Elective interest payments, bi-monthly frequency | 2 months | |||
Elective interest payments, quarterly frequency | 3 months | |||
Elective interest payments, semi-annual frequency | 6 months | |||
Long-term debt | $ 792,167 | $ 798,605 | $ 792,167 | |
May 2014 First Lien | Before Qualified IPO | ||||
Payment terms | ||||
Interest rate at end of period (as a percent) | 4.50% | 5.00% | 4.50% | |
May 2014 Second Lien | ||||
Payment terms | ||||
Elective interest payments, monthly frequency | 1 month | |||
Elective interest payments, bi-monthly frequency | 2 months | |||
Elective interest payments, quarterly frequency | 3 months | |||
Elective interest payments, semi-annual frequency | 6 months | |||
May 2014 Second Lien | Before Qualified IPO | ||||
Payment terms | ||||
Interest rate at end of period (as a percent) | 8.00% | 8.00% | 8.00% | |
ABR Loans | May 2014 First Lien | Before Qualified IPO | ||||
Payment terms | ||||
Stated interest rate (as a percent) | 2.00% | 2.00% | ||
ABR Loans | May 2014 Second Lien | Before Qualified IPO | ||||
Payment terms | ||||
Stated interest rate (as a percent) | 2.00% | 2.00% | ||
LIBOR Loans | May 2014 First Lien | Before Qualified IPO | ||||
Payment terms | ||||
Stated interest rate (as a percent) | 1.00% | 1.00% | ||
LIBOR Loans | May 2014 Second Lien | Before Qualified IPO | ||||
Payment terms | ||||
Stated interest rate (as a percent) | 1.00% | 1.00% | ||
Revolver | May 2014 Second Lien | ||||
Payment terms | ||||
Elective interest payments, monthly frequency | 1 month | |||
Elective interest payments, bi-monthly frequency | 2 months | |||
Elective interest payments, quarterly frequency | 3 months | |||
Elective interest payments, semi-annual frequency | 6 months | |||
Commitment fee on unused capacity (as a percentate) | 0.375% | 0.50% | ||
Interest rate at end of period (as a percent) | 4.00% | 4.25% | 4.00% | |
Letters of credit outstanding | $ 3,526 | $ 150 | $ 3,526 | |
Long-term debt | $ 0 | $ 0 | $ 0 | |
Revolver | May 2014 Second Lien | Minimum | ||||
Payment terms | ||||
Commitment fee on unused capacity (as a percentate) | 0.375% | |||
Revolver | May 2014 Second Lien | Maximum | ||||
Payment terms | ||||
Commitment fee on unused capacity (as a percentate) | 0.50% | |||
Alternate Base Rate | ABR Loans | May 2014 First Lien | Before Qualified IPO | ||||
Payment terms | ||||
Variable rate, basis spread (as a percent) | 2.50% | |||
Alternate Base Rate | ABR Loans | May 2014 First Lien | After Qualified IPO | ||||
Payment terms | ||||
Variable rate, basis spread (as a percent) | 2.25% | |||
Alternate Base Rate | ABR Loans | May 2014 Second Lien | Before Qualified IPO | ||||
Payment terms | ||||
Variable rate, basis spread (as a percent) | 6.00% | |||
Alternate Base Rate | ABR Loans | May 2014 Second Lien | After Qualified IPO | ||||
Payment terms | ||||
Variable rate, basis spread (as a percent) | 5.75% | |||
Alternate Base Rate | Revolver | ABR Loans | May 2014 Second Lien | Minimum | ||||
Payment terms | ||||
Variable rate, basis spread (as a percent) | 1.75% | |||
Alternate Base Rate | Revolver | ABR Loans | May 2014 Second Lien | Maximum | ||||
Payment terms | ||||
Variable rate, basis spread (as a percent) | 2.25% | |||
LIBOR | ABR Loans | May 2014 First Lien | Before Qualified IPO | ||||
Payment terms | ||||
Variable rate, basis spread (as a percent) | 1.00% | |||
LIBOR | ABR Loans | May 2014 Second Lien | Before Qualified IPO | ||||
Payment terms | ||||
Variable rate, basis spread (as a percent) | 1.00% | |||
LIBOR | LIBOR Loans | May 2014 First Lien | Before Qualified IPO | ||||
Payment terms | ||||
Variable rate, basis spread (as a percent) | 3.50% | |||
LIBOR | LIBOR Loans | May 2014 First Lien | After Qualified IPO | ||||
Payment terms | ||||
Variable rate, basis spread (as a percent) | 3.25% | |||
LIBOR | LIBOR Loans | May 2014 Second Lien | Before Qualified IPO | ||||
Payment terms | ||||
Variable rate, basis spread (as a percent) | 7.00% | |||
LIBOR | LIBOR Loans | May 2014 Second Lien | After Qualified IPO | ||||
Payment terms | ||||
Variable rate, basis spread (as a percent) | 6.75% | |||
LIBOR | Revolver | ABR Loans | May 2014 Second Lien | ||||
Payment terms | ||||
Variable rate, basis spread (as a percent) | 1.00% | |||
LIBOR | Revolver | LIBOR Loans | May 2014 Second Lien | ||||
Payment terms | ||||
Stated interest rate (as a percent) | 1.00% | 1.00% | ||
LIBOR | Revolver | LIBOR Loans | May 2014 Second Lien | Minimum | ||||
Payment terms | ||||
Variable rate, basis spread (as a percent) | 2.75% | |||
LIBOR | Revolver | LIBOR Loans | May 2014 Second Lien | Maximum | ||||
Payment terms | ||||
Variable rate, basis spread (as a percent) | 3.25% | |||
Federal Funds Effective Rate | ABR Loans | May 2014 First Lien | Before Qualified IPO | ||||
Payment terms | ||||
Variable rate, basis spread (as a percent) | 0.50% | |||
Federal Funds Effective Rate | ABR Loans | May 2014 Second Lien | Before Qualified IPO | ||||
Payment terms | ||||
Variable rate, basis spread (as a percent) | 0.50% | |||
Federal Funds Effective Rate | Revolver | ABR Loans | May 2014 Second Lien | ||||
Payment terms | ||||
Variable rate, basis spread (as a percent) | 0.50% |
Long-term Debt - Credit Agreeme
Long-term Debt - Credit Agreements - Covenants (Details) - May 2014 Credit Agreements - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Jun. 30, 2016 | Dec. 31, 2015 | |
Debt covenants | ||
Subsidiarys net assets, percentage restricted | 90.00% | |
Borrowing threshold for leverage ratio covenant to apply (as a percent) | 35.00% | |
Forecast | ||
Debt covenants | ||
Voluntary prepayment of borrowings | $ 13,099 |
Long-term Debt - Annual Aggrega
Long-term Debt - Annual Aggregate Maturities (Details) $ in Thousands | Dec. 31, 2015USD ($) |
Aggregate maturities of long term debt | |
2,016 | $ 21,099 |
2,017 | 7,967 |
2,018 | 7,967 |
2,019 | 7,967 |
2,020 | $ 7,967 |
Derivative Instruments - Int142
Derivative Instruments - Interest Rate Caps (Details) - Interest rate cap agreements - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
LIBOR | ||||||
Interest rate derivatives | ||||||
Interest rate cap on floating rate debt (as a percent) | 3.00% | 3.00% | 3.00% | |||
Cash flow hedge | ||||||
Cash flow hedge activity | ||||||
Ineffectiveness recorded | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Cash flow hedge | Interest expense | ||||||
Cash flow hedge activity | ||||||
Expense recognized | 56 | $ 23 | 200 | $ 55 | 105 | 0 |
Designated as Hedge | ||||||
Interest rate derivatives | ||||||
Notional amount | $ 630,000 | $ 630,000 | $ 630,000 | $ 700,000 |
Derivative Instruments - Qua143
Derivative Instruments - Quantitative Information (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Interest rate cash flow hedges | |||
Estimated amount of existing losses expected to be reclassified into earnings in the next 12 months | $ (1,287) | $ (283) | $ (71) |
Interest rate cap agreements | |||
Interest rate cash flow hedges | |||
Deferred hedge premiums paid and recorded in accumulated other comprehensive (loss) income | 2,204 | 1,103 | |
Expected additional payments of deferred premiums | 4,190 | 5,291 | |
Designated as Hedge | Interest rate cap agreements | Other long-term liabilities | |||
Interest rate cash flow hedges | |||
Derivative liability | 2,428 | 2,310 | $ 1,099 |
Designated as Hedge | Interest rate cap agreements | Accounts payable and accrued other expenses | |||
Interest rate cash flow hedges | |||
Derivative liability | $ 1,070 | $ 1,086 |
Derivative Instruments - Cha144
Derivative Instruments - Changes in OCI Related to Cash Flow Hedges (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Changes in other comprehensive income related to derivative instruments classified as cash flow hedges | ||||||
Balance at beginning of period | $ (3,534) | $ (2,191) | $ (2,968) | $ (623) | $ (623) | |
Reclassifications in earnings, net of tax of $24 and $6 for the three and six months ended June 30, 2016, $56 and $14 for the three and six months ended June 30, 2015 | 35 | 14 | 124 | 33 | 65 | |
Change in fair value of derivative instrument, net of tax of $184 and $202, respectively | (84) | (1,075) | (739) | (2,662) | (2,410) | $ (623) |
Balance at end of period | $ (3,583) | $ (3,252) | $ (3,583) | $ (3,252) | $ (2,968) | $ (623) |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Instruments (Details) - Recurring - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Level 1 | |||
Assets: | |||
Available-for-sale Securities, Current | $ 0 | $ 1,181 | $ 1,582 |
Level 2 | |||
Assets: | |||
Available-for-sale Securities, Current | 0 | 0 | |
Liabilities | |||
Interest rate cap agreements | 3,498 | 3,396 | 1,099 |
Total | 3,498 | 3,396 | 1,099 |
Level 3 | |||
Assets: | |||
Available-for-sale Securities, Current | 0 | 0 | |
Liabilities | |||
Long-term debt | 795,364 | 1,055,045 | 1,061,165 |
Total | $ 795,364 | $ 1,055,045 | $ 1,061,165 |
Income Taxes - Tax Expense (Ben
Income Taxes - Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Taxes | ||||||
Income tax expense (benefit) from continuing operations | $ 711 | $ (4,571) | $ 12,780 | $ 3,932 | $ 14,401 | $ (16,804) |
Income tax expense from discontinued operations | 341 | |||||
Total income tax expense (benefit) | $ 14,742 | $ (16,804) |
Income Taxes - Income (Loss) be
Income Taxes - Income (Loss) before Tax from Continuing Operations (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Components of income (loss) before income taxes from continuing operations | ||
U.S. operations | $ 27,605 | $ (45,203) |
Foreign operations | 100 | 2,574 |
Income (loss) before income taxes | $ 27,705 | $ (42,629) |
Income Taxes - Current and Defe
Income Taxes - Current and Deferred Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Current: | ||||||
U.S. federal | $ 20,382 | $ 25,136 | ||||
State and local | 4,822 | 4,091 | ||||
Foreign | 1,029 | 842 | ||||
Current income tax expense | 26,233 | 30,069 | ||||
Deferred | ||||||
U.S. federal | (12,584) | (42,047) | ||||
State and local | 798 | (4,826) | ||||
Foreign | (46) | |||||
Deferred Income Tax Expense (Benefit), Total | $ (8,682) | $ (11,596) | (11,832) | (46,873) | ||
Income Tax Expense (Benefit), Total | $ 711 | $ (4,571) | $ 12,780 | $ 3,932 | $ 14,401 | $ (16,804) |
Income Taxes - Effective Tax Ra
Income Taxes - Effective Tax Rate Reconciliation (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of effective tax rates from continuing operations to U.S. statutory rates - amounts | ||||||
Federal income tax expense (benefit) at the statutory rate | $ 9,697,000 | $ (14,920,000) | ||||
State and local taxes, net of federal benefit | 3,922,000 | (2,167,000) | ||||
Non deductible costs (permanent differences) | 1,070,000 | 815,000 | ||||
Unrecognized tax positions | 508,000 | (240,000) | ||||
Other | (796,000) | (292,000) | ||||
Income Tax Expense (Benefit), Total | $ 711,000 | $ (4,571,000) | $ 12,780,000 | $ 3,932,000 | $ 14,401,000 | $ (16,804,000) |
Reconciliation of effective tax rates from continuing operations to U.S. statutory rates - percent | ||||||
Effective income tax rate (as a percent) | 13.40% | 38.50% | 35.20% | 48.80% | 52.00% | 39.40% |
Undistributed earnings of foreign subsidiaries | ||||||
Earnings of foreign subsidiaries, deferred tax liability | $ 0 | $ 0 | ||||
Foreign subsidiaries, amounts considered permanently reinvested | 5,910,000 | 4,610,000 | ||||
Foreign subsidiaries, tax expense if earnings not permanently reinvested | $ 1,386,000 | $ 1,081,000 |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Ccomponents of deferred tax assets and liabilities | |||
Deferred income taxes | $ 33,346 | $ 32,919 | $ 32,319 |
Deferred tax liabilities | $ 152,967 | 162,203 | 175,266 |
Deferred tax assets: | |||
Allowance for doubtful accounts and estimated allowance for refunds and appeals | 35,174 | 33,443 | |
Accrued compensation | 540 | 2,461 | |
Deferred rent | 156 | 250 | |
Stock compensation | 2,960 | 1,745 | |
Tax credit and net operating loss carryforward | 1,652 | 939 | |
Deferred debt issuance costs | 1,124 | ||
Other deductible temporary differences | 6,353 | 3,953 | |
Gross deferred tax assets | 46,835 | 43,915 | |
Less: valuation allowance | (440) | (51) | |
Total deferred tax assets | 46,395 | 43,864 | |
Deferred tax liabilities: | |||
Unbilled receivables and other liabilities | (2,435) | (2,975) | |
Intangibles and goodwill | (161,099) | (175,507) | |
Property and equipment | (8,706) | (5,264) | |
Software development costs | (1,998) | (1,835) | |
Other taxable temporary differences | (1,441) | (1,230) | |
Total gross deferred tax liabilities | (175,679) | (186,811) | |
Net deferred tax liability | $ (129,284) | $ (142,947) |
Income Taxes - NOL and Carryfor
Income Taxes - NOL and Carryforwards (Details) $ in Thousands | Dec. 31, 2015USD ($) |
Foreign operations | |
Net operating loss carryforwards | |
Net operating loss carryforwards | $ 2,316 |
2029 | Federal | |
Net operating loss carryforwards | |
Net operating loss carryforwards | $ 1,397 |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of the beginning and ending amount of unrecognized tax benefits | ||||
Unrecognized tax benefits - January 1 | $ 4,937 | $ 4,324 | $ 1,321 | |
Increase for tax positions of acquired entities | 2,341 | |||
Increase for tax positions taken in prior period | 619 | |||
Increase for tax positions taken in current period | 694 | 734 | ||
Decrease for tax positions taken in prior period | $ (1,300) | $ (1,300) | (8) | |
Decrease for tax positions taken in current period | (146) | |||
Decrease related to lapse in statute of limitations | (554) | (64) | ||
Unrecognized tax benefits - December 31 | $ 4,937 | $ 4,324 |
Income Taxes - Uncertain Tax Po
Income Taxes - Uncertain Tax Positions and Other (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Taxes | ||
Total uncertain tax positions expected to reverse in the next 12 months | $ 194 | $ 603 |
Total penalty and interest incurred, relating to uncertain tax positions | $ 920 | $ 583 |
Stockholders' Equity - Issua154
Stockholders' Equity - Issuance of Common Stock (Details) $ in Thousands | 1 Months Ended | 9 Months Ended | 12 Months Ended |
May 31, 2014USD ($)shares | Sep. 30, 2016Vote | Dec. 31, 2015Vote | |
Issuance of common stock | |||
Value of shares issued | $ 365,187 | ||
Number of votes a share of common stock entitles the holder | Vote | 1 | 1 | |
Former Stockholders | |||
Issuance of common stock | |||
Value of shares issued | $ 69,957 | ||
Connolly iHealth Merger | |||
Issuance of common stock | |||
Shares issued (in shares) | shares | 32,790,321 | ||
Value of shares issued | $ 435,144 |
Earnings per Share - Basic a155
Earnings per Share - Basic and Diluted Computation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||
Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Basic and diluted earnings per share computation | |||||||||||||
Net income available to common stockholders | $ 4,583 | $ 9,183 | $ (7,294) | $ 7,780 | $ 4,194 | $ (38,967) | $ 9,534 | $ 3,949 | $ (341) | $ 23,560 | $ 4,680 | $ 13,863 | $ (25,825) |
Weighted average outstanding shares of common stock | 90,170,462 | 77,224,463 | 83,275,206 | 77,211,354 | 77,216,133 | 65,253,954 | |||||||
Dilutive effect of stock-based awards | 3,783,441 | 3,582,720 | 503,591 | 425,255 | |||||||||
Adjusted weighted average outstanding and assumed conversions for diluted EPS | 93,953,903 | 77,224,463 | 86,857,926 | 77,714,945 | 77,641,388 | 65,253,954 | |||||||
Earnings per share from continuing operations: | |||||||||||||
Basic (in dollars per share) | $ 0.05 | $ 0.12 | $ (0.09) | $ 0.10 | $ 0.04 | $ 0.28 | $ 0.05 | $ 0.17 | $ (0.40) | ||||
Diluted (in dollars per share) | 0.05 | 0.12 | (0.09) | 0.10 | 0.04 | 0.27 | 0.05 | 0.17 | (0.40) | ||||
Earnings per share from discontinued operations: | |||||||||||||
Basic (in dollars per share) | 0.01 | 0.01 | 0.01 | ||||||||||
Diluted (in dollars per share) | 0.01 | 0.01 | 0.01 | ||||||||||
Total earnings per share: | |||||||||||||
Basic (in dollars per share) | 0.05 | 0.12 | (0.09) | 0.10 | 0.05 | $ (0.50) | $ 0.12 | $ 0.06 | $ (0.01) | 0.28 | 0.06 | 0.18 | (0.40) |
Diluted (in dollars per share) | $ 0.05 | $ 0.12 | $ (0.09) | $ 0.10 | $ 0.05 | $ (0.50) | $ 0.12 | $ 0.06 | $ (0.01) | $ 0.27 | $ 0.06 | $ 0.18 | $ (0.40) |
Earnings per Share - Awards 156
Earnings per Share - Awards Excluded from Diluted Calculation (Details) - shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2015 | |
Performance-based stock options | |||
Anti-dilutive securities | |||
Vesting conditions not satisfied | 2,794,910 | 2,487,275 | 2,234,217 |
Stock options | |||
Anti-dilutive securities | |||
Employee stock options excluded from calculation of diluted earnings per share (in shares) | 2,035,332 | 2,536,960 |
Earnings per Share - Special Di
Earnings per Share - Special Dividend (Details) $ / shares in Units, $ in Thousands | May 25, 2016USD ($)$ / shares |
Special cash dividend | |
Special dividends to be paid | $ | $ 150,000 |
Dividend declared (in dollars per share) | $ 1.94 |
IPO | Common stock | |
Special cash dividend | |
Offering price (in dollars per share) | 19 |
Net proceeds (in dollars per share) | $ 17.45 |
Earnings per Share - Pro Forma
Earnings per Share - Pro Forma Earnings Per Share (Details) - $ / shares | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Basic and diluted earnings per share computation | ||||||
Weighted average outstanding shares of common stock | 90,170,462 | 77,224,463 | 83,275,206 | 77,211,354 | 77,216,133 | 65,253,954 |
Additional pro forma shares required to be issued in offering necessary to pay dividend | 7,835,775 | |||||
Pro forma weighted average shares of common stock - basic | 85,051,908 | |||||
Adjusted weighted average outstanding and assumed conversions for diluted EPS | 93,953,903 | 77,224,463 | 86,857,926 | 77,714,945 | 77,641,388 | 65,253,954 |
Pro forma weighted average shares of common stock - diluted | 85,477,163 | |||||
Pro forma earnings per share from continuing operations: | ||||||
Basic (in dollars per share) | $ 0.15 | |||||
Diluted (in dollars per share) | 0.15 | |||||
Pro forma earnings per share from discontinued operations: | ||||||
Basic (in dollars per share) | 0.01 | |||||
Diluted (in dollars per share) | 0.01 | |||||
Total earnings per share: | ||||||
Basic (in dollars per share) | 0.16 | |||||
Diluted (in dollars per share) | $ 0.16 |
Stock-Based Compensation - E159
Stock-Based Compensation - Equity Incentive Plans (Details) - Amended 2012 Equity Incentive Plan - shares | 1 Months Ended | ||||
May 31, 2014 | Sep. 30, 2016 | May 24, 2016 | Dec. 31, 2015 | Dec. 31, 2012 | |
Equity Incentive Plans | |||||
Shares authorized for issuance | 7,243,329 | 7,243,330 | 4,392,000 | ||
Additional shares authorized for issuance | 2,851,329 | ||||
Shares available for future issuance | 0 | 776,839 | 762,421 |
Stock-Based Compensation - S160
Stock-Based Compensation - Stock Option Terms (Details) - shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Stock Options | ||
Unvested awards outstanding (in shares) | 2,540,534 | |
Stock options | Maximum | ||
Stock Options | ||
Term of award | 10 years | 10 years |
Stock options | Owner of more than 10 percent of voting stock | ||
Stock Options | ||
Term of award | 5 years | |
Stock options | Owner of more than 10 percent of voting stock | Minimum | ||
Stock Options | ||
Total combined voting power percentage | 10.00% | |
Stock options | Owner of more than 10 percent of voting stock | Maximum | ||
Stock Options | ||
Term of award | 5 years | |
Service-based stock options | ||
Stock Options | ||
Vesting period | 5 years | |
Performance-based stock options | ||
Stock Options | ||
Unvested awards outstanding (in shares) | 458,182 |
Stock-Based Compensation - W161
Stock-Based Compensation - Weighted Average Assumptions to Estimate Fair Value of Stock Options (Details) - Stock options - $ / shares | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Assumptions used to estimate fair value of stock options granted | ||||
Expected term (years) | 6 years 3 months | 6 years 3 months | ||
Expected volatility (as a percent) | 50.00% | 50.00% | ||
Expected dividend yield (as a percent) | 0.00% | 0.00% | 0.00% | |
Weighted average risk-free interest rate (as a percent) | 1.70% | 1.80% | ||
Weighted average grant date fair value (in dollars per share) | $ 9.39 | $ 5.49 | $ 7.77 | $ 5.70 |
Weighted average | ||||
Assumptions used to estimate fair value of stock options granted | ||||
Expected term (years) | 6 years 3 months | 6 years 3 months | ||
Expected volatility (as a percent) | 50.00% | 50.00% | ||
Expected dividend yield (as a percent) | 0.00% | 0.00% | ||
Weighted average risk-free interest rate (as a percent) | 1.34% | 1.61% |
Stock-Based Compensation - E162
Stock-Based Compensation - Expense Recorded (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Stock-based compensation expense | |||||||
Stock-based compensation expense | $ 17,042 | $ 405 | $ 21,544 | $ 1,624 | $ 3,399 | $ 2,492 | |
Unvested awards outstanding (in shares) | 2,540,534 | ||||||
Unrecognized compensation cost | $ 15,088 | ||||||
Period of recognition of unrecognized compensation cost | 3 years 10 months 24 days | ||||||
Outstanding (in shares) | 6,441,527 | 5,024,235 | 3,312,666 | ||||
Stock options | |||||||
Stock-based compensation expense | |||||||
Outstanding (in shares) | 6,601,890 | 4,518,118 | 6,601,890 | 4,518,118 | 6,441,573 | 5,012,034 | |
Service-based stock options | |||||||
Stock-based compensation expense | |||||||
Outstanding (in shares) | 3,840,828 | 3,840,828 | 3,646,617 | ||||
Performance-based stock options | |||||||
Stock-based compensation expense | |||||||
Stock-based compensation expense | $ 15,898 | $ 15,898 | $ 0 | ||||
Unvested awards outstanding (in shares) | 458,182 | ||||||
Unrecognized compensation cost | $ 16,185 | ||||||
Outstanding (in shares) | 2,761,062 | 2,761,062 | 2,794,910 |
Stock-Based Compensation - S163
Stock-Based Compensation - Stock Option Activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Shares | ||
Outstanding at beginning of period (in shares) | 5,024,235 | 3,312,666 |
Granted (in shares) | 1,997,964 | 1,961,150 |
Exercised (in shares) | (25,620) | (13,762) |
Forfeited (in shares) | (555,051) | (235,820) |
Outstanding at end of period (in shares) | 6,441,527 | 5,024,235 |
Weighted average exercise price | ||
Outstanding at beginning of period (in dollars per share) | $ 9.92 | $ 8.20 |
Granted (in dollars per share) | 15.70 | 12.61 |
Exercised (in dollars per share) | 8.20 | 8.20 |
Forfeited (in dollars per share) | 12.10 | 8.20 |
Outstanding at end of period (in dollars per share) | $ 11.53 | $ 9.92 |
Stock-Based Compensation - S164
Stock-Based Compensation - Stock Options Outstanding (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Shares | |||||||
Outstanding (in shares) | 6,441,527 | 5,024,235 | 3,312,666 | ||||
Weighted average exercise price | |||||||
Outstanding (in dollars per share) | $ 11.53 | $ 9.92 | $ 8.20 | ||||
Aggregate Intrinsic Value | |||||||
Total fair value of options vested | $ 2,450 | $ 2,000 | |||||
Stock options | |||||||
Shares | |||||||
Outstanding (in shares) | 6,601,890 | 4,518,118 | 6,601,890 | 4,518,118 | 6,441,573 | 5,012,034 | |
Weighted average exercise price | |||||||
Outstanding (in dollars per share) | $ 9.92 | $ 7.77 | $ 9.92 | $ 7.77 | $ 9.59 | $ 7.97 | |
Average Remaining Contractual Term | |||||||
Outstanding | 7 years 6 months | 8 years 2 months 12 days | |||||
Vested and exercisable | 7 years 2 months 12 days | 7 years 2 months 12 days | |||||
Aggregate Intrinsic Value | |||||||
Outstanding | $ 155,844 | $ 155,844 | $ 27,042 | ||||
Vested and exercisable | 117,257 | 117,257 | $ 7,764 | ||||
Total fair value of options vested | $ 19,153 | $ 1,831 | $ 22,159 | $ 2,014 | |||
Service-based stock options | |||||||
Shares | |||||||
Outstanding (in shares) | 3,840,828 | 3,840,828 | 3,646,617 | ||||
Vested and exercisable (in shares) | 2,031,919 | 2,031,919 | 1,120,113 | ||||
Weighted average exercise price | |||||||
Outstanding (in dollars per share) | $ 10.55 | $ 10.55 | $ 11.95 | ||||
Vested and exercisable (in dollars per share) | $ 8.95 | $ 8.95 | $ 8.80 | ||||
Performance-based stock options | |||||||
Shares | |||||||
Outstanding (in shares) | 2,761,062 | 2,761,062 | 2,794,910 | ||||
Vested and exercisable (in shares) | 2,746,592 | 2,746,592 | |||||
Weighted average exercise price | |||||||
Outstanding (in dollars per share) | $ 9.05 | $ 9.05 | $ 10.99 | ||||
Vested and exercisable (in dollars per share) | 9.02 | 9.02 | |||||
Common stock | |||||||
Aggregate Intrinsic Value | |||||||
Fair value of stock (in dollars per share) | $ 33.53 | $ 33.53 | $ 15.73 |
Related Party Transactions (Det
Related Party Transactions (Details) - Connolly iHealth Merger - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Accounts payable and accrued other expenses | ||
Related party transactions | ||
Preliminary liability | $ 21,291 | |
Former Stockholders | ||
Related party transactions | ||
Payment made | $ 22,270 |
Segment and Geographic Infor166
Segment and Geographic Information - Operating Segment Results (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||
Sep. 30, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2014USD ($) | Jun. 30, 2014USD ($) | Mar. 31, 2014USD ($) | Sep. 30, 2016USD ($)segment | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($)segment | Dec. 31, 2014USD ($) | |
Segment information | |||||||||||||
Number of reportable segments | segment | 2 | 2 | |||||||||||
Net Revenue | $ 156,241 | $ 151,463 | $ 136,936 | $ 133,306 | $ 119,638 | $ 122,765 | $ 126,622 | $ 108,294 | $ 83,691 | $ 457,250 | $ 389,880 | $ 541,343 | $ 441,372 |
Operating Income | 24,155 | $ 34,916 | 4,128 | $ 33,773 | $ 23,707 | $ (47,680) | $ 33,128 | $ 27,726 | $ 17,023 | 92,331 | 61,608 | 96,524 | 30,197 |
Healthcare | |||||||||||||
Segment information | |||||||||||||
Net Revenue | 138,470 | 119,127 | 403,643 | 336,683 | 467,044 | 359,842 | |||||||
Operating Income | 22,544 | 4,288 | 85,879 | 55,812 | 84,240 | 23,713 | |||||||
Global Retail and Other | |||||||||||||
Segment information | |||||||||||||
Net Revenue | 17,771 | 17,809 | 53,607 | 53,197 | 74,299 | 81,530 | |||||||
Operating Income | $ 1,611 | $ (160) | $ 6,452 | $ 5,796 | $ 12,284 | $ 6,484 |
Segment and Geographic Infor167
Segment and Geographic Information - Operating Segment Net Revenue by Product Type (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||
Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Net revenue by product type | |||||||||||||
Net revenue | $ 156,241 | $ 151,463 | $ 136,936 | $ 133,306 | $ 119,638 | $ 122,765 | $ 126,622 | $ 108,294 | $ 83,691 | $ 457,250 | $ 389,880 | $ 541,343 | $ 441,372 |
Product | Consolidated net revenue | |||||||||||||
Net revenue by product type | |||||||||||||
Net revenue | $ 156,241 | $ 136,936 | $ 457,250 | $ 389,880 | $ 541,343 | $ 441,372 | |||||||
Proportionate share of total (as a percent) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | |||||||
Healthcare | |||||||||||||
Net revenue by product type | |||||||||||||
Net revenue | $ 138,470 | $ 119,127 | $ 403,643 | $ 336,683 | $ 467,044 | $ 359,842 | |||||||
Healthcare | Product | Consolidated net revenue | |||||||||||||
Net revenue by product type | |||||||||||||
Net revenue | $ 138,470 | $ 119,127 | $ 403,643 | $ 336,683 | $ 467,044 | $ 359,842 | |||||||
Proportionate share of total (as a percent) | 88.60% | 87.00% | 88.30% | 86.40% | 86.30% | 81.60% | |||||||
Healthcare | Retrospective claims accuracy | Product | Consolidated net revenue | |||||||||||||
Net revenue by product type | |||||||||||||
Net revenue | $ 78,133 | $ 62,369 | $ 224,335 | $ 178,818 | $ 251,288 | $ 240,544 | |||||||
Proportionate share of total (as a percent) | 50.00% | 45.50% | 49.10% | 45.90% | 46.40% | 54.50% | |||||||
Healthcare | Prospective claims accuracy | Product | Consolidated net revenue | |||||||||||||
Net revenue by product type | |||||||||||||
Net revenue | $ 57,233 | $ 53,419 | $ 169,632 | $ 147,335 | $ 201,899 | $ 108,828 | |||||||
Proportionate share of total (as a percent) | 36.60% | 39.10% | 37.10% | 37.80% | 37.30% | 24.70% | |||||||
Healthcare | Transaction services | Product | Consolidated net revenue | |||||||||||||
Net revenue by product type | |||||||||||||
Net revenue | $ 3,104 | $ 3,339 | $ 9,676 | $ 10,530 | $ 13,857 | $ 10,470 | |||||||
Proportionate share of total (as a percent) | 2.00% | 2.40% | 2.10% | 2.70% | 2.60% | 2.40% | |||||||
Global Retail and Other | |||||||||||||
Net revenue by product type | |||||||||||||
Net revenue | $ 17,771 | $ 17,809 | $ 53,607 | $ 53,197 | $ 74,299 | $ 81,530 | |||||||
Global Retail and Other | Product | Consolidated net revenue | |||||||||||||
Net revenue by product type | |||||||||||||
Net revenue | $ 17,771 | $ 17,809 | $ 53,607 | $ 53,197 | $ 74,299 | $ 81,530 | |||||||
Proportionate share of total (as a percent) | 11.40% | 13.00% | 11.70% | 13.60% | 13.70% | 18.40% | |||||||
Global Retail and Other | Retrospective claims accuracy | Product | Consolidated net revenue | |||||||||||||
Net revenue by product type | |||||||||||||
Net revenue | $ 17,039 | $ 17,292 | $ 51,730 | $ 51,546 | $ 72,060 | $ 80,075 | |||||||
Proportionate share of total (as a percent) | 10.90% | 12.60% | 11.30% | 13.20% | 13.30% | 18.10% | |||||||
Global Retail and Other | Other | Product | Consolidated net revenue | |||||||||||||
Net revenue by product type | |||||||||||||
Net revenue | $ 732 | $ 517 | $ 1,877 | $ 1,651 | $ 2,239 | $ 1,455 | |||||||
Proportionate share of total (as a percent) | 0.50% | 0.40% | 0.40% | 0.40% | 0.40% | 0.30% |
Segment and Geographic Infor168
Segment and Geographic Information - Geographic Information (Details) - Geographic | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated net revenue | United States | ||
Geographic net revenue and long lived assets | ||
Proportionate share of total (as a percent) | 98.00% | 95.00% |
Long-lived assets | Minimum | Foreign | ||
Geographic net revenue and long lived assets | ||
Proportionate share of total (as a percent) | 1.00% | |
Long-lived assets | Maximum | United States | ||
Geographic net revenue and long lived assets | ||
Proportionate share of total (as a percent) | 99.00% |
Client Concentration (Details)
Client Concentration (Details) - Consolidated net revenue - Customer Concentration Risk | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Customer A | ||
Client Concentration | ||
Concentration percentage | 14.00% | 15.00% |
Customer B | ||
Client Concentration | ||
Concentration percentage | 10.00% | 10.00% |
Customer C | ||
Client Concentration | ||
Concentration percentage | 3.00% | 10.00% |
Employee Benefit Plans - Con170
Employee Benefit Plans - Contributions (Details) - Compensation - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Employee benefit plans | ||||||
Contributions expensed | $ 1,142 | $ 825 | $ 3,384 | $ 3,140 | $ 4,019 | $ 2,199 |
401(k) Plan | ||||||
Employee benefit plans | ||||||
Contributions expensed | 1,010 | 651 | 2,768 | 2,386 | 3,053 | 1,604 |
Profit Share Plan | ||||||
Employee benefit plans | ||||||
Contributions expensed | 62 | 220 | 438 | 539 | 416 | |
Provident Plan | ||||||
Employee benefit plans | ||||||
Contributions expensed | $ 132 | $ 112 | $ 396 | $ 316 | $ 427 | $ 179 |
Employee Benefit Plans - Non171
Employee Benefit Plans - Nonqualified Profit Sharing Plan (Details) - Profit Share Plan - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2014 | Sep. 30, 2016 | Dec. 31, 2015 | |
Employee benefit plans | |||
Accrued employee benefits | $ 441 | $ 535 | |
Maximum | |||
Employee benefit plans | |||
Period following last day of plan year that contributions are made | 90 days | ||
Service period required for eligibility | 1000 hours | ||
Minimum | |||
Employee benefit plans | |||
Period following last day of plan year that contributions are made | 90 days | ||
Service period required for eligibility | 1000 hours | ||
Accrued compensation costs | |||
Employee benefit plans | |||
Accrued employee benefits | $ 1,171 | $ 0 | $ 893 |
Discontinued Operations - 2012
Discontinued Operations - 2012 Disposal (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Feb. 28, 2015 | Mar. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2015 | |
Discontinued operations | ||||
Gain from collection of fully reserved note receivable | $ 900 | $ 900 | ||
Estimated impact to diluted EPS as a result of gain on discontinued operations (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | |
Discontinued operations sold | Business disposed of in 2012 | ||||
Discontinued operations | ||||
Gain from collection of fully reserved note receivable | $ 900 | $ 900 | ||
Estimated impact to diluted EPS as a result of gain on discontinued operations (in dollars per share) | $ 0.01 | $ 0.01 |
Selected Quarterly Financial173
Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||
Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Selected Quarterly Financial Data (Unaudited) | |||||||||||||
Net Revenue | $ 156,241 | $ 151,463 | $ 136,936 | $ 133,306 | $ 119,638 | $ 122,765 | $ 126,622 | $ 108,294 | $ 83,691 | $ 457,250 | $ 389,880 | $ 541,343 | $ 441,372 |
Operating income | 24,155 | 34,916 | 4,128 | 33,773 | 23,707 | (47,680) | 33,128 | 27,726 | 17,023 | 92,331 | 61,608 | 96,524 | 30,197 |
Income (loss) from continuing operations | 4,583 | 9,183 | (7,294) | 7,780 | 3,635 | (38,967) | 9,534 | 3,949 | (341) | 23,560 | 4,121 | 13,304 | (25,825) |
Net income (loss) | $ 4,583 | $ 9,183 | $ (7,294) | $ 7,780 | $ 4,194 | $ (38,967) | $ 9,534 | $ 3,949 | $ (341) | $ 23,560 | $ 4,680 | $ 13,863 | $ (25,825) |
Earnings (loss) per share from continuing operations-Basic (in dollars per share) | $ 0.05 | $ 0.12 | $ (0.09) | $ 0.10 | $ 0.04 | $ 0.28 | $ 0.05 | $ 0.17 | $ (0.40) | ||||
Earnings (loss) per share from continuing operations-Diluted (in dollars per share) | 0.05 | 0.12 | (0.09) | 0.10 | 0.04 | 0.27 | 0.05 | 0.17 | (0.40) | ||||
Earnings per share from discontinued operations | 0.01 | 0.01 | 0.01 | ||||||||||
Diluted (in dollars per share) | 0.01 | 0.01 | 0.01 | ||||||||||
Total earnings (loss) per share - Basic (in dollars per share) | 0.05 | 0.12 | (0.09) | 0.10 | 0.05 | $ (0.50) | $ 0.12 | $ 0.06 | $ (0.01) | 0.28 | 0.06 | 0.18 | (0.40) |
Total earnings (loss) per share-Diluted (in dollars per share) | $ 0.05 | $ 0.12 | $ (0.09) | $ 0.10 | $ 0.05 | $ (0.50) | $ 0.12 | $ 0.06 | $ (0.01) | $ 0.27 | $ 0.06 | $ 0.18 | $ (0.40) |
Selected Quarterly Financial174
Selected Quarterly Financial Data (Unaudited) Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Feb. 28, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Loss on extinguishment of debt | ||||||||||||
Loss on extinguishment of debt | $ 9,349 | $ 16,417 | $ 4,084 | $ 4,084 | $ 21,524 | |||||||
Impairment of intangible assets | ||||||||||||
Loss on impairment of intangible assets | $ 27,826 | 27,826 | 27,826 | 74,034 | ||||||||
Discontinued Operations | ||||||||||||
Gain from collection of fully reserved note receivable | 900 | 900 | ||||||||||
Gain on discontinued operations, net of tax | $ 559 | 559 | ||||||||||
Customer relationships | ||||||||||||
Impairment of intangible assets | ||||||||||||
Impairment | $ 74,034 | $ 74,034 | ||||||||||
Discontinued operations sold | Business disposed of in 2012 | ||||||||||||
Discontinued Operations | ||||||||||||
Gain from collection of fully reserved note receivable | $ 900 | $ 900 | ||||||||||
Gain on discontinued operations, net of tax | $ 559 | |||||||||||
First Lien Credit Agreement, First and Second Amendments | ||||||||||||
Loss on extinguishment of debt | ||||||||||||
Loss on extinguishment of debt | $ 4,084 | |||||||||||
January 2014 Credit Agreement | ||||||||||||
Loss on extinguishment of debt | ||||||||||||
Loss on extinguishment of debt | $ 9,855 | $ 11,669 |
Subsequent Events (Details)
Subsequent Events (Details) - Common stock | May 13, 2016 |
Subsequent Events | |
Stock split ratio | 6.1 |
Subsequent Events | |
Subsequent Events | |
Stock split ratio | 6.1 |