Cotiviti (COTV) 10-Q 3 May 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	3 Months Ended
	Mar. 31, 2017shares
Document and Entity Information
Entity Registrant Name	Cotiviti Holdings, Inc.
Entity Central Index Key	1,657,197
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding	91,838,470
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets
Cash and cash equivalents	$ 128,458	$ 110,635
Restricted cash	7,232	9,103
Accounts receivable, net of allowance for doubtful accounts of $648 and $851 at March 31, 2017 and December 31, 2016, respectively; and net of estimated allowance for refunds and appeals of $35,518 and $41,020 at March 31, 2017 and December 31, 2016, respectively	62,072	67,735
Prepaid expenses and other current assets	17,847	14,957
Total current assets	215,609	202,430
Property and equipment, net	70,286	67,640
Goodwill	1,196,121	1,196,024
Intangible assets, net	518,131	533,305
Other long-term assets	2,746	2,864
TOTAL ASSETS	2,002,893	2,002,263
Current liabilities:
Current maturities of long-term debt	18,000	18,000
Customer deposits	7,232	9,103
Accounts payable and accrued other expenses	26,736	23,162
Accrued compensation costs	29,379	58,589
Estimated liability for refunds and appeals	61,766	62,539
Total current liabilities	143,113	171,393
Long-term liabilities:
Long-term debt	758,348	762,202
Other long-term liabilities	5,765	8,799
Deferred tax liabilities	119,759	120,533
Total long-term liabilities	883,872	891,534
Total liabilities	1,026,985	1,062,927
Commitments and contingencies (Note 6)
Stockholders' equity:
Common stock ($0.001 par value; 600,000,000 shares authorized, 91,845,947 and 90,748,740 issued, and 91,838,470 and 90,741,340 outstanding at March 31, 2017 and December 31, 2016, respectively)	92	91
Additional paid-in capital	921,186	911,582
Retained earnings	60,892	33,917
Accumulated other comprehensive loss	(6,161)	(6,156)
Treasury stock, at cost (7,477 and 7,400 shares at March 31, 2017 and December 31, 2016, respectively)	(101)	(98)
Total stockholders' equity	975,908	939,336
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 2,002,893	$ 2,002,263

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Consolidated Balance Sheets
Allowance for doubtful accounts	$ 648	$ 851
Estimated allowance for refunds and appeals	$ 35,518	$ 41,020
Common stock, par value per share	$ 0.001	$ 0.001
Common stock, shares authorized	600,000,000	600,000,000
Common stock, shares issued	91,845,947	90,748,740
Common stock, shares outstanding	91,838,470	90,741,340
Treasury stock, shares	7,477	7,400

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Consolidated Statements of Comprehensive Income (Loss)
Net revenue	$ 160,133	$ 142,718
Cost of revenue (exclusive of depreciation and amortization, stated separately below):
Compensation	56,288	53,461
Other costs of revenue	6,686	5,398
Total cost of revenue	62,974	58,859
Selling, general and administrative expenses (exclusive of depreciation and amortization, stated separately below):
Compensation	24,693	19,110
Other selling, general and administrative expenses	16,879	15,229
Total selling, general and administrative expenses	41,572	34,339
Depreciation and amortization of property and equipment	5,575	4,835
Amortization of intangible assets	15,199	15,207
Transaction-related expenses	731	240
Total operating expenses	126,051	113,480
Operating income	34,082	29,238
Other expense (income):
Interest expense	8,421	16,060
Other non-operating (income) expense	(453)	(299)
Total other expense (income)	7,968	15,761
Income before income taxes	26,114	13,477
Income tax (benefit) expense	(861)	5,393
Net income	26,975	8,084
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	57	(26)
Change in fair value of derivative instruments	(62)	(482)
Total other comprehensive (loss) income	(5)	(508)
Comprehensive income	$ 26,970	$ 7,576
Earnings per share
Basic (in dollars per share)	$ 0.30	$ 0.10
Diluted (in dollars per share)	$ 0.28	$ 0.10

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flows from operating activities:
Net income	$ 26,975	$ 8,084
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Deferred income taxes	1,877	(5,405)
Depreciation and amortization	20,774	20,042
Stock-based compensation expense	2,083	1,074
Amortization of debt issuance costs	645	1,348
Accretion of asset retirement obligations	48	46
Changes in operating assets and liabilities:
Restricted cash	1,871	(1,518)
Accounts receivable	5,663	12,266
Other assets	(2,612)	7,493
Customer deposits	(1,871)	1,518
Accrued compensation	(29,210)	(8,452)
Accounts payable and accrued other expenses	(841)	(2,225)
Estimated liability for refunds and appeals	(774)	2,262
Other long-term liabilities	247	144
Other	(303)	(324)
Net cash provided by operating activities	24,572	36,353
Cash flows from investing activities:
Expenditures for property and equipment	(9,660)	(9,467)
Other investing activities		2
Net cash used in investing activities	(9,660)	(9,465)
Cash flows from financing activities:
Proceeds from exercise of stock options	7,363	16
Purchase of treasury shares	(3)
Repayment of debt	(4,500)	(2,025)
Net cash provided by (used in) financing activities	2,860	(2,009)
Effect of foreign exchanges on cash and cash equivalents	51	8
Net increase in cash and cash equivalents	17,823	24,887
Cash and cash equivalents at beginning of period	110,635	149,365
Cash and cash equivalents at end of the period	128,458	174,252
Supplemental disclosures of cash flow information:
Cash paid for income taxes	649	590
Cash paid for interest	7,587	14,565
Noncash investing activities (accrued property and equipment purchases)	$ 6,738	$ 9,052

Description of Business

Description of Business	3 Months Ended
	Mar. 31, 2017
Description of Business
Description of Business 10-Q	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 over 20 of the 25 largest U.S. commercial, Medicare and Medicaid managed health plans, as well as 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.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2017
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 SEC. 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. Estimated Liability for Refunds and Appeals and Unbilled Receivables 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 $61,766 and $62,539 at March 31, 2017 and December 31, 2016, respectively. The estimated allowance for refunds and appeals representing our estimate of claims that may be overturned related to amounts in accounts receivable was $35,518 and $41,020 at March 31, 2017 and December 31, 2016, respectively. 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 of approximately $49,676 and $51,643 as of March 31, 2017 and December 31, 2016, respectively, 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 $6,087 and $6,137 as of March 31, 2017 and December 31, 2016, 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 January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (“ASU2017-04”), which is intended to simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of the goodwill. Instead, an entity should compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2019, and interim periods within those annual periods. 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 as the fair values of our reporting units exceed their carrying values. In November 2016, the FASB issued ASU 2016-18, Restricted Cash (“ASU 2016-18”), which requires that restricted cash be included with cash and cash equivalents when reconciling the beginning and end of period total amounts shown on the statement of cash flows. 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 and expect the adoption of this ASU could impact the disclosure of our cash flows from operations. 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 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 May 2014, the FASB issued ASU 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 sets forth a five-step model for determining when and how revenue is recognized. The core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Additional disclosures will be required to describe the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. The two permitted transition methods under ASU 2014-09 are the full retrospective method, in which case the new guidance would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of the initial application. The guidance is effective for public companies with annual periods beginning after December 15, 2017 and interim periods within that reporting period. The FASB will permit companies to adopt the new standard early, but not before the original effective date of annual reporting periods beginning after December 15, 2016. In 2016, we formed an internal team to evaluate and quantify the potential impact of this new revenue guidance. As of the date of this filing, we have made significant progress on our contract reviews and policy drafting. We will continue to evaluate this new guidance and plan to provide additional information about our method of adoption and the impact, if any, on our consolidated financial statements and related disclosures in future filings.

Property and Equipment

Property and Equipment	3 Months Ended
	Mar. 31, 2017
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: March 31, December 31, 2017 2016 Computer equipment $ 41,106 $ 40,349 Software 53,837 42,614 Furniture and fixtures 8,802 8,652 Leasehold improvements 4,895 4,392 Projects in progress 7,234 12,001 Property and equipment, gross $ 115,874 $ 108,008 Less: accumulated depreciation and amortization 45,588 40,368 Property and equipment, net $ 70,286 $ 67,640 In December 2015, we purchased a perpetual software license, which is included in the software total above. We are paying for this software over a two year period ending in January 2018. As such, there is approximately $3,256 and $3,351 included in accounts payable and accrued other expenses on our Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016, respectively, and $3,225 included in other long-term liabilities on our Consolidated Balance Sheets as of December 31, 2016. Total depreciation and amortization expense related to property and equipment, including capitalized software costs, was $5,575 and $4,835 for the three months ended March 31, 2017 and 2016, respectively.

Intangible Assets

Intangible Assets	3 Months Ended
	Mar. 31, 2017
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 Amount Period March 31, 2017: Customer relationships $ 640,095 $ 156,549 $ 483,546 years Acquired software 82,400 52,015 30,385 years Connolly trademark 4,200 — 4,200 indefinite-lived Total $ 726,695 $ 208,564 $ 518,131 years December 31, 2016: Customer relationships $ 640,052 $ 144,768 $ 495,284 years Acquired software 82,400 48,579 33,821 years Connolly trademark 4,200 — 4,200 indefinite-lived Total $ 726,652 $ 193,347 $ 533,305 years Amortization expense was $15,199 and $15,207 for the three months ended March 31, 2017 and 2016, respectively. As of March 31, 2017 amortization expense for the next 5 years is expected to be: Remainder of 2017 $ 42,628 2018 53,898 2019 53,898 2020 53,898 2021 49,576

Goodwill

Goodwill	3 Months Ended
	Mar. 31, 2017
Goodwill
Goodwill	Note 5. Goodwill Total goodwill in our Consolidated Balance Sheets was $1,196,121 and $1,196,024 as of March 31, 2017 and December 31, 2016, respectively. Changes in the carrying amount of goodwill by our Healthcare and Global Retail and Other segments for the three months ended March 31, 2017 were as follows: Global Retail Healthcare and Other December 31, 2016 $ $ 48,253 Foreign currency translation — 97 March 31, 2017 $ $ 48,350 There was no impairment related to goodwill for any period presented.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2017
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 $13,000 in excess of the amount we accrued as of March 31, 2017 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. CMS has not yet provided us with any information and accordingly the amount of any such additional claims cannot presently be determined.

Long-term Debt

Long-term Debt	3 Months Ended
	Mar. 31, 2017
Long-term Debt
Long-term Debt	Note 7. Long‑term Debt Long‑term debt for the periods presented was as follows: March 31, December 31, 2017 2016 First Lien Term A Loan $ 243,580 $ 246,694 First Lien Term B Loan 543,130 544,345 Revolver — — Total debt 786,710 791,039 Less: debt issuance costs 10,362 10,837 Less: current portion 18,000 18,000 Total long-term debt $ 758,348 $ 762,202 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. There is a required financial covenant applicable only to the Revolver and the Term A Loan, 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 March 31, 2017 and December 31, 2016, respectively. 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 in the second quarter based on an annual excess cash flow calculation for the proceeding year as defined within the Restated Credit Agreement. As of March 31, 2017, the aggregate maturities of long‑term debt (excluding any amounts that may become payable with respect to the aforementioned mandatory prepayment provision for annual excess cash flows) for each of the next five years are expected to be $13,500 for the remainder of 2017, $18,000 in 2018, $24,250 in 2019, $30,500 in 2020 and $183,625 in 2021. In April 2017, we entered into and executed the First Amendment Agreement to the then outstanding Restated Credit Agreement, which, among other things, provided for a 25 basis point reduction in applicable interest rate spread over LIBOR associated with the First Lien Term B Loan. As a result, we expect to record a loss on extinguishment of approximately $3,000, which will be included in our Consolidated Statements of Comprehensive Income during the second quarter of 2017.

Derivative Instruments

Derivative Instruments	3 Months Ended
	Mar. 31, 2017
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 March 31, 2017 and December 31, 2016, we had $540,000 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 derivative 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 $201 and $82 related to interest rate caps during the three months ended March 31, 2017 and 2016, 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 months ended March 31, 2017 and 2016, 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: March 31, December 31, 2017 2016 Liability fair value recorded in other long-term liabilities $ 1,691 $ 1,729 Liability fair value recorded in accounts payable and accrued other expenses 1,046 1,065 Estimated amount of existing losses expected to be reclassified into earnings in the next 12 months (2,200) (1,783) 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 March 31, 2017, we have made payments of $2,945 related to these deferred premiums. We expect to pay an additional $3,449 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 March 31, 2017 2016 Balance at beginning of period, January 1 $ (3,334) $ (2,968) Reclassifications in earnings, net of tax of $76 and $31, respectively 125 51 Change in fair value of derivative instrument, net of tax of $112 and $323, respectively (187) (533) Balance at end of period, March 31 $ (3,396) $ (3,450)

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Mar. 31, 2017
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: March 31, 2017 December 31, 2016 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Liabilities: Long-term debt $ — $ — $ 786,710 $ — $ — $ 791,039 Interest rate cap agreements — 2,737 — — 2,794 — Total $ — $ 2,737 $ 786,710 $ — $ 2,794 $ 791,039 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. Refer to Note 7 for more information on our long-term debt. 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. Refer to Note 8 for more information on our interest rate cap agreements.

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2017
Income Taxes
Income Taxes	Note 10. Income Taxes The following table presents our income tax provision and effective income tax rate: Three Months Ended March 31, 2017 2016 Income tax provision $ (861) $ 5,393 Effective income tax rate (3.3) % 40.0 % Our effective income tax rate was (3.3)% and 40.0% for the three months ended March 31, 2017 and 2016, respectively. The decrease in the effective tax rate is primarily due to a $10,422 tax benefit related to stock option exercises. Additionally, we realized a tax benefit of $337 during the three months ended March 31, 2017 related to the settlement of an uncertain tax position as a result of the closure of our audit with the Internal Revenue Service for the tax year ended December 31, 2014 and the iHealth Technologies, Inc. audit for the tax years ended December 31, 2012, December 31, 2013 and May 13, 2014. We file income taxes with the U.S. federal government and various states and foreign jurisdictions. We operate in a number of state and local jurisdictions and as such are subject to state and local income tax examinations based upon various statutes of limitations in each jurisdiction. We are currently under audit by the State of New York for the tax year ended December 31, 2014 and for iHealth Technologies for the tax years ended December 31, 2012, December 31, 2013, May 13, 2014 and December 31, 2014.

Stockholders' Equity

Stockholders' Equity	3 Months Ended
	Mar. 31, 2017
Stockholders' Equity
Stockholders' Equity	Note 11. Stockholders’ Equity Secondary Offering On March 7, 2017 we completed a secondary public offering of 9,683,000 shares of our common stock by certain of our stockholders, including 1,263,000 shares sold to the underwriters pursuant to their option to purchase additional shares, at a public offering price of $36.00 per share. All of the shares offered were sold by selling stockholders. Accordingly, we did not receive any proceeds from the sale of the shares. In connection with this offering, we incurred approximately $600 in professional services expenses, which are included in transaction-related expenses on our Consolidated Statements of Comprehensive Income for the three months ended March 31, 2017.

Earnings per Share

Earnings per Share	3 Months Ended
	Mar. 31, 2017
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 equity incentive awards. Our potential common shares consist of the incremental common shares issuable upon the exercise of stock options or vesting of RSUs. The dilutive effect of outstanding equity incentive awards 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 March 31, 2017 2016 Net income available to common stockholders $ 26,975 $ 8,084 Weighted average outstanding shares of common stock 91,138,356 77,231,196 Dilutive effect of stock-based awards 3,766,874 526,162 Adjusted weighted average outstanding and assumed conversions for diluted EPS 94,905,230 77,757,358 Earnings per share: Basic $ 0.30 $ 0.10 Diluted 0.28 0.10 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 March 31, 2017 2016 Employee stock-based awards 361,566 2,019,649 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, outstanding performance-based stock options were included in the calculation of diluted earnings per share for the three months ended March 31, 2017. Performance-based stock options of 2,794,910 were not included in the calculation of diluted earnings per share for the three months ended March 31, 2016 as the vesting conditions had not yet been satisfied.

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2017
Stock-Based Compensation
Stock-Based Compensation	Note 13. Stock‑Based Compensation Stock Options The following is a summary of stock option activity under the Plans: Weighted Weighted average average remaining Aggregate Outstanding exercise price contractual life Intrinsic Value Options per share (Years) (in thousands) Outstanding at December 31, 2016 5,997,372 $ 10.18 7.30 $ 145,270 Granted 534,262 34.39 — Forfeited (35,008) 12.58 — Exercised (1,096,999) 6.86 — Expired (2,893) 13.79 — Outstanding at March 31, 2017 5,396,734 $ 13.23 7.56 $ 153,263 Vested, exercisable, expected to vest at March 31, 2017 5,396,734 $ 13.23 7.56 $ 153,263 Exercisable at March 31, 2017 3,188,518 $ 9.95 6.99 $ 101,004 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 $41.63 as of March 31, 2017 based upon the closing price of our common stock on the NYSE. The total intrinsic value of stock options exercised was $33,482 for the three months ended March 31, 2017 and insignificant for the three months ended March 31, 2016. Restricted Stock Units The following is a summary of RSU activity under the 2016 Plan: Weighted average grant date fair value Number of Awards per share Outstanding at December 31, 2016 67,295 $ 25.88 Granted 235,412 34.39 Forfeited (3,875) 24.70 Vested and converted to shares, net of units withheld for taxes (131) 19.00 Units withheld for taxes (77) 19.00 Outstanding at March 31, 2017 298,624 $ 32.59 Expected to vest at March 31, 2017 298,624 $ 32.59 Employee Stock Purchase Plan We have an ESPP for US and non-US employees (collectively, “ESPP”), both of which have a series of six month offering periods, with a new offering period beginning on the first day of January and July each year. The ESPP was adopted by our Board of Directors in May 2016. In order for the US ESPP to qualify as an “employee stock purchase plan” under the requirements of Section 423 of the United States Internal Revenue Code of 1986, as amended, the ESPP is subject to stockholder approval at our first annual meeting of stockholders to be held on May 25, 2017. The ESPP was effective January 1, 2017 with the first purchase date scheduled for June 30, 2017. Employees may contribute up to 10% of their pay towards the purchase of common stock via payroll deductions to a maximum of $10 per year, or $5 per offering period. Purchase dates occur on the last business day of June and December of each year. Stock Compensation Expense We used the following weighted average assumptions to estimate the fair value of stock options granted for the periods presented as follows: Three Months Ended March 31, 2017 Expected term (years) 6.25 Expected volatility 40.00 % Expected dividend yield 0.00 % Weighted average risk-free interest rate 1.93 % Weighted average grant date fair value $ 14.45 No stock options were granted during the three months ended March 31, 2016. We recorded total stock‑based compensation expense of $2,083 and $1,074 for the three months ended March 31, 2017 and 2016, respectively. As of March 31, 2017, we had total unrecognized compensation cost related to 2,506,840 unvested stock options and RSUs under the Plans of $25,037 which we expect to recognize over the next 2.9 years.

Segment Information

Segment Information	3 Months Ended
	Mar. 31, 2017
Segment Information
Segment Information	Note 14. Segment Information We conduct our business through two reportable business segments: Healthcare and Global Retail and Other. Through our Healthcare segment, we offer prospective and retrospective claims accuracy solutions to healthcare payers in the United States. We also provide analytics-based solutions unrelated to our healthcare payment accuracy solutions, on a limited basis in the United States. Through our Global Retail and Other segment, we provide retrospective claims accuracy solutions to retailers primarily in the United States, Canada and the United Kingdom, as well as solutions that improve efficiency and effectiveness of payment networks for a limited number of clients. 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 Chief Operating Decision Maker 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 March 31, 2017 2016 (unaudited) Net Revenue Healthcare $ $ 124,130 Global Retail and Other 20,330 18,588 Consolidated net revenue $ $ 142,718 Operating Income Healthcare $ 31,161 $ 26,622 Global Retail and Other 2,921 2,616 Consolidated operating income $ 34,082 $ 29,238 Operating segment net revenue by product type for the periods presented was as follows: Three Months Ended March 31, 2017 % 2016 % (unaudited) Healthcare Retrospective claims accuracy $ 77,516 48.4 $ 65,270 45.7 Prospective claims accuracy 59,717 37.3 55,410 38.8 Transaction services 2,570 1.6 3,450 2.5 Total Healthcare 139,803 87.3 124,130 87.0 Global Retail and Other Retrospective claims accuracy 19,674 12.3 17,990 12.6 Other 656 0.4 598 0.4 Total Global Retail and Other 20,330 12.7 18,588 13.0 Consolidated net revenue $ 160,133 100.0 $ 142,718 100.0

Summary of Significant Accoun20

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2017
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 SEC. 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.
Estimated Liability for Refunds and Appeals and Unbilled Receivables	Estimated Liability for Refunds and Appeals and Unbilled Receivables 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 $61,766 and $62,539 at March 31, 2017 and December 31, 2016, respectively. The estimated allowance for refunds and appeals representing our estimate of claims that may be overturned related to amounts in accounts receivable was $35,518 and $41,020 at March 31, 2017 and December 31, 2016, respectively. 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 of approximately $49,676 and $51,643 as of March 31, 2017 and December 31, 2016, respectively, 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 $6,087 and $6,137 as of March 31, 2017 and December 31, 2016, 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 January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (“ASU2017-04”), which is intended to simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of the goodwill. Instead, an entity should compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2019, and interim periods within those annual periods. 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 as the fair values of our reporting units exceed their carrying values. In November 2016, the FASB issued ASU 2016-18, Restricted Cash (“ASU 2016-18”), which requires that restricted cash be included with cash and cash equivalents when reconciling the beginning and end of period total amounts shown on the statement of cash flows. 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 and expect the adoption of this ASU could impact the disclosure of our cash flows from operations. 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 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 May 2014, the FASB issued ASU 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 sets forth a five-step model for determining when and how revenue is recognized. The core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Additional disclosures will be required to describe the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. The two permitted transition methods under ASU 2014-09 are the full retrospective method, in which case the new guidance would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of the initial application. The guidance is effective for public companies with annual periods beginning after December 15, 2017 and interim periods within that reporting period. The FASB will permit companies to adopt the new standard early, but not before the original effective date of annual reporting periods beginning after December 15, 2016. In 2016, we formed an internal team to evaluate and quantify the potential impact of this new revenue guidance. As of the date of this filing, we have made significant progress on our contract reviews and policy drafting. We will continue to evaluate this new guidance and plan to provide additional information about our method of adoption and the impact, if any, on our consolidated financial statements and related disclosures in future filings.

Property and Equipment (Tables)

Property and Equipment (Tables)	3 Months Ended
	Mar. 31, 2017
Property and Equipment
Schedule of property and equipment by major asset class	March 31, December 31, 2017 2016 Computer equipment $ 41,106 $ 40,349 Software 53,837 42,614 Furniture and fixtures 8,802 8,652 Leasehold improvements 4,895 4,392 Projects in progress 7,234 12,001 Property and equipment, gross $ 115,874 $ 108,008 Less: accumulated depreciation and amortization 45,588 40,368 Property and equipment, net $ 70,286 $ 67,640

Intangible Assets (Tables)

Intangible Assets (Tables)	3 Months Ended
	Mar. 31, 2017
Intangible Assets
Schedule of intangible asset balances by major asset class	Weighted Gross Net Average Carrying Accumulated Carrying Amortization Amount Amortization Amount Period March 31, 2017: Customer relationships $ 640,095 $ 156,549 $ 483,546 years Acquired software 82,400 52,015 30,385 years Connolly trademark 4,200 — 4,200 indefinite-lived Total $ 726,695 $ 208,564 $ 518,131 years December 31, 2016: Customer relationships $ 640,052 $ 144,768 $ 495,284 years Acquired software 82,400 48,579 33,821 years Connolly trademark 4,200 — 4,200 indefinite-lived Total $ 726,652 $ 193,347 $ 533,305 years
Schedule of intangible asset amortization expense	Remainder of 2017 $ 42,628 2018 53,898 2019 53,898 2020 53,898 2021 49,576

Goodwill (Tables)

Goodwill (Tables)	3 Months Ended
	Mar. 31, 2017
Goodwill
Schedule of changes in the carrying amount of goodwill by segment	Global Retail Healthcare and Other December 31, 2016 $ $ 48,253 Foreign currency translation — 97 March 31, 2017 $ $ 48,350

Long-term Debt (Tables)

Long-term Debt (Tables)	3 Months Ended
	Mar. 31, 2017
Long-term Debt
Schedule of long-term debt	March 31, December 31, 2017 2016 First Lien Term A Loan $ 243,580 $ 246,694 First Lien Term B Loan 543,130 544,345 Revolver — — Total debt 786,710 791,039 Less: debt issuance costs 10,362 10,837 Less: current portion 18,000 18,000 Total long-term debt $ 758,348 $ 762,202

Derivative Instruments (Tables)

Derivative Instruments (Tables)	3 Months Ended
	Mar. 31, 2017
Derivative Instruments
Schedule of fair value and location of derivative instruments	March 31, December 31, 2017 2016 Liability fair value recorded in other long-term liabilities $ 1,691 $ 1,729 Liability fair value recorded in accounts payable and accrued other expenses 1,046 1,065 Estimated amount of existing losses expected to be reclassified into earnings in the next 12 months (2,200) (1,783)
Schedule of changes in other comprehensive income related to derivative instruments classified as cash flow hedges	Three Months Ended March 31, 2017 2016 Balance at beginning of period, January 1 $ (3,334) $ (2,968) Reclassifications in earnings, net of tax of $76 and $31, respectively 125 51 Change in fair value of derivative instrument, net of tax of $112 and $323, respectively (187) (533) Balance at end of period, March 31 $ (3,396) $ (3,450)

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	3 Months Ended
	Mar. 31, 2017
Fair Value Measurements
Summary of financial instruments measured at fair value	March 31, 2017 December 31, 2016 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Liabilities: Long-term debt $ — $ — $ 786,710 $ — $ — $ 791,039 Interest rate cap agreements — 2,737 — — 2,794 — Total $ — $ 2,737 $ 786,710 $ — $ 2,794 $ 791,039

Income Taxes (Tables)

Income Taxes (Tables)	3 Months Ended
	Mar. 31, 2017
Income Taxes
Schedule of income tax provision and effective income tax rate	Three Months Ended March 31, 2017 2016 Income tax provision $ (861) $ 5,393 Effective income tax rate (3.3) % 40.0 %

Earnings per Share (Tables)

Earnings per Share (Tables)	3 Months Ended
	Mar. 31, 2017
Earnings per Share
Schedule of computation of basic and diluted earnings per share	Three Months Ended March 31, 2017 2016 Net income available to common stockholders $ 26,975 $ 8,084 Weighted average outstanding shares of common stock 91,138,356 77,231,196 Dilutive effect of stock-based awards 3,766,874 526,162 Adjusted weighted average outstanding and assumed conversions for diluted EPS 94,905,230 77,757,358 Earnings per share: Basic $ 0.30 $ 0.10 Diluted 0.28 0.10
Schedule of antidilutive securities excluded from earnings per share	Three Months Ended March 31, 2017 2016 Employee stock-based awards 361,566 2,019,649

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2017
Stock-Based Compensation
Summary of stock options outstanding, vested and exercisable	Weighted Weighted average average remaining Aggregate Outstanding exercise price contractual life Intrinsic Value Options per share (Years) (in thousands) Outstanding at December 31, 2016 5,997,372 $ 10.18 7.30 $ 145,270 Granted 534,262 34.39 — Forfeited (35,008) 12.58 — Exercised (1,096,999) 6.86 — Expired (2,893) 13.79 — Outstanding at March 31, 2017 5,396,734 $ 13.23 7.56 $ 153,263 Vested, exercisable, expected to vest at March 31, 2017 5,396,734 $ 13.23 7.56 $ 153,263 Exercisable at March 31, 2017 3,188,518 $ 9.95 6.99 $ 101,004
Summary of restricted stock units activity	Weighted average grant date fair value Number of Awards per share Outstanding at December 31, 2016 67,295 $ 25.88 Granted 235,412 34.39 Forfeited (3,875) 24.70 Vested and converted to shares, net of units withheld for taxes (131) 19.00 Units withheld for taxes (77) 19.00 Outstanding at March 31, 2017 298,624 $ 32.59 Expected to vest at March 31, 2017 298,624 $ 32.59
Schedule of weighted average assumptions to estimate the fair value of stock options granted	Three Months Ended March 31, 2017 Expected term (years) 6.25 Expected volatility 40.00 % Expected dividend yield 0.00 % Weighted average risk-free interest rate 1.93 % Weighted average grant date fair value $ 14.45

Segment Information (Tables)

Segment Information (Tables)	3 Months Ended
	Mar. 31, 2017
Segment Information
Schedule of operating segment results	Three Months Ended March 31, 2017 2016 (unaudited) Net Revenue Healthcare $ $ 124,130 Global Retail and Other 20,330 18,588 Consolidated net revenue $ $ 142,718 Operating Income Healthcare $ 31,161 $ 26,622 Global Retail and Other 2,921 2,616 Consolidated operating income $ 34,082 $ 29,238
Schedule of operating segment net revenue by product type	Three Months Ended March 31, 2017 % 2016 % (unaudited) Healthcare Retrospective claims accuracy $ 77,516 48.4 $ 65,270 45.7 Prospective claims accuracy 59,717 37.3 55,410 38.8 Transaction services 2,570 1.6 3,450 2.5 Total Healthcare 139,803 87.3 124,130 87.0 Global Retail and Other Retrospective claims accuracy 19,674 12.3 17,990 12.6 Other 656 0.4 598 0.4 Total Global Retail and Other 20,330 12.7 18,588 13.0 Consolidated net revenue $ 160,133 100.0 $ 142,718 100.0

Description of Business (Detail

Description of Business (Details)	Mar. 31, 2017customercompany
Healthcare | Minimum
Description of business
Number of clients	40
Commercial, Medicaid and Medicare managed health plans | United States
Description of business
Number of largest companies in the industry sector | company	25
Commercial, Medicaid and Medicare managed health plans | United States | Minimum
Description of business
Number of largest companies in the industry sector that are customers	20
Retail | Minimum
Description of business
Number of clients	35
Retail | United States
Description of business
Number of largest companies in the industry sector that are customers	8
Number of largest companies in the industry sector | company	10

Summary of Significant Accoun32

Summary of Significant Accounting Policies - Revenue Recognition, Unbilled Receivables, and Estimated Liability for Refunds and Appeals (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Summary of Significant Accounting Policies
Estimated liability for refunds and appeals	$ 61,766	$ 62,539
Estimated allowance for refunds and appeals	35,518	41,020
Accounts receivable
Summary of Significant Accounting Policies
Unbilled receivables	49,676	51,643
Unbilled receivables arising from deferred billing	$ 6,087	$ 6,137

Summary of Significant Accoun33

Summary of Significant Accounting Policies - Recently Issued Accounting Standards (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Summary of Significant Accounting Policies
Excess tax benefit related to stock option exercises resulting from the early adoption of ASU 2016-09	$ 10,422
Long-term deferred tax liabilities	119,759	$ 120,533
Debt issuance costs, net	$ 10,362	$ 10,837

Property and Equipment - Balanc

Property and Equipment - Balances by Major Asset Class (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Property and equipment
Property and equipment, gross	$ 115,874	$ 108,008
Less: Accumulated depreciation and amortization	45,588	40,368
Property and equipment, net	70,286	67,640
Computer equipment
Property and equipment
Property and equipment, gross	41,106	40,349
Software
Property and equipment
Property and equipment, gross	53,837	42,614
Furniture and fixtures
Property and equipment
Property and equipment, gross	8,802	8,652
Leasehold improvements
Property and equipment
Property and equipment, gross	4,895	4,392
Projects in progress
Property and equipment
Property and equipment, gross	$ 7,234	$ 12,001

Property and Equipment - Perpet

Property and Equipment - Perpetual Software License (Details) - Perpetual software license - USD ($) $ in Thousands	1 Months Ended
	Dec. 31, 2015	Mar. 31, 2017	Dec. 31, 2016
Recorded obligation
Remaining payment period	2 years
Accounts payable and accrued other expenses
Recorded obligation
License obligation		$ 3,256	$ 3,351
Other long-term liabilities
Recorded obligation
License obligation			$ 3,225

Property and Equipment - Deprec

Property and Equipment - Depreciation and Amortization Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Property and Equipment
Depreciation and amortization expense related to property and equipment	$ 5,575	$ 4,835

Intangible Assets - Balances by

Intangible Assets - Balances by Major Asset Class and Amortization Expense (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Intangible assets with definite lives
Accumulated Amortization	$ 208,564		$ 193,347
Amortization expense	15,199	$ 15,207
Intangible assets
Gross Carrying Amount	726,695		726,652
Net Carrying Amount	$ 518,131		$ 533,305
Weighted average
Intangible assets with definite lives
Amortization period	12 years 9 months 18 days		12 years 9 months 18 days
Connolly Trademark
Intangible assets with indefinite lives
Gross Carrying Amount	$ 4,200		$ 4,200
Net Carrying Amount	4,200		4,200
Customer relationships
Intangible assets with definite lives
Gross Carrying Amount	640,095		640,052
Accumulated Amortization	156,549		144,768
Net Carrying Amount	$ 483,546		$ 495,284
Customer relationships | Weighted average
Intangible assets with definite lives
Amortization period	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
Accumulated Amortization	52,015		48,579
Net Carrying Amount	$ 30,385		$ 33,821
Acquired software | Weighted average
Intangible assets with definite lives
Amortization period	6 years 2 months 12 days		6 years 2 months 12 days

Intangible Assets - Balances 38

Intangible Assets - Balances by Major Asset Class - Future Amortization Expense (Details) $ in Thousands	Mar. 31, 2017USD ($)
Amortization expense for the next 5 years
Remainder of 2017	$ 42,628
2,018	53,898
2,019	53,898
2,020	53,898
2,021	$ 49,576

Goodwill (Details)

Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Changes in the carrying amount of goodwill
Balance	$ 1,196,024
Balance	1,196,121
Impairment related to goodwill	0	$ 0
Healthcare
Changes in the carrying amount of goodwill
Balance	1,147,771
Foreign currency translation and other
Balance	1,147,771
Global Retail and Other
Changes in the carrying amount of goodwill
Balance	48,253
Foreign currency translation and other	97
Balance	$ 48,350

Commitments and Contingencies -

Commitments and Contingencies - Legal and Other Matters (Details) - Unfavorable action - Centers for Medicare and Medicaid Services (CMS) - USD ($) $ in Thousands	Jul. 01, 2015	Aug. 31, 2014	Mar. 31, 2017
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			$ 13,000
Estimated liability for refunds and appeals
Loss contingency
Estimated refund liability on settled claims			$ 22,308

Long-term Debt - Summary of Com

Long-term Debt - Summary of Components (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Long-term debt components
Total debt	$ 786,710	$ 791,039
Less: debt issuance costs	10,362	10,837
Less: current portion	18,000	18,000
Total long-term debt	758,348	762,202
Term Loan A | Restated Credit Agreement
Long-term debt components
Total debt	243,580	246,694
Term Loan B | Restated Credit Agreement
Long-term debt components
Total debt	$ 543,130	$ 544,345

Long-term Debt - Other Covenant

Long-term Debt - Other Covenant Terms (Details) - Restated Credit Agreement - Maximum	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Term Loan A
Ratio requirements
Secured Leverage Ratio covenant, through September 2018	5.50	5.50
Secured Leverage Ratio covenant, through September 2019	5.25	5.25
Secured Leverage Ratio covenant, through June 2021	5	5
Revolver
Ratio requirements
Secured Leverage Ratio covenant, through September 2018	5.50	5.50
Secured Leverage Ratio covenant, through September 2019	5.25	5.25
Secured Leverage Ratio covenant, through June 2021	5	5

Long-term Debt - Aggregate Matu

Long-term Debt - Aggregate Maturities (Details) $ in Thousands	Mar. 31, 2017USD ($)
Aggregate maturities of long term debt
Remainder of 2017	$ 13,500
2,018	18,000
2,019	24,250
2,020	30,500
2,021	$ 183,625

Long-term Debt - First Amendmen

Long-term Debt - First Amendment Agreement (Details) - Term Loan B - First Amendment Agreement $ in Thousands	1 Months Ended
	Apr. 30, 2017USD ($)
Extinguishment of debt
Loss on extinguishment of debt	$ 3,000
LIBOR
Extinguishment of debt
Decrease in interest rate (as a percent)	0.25%

Derivative Instruments - Intere

Derivative Instruments - Interest Rate Cap Contracts (Details) - Interest rate cap agreements - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
LIBOR
Interest rate derivatives
Interest rate cap on floating rate debt (as a percent)	3.00%
Cash flow hedge
Cash flow hedge activity
Ineffectiveness recorded	$ 0	$ 0
Cash flow hedge | Interest expense
Cash flow hedge activity
Expense recognized	201	$ 82
Designated as Hedge
Interest rate derivatives
Notional amount	$ 540,000		$ 540,000

Derivative Instruments - Quanti

Derivative Instruments - Quantitative Information Related to Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Interest rate cash flow hedges
Estimated amount of existing losses expected to be reclassified into earnings in the next 12 months	$ (2,200)	$ (1,783)
Interest rate cap agreements
Interest rate cash flow hedges
Deferred hedge premiums paid and recorded in accumulated other comprehensive (loss) income	2,945
Expected additional payments of deferred premiums	3,449
Designated as Hedge | Interest rate cap agreements | Other long-term liabilities
Interest rate cash flow hedges
Derivative liability	1,691	1,729
Designated as Hedge | Interest rate cap agreements | Accounts payable and accrued other expenses
Interest rate cash flow hedges
Derivative liability	$ 1,046	$ 1,065

Derivative Instruments - Change

Derivative Instruments - Changes in Other Comprehensive Income Related to Cash Flow Hedges (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Changes in other comprehensive income related to derivative instruments classified as cash flow hedges
Balance at beginning of period	$ (3,334)	$ (2,968)
Reclassifications in earnings, net of tax of $76 and $31, respectively	125	51
Change in fair value of derivative instrument, net of tax of $112 and $323, respectively	(187)	(533)
Balance at end of period	(3,396)	(3,450)
Other comprehensive income, tax effect
Reclassifications in earnings, tax	76	31
Change in fair value of derivative instrument, tax	$ 112	$ 323

Fair Value Measurements (Detail

Fair Value Measurements (Details) - Recurring - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Level 2
Liabilities
Interest rate cap agreements	$ 2,737	$ 2,794
Total	2,737	2,794
Level 3
Liabilities
Long-term debt	786,710	791,039
Total	$ 786,710	$ 791,039

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income Taxes
Income tax provision	$ (861)	$ 5,393
Effective income tax rate (as a percent)	(3.30%)	40.00%
Excess tax benefit related to stock option exercises resulting from the early adoption of ASU 2016-09	$ 10,422
Decrease in effective tax rate due to settlement of an uncertain tax position recorded in prior period	$ 337

Stockholders' Equity - Issuance

Stockholders' Equity - Issuance of Common Stock (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	Mar. 07, 2017	Mar. 31, 2017
Secondary Offering
Issuance of stock
Proceeds from issuance of common stock		$ 0
Offering expenses		$ 600
Secondary Offering | Selling Stockholders
Issuance of stock
Shares sold in secondary offering	9,683
Offering price (in dollars per share)	$ 36
Underwriters option
Issuance of stock
Shares sold in secondary offering	1,263

Earnings per Share - Basic and

Earnings per Share - Basic and Diluted Computation (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Basic and diluted earnings per share computation
Net income available to common stockholders	$ 26,975	$ 8,084
Weighted average outstanding shares of common stock	91,138,356	77,231,196
Dilutive effect of stock-based awards	3,766,874	526,162
Adjusted weighted average outstanding and assumed conversions for diluted EPS	94,905,230	77,757,358
Earnings per share
Basic (in dollars per share)	$ 0.30	$ 0.10
Diluted (in dollars per share)	$ 0.28	$ 0.10

Earnings per Share - Awards Exc

Earnings per Share - Awards Excluded from Diluted Calculation (Details) - shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Performance-based stock options
Anti-dilutive securities and other information
Share-based awards excluded because vesting conditions not satisfied		2,794,910
Service based stock options and RSUs
Anti-dilutive securities and other information
Stock-based awards excluded from calculation of diluted earnings per share (in shares)	361,566	2,019,649

Stock-Based Compensation - Stoc

Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Shares
Outstanding at beginning of period (in shares)	5,997,372
Granted (in shares)	534,262	0
Forfeited (in shares)	(35,008)
Exercised (in shares)	(1,096,999)
Expired (in shares)	(2,893)
Outstanding at end of period (in shares)	5,396,734		5,997,372
Vested, exercisable, expected to vest (in shares)	5,396,734
Exercisable (in shares)	3,188,518
Weighted average exercise price
Outstanding at beginning of period (in dollars per share)	$ 10.18
Granted (in dollars per share)	34.39
Forfeited (in dollars per share)	12.58
Exercised (in dollars per share)	6.86
Expired (in dollars per share)	(13.79)
Outstanding at end of period (in dollars per share)	13.23		$ 10.18
Vested, exercisable, expected to vest (in dollars per share)	13.23
Exercisable (in dollars per share)	$ 9.95
Weighted Average Remaining Contractual Term
Outstanding	7 years 6 months 22 days		7 years 3 months 18 days
Vested, exercisable, expected to vest	7 years 6 months 22 days
Exercisable (in years)	6 years 11 months 27 days
Aggregate Intrinsic Value
Outstanding	$ 153,263		$ 145,270
Vested, exercisable, expected to vest	153,263
Exercisable	101,004
Total intrinsic value of options exercised	$ 33,482
Common stock
Aggregate Intrinsic Value
Fair value of stock (in dollars per share)	$ 41.63

Stock-Based Compensation - Rest

Stock-Based Compensation - Restricted Stock Units Vesting and Activity (Details) - 2016 Plan - Restricted stock units	3 Months Ended
	Mar. 31, 2017$ / sharesshares
Shares
Outstanding at beginning of period | shares	67,295
Granted (in shares) | shares	235,412
Forfeited (in shares) | shares	(3,875)
Vested (in shares) | shares	(131)
Units withheld for taxes ( in shares) | shares	(77)
Outstanding at end of period | shares	298,624
Expected to vest at end of period | shares	298,624
Weighted average grant date fair value
Outstanding at beginning of period (in dollars per share) | $ / shares	$ 25.88
Granted (in dollars per share) | $ / shares	34.39
Forfeited (in dollars per share) | $ / shares	24.70
Vested (in dollars per share) | $ / shares	19
Units withheld for taxes (in dollars per share) | $ / shares	19
Outstanding at end of period (in dollars per share) | $ / shares	32.59
Expected to vest at end of period | $ / shares	$ 32.59

Stock-Based Compensation - Empl

Stock-Based Compensation - Employee Stock Purchase Plan (Details) - Employee Stock Purchase Plan $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)
Employee Stock Purchase Plan
Offering period	6 months
Contribution maximum percentage of pay	10.00%
Contribution maximum amount per year	$ 10
Contribution maximum amount per offering period	$ 5

Stock-Based Compensation - Weig

Stock-Based Compensation - Weighted Average Assumptions to Estimate Fair Value of Stock Options (Details) - $ / shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Assumptions used to estimate fair value of stock options granted
Granted (in shares)	534,262	0
Stock options | Weighted average
Assumptions used to estimate fair value of stock options granted
Expected term	6 years 3 months
Expected volatility (as a percent)	40.00%
Expected dividend yield (as a percent)	0.00%
Risk-free interest rate (as a percent)	1.93%
Weighted average grant date fair value (in dollars per share)	$ 14.45

Stock-Based Compensation - Expe

Stock-Based Compensation - Expense Recorded (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Stock-based compensation expense
Stock-based compensation expense	$ 2,083	$ 1,074
Service based stock options and RSUs
Stock-based compensation expense
Unvested service-based stock options and RSU awards (in shares)	2,506,840
Unrecognized compensation cost	$ 25,037
Period of recognition of unrecognized compensation cost	2 years 10 months 24 days

Segment Information - Operating

Segment Information - Operating Segment Results (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)segment	Mar. 31, 2016USD ($)
Segment information
Number of reportable segments | segment	2
Net Revenue	$ 160,133	$ 142,718
Operating Income	34,082	29,238
Healthcare
Segment information
Net Revenue	139,803	124,130
Operating Income	31,161	26,622
Global Retail and Other
Segment information
Net Revenue	20,330	18,588
Operating Income	$ 2,921	$ 2,616

Segment Information - Operati59

Segment Information - Operating Segment Net Revenue by Product Type (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Net revenue by product type
Net revenue	$ 160,133	$ 142,718
Product | Total net revenue
Net revenue by product type
Net revenue	$ 160,133	$ 142,718
Proportionate share of total (as a percent)	100.00%	100.00%
Healthcare
Net revenue by product type
Net revenue	$ 139,803	$ 124,130
Healthcare | Product | Total net revenue
Net revenue by product type
Net revenue	$ 139,803	$ 124,130
Proportionate share of total (as a percent)	87.30%	87.00%
Healthcare | Retrospective claims accuracy | Product | Total net revenue
Net revenue by product type
Net revenue	$ 77,516	$ 65,270
Proportionate share of total (as a percent)	48.40%	45.70%
Healthcare | Prospective claims accuracy | Product | Total net revenue
Net revenue by product type
Net revenue	$ 59,717	$ 55,410
Proportionate share of total (as a percent)	37.30%	38.80%
Healthcare | Transaction services | Product | Total net revenue
Net revenue by product type
Net revenue	$ 2,570	$ 3,450
Proportionate share of total (as a percent)	1.60%	2.50%
Global Retail and Other
Net revenue by product type
Net revenue	$ 20,330	$ 18,588
Global Retail and Other | Product | Total net revenue
Net revenue by product type
Net revenue	$ 20,330	$ 18,588
Proportionate share of total (as a percent)	12.70%	13.00%
Global Retail and Other | Retrospective claims accuracy | Product | Total net revenue
Net revenue by product type
Net revenue	$ 19,674	$ 17,990
Proportionate share of total (as a percent)	12.30%	12.60%
Global Retail and Other | Other | Product | Total net revenue
Net revenue by product type
Net revenue	$ 656	$ 598
Proportionate share of total (as a percent)	0.40%	0.40%