Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
In Billions, except Share data, unless otherwise specified | Dec. 31, 2013 | Feb. 26, 2014 | Jun. 30, 2013 |
Document and Entity Information | ' | ' | ' |
Entity Registrant Name | 'MAGELLAN HEALTH SERVICES INC | ' | ' |
Entity Central Index Key | '0000019411 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Well-known Seasoned Issuer | 'Yes | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Filer Category | 'Large Accelerated Filer | ' | ' |
Entity Public Float | ' | ' | $1.50 |
Entity Common Stock, Shares Outstanding | ' | 27,479,084 | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Current Assets: | ' | ' |
Cash and cash equivalents | $203,187 | $189,464 |
Restricted cash | 236,696 | 226,554 |
Accounts receivable, less allowance for doubtful accounts of $4,612 and $5,447 at December 31, 2012 and 2013, respectively | 238,185 | 138,253 |
Short-term investments (restricted investments of $88,332 and $117,674 at December 31, 2012 and 2013, respectively) | 175,883 | 201,127 |
Deferred income taxes | 37,530 | 31,698 |
Pharmaceutical inventory | 49,609 | 45,727 |
Other current assets (restricted deposits of $20,846 and $25,009 at December 31, 2012 and 2013, respectively) | 48,268 | 38,595 |
Total Current Assets | 989,358 | 871,418 |
Property and equipment, net | 172,333 | 136,548 |
Restricted long-term investments | 32,430 | 32,563 |
Other long-term assets | 7,197 | 9,730 |
Goodwill | 488,206 | 426,939 |
Other intangible assets, net | 69,694 | 34,935 |
Total Assets | 1,759,218 | 1,512,133 |
Current Liabilities: | ' | ' |
Accounts payable | 42,853 | 17,081 |
Accrued liabilities | 134,652 | 100,778 |
Medical claims payable | 228,341 | 198,429 |
Other medical liabilities | 67,416 | 76,914 |
Current maturities of long-term capital lease obligations | 3,005 | ' |
Total Current Liabilities | 476,267 | 393,202 |
Long-term capital lease obligations | 23,720 | ' |
Deferred income taxes | 42,046 | 34,086 |
Tax contingencies | 32,343 | 60,697 |
Deferred credits and other long-term liabilities | 17,803 | 6,815 |
Total Liabilities | 592,179 | 494,800 |
Redeemable non-controlling interest | 10,554 | ' |
Preferred stock, par value $.01 per share Authorized - 10,000 shares at December 31, 2012 and 2013 - Issued and outstanding - none | ' | ' |
Other Stockholders' Equity: | ' | ' |
Additional paid-in capital | 922,325 | 848,238 |
Retained earnings | 1,100,493 | 975,232 |
Accumulated other comprehensive loss | -93 | -35 |
Ordinary common stock in treasury, at cost, 18,575 shares and 19,735 shares at December 31, 2012 and 2013, respectively | -866,714 | -806,561 |
Total Stockholders' Equity | 1,156,485 | 1,017,333 |
Total Liabilities, Redeemable Non-Controlling Interest and Stockholders' Equity | 1,759,218 | 1,512,133 |
Ordinary common stock | ' | ' |
Current Liabilities: | ' | ' |
Common stock | 474 | 459 |
Multi-Vote common stock | ' | ' |
Current Liabilities: | ' | ' |
Common stock | ' | ' |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, except Per Share data, unless otherwise specified | ||
Accounts receivable, allowance for doubtful accounts (in dollars) | $5,447 | $4,612 |
Short-term restricted investments (in dollars) | 117,674 | 88,332 |
Other current assets, restricted deposits (in dollars) | $25,009 | $20,846 |
Preferred stock, par value (in dollars per share) | $0.01 | $0.01 |
Preferred stock, Authorized shares | 10,000 | 10,000 |
Preferred stock, Issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Ordinary common stock in treasury, shares | 19,735 | 18,575 |
Ordinary common stock | ' | ' |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, Authorized shares | 100,000 | 100,000 |
Common stock, Issued shares | 47,351 | 45,928 |
Common stock, outstanding shares | 27,616 | 27,353 |
Multi-Vote common stock | ' | ' |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, Authorized shares | 40,000 | 40,000 |
Common stock, Issued shares | 0 | 0 |
Common stock, outstanding shares | 0 | 0 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 12 Months Ended | |||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |||
Net revenue: | ' | ' | ' | |||
Managed care and other | $3,063,049 | $2,857,099 | $2,551,991 | |||
PBM and dispensing revenue | 483,268 | 350,298 | 247,409 | |||
Total net revenue | 3,546,317 | 3,207,397 | 2,799,400 | |||
Costs and expenses: | ' | ' | ' | |||
Cost of care | 2,232,976 | 2,071,890 | 1,784,724 | |||
Cost of goods sold | 455,601 | 328,414 | 232,038 | |||
Direct service costs and other operating expenses | 619,546 | [1] | 557,512 | [1] | 529,634 | [1] |
Depreciation and amortization | 71,994 | 60,488 | 58,623 | |||
Interest expense | 3,000 | 2,247 | 2,502 | |||
Interest and other income | -1,985 | -2,019 | -2,781 | |||
Total costs and expenses | 3,381,132 | 3,018,532 | 2,604,740 | |||
Income before income taxes | 165,185 | 188,865 | 194,660 | |||
Provision for income taxes | 39,924 | 37,838 | 65,037 | |||
Net income | 125,261 | 151,027 | 129,623 | |||
Net income per common share -basic: (in dollars per share) | $4.63 | $5.51 | $4.25 | |||
Net income per common share -diluted: (in dollars per share) | $4.53 | $5.42 | $4.17 | |||
Other comprehensive (loss) income | ' | ' | ' | |||
Unrealized (losses) gains on available-for-sale securities | -58 | [2] | 115 | [2] | -159 | [2] |
Comprehensive income | $125,203 | $151,142 | $129,464 | |||
[1] | Includes stock compensation expense of $17,418, $17,783 and $21,252 for the years ended December 31, 2011, 2012 and 2013, respectively. | |||||
[2] | Net of income tax (benefit) provision of $(102), $73 and $(38) for the years ended December 31, 2011, 2012 and 2013, respectively. |
CONSOLIDATED_STATEMENTS_OF_COM1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ' | ' | ' |
Stock compensation expense | $21,252 | $17,783 | $17,418 |
Net of income tax (benefit) provision | ($38) | $73 | ($102) |
CONSOLIDATED_STATEMENTS_OF_CHA
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $) | Total | Common Stock | Common Stock In Treasury | Additional Paid in Capital | Retained Earnings | Warrants Outstanding | Accumulated Other Comprehensive Income (Loss) |
In Thousands, except Share data, unless otherwise specified | |||||||
Balance at Dec. 31, 2010 | $1,039,015 | $437 | ($381,755) | $725,322 | $694,582 | $420 | $9 |
Balance (in shares) at Dec. 31, 2010 | ' | 43,687,000 | -9,905,000 | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | ' | ' |
Stock compensation expense | 17,256 | ' | ' | 17,256 | ' | ' | ' |
Exercise of stock options | 40,841 | 11 | ' | 40,830 | ' | ' | ' |
Exercise of stock options (in shares) | ' | 1,065,000 | ' | ' | ' | ' | ' |
Tax benefit (cost) from exercise of stock options and vesting of stock awards | -1,213 | ' | ' | -1,213 | ' | ' | ' |
Exercise of stock warrants | 955 | ' | ' | 1,251 | ' | -296 | ' |
Exercise of stock warrants (in shares) | ' | 31,000 | ' | ' | ' | ' | ' |
Issuance of equity | 17,980 | 5 | ' | 17,975 | ' | ' | ' |
Issuance of equity (in shares) | ' | 502,000 | ' | ' | ' | ' | ' |
Repurchase of stock | -401,514 | ' | -401,514 | ' | ' | ' | ' |
Repurchase of stock (in shares) | ' | ' | -8,207,000 | ' | ' | ' | ' |
Adjustment to additional paid in capital due to reversal of tax contingency | 2,490 | ' | ' | 2,490 | ' | ' | ' |
Forfeiture of stock warrants | ' | ' | ' | 124 | ' | -124 | ' |
Net income | 129,623 | ' | ' | ' | 129,623 | ' | ' |
Other comprehensive (loss) income-other | -159 | ' | ' | ' | ' | ' | -159 |
Balance at Dec. 31, 2011 | 845,274 | 453 | -783,269 | 804,035 | 824,205 | ' | -150 |
Balance (in shares) at Dec. 31, 2011 | ' | 45,285,000 | -18,112,000 | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | ' | ' |
Stock compensation expense | 17,945 | ' | ' | 17,945 | ' | ' | ' |
Exercise of stock options | 20,722 | 5 | ' | 20,717 | ' | ' | ' |
Exercise of stock options (in shares) | ' | 531,000 | ' | ' | ' | ' | ' |
Tax benefit (cost) from exercise of stock options and vesting of stock awards | 112 | ' | ' | 112 | ' | ' | ' |
Issuance of equity | -732 | 1 | ' | -733 | ' | ' | ' |
Issuance of equity (in shares) | ' | 112,000 | ' | ' | ' | ' | ' |
Repurchase of stock | -23,292 | ' | -23,292 | ' | ' | ' | ' |
Repurchase of stock (in shares) | ' | ' | -463,000 | ' | ' | ' | ' |
Adjustment to additional paid in capital due to reversal of tax contingency | 6,162 | ' | ' | 6,162 | ' | ' | ' |
Net income | 151,027 | ' | ' | ' | 151,027 | ' | ' |
Other comprehensive (loss) income-other | 115 | ' | ' | ' | ' | ' | 115 |
Balance at Dec. 31, 2012 | 1,017,333 | 459 | -806,561 | 848,238 | 975,232 | ' | -35 |
Balance (in shares) at Dec. 31, 2012 | ' | 45,928,000 | -18,575,000 | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | ' | ' |
Stock compensation expense | 21,252 | ' | ' | 21,252 | ' | ' | ' |
Exercise of stock options | 47,293 | 12 | ' | 47,281 | ' | ' | ' |
Exercise of stock options (in shares) | ' | 1,139,000 | ' | ' | ' | ' | ' |
Tax benefit (cost) from exercise of stock options and vesting of stock awards | 2,297 | ' | ' | 2,297 | ' | ' | ' |
Issuance of equity | -593 | 3 | ' | -596 | ' | ' | ' |
Issuance of equity (in shares) | ' | 284,000 | ' | ' | ' | ' | ' |
Repurchase of stock | -60,153 | ' | -60,153 | ' | ' | ' | ' |
Repurchase of stock (in shares) | ' | ' | -1,160,000 | ' | ' | ' | ' |
Adjustment to additional paid in capital due to reversal of tax contingency | 3,853 | ' | ' | 3,853 | ' | ' | ' |
Net income | 125,261 | ' | ' | ' | 125,261 | ' | ' |
Other comprehensive (loss) income-other | -58 | ' | ' | ' | ' | ' | -58 |
Balance at Dec. 31, 2013 | $1,156,485 | $474 | ($866,714) | $922,325 | $1,100,493 | ' | ($93) |
Balance (in shares) at Dec. 31, 2013 | ' | 47,351,000 | -19,735,000 | ' | ' | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Cash flows from operating activities: | ' | ' | ' |
Net income | $125,261 | $151,027 | $129,623 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' | ' |
Depreciation and amortization | 71,994 | 60,488 | 58,623 |
Non-cash interest expense | 736 | 728 | 1,033 |
Non-cash stock compensation expense | 21,252 | 17,783 | 17,418 |
Non-cash income tax expense (benefits) | -1,212 | 17,306 | 8,285 |
Non-cash amortization on investments | 9,107 | 7,193 | 12,309 |
Cash flows from changes in assets and liabilities, net of effects from acquisitions of businesses: | ' | ' | ' |
Restricted cash | -2,242 | -40,760 | -69,060 |
Accounts receivable, net | -40,804 | -16,411 | -15,609 |
Pharmaceutical inventory | -3,882 | -6,160 | -11,657 |
Other assets | -9,293 | 414 | 3,804 |
Accounts payable and accrued liabilities | 3,593 | -8,321 | -7,251 |
Medical claims payable and other medical liabilities | 17,866 | 31,292 | -7,905 |
Tax contingencies | -22,960 | -35,376 | -9,453 |
Deferred credits and other long-term liabilities | 10,988 | 1,901 | 1,558 |
Other | 2,757 | 189 | 285 |
Net cash provided by operating activities | 183,161 | 181,293 | 112,003 |
Cash flows from investing activities: | ' | ' | ' |
Capital expenditures | -64,542 | -69,549 | -54,394 |
Acquisitions and investments in businesses, net of cash acquired | -107,541 | ' | -376 |
Purchase of investments | -323,253 | -321,541 | -259,552 |
Maturity of investments | 339,428 | 281,748 | 330,583 |
Other | ' | -1,225 | ' |
Net cash provided by (used in) investing activities | -155,908 | -110,567 | 16,261 |
Cash flows from financing activities: | ' | ' | ' |
Payments on long-term debt and capital lease obligations | -3,001 | ' | -559 |
Payments to acquire treasury stock | -60,677 | -21,868 | -407,645 |
Proceeds from issuance of equity | ' | ' | 20,000 |
Proceeds from exercise of stock options and warrants | 47,529 | 20,486 | 41,796 |
Tax benefit from exercise of stock options and vesting of stock awards | 3,212 | 990 | 2,038 |
Other | -593 | -732 | -1,211 |
Net cash used in financing activities | -13,530 | -1,124 | -345,581 |
Net (decrease) increase in cash and cash equivalents | 13,723 | 69,602 | -217,317 |
Cash and cash equivalents at beginning of period | 189,464 | 119,862 | 337,179 |
Cash and cash equivalents at end of period | $203,187 | $189,464 | $119,862 |
General
General | 12 Months Ended |
Dec. 31, 2013 | |
General | ' |
General | ' |
1. General | |
Basis of Presentation | |
The consolidated financial statements of Magellan Health Services, Inc., a Delaware corporation ("Magellan"), include the accounts of Magellan, its majority owned subsidiaries, and all variable interest entities ("VIEs") for which Magellan is the primary beneficiary (together with Magellan, the "Company"). All significant intercompany accounts and transactions have been eliminated in consolidation. | |
Business Overview | |
The Company is engaged in the healthcare management business, and is focused on meeting needs in areas of healthcare that are fast growing, highly complex and high cost, with an emphasis on special population management. The Company provides services to health plans, managed care organizations ("MCOs"), insurance companies, employers, labor unions, various military and governmental agencies, third party administrators, and brokers. The Company's business is divided into the following five segments, based on the services it provides and/or the customers that it serves, as described below. | |
Managed Healthcare | |
Two of the Company's segments are in the managed healthcare business (previously referred to as the managed behavioral healthcare business). This line of business reflects the Company's: (i) management of behavioral healthcare services, and (ii) the integrated management of physical and behavioral healthcare for special populations, delivered through Magellan Complete Care ("MCC"). The Company's coordination and management of behavioral healthcare includes services provided through its comprehensive network of behavioral health professionals, clinics, hospitals and ancillary service providers. This network of credentialed and privileged providers is integrated with clinical and quality improvement programs to enhance the healthcare experience for individuals in need of care, while at the same time managing the cost of these services for our customers. The treatment services provided through the Company's provider network include outpatient programs (such as counseling or therapy), intermediate care programs (such as intensive outpatient programs and partial hospitalization services), inpatient treatment and crisis intervention services. The Company generally does not directly provide or own any provider of treatment services, although it does employ licensed behavioral health counselors to deliver non-medical counseling under certain government contracts. | |
The Company's integrated management of physical and behavioral healthcare includes its full service health plans which provide for the holistic management of special populations. The special populations include individuals with serious mental illness, dual eligibles, those eligible for long term care, intellectually and developmentally disabled individuals, and other populations with unique and often complex healthcare needs. | |
The Company provides its management services primarily through: (i) risk-based products, where the Company assumes all or a substantial portion of the responsibility for the cost of providing treatment services in exchange for a fixed per member per month fee, (ii) administrative services only ("ASO") products, where the Company provides services such as utilization review, claims administration and/or provider network management, but does not assume responsibility for the cost of the treatment services, and (iii) employee assistance programs ("EAPs") where the Company provides short-term outpatient behavioral counseling services. | |
The managed healthcare business is managed based on the services provided and/or the customers served, through the following two segments: | |
Commercial. The Managed Healthcare Commercial segment ("Commercial") generally reflects managed behavioral healthcare services and EAP services provided under contracts with health plans, insurance companies and MCOs for some or all of their commercial, Medicaid and Medicare members, as well as with employers, including corporations, governmental agencies, and labor unions. Commercial's contracts encompass risk-based, ASO and EAP arrangements. | |
Public Sector. The Managed Healthcare Public Sector segment ("Public Sector") generally reflects: (i) the management of behavioral health services provided to recipients under Medicaid and other state sponsored programs under contracts with state and local governmental agencies, and (ii) the integrated management of physical, behavioral and pharmaceutical care for special populations covered under Medicaid and other government sponsored programs. Public Sector contracts encompass either risk-based or ASO arrangements. | |
Specialty Solutions | |
The Specialty Solutions segment ("Specialty Solutions") generally reflects the management of the delivery of diagnostic imaging (radiology benefits management or "RBM") and a variety of other specialty areas such as radiation oncology, obstetrical ultrasound, cardiology and pain management, including spine surgery and musculoskeletal management, to ensure that such services are clinically appropriate and cost effective. The Company's Specialty Solutions services are currently provided under contracts with health plans and insurance companies for some or all of their commercial, Medicaid and Medicare members. The Company also contracts with state and local governmental agencies for the provision of such services to Medicaid recipients. The Company offers its Specialty Solutions services through risk-based contracts, where the Company assumes all or a substantial portion of the responsibility for the cost of providing services, and through ASO contracts, where the Company provides services such as utilization review and claims administration, but does not assume responsibility for the cost of the services. | |
This segment was previously defined as Radiology Benefits Management; however, as it has grown and expanded to include additional products, the Company has renamed the segment Specialty Solutions to encompass all of its additional product offerings. | |
Pharmacy Management | |
The Pharmacy Management segment ("Pharmacy Management") comprises products and solutions that provide clinical and financial management of drugs paid under medical and pharmacy benefit programs. Pharmacy Managements' services include (i) traditional pharmacy benefit management ("PBM") services; (ii) pharmacy benefit administration ("PBA") for state Medicaid and other government sponsored programs; (iii) specialty pharmaceutical dispensing operations, contracting and formulary optimization programs; (iv) medical pharmacy management programs; and (v) programs for the integrated management of drugs that treat complex conditions, regardless of site of service, method of delivery, or benefit reimbursement. In addition, the Company has a subcontract arrangement to provide PBM services on a risk basis for one of Public Sector's customers, which is scheduled to terminate on March 31, 2014. | |
The Company's Pharmacy Management programs are provided under contracts with health plans, employers, Medicaid MCOs, state Medicaid programs, and other government agencies, and encompass risk-based and fee-for-service ("FFS") arrangements. | |
Beginning in the first quarter of 2013, the Company underwent organizational changes. As a result of these changes, the Company concluded that changes to its reportable segments now comprising the new Pharmacy Management segment were warranted. This segment contains the operating segments previously defined as the Specialty Pharmaceutical Management segment and the Medicaid Administration segment. Prior period balances have been reclassified to reflect this change. | |
Corporate | |
This segment of the Company is comprised primarily of operational support functions such as sales and marketing and information technology, as well as corporate support functions such as executive, finance, human resources and legal. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
Summary of Significant Accounting Policies | ' | |||||||||||||
Summary of Significant Accounting Policies | ' | |||||||||||||
2. Summary of Significant Accounting Policies | ||||||||||||||
Recent Accounting Pronouncements | ||||||||||||||
In July 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-06, "Other Expenses (Topic 720): Fees Paid to the Federal Government by Health Insurers (a consensus of the FASB Emerging Issues Task Force)" ("ASU 2011-06"), which addresses how fees mandated by the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the "Health Reform Law"), should be recognized and classified in the income statements of health insurers. The Health Reform Law imposes a mandatory annual fee on health insurers for each calendar year beginning on or after January 1, 2014. ASU 2011-06 stipulates that the liability incurred for that fee be amortized to expense over the calendar year in which it is payable. This ASU is effective for calendar years beginning after December 31, 2013, when the fee initially becomes effective. We believe that our state public sector customers will make rate adjustments to cover the direct costs of these fees and a majority of the impact from non-deductibility of such fees for federal income tax purposes. There may be some impact due to taxes paid for non-renewing customers where the timing and amount of recoupment of these additional costs is uncertain. For 2014, the projected ACA fees are currently estimated to be $25.0 million. There can be no guarantees regarding this adjustment from our state public sector customers and these taxes and fees may have a material impact on the Company. | ||||||||||||||
In February 2013, the FASB issued ASU No. 2013-02, "Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of Accumulated Comprehensive Income" ("ASU 2013-02"). ASU 2013-02 requires companies to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under generally accepted accounting principles ("GAAP") to be reclassified in its entirety to net income. Entities are required to provide information about significant reclassifications by component, and to present those reclassifications either on the face of the statement where net income is presented or in the notes. For other amounts that are not required to be reclassified in their entirety to net income, entities are required to cross-reference other disclosures that provide additional details about those amounts. The amendments in this ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. The amendments in this ASU are effective prospectively for reporting periods beginning after December 15, 2012 and were adopted by the Company during the quarter ended March 31, 2013. The guidance did not impact the Company's consolidated results of operations, financial position, or cash flows. | ||||||||||||||
In July 2013, the FASB issued ASU No. 2013-11, "Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Carryforward Exists" ("ASU 2013-11"). ASU 2013-11 provides guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. An unrecognized tax benefit should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward with certain exceptions, in which case such an unrecognized tax benefit should be presented in the financial statements as a liability. The amendments in this ASU do not require new recurring disclosures. The amendments in this ASU are effective for reporting periods beginning after December 15, 2013. The guidance is not expected to materially impact the Company's consolidated results of operations, financial position, or cash flows. | ||||||||||||||
Use of Estimates | ||||||||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates of the Company include, among other things, accounts receivable realization, valuation allowances for deferred tax assets, valuation of goodwill and intangible assets, medical claims payable, other medical liabilities, stock compensation assumptions, tax contingencies and legal liabilities. Actual results could differ from those estimates. | ||||||||||||||
Managed Care and Other Revenue | ||||||||||||||
Managed Care Revenue. Managed care revenue, inclusive of revenue from the Company's risk, EAP and ASO contracts, is recognized over the applicable coverage period on a per member basis for covered members. The Company is paid a per member fee for all enrolled members, and this fee is recorded as revenue in the month in which members are entitled to service. The Company adjusts its revenue for retroactive membership terminations, additions and other changes, when such adjustments are identified, with the exception of retroactivity that can be reasonably estimated. The impact of retroactive rate amendments is generally recorded in the accounting period that terms to the amendment are finalized, and that the amendment is executed. Any fees paid prior to the month of service are recorded as deferred revenue. Managed care revenues approximated $2.2 billion, $2.5 billion and $2.7 billion for the years ended December 31, 2011, 2012 and 2013, respectively. | ||||||||||||||
Fee-For-Service and Cost-Plus Contracts. The Company has certain fee-for-service contracts, including cost-plus contracts, with customers under which the Company recognizes revenue as services are performed and as costs are incurred. Revenues from these contracts approximated $174.5 million, $151.4 million and $215.1 million for the years ended December 31, 2011, 2012 and 2013, respectively. | ||||||||||||||
Block Grant Revenues. Public Sector has a contract that is partially funded by federal, state and county block grant money, which represents annual appropriations. The Company recognizes revenue from block grant activity ratably over the period to which the block grant funding applies. Block grant revenues were approximately $114.4 million, $124.8 million and $131.5 million for the years ended December 31, 2011, 2012 and 2013, respectively. | ||||||||||||||
Performance-Based Revenue. The Company has the ability to earn performance-based revenue under certain risk and non-risk contracts. Performance-based revenue generally is based on either the ability of the Company to manage care for its clients below specified targets, or on other operating metrics. For each such contract, the Company estimates and records performance-based revenue after considering the relevant contractual terms and the data available for the performance-based revenue calculation. Pro-rata performance-based revenue may be recognized on an interim basis pursuant to the rights and obligations of each party upon termination of the contracts. Performance-based revenues were $26.5 million, $25.4 million and $14.0 million for the years ended December 31, 2011, 2012 and 2013, respectively. | ||||||||||||||
Rebate Revenue. The Company administers a rebate program for certain clients through which the Company coordinates the achievement, calculation and collection of rebates and administrative fees from pharmaceutical manufacturers on behalf of clients. Each period, the Company estimates the total rebates earned based on actual volumes of pharmaceutical purchases by the Company's clients, as well as historical and/or anticipated sharing percentages. The Company earns fees based upon the volume of rebates generated for its clients. The Company does not record as rebate revenue any rebates that are passed through to its clients. Total rebate revenues for the years ended December 31, 2011, 2012 and 2013 were $32.8 million, $40.2 million and $34.8 million, respectively. | ||||||||||||||
In relation to the Company's PBM business, the Company administers rebate programs through which it receives rebates from pharmaceutical manufacturers that are shared with its customers. The Company recognizes rebates when the Company is entitled to them and when the amounts of the rebates are determinable. The amount recorded for rebates earned by the Company from the pharmaceutical manufacturers are recorded as a reduction of cost of goods sold. | ||||||||||||||
PBM and Dispensing Revenue | ||||||||||||||
Pharmacy Benefit Management Revenue. The Company recognizes PBM revenue, which consists of a negotiated prescription price (ingredient cost plus dispensing fee), co-payments collected by the pharmacy and any associated administrative fees, when claims are adjudicated. The Company recognizes PBM revenue on a gross basis (i.e. including drug costs and co-payments) as it is acting as the principal in the arrangement and is contractually obligated to its clients and network pharmacies, which is a primary indicator of gross reporting. In addition, the Company is solely responsible for the claims adjudication process, negotiating the prescription price for the pharmacy, collection of payments from the client for drugs dispensed by the pharmacy, and managing the total prescription drug relationship with the client's members. If the Company enters into a contract where it is only an administrator, and does not assume any of the risks previously noted, revenue will be recognized on a net basis. Prior to the year ended December 31, 2013 the Company had no PBM business. PBM revenues were $106.7 million for the year ended December 31, 2013. | ||||||||||||||
Dispensing Revenue. The Company recognizes dispensing revenue, which includes the co-payments received from members of the health plans the Company serves, when the specialty pharmaceutical drugs are shipped. At the time of shipment, the earnings process is complete; the obligation of the Company's customer to pay for the specialty pharmaceutical drugs is fixed, and, due to the nature of the product, the member may neither return the specialty pharmaceutical drugs nor receive a refund. Revenues from the dispensing of specialty pharmaceutical drugs on behalf of health plans were $247.4 million, $350.3 million and $376.6 million for the years ended December 31, 2011, 2012 and 2013, respectively. | ||||||||||||||
Significant Customers | ||||||||||||||
Consolidated Company | ||||||||||||||
The Company provides behavioral healthcare management and other related services to approximately 660,000 members in Maricopa County, Arizona as the Regional Behavioral Health Authority ("RHBA") for GSA6 ("Maricopa County") pursuant to a contract with the State of Arizona (the "Maricopa Contract"). | ||||||||||||||
The Maricopa Contract generated net revenues that exceeded, in the aggregate, ten percent of net revenues for the consolidated Company for the years ended December 31, 2011, 2012 and 2013. The Maricopa Contract is for the management of the publicly funded behavioral health system that delivers mental health, substance abuse and crisis services for adults, youth, and children. Under the Maricopa Contract, the Company is responsible for providing covered behavioral health services to persons eligible under Title XIX (Medicaid) and Title XXI (State Children's Health Insurance Program) of the Social Security Act, non-Title XIX and non-Title XXI eligible children and adults with a serious mental illness, and to certain non-Title XIX and non-Title XXI adults with behavioral health or substance abuse disorders. The Maricopa Contract began on September 1, 2007 and was scheduled to expire on October 1, 2013. The Company and the State of Arizona have agreed to extend the Maricopa Contract through March 31, 2014. The State of Arizona has the right to terminate the Maricopa Contract for cause, as defined, upon ten days' notice with an opportunity to cure, and, after January 1, 2014, without cause upon 30 days prior notice to the Company. The Maricopa Contract generated net revenues of $779.5 million, $758.3 million and $755.0 million for the years ended December 31, 2011, 2012 and 2013, respectively. | ||||||||||||||
The State of Arizona had previously issued a Solicitation for a new RBHA for Maricopa County (the "New Contract") to replace the current contract with the Company to be effective on October 1, 2013. The New Contract is for the management of the publicly funded behavioral health system currently provided by the Company under the Maricopa Contract, and also includes an integrated behavioral and physical healthcare system for a small number of individuals with serious mental illness. Magellan Complete Care of Arizona ("MCCAZ"), a joint venture owned 80% by the Company and 20% by Vanguard/Phoenix Health Plan, previously submitted a bid for the Contract. | ||||||||||||||
On March 25, 2013, the Company was notified that MCCAZ was not selected as the RBHA for the New Contract. On April 3, 2013, the Company filed a formal protest regarding the State's decision to award the RBHA in Maricopa County to another vendor. On April 17, 2013, the Arizona Department of Health Services denied the Company's protest. On May 9, 2013, the Company filed an appeal of the denial of its protest (the "Appeal") with the Arizona Department of Administration (the "DOA"), the agency responsible for considering appeals of procurement protest denials. The Company also filed with the DOA a motion to stay the award and implementation of the contract pending a decision on the Appeal. On May 21, 2013, the DOA granted the Company's motion and issued a stay of the award and implementation of the contract pending resolution of the Appeal by the DOA (the "Stay"). | ||||||||||||||
On June 13, 2013 the DOA referred the Appeal for a hearing before an independent administrative law judge ("ALJ") in the Arizona Office of Administrative Hearings (the "OAH"). The OAH held an evidentiary hearing on the Appeal on September 18-27, 2013. On November 18, 2013, the ALJ issued a decision and recommended that the DOA rule against Magellan and dismiss the Appeal. On December 3, 2013 the DOA accepted the recommendation of the ALJ and issued a final administrative decision ruling against Magellan, affirming the award of the New Contract to the winning bidder, and dismissing the Appeal. The DOA also lifted the previously issued Stay on implementation of the New Contract. | ||||||||||||||
On December 6, 2013 Magellan filed an appeal of the DOA decision in the Arizona Superior Court in Maricopa County (the "Superior Court") and, on December 10, 2013, filed a motion seeking a judicial stay of the implementation of the contract until after the court's decision on the appeal. On February 18, 2014 the Superior Court issued an order denying the Company's motion for stay. The denial of the motion for stay does not impact the final decision on the merits of Magellan's appeal of the DOA decision, which will continue to proceed in the Superior Court. The Company also previously filed a separate civil lawsuit in the Superior Court challenging the legal authority of the public entity that is one of the key members of the non-profit winning bidder to invest in and participate in the winning bidder's performance under the New Contract. In connection with such civil suit, the Company previously filed a motion seeking a preliminary injunction that, if granted, could prohibit such public entity from participation as a member of the winning bidder in the New Contract. No decision on the motion for preliminary injunction in the separate civil suit has yet been issued by the court. There is no assurance that the Company will prevail on its appeal to the Superior Court or that a motion for preliminary injunction will be granted. | ||||||||||||||
In the event that the Company does not prevail on the appeal, the Company will likely incur shutdown costs pertaining to the contract, including severance, lease termination, and software impairment charges. As of December 31, 2013, the Company has recorded $6.1 million of such shutdown costs. | ||||||||||||||
By Segment | ||||||||||||||
In addition to the Maricopa Contract previously discussed, the following customers generated in excess of ten percent of net revenues for the respective segment for the years ended December 31, 2011, 2012 and 2013 (in thousands): | ||||||||||||||
Segment | Term Date | 2011 | 2012 | 2013 | ||||||||||
Commercial | ||||||||||||||
Customer A | June 30, 2014(1) | $ | 171,109 | $ | 192,415 | $ | 207,080 | |||||||
Customer B | December 31, 2017 | 67,049 | 67,959 | * | 71,085 | * | ||||||||
Customer C | December 31, 2012 to December 14, 2013(2)(3) | 111,607 | 118,351 | 74,203 | * | |||||||||
Customer D | December 31, 2019 | — | 134,885 | 141,444 | ||||||||||
Public Sector | ||||||||||||||
Customer E | June 30, 2014(4) | 191,063 | 240,224 | 321,072 | ||||||||||
Specialty Solutions | ||||||||||||||
Customer F | December 31, 2015 | 134,257 | 117,739 | 130,895 | ||||||||||
Customer G | June 30, 2011 to November 30, 2011(2)(5) | 38,297 | — | — | ||||||||||
Customer H | June 30, 2014 | 55,197 | 60,094 | 55,078 | ||||||||||
Customer I | July 31, 2015 | 36,293 | 57,455 | 61,838 | ||||||||||
Customer J | January 31, 2015 | 32,342 | * | 38,366 | 47,311 | |||||||||
Pharmacy Management | ||||||||||||||
Customer K | November 30, 2014 to December 31, 2014(2) | 90,563 | 129,209 | 133,724 | ||||||||||
Customer L | December 31, 2013(5) | 56,115 | 60,350 | 59,125 | * | |||||||||
Customer B | September 27, 2013 to December 31, 2013(2)(5) | 22,899 | * | 73,785 | 92,647 | |||||||||
Customer M | March 31, 2014(6) | 82,770 | 69,090 | 66,153 | * | |||||||||
* | ||||||||||||||
Revenue amount did not exceed ten percent of net revenues for the respective segment for the year presented. Amount is shown for comparative purposes only. | ||||||||||||||
-1 | ||||||||||||||
The customer has informed the Company that, after a competitive evaluation process, it has decided not to renew its contract after the contract expires on December 31, 2013. The contract was extended through June 30, 2014 to allow for transition to the new vendor. | ||||||||||||||
-2 | ||||||||||||||
The customer has more than one contract. The individual contracts are scheduled to terminate at various points during the time period indicated above. | ||||||||||||||
-3 | ||||||||||||||
Revenues for the year ended December 31, 2012 of $50.0 million relate to a contract that terminated as of December 31, 2012. | ||||||||||||||
-4 | ||||||||||||||
Contract has options for the customer to extend the term for one additional one-year period. | ||||||||||||||
-5 | ||||||||||||||
The contract has terminated. | ||||||||||||||
-6 | ||||||||||||||
This customer represents a subcontract with Public Sector for the Maricopa Contract, and is eliminated in consolidation. | ||||||||||||||
Concentration of Business | ||||||||||||||
The Company also has a significant concentration of business with various counties in the State of Pennsylvania (the "Pennsylvania Counties") which are part of the Pennsylvania Medicaid program, and with various areas in the State of Florida (the "Florida Areas") which are part of the Florida Medicaid program. Net revenues from the Pennsylvania Counties in the aggregate totaled $351.6 million, $354.1 million and $359.0 million for the years ended December 31, 2011, 2012 and 2013, respectively. Net revenues from the Florida Areas in the aggregate totaled $131.8 million, $133.9 million and $128.0 million for the years ended December 31, 2011, 2012 and 2013, respectively. | ||||||||||||||
The Company's contracts with customers typically have terms of one to three years, and in certain cases contain renewal provisions (at the customer's option) for successive terms of between one and two years (unless terminated earlier). Substantially all of these contracts may be immediately terminated with cause and many of the Company's contracts are terminable without cause by the customer or the Company either upon the giving of requisite notice and the passage of a specified period of time (typically between 60 and 180 days) or upon the occurrence of other specified events. In addition, the Company's contracts with federal, state and local governmental agencies generally are conditioned on legislative appropriations. These contracts generally can be terminated or modified by the customer if such appropriations are not made. | ||||||||||||||
Income Taxes | ||||||||||||||
The Company files a consolidated federal income tax return for the Company and its eighty-percent or more owned subsidiaries, and the Company and its subsidiaries file income tax returns in various state and local jurisdictions. | ||||||||||||||
The Company estimates income taxes for each of the jurisdictions in which it operates. This process involves determining both permanent and temporary differences resulting from differing treatment for tax and book purposes. Deferred tax assets and/or liabilities are determined by multiplying the temporary differences between the financial reporting and tax reporting bases for assets and liabilities by the enacted tax rates expected to be in effect when such differences are recovered or settled. The Company establishes valuation allowances against deferred tax assets if it is more likely than not that the deferred tax asset will not be realized. The need for a valuation allowance is determined based on the evaluation of various factors, including expectations of future earnings and management's judgment. The effect of a change in tax rates on deferred taxes is recognized in income in the period that includes the enactment date. | ||||||||||||||
Reversals of both valuation allowances and unrecognized tax benefits are recorded in the period they occur, typically as reductions to income tax expense. However, reversals of unrecognized tax benefits related to deductions for stock compensation in excess of the related book expense are recorded as increases in additional paid-in capital. To the extent reversals of unrecognized tax benefits cannot be specifically traced to these excess deductions due to complexities in the tax law, the Company records the tax benefit for such reversals to additional paid-in-capital on a pro-rata basis. | ||||||||||||||
The Company recognizes interim period income taxes by estimating an annual effective tax rate and applying it to year-to-date results. The estimated annual effective tax rate is periodically updated throughout the year based on actual results to date and an updated projection of full year income. Although the effective tax rate approach is generally used for interim periods, taxes on significant, unusual and infrequent items are recognized at the statutory tax rate entirely in the period the amounts are realized. | ||||||||||||||
Cash and Cash Equivalents | ||||||||||||||
Cash equivalents are short-term, highly liquid interest-bearing investments with maturity dates of three months or less when purchased, consisting primarily of money market instruments. At December 31, 2013, the Company's excess capital and undistributed earnings for the Company's regulated subsidiaries of $40.9 million are included in cash and cash equivalents. | ||||||||||||||
Restricted Assets | ||||||||||||||
The Company has certain assets which are considered restricted for: (i) the payment of claims under the terms of certain managed care contracts; (ii) regulatory purposes related to the payment of claims in certain jurisdictions; and (iii) the maintenance of minimum required tangible net equity levels for certain of the Company's subsidiaries. Significant restricted assets of the Company as of December 31, 2012 and 2013 were as follows (in thousands): | ||||||||||||||
2012 | 2013 | |||||||||||||
Restricted cash | $ | 226,554 | $ | 236,696 | ||||||||||
Restricted short-term investments | 88,332 | 117,674 | ||||||||||||
Restricted deposits (included in other current assets) | 20,846 | 25,009 | ||||||||||||
Restricted long-term investments | 32,563 | 32,430 | ||||||||||||
| | | | | | | | |||||||
Total | $ | 368,295 | $ | 411,809 | ||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
Investments | ||||||||||||||
All of the Company's investments are classified as "available-for-sale" and are carried at fair value. Securities which have been classified as Level 1 are measured using quoted market prices while those which have been classified as Level 2 are measured using quoted prices for identical assets and liabilities in markets that are not active. The Company's policy is to classify all investments with contractual maturities within one year as current. Investment income is recognized when earned and reported net of investment expenses. Net unrealized holding gains or losses are excluded from earnings and are reported, net of tax, as "accumulated other comprehensive income (loss)" in the accompanying consolidated balance sheets and consolidated statements of comprehensive income until realized, unless the losses are deemed to be other-than-temporary. Realized gains or losses, including any provision for other-than-temporary declines in value, are included in the consolidated statements of comprehensive income. | ||||||||||||||
If a debt security is in an unrealized loss position and the Company has the intent to sell the debt security, or it is more likely than not that the Company will have to sell the debt security before recovery of its amortized cost basis, the decline in value is deemed to be other-than-temporary and is recorded to other-than-temporary impairment losses recognized in income in the consolidated statements of comprehensive income. For impaired debt securities that the Company does not intend to sell or it is more likely than not that the Company will not have to sell such securities, but the Company expects that it will not fully recover the amortized cost basis, the credit component of the other-than-temporary impairment is recognized in other-than-temporary impairment losses recognized in income in the consolidated statements of comprehensive income and the non-credit component of the other-than-temporary impairment is recognized in other comprehensive income. | ||||||||||||||
The credit component of an other-than-temporary impairment is determined by comparing the net present value of projected future cash flows with the amortized cost basis of the debt security. The net present value is calculated by discounting the best estimate of projected future cash flows at the effective interest rate implicit in the debt security at the date of acquisition. Cash flow estimates are driven by assumptions regarding probability of default, including changes in credit ratings, and estimates regarding timing and amount of recoveries associated with a default. Furthermore, unrealized losses entirely caused by non-credit related factors related to debt securities for which the Company expects to fully recover the amortized cost basis continue to be recognized in accumulated other comprehensive income. | ||||||||||||||
As of December 31, 2012 and 2013, there were no unrealized losses that the Company believed to be other-than-temporary. No realized gains or losses were recorded for the years ended December 31, 2011, 2012 or 2013. The following is a summary of short-term and long-term investments at December 31, 2012 and 2013 (in thousands): | ||||||||||||||
December 31, 2012 | ||||||||||||||
Amortized | Gross | Gross | Estimated | |||||||||||
Cost | Unrealized | Unrealized | Fair | |||||||||||
Gains | Losses | Value | ||||||||||||
U.S. Government and agency securities | $ | 1,065 | $ | — | $ | — | $ | 1,065 | ||||||
Obligations of government-sponsored enterprises(1) | 6,126 | 4 | (2 | ) | 6,128 | |||||||||
Corporate debt securities | 214,603 | 66 | (122 | ) | 214,547 | |||||||||
Certificates of deposit | 150 | — | — | 150 | ||||||||||
Taxable municipal bonds | 11,805 | — | (5 | ) | 11,800 | |||||||||
| | | | | | | | | | | | | | |
Total investments at December 31, 2012 | $ | 233,749 | $ | 70 | $ | (129 | ) | $ | 233,690 | |||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
December 31, 2013 | ||||||||||||||
Amortized | Gross | Gross | Estimated | |||||||||||
Cost | Unrealized | Unrealized | Fair | |||||||||||
Gains | Losses | Value | ||||||||||||
U.S. Government and agency securities | $ | 1,129 | $ | — | $ | — | $ | 1,129 | ||||||
Obligations of government-sponsored enterprises(1) | 8,441 | 2 | (3 | ) | 8,440 | |||||||||
Corporate debt securities | 198,748 | 18 | (172 | ) | 198,594 | |||||||||
Certificates of deposit | 150 | — | — | 150 | ||||||||||
| | | | | | | | | | | | | | |
Total investments at December 31, 2013 | $ | 208,468 | $ | 20 | $ | (175 | ) | $ | 208,313 | |||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
-1 | ||||||||||||||
Includes investments in notes issued by the Federal Home Loan Bank. | ||||||||||||||
The maturity dates of the Company's investments as of December 31, 2013 are summarized below (in thousands): | ||||||||||||||
Amortized | Estimated | |||||||||||||
Cost | Fair Value | |||||||||||||
2014 | $ | 175,997 | $ | 175,883 | ||||||||||
2015 | 31,518 | 31,479 | ||||||||||||
2016 | 953 | 951 | ||||||||||||
| | | | | | | | |||||||
Total investments at December 31, 2013 | $ | 208,468 | $ | 208,313 | ||||||||||
| | | | | | | | |||||||
Accounts Receivable | ||||||||||||||
The Company's accounts receivable consists of amounts due from customers throughout the United States. Collateral is generally not required. The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. Management believes the allowance for doubtful accounts is adequate to provide for normal credit losses. | ||||||||||||||
Concentration of Credit Risk | ||||||||||||||
Accounts receivable subjects the Company to a concentration of credit risk with third party payors that include health insurance companies, managed healthcare organizations, healthcare providers and governmental entities. | ||||||||||||||
The Company maintains cash and cash equivalents balances at financial institutions and are insured by the Federal Deposit Insurance Corporation ("FDIC"). At times, balances in certain bank accounts may exceed the FDIC insured limits. | ||||||||||||||
Pharmaceutical Inventory | ||||||||||||||
Pharmaceutical inventory consists solely of finished goods (primarily prescription drugs) and are stated at the lower of first-in first-out cost or market. | ||||||||||||||
Long-lived Assets | ||||||||||||||
Long-lived assets, including property and equipment and intangible assets to be held and used, are currently reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount should be addressed. Impairment is determined by comparing the carrying value of these long-lived assets to management's best estimate of the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. The cash flow projections used to make this assessment are consistent with the cash flow projections that management uses internally in making key decisions. In the event an impairment exists, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the asset, which is generally determined by using quoted market prices or the discounted present value of expected future cash flows. | ||||||||||||||
Property and Equipment | ||||||||||||||
Property and equipment is stated at cost, except for assets that have been impaired, for which the carrying amount has been reduced to estimated fair value. Expenditures for renewals and improvements are capitalized to the property accounts. Replacements and maintenance and repairs that do not improve or extend the life of the respective assets are expensed as incurred. The Company capitalizes costs incurred to develop internal-use software during the application development stage. Capitalization of software development costs occurs after the preliminary project stage is complete, management authorizes the project, and it is probable that the project will be completed and the software will be used for the function intended. Amortization of capital lease assets is included in depreciation expense and is included in accumulated depreciation as reflected in the table below. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets, which is generally two to ten years for building improvements (or the lease term, if shorter), three to fifteen years for equipment and three to five years for capitalized internal-use software. The net capitalized internal use software as of December 31, 2012 and 2013 was $71.1 million and $78.8 million, respectively. Depreciation expense was $47.9 million, $50.8 million and $61.4 million for the years ended December 31, 2011, 2012 and 2013, respectively. Included in depreciation expense for the years ended December 31, 2011, 2012 and 2013 was $28.9 million, $28.8 million and $34.8 million, respectively, related to capitalized internal use software. | ||||||||||||||
Property and equipment, net, consisted of the following at December 31, 2012 and 2013 (in thousands): | ||||||||||||||
2012 | 2013 | |||||||||||||
Building improvements | $ | 7,285 | $ | 12,074 | ||||||||||
Equipment | 168,400 | 180,540 | ||||||||||||
Capital leases—property | — | 26,945 | ||||||||||||
Capital leases—equipment | — | 2,794 | ||||||||||||
Capitalized internal-use software | 261,833 | 304,146 | ||||||||||||
| | | | | | | | |||||||
437,518 | 526,499 | |||||||||||||
Accumulated depreciation | (300,970 | ) | (354,166 | ) | ||||||||||
| | | | | | | | |||||||
Property and equipment, net | $ | 136,548 | $ | 172,333 | ||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
Goodwill | ||||||||||||||
The Company is required to test its goodwill for impairment on at least an annual basis. The Company has selected October 1 as the date of its annual impairment test. The goodwill impairment test is a two-step process that requires management to make judgments in determining what assumptions to use in the calculation. The first step of the process consists of estimating the fair value of each reporting unit with goodwill based on various valuation techniques, with the primary technique being a discounted cash flow analysis, which requires the input of various assumptions with respect to revenues, operating margins, growth rates and discount rates. The estimated fair value for each reporting unit is compared to the carrying value of the reporting unit, which includes goodwill. If the estimated fair value is less than the carrying value, a second step is performed to compute the amount of the impairment by determining an "implied fair value" of goodwill. The determination of a reporting unit's "implied fair value" of goodwill requires the Company to allocate the estimated fair value of the reporting unit to the assets and liabilities of the reporting unit. Any unallocated fair value represents the "implied fair value" of goodwill, which is compared to its corresponding carrying value. | ||||||||||||||
Goodwill is tested for impairment at a level referred to as a reporting unit, with the Company's reporting units as of December 31, 2013 comprised of Health Plan, Specialty Solutions, Pharmacy Management, and Public Sector. Prior to October 1, 2013, the Company's reporting units included Specialty Pharmaceutical Management and Medicaid Administration. Effective October 1, 2013, the goodwill associated with these reporting units was aggregated with the goodwill recognized from the acquisition of Partners Rx Management, LLC ("Partners Rx"), and represent the Pharmacy Management reporting unit. The change in reporting units was attributable to the fact that discrete financial information is now being reviewed at the Pharmacy Management operating segment level. The Company's marketing and pricing of pharmacy products is on an integrated basis and integration of pharmacy related operations contributed to the reporting unit change. | ||||||||||||||
The fair value of the Health Plan (a component of the Commercial segment) and Specialty Solutions reporting units were determined using a discounted cash flow method. This method involves estimating the present value of estimated future cash flows utilizing a risk adjusted discount rate. Key assumptions for this method include cash flow projections, terminal growth rates and discount rates. | ||||||||||||||
The fair value of the Pharmacy Management reporting unit was determined using discounted cash flow, guideline company and similar transaction methods. Key assumptions for the discounted cash flow method are consistent with those described above. For the guideline company method, revenue and earnings before interest, taxes, depreciation, and amortization ("EBITDA") multiples for guideline companies were applied to the reporting unit's pro forma revenue and EDITDA for 2013, which represents actual results for the nine-month period ended September 30, 2013 and projected results for the three-month period ended December 31, 2013, and to the reporting unit's projected revenue and EBITDA for 2014. For the similar transaction method, revenue and EBITDA multiples based on merger and acquisition transactions for similar companies were applied to the reporting unit's pro forma revenue and EBITDA for 2013, which represents actual results for the nine-month period ended September 30, 2013 and projected results for the three-month period ended December 31, 2013. The weighting applied to the fair values determined using the discounted cash flow, guideline company and similar transaction methods to determine an overall fair value for the Pharmacy Management reporting unit was 75 percent, 22.5 percent and 2.5 percent, respectively. The weighting of each of the methods described above was based on the relevance of the approach. A change in the weighting would not change the outcome of the first step of the impairment test. | ||||||||||||||
As a result of the first step of the 2013 annual goodwill impairment analysis, the fair value of each reporting unit with goodwill exceeded its carrying value. Therefore, the second step was not necessary. However, a 47.9 percent, 32.9 percent, and 25.5 percent decline in the fair values of the Health Plan, Specialty Solutions, and Pharmacy Management reporting units, respectively, would have caused the carrying values for these reporting units to be in excess of fair values, which would require the second step to be performed. The second step could have resulted in an impairment loss for goodwill. | ||||||||||||||
The Company's goodwill attributed to the Public Sector reporting unit is related to the AlphaCare Holdings, Inc. ("AlphaCare Holdings") acquisition which closed on December 31, 2013, therefore an impairment analysis was not performed for this reporting unit in 2013. | ||||||||||||||
Goodwill for each of the Company's reporting units at December 31, 2012 and 2013 were as follows (in thousands): | ||||||||||||||
2012 | 2013 | |||||||||||||
Health Plan | $ | 120,485 | $ | 120,485 | ||||||||||
Specialty Solutions | 104,549 | 104,549 | ||||||||||||
Pharmacy Management | 201,905 | 242,290 | ||||||||||||
Public Sector | — | 20,882 | ||||||||||||
| | | | | | | | |||||||
Total | $ | 426,939 | $ | 488,206 | ||||||||||
| | | | | | | | |||||||
The changes in the carrying amount of goodwill for the years ended December 31, 2012 and 2013 are reflected in the table below (in thousands): | ||||||||||||||
2012 | 2013 | |||||||||||||
Balance as of beginning of period | $ | 426,939 | $ | 426,939 | ||||||||||
Acquisition of Partners Rx | — | 40,385 | ||||||||||||
Acquisition of AlphaCare Holdings | — | 20,882 | ||||||||||||
| | | | | | | | |||||||
Balance as of end of period | $ | 426,939 | $ | 488,206 | ||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
Intangible Assets | ||||||||||||||
The following is a summary of intangible assets at December 31, 2012 and 2013, and the estimated useful lives for such assets (in thousands): | ||||||||||||||
December 31, 2012 | ||||||||||||||
Asset | Estimated | Gross | Accumulated | Net | ||||||||||
Useful Life | Carrying | Amortization | Carrying | |||||||||||
Amount | Amount | |||||||||||||
Customer agreements and lists | 3 to 18 years | $ | 121,490 | $ | (90,548 | ) | $ | 30,942 | ||||||
Provider networks and other | 5 to 16 years | 8,743 | (4,750 | ) | 3,993 | |||||||||
| | | | | | | | | | | | | ||
$ | 130,233 | $ | (95,298 | ) | $ | 34,935 | ||||||||
| | | | | | | | | | | | | ||
| | | | | | | | | | | | | ||
December 31, 2013 | ||||||||||||||
Asset | Estimated | Gross | Accumulated | Net | ||||||||||
Useful Life | Carrying | Amortization | Carrying | |||||||||||
Amount | Amount | |||||||||||||
Customer agreements and lists | 2.5 to 18 years | $ | 163,990 | $ | (100,482 | ) | $ | 63,508 | ||||||
Provider networks and other | 1 to 16 years | 11,593 | (5,407 | ) | 6,186 | |||||||||
| | | | | | | | | | | | | ||
$ | 175,583 | $ | (105,889 | ) | $ | 69,694 | ||||||||
| | | | | | | | | | | | | ||
| | | | | | | | | | | | | ||
Amortization expense was $10.7 million, $9.7 million and $10.6 million for the years ended December 31, 2011, 2012 and 2013, respectively. The Company estimates amortization expense will be $15.4 million, $14.0 million, $9.9 million, $6.1 million and $4.6 million for the years ending December 31, 2014, 2015, 2015, 2017, and 2018 respectively. | ||||||||||||||
Cost of Care, Medical Claims Payable and Other Medical Liabilities | ||||||||||||||
Cost of care is recognized in the period in which members receive managed healthcare services. In addition to actual benefits paid, cost of care in a period also includes the impact of accruals for estimates of medical claims payable. Medical claims payable represents the liability for healthcare claims reported but not yet paid and claims incurred but not yet reported ("IBNR") related to the Company's managed healthcare businesses. Such liabilities are determined by employing actuarial methods that are commonly used by health insurance actuaries and that meet actuarial standards of practice. | ||||||||||||||
The IBNR portion of medical claims payable is estimated based on past claims payment experience for member groups, enrollment data, utilization statistics, authorized healthcare services and other factors. This data is incorporated into contract-specific actuarial reserve models and is further analyzed to create "completion factors" that represent the average percentage of total incurred claims that have been paid through a given date after being incurred. Factors that affect estimated completion factors include benefit changes, enrollment changes, shifts in product mix, seasonality influences, provider reimbursement changes, changes in claims inventory levels, the speed of claims processing and changes in paid claim levels. Completion factors are applied to claims paid through the financial statement date to estimate the ultimate claim expense incurred for the current period. Actuarial estimates of claim liabilities are then determined by subtracting the actual paid claims from the estimate of the ultimate incurred claims. For the most recent incurred months (generally the most recent two months), the percentage of claims paid for claims incurred in those months is generally low. This makes the completion factor methodology less reliable for such months. Therefore, incurred claims for any month with a completion factor that is less than 70 percent are generally not projected from historical completion and payment patterns; rather they are projected by estimating claims expense based on recent monthly estimated cost incurred per member per month times membership, taking into account seasonality influences, benefit changes and healthcare trend levels, collectively considered to be "trend factors." | ||||||||||||||
Medical claims payable balances are continually monitored and reviewed. If it is determined that the Company's assumptions in estimating such liabilities are significantly different than actual results, the Company's results of operations and financial position could be impacted in future periods. Adjustments of prior period estimates may result in additional cost of care or a reduction of cost of care in the period an adjustment is made. Further, due to the considerable variability of healthcare costs, adjustments to claim liabilities occur each period and are sometimes significant as compared to the net income recorded in that period. Prior period development is recognized immediately upon the actuary's judgment that a portion of the prior period liability is no longer needed or that additional liability should have been accrued. The following table presents the components of the change in medical claims payable for the years ended December 31, 2011, 2012 and 2013 (in thousands): | ||||||||||||||
2011 | 2012 | 2013(3) | ||||||||||||
Claims payable and IBNR, beginning of period | $ | 166,095 | $ | 157,099 | $ | 222,929 | ||||||||
Cost of care: | ||||||||||||||
Current year | 1,790,124 | 2,076,190 | 2,264,276 | |||||||||||
Prior years | (5,400 | ) | (4,300 | ) | (31,300 | ) | ||||||||
| | | | | | | | | | | ||||
Total cost of care | 1,784,724 | 2,071,890 | 2,232,976 | |||||||||||
| | | | | | | | | | | ||||
Claim payments and transfers to other medical liabilities(1): | ||||||||||||||
Current year | 1,657,291 | 1,877,459 | 2,053,274 | |||||||||||
Prior years | 136,429 | 128,601 | 160,402 | |||||||||||
| | | | | | | | | | | ||||
Total claim payments and transfers to other medical liabilities | 1,793,720 | 2,006,060 | 2,213,676 | |||||||||||
| | | | | | | | | | | ||||
Claims payable and IBNR, end of period | 157,099 | 222,929 | 242,229 | |||||||||||
Withhold receivables, end of period(2) | (19,126 | ) | (24,500 | ) | (13,888 | ) | ||||||||
| | | | | | | | | | | ||||
Medical claims payable, end of period | $ | 137,973 | $ | 198,429 | $ | 228,341 | ||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
-1 | ||||||||||||||
For any given period, a portion of unpaid medical claims payable could be covered by reinvestment liability (discussed below) and may not impact the Company's results of operations for such periods. | ||||||||||||||
-2 | ||||||||||||||
Medical claims payable is offset by customer withholds from capitation payments in situations in which the customer has the contractual requirement to pay providers for care incurred. | ||||||||||||||
-3 | ||||||||||||||
The favorable development of prior years cost of care includes approximately $15.1 million of adjustments of block funding to providers resulting from an annual reconciliation process. | ||||||||||||||
Actuarial standards of practice require that the claim liabilities be adequate under moderately adverse circumstances. Adverse circumstances are situations in which the actual claims experience could be higher than the otherwise estimated value of such claims. In many situations, the claims paid amount experienced will be less than the estimate that satisfies the actuarial standards of practice. | ||||||||||||||
Due to the existence of risk sharing and reinvestment provisions in certain customer contracts, principally in the Public Sector segment, a change in the estimate for medical claims payable does not necessarily result in an equivalent impact on cost of care. | ||||||||||||||
The Company believes that the amount of medical claims payable is adequate to cover its ultimate liability for unpaid claims as of December 31, 2013; however, actual claims payments may differ from established estimates. | ||||||||||||||
Other medical liabilities consist primarily of "reinvestment" payables under certain managed healthcare contracts with Medicaid customers and "profit share" payables under certain risk-based contracts. Under a contract with reinvestment features, if the cost of care is less than certain minimum amounts specified in the contract (usually as a percentage of revenue), the Company is required to "reinvest" such difference in behavioral healthcare programs when and as specified by the customer or to pay the difference to the customer for their use in funding such programs. Under a contract with profit share provisions, if the cost of care is below certain specified levels, the Company will "share" the cost savings with the customer at the percentages set forth in the contract. | ||||||||||||||
Accrued Liabilities | ||||||||||||||
As of December 31, 2012 and 2013, the only individual current liability that exceeded five percent of total current liabilities related to accrued employee compensation liabilities of $36.5 million and $40.2 million, respectively. | ||||||||||||||
Net Income per Common Share | ||||||||||||||
Net income per common share is computed based on the weighted average number of shares of common stock and common stock equivalents outstanding during the period (see Note 6—"Stockholders' Equity"). | ||||||||||||||
Redeemable Non-Controlling Interest | ||||||||||||||
Noncontrolling interests with redemption features, such as put options, that are not solely within the Company's control are considered redeemable noncontrolling interest. Redeemable noncontrolling interest is considered to be temporary equity and is therefore reported in the mezzanine section between liabilities and equity on the Company's consolidated balance sheets at the greater of the initial carrying amount adjusted for the noncontrolling interest's share of net income or loss or its redemption value. | ||||||||||||||
Stock Compensation | ||||||||||||||
The Company uses the Black-Scholes-Merton formula to estimate the fair value of substantially all stock options granted to employees, and recorded stock compensation expense of $17.4 million, $17.8 million and $21.3 million for the years ended December 31, 2011, 2012 and 2013, respectively. As stock compensation expense recognized in the consolidated statements of comprehensive income for the years ended December 31, 2011, 2012 and 2013 is based on awards ultimately expected to vest, it has been reduced for annual estimated forfeitures of four percent. If the actual number of forfeitures differs from those estimated, additional adjustments to compensation expense may be required in future periods. If vesting of an award is conditioned upon the achievement of performance goals, compensation expense during the performance period is estimated using the most probable outcome of the performance goals, and adjusted as the expected outcome changes. The Company recognizes compensation costs for awards that do not contain performance conditions on a straight-line basis over the requisite service period, which is generally the vesting term of three years. For restricted stock units that include performance conditions, stock compensation is recognized using an accelerated method over the vesting period. | ||||||||||||||
Fair Value Measurements | ||||||||||||||
The Company currently does not have non-financial assets and non-financial liabilities that are required to be measured at fair value on a recurring basis. Financial assets and liabilities are to be measured using inputs from the three levels of the fair value hierarchy, which are as follows: | ||||||||||||||
Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. | ||||||||||||||
Level 2—Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). | ||||||||||||||
Level 3—Unobservable inputs that reflect the Company's assumptions about the assumptions that market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available, including the Company's data. | ||||||||||||||
In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company's financial assets and liabilities that are required to be measured at fair value as of December 31, 2012 and 2013 (in thousands): | ||||||||||||||
Fair Value Measurements | ||||||||||||||
at December 31, 2012 | ||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||
Cash and Cash Equivalents(1) | $ | — | $ | 102,137 | $ | — | $ | 102,137 | ||||||
Restricted Cash(2) | — | 82,839 | — | 82,839 | ||||||||||
Investments: | ||||||||||||||
U.S. Government and agency securities | 1,065 | — | — | 1,065 | ||||||||||
Obligations of government-sponsored enterprises(3) | — | 6,128 | — | 6,128 | ||||||||||
Corporate debt securities | — | 214,547 | — | 214,547 | ||||||||||
Taxable municipal bonds | — | 11,800 | — | 11,800 | ||||||||||
Certificates of deposit | — | 150 | — | 150 | ||||||||||
| | | | | | | | | | | | | | |
December 31, 2012 | $ | 1,065 | $ | 417,601 | $ | — | $ | 418,666 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Fair Value Measurements | ||||||||||||||
at December 31, 2013 | ||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||
Cash and Cash Equivalents(4) | $ | — | $ | 101,028 | $ | — | $ | 101,028 | ||||||
Restricted Cash(5) | — | 128,318 | — | 128,318 | ||||||||||
Investments: | ||||||||||||||
U.S. Government and agency securities | 1,129 | — | — | 1,129 | ||||||||||
Obligations of government-sponsored enterprises(3) | — | 8,440 | — | 8,440 | ||||||||||
Corporate debt securities | — | 198,594 | — | 198,594 | ||||||||||
Certificates of deposit | — | 150 | — | 150 | ||||||||||
| | | | | | | | | | | | | | |
December 31, 2013 | $ | 1,129 | $ | 436,530 | $ | — | $ | 437,659 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
-1 | ||||||||||||||
Excludes $87.3 million of cash held in bank accounts by the Company. | ||||||||||||||
-2 | ||||||||||||||
Excludes $143.7 million of restricted cash held in bank accounts by the Company. | ||||||||||||||
-3 | ||||||||||||||
Includes investments in notes issued by the Federal Home Loan Bank. | ||||||||||||||
-4 | ||||||||||||||
Excludes $102.2 million of cash held in bank accounts by the Company. | ||||||||||||||
-5 | ||||||||||||||
Excludes $108.4 million of restricted cash held in bank accounts by the Company. | ||||||||||||||
Reclassifications | ||||||||||||||
Certain prior year amounts have been reclassified to conform with the current year presentation. | ||||||||||||||
Acquisitions_and_Joint_Venture
Acquisitions and Joint Ventures | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Acquisitions and Joint Ventures | ' | ||||
Acquisitions and Joint Ventures | ' | ||||
3. Acquisitions and Joint Ventures | |||||
Magellan Complete Care of Arizona, Inc. ("MCCAZ"), a joint venture owned 80 percent by the Company and 20 percent by VHS Phoenix Health Plan, LLC (a subsidiary of Vanguard Health Systems, Inc.), was formed to manage integrated behavioral and physical healthcare for recipients with SMI and behavioral healthcare for other Medicaid beneficiaries in Maricopa County. MCCAZ previously responded to a Request for Proposal ("RFP") released by the Arizona Department of Health Services ("ADHS"). See further discussion related to the status of this RFP in Note 2—"Summary of Significant Accounting Policies". During the year ended December 31, 2012, the Company invested $1.5 million in MCCAZ, which is included within restricted cash on the accompanying consolidated balance sheets. The Company has consolidated the balance sheet and results of operations of MCCAZ in its consolidated financial statements as of December 31, 2012 and December 31, 2013. | |||||
Acquisition of Partners Rx Management LLC | |||||
Pursuant to the September 6, 2013 Agreement and Plan of Merger (the "Merger Agreement") with Partners Rx, on October 1, 2013 the Company acquired all of the outstanding ownership interests of Partners Rx. Partners Rx is a full-service commercial PBM with a strong focus on health plans and self-funded employers primarily through sales through third party administrators, consultants and brokers. As consideration for the transaction, the Company paid $100 million in cash, subject to working capital adjustments. At closing, cash consideration paid was reduced by a preliminary working capital adjustment of $1.5 million. The Company funded the acquisition with cash on hand. | |||||
Pursuant to the Merger Agreement, certain principal owners of Partners Rx purchased a total of $10 million in the Company's restricted stock at a price equal to the average of the closing prices of the Company's stock for the five trading day period ended on the day prior to the execution of the Merger Agreement. The shares received by such principal owners of Partners Rx are subject to vesting over three years with 50% vesting on the second anniversary of the acquisition and 50% vesting on the third anniversary of the acquisition, conditioned on continued employment with the Company on the applicable vesting dates. | |||||
The Company reports the results of operations of Partners Rx within its Pharmacy Management segment. | |||||
The purchase price has been allocated based upon the estimated fair value of net assets acquired at the date of acquisition. A portion of the excess purchase price over tangible net assets acquired has been allocated to identified intangible assets totaling $40.8 million, consisting of customer contracts in the amount of $38.7 million, which is being amortized over 2.5 to 10 years, tradenames in the amount of $0.4 million, which is being amortized over 15 months, and non-compete agreements in the amount of $1.7 million, which is being amortized over 5 years. The entire purchase price is amortizable for tax purposes, although the Company's effective tax rate will not be impacted by the tax amortization of the goodwill recorded with the Partners Rx transaction. | |||||
The estimated fair values of Partners Rx assets acquired and liabilities assumed at the date of the acquisition are summarized as follows (in thousands): | |||||
Assets acquired: | |||||
Current assets (includes $58,038 of accounts receivable) | $ | 58,164 | |||
Property and equipment, net | 4,327 | ||||
Deferred tax assets | 254 | ||||
Other identified intangible assets | 40,760 | ||||
Goodwill | 40,385 | ||||
| | | | | |
Total assets acquired | 143,890 | ||||
| | | | | |
Liabilities assumed: | |||||
Current liabilities | 56,125 | ||||
| | | | | |
Total liabilities assumed | 56,125 | ||||
| | | | | |
Net assets acquired | $ | 87,765 | |||
| | | | | |
| | | | | |
As of December 31, 2013, the Company established a working capital receivable of $0.7 million that was reflected as a reduction to goodwill. | |||||
As of December 31, 2013, settlement of the working capital and certain contractual liabilities remain open and therefore are subject to further estimation. In addition, the amount recognized for deferred tax assets may be impacted by the determination of these items. The Company will make appropriate adjustments to the purchase price allocation prior to the completion of the measurement period as required. | |||||
In connection with the Partners Rx acquisition, the Company incurred $0.8 million of acquisition related costs that were expensed during the year ended December 31, 2013. These costs are included within direct service costs and other operating expenses in the accompanying consolidated statements of comprehensive income. | |||||
Pro Forma disclosures related to the Partners Rx acquisition have been excluded as immaterial. | |||||
Acquisition of AlphaCare Holdings, Inc. | |||||
Pursuant to the August 13, 2013 stock purchase agreement (the "Stock Purchase Agreement"), on December 31, 2013 (the "Closing Date") the Company acquired a 65% equity interest in AlphaCare Holdings, the holding company for AlphaCare New York, Inc. ("AlphaCare"), a Health Maintenance Organization ("HMO") in New York that operates a New York Managed Long-Term Care Plan ("MLTCP") in Bronx, New York, Queens, Kings and Westchester Counties, and Medicare Plans in Bronx, New York, Queens and Kings Counties. | |||||
The Company previously held a 7% equity interest in AlphaCare through a previous equity investment of $2.0 million in preferred membership units of AlphaCare's previous holding company, AlphaCare Holdings, LLC on May 17, 2013. The Company also previously loaned $5.9 million to AlphaCare Holdings, LLC. As part of the Stock Purchase Agreement, AlphaCare Holdings, LLC was reorganized into a Delaware corporation, the preferred membership units and the loan were converted into Series A Participating Preferred Stock ("Series A Preferred") of AlphaCare Holdings and the Company purchased an additional $17.4 million of Series A Preferred. The Company holds a 65% voting interest and the remaining shareholders hold a 35% voting interest in AlphaCare Holdings. | |||||
Based on the Company's 65% equity and voting interest in AlphaCare Holdings, the Company has included the results of operations in its consolidated financial statements. The Company reports the results of operations of AlphaCare Holdings within the Public Sector segment. | |||||
During the year ended December 31, 2013, the Company accounted for its 7% interest in AlphaCare using the equity method and reported its results within the Public Sector segment. The incremental 58% interest was accounted for as a business combination achieved in stages. The acquisition was accounted for using the acquisition method of accounting. | |||||
On the Closing Date, the Company remeasured its preexisting investment in AlphaCare and recognized a gain from such remeasurement. The fair value of the Company's interest immediately before the Closing Date was $2.2 million, which resulted in the Company recognizing a non-cash gain of approximately $0.7 million which is included within interest and other income on the consolidated statements of comprehensive income for the year ended December 31, 2013. The Company used the guideline transaction method of the market approach to measure both the fair value of the Company's preexisting investment and the fair value of the noncontrolling interest. | |||||
The other shareholders of AlphaCare Holdings have the right to exercise put options, requiring the Company to purchase 50 percent of the remaining shares prior to January 1, 2017 provided certain membership levels are attained. After December 31, 2016 the other shareholders of AlphaCare Holdings have the right to exercise put options requiring the Company to purchase all or any portion of the remaining shares. In addition, after December 31, 2016 the Company has the right to purchase all remaining shares. Noncontrolling interests with redemption features, such as put options, that are not solely within the Company's control are considered redeemable noncontrolling interest. Redeemable non-controlling interest is considered to be temporary and is therefore reported in a mezzanine level between liabilities and stockholders' equity on the Company's consolidated balance sheet at the greater of the initial carrying amount adjusted for the non-controlling interest's share of net income or loss or its redemption value. The Company recorded $10.6 million of redeemable non-controlling interest in relation to the acquisition. As of December 31, 2013 the carrying value of the noncontrolling interest exceeded the redemption value and therefore no adjustment to the carrying value was required. | |||||
The purchase price has been allocated based upon the estimated fair value of net assets acquired at the date of acquisition. A portion of the excess purchase price over tangible net assets acquired has been allocated to identified intangible assets totaling $4.6 million, consisting of customer contracts in the amount of $3.8 million, which is being amortized over 10 years, and provider networks in the amount of $0.8 million, which is being amortized over 10 years. The Company's effective tax rate will not be impacted by the non-deductible amortization of these identified intangibles. None of the goodwill is deductible for tax purposes. | |||||
The estimated fair values of AlphaCare Holdings assets acquired and liabilities assumed at the date of the acquisition are summarized as follows (in thousands): | |||||
Assets acquired: | |||||
Current assets (includes $6,249 of cash and $7,900 of restricted cash) | $ | 15,053 | |||
Property and equipment, net | 310 | ||||
Other assets | 188 | ||||
Other identified intangible assets | 4,590 | ||||
Goodwill | 20,882 | ||||
| | | | | |
Total assets acquired | 41,023 | ||||
| | | | | |
Liabilities assumed: | |||||
Current liabilities | 3,323 | ||||
Deferred tax liabilities | 1,830 | ||||
| | | | | |
Total liabilities assumed | 5,153 | ||||
| | | | | |
Net assets acquired | 35,870 | ||||
Less: net assets attributable to noncontrolling interest | (10,554 | ) | |||
| | | | | |
Net consideration | $ | 25,316 | |||
| | | | | |
| | | | | |
As of December 31, 2013, finalization of the estimated intangibles remain open and therefore are subject to further estimation. The Company will make appropriate adjustments to the purchase price allocation prior to the completion of the measurement period as required. | |||||
In connection with the AlphaCare Holdings acquisition, the Company incurred $0.3 million of acquisition related costs that were expensed during the year ended December 31, 2013. These costs are included within direct service costs and other operating expenses in the accompanying consolidated statements of comprehensive income. | |||||
Pro Forma disclosures related to the AlphaCare Holdings acquisition have been excluded as immaterial. | |||||
Benefit_Plans
Benefit Plans | 12 Months Ended |
Dec. 31, 2013 | |
Benefit Plans | ' |
Benefit Plans | ' |
4. Benefit Plans | |
The Company has a defined contribution retirement plan (the "401(k) Plan"). Employee participants can elect to contribute up to 75 percent of their compensation, subject to Internal Revenue Service ("IRS") deferral limitations. The Company makes contributions to the 401(k) Plan based on employee compensation and contributions. The Company matches 50 percent of each employee's contribution up to 6 percent of their annual compensation. The Company recognized $5.8 million, $6.3 million and $7.4 million of expense for the years ended December 31, 2011, 2012 and 2013, respectively, for matching contributions to the 401(k) Plan. | |
LongTerm_Debt_and_Capital_Leas
Long-Term Debt and Capital Lease Obligations | 12 Months Ended |
Dec. 31, 2013 | |
Long-Term Debt and Capital Lease Obligations | ' |
Long-Term Debt and Capital Lease Obligations | ' |
5. Long-Term Debt and Capital Lease Obligations | |
On December 9, 2011, the Company entered into a Senior Secured Revolving Credit Facility Credit Agreement with Citibank, N.A., Wells Fargo Bank, N.A., Bank of America, N.A., and U.S. Bank, N.A. that provides for up to $230.0 million of revolving loans with a sublimit of up to $70.0 million for the issuance of letters of credit for the account of the Company (the "2011 Credit Facility"). Citibank, N.A., has assigned a portion of its interest in the 2011 Credit Facility to Bank of Tokyo. The 2011 Credit Facility is guaranteed by substantially all of the subsidiaries of the Company and is secured by substantially all of the assets of the Company and the subsidiary guarantors. The 2011 Credit Facility will mature on December 9, 2014. | |
Under the 2011 Credit Facility, the annual interest rate on Revolving Loan borrowings is equal to (i) in the case of U.S. dollar denominated loans, the sum of a borrowing margin of 0.75 percent plus the higher of the prime rate, one-half of one percent in excess of the overnight "federal funds" rate, or the Eurodollar rate for one month plus 1.00 percent, or (ii) in the case of Eurodollar denominated loans, the sum of a borrowing margin of 1.75 percent plus the Eurodollar rate for the selected interest period. The Company has the option to borrow in U.S. dollar denominated loans or Eurodollar denominated loans at its discretion. Letters of Credit issued under the Revolving Loan Commitment bear interest at the rate of 1.875 percent. The commitment commission on the 2011 Credit Facility is 0.375 percent of the unused Revolving Loan Commitment. | |
The 2011 Credit Facility contains covenants that limit management's discretion in operating the Company's business by restricting or limiting the Company's ability, among other things, to: | |
• | |
incur or guarantee additional indebtedness or issue preferred or redeemable stock; | |
• | |
pay dividends and make other distributions; | |
• | |
repurchase equity interests; | |
• | |
make certain advances, investments and loans; | |
• | |
enter into sale and leaseback transactions; | |
• | |
create liens; | |
• | |
sell and otherwise dispose of assets; | |
• | |
acquire or merge or consolidate with another company; and | |
• | |
enter into some types of transactions with affiliates. | |
There were $32.0 million and $33.7 million of letters of credit outstanding at December 31, 2012 and 2013, respectively, and no Revolving Loan borrowings at December 31, 2012 or 2013. | |
There were no capital lease obligations at December 31, 2012 and $26.7 million of capital lease obligations at December 31, 2013. The Company's capital lease obligations represent amounts due under leases for certain properties and computer software and equipment. The recorded gross cost of capital leased assets was $29.7 million at December 31, 2013. | |
Stockholders_Equity
Stockholders' Equity | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
Stockholders' Equity | ' | |||||||||||||||||||
Stockholders' Equity | ' | |||||||||||||||||||
6. Stockholders' Equity | ||||||||||||||||||||
Stock Compensation | ||||||||||||||||||||
At December 31, 2012 and 2013, the Company had equity-based employee incentive plans. Prior to May 18, 2011, the Company utilized the 2008 Management Incentive Plan (the "2008 MIP"), 2006 Management Incentive Plan (the "2006 MIP"), 2003 Management Incentive Plan (the "2003 MIP") and 2006 Directors' Equity Compensation Plan (collectively the "Preexisting Plans") for grants of stock options, restricted stock, restricted stock units, and stock appreciation rights, to provide incentives to officers, employees and non-employee directors. | ||||||||||||||||||||
On February 18, 2011, the board of directors of the Company approved the 2011 Management Incentive Plan ("2011 MIP"), and the 2011 MIP was approved by the Company's shareholders at the 2011 Annual Meeting of Shareholders on May 18, 2011. The 2011 MIP provides for the delivery of up to a number of shares equal to (i) 5,000,000 shares of common stock, plus (ii) the number of shares subject to outstanding awards under the Preexisting Plans which become available after shareholder approval of the 2011 MIP as a result of forfeitures, expirations, and in other permitted ways under the share recapture provisions of the 2011 MIP. Delivery of shares under "full-value" awards (awards other than options or stock appreciation rights) will be counted for each share delivered as 2.29 shares against the total number of shares reserved under the 2011 MIP. Upon shareholder approval of the 2011 MIP, no further awards were made under the Preexisting Plans, and any shares that remained available for new awards (i.e., were not committed for outstanding awards) under the Preexisting Plans were not carried forward to the 2011 MIP. | ||||||||||||||||||||
The 2011 MIP provides for awards of stock options, restricted stock awards ("RSAs"), restricted stock units ("RSUs"), stock appreciation rights, cash-denominated awards and any combination of the foregoing. A restricted stock unit is a notional account representing the right to receive a share of the Company's Common Stock (or, at the Company's option, cash in lieu thereof) at some future date. In general, stock options vest ratably on each anniversary over the three years subsequent to grant, and have a ten year life. With the exception of the shares received by the principal owners of Partners, Rx, RSAs generally vest on the anniversary of the grant. In general, RSUs vest ratably on each anniversary over the three years subsequent to grant, assuming that the associated performance hurdle(s) for that vesting year are met. Stock compensation expense is recognized using an accelerated method over the vesting period based upon the continued employment of the RSU holder and the probability of achievement of the performance hurdle(s). RSUs granted in 2011 have performance thresholds based on EPS, while RSUs granted in 2012 and 2013 have performance thresholds based on EPS and return on equity ("ROE"). At December 31, 2013, 2,289,039 shares of the Company's common stock remain available for future grant under the Company's 2011 MIP. | ||||||||||||||||||||
On February 18, 2011 the board of directors of the Company approved the 2011 Employee Stock Purchase Plan ("2011 ESPP"), and the 2011 ESPP was approved by the Company's shareholders at the 2011 Annual Meeting of Shareholders on May 18, 2011. The 2011 ESPP provides for up to 100,000 shares of the Company's ordinary common stock to be issued. During the years ended December 31, 2012 and 2013, 23,346 and 28,715 shares of the Company's common stock were issued under the 2011 ESPP, respectively. At December 31, 2013, 47,939 shares of the Company's common stock remain available for future grant under the Company's 2011 ESPP. | ||||||||||||||||||||
Stock Options | ||||||||||||||||||||
Summarized information related to the Company's stock options for the years ended December 31, 2011, 2012 and 2013 is as follows: | ||||||||||||||||||||
2011 | 2012 | |||||||||||||||||||
Options | Weighted | Options | Weighted | |||||||||||||||||
Average | Average | |||||||||||||||||||
Exercise | Exercise | |||||||||||||||||||
Price | Price | |||||||||||||||||||
Outstanding, beginning of period | 3,775,586 | $ | 39.27 | 3,841,233 | $ | 42.65 | ||||||||||||||
Granted | 1,217,958 | 49.3 | 1,402,800 | 47.54 | ||||||||||||||||
Forfeited | (86,986 | ) | 42.13 | (444,939 | ) | 46.08 | ||||||||||||||
Exercised | (1,065,325 | ) | 38.34 | (530,854 | ) | 39.03 | ||||||||||||||
| | | | | | | | | | | | | | |||||||
Outstanding, end of period | 3,841,233 | $ | 42.65 | 4,268,240 | $ | 44.35 | ||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
2013 | ||||||||||||||||||||
Options | Weighted | Weighted | Aggregate | |||||||||||||||||
Average | Average | Intrinsic | ||||||||||||||||||
Exercise | Remaining Contractual | Value | ||||||||||||||||||
Price | Term (in years) | (in thousands) | ||||||||||||||||||
Outstanding, beginning of period | 4,268,240 | $ | 44.35 | |||||||||||||||||
Granted | 1,047,133 | 53.18 | ||||||||||||||||||
Forfeited | (165,734 | ) | 49.66 | |||||||||||||||||
Exercised | (1,139,493 | ) | 41.53 | |||||||||||||||||
| | | | | | | | | | | | | | |||||||
Outstanding, end of period | 4,010,146 | $ | 47.23 | 7.18 | $ | 50,902 | ||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
Vested and expected to vest at end of period | 3,971,929 | $ | 47.19 | 7.17 | $ | 50,585 | ||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
Exercisable, end of period | 1,971,716 | $ | 43.8 | 5.77 | $ | 31,763 | ||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (based upon the difference between the Company's closing stock price on the last trading day of 2013 of $59.91 and the exercise price) for all in-the-money options as of December 31, 2013. This amount changes based on the fair market value of the Company's common stock. | ||||||||||||||||||||
The total pre-tax intrinsic value of options exercised (based on the difference between the Company's closing stock price on the day the option was exercised and the exercise price) during the years ended December 31, 2011, 2012 and 2013 was $13.1 million, $6.4 million, and $18.2 million, respectively. | ||||||||||||||||||||
The weighted average grant date fair value per share of substantially all stock options granted during the years ended December 31, 2011, 2012 and 2013 was $12.72, $11.65 and $12.24, respectively, as estimated using the Black- Scholes-Merton option pricing model based on the following weighted average assumptions: | ||||||||||||||||||||
2011 | 2012 | 2013 | ||||||||||||||||||
Risk-free interest rate | 1.63 | % | 0.66 | % | 0.67 | % | ||||||||||||||
Expected life | 4 years | 4 years | 4 years | |||||||||||||||||
Expected volatility | 29.88 | % | 30.3 | % | 27.86 | % | ||||||||||||||
Expected dividend yield | 0 | % | 0 | % | 0 | % | ||||||||||||||
For the years ended December 31, 2011, 2012 and 2013, expected volatility was based on the historical volatility of the Company's stock price. | ||||||||||||||||||||
As of December 31, 2013, there was $14.3 million of total unrecognized compensation expense related to nonvested stock options that is expected to be recognized over a weighted average remaining recognition period of 2.02 years. The total fair value of options vested during the year ended December 31, 2013 was $11.5 million. | ||||||||||||||||||||
The benefits of tax deductions in excess of recognized stock compensation expense are reported as a financing cash flow, rather than as an operating cash flow. In the years ended December 31, 2011, 2012 and 2013, approximately $2.0 million, $1.0 million and $3.2 million, respectively, of benefits of such tax deductions related to stock compensation expense were realized and as such were reported as financing cash flows. For the year ended December 31, 2013, the net change to additional paid-in capital related to tax benefits (deficiencies) was $2.3 million which includes the $3.2 million of excess tax benefits offset by $0.9 million of tax deficiencies and adjustments to prior years' tax benefit from exercise of stock options and vesting of stock awards. For the year ended December 31, 2012, the change to additional paid-in capital related to tax benefits (deficiencies) was $0.1 million which includes the $1.0 million of excess tax benefits offset by $0.9 million of tax deficiencies and adjustments to prior years' tax benefit from exercise of stock options and vesting of stock awards. For the year ended December 31, 2011, the net change to additional paid-in capital related to tax benefits (deficiencies) was $(1.2) million which includes the $2.0 million of excess tax benefits offset by $3.2 million of tax deficiencies and adjustments to prior years' tax benefit from exercise of stock options and vesting of stock awards. | ||||||||||||||||||||
Restricted Stock Awards | ||||||||||||||||||||
Summarized information related to the Company's nonvested RSAs for the years ended December 31, 2011, 2012 and 2013 is as follows: | ||||||||||||||||||||
2011 | 2012 | 2013 | ||||||||||||||||||
Shares | Weighted | Shares | Weighted | Shares | Weighted | |||||||||||||||
Average | Average | Average | ||||||||||||||||||
Grant Date | Grant Date | Grant Date | ||||||||||||||||||
Fair Value | Fair Value | Fair Value | ||||||||||||||||||
Outstanding, beginning of period | 22,309 | $ | 39.23 | 18,748 | $ | 52.11 | 23,672 | $ | 42.25 | |||||||||||
Awarded | 18,748 | 52.11 | 23,672 | 42.25 | 192,165 | 56.59 | ||||||||||||||
Vested | (22,309 | ) | 39.23 | (18,748 | ) | 52.11 | (23,672 | ) | (42.25 | ) | ||||||||||
Forfeited | — | — | — | — | — | — | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Outstanding, ending of period | 18,748 | $ | 52.11 | 23,672 | $ | 42.25 | 192,165 | $ | 56.59 | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
As of December 31, 2013, there was $9.5 million of unrecognized stock compensation expense related to nonvested restricted stock awards. This cost is expected to be recognized over a weighted-average period of 2.61 years. | ||||||||||||||||||||
Restricted Stock Units | ||||||||||||||||||||
Summarized information related to the Company's nonvested RSUs for the years ended December 31, 2011, 2012 and 2013 is as follows: | ||||||||||||||||||||
2011 | 2012 | 2013 | ||||||||||||||||||
Shares | Weighted | Shares | Weighted | Shares | Weighted | |||||||||||||||
Average | Average | Average | ||||||||||||||||||
Grant Date | Grant Date | Grant Date | ||||||||||||||||||
Fair Value | Fair Value | Fair Value | ||||||||||||||||||
Outstanding, beginning of period | 190,488 | $ | 38.43 | 206,338 | $ | 44.63 | 202,690 | $ | 47.38 | |||||||||||
Awarded | 115,003 | 49.14 | 131,913 | 47.48 | 98,580 | 52.62 | ||||||||||||||
Vested | (90,853 | ) | 37.5 | (99,976 | ) | 41.81 | (95,138 | ) | 46.72 | |||||||||||
Forfeited | (8,300 | ) | 42.94 | (35,585 | ) | 47.43 | (11,219 | ) | 49.79 | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
Outstanding, ending of period | 206,338 | $ | 44.63 | 202,690 | $ | 47.38 | 194,913 | $ | 50.21 | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
As of December 31, 2013, there was $3.5 million of unrecognized stock compensation expense related to nonvested restricted stock units. This cost is expected to be recognized over a weighted-average period of 2.79 years. | ||||||||||||||||||||
Common Stock Warrants | ||||||||||||||||||||
On January 5, 2004, the Company issued 570,825 warrants to purchase common stock of the Company at a purchase price of $30.46 per share at anytime until January 5, 2011 and at an approximate fair value per warrant of $9.44 ("2004 Warrants"). As of December 31, 2010, 44,561 of these 2004 Warrants remained outstanding. In January 2011, 31,362 warrants were exercised and the remaining 13,199 warrants were forfeited. There were no warrants outstanding as of December 31, 2013. | ||||||||||||||||||||
Income per Common Share | ||||||||||||||||||||
The following table reconciles income (numerator) and shares (denominator) used in the Company's computations of net income per share for the years ended December 31, 2011, 2012 and 2013 (in thousands, except per share data): | ||||||||||||||||||||
2011 | 2012 | 2013 | ||||||||||||||||||
Numerator: | ||||||||||||||||||||
Net income | $ | 129,623 | $ | 151,027 | $ | 125,261 | ||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
Denominator: | ||||||||||||||||||||
Weighted average number of common shares outstanding—basic | 30,478 | 27,386 | 27,054 | |||||||||||||||||
Common stock equivalents—stock options | 480 | 406 | 564 | |||||||||||||||||
Common stock equivalents—restricted stock awards | 9 | 11 | 13 | |||||||||||||||||
Common stock equivalents—restricted stock units | 91 | 77 | 42 | |||||||||||||||||
Common stock equivalents—employee stock purchase plan | — | 2 | 2 | |||||||||||||||||
| | | | | | | | | | | ||||||||||
Weighted average number of common shares outstanding—diluted | 31,058 | 27,882 | 27,675 | |||||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
Net income per common share—basic | $ | 4.25 | $ | 5.51 | $ | 4.63 | ||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
Net income per common share—diluted | $ | 4.17 | $ | 5.42 | $ | 4.53 | ||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
The weighted average number of common shares outstanding for the years ended December 31, 2011, 2012 and 2013 was calculated using outstanding shares of the Company's common stock. Common stock equivalents included in the calculation of diluted weighted average common shares outstanding for the years ended December 31, 2011, 2012 and 2013 represent stock options to purchase shares of the Company's common stock, restricted stock awards, restricted stock units and stock purchased under the ESPP. | ||||||||||||||||||||
For the years ended December 31, 2011, 2012 and 2013, the Company had additional potential dilutive securities outstanding representing 1.0 million, 2.2 million and 0.8 million options, respectively, that were not included in the computation of dilutive securities because they were anti-dilutive for such periods. Had these shares not been anti-dilutive, all of these shares would not have been included in the net income per common share calculation as the Company uses the treasury stock method of calculating diluted shares. | ||||||||||||||||||||
Stock Repurchases | ||||||||||||||||||||
The Company's board of directors has previously authorized a series of stock repurchase plans. Stock repurchases for each such plan could be executed through open market repurchases, privately negotiated transactions, accelerated share repurchases or other means. The board of directors authorized management to execute stock repurchase transactions from time to time and in such amounts and via such methods as management deemed appropriate. Each stock repurchase program could be limited or terminated at any time without prior notice. | ||||||||||||||||||||
On July 27, 2010 the Company's board of directors approved a stock repurchase plan which authorized the Company to purchase up to $350 million of its outstanding common stock through July 28, 2012. On February 18, 2011, the Company's board of directors increased the stock repurchase program by an additional $100 million, to a total of $450 million. Pursuant to this program, the Company made open market purchases of 1,684,510 shares of the Company's common stock at an average price of $48.36 per share for an aggregate cost of $81.5 million (excluding broker commissions) during the period from November 3, 2010 through December 31, 2010. Pursuant to this program, the Company made open market purchases of 7,534,766 shares of the Company's common stock at an average price of $48.91 per share for an aggregate cost of $368.5 million (excluding broker commissions) during the period January 1, 2011 through November 10, 2011, which was the date the repurchase program was completed. | ||||||||||||||||||||
On October 25, 2011 the Company's board of directors approved a stock repurchase plan which authorized the Company to purchase up to $200 million of its outstanding common stock through October 25, 2013. On July 24, 2013 the Company's board of directors approved an increase and extension of the stock repurchase plan which authorizes the Company to purchase up to $300 million of its outstanding stock through October 25, 2015. Pursuant to this program, the Company made open market purchases of 671,776 shares of the Company's common stock at an average price of $48.72 per share for an aggregate cost of $32.7 million (excluding broker commissions) during the period from November 11, 2011 through December 31, 2011. Pursuant to this program, the Company made open market purchases of 459,252 shares of the Company's common stock at an average price of $50.27 per share for an aggregate cost of $23.1 million (excluding broker commissions) during 2012. Pursuant to this program, the Company made open market purchases of 1,159,871 shares of the Company's common stock at an average price of $51.83 per share for an aggregate cost of $60.1 million (excluding broker commissions) during 2013. | ||||||||||||||||||||
During the period from January 1, 2014 through February 26, 2013, the Company made additional open market purchases of 177,227 shares of the Company's common stock at an aggregate cost of $10.6 million (excluding broker commissions). | ||||||||||||||||||||
Recent Sales of Unregistered Securities | ||||||||||||||||||||
On January 28, 2011, the Company and Blue Shield of California ("Blue Shield") entered into a Share Purchase Agreement (the "Share Purchase Agreement") pursuant to which on January 31, 2011 Blue Shield purchased 416,840 shares of the Company's Common Stock (the "Shares") for a total purchase price of $20 million. The Shares were issued to Blue Shield, an accredited investor, in a private placement pursuant to Regulation D of the Securities Act. Blue Shield agreed not to transfer such Shares for a two year period, except in the event of any change in control of the Company as defined in the Share Purchase Agreement. The purchase price for the Shares issued was determined taking into account the recent trading price of the Company's Common Stock on NASDAQ and the restrictions on transfer of the Shares agreed to by Blue Shield. | ||||||||||||||||||||
On September 6, 2013, the Company and Partners Rx entered into a Merger Agreement pursuant to which on October 1, 2013 certain principal owners of Partners Rx purchased 175,596 shares of the Company's restricted stock for a total purchase price of $10 million. The purchase price of the shares was equal to the average of the closing prices of the Company's stock for the five trading day period on the day prior to the execution of the Merger Agreement. The shares received by such principal owners of Partners Rx are subject to vesting over three years with 50% vesting on the second anniversary of the acquisition and 50% vesting on the third anniversary of the acquisition, conditioned on continued employment with the Company on the applicable vesting dates. The shares were issued to the principal owners of Partners Rx in a private placement pursuant to Section 4(a)(2) of the Securities Act. | ||||||||||||||||||||
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Income Taxes | ' | ||||||||||
Income Taxes | ' | ||||||||||
7. Income Taxes | |||||||||||
Income Tax Expense | |||||||||||
The components of income tax expense (benefit) for the following years ended December 31 were as follows (in thousands): | |||||||||||
2011 | 2012 | 2013 | |||||||||
Income taxes currently payable: | |||||||||||
Federal | $ | 51,195 | $ | 18,345 | $ | 37,691 | |||||
State | 5,534 | 2,187 | 3,445 | ||||||||
| | | | | | | | | | | |
56,729 | 20,532 | 41,136 | |||||||||
| | | | | | | | | | | |
Deferred income taxes (benefits): | |||||||||||
Federal | 8,644 | 14,922 | (1,726 | ) | |||||||
State | (336 | ) | 2,384 | 514 | |||||||
| | | | | | | | | | | |
8,308 | 17,306 | (1,212 | ) | ||||||||
| | | | | | | | | | | |
Total income tax expense | $ | 65,037 | $ | 37,838 | $ | 39,924 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Total income tax expense for the years ended December 31 was different from the amount computed using the statutory federal income tax rate of 35 percent for the following reasons (in thousands): | |||||||||||
2011 | 2012 | 2013 | |||||||||
Income tax expense at federal statutory rate | $ | 68,458 | $ | 67,107 | $ | 57,815 | |||||
State income taxes, net of federal income tax benefit | 7,013 | 6,812 | 4,412 | ||||||||
Tax contingencies reversed due to statute closings | (12,521 | ) | (37,093 | ) | (25,299 | ) | |||||
Other-net | 2,087 | 1,012 | 2,996 | ||||||||
| | | | | | | | | | | |
Total income tax expense | $ | 65,037 | $ | 37,838 | $ | 39,924 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Deferred Income Taxes | |||||||||||
The significant components of deferred tax assets and liabilities at December 31 were as follows (in thousands): | |||||||||||
2012 | 2013 | ||||||||||
Deferred tax assets: | |||||||||||
Operating loss carryforwards | $ | 10,116 | $ | 8,604 | |||||||
Share-based compensation | 16,225 | 15,926 | |||||||||
Other accrued compensation | 3,891 | 7,619 | |||||||||
Community reinvestment reserves | 6,276 | 550 | |||||||||
Claims reserves | 7,244 | 8,005 | |||||||||
Deferred Revenue | 2,408 | 6,708 | |||||||||
Other non-deductible accrued liabilities | 8,082 | 13,018 | |||||||||
Indirect tax benefits | 5,897 | 4,804 | |||||||||
Other deferred tax assets | 1,282 | 987 | |||||||||
| | | | | | | | ||||
Total deferred tax assets | 61,421 | 66,221 | |||||||||
Valuation allowance | (3,130 | ) | (3,102 | ) | |||||||
| | | | | | | | ||||
Deferred tax assets after valuation allowance | 58,291 | 63,119 | |||||||||
| | | | | | | | ||||
Deferred tax liabilities: | |||||||||||
Depreciation | (44,728 | ) | (43,417 | ) | |||||||
Amortization of goodwill and intangible assets | (15,782 | ) | (20,615 | ) | |||||||
Other deferred tax liabilities | (169 | ) | (3,603 | ) | |||||||
| | | | | | | | ||||
Total deferred tax liabilities | (60,679 | ) | (67,635 | ) | |||||||
| | | | | | | | ||||
Net deferred tax assets (liabilities) | $ | (2,388 | ) | $ | (4,516 | ) | |||||
| | | | | | | | ||||
| | | | | | | | ||||
The Company has federal NOLs as of December 31, 2013 of $3.6 million available to reduce future federal taxable income. These NOLs, if not used, will expire in 2017 through 2019 and are subject to examination and adjustment by the IRS. Utilization of these NOLs is also subject to certain timing limitations, although the Company does not believe these limitations will restrict its ability to use any federal NOLs before they expire. The Company has state NOLs as of December 31, 2013 of $152.3 million available to reduce future state taxable income at certain subsidiaries. Most of these NOLs, if not used, will expire in 2017 through 2022 and are subject to examination and adjustment by the respective state tax authorities. | |||||||||||
The Company's valuation allowances against deferred tax assets were $3.1 million as of December 31, 2012 and 2013, mostly relating to uncertainties regarding the eventual realization of certain state net operating loss carryforwards ("NOLs"). Determination of the amount of deferred tax assets considered realizable requires significant judgment and estimation regarding the forecasts of future taxable income which are consistent with the plans and estimates the Company uses to manage the underlying businesses. Although consideration is also given to potential tax planning strategies which might be available to improve the realization of deferred tax assets, none were identified which were both prudent and reasonable. The Company believes taxable income expected to be generated in the future will be sufficient to support realization of the Company's deferred tax assets, as reduced by valuation allowances. This determination is based upon its consistent overall earnings history and future earnings expectations. Other than deferred tax benefits attributable to operating loss carryforwards, there are no time constraints within which the Company's deferred tax assets must be realized. Changes in these estimates in the future could materially affect the Company's financial condition and results of operations. Reversals of valuation allowances are recorded as reductions to income tax expense in the period they occur. | |||||||||||
Uncertain Tax Positions | |||||||||||
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands): | |||||||||||
2011 | 2012 | 2013 | |||||||||
Balance as of beginning of period | $ | 111,594 | $ | 99,230 | $ | 56,601 | |||||
Additions for current year tax positions | 3,240 | 1,904 | 2,367 | ||||||||
Additions for tax positions of prior years | 948 | 403 | 214 | ||||||||
Reductions for tax positions of prior years | (1,492 | ) | (1,618 | ) | (396 | ) | |||||
Reductions due to lapses of applicable statutes of limitation | (15,011 | ) | (43,297 | ) | (28,606 | ) | |||||
Reductions due to settlements with taxing authorities | (49 | ) | (21 | ) | (4 | ) | |||||
| | | | | | | | | | | |
Balance as of end of period | $ | 99,230 | $ | 56,601 | $ | 30,176 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
If these unrecognized tax benefits had been realized as of December 31, 2012 and 2013, $45.1 million and $23.3 million, respectively, would have reduced income tax expense. | |||||||||||
The Company continually performs a comprehensive review of its tax positions and accrues amounts for tax contingencies related to uncertain tax positions. Based upon these reviews, the status of ongoing tax audits, and the expiration of applicable statutes of limitations, accruals are adjusted as necessary. The tax benefit from an uncertain tax position is recognized when it is more likely than not that, based on technical merit, the position will be sustained upon examination, including resolution of any related appeals or litigation processes. | |||||||||||
The Company also adjusts these liabilities for unrecognized tax benefits when its judgment changes as a result of the evaluation of new information not previously available. However, the ultimate resolution of a disputed tax position following an examination by a taxing authority could result in a payment that is materially different from that accrued by the Company. These differences are reflected as increases or decreases to income tax expense in the period in which they are determined. However, reversals of unrecognized tax benefits related to deductions for stock compensation in excess of the related book expense are recorded as increases in additional paid-in capital. To the extent reversals of unrecognized tax benefits cannot be specifically traced to these excess deductions due to complexities in the tax law, the Company records the tax benefit for such reversals to additional paid-in capital on a pro-rata basis. | |||||||||||
The statutes of limitations regarding the assessment of federal and certain state and local income taxes for 2009 expired during 2013. As a result, $28.6 million of unrecognized tax benefits recorded as of December 31, 2012 were reversed in the current year as a result of statute expirations, of which $23.2 million is reflected as a reduction to income tax expense, $3.9 million as an increase to additional paid-in capital, and the remainder as a decrease to deferred tax assets. Additionally, $2.1 million of accrued interest was reversed in 2013 and reflected as a reduction to income tax expense due to the closing of statutes of limitations on tax assessments. | |||||||||||
The statutes of limitations regarding the assessment of federal and certain state and local income taxes for 2008 expired during 2012. As a result, $43.3 million of unrecognized tax benefits recorded as of December 31, 2011 were reversed in 2012 as a result of statute expirations, of which $35.7 million is reflected as a reduction to income tax expense, $6.2 million as an increase to additional paid-in capital, and the remainder as a decrease to deferred tax assets. Additionally, $1.4 million of accrued interest and $0.8 million of unrecognized state tax benefits were reversed in 2012 and reflected as reductions to income tax expense due to the closing of statutes of limitations on tax assessments and changes in tax return elections, respectively. | |||||||||||
With few exceptions, the Company is no longer subject to income tax assessments by tax authorities for years ended prior to 2010. Further, it is reasonably possible the statutes of limitations regarding the assessment of federal and most state and local income taxes for 2010 could expire during 2014. The Company anticipates that up to $19.5 million of unrecognized tax benefits recorded as of December 31, 2013 could be reversed during 2014 as a result of statute expirations, of which $16.0 million would be reflected as a reduction to income tax expense, $2.6 million as an increase to additional paid-in capital, and the remainder as a decrease to deferred tax assets. All such reversals would be reflected as discrete adjustments during the quarter in which the respective statute expiration occurs, primarily in the third quarter. | |||||||||||
As of December 31, 2012 and 2013, the Company had accrued approximately $2.7 million and $1.5 million, respectively, for the potential payment of interest and penalties (net of indirect benefits). The Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes. During the years ended December 31, 2011, 2012 and 2013, the Company recorded approximately $(0.9) million, $(0.1) million and $(1.2) million in interest and penalties. | |||||||||||
Supplemental_Cash_Flow_Informa
Supplemental Cash Flow Information | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Supplemental Cash Flow Information | ' | ||||||||||
Supplemental Cash Flow Information | ' | ||||||||||
8. Supplemental Cash Flow Information | |||||||||||
Supplemental cash flow information for the years ended December 31, 2011, 2012 and 2013 is as follows (in thousands): | |||||||||||
2011 | 2012 | 2013 | |||||||||
Income taxes paid, net of refunds | $ | 50,324 | $ | 57,663 | $ | 65,511 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Interest paid | $ | 1,521 | $ | 1,594 | $ | 2,264 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Assets acquired through capital leases | $ | — | $ | — | $ | 29,739 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2013 | |
Commitments and Contingencies | ' |
Commitments and Contingencies | ' |
9. Commitments and Contingencies | |
Insurance | |
The Company maintains a program of insurance coverage for a broad range of risks in its business. The Company has renewed its general, professional and managed care liability insurance policies with unaffiliated insurers for a one-year period from June 17, 2013 to June 17, 2014. The general liability policy is written on an "occurrence" basis, subject to a $0.05 million per claim un-aggregated self-insured retention. The professional liability and managed care errors and omissions liability policies are written on a "claims-made" basis, subject to a $1.0 million per claim ($10.0 million per class action claim) un-aggregated self-insured retention for managed care errors and omissions liability, and a $0.05 million per claim un-aggregated self-insured retention for professional liability. | |
The Company maintains a separate general and professional liability insurance policy with an unaffiliated insurer for its Specialty Pharmaceutical Management business. The Specialty Pharmaceutical Management insurance policy has a one-year term for the period June 17, 2013 to June 17, 2014. The general liability policy is written on an "occurrence" basis and the professional liability policy is written on a "claims-made" basis, subject to a $0.05 million per claim and $0.25 million aggregated self-insured retention. | |
The Company maintains separate professional liability insurance policies with unaffiliated insurers for its Maricopa Contract business for the behavioral health direct care facilities, all of which were divested at various times prior to September 1, 2009. The Maricopa Contract professional liability insurance policies effective dates were from September 1, 2008 to September 1, 2009. The Company purchased a five-year extended reporting period for the professional liability policies effective September 1, 2009 for the period September 1, 2009 to September 1, 2014, subject to a $0.5 million per claim un-aggregated self-insured retention. The professional liability policies are written on a "claims-made" basis. | |
The Company is responsible for claims within its self-insured retentions, and for portions of claims reported after the expiration date of the policies if they are not renewed, or if policy limits are exceeded. The Company also purchases excess liability coverage in an amount that management believes to be reasonable for the size and profile of the organization. | |
Regulatory Issues | |
The managed healthcare industry is subject to numerous laws and regulations. The subjects of such laws and regulations cover, but are not limited to, matters such as licensure, accreditation, government healthcare program participation requirements, information privacy and security, reimbursement for patient services, and Medicare and Medicaid fraud and abuse. Over the past several years, government activity has increased with respect to investigations and/or allegations concerning possible violations of fraud and abuse and false claims statutes and/or regulations by healthcare organizations and insurers. Entities that are found to have violated these laws and regulations may be excluded from participating in government healthcare programs, subjected to fines or penalties or required to repay amounts received from the government for previously billed patient services. Compliance with such laws and regulations can be subject to future government review and interpretation, as well as regulatory actions unknown or unasserted at this time. | |
In addition, regulators of certain of the Company's subsidiaries may exercise certain discretionary rights under regulations including increasing their supervision of such entities, requiring additional restricted cash or other security or seizing or otherwise taking control of the assets and operations of such subsidiaries. | |
Legal | |
The Company's operating activities entail significant risks of liability. From time to time, the Company is subject to various actions and claims arising from the acts or omissions of its employees, network providers or other parties. In the normal course of business, the Company receives reports relating to deaths and other serious incidents involving patients whose care is being managed by the Company. Such incidents occasionally give rise to malpractice, professional negligence and other related actions and claims against the Company or its network providers. Many of these actions and claims received by the Company seek substantial damages and therefore require the Company to incur significant fees and costs related to their defense. | |
On July 25, 2012, the Company filed a lawsuit currently pending in the United States District Court for the District of Connecticut against two former employees and a corporation partially-owned by one of such former employees asserting claims for violation of contractual restrictive covenants and common law obligations owed to the Company arising from actions of such former employees in connection with their employment by the defendant corporation. The Company's complaint alleges claims for breach of contract and breach of the covenant of good dealing against the individual former employees; tortious interference with contract against the defendant corporation; and violation of the Connecticut Uniform Trade Secrets Act, civil conspiracy, and violation of the Connecticut Unfair Trade Practices Act against all defendants arising out of activity undertaken by the former employees on behalf of the defendant corporation in competition with the Company's specialty pharmacy business. The Company is seeking a permanent injunction and recovery of compensatory and punitive damages and an award of attorneys' fees and costs. On December 18, 2012, the defendant corporation filed counterclaims against the Company in which it asserts tortious interference with business expectancy, abuse of process, and violation of the Connecticut Unfair Trade Practices Act arising out of the Company's efforts to enforce its contractual and legal rights. On June 10, 2013, the defendant corporation disclosed an alleged damages computation in the amount of $155 million in lost profits plus unspecified business diminution damages. The Company believes the counterclaims and damages calculations of the defendant corporation are without merit and is defending them vigorously. | |
The Company is also subject to or party to certain class actions and other litigation and claims relating to its operations or business practices. In the opinion of management, the Company has recorded reserves that are adequate to cover litigation, claims or assessments that have been or may be asserted against the Company, and for which the outcome is probable and reasonably estimable. Management believes that the resolution of such litigation and claims will not have a material adverse effect on the Company's financial condition or results of operations; however, there can be no assurance in this regard. | |
Operating Leases | |
The Company leases certain of its operating facilities and equipment. The leases, which expire at various dates through January 2025, generally require the Company to pay all maintenance, property tax and insurance costs. | |
At December 31, 2013, aggregate amounts of future minimum payments under operating leases were as follows: 2014—$16.8 million; 2015—$15.9 million; 2016—$14.5 million; 2017—$12.4 million; 2018—$11.1 million; 2019 and beyond—$35.6 million. Operating lease obligations include estimated future lease payments for both open and closed offices. | |
At December 31, 2013, aggregate amounts of future minimum rentals to be received under operating subleases were as follows: 2014—$0.5 million and 2015—$0.3 million. Operating sublease rentals to be received relate primarily to behavioral health direct care facilities transitioned to third parties pursuant to the Maricopa Contract. | |
Rent expense is recognized on a straight-line basis over the terms of the leases. Rent expense was $19.3 million, $19.5 million and $15.2 million for the years ended December 31, 2011, 2012 and 2013, respectively. | |
Capital Leases | |
At December 31, 2013, aggregate future amounts of minimum payments under capital leases, net of leasehold improvement allowances, were as follows: 2014—$0.9 million; 2015—$2.1 million; 2016—$3.2 million; 2017—$3.3 million; 2018—$3.4 million; 2019 and beyond—$21.3 million. Included in the future amounts payable under capital lease commitments is imputed interest of $7.5 million. | |
Restructuring Activities | |
In connection with various restructuring activities initiated in 2013, the Company anticipates it will incur approximately $17.7 million in restructuring costs related to contract terminations and organizational changes made in an effort to improve its ability to execute its strategy. These restructuring costs include $12.8 million of employee termination costs, $2.5 million of asset impairment charges and $2.4 million of lease termination and exit costs. Projected restructuring costs by segment are Public Sector $8.2 million, Commercial $5.7 million and Corporate $3.8 million. For the year ended December 31, 2013, the Company incurred $15.3 million of restructuring costs which represents the employee termination and asset impairment charges. The restructuring costs incurred by segment for the year ended December 31, 2013 were Public Sector $6.8 million, Commercial $4.7 million and Corporate $3.8 million. The restructuring costs are included in direct service costs and other operating expenses in the consolidated statements of comprehensive income. At December 31, 2013, a remaining liability associated with employee termination costs of $12.5 million is included in accrued liabilities on the Company's consolidated balance sheets. | |
Business_Segment_Information
Business Segment Information | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
Business Segment Information | ' | |||||||||||||||||||
Business Segment Information | ' | |||||||||||||||||||
10. Business Segment Information | ||||||||||||||||||||
The accounting policies of the Company's segments are the same as those described in Note 1—"General." The Company evaluates performance of its segments based on profit or loss from operations before stock compensation expense, depreciation and amortization, interest expense, interest and other income, gain on sale of assets, special charges or benefits, and income taxes ("Segment Profit"). Management uses Segment Profit information for internal reporting and control purposes and considers it important in making decisions regarding the allocation of capital and other resources, risk assessment and employee compensation, among other matters. Public Sector subcontracts with Pharmacy Management to provide pharmacy benefits management services for certain of Public Sector's customers. As such, revenue and cost of care related to this intersegment arrangement are eliminated. The Company's segments are defined previously. | ||||||||||||||||||||
The following tables summarize, for the periods indicated, operating results by business segment (in thousands): | ||||||||||||||||||||
Commercial | Public | Specialty | Pharmacy | Corporate | Consolidated | |||||||||||||||
Sector | Solutions | Management | and | |||||||||||||||||
Elimination | ||||||||||||||||||||
Year Ended December 31, 2011 | ||||||||||||||||||||
Managed care and other revenue | $ | 561,780 | $ | 1,459,659 | $ | 344,335 | $ | 268,987 | $ | (82,770 | ) | $ | 2,551,991 | |||||||
Dispensing revenue | — | — | — | 247,409 | — | 247,409 | ||||||||||||||
Cost of care | (314,178 | ) | (1,271,532 | ) | (205,240 | ) | (76,544 | ) | 82,770 | (1,784,724 | ) | |||||||||
Cost of goods sold | — | — | — | (232,038 | ) | — | (232,038 | ) | ||||||||||||
Direct service costs and other | (152,760 | ) | (67,227 | ) | (61,681 | ) | (127,598 | ) | (120,368 | ) | (529,634 | ) | ||||||||
Stock compensation expense(1) | 839 | 872 | 1,563 | 817 | 13,327 | 17,418 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Segment profit (loss) | $ | 95,681 | $ | 121,772 | $ | 78,977 | $ | 81,033 | $ | (107,041 | ) | $ | 270,422 | |||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Identifiable assets by business segment(2) | ||||||||||||||||||||
Restricted cash | $ | 18,319 | $ | 164,479 | $ | — | $ | — | $ | 2,996 | $ | 185,794 | ||||||||
Net accounts receivable | 26,822 | 28,331 | 1,398 | 52,024 | 13,031 | 121,606 | ||||||||||||||
Investments | 5,320 | 131,261 | — | — | 64,322 | 200,903 | ||||||||||||||
Pharmaceutical inventory | — | — | 39,567 | — | — | 39,567 | ||||||||||||||
Goodwill | 120,485 | — | 104,549 | 201,905 | — | 426,939 | ||||||||||||||
Other intangible assets, net | 3,228 | — | 9,632 | 31,729 | — | 44,589 | ||||||||||||||
Commercial | Public | Specialty | Pharmacy | Corporate | Consolidated | |||||||||||||||
Sector | Solutions | Management | and | |||||||||||||||||
Elimination | ||||||||||||||||||||
Year Ended December 31, 2012 | ||||||||||||||||||||
Managed care and other revenue | $ | 728,512 | $ | 1,620,875 | $ | 349,133 | $ | 227,669 | $ | (69,090 | ) | $ | 2,857,099 | |||||||
Dispensing revenue | — | — | — | 350,298 | — | 350,298 | ||||||||||||||
Cost of care | (437,518 | ) | (1,413,320 | ) | (228,383 | ) | (61,759 | ) | 69,090 | (2,071,890 | ) | |||||||||
Cost of goods sold | — | — | — | (328,414 | ) | — | (328,414 | ) | ||||||||||||
Direct service costs and other | (172,035 | ) | (89,129 | ) | (55,418 | ) | (111,593 | ) | (129,337 | ) | (557,512 | ) | ||||||||
Stock compensation expense(1) | 532 | 1,111 | 1,567 | 1,007 | 13,566 | 17,783 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Segment profit (loss) | $ | 119,491 | $ | 119,537 | $ | 66,899 | $ | 77,208 | $ | (115,771 | ) | $ | 267,364 | |||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Identifiable assets by business segment(2) | ||||||||||||||||||||
Restricted cash | $ | 18,254 | $ | 147,766 | $ | — | $ | — | $ | 60,534 | $ | 226,554 | ||||||||
Net accounts receivable | 39,678 | 27,415 | 7,580 | 65,755 | (2,175 | ) | 138,253 | |||||||||||||
Investments | 21,273 | 101,093 | — | — | 111,324 | 233,690 | ||||||||||||||
Pharmaceutical inventory | — | — | 45,727 | — | — | 45,727 | ||||||||||||||
Goodwill | 120,485 | — | 104,549 | 201,905 | — | 426,939 | ||||||||||||||
Other intangible assets, net | 2,152 | — | 7,877 | 24,906 | — | 34,935 | ||||||||||||||
Commercial | Public | Specialty | Pharmacy | Corporate | Consolidated | |||||||||||||||
Sector | Solutions | Management | and | |||||||||||||||||
Elimination | ||||||||||||||||||||
Year Ended December 31, 2013 | ||||||||||||||||||||
Managed care and other revenue | $ | 766,841 | $ | 1,757,933 | $ | 375,818 | $ | 228,705 | $ | (66,248 | ) | $ | 3,063,049 | |||||||
PBM and dispensing revenue | — | — | — | 483,268 | — | 483,268 | ||||||||||||||
Cost of care | (469,478 | ) | (1,523,023 | ) | (247,496 | ) | (59,227 | ) | 66,248 | (2,232,976 | ) | |||||||||
Cost of goods sold | — | — | — | (455,601 | ) | — | (455,601 | ) | ||||||||||||
Direct service costs and other | (172,491 | ) | (122,819 | ) | (57,334 | ) | (128,427 | ) | (138,475 | ) | (619,546 | ) | ||||||||
Stock compensation expense(1) | 503 | 1,038 | 1,630 | 1,172 | 16,909 | 21,252 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Segment profit (loss) | $ | 125,375 | $ | 113,129 | $ | 72,618 | $ | 69,890 | $ | (121,566 | ) | $ | 259,446 | |||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Identifiable assets by business segment(2) | ||||||||||||||||||||
Restricted cash | $ | 25,107 | $ | 196,651 | $ | — | $ | — | $ | 14,938 | $ | 236,696 | ||||||||
Net accounts receivable | 50,407 | 62,977 | 7,368 | 115,527 | 1,906 | 238,185 | ||||||||||||||
Investments | 16,491 | 92,966 | — | — | 98,856 | 208,313 | ||||||||||||||
Pharmaceutical inventory | — | — | 49,609 | — | — | 49,609 | ||||||||||||||
Goodwill | 120,485 | 20,882 | 104,549 | 242,290 | — | 488,206 | ||||||||||||||
Other intangible assets, net | 1,076 | 4,590 | 6,123 | 57,905 | — | 69,694 | ||||||||||||||
-1 | ||||||||||||||||||||
Stock compensation expense is included in direct service costs and other operating expenses, however this amount is excluded from the computation of segment profit since it is managed on a consolidated basis. | ||||||||||||||||||||
-2 | ||||||||||||||||||||
Identifiable assets by business segment are those assets that are used in the operations of each segment. The remainder of the Company's assets cannot be specifically identified by segment. | ||||||||||||||||||||
The following table reconciles Segment Profit to consolidated income before income taxes for the years ended December 31, 2011, 2012 and 2013 (in thousands): | ||||||||||||||||||||
2011 | 2012 | 2013 | ||||||||||||||||||
Segment Profit | $ | 270,422 | $ | 267,364 | $ | 259,446 | ||||||||||||||
Stock compensation expense | (17,418 | ) | (17,783 | ) | (21,252 | ) | ||||||||||||||
Depreciation and amortization | (58,623 | ) | (60,488 | ) | (71,994 | ) | ||||||||||||||
Interest expense | (2,502 | ) | (2,247 | ) | (3,000 | ) | ||||||||||||||
Interest and other income | 2,781 | 2,019 | 1,985 | |||||||||||||||||
| | | | | | | | | | | ||||||||||
Income before income taxes | $ | 194,660 | $ | 188,865 | $ | 165,185 | ||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
Selected_Quarterly_Financial_D
Selected Quarterly Financial Data (Unaudited) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
Selected Quarterly Financial Data (Unaudited) | ' | |||||||||||||
Selected Quarterly Financial Data (Unaudited) | ' | |||||||||||||
11. Selected Quarterly Financial Data (Unaudited) | ||||||||||||||
The following is a summary of the unaudited quarterly results of operations for the years ended December 31, 2012 and 2013 (in thousands, except per share amounts): | ||||||||||||||
For the Quarter Ended | ||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||
2012 | 2012 | 2012 | 2012 | |||||||||||
Fiscal Year Ended December 31, 2012 | ||||||||||||||
Net revenue: | ||||||||||||||
Managed care and other | $ | 686,059 | $ | 716,998 | $ | 711,092 | $ | 742,950 | ||||||
Dispensing | 87,154 | 88,475 | 87,345 | 87,324 | ||||||||||
| | | | | | | | | | | | | | |
Total net revenue | 773,213 | 805,473 | 798,437 | 830,274 | ||||||||||
| | | | | | | | | | | | | | |
Costs and expenses: | ||||||||||||||
Cost of care | 505,293 | 521,830 | 516,238 | 528,529 | ||||||||||
Cost of goods sold | 81,038 | 82,855 | 81,662 | 82,859 | ||||||||||
Direct service costs and other operating expenses(1) | 136,589 | 140,333 | 135,574 | 145,016 | ||||||||||
Depreciation and amortization | 14,781 | 15,152 | 15,239 | 15,316 | ||||||||||
Interest expense | 600 | 576 | 537 | 534 | ||||||||||
Interest and other income | (412 | ) | (857 | ) | (350 | ) | (400 | ) | ||||||
| | | | | | | | | | | | | | |
Total costs and expenses | 737,889 | 759,889 | 748,900 | 771,854 | ||||||||||
| | | | | | | | | | | | | | |
Income before income taxes | 35,324 | 45,584 | 49,537 | 58,420 | ||||||||||
Provision for income taxes | 14,534 | 18,611 | (16,725 | ) | 21,418 | |||||||||
| | | | | | | | | | | | | | |
Net income | $ | 20,790 | $ | 26,973 | $ | 66,262 | $ | 37,002 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Weighted average number of common shares outstanding—basic | 27,199 | 27,317 | 27,521 | 27,505 | ||||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Weighted average number of common shares outstanding—diluted | 27,747 | 27,717 | 28,042 | 28,020 | ||||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Net income per common share—basic: | $ | 0.76 | $ | 0.99 | $ | 2.41 | $ | 1.35 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Net income per common share—diluted: | $ | 0.75 | $ | 0.97 | $ | 2.36 | $ | 1.32 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
For the Quarter Ended | ||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||
2013(3) | 2013(3) | 2013(3) | 2013 | |||||||||||
Fiscal Year Ended December 31, 2013 | ||||||||||||||
Net revenue: | ||||||||||||||
Managed care and other | $ | 722,589 | $ | 746,720 | $ | 770,113 | $ | 823,627 | ||||||
PBM and dispensing | 99,172 | 96,028 | 103,485 | 184,583 | ||||||||||
| | | | | | | | | | | | | | |
Total net revenue | 821,761 | 842,748 | 873,598 | 1,008,210 | ||||||||||
| | | | | | | | | | | | | | |
Costs and expenses: | ||||||||||||||
Cost of care | 525,027 | 537,630 | 564,537 | 605,782 | ||||||||||
Cost of goods sold | 93,512 | 90,175 | 97,503 | 174,411 | ||||||||||
Direct service costs and other operating expenses(2) | 139,627 | 144,497 | 156,834 | 178,588 | ||||||||||
Depreciation and amortization | 16,170 | 16,946 | 17,654 | 21,224 | ||||||||||
Interest expense | 610 | 792 | 789 | 809 | ||||||||||
Interest and other income | (353 | ) | (358 | ) | (291 | ) | (983 | ) | ||||||
| | | | | | | | | | | | | | |
Total costs and expenses | 774,593 | 789,682 | 837,026 | 979,831 | ||||||||||
| | | | | | | | | | | | | | |
Income before income taxes | 47,168 | 53,066 | 36,572 | 28,379 | ||||||||||
Provision for income taxes | 19,110 | 21,586 | (10,660 | ) | 9,888 | |||||||||
| | | | | | | | | | | | | | |
Net income | $ | 28,058 | $ | 31,480 | $ | 47,232 | $ | 18,491 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Weighted average number of common shares outstanding—basic | 27,110 | 26,829 | 26,990 | 27,285 | ||||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Weighted average number of common shares outstanding—diluted | 27,648 | 27,338 | 27,704 | 28,008 | ||||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Net income per common share—basic: | $ | 1.03 | $ | 1.17 | $ | 1.75 | $ | 0.68 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Net income per common share—diluted: | $ | 1.01 | $ | 1.15 | $ | 1.7 | $ | 0.67 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
-1 | ||||||||||||||
Includes stock compensation expense of $5,102, $4,365, $4,468 and $3,848 for the quarters ended March 31, June 30, September 30, and December 31, 2012, respectively. | ||||||||||||||
-2 | ||||||||||||||
Includes stock compensation expense of $5,638, $4,602, $4,524 and $6,488 for the quarters ended March 31, June 30, September 30, and December 31, 2013, respectively. | ||||||||||||||
-3 | ||||||||||||||
Certain amounts have been reclassified to conform to the presentation for the quarter ended December 31, 2013. | ||||||||||||||
SCHEDULE_IIVALUATION_AND_QUALI
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS | ' | |||||||||||||||||||
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS | ' | |||||||||||||||||||
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Classification | Balance at | Charged to | Charged to | Addition | Deduction | Balance | ||||||||||||||
Beginning | Costs and | Other | at End | |||||||||||||||||
of Period | Expenses | Accounts | of Period | |||||||||||||||||
Year Ended December 31, 2011 | ||||||||||||||||||||
Allowance for doubtful accounts | $ | 1,985 | $ | 1,528 | -3 | $ | (150 | )(1) | $ | — | $ | (27 | )(2) | $ | 3,336 | |||||
Year Ended December 31, 2012 | ||||||||||||||||||||
Allowance for doubtful accounts | 3,336 | 1,947 | -3 | (346 | )(1) | — | (325 | )(2) | 4,612 | |||||||||||
Year Ended December 31, 2013 | ||||||||||||||||||||
Allowance for doubtful accounts | 4,612 | 1,205 | -3 | (126 | )(1) | 130 | -4 | (374 | )(2) | 5,447 | ||||||||||
-1 | ||||||||||||||||||||
Recoveries of accounts receivable previously written off. | ||||||||||||||||||||
-2 | ||||||||||||||||||||
Accounts written off. | ||||||||||||||||||||
-3 | ||||||||||||||||||||
Bad debt expense. | ||||||||||||||||||||
-4 | ||||||||||||||||||||
To establish a reserve on pre-acquisition balances of Partners Rx. | ||||||||||||||||||||
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
Summary of Significant Accounting Policies | ' | |||||||||||||
Recent Accounting Pronouncements | ' | |||||||||||||
Recent Accounting Pronouncements | ||||||||||||||
In July 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-06, "Other Expenses (Topic 720): Fees Paid to the Federal Government by Health Insurers (a consensus of the FASB Emerging Issues Task Force)" ("ASU 2011-06"), which addresses how fees mandated by the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the "Health Reform Law"), should be recognized and classified in the income statements of health insurers. The Health Reform Law imposes a mandatory annual fee on health insurers for each calendar year beginning on or after January 1, 2014. ASU 2011-06 stipulates that the liability incurred for that fee be amortized to expense over the calendar year in which it is payable. This ASU is effective for calendar years beginning after December 31, 2013, when the fee initially becomes effective. We believe that our state public sector customers will make rate adjustments to cover the direct costs of these fees and a majority of the impact from non-deductibility of such fees for federal income tax purposes. There may be some impact due to taxes paid for non-renewing customers where the timing and amount of recoupment of these additional costs is uncertain. For 2014, the projected ACA fees are currently estimated to be $25.0 million. There can be no guarantees regarding this adjustment from our state public sector customers and these taxes and fees may have a material impact on the Company. | ||||||||||||||
In February 2013, the FASB issued ASU No. 2013-02, "Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of Accumulated Comprehensive Income" ("ASU 2013-02"). ASU 2013-02 requires companies to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under generally accepted accounting principles ("GAAP") to be reclassified in its entirety to net income. Entities are required to provide information about significant reclassifications by component, and to present those reclassifications either on the face of the statement where net income is presented or in the notes. For other amounts that are not required to be reclassified in their entirety to net income, entities are required to cross-reference other disclosures that provide additional details about those amounts. The amendments in this ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. The amendments in this ASU are effective prospectively for reporting periods beginning after December 15, 2012 and were adopted by the Company during the quarter ended March 31, 2013. The guidance did not impact the Company's consolidated results of operations, financial position, or cash flows. | ||||||||||||||
In July 2013, the FASB issued ASU No. 2013-11, "Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Carryforward Exists" ("ASU 2013-11"). ASU 2013-11 provides guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. An unrecognized tax benefit should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward with certain exceptions, in which case such an unrecognized tax benefit should be presented in the financial statements as a liability. The amendments in this ASU do not require new recurring disclosures. The amendments in this ASU are effective for reporting periods beginning after December 15, 2013. The guidance is not expected to materially impact the Company's consolidated results of operations, financial position, or cash flows. | ||||||||||||||
Use of Estimates | ' | |||||||||||||
Use of Estimates | ||||||||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates of the Company include, among other things, accounts receivable realization, valuation allowances for deferred tax assets, valuation of goodwill and intangible assets, medical claims payable, other medical liabilities, stock compensation assumptions, tax contingencies and legal liabilities. Actual results could differ from those estimates. | ||||||||||||||
Revenue recognition | ' | |||||||||||||
Managed Care and Other Revenue | ||||||||||||||
Managed Care Revenue. Managed care revenue, inclusive of revenue from the Company's risk, EAP and ASO contracts, is recognized over the applicable coverage period on a per member basis for covered members. The Company is paid a per member fee for all enrolled members, and this fee is recorded as revenue in the month in which members are entitled to service. The Company adjusts its revenue for retroactive membership terminations, additions and other changes, when such adjustments are identified, with the exception of retroactivity that can be reasonably estimated. The impact of retroactive rate amendments is generally recorded in the accounting period that terms to the amendment are finalized, and that the amendment is executed. Any fees paid prior to the month of service are recorded as deferred revenue. Managed care revenues approximated $2.2 billion, $2.5 billion and $2.7 billion for the years ended December 31, 2011, 2012 and 2013, respectively. | ||||||||||||||
Fee-For-Service and Cost-Plus Contracts. The Company has certain fee-for-service contracts, including cost-plus contracts, with customers under which the Company recognizes revenue as services are performed and as costs are incurred. Revenues from these contracts approximated $174.5 million, $151.4 million and $215.1 million for the years ended December 31, 2011, 2012 and 2013, respectively. | ||||||||||||||
Block Grant Revenues. Public Sector has a contract that is partially funded by federal, state and county block grant money, which represents annual appropriations. The Company recognizes revenue from block grant activity ratably over the period to which the block grant funding applies. Block grant revenues were approximately $114.4 million, $124.8 million and $131.5 million for the years ended December 31, 2011, 2012 and 2013, respectively. | ||||||||||||||
Performance-Based Revenue. The Company has the ability to earn performance-based revenue under certain risk and non-risk contracts. Performance-based revenue generally is based on either the ability of the Company to manage care for its clients below specified targets, or on other operating metrics. For each such contract, the Company estimates and records performance-based revenue after considering the relevant contractual terms and the data available for the performance-based revenue calculation. Pro-rata performance-based revenue may be recognized on an interim basis pursuant to the rights and obligations of each party upon termination of the contracts. Performance-based revenues were $26.5 million, $25.4 million and $14.0 million for the years ended December 31, 2011, 2012 and 2013, respectively. | ||||||||||||||
Rebate Revenue. The Company administers a rebate program for certain clients through which the Company coordinates the achievement, calculation and collection of rebates and administrative fees from pharmaceutical manufacturers on behalf of clients. Each period, the Company estimates the total rebates earned based on actual volumes of pharmaceutical purchases by the Company's clients, as well as historical and/or anticipated sharing percentages. The Company earns fees based upon the volume of rebates generated for its clients. The Company does not record as rebate revenue any rebates that are passed through to its clients. Total rebate revenues for the years ended December 31, 2011, 2012 and 2013 were $32.8 million, $40.2 million and $34.8 million, respectively. | ||||||||||||||
In relation to the Company's PBM business, the Company administers rebate programs through which it receives rebates from pharmaceutical manufacturers that are shared with its customers. The Company recognizes rebates when the Company is entitled to them and when the amounts of the rebates are determinable. The amount recorded for rebates earned by the Company from the pharmaceutical manufacturers are recorded as a reduction of cost of goods sold. | ||||||||||||||
PBM and Dispensing Revenue | ||||||||||||||
Pharmacy Benefit Management Revenue. The Company recognizes PBM revenue, which consists of a negotiated prescription price (ingredient cost plus dispensing fee), co-payments collected by the pharmacy and any associated administrative fees, when claims are adjudicated. The Company recognizes PBM revenue on a gross basis (i.e. including drug costs and co-payments) as it is acting as the principal in the arrangement and is contractually obligated to its clients and network pharmacies, which is a primary indicator of gross reporting. In addition, the Company is solely responsible for the claims adjudication process, negotiating the prescription price for the pharmacy, collection of payments from the client for drugs dispensed by the pharmacy, and managing the total prescription drug relationship with the client's members. If the Company enters into a contract where it is only an administrator, and does not assume any of the risks previously noted, revenue will be recognized on a net basis. Prior to the year ended December 31, 2013 the Company had no PBM business. PBM revenues were $106.7 million for the year ended December 31, 2013. | ||||||||||||||
Dispensing Revenue. The Company recognizes dispensing revenue, which includes the co-payments received from members of the health plans the Company serves, when the specialty pharmaceutical drugs are shipped. At the time of shipment, the earnings process is complete; the obligation of the Company's customer to pay for the specialty pharmaceutical drugs is fixed, and, due to the nature of the product, the member may neither return the specialty pharmaceutical drugs nor receive a refund. Revenues from the dispensing of specialty pharmaceutical drugs on behalf of health plans were $247.4 million, $350.3 million and $376.6 million for the years ended December 31, 2011, 2012 and 2013, respectively. | ||||||||||||||
Significant Customers | ||||||||||||||
Consolidated Company | ||||||||||||||
The Company provides behavioral healthcare management and other related services to approximately 660,000 members in Maricopa County, Arizona as the Regional Behavioral Health Authority ("RHBA") for GSA6 ("Maricopa County") pursuant to a contract with the State of Arizona (the "Maricopa Contract"). | ||||||||||||||
The Maricopa Contract generated net revenues that exceeded, in the aggregate, ten percent of net revenues for the consolidated Company for the years ended December 31, 2011, 2012 and 2013. The Maricopa Contract is for the management of the publicly funded behavioral health system that delivers mental health, substance abuse and crisis services for adults, youth, and children. Under the Maricopa Contract, the Company is responsible for providing covered behavioral health services to persons eligible under Title XIX (Medicaid) and Title XXI (State Children's Health Insurance Program) of the Social Security Act, non-Title XIX and non-Title XXI eligible children and adults with a serious mental illness, and to certain non-Title XIX and non-Title XXI adults with behavioral health or substance abuse disorders. The Maricopa Contract began on September 1, 2007 and was scheduled to expire on October 1, 2013. The Company and the State of Arizona have agreed to extend the Maricopa Contract through March 31, 2014. The State of Arizona has the right to terminate the Maricopa Contract for cause, as defined, upon ten days' notice with an opportunity to cure, and, after January 1, 2014, without cause upon 30 days prior notice to the Company. The Maricopa Contract generated net revenues of $779.5 million, $758.3 million and $755.0 million for the years ended December 31, 2011, 2012 and 2013, respectively. | ||||||||||||||
The State of Arizona had previously issued a Solicitation for a new RBHA for Maricopa County (the "New Contract") to replace the current contract with the Company to be effective on October 1, 2013. The New Contract is for the management of the publicly funded behavioral health system currently provided by the Company under the Maricopa Contract, and also includes an integrated behavioral and physical healthcare system for a small number of individuals with serious mental illness. Magellan Complete Care of Arizona ("MCCAZ"), a joint venture owned 80% by the Company and 20% by Vanguard/Phoenix Health Plan, previously submitted a bid for the Contract. | ||||||||||||||
On March 25, 2013, the Company was notified that MCCAZ was not selected as the RBHA for the New Contract. On April 3, 2013, the Company filed a formal protest regarding the State's decision to award the RBHA in Maricopa County to another vendor. On April 17, 2013, the Arizona Department of Health Services denied the Company's protest. On May 9, 2013, the Company filed an appeal of the denial of its protest (the "Appeal") with the Arizona Department of Administration (the "DOA"), the agency responsible for considering appeals of procurement protest denials. The Company also filed with the DOA a motion to stay the award and implementation of the contract pending a decision on the Appeal. On May 21, 2013, the DOA granted the Company's motion and issued a stay of the award and implementation of the contract pending resolution of the Appeal by the DOA (the "Stay"). | ||||||||||||||
On June 13, 2013 the DOA referred the Appeal for a hearing before an independent administrative law judge ("ALJ") in the Arizona Office of Administrative Hearings (the "OAH"). The OAH held an evidentiary hearing on the Appeal on September 18-27, 2013. On November 18, 2013, the ALJ issued a decision and recommended that the DOA rule against Magellan and dismiss the Appeal. On December 3, 2013 the DOA accepted the recommendation of the ALJ and issued a final administrative decision ruling against Magellan, affirming the award of the New Contract to the winning bidder, and dismissing the Appeal. The DOA also lifted the previously issued Stay on implementation of the New Contract. | ||||||||||||||
On December 6, 2013 Magellan filed an appeal of the DOA decision in the Arizona Superior Court in Maricopa County (the "Superior Court") and, on December 10, 2013, filed a motion seeking a judicial stay of the implementation of the contract until after the court's decision on the appeal. On February 18, 2014 the Superior Court issued an order denying the Company's motion for stay. The denial of the motion for stay does not impact the final decision on the merits of Magellan's appeal of the DOA decision, which will continue to proceed in the Superior Court. The Company also previously filed a separate civil lawsuit in the Superior Court challenging the legal authority of the public entity that is one of the key members of the non-profit winning bidder to invest in and participate in the winning bidder's performance under the New Contract. In connection with such civil suit, the Company previously filed a motion seeking a preliminary injunction that, if granted, could prohibit such public entity from participation as a member of the winning bidder in the New Contract. No decision on the motion for preliminary injunction in the separate civil suit has yet been issued by the court. There is no assurance that the Company will prevail on its appeal to the Superior Court or that a motion for preliminary injunction will be granted. | ||||||||||||||
In the event that the Company does not prevail on the appeal, the Company will likely incur shutdown costs pertaining to the contract, including severance, lease termination, and software impairment charges. As of December 31, 2013, the Company has recorded $6.1 million of such shutdown costs. | ||||||||||||||
By Segment | ||||||||||||||
In addition to the Maricopa Contract previously discussed, the following customers generated in excess of ten percent of net revenues for the respective segment for the years ended December 31, 2011, 2012 and 2013 (in thousands): | ||||||||||||||
Segment | Term Date | 2011 | 2012 | 2013 | ||||||||||
Commercial | ||||||||||||||
Customer A | June 30, 2014(1) | $ | 171,109 | $ | 192,415 | $ | 207,080 | |||||||
Customer B | December 31, 2017 | 67,049 | 67,959 | * | 71,085 | * | ||||||||
Customer C | December 31, 2012 to December 14, 2013(2)(3) | 111,607 | 118,351 | 74,203 | * | |||||||||
Customer D | December 31, 2019 | — | 134,885 | 141,444 | ||||||||||
Public Sector | ||||||||||||||
Customer E | June 30, 2014(4) | 191,063 | 240,224 | 321,072 | ||||||||||
Specialty Solutions | ||||||||||||||
Customer F | December 31, 2015 | 134,257 | 117,739 | 130,895 | ||||||||||
Customer G | June 30, 2011 to November 30, 2011(2)(5) | 38,297 | — | — | ||||||||||
Customer H | June 30, 2014 | 55,197 | 60,094 | 55,078 | ||||||||||
Customer I | July 31, 2015 | 36,293 | 57,455 | 61,838 | ||||||||||
Customer J | January 31, 2015 | 32,342 | * | 38,366 | 47,311 | |||||||||
Pharmacy Management | ||||||||||||||
Customer K | November 30, 2014 to December 31, 2014(2) | 90,563 | 129,209 | 133,724 | ||||||||||
Customer L | December 31, 2013(5) | 56,115 | 60,350 | 59,125 | * | |||||||||
Customer B | September 27, 2013 to December 31, 2013(2)(5) | 22,899 | * | 73,785 | 92,647 | |||||||||
Customer M | March 31, 2014(6) | 82,770 | 69,090 | 66,153 | * | |||||||||
* | ||||||||||||||
Revenue amount did not exceed ten percent of net revenues for the respective segment for the year presented. Amount is shown for comparative purposes only. | ||||||||||||||
-1 | ||||||||||||||
The customer has informed the Company that, after a competitive evaluation process, it has decided not to renew its contract after the contract expires on December 31, 2013. The contract was extended through June 30, 2014 to allow for transition to the new vendor. | ||||||||||||||
-2 | ||||||||||||||
The customer has more than one contract. The individual contracts are scheduled to terminate at various points during the time period indicated above. | ||||||||||||||
-3 | ||||||||||||||
Revenues for the year ended December 31, 2012 of $50.0 million relate to a contract that terminated as of December 31, 2012. | ||||||||||||||
-4 | ||||||||||||||
Contract has options for the customer to extend the term for one additional one-year period. | ||||||||||||||
-5 | ||||||||||||||
The contract has terminated. | ||||||||||||||
-6 | ||||||||||||||
This customer represents a subcontract with Public Sector for the Maricopa Contract, and is eliminated in consolidation. | ||||||||||||||
Concentration of Business | ||||||||||||||
The Company also has a significant concentration of business with various counties in the State of Pennsylvania (the "Pennsylvania Counties") which are part of the Pennsylvania Medicaid program, and with various areas in the State of Florida (the "Florida Areas") which are part of the Florida Medicaid program. Net revenues from the Pennsylvania Counties in the aggregate totaled $351.6 million, $354.1 million and $359.0 million for the years ended December 31, 2011, 2012 and 2013, respectively. Net revenues from the Florida Areas in the aggregate totaled $131.8 million, $133.9 million and $128.0 million for the years ended December 31, 2011, 2012 and 2013, respectively. | ||||||||||||||
The Company's contracts with customers typically have terms of one to three years, and in certain cases contain renewal provisions (at the customer's option) for successive terms of between one and two years (unless terminated earlier). Substantially all of these contracts may be immediately terminated with cause and many of the Company's contracts are terminable without cause by the customer or the Company either upon the giving of requisite notice and the passage of a specified period of time (typically between 60 and 180 days) or upon the occurrence of other specified events. In addition, the Company's contracts with federal, state and local governmental agencies generally are conditioned on legislative appropriations. These contracts generally can be terminated or modified by the customer if such appropriations are not made. | ||||||||||||||
Income Taxes | ' | |||||||||||||
Income Taxes | ||||||||||||||
The Company files a consolidated federal income tax return for the Company and its eighty-percent or more owned subsidiaries, and the Company and its subsidiaries file income tax returns in various state and local jurisdictions. | ||||||||||||||
The Company estimates income taxes for each of the jurisdictions in which it operates. This process involves determining both permanent and temporary differences resulting from differing treatment for tax and book purposes. Deferred tax assets and/or liabilities are determined by multiplying the temporary differences between the financial reporting and tax reporting bases for assets and liabilities by the enacted tax rates expected to be in effect when such differences are recovered or settled. The Company establishes valuation allowances against deferred tax assets if it is more likely than not that the deferred tax asset will not be realized. The need for a valuation allowance is determined based on the evaluation of various factors, including expectations of future earnings and management's judgment. The effect of a change in tax rates on deferred taxes is recognized in income in the period that includes the enactment date. | ||||||||||||||
Reversals of both valuation allowances and unrecognized tax benefits are recorded in the period they occur, typically as reductions to income tax expense. However, reversals of unrecognized tax benefits related to deductions for stock compensation in excess of the related book expense are recorded as increases in additional paid-in capital. To the extent reversals of unrecognized tax benefits cannot be specifically traced to these excess deductions due to complexities in the tax law, the Company records the tax benefit for such reversals to additional paid-in-capital on a pro-rata basis. | ||||||||||||||
The Company recognizes interim period income taxes by estimating an annual effective tax rate and applying it to year-to-date results. The estimated annual effective tax rate is periodically updated throughout the year based on actual results to date and an updated projection of full year income. Although the effective tax rate approach is generally used for interim periods, taxes on significant, unusual and infrequent items are recognized at the statutory tax rate entirely in the period the amounts are realized. | ||||||||||||||
Cash and Cash Equivalents | ' | |||||||||||||
Cash and Cash Equivalents | ||||||||||||||
Cash equivalents are short-term, highly liquid interest-bearing investments with maturity dates of three months or less when purchased, consisting primarily of money market instruments. At December 31, 2013, the Company's excess capital and undistributed earnings for the Company's regulated subsidiaries of $40.9 million are included in cash and cash equivalents. | ||||||||||||||
Restricted Assets | ' | |||||||||||||
Restricted Assets | ||||||||||||||
The Company has certain assets which are considered restricted for: (i) the payment of claims under the terms of certain managed care contracts; (ii) regulatory purposes related to the payment of claims in certain jurisdictions; and (iii) the maintenance of minimum required tangible net equity levels for certain of the Company's subsidiaries. Significant restricted assets of the Company as of December 31, 2012 and 2013 were as follows (in thousands): | ||||||||||||||
2012 | 2013 | |||||||||||||
Restricted cash | $ | 226,554 | $ | 236,696 | ||||||||||
Restricted short-term investments | 88,332 | 117,674 | ||||||||||||
Restricted deposits (included in other current assets) | 20,846 | 25,009 | ||||||||||||
Restricted long-term investments | 32,563 | 32,430 | ||||||||||||
| | | | | | | | |||||||
Total | $ | 368,295 | $ | 411,809 | ||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
Investments | ' | |||||||||||||
Investments | ||||||||||||||
All of the Company's investments are classified as "available-for-sale" and are carried at fair value. Securities which have been classified as Level 1 are measured using quoted market prices while those which have been classified as Level 2 are measured using quoted prices for identical assets and liabilities in markets that are not active. The Company's policy is to classify all investments with contractual maturities within one year as current. Investment income is recognized when earned and reported net of investment expenses. Net unrealized holding gains or losses are excluded from earnings and are reported, net of tax, as "accumulated other comprehensive income (loss)" in the accompanying consolidated balance sheets and consolidated statements of comprehensive income until realized, unless the losses are deemed to be other-than-temporary. Realized gains or losses, including any provision for other-than-temporary declines in value, are included in the consolidated statements of comprehensive income. | ||||||||||||||
If a debt security is in an unrealized loss position and the Company has the intent to sell the debt security, or it is more likely than not that the Company will have to sell the debt security before recovery of its amortized cost basis, the decline in value is deemed to be other-than-temporary and is recorded to other-than-temporary impairment losses recognized in income in the consolidated statements of comprehensive income. For impaired debt securities that the Company does not intend to sell or it is more likely than not that the Company will not have to sell such securities, but the Company expects that it will not fully recover the amortized cost basis, the credit component of the other-than-temporary impairment is recognized in other-than-temporary impairment losses recognized in income in the consolidated statements of comprehensive income and the non-credit component of the other-than-temporary impairment is recognized in other comprehensive income. | ||||||||||||||
The credit component of an other-than-temporary impairment is determined by comparing the net present value of projected future cash flows with the amortized cost basis of the debt security. The net present value is calculated by discounting the best estimate of projected future cash flows at the effective interest rate implicit in the debt security at the date of acquisition. Cash flow estimates are driven by assumptions regarding probability of default, including changes in credit ratings, and estimates regarding timing and amount of recoveries associated with a default. Furthermore, unrealized losses entirely caused by non-credit related factors related to debt securities for which the Company expects to fully recover the amortized cost basis continue to be recognized in accumulated other comprehensive income. | ||||||||||||||
As of December 31, 2012 and 2013, there were no unrealized losses that the Company believed to be other-than-temporary. No realized gains or losses were recorded for the years ended December 31, 2011, 2012 or 2013. The following is a summary of short-term and long-term investments at December 31, 2012 and 2013 (in thousands): | ||||||||||||||
December 31, 2012 | ||||||||||||||
Amortized | Gross | Gross | Estimated | |||||||||||
Cost | Unrealized | Unrealized | Fair | |||||||||||
Gains | Losses | Value | ||||||||||||
U.S. Government and agency securities | $ | 1,065 | $ | — | $ | — | $ | 1,065 | ||||||
Obligations of government-sponsored enterprises(1) | 6,126 | 4 | (2 | ) | 6,128 | |||||||||
Corporate debt securities | 214,603 | 66 | (122 | ) | 214,547 | |||||||||
Certificates of deposit | 150 | — | — | 150 | ||||||||||
Taxable municipal bonds | 11,805 | — | (5 | ) | 11,800 | |||||||||
| | | | | | | | | | | | | | |
Total investments at December 31, 2012 | $ | 233,749 | $ | 70 | $ | (129 | ) | $ | 233,690 | |||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
December 31, 2013 | ||||||||||||||
Amortized | Gross | Gross | Estimated | |||||||||||
Cost | Unrealized | Unrealized | Fair | |||||||||||
Gains | Losses | Value | ||||||||||||
U.S. Government and agency securities | $ | 1,129 | $ | — | $ | — | $ | 1,129 | ||||||
Obligations of government-sponsored enterprises(1) | 8,441 | 2 | (3 | ) | 8,440 | |||||||||
Corporate debt securities | 198,748 | 18 | (172 | ) | 198,594 | |||||||||
Certificates of deposit | 150 | — | — | 150 | ||||||||||
| | | | | | | | | | | | | | |
Total investments at December 31, 2013 | $ | 208,468 | $ | 20 | $ | (175 | ) | $ | 208,313 | |||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
-1 | ||||||||||||||
Includes investments in notes issued by the Federal Home Loan Bank. | ||||||||||||||
The maturity dates of the Company's investments as of December 31, 2013 are summarized below (in thousands): | ||||||||||||||
Amortized | Estimated | |||||||||||||
Cost | Fair Value | |||||||||||||
2014 | $ | 175,997 | $ | 175,883 | ||||||||||
2015 | 31,518 | 31,479 | ||||||||||||
2016 | 953 | 951 | ||||||||||||
| | | | | | | | |||||||
Total investments at December 31, 2013 | $ | 208,468 | $ | 208,313 | ||||||||||
| | | | | | | | |||||||
Accounts Receivable | ' | |||||||||||||
Accounts Receivable | ||||||||||||||
The Company's accounts receivable consists of amounts due from customers throughout the United States. Collateral is generally not required. The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. Management believes the allowance for doubtful accounts is adequate to provide for normal credit losses. | ||||||||||||||
Concentration of Credit Risk | ' | |||||||||||||
Concentration of Credit Risk | ||||||||||||||
Accounts receivable subjects the Company to a concentration of credit risk with third party payors that include health insurance companies, managed healthcare organizations, healthcare providers and governmental entities. | ||||||||||||||
The Company maintains cash and cash equivalents balances at financial institutions and are insured by the Federal Deposit Insurance Corporation ("FDIC"). At times, balances in certain bank accounts may exceed the FDIC insured limits. | ||||||||||||||
Pharmaceutical Inventory | ' | |||||||||||||
Pharmaceutical Inventory | ||||||||||||||
Pharmaceutical inventory consists solely of finished goods (primarily prescription drugs) and are stated at the lower of first-in first-out cost or market. | ||||||||||||||
Long-lived Assets | ' | |||||||||||||
Long-lived Assets | ||||||||||||||
Long-lived assets, including property and equipment and intangible assets to be held and used, are currently reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount should be addressed. Impairment is determined by comparing the carrying value of these long-lived assets to management's best estimate of the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. The cash flow projections used to make this assessment are consistent with the cash flow projections that management uses internally in making key decisions. In the event an impairment exists, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the asset, which is generally determined by using quoted market prices or the discounted present value of expected future cash flows. | ||||||||||||||
Property and Equipment | ' | |||||||||||||
Property and Equipment | ||||||||||||||
Property and equipment is stated at cost, except for assets that have been impaired, for which the carrying amount has been reduced to estimated fair value. Expenditures for renewals and improvements are capitalized to the property accounts. Replacements and maintenance and repairs that do not improve or extend the life of the respective assets are expensed as incurred. The Company capitalizes costs incurred to develop internal-use software during the application development stage. Capitalization of software development costs occurs after the preliminary project stage is complete, management authorizes the project, and it is probable that the project will be completed and the software will be used for the function intended. Amortization of capital lease assets is included in depreciation expense and is included in accumulated depreciation as reflected in the table below. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets, which is generally two to ten years for building improvements (or the lease term, if shorter), three to fifteen years for equipment and three to five years for capitalized internal-use software. The net capitalized internal use software as of December 31, 2012 and 2013 was $71.1 million and $78.8 million, respectively. Depreciation expense was $47.9 million, $50.8 million and $61.4 million for the years ended December 31, 2011, 2012 and 2013, respectively. Included in depreciation expense for the years ended December 31, 2011, 2012 and 2013 was $28.9 million, $28.8 million and $34.8 million, respectively, related to capitalized internal use software. | ||||||||||||||
Property and equipment, net, consisted of the following at December 31, 2012 and 2013 (in thousands): | ||||||||||||||
2012 | 2013 | |||||||||||||
Building improvements | $ | 7,285 | $ | 12,074 | ||||||||||
Equipment | 168,400 | 180,540 | ||||||||||||
Capital leases—property | — | 26,945 | ||||||||||||
Capital leases—equipment | — | 2,794 | ||||||||||||
Capitalized internal-use software | 261,833 | 304,146 | ||||||||||||
| | | | | | | | |||||||
437,518 | 526,499 | |||||||||||||
Accumulated depreciation | (300,970 | ) | (354,166 | ) | ||||||||||
| | | | | | | | |||||||
Property and equipment, net | $ | 136,548 | $ | 172,333 | ||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
Goodwill | ' | |||||||||||||
Goodwill | ||||||||||||||
The Company is required to test its goodwill for impairment on at least an annual basis. The Company has selected October 1 as the date of its annual impairment test. The goodwill impairment test is a two-step process that requires management to make judgments in determining what assumptions to use in the calculation. The first step of the process consists of estimating the fair value of each reporting unit with goodwill based on various valuation techniques, with the primary technique being a discounted cash flow analysis, which requires the input of various assumptions with respect to revenues, operating margins, growth rates and discount rates. The estimated fair value for each reporting unit is compared to the carrying value of the reporting unit, which includes goodwill. If the estimated fair value is less than the carrying value, a second step is performed to compute the amount of the impairment by determining an "implied fair value" of goodwill. The determination of a reporting unit's "implied fair value" of goodwill requires the Company to allocate the estimated fair value of the reporting unit to the assets and liabilities of the reporting unit. Any unallocated fair value represents the "implied fair value" of goodwill, which is compared to its corresponding carrying value. | ||||||||||||||
Goodwill is tested for impairment at a level referred to as a reporting unit, with the Company's reporting units as of December 31, 2013 comprised of Health Plan, Specialty Solutions, Pharmacy Management, and Public Sector. Prior to October 1, 2013, the Company's reporting units included Specialty Pharmaceutical Management and Medicaid Administration. Effective October 1, 2013, the goodwill associated with these reporting units was aggregated with the goodwill recognized from the acquisition of Partners Rx Management, LLC ("Partners Rx"), and represent the Pharmacy Management reporting unit. The change in reporting units was attributable to the fact that discrete financial information is now being reviewed at the Pharmacy Management operating segment level. The Company's marketing and pricing of pharmacy products is on an integrated basis and integration of pharmacy related operations contributed to the reporting unit change. | ||||||||||||||
The fair value of the Health Plan (a component of the Commercial segment) and Specialty Solutions reporting units were determined using a discounted cash flow method. This method involves estimating the present value of estimated future cash flows utilizing a risk adjusted discount rate. Key assumptions for this method include cash flow projections, terminal growth rates and discount rates. | ||||||||||||||
The fair value of the Pharmacy Management reporting unit was determined using discounted cash flow, guideline company and similar transaction methods. Key assumptions for the discounted cash flow method are consistent with those described above. For the guideline company method, revenue and earnings before interest, taxes, depreciation, and amortization ("EBITDA") multiples for guideline companies were applied to the reporting unit's pro forma revenue and EDITDA for 2013, which represents actual results for the nine-month period ended September 30, 2013 and projected results for the three-month period ended December 31, 2013, and to the reporting unit's projected revenue and EBITDA for 2014. For the similar transaction method, revenue and EBITDA multiples based on merger and acquisition transactions for similar companies were applied to the reporting unit's pro forma revenue and EBITDA for 2013, which represents actual results for the nine-month period ended September 30, 2013 and projected results for the three-month period ended December 31, 2013. The weighting applied to the fair values determined using the discounted cash flow, guideline company and similar transaction methods to determine an overall fair value for the Pharmacy Management reporting unit was 75 percent, 22.5 percent and 2.5 percent, respectively. The weighting of each of the methods described above was based on the relevance of the approach. A change in the weighting would not change the outcome of the first step of the impairment test. | ||||||||||||||
As a result of the first step of the 2013 annual goodwill impairment analysis, the fair value of each reporting unit with goodwill exceeded its carrying value. Therefore, the second step was not necessary. However, a 47.9 percent, 32.9 percent, and 25.5 percent decline in the fair values of the Health Plan, Specialty Solutions, and Pharmacy Management reporting units, respectively, would have caused the carrying values for these reporting units to be in excess of fair values, which would require the second step to be performed. The second step could have resulted in an impairment loss for goodwill. | ||||||||||||||
The Company's goodwill attributed to the Public Sector reporting unit is related to the AlphaCare Holdings, Inc. ("AlphaCare Holdings") acquisition which closed on December 31, 2013, therefore an impairment analysis was not performed for this reporting unit in 2013. | ||||||||||||||
Goodwill for each of the Company's reporting units at December 31, 2012 and 2013 were as follows (in thousands): | ||||||||||||||
2012 | 2013 | |||||||||||||
Health Plan | $ | 120,485 | $ | 120,485 | ||||||||||
Specialty Solutions | 104,549 | 104,549 | ||||||||||||
Pharmacy Management | 201,905 | 242,290 | ||||||||||||
Public Sector | — | 20,882 | ||||||||||||
| | | | | | | | |||||||
Total | $ | 426,939 | $ | 488,206 | ||||||||||
| | | | | | | | |||||||
The changes in the carrying amount of goodwill for the years ended December 31, 2012 and 2013 are reflected in the table below (in thousands): | ||||||||||||||
2012 | 2013 | |||||||||||||
Balance as of beginning of period | $ | 426,939 | $ | 426,939 | ||||||||||
Acquisition of Partners Rx | — | 40,385 | ||||||||||||
Acquisition of AlphaCare Holdings | — | 20,882 | ||||||||||||
| | | | | | | | |||||||
Balance as of end of period | $ | 426,939 | $ | 488,206 | ||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
Intangible Assets | ' | |||||||||||||
Intangible Assets | ||||||||||||||
The following is a summary of intangible assets at December 31, 2012 and 2013, and the estimated useful lives for such assets (in thousands): | ||||||||||||||
December 31, 2012 | ||||||||||||||
Asset | Estimated | Gross | Accumulated | Net | ||||||||||
Useful Life | Carrying | Amortization | Carrying | |||||||||||
Amount | Amount | |||||||||||||
Customer agreements and lists | 3 to 18 years | $ | 121,490 | $ | (90,548 | ) | $ | 30,942 | ||||||
Provider networks and other | 5 to 16 years | 8,743 | (4,750 | ) | 3,993 | |||||||||
| | | | | | | | | | | | | ||
$ | 130,233 | $ | (95,298 | ) | $ | 34,935 | ||||||||
| | | | | | | | | | | | | ||
| | | | | | | | | | | | | ||
December 31, 2013 | ||||||||||||||
Asset | Estimated | Gross | Accumulated | Net | ||||||||||
Useful Life | Carrying | Amortization | Carrying | |||||||||||
Amount | Amount | |||||||||||||
Customer agreements and lists | 2.5 to 18 years | $ | 163,990 | $ | (100,482 | ) | $ | 63,508 | ||||||
Provider networks and other | 1 to 16 years | 11,593 | (5,407 | ) | 6,186 | |||||||||
| | | | | | | | | | | | | ||
$ | 175,583 | $ | (105,889 | ) | $ | 69,694 | ||||||||
| | | | | | | | | | | | | ||
| | | | | | | | | | | | | ||
Amortization expense was $10.7 million, $9.7 million and $10.6 million for the years ended December 31, 2011, 2012 and 2013, respectively. The Company estimates amortization expense will be $15.4 million, $14.0 million, $9.9 million, $6.1 million and $4.6 million for the years ending December 31, 2014, 2015, 2015, 2017, and 2018 respectively. | ||||||||||||||
Cost of Care, Medical Claims Payable and Other Medical Liabilities | ' | |||||||||||||
Cost of Care, Medical Claims Payable and Other Medical Liabilities | ||||||||||||||
Cost of care is recognized in the period in which members receive managed healthcare services. In addition to actual benefits paid, cost of care in a period also includes the impact of accruals for estimates of medical claims payable. Medical claims payable represents the liability for healthcare claims reported but not yet paid and claims incurred but not yet reported ("IBNR") related to the Company's managed healthcare businesses. Such liabilities are determined by employing actuarial methods that are commonly used by health insurance actuaries and that meet actuarial standards of practice. | ||||||||||||||
The IBNR portion of medical claims payable is estimated based on past claims payment experience for member groups, enrollment data, utilization statistics, authorized healthcare services and other factors. This data is incorporated into contract-specific actuarial reserve models and is further analyzed to create "completion factors" that represent the average percentage of total incurred claims that have been paid through a given date after being incurred. Factors that affect estimated completion factors include benefit changes, enrollment changes, shifts in product mix, seasonality influences, provider reimbursement changes, changes in claims inventory levels, the speed of claims processing and changes in paid claim levels. Completion factors are applied to claims paid through the financial statement date to estimate the ultimate claim expense incurred for the current period. Actuarial estimates of claim liabilities are then determined by subtracting the actual paid claims from the estimate of the ultimate incurred claims. For the most recent incurred months (generally the most recent two months), the percentage of claims paid for claims incurred in those months is generally low. This makes the completion factor methodology less reliable for such months. Therefore, incurred claims for any month with a completion factor that is less than 70 percent are generally not projected from historical completion and payment patterns; rather they are projected by estimating claims expense based on recent monthly estimated cost incurred per member per month times membership, taking into account seasonality influences, benefit changes and healthcare trend levels, collectively considered to be "trend factors." | ||||||||||||||
Medical claims payable balances are continually monitored and reviewed. If it is determined that the Company's assumptions in estimating such liabilities are significantly different than actual results, the Company's results of operations and financial position could be impacted in future periods. Adjustments of prior period estimates may result in additional cost of care or a reduction of cost of care in the period an adjustment is made. Further, due to the considerable variability of healthcare costs, adjustments to claim liabilities occur each period and are sometimes significant as compared to the net income recorded in that period. Prior period development is recognized immediately upon the actuary's judgment that a portion of the prior period liability is no longer needed or that additional liability should have been accrued. The following table presents the components of the change in medical claims payable for the years ended December 31, 2011, 2012 and 2013 (in thousands): | ||||||||||||||
2011 | 2012 | 2013(3) | ||||||||||||
Claims payable and IBNR, beginning of period | $ | 166,095 | $ | 157,099 | $ | 222,929 | ||||||||
Cost of care: | ||||||||||||||
Current year | 1,790,124 | 2,076,190 | 2,264,276 | |||||||||||
Prior years | (5,400 | ) | (4,300 | ) | (31,300 | ) | ||||||||
| | | | | | | | | | | ||||
Total cost of care | 1,784,724 | 2,071,890 | 2,232,976 | |||||||||||
| | | | | | | | | | | ||||
Claim payments and transfers to other medical liabilities(1): | ||||||||||||||
Current year | 1,657,291 | 1,877,459 | 2,053,274 | |||||||||||
Prior years | 136,429 | 128,601 | 160,402 | |||||||||||
| | | | | | | | | | | ||||
Total claim payments and transfers to other medical liabilities | 1,793,720 | 2,006,060 | 2,213,676 | |||||||||||
| | | | | | | | | | | ||||
Claims payable and IBNR, end of period | 157,099 | 222,929 | 242,229 | |||||||||||
Withhold receivables, end of period(2) | (19,126 | ) | (24,500 | ) | (13,888 | ) | ||||||||
| | | | | | | | | | | ||||
Medical claims payable, end of period | $ | 137,973 | $ | 198,429 | $ | 228,341 | ||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
-1 | ||||||||||||||
For any given period, a portion of unpaid medical claims payable could be covered by reinvestment liability (discussed below) and may not impact the Company's results of operations for such periods. | ||||||||||||||
-2 | ||||||||||||||
Medical claims payable is offset by customer withholds from capitation payments in situations in which the customer has the contractual requirement to pay providers for care incurred. | ||||||||||||||
-3 | ||||||||||||||
The favorable development of prior years cost of care includes approximately $15.1 million of adjustments of block funding to providers resulting from an annual reconciliation process. | ||||||||||||||
Actuarial standards of practice require that the claim liabilities be adequate under moderately adverse circumstances. Adverse circumstances are situations in which the actual claims experience could be higher than the otherwise estimated value of such claims. In many situations, the claims paid amount experienced will be less than the estimate that satisfies the actuarial standards of practice. | ||||||||||||||
Due to the existence of risk sharing and reinvestment provisions in certain customer contracts, principally in the Public Sector segment, a change in the estimate for medical claims payable does not necessarily result in an equivalent impact on cost of care. | ||||||||||||||
The Company believes that the amount of medical claims payable is adequate to cover its ultimate liability for unpaid claims as of December 31, 2013; however, actual claims payments may differ from established estimates. | ||||||||||||||
Other medical liabilities consist primarily of "reinvestment" payables under certain managed healthcare contracts with Medicaid customers and "profit share" payables under certain risk-based contracts. Under a contract with reinvestment features, if the cost of care is less than certain minimum amounts specified in the contract (usually as a percentage of revenue), the Company is required to "reinvest" such difference in behavioral healthcare programs when and as specified by the customer or to pay the difference to the customer for their use in funding such programs. Under a contract with profit share provisions, if the cost of care is below certain specified levels, the Company will "share" the cost savings with the customer at the percentages set forth in the contract. | ||||||||||||||
Accrued Liabilities | ' | |||||||||||||
Accrued Liabilities | ||||||||||||||
As of December 31, 2012 and 2013, the only individual current liability that exceeded five percent of total current liabilities related to accrued employee compensation liabilities of $36.5 million and $40.2 million, respectively. | ||||||||||||||
Net Income per Common Share | ' | |||||||||||||
Net Income per Common Share | ||||||||||||||
Net income per common share is computed based on the weighted average number of shares of common stock and common stock equivalents outstanding during the period (see Note 6—"Stockholders' Equity"). | ||||||||||||||
Redeemable Non-controlling Interest | ' | |||||||||||||
Redeemable Non-Controlling Interest | ||||||||||||||
Noncontrolling interests with redemption features, such as put options, that are not solely within the Company's control are considered redeemable noncontrolling interest. Redeemable noncontrolling interest is considered to be temporary equity and is therefore reported in the mezzanine section between liabilities and equity on the Company's consolidated balance sheets at the greater of the initial carrying amount adjusted for the noncontrolling interest's share of net income or loss or its redemption value. | ||||||||||||||
Stock Compensation | ' | |||||||||||||
Stock Compensation | ||||||||||||||
The Company uses the Black-Scholes-Merton formula to estimate the fair value of substantially all stock options granted to employees, and recorded stock compensation expense of $17.4 million, $17.8 million and $21.3 million for the years ended December 31, 2011, 2012 and 2013, respectively. As stock compensation expense recognized in the consolidated statements of comprehensive income for the years ended December 31, 2011, 2012 and 2013 is based on awards ultimately expected to vest, it has been reduced for annual estimated forfeitures of four percent. If the actual number of forfeitures differs from those estimated, additional adjustments to compensation expense may be required in future periods. If vesting of an award is conditioned upon the achievement of performance goals, compensation expense during the performance period is estimated using the most probable outcome of the performance goals, and adjusted as the expected outcome changes. The Company recognizes compensation costs for awards that do not contain performance conditions on a straight-line basis over the requisite service period, which is generally the vesting term of three years. For restricted stock units that include performance conditions, stock compensation is recognized using an accelerated method over the vesting period. | ||||||||||||||
Fair Value Measurements | ' | |||||||||||||
Fair Value Measurements | ||||||||||||||
The Company currently does not have non-financial assets and non-financial liabilities that are required to be measured at fair value on a recurring basis. Financial assets and liabilities are to be measured using inputs from the three levels of the fair value hierarchy, which are as follows: | ||||||||||||||
Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. | ||||||||||||||
Level 2—Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). | ||||||||||||||
Level 3—Unobservable inputs that reflect the Company's assumptions about the assumptions that market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available, including the Company's data. | ||||||||||||||
In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company's financial assets and liabilities that are required to be measured at fair value as of December 31, 2012 and 2013 (in thousands): | ||||||||||||||
Fair Value Measurements | ||||||||||||||
at December 31, 2012 | ||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||
Cash and Cash Equivalents(1) | $ | — | $ | 102,137 | $ | — | $ | 102,137 | ||||||
Restricted Cash(2) | — | 82,839 | — | 82,839 | ||||||||||
Investments: | ||||||||||||||
U.S. Government and agency securities | 1,065 | — | — | 1,065 | ||||||||||
Obligations of government-sponsored enterprises(3) | — | 6,128 | — | 6,128 | ||||||||||
Corporate debt securities | — | 214,547 | — | 214,547 | ||||||||||
Taxable municipal bonds | — | 11,800 | — | 11,800 | ||||||||||
Certificates of deposit | — | 150 | — | 150 | ||||||||||
| | | | | | | | | | | | | | |
December 31, 2012 | $ | 1,065 | $ | 417,601 | $ | — | $ | 418,666 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Fair Value Measurements | ||||||||||||||
at December 31, 2013 | ||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||
Cash and Cash Equivalents(4) | $ | — | $ | 101,028 | $ | — | $ | 101,028 | ||||||
Restricted Cash(5) | — | 128,318 | — | 128,318 | ||||||||||
Investments: | ||||||||||||||
U.S. Government and agency securities | 1,129 | — | — | 1,129 | ||||||||||
Obligations of government-sponsored enterprises(3) | — | 8,440 | — | 8,440 | ||||||||||
Corporate debt securities | — | 198,594 | — | 198,594 | ||||||||||
Certificates of deposit | — | 150 | — | 150 | ||||||||||
| | | | | | | | | | | | | | |
December 31, 2013 | $ | 1,129 | $ | 436,530 | $ | — | $ | 437,659 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
-1 | ||||||||||||||
Excludes $87.3 million of cash held in bank accounts by the Company. | ||||||||||||||
-2 | ||||||||||||||
Excludes $143.7 million of restricted cash held in bank accounts by the Company. | ||||||||||||||
-3 | ||||||||||||||
Includes investments in notes issued by the Federal Home Loan Bank. | ||||||||||||||
-4 | ||||||||||||||
Excludes $102.2 million of cash held in bank accounts by the Company. | ||||||||||||||
-5 | ||||||||||||||
Excludes $108.4 million of restricted cash held in bank accounts by the Company. | ||||||||||||||
Reclassifications | ' | |||||||||||||
Reclassifications | ||||||||||||||
Certain prior year amounts have been reclassified to conform with the current year presentation. | ||||||||||||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
Summary of Significant Accounting Policies | ' | |||||||||||||
Schedule of customers generating in excess of ten percent of net revenues for respective segment | ' | |||||||||||||
In addition to the Maricopa Contract previously discussed, the following customers generated in excess of ten percent of net revenues for the respective segment for the years ended December 31, 2011, 2012 and 2013 (in thousands): | ||||||||||||||
Segment | Term Date | 2011 | 2012 | 2013 | ||||||||||
Commercial | ||||||||||||||
Customer A | June 30, 2014(1) | $ | 171,109 | $ | 192,415 | $ | 207,080 | |||||||
Customer B | December 31, 2017 | 67,049 | 67,959 | * | 71,085 | * | ||||||||
Customer C | December 31, 2012 to December 14, 2013(2)(3) | 111,607 | 118,351 | 74,203 | * | |||||||||
Customer D | December 31, 2019 | — | 134,885 | 141,444 | ||||||||||
Public Sector | ||||||||||||||
Customer E | June 30, 2014(4) | 191,063 | 240,224 | 321,072 | ||||||||||
Specialty Solutions | ||||||||||||||
Customer F | December 31, 2015 | 134,257 | 117,739 | 130,895 | ||||||||||
Customer G | June 30, 2011 to November 30, 2011(2)(5) | 38,297 | — | — | ||||||||||
Customer H | June 30, 2014 | 55,197 | 60,094 | 55,078 | ||||||||||
Customer I | July 31, 2015 | 36,293 | 57,455 | 61,838 | ||||||||||
Customer J | January 31, 2015 | 32,342 | * | 38,366 | 47,311 | |||||||||
Pharmacy Management | ||||||||||||||
Customer K | November 30, 2014 to December 31, 2014(2) | 90,563 | 129,209 | 133,724 | ||||||||||
Customer L | December 31, 2013(5) | 56,115 | 60,350 | 59,125 | * | |||||||||
Customer B | September 27, 2013 to December 31, 2013(2)(5) | 22,899 | * | 73,785 | 92,647 | |||||||||
Customer M | March 31, 2014(6) | 82,770 | 69,090 | 66,153 | * | |||||||||
* | ||||||||||||||
Revenue amount did not exceed ten percent of net revenues for the respective segment for the year presented. Amount is shown for comparative purposes only. | ||||||||||||||
-1 | ||||||||||||||
The customer has informed the Company that, after a competitive evaluation process, it has decided not to renew its contract after the contract expires on December 31, 2013. The contract was extended through June 30, 2014 to allow for transition to the new vendor. | ||||||||||||||
-2 | ||||||||||||||
The customer has more than one contract. The individual contracts are scheduled to terminate at various points during the time period indicated above. | ||||||||||||||
-3 | ||||||||||||||
Revenues for the year ended December 31, 2012 of $50.0 million relate to a contract that terminated as of December 31, 2012. | ||||||||||||||
-4 | ||||||||||||||
Contract has options for the customer to extend the term for one additional one-year period. | ||||||||||||||
-5 | ||||||||||||||
The contract has terminated. | ||||||||||||||
-6 | ||||||||||||||
This customer represents a subcontract with Public Sector for the Maricopa Contract, and is eliminated in consolidation. | ||||||||||||||
Schedule of significant restricted assets | ' | |||||||||||||
Significant restricted assets of the Company as of December 31, 2012 and 2013 were as follows (in thousands): | ||||||||||||||
2012 | 2013 | |||||||||||||
Restricted cash | $ | 226,554 | $ | 236,696 | ||||||||||
Restricted short-term investments | 88,332 | 117,674 | ||||||||||||
Restricted deposits (included in other current assets) | 20,846 | 25,009 | ||||||||||||
Restricted long-term investments | 32,563 | 32,430 | ||||||||||||
| | | | | | | | |||||||
Total | $ | 368,295 | $ | 411,809 | ||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
Summary of short-term and long-term "available-for-sale" investments | ' | |||||||||||||
The following is a summary of short-term and long-term investments at December 31, 2012 and 2013 (in thousands): | ||||||||||||||
December 31, 2012 | ||||||||||||||
Amortized | Gross | Gross | Estimated | |||||||||||
Cost | Unrealized | Unrealized | Fair | |||||||||||
Gains | Losses | Value | ||||||||||||
U.S. Government and agency securities | $ | 1,065 | $ | — | $ | — | $ | 1,065 | ||||||
Obligations of government-sponsored enterprises(1) | 6,126 | 4 | (2 | ) | 6,128 | |||||||||
Corporate debt securities | 214,603 | 66 | (122 | ) | 214,547 | |||||||||
Certificates of deposit | 150 | — | — | 150 | ||||||||||
Taxable municipal bonds | 11,805 | — | (5 | ) | 11,800 | |||||||||
| | | | | | | | | | | | | | |
Total investments at December 31, 2012 | $ | 233,749 | $ | 70 | $ | (129 | ) | $ | 233,690 | |||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
December 31, 2013 | ||||||||||||||
Amortized | Gross | Gross | Estimated | |||||||||||
Cost | Unrealized | Unrealized | Fair | |||||||||||
Gains | Losses | Value | ||||||||||||
U.S. Government and agency securities | $ | 1,129 | $ | — | $ | — | $ | 1,129 | ||||||
Obligations of government-sponsored enterprises(1) | 8,441 | 2 | (3 | ) | 8,440 | |||||||||
Corporate debt securities | 198,748 | 18 | (172 | ) | 198,594 | |||||||||
Certificates of deposit | 150 | — | — | 150 | ||||||||||
| | | | | | | | | | | | | | |
Total investments at December 31, 2013 | $ | 208,468 | $ | 20 | $ | (175 | ) | $ | 208,313 | |||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
-1 | ||||||||||||||
Includes investments in notes issued by the Federal Home Loan Bank. | ||||||||||||||
Summary of maturity dates of investments | ' | |||||||||||||
The maturity dates of the Company's investments as of December 31, 2013 are summarized below (in thousands): | ||||||||||||||
Amortized | Estimated | |||||||||||||
Cost | Fair Value | |||||||||||||
2014 | $ | 175,997 | $ | 175,883 | ||||||||||
2015 | 31,518 | 31,479 | ||||||||||||
2016 | 953 | 951 | ||||||||||||
| | | | | | | | |||||||
Total investments at December 31, 2013 | $ | 208,468 | $ | 208,313 | ||||||||||
| | | | | | | | |||||||
Schedule of net property and equipment | ' | |||||||||||||
Property and equipment, net, consisted of the following at December 31, 2012 and 2013 (in thousands): | ||||||||||||||
2012 | 2013 | |||||||||||||
Building improvements | $ | 7,285 | $ | 12,074 | ||||||||||
Equipment | 168,400 | 180,540 | ||||||||||||
Capital leases—property | — | 26,945 | ||||||||||||
Capital leases—equipment | — | 2,794 | ||||||||||||
Capitalized internal-use software | 261,833 | 304,146 | ||||||||||||
| | | | | | | | |||||||
437,518 | 526,499 | |||||||||||||
Accumulated depreciation | (300,970 | ) | (354,166 | ) | ||||||||||
| | | | | | | | |||||||
Property and equipment, net | $ | 136,548 | $ | 172,333 | ||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
Schedule of allocation of goodwill by reporting units | ' | |||||||||||||
Goodwill for each of the Company's reporting units at December 31, 2012 and 2013 were as follows (in thousands): | ||||||||||||||
2012 | 2013 | |||||||||||||
Health Plan | $ | 120,485 | $ | 120,485 | ||||||||||
Specialty Solutions | 104,549 | 104,549 | ||||||||||||
Pharmacy Management | 201,905 | 242,290 | ||||||||||||
Public Sector | — | 20,882 | ||||||||||||
| | | | | | | | |||||||
Total | $ | 426,939 | $ | 488,206 | ||||||||||
| | | | | | | | |||||||
Summary changes in the carrying amount of goodwill | ' | |||||||||||||
The changes in the carrying amount of goodwill for the years ended December 31, 2012 and 2013 are reflected in the table below (in thousands): | ||||||||||||||
2012 | 2013 | |||||||||||||
Balance as of beginning of period | $ | 426,939 | $ | 426,939 | ||||||||||
Acquisition of Partners Rx | — | 40,385 | ||||||||||||
Acquisition of AlphaCare Holdings | — | 20,882 | ||||||||||||
| | | | | | | | |||||||
Balance as of end of period | $ | 426,939 | $ | 488,206 | ||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
Schedule of intangible assets | ' | |||||||||||||
The following is a summary of intangible assets at December 31, 2012 and 2013, and the estimated useful lives for such assets (in thousands): | ||||||||||||||
December 31, 2012 | ||||||||||||||
Asset | Estimated | Gross | Accumulated | Net | ||||||||||
Useful Life | Carrying | Amortization | Carrying | |||||||||||
Amount | Amount | |||||||||||||
Customer agreements and lists | 3 to 18 years | $ | 121,490 | $ | (90,548 | ) | $ | 30,942 | ||||||
Provider networks and other | 5 to 16 years | 8,743 | (4,750 | ) | 3,993 | |||||||||
| | | | | | | | | | | | | ||
$ | 130,233 | $ | (95,298 | ) | $ | 34,935 | ||||||||
| | | | | | | | | | | | | ||
| | | | | | | | | | | | | ||
December 31, 2013 | ||||||||||||||
Asset | Estimated | Gross | Accumulated | Net | ||||||||||
Useful Life | Carrying | Amortization | Carrying | |||||||||||
Amount | Amount | |||||||||||||
Customer agreements and lists | 2.5 to 18 years | $ | 163,990 | $ | (100,482 | ) | $ | 63,508 | ||||||
Provider networks and other | 1 to 16 years | 11,593 | (5,407 | ) | 6,186 | |||||||||
| | | | | | | | | | | | | ||
$ | 175,583 | $ | (105,889 | ) | $ | 69,694 | ||||||||
| | | | | | | | | | | | | ||
| | | | | | | | | | | | | ||
Schedule of changes in medical claims payable | ' | |||||||||||||
The following table presents the components of the change in medical claims payable for the years ended December 31, 2011, 2012 and 2013 (in thousands): | ||||||||||||||
2011 | 2012 | 2013(3) | ||||||||||||
Claims payable and IBNR, beginning of period | $ | 166,095 | $ | 157,099 | $ | 222,929 | ||||||||
Cost of care: | ||||||||||||||
Current year | 1,790,124 | 2,076,190 | 2,264,276 | |||||||||||
Prior years | (5,400 | ) | (4,300 | ) | (31,300 | ) | ||||||||
| | | | | | | | | | | ||||
Total cost of care | 1,784,724 | 2,071,890 | 2,232,976 | |||||||||||
| | | | | | | | | | | ||||
Claim payments and transfers to other medical liabilities(1): | ||||||||||||||
Current year | 1,657,291 | 1,877,459 | 2,053,274 | |||||||||||
Prior years | 136,429 | 128,601 | 160,402 | |||||||||||
| | | | | | | | | | | ||||
Total claim payments and transfers to other medical liabilities | 1,793,720 | 2,006,060 | 2,213,676 | |||||||||||
| | | | | | | | | | | ||||
Claims payable and IBNR, end of period | 157,099 | 222,929 | 242,229 | |||||||||||
Withhold receivables, end of period(2) | (19,126 | ) | (24,500 | ) | (13,888 | ) | ||||||||
| | | | | | | | | | | ||||
Medical claims payable, end of period | $ | 137,973 | $ | 198,429 | $ | 228,341 | ||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | | ||||
-1 | ||||||||||||||
For any given period, a portion of unpaid medical claims payable could be covered by reinvestment liability (discussed below) and may not impact the Company's results of operations for such periods. | ||||||||||||||
-2 | ||||||||||||||
Medical claims payable is offset by customer withholds from capitation payments in situations in which the customer has the contractual requirement to pay providers for care incurred. | ||||||||||||||
-3 | ||||||||||||||
The favorable development of prior years cost of care includes approximately $15.1 million of adjustments of block funding to providers resulting from an annual reconciliation process. | ||||||||||||||
Schedule of fair value of financial assets and liabilities | ' | |||||||||||||
In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company's financial assets and liabilities that are required to be measured at fair value as of December 31, 2012 and 2013 (in thousands): | ||||||||||||||
Fair Value Measurements | ||||||||||||||
at December 31, 2012 | ||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||
Cash and Cash Equivalents(1) | $ | — | $ | 102,137 | $ | — | $ | 102,137 | ||||||
Restricted Cash(2) | — | 82,839 | — | 82,839 | ||||||||||
Investments: | ||||||||||||||
U.S. Government and agency securities | 1,065 | — | — | 1,065 | ||||||||||
Obligations of government-sponsored enterprises(3) | — | 6,128 | — | 6,128 | ||||||||||
Corporate debt securities | — | 214,547 | — | 214,547 | ||||||||||
Taxable municipal bonds | — | 11,800 | — | 11,800 | ||||||||||
Certificates of deposit | — | 150 | — | 150 | ||||||||||
| | | | | | | | | | | | | | |
December 31, 2012 | $ | 1,065 | $ | 417,601 | $ | — | $ | 418,666 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Fair Value Measurements | ||||||||||||||
at December 31, 2013 | ||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||
Cash and Cash Equivalents(4) | $ | — | $ | 101,028 | $ | — | $ | 101,028 | ||||||
Restricted Cash(5) | — | 128,318 | — | 128,318 | ||||||||||
Investments: | ||||||||||||||
U.S. Government and agency securities | 1,129 | — | — | 1,129 | ||||||||||
Obligations of government-sponsored enterprises(3) | — | 8,440 | — | 8,440 | ||||||||||
Corporate debt securities | — | 198,594 | — | 198,594 | ||||||||||
Certificates of deposit | — | 150 | — | 150 | ||||||||||
| | | | | | | | | | | | | | |
December 31, 2013 | $ | 1,129 | $ | 436,530 | $ | — | $ | 437,659 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
-1 | ||||||||||||||
Excludes $87.3 million of cash held in bank accounts by the Company. | ||||||||||||||
-2 | ||||||||||||||
Excludes $143.7 million of restricted cash held in bank accounts by the Company. | ||||||||||||||
-3 | ||||||||||||||
Includes investments in notes issued by the Federal Home Loan Bank. | ||||||||||||||
-4 | ||||||||||||||
Excludes $102.2 million of cash held in bank accounts by the Company. | ||||||||||||||
-5 | ||||||||||||||
Excludes $108.4 million of restricted cash held in bank accounts by the Company. | ||||||||||||||
Acquisitions_and_Joint_Venture1
Acquisitions and Joint Ventures (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Partners Rx | ' | ||||
Acquisitions and joint ventures | ' | ||||
Summary of estimated fair values of assets acquired and liabilities assumed at the date of the acquisition | ' | ||||
The estimated fair values of Partners Rx assets acquired and liabilities assumed at the date of the acquisition are summarized as follows (in thousands): | |||||
Assets acquired: | |||||
Current assets (includes $58,038 of accounts receivable) | $ | 58,164 | |||
Property and equipment, net | 4,327 | ||||
Deferred tax assets | 254 | ||||
Other identified intangible assets | 40,760 | ||||
Goodwill | 40,385 | ||||
| | | | | |
Total assets acquired | 143,890 | ||||
| | | | | |
Liabilities assumed: | |||||
Current liabilities | 56,125 | ||||
| | | | | |
Total liabilities assumed | 56,125 | ||||
| | | | | |
Net assets acquired | $ | 87,765 | |||
| | | | | |
| | | | | |
AlphaCare Holdings | ' | ||||
Acquisitions and joint ventures | ' | ||||
Summary of estimated fair values of assets acquired and liabilities assumed at the date of the acquisition | ' | ||||
The estimated fair values of AlphaCare Holdings assets acquired and liabilities assumed at the date of the acquisition are summarized as follows (in thousands): | |||||
Assets acquired: | |||||
Current assets (includes $6,249 of cash and $7,900 of restricted cash) | $ | 15,053 | |||
Property and equipment, net | 310 | ||||
Other assets | 188 | ||||
Other identified intangible assets | 4,590 | ||||
Goodwill | 20,882 | ||||
| | | | | |
Total assets acquired | 41,023 | ||||
| | | | | |
Liabilities assumed: | |||||
Current liabilities | 3,323 | ||||
Deferred tax liabilities | 1,830 | ||||
| | | | | |
Total liabilities assumed | 5,153 | ||||
| | | | | |
Net assets acquired | 35,870 | ||||
Less: net assets attributable to noncontrolling interest | (10,554 | ) | |||
| | | | | |
Net consideration | $ | 25,316 | |||
| | | | | |
| | | | | |
Stockholders_Equity_Tables
Stockholders' Equity (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
Stockholders' Equity | ' | |||||||||||||||||||
Schedule of stock option activity | ' | |||||||||||||||||||
2011 | 2012 | |||||||||||||||||||
Options | Weighted | Options | Weighted | |||||||||||||||||
Average | Average | |||||||||||||||||||
Exercise | Exercise | |||||||||||||||||||
Price | Price | |||||||||||||||||||
Outstanding, beginning of period | 3,775,586 | $ | 39.27 | 3,841,233 | $ | 42.65 | ||||||||||||||
Granted | 1,217,958 | 49.3 | 1,402,800 | 47.54 | ||||||||||||||||
Forfeited | (86,986 | ) | 42.13 | (444,939 | ) | 46.08 | ||||||||||||||
Exercised | (1,065,325 | ) | 38.34 | (530,854 | ) | 39.03 | ||||||||||||||
| | | | | | | | | | | | | | |||||||
Outstanding, end of period | 3,841,233 | $ | 42.65 | 4,268,240 | $ | 44.35 | ||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
2013 | ||||||||||||||||||||
Options | Weighted | Weighted | Aggregate | |||||||||||||||||
Average | Average | Intrinsic | ||||||||||||||||||
Exercise | Remaining Contractual | Value | ||||||||||||||||||
Price | Term (in years) | (in thousands) | ||||||||||||||||||
Outstanding, beginning of period | 4,268,240 | $ | 44.35 | |||||||||||||||||
Granted | 1,047,133 | 53.18 | ||||||||||||||||||
Forfeited | (165,734 | ) | 49.66 | |||||||||||||||||
Exercised | (1,139,493 | ) | 41.53 | |||||||||||||||||
| | | | | | | | | | | | | | |||||||
Outstanding, end of period | 4,010,146 | $ | 47.23 | 7.18 | $ | 50,902 | ||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
Vested and expected to vest at end of period | 3,971,929 | $ | 47.19 | 7.17 | $ | 50,585 | ||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
Exercisable, end of period | 1,971,716 | $ | 43.8 | 5.77 | $ | 31,763 | ||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
Schedule of weighted average assumptions used to determine weighted average grant date fair value | ' | |||||||||||||||||||
2011 | 2012 | 2013 | ||||||||||||||||||
Risk-free interest rate | 1.63 | % | 0.66 | % | 0.67 | % | ||||||||||||||
Expected life | 4 years | 4 years | 4 years | |||||||||||||||||
Expected volatility | 29.88 | % | 30.3 | % | 27.86 | % | ||||||||||||||
Expected dividend yield | 0 | % | 0 | % | 0 | % | ||||||||||||||
Schedule of nonvested restricted stock award activity | ' | |||||||||||||||||||
2011 | 2012 | 2013 | ||||||||||||||||||
Shares | Weighted | Shares | Weighted | Shares | Weighted | |||||||||||||||
Average | Average | Average | ||||||||||||||||||
Grant Date | Grant Date | Grant Date | ||||||||||||||||||
Fair Value | Fair Value | Fair Value | ||||||||||||||||||
Outstanding, beginning of period | 22,309 | $ | 39.23 | 18,748 | $ | 52.11 | 23,672 | $ | 42.25 | |||||||||||
Awarded | 18,748 | 52.11 | 23,672 | 42.25 | 192,165 | 56.59 | ||||||||||||||
Vested | (22,309 | ) | 39.23 | (18,748 | ) | 52.11 | (23,672 | ) | (42.25 | ) | ||||||||||
Forfeited | — | — | — | — | — | — | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Outstanding, ending of period | 18,748 | $ | 52.11 | 23,672 | $ | 42.25 | 192,165 | $ | 56.59 | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Schedule of nonvested restricted stock units | ' | |||||||||||||||||||
2011 | 2012 | 2013 | ||||||||||||||||||
Shares | Weighted | Shares | Weighted | Shares | Weighted | |||||||||||||||
Average | Average | Average | ||||||||||||||||||
Grant Date | Grant Date | Grant Date | ||||||||||||||||||
Fair Value | Fair Value | Fair Value | ||||||||||||||||||
Outstanding, beginning of period | 190,488 | $ | 38.43 | 206,338 | $ | 44.63 | 202,690 | $ | 47.38 | |||||||||||
Awarded | 115,003 | 49.14 | 131,913 | 47.48 | 98,580 | 52.62 | ||||||||||||||
Vested | (90,853 | ) | 37.5 | (99,976 | ) | 41.81 | (95,138 | ) | 46.72 | |||||||||||
Forfeited | (8,300 | ) | 42.94 | (35,585 | ) | 47.43 | (11,219 | ) | 49.79 | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
Outstanding, ending of period | 206,338 | $ | 44.63 | 202,690 | $ | 47.38 | 194,913 | $ | 50.21 | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Computation of basic and diluted earnings per share | ' | |||||||||||||||||||
The following table reconciles income (numerator) and shares (denominator) used in the Company's computations of net income per share for the years ended December 31, 2011, 2012 and 2013 (in thousands, except per share data): | ||||||||||||||||||||
2011 | 2012 | 2013 | ||||||||||||||||||
Numerator: | ||||||||||||||||||||
Net income | $ | 129,623 | $ | 151,027 | $ | 125,261 | ||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
Denominator: | ||||||||||||||||||||
Weighted average number of common shares outstanding—basic | 30,478 | 27,386 | 27,054 | |||||||||||||||||
Common stock equivalents—stock options | 480 | 406 | 564 | |||||||||||||||||
Common stock equivalents—restricted stock awards | 9 | 11 | 13 | |||||||||||||||||
Common stock equivalents—restricted stock units | 91 | 77 | 42 | |||||||||||||||||
Common stock equivalents—employee stock purchase plan | — | 2 | 2 | |||||||||||||||||
| | | | | | | | | | | ||||||||||
Weighted average number of common shares outstanding—diluted | 31,058 | 27,882 | 27,675 | |||||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
Net income per common share—basic | $ | 4.25 | $ | 5.51 | $ | 4.63 | ||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
Net income per common share—diluted | $ | 4.17 | $ | 5.42 | $ | 4.53 | ||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Income Taxes | ' | ||||||||||
Schedule of components of income tax expense (benefit) | ' | ||||||||||
The components of income tax expense (benefit) for the following years ended December 31 were as follows (in thousands): | |||||||||||
2011 | 2012 | 2013 | |||||||||
Income taxes currently payable: | |||||||||||
Federal | $ | 51,195 | $ | 18,345 | $ | 37,691 | |||||
State | 5,534 | 2,187 | 3,445 | ||||||||
| | | | | | | | | | | |
56,729 | 20,532 | 41,136 | |||||||||
| | | | | | | | | | | |
Deferred income taxes (benefits): | |||||||||||
Federal | 8,644 | 14,922 | (1,726 | ) | |||||||
State | (336 | ) | 2,384 | 514 | |||||||
| | | | | | | | | | | |
8,308 | 17,306 | (1,212 | ) | ||||||||
| | | | | | | | | | | |
Total income tax expense | $ | 65,037 | $ | 37,838 | $ | 39,924 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of differences between total income tax expense and amount computed using the statutory federal income tax rate | ' | ||||||||||
Total income tax expense for the years ended December 31 was different from the amount computed using the statutory federal income tax rate of 35 percent for the following reasons (in thousands): | |||||||||||
2011 | 2012 | 2013 | |||||||||
Income tax expense at federal statutory rate | $ | 68,458 | $ | 67,107 | $ | 57,815 | |||||
State income taxes, net of federal income tax benefit | 7,013 | 6,812 | 4,412 | ||||||||
Tax contingencies reversed due to statute closings | (12,521 | ) | (37,093 | ) | (25,299 | ) | |||||
Other-net | 2,087 | 1,012 | 2,996 | ||||||||
| | | | | | | | | | | |
Total income tax expense | $ | 65,037 | $ | 37,838 | $ | 39,924 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of components of deferred tax assets and liabilities | ' | ||||||||||
The significant components of deferred tax assets and liabilities at December 31 were as follows (in thousands): | |||||||||||
2012 | 2013 | ||||||||||
Deferred tax assets: | |||||||||||
Operating loss carryforwards | $ | 10,116 | $ | 8,604 | |||||||
Share-based compensation | 16,225 | 15,926 | |||||||||
Other accrued compensation | 3,891 | 7,619 | |||||||||
Community reinvestment reserves | 6,276 | 550 | |||||||||
Claims reserves | 7,244 | 8,005 | |||||||||
Deferred Revenue | 2,408 | 6,708 | |||||||||
Other non-deductible accrued liabilities | 8,082 | 13,018 | |||||||||
Indirect tax benefits | 5,897 | 4,804 | |||||||||
Other deferred tax assets | 1,282 | 987 | |||||||||
| | | | | | | | ||||
Total deferred tax assets | 61,421 | 66,221 | |||||||||
Valuation allowance | (3,130 | ) | (3,102 | ) | |||||||
| | | | | | | | ||||
Deferred tax assets after valuation allowance | 58,291 | 63,119 | |||||||||
| | | | | | | | ||||
Deferred tax liabilities: | |||||||||||
Depreciation | (44,728 | ) | (43,417 | ) | |||||||
Amortization of goodwill and intangible assets | (15,782 | ) | (20,615 | ) | |||||||
Other deferred tax liabilities | (169 | ) | (3,603 | ) | |||||||
| | | | | | | | ||||
Total deferred tax liabilities | (60,679 | ) | (67,635 | ) | |||||||
| | | | | | | | ||||
Net deferred tax assets (liabilities) | $ | (2,388 | ) | $ | (4,516 | ) | |||||
| | | | | | | | ||||
| | | | | | | | ||||
Schedule of reconciliation of the beginning and ending amount of gross unrecognized tax benefits | ' | ||||||||||
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands): | |||||||||||
2011 | 2012 | 2013 | |||||||||
Balance as of beginning of period | $ | 111,594 | $ | 99,230 | $ | 56,601 | |||||
Additions for current year tax positions | 3,240 | 1,904 | 2,367 | ||||||||
Additions for tax positions of prior years | 948 | 403 | 214 | ||||||||
Reductions for tax positions of prior years | (1,492 | ) | (1,618 | ) | (396 | ) | |||||
Reductions due to lapses of applicable statutes of limitation | (15,011 | ) | (43,297 | ) | (28,606 | ) | |||||
Reductions due to settlements with taxing authorities | (49 | ) | (21 | ) | (4 | ) | |||||
| | | | | | | | | | | |
Balance as of end of period | $ | 99,230 | $ | 56,601 | $ | 30,176 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Supplemental_Cash_Flow_Informa1
Supplemental Cash Flow Information (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Supplemental Cash Flow Information | ' | ||||||||||
Schedule of supplemental cash flow information | ' | ||||||||||
Supplemental cash flow information for the years ended December 31, 2011, 2012 and 2013 is as follows (in thousands): | |||||||||||
2011 | 2012 | 2013 | |||||||||
Income taxes paid, net of refunds | $ | 50,324 | $ | 57,663 | $ | 65,511 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Interest paid | $ | 1,521 | $ | 1,594 | $ | 2,264 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Assets acquired through capital leases | $ | — | $ | — | $ | 29,739 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Business_Segment_Information_T
Business Segment Information (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
Business Segment Information | ' | |||||||||||||||||||
Schedule of operating results by business segment | ' | |||||||||||||||||||
The following tables summarize, for the periods indicated, operating results by business segment (in thousands): | ||||||||||||||||||||
Commercial | Public | Specialty | Pharmacy | Corporate | Consolidated | |||||||||||||||
Sector | Solutions | Management | and | |||||||||||||||||
Elimination | ||||||||||||||||||||
Year Ended December 31, 2011 | ||||||||||||||||||||
Managed care and other revenue | $ | 561,780 | $ | 1,459,659 | $ | 344,335 | $ | 268,987 | $ | (82,770 | ) | $ | 2,551,991 | |||||||
Dispensing revenue | — | — | — | 247,409 | — | 247,409 | ||||||||||||||
Cost of care | (314,178 | ) | (1,271,532 | ) | (205,240 | ) | (76,544 | ) | 82,770 | (1,784,724 | ) | |||||||||
Cost of goods sold | — | — | — | (232,038 | ) | — | (232,038 | ) | ||||||||||||
Direct service costs and other | (152,760 | ) | (67,227 | ) | (61,681 | ) | (127,598 | ) | (120,368 | ) | (529,634 | ) | ||||||||
Stock compensation expense(1) | 839 | 872 | 1,563 | 817 | 13,327 | 17,418 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Segment profit (loss) | $ | 95,681 | $ | 121,772 | $ | 78,977 | $ | 81,033 | $ | (107,041 | ) | $ | 270,422 | |||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Identifiable assets by business segment(2) | ||||||||||||||||||||
Restricted cash | $ | 18,319 | $ | 164,479 | $ | — | $ | — | $ | 2,996 | $ | 185,794 | ||||||||
Net accounts receivable | 26,822 | 28,331 | 1,398 | 52,024 | 13,031 | 121,606 | ||||||||||||||
Investments | 5,320 | 131,261 | — | — | 64,322 | 200,903 | ||||||||||||||
Pharmaceutical inventory | — | — | 39,567 | — | — | 39,567 | ||||||||||||||
Goodwill | 120,485 | — | 104,549 | 201,905 | — | 426,939 | ||||||||||||||
Other intangible assets, net | 3,228 | — | 9,632 | 31,729 | — | 44,589 | ||||||||||||||
Commercial | Public | Specialty | Pharmacy | Corporate | Consolidated | |||||||||||||||
Sector | Solutions | Management | and | |||||||||||||||||
Elimination | ||||||||||||||||||||
Year Ended December 31, 2012 | ||||||||||||||||||||
Managed care and other revenue | $ | 728,512 | $ | 1,620,875 | $ | 349,133 | $ | 227,669 | $ | (69,090 | ) | $ | 2,857,099 | |||||||
Dispensing revenue | — | — | — | 350,298 | — | 350,298 | ||||||||||||||
Cost of care | (437,518 | ) | (1,413,320 | ) | (228,383 | ) | (61,759 | ) | 69,090 | (2,071,890 | ) | |||||||||
Cost of goods sold | — | — | — | (328,414 | ) | — | (328,414 | ) | ||||||||||||
Direct service costs and other | (172,035 | ) | (89,129 | ) | (55,418 | ) | (111,593 | ) | (129,337 | ) | (557,512 | ) | ||||||||
Stock compensation expense(1) | 532 | 1,111 | 1,567 | 1,007 | 13,566 | 17,783 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Segment profit (loss) | $ | 119,491 | $ | 119,537 | $ | 66,899 | $ | 77,208 | $ | (115,771 | ) | $ | 267,364 | |||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Identifiable assets by business segment(2) | ||||||||||||||||||||
Restricted cash | $ | 18,254 | $ | 147,766 | $ | — | $ | — | $ | 60,534 | $ | 226,554 | ||||||||
Net accounts receivable | 39,678 | 27,415 | 7,580 | 65,755 | (2,175 | ) | 138,253 | |||||||||||||
Investments | 21,273 | 101,093 | — | — | 111,324 | 233,690 | ||||||||||||||
Pharmaceutical inventory | — | — | 45,727 | — | — | 45,727 | ||||||||||||||
Goodwill | 120,485 | — | 104,549 | 201,905 | — | 426,939 | ||||||||||||||
Other intangible assets, net | 2,152 | — | 7,877 | 24,906 | — | 34,935 | ||||||||||||||
Commercial | Public | Specialty | Pharmacy | Corporate | Consolidated | |||||||||||||||
Sector | Solutions | Management | and | |||||||||||||||||
Elimination | ||||||||||||||||||||
Year Ended December 31, 2013 | ||||||||||||||||||||
Managed care and other revenue | $ | 766,841 | $ | 1,757,933 | $ | 375,818 | $ | 228,705 | $ | (66,248 | ) | $ | 3,063,049 | |||||||
PBM and dispensing revenue | — | — | — | 483,268 | — | 483,268 | ||||||||||||||
Cost of care | (469,478 | ) | (1,523,023 | ) | (247,496 | ) | (59,227 | ) | 66,248 | (2,232,976 | ) | |||||||||
Cost of goods sold | — | — | — | (455,601 | ) | — | (455,601 | ) | ||||||||||||
Direct service costs and other | (172,491 | ) | (122,819 | ) | (57,334 | ) | (128,427 | ) | (138,475 | ) | (619,546 | ) | ||||||||
Stock compensation expense(1) | 503 | 1,038 | 1,630 | 1,172 | 16,909 | 21,252 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Segment profit (loss) | $ | 125,375 | $ | 113,129 | $ | 72,618 | $ | 69,890 | $ | (121,566 | ) | $ | 259,446 | |||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Identifiable assets by business segment(2) | ||||||||||||||||||||
Restricted cash | $ | 25,107 | $ | 196,651 | $ | — | $ | — | $ | 14,938 | $ | 236,696 | ||||||||
Net accounts receivable | 50,407 | 62,977 | 7,368 | 115,527 | 1,906 | 238,185 | ||||||||||||||
Investments | 16,491 | 92,966 | — | — | 98,856 | 208,313 | ||||||||||||||
Pharmaceutical inventory | — | — | 49,609 | — | — | 49,609 | ||||||||||||||
Goodwill | 120,485 | 20,882 | 104,549 | 242,290 | — | 488,206 | ||||||||||||||
Other intangible assets, net | 1,076 | 4,590 | 6,123 | 57,905 | — | 69,694 | ||||||||||||||
-1 | ||||||||||||||||||||
Stock compensation expense is included in direct service costs and other operating expenses, however this amount is excluded from the computation of segment profit since it is managed on a consolidated basis. | ||||||||||||||||||||
-2 | ||||||||||||||||||||
Identifiable assets by business segment are those assets that are used in the operations of each segment. The remainder of the Company's assets cannot be specifically identified by segment. | ||||||||||||||||||||
Schedule of reconciliation of Segment Profit to consolidated income before income taxes | ' | |||||||||||||||||||
The following table reconciles Segment Profit to consolidated income before income taxes for the years ended December 31, 2011, 2012 and 2013 (in thousands): | ||||||||||||||||||||
2011 | 2012 | 2013 | ||||||||||||||||||
Segment Profit | $ | 270,422 | $ | 267,364 | $ | 259,446 | ||||||||||||||
Stock compensation expense | (17,418 | ) | (17,783 | ) | (21,252 | ) | ||||||||||||||
Depreciation and amortization | (58,623 | ) | (60,488 | ) | (71,994 | ) | ||||||||||||||
Interest expense | (2,502 | ) | (2,247 | ) | (3,000 | ) | ||||||||||||||
Interest and other income | 2,781 | 2,019 | 1,985 | |||||||||||||||||
| | | | | | | | | | | ||||||||||
Income before income taxes | $ | 194,660 | $ | 188,865 | $ | 165,185 | ||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
Selected_Quarterly_Financial_D1
Selected Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
Selected Quarterly Financial Data (Unaudited) | ' | |||||||||||||
Schedule of Summary of unaudited quarterly results of operations | ' | |||||||||||||
The following is a summary of the unaudited quarterly results of operations for the years ended December 31, 2012 and 2013 (in thousands, except per share amounts): | ||||||||||||||
For the Quarter Ended | ||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||
2012 | 2012 | 2012 | 2012 | |||||||||||
Fiscal Year Ended December 31, 2012 | ||||||||||||||
Net revenue: | ||||||||||||||
Managed care and other | $ | 686,059 | $ | 716,998 | $ | 711,092 | $ | 742,950 | ||||||
Dispensing | 87,154 | 88,475 | 87,345 | 87,324 | ||||||||||
| | | | | | | | | | | | | | |
Total net revenue | 773,213 | 805,473 | 798,437 | 830,274 | ||||||||||
| | | | | | | | | | | | | | |
Costs and expenses: | ||||||||||||||
Cost of care | 505,293 | 521,830 | 516,238 | 528,529 | ||||||||||
Cost of goods sold | 81,038 | 82,855 | 81,662 | 82,859 | ||||||||||
Direct service costs and other operating expenses(1) | 136,589 | 140,333 | 135,574 | 145,016 | ||||||||||
Depreciation and amortization | 14,781 | 15,152 | 15,239 | 15,316 | ||||||||||
Interest expense | 600 | 576 | 537 | 534 | ||||||||||
Interest and other income | (412 | ) | (857 | ) | (350 | ) | (400 | ) | ||||||
| | | | | | | | | | | | | | |
Total costs and expenses | 737,889 | 759,889 | 748,900 | 771,854 | ||||||||||
| | | | | | | | | | | | | | |
Income before income taxes | 35,324 | 45,584 | 49,537 | 58,420 | ||||||||||
Provision for income taxes | 14,534 | 18,611 | (16,725 | ) | 21,418 | |||||||||
| | | | | | | | | | | | | | |
Net income | $ | 20,790 | $ | 26,973 | $ | 66,262 | $ | 37,002 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Weighted average number of common shares outstanding—basic | 27,199 | 27,317 | 27,521 | 27,505 | ||||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Weighted average number of common shares outstanding—diluted | 27,747 | 27,717 | 28,042 | 28,020 | ||||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Net income per common share—basic: | $ | 0.76 | $ | 0.99 | $ | 2.41 | $ | 1.35 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Net income per common share—diluted: | $ | 0.75 | $ | 0.97 | $ | 2.36 | $ | 1.32 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
For the Quarter Ended | ||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||
2013(3) | 2013(3) | 2013(3) | 2013 | |||||||||||
Fiscal Year Ended December 31, 2013 | ||||||||||||||
Net revenue: | ||||||||||||||
Managed care and other | $ | 722,589 | $ | 746,720 | $ | 770,113 | $ | 823,627 | ||||||
PBM and dispensing | 99,172 | 96,028 | 103,485 | 184,583 | ||||||||||
| | | | | | | | | | | | | | |
Total net revenue | 821,761 | 842,748 | 873,598 | 1,008,210 | ||||||||||
| | | | | | | | | | | | | | |
Costs and expenses: | ||||||||||||||
Cost of care | 525,027 | 537,630 | 564,537 | 605,782 | ||||||||||
Cost of goods sold | 93,512 | 90,175 | 97,503 | 174,411 | ||||||||||
Direct service costs and other operating expenses(2) | 139,627 | 144,497 | 156,834 | 178,588 | ||||||||||
Depreciation and amortization | 16,170 | 16,946 | 17,654 | 21,224 | ||||||||||
Interest expense | 610 | 792 | 789 | 809 | ||||||||||
Interest and other income | (353 | ) | (358 | ) | (291 | ) | (983 | ) | ||||||
| | | | | | | | | | | | | | |
Total costs and expenses | 774,593 | 789,682 | 837,026 | 979,831 | ||||||||||
| | | | | | | | | | | | | | |
Income before income taxes | 47,168 | 53,066 | 36,572 | 28,379 | ||||||||||
Provision for income taxes | 19,110 | 21,586 | (10,660 | ) | 9,888 | |||||||||
| | | | | | | | | | | | | | |
Net income | $ | 28,058 | $ | 31,480 | $ | 47,232 | $ | 18,491 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Weighted average number of common shares outstanding—basic | 27,110 | 26,829 | 26,990 | 27,285 | ||||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Weighted average number of common shares outstanding—diluted | 27,648 | 27,338 | 27,704 | 28,008 | ||||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Net income per common share—basic: | $ | 1.03 | $ | 1.17 | $ | 1.75 | $ | 0.68 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Net income per common share—diluted: | $ | 1.01 | $ | 1.15 | $ | 1.7 | $ | 0.67 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
-1 | ||||||||||||||
Includes stock compensation expense of $5,102, $4,365, $4,468 and $3,848 for the quarters ended March 31, June 30, September 30, and December 31, 2012, respectively. | ||||||||||||||
-2 | ||||||||||||||
Includes stock compensation expense of $5,638, $4,602, $4,524 and $6,488 for the quarters ended March 31, June 30, September 30, and December 31, 2013, respectively. | ||||||||||||||
-3 | ||||||||||||||
Certain amounts have been reclassified to conform to the presentation for the quarter ended December 31, 2013. | ||||||||||||||
General_Details
General (Details) | 12 Months Ended |
Dec. 31, 2013 | |
segment | |
Operating results by business segment | ' |
Number of segments | 5 |
Managed Healthcare | ' |
Operating results by business segment | ' |
Number of segments | 2 |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Net revenues | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Projected ACA fees | ' | ' | ' | ' | ' | ' | ' | ' | $25,000,000 | ' | ' | ' |
Managed Care Revenue | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,700,000,000 | 2,500,000,000 | 2,200,000,000 |
Fee-For-Service and Cost-Plus Contracts Revenue | ' | ' | ' | ' | ' | ' | ' | ' | ' | 215,100,000 | 151,400,000 | 174,500,000 |
Block Grant Revenues | ' | ' | ' | ' | ' | ' | ' | ' | ' | 131,500,000 | 124,800,000 | 114,400,000 |
Performance-Based Revenue | ' | ' | ' | ' | ' | ' | ' | ' | ' | 14,000,000 | 25,400,000 | 26,500,000 |
Rebate Revenues | ' | ' | ' | ' | ' | ' | ' | ' | ' | 34,800,000 | 40,200,000 | 32,800,000 |
PBM Revenue | ' | ' | ' | ' | ' | ' | ' | ' | ' | 106,700,000 | ' | ' |
Dispensing Revenue | ' | ' | ' | ' | ' | ' | ' | ' | ' | 376,600,000 | 350,300,000 | 247,400,000 |
Significant customers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues generated | 1,008,210,000 | 873,598,000 | 842,748,000 | 821,761,000 | 830,274,000 | 798,437,000 | 805,473,000 | 773,213,000 | ' | 3,546,317,000 | 3,207,397,000 | 2,799,400,000 |
Contract shutdown costs | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6,100,000 | ' | ' |
Maricopa County Regional Behavioral Health Authority | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Significant customers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of members receiving behavioral healthcare management and other related services | ' | ' | ' | ' | ' | ' | ' | ' | ' | 660,000 | ' | ' |
Termination notice | ' | ' | ' | ' | ' | ' | ' | ' | ' | '10 days | ' | ' |
Termination notice period without cause | ' | ' | ' | ' | ' | ' | ' | ' | ' | '30 days | ' | ' |
Revenues generated | ' | ' | ' | ' | ' | ' | ' | ' | ' | 755,000,000 | 758,300,000 | 779,500,000 |
Maricopa County Regional Behavioral Health Authority | Service | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Significant customers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Major customer defined (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10.00% | 10.00% | 10.00% |
Magellan Complete Care of Arizona, Inc. | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Significant customers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of investment in joint venture | 80.00% | ' | ' | ' | ' | ' | ' | ' | ' | 80.00% | ' | ' |
Vanguard/Phoenix Health Plan | Magellan Complete Care of Arizona, Inc. | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Significant customers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of investment in joint venture | 20.00% | ' | ' | ' | ' | ' | ' | ' | ' | 20.00% | ' | ' |
Commercial | Customer A | Service | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Significant customers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues generated | ' | ' | ' | ' | ' | ' | ' | ' | ' | 207,080,000 | 192,415,000 | 171,109,000 |
Commercial | Customer B | Service | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Significant customers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues generated | ' | ' | ' | ' | ' | ' | ' | ' | ' | 71,085,000 | 67,959,000 | 67,049,000 |
Commercial | Customer C | Service | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Significant customers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues generated | ' | ' | ' | ' | ' | ' | ' | ' | ' | 74,203,000 | 118,351,000 | 111,607,000 |
Minimum number of contracts per customer | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 | ' | ' |
Revenues related to terminated contract | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50,000,000 | ' |
Commercial | Customer D | Service | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Significant customers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues generated | ' | ' | ' | ' | ' | ' | ' | ' | ' | 141,444,000 | 134,885,000 | ' |
Public Sector | Customer E | Service | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Significant customers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues generated | ' | ' | ' | ' | ' | ' | ' | ' | ' | 321,072,000 | 240,224,000 | 191,063,000 |
Number of contract extensions available under option | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 | ' | ' |
Contract extension period available under option | ' | ' | ' | ' | ' | ' | ' | ' | ' | '1 year | ' | ' |
Specialty Solutions | Customer F | Service | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Significant customers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues generated | ' | ' | ' | ' | ' | ' | ' | ' | ' | 130,895,000 | 117,739,000 | 134,257,000 |
Specialty Solutions | Customer G | Service | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Significant customers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues generated | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 38,297,000 |
Minimum number of contracts per customer | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 | ' | ' |
Specialty Solutions | Customer H | Service | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Significant customers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues generated | ' | ' | ' | ' | ' | ' | ' | ' | ' | 55,078,000 | 60,094,000 | 55,197,000 |
Specialty Solutions | Customer I | Service | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Significant customers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues generated | ' | ' | ' | ' | ' | ' | ' | ' | ' | 61,838,000 | 57,455,000 | 36,293,000 |
Specialty Solutions | Customer J | Service | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Significant customers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues generated | ' | ' | ' | ' | ' | ' | ' | ' | ' | 47,311,000 | 38,366,000 | 32,342,000 |
Pharmacy Management | Customer B | Service | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Significant customers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues generated | ' | ' | ' | ' | ' | ' | ' | ' | ' | 92,647,000 | 73,785,000 | 22,899,000 |
Minimum number of contracts per customer | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 | ' | ' |
Pharmacy Management | Customer K | Service | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Significant customers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues generated | ' | ' | ' | ' | ' | ' | ' | ' | ' | 133,724,000 | 129,209,000 | 90,563,000 |
Minimum number of contracts per customer | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 | ' | ' |
Pharmacy Management | Customer L | Service | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Significant customers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues generated | ' | ' | ' | ' | ' | ' | ' | ' | ' | 59,125,000 | 60,350,000 | 56,115,000 |
Pharmacy Management | Customer M | Service | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Significant customers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues generated | ' | ' | ' | ' | ' | ' | ' | ' | ' | $66,153,000 | $69,090,000 | $82,770,000 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Concentration of Business | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net revenue | $1,008,210 | $873,598 | $842,748 | $821,761 | $830,274 | $798,437 | $805,473 | $773,213 | $3,546,317 | $3,207,397 | $2,799,400 |
Minimum | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Concentration of Business | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Term of Contract | ' | ' | ' | ' | ' | ' | ' | ' | '1 year | ' | ' |
Term of renewed contract | ' | ' | ' | ' | ' | ' | ' | ' | '1 year | ' | ' |
Notice period for termination of contract | ' | ' | ' | ' | ' | ' | ' | ' | '60 days | ' | ' |
Maximum | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Concentration of Business | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Term of Contract | ' | ' | ' | ' | ' | ' | ' | ' | '3 years | ' | ' |
Term of renewed contract | ' | ' | ' | ' | ' | ' | ' | ' | '2 years | ' | ' |
Notice period for termination of contract | ' | ' | ' | ' | ' | ' | ' | ' | '180 days | ' | ' |
Pennsylvania Counties | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Concentration of Business | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net revenue | ' | ' | ' | ' | ' | ' | ' | ' | 359,000 | 354,100 | 351,600 |
Florida Areas | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Concentration of Business | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net revenue | ' | ' | ' | ' | ' | ' | ' | ' | $128,000 | $133,900 | $131,800 |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details 3) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Income Taxes | ' | ' | ' |
The ownership percentage for which the entity files a consolidated federal income tax return, low end of range | 80.00% | ' | ' |
Cash and Cash Equivalents | ' | ' | ' |
Maximum maturity period of short-term and highly liquid interest bearing investments at time of purchase | '3 months | ' | ' |
Excess capital and undistributed earnings included in cash and cash equivalents | $40,900,000 | ' | ' |
Restricted Assets | ' | ' | ' |
Restricted cash | 236,696,000 | 226,554,000 | 185,794,000 |
Restricted short-term investments | 117,674,000 | 88,332,000 | ' |
Restricted deposits (included in other current assets) | 25,009,000 | 20,846,000 | ' |
Restricted long-term investments | 32,430,000 | 32,563,000 | ' |
Total | $411,809,000 | $368,295,000 | ' |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies (Details 4) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Short-term and long-term investments | ' | ' | ' |
Other-than-temporary unrealized losses | $0 | $0 | ' |
Realized gains or losses | 0 | 0 | 0 |
Amortized Cost | 208,468 | 233,749 | ' |
Gross Unrealized Gains | 20 | 70 | ' |
Gross Unrealized Losses | -175 | -129 | ' |
Total, Estimated Fair Value | 208,313 | 233,690 | ' |
Amortized Cost | ' | ' | ' |
Maturity dates, investments, 2014 | 175,997 | ' | ' |
Maturity dates, investments, 2015 | 31,518 | ' | ' |
Maturity dates, investments, 2016 | 953 | ' | ' |
Total, Amortized Cost | 208,468 | ' | ' |
Estimated Fair Value | ' | ' | ' |
Maturity dates, investments, 2014 | 175,883 | ' | ' |
Maturity dates, investments, 2015 | 31,479 | ' | ' |
Maturity dates, investments, 2016 | 951 | ' | ' |
Total, Estimated Fair Value | 208,313 | 233,690 | ' |
U.S. Government and agency securities | ' | ' | ' |
Short-term and long-term investments | ' | ' | ' |
Amortized Cost | 1,129 | 1,065 | ' |
Total, Estimated Fair Value | 1,129 | 1,065 | ' |
Estimated Fair Value | ' | ' | ' |
Total, Estimated Fair Value | 1,129 | 1,065 | ' |
Obligations of government-sponsored enterprises | ' | ' | ' |
Short-term and long-term investments | ' | ' | ' |
Amortized Cost | 8,441 | 6,126 | ' |
Gross Unrealized Gains | 2 | 4 | ' |
Gross Unrealized Losses | -3 | -2 | ' |
Total, Estimated Fair Value | 8,440 | 6,128 | ' |
Estimated Fair Value | ' | ' | ' |
Total, Estimated Fair Value | 8,440 | 6,128 | ' |
Corporate debt securities | ' | ' | ' |
Short-term and long-term investments | ' | ' | ' |
Amortized Cost | 198,748 | 214,603 | ' |
Gross Unrealized Gains | 18 | 66 | ' |
Gross Unrealized Losses | -172 | -122 | ' |
Total, Estimated Fair Value | 198,594 | 214,547 | ' |
Estimated Fair Value | ' | ' | ' |
Total, Estimated Fair Value | 198,594 | 214,547 | ' |
Certificates of deposit | ' | ' | ' |
Short-term and long-term investments | ' | ' | ' |
Amortized Cost | 150 | 150 | ' |
Total, Estimated Fair Value | 150 | 150 | ' |
Estimated Fair Value | ' | ' | ' |
Total, Estimated Fair Value | 150 | 150 | ' |
Taxable municipal bonds | ' | ' | ' |
Short-term and long-term investments | ' | ' | ' |
Amortized Cost | ' | 11,805 | ' |
Gross Unrealized Losses | ' | -5 | ' |
Total, Estimated Fair Value | ' | 11,800 | ' |
Estimated Fair Value | ' | ' | ' |
Total, Estimated Fair Value | ' | $11,800 | ' |
Summary_of_Significant_Account7
Summary of Significant Accounting Policies (Details 5) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Property and Equipment | ' | ' | ' |
Depreciation expense | $61,400,000 | $50,800,000 | $47,900,000 |
Property and equipment, gross | 526,499,000 | 437,518,000 | ' |
Accumulated depreciation | -354,166,000 | -300,970,000 | ' |
Property and equipment, net | 172,333,000 | 136,548,000 | ' |
Building improvements | ' | ' | ' |
Property and Equipment | ' | ' | ' |
Property and equipment, gross | 12,074,000 | 7,285,000 | ' |
Building improvements | Minimum | ' | ' | ' |
Property and Equipment | ' | ' | ' |
Estimated useful lives of assets | '2 years | ' | ' |
Building improvements | Maximum | ' | ' | ' |
Property and Equipment | ' | ' | ' |
Estimated useful lives of assets | '10 years | ' | ' |
Equipment | ' | ' | ' |
Property and Equipment | ' | ' | ' |
Property and equipment, gross | 180,540,000 | 168,400,000 | ' |
Equipment | Minimum | ' | ' | ' |
Property and Equipment | ' | ' | ' |
Estimated useful lives of assets | '3 years | ' | ' |
Equipment | Maximum | ' | ' | ' |
Property and Equipment | ' | ' | ' |
Estimated useful lives of assets | '15 years | ' | ' |
Capital leases - property | ' | ' | ' |
Property and Equipment | ' | ' | ' |
Property and equipment, gross | 26,945,000 | ' | ' |
Capital leases - equipment | ' | ' | ' |
Property and Equipment | ' | ' | ' |
Property and equipment, gross | 2,794,000 | ' | ' |
Capitalized internal-use software | ' | ' | ' |
Property and Equipment | ' | ' | ' |
Depreciation expense | 34,800,000 | 28,800,000 | 28,900,000 |
Property and equipment, gross | 304,146,000 | 261,833,000 | ' |
Property and equipment, net | $78,800,000 | $71,100,000 | ' |
Capitalized internal-use software | Minimum | ' | ' | ' |
Property and Equipment | ' | ' | ' |
Estimated useful lives of assets | '3 years | ' | ' |
Capitalized internal-use software | Maximum | ' | ' | ' |
Property and Equipment | ' | ' | ' |
Estimated useful lives of assets | '5 years | ' | ' |
Summary_of_Significant_Account8
Summary of Significant Accounting Policies (Details 6) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Oct. 02, 2013 | Dec. 31, 2013 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | Partners Rx | Partners Rx | AlphaCare Holdings Inc. | Health Plan | Health Plan | Health Plan | Specialty Solutions | Specialty Solutions | Specialty Solutions | Pharmacy Management | Pharmacy Management | Pharmacy Management | Pharmacy Management | Pharmacy Management | Pharmacy Management | Public Sector | |||
Discounted cash flow | Merger and acquisition | Public company | |||||||||||||||||
Goodwill | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weights applied to determine fair value of goodwill (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 75.00% | 22.50% | 2.50% | ' |
Percentage change in fair value of goodwill | ' | ' | ' | ' | ' | ' | 47.90% | ' | ' | 32.90% | ' | ' | 25.50% | ' | ' | ' | ' | ' | ' |
Goodwill | $488,206 | $426,939 | $426,939 | ' | $40,385 | $20,882 | ' | $120,485 | $120,485 | ' | $104,549 | $104,549 | ' | $242,290 | $201,905 | ' | ' | ' | $20,882 |
Changes in goodwill | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Balance as of beginning of period | 488,206 | 426,939 | 426,939 | ' | 40,385 | ' | ' | 120,485 | 120,485 | ' | 104,549 | 104,549 | ' | 242,290 | 201,905 | ' | ' | ' | 20,882 |
Acquisition | ' | ' | ' | 40,385 | ' | 20,882 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Balance as of end of period | $488,206 | $426,939 | $426,939 | ' | $40,385 | $20,882 | ' | $120,485 | $120,485 | ' | $104,549 | $104,549 | ' | $242,290 | $201,905 | ' | ' | ' | $20,882 |
Summary_of_Significant_Account9
Summary of Significant Accounting Policies (Details 7) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Summary of intangible assets | ' | ' | ' |
Gross Carrying Amount | $175,583,000 | $130,233,000 | ' |
Accumulated Amortization | -105,889,000 | -95,298,000 | ' |
Net Carrying Amount | 69,694,000 | 34,935,000 | ' |
Amortization expense | 10,600,000 | 9,700,000 | 10,700,000 |
Estimated amortization expense in future | ' | ' | ' |
2014 | 15,400,000 | ' | ' |
2015 | 14,000,000 | ' | ' |
2016 | 9,900,000 | ' | ' |
2017 | 6,100,000 | ' | ' |
2018 | 4,600,000 | ' | ' |
Customer agreements and lists | ' | ' | ' |
Summary of intangible assets | ' | ' | ' |
Gross Carrying Amount | 163,990,000 | 121,490,000 | ' |
Accumulated Amortization | -100,482,000 | -90,548,000 | ' |
Net Carrying Amount | 63,508,000 | 30,942,000 | ' |
Customer agreements and lists | Minimum | ' | ' | ' |
Summary of intangible assets | ' | ' | ' |
Estimated Useful Life | '2 years 6 months | '3 years | ' |
Customer agreements and lists | Maximum | ' | ' | ' |
Summary of intangible assets | ' | ' | ' |
Estimated Useful Life | '18 years | '18 years | ' |
Provider networks and other | ' | ' | ' |
Summary of intangible assets | ' | ' | ' |
Gross Carrying Amount | 11,593,000 | 8,743,000 | ' |
Accumulated Amortization | -5,407,000 | -4,750,000 | ' |
Net Carrying Amount | $6,186,000 | $3,993,000 | ' |
Provider networks and other | Minimum | ' | ' | ' |
Summary of intangible assets | ' | ' | ' |
Estimated Useful Life | '1 year | '5 years | ' |
Provider networks and other | Maximum | ' | ' | ' |
Summary of intangible assets | ' | ' | ' |
Estimated Useful Life | '16 years | '16 years | ' |
Recovered_Sheet1
Summary of Significant Accounting Policies (Details 8) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Cost of Care, Medical Claims Payable and Other Medical Liabilities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Period considered for comparing medical claims trend | ' | ' | ' | ' | ' | ' | ' | ' | '2 months | ' | ' |
Minimum completion factor of insured claims to make projection from historical completion and payment patterns (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | 70.00% | ' | ' |
Changes in medical claims payable | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Claims payable and IBNR, beginning of period | ' | ' | ' | $222,929,000 | ' | ' | ' | $157,099,000 | $222,929,000 | $157,099,000 | $166,095,000 |
Cost of care: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Current year | ' | ' | ' | ' | ' | ' | ' | ' | 2,264,276,000 | 2,076,190,000 | 1,790,124,000 |
Prior years | ' | ' | ' | ' | ' | ' | ' | ' | -31,300,000 | -4,300,000 | -5,400,000 |
Total cost of care | 605,782,000 | 564,537,000 | 537,630,000 | 525,027,000 | 528,529,000 | 516,238,000 | 521,830,000 | 505,293,000 | 2,232,976,000 | 2,071,890,000 | 1,784,724,000 |
Claim payments and transfers to other medical liabilities: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Current year | ' | ' | ' | ' | ' | ' | ' | ' | 2,053,274,000 | 1,877,459,000 | 1,657,291,000 |
Prior years | ' | ' | ' | ' | ' | ' | ' | ' | 160,402,000 | 128,601,000 | 136,429,000 |
Total claim payments and transfers to other medical liabilities | ' | ' | ' | ' | ' | ' | ' | ' | 2,213,676,000 | 2,006,060,000 | 1,793,720,000 |
Claims payable and IBNR, end of period | 242,229,000 | ' | ' | ' | 222,929,000 | ' | ' | ' | 242,229,000 | 222,929,000 | 157,099,000 |
Withhold receivables, end of period | -13,888,000 | ' | ' | ' | -24,500,000 | ' | ' | ' | -13,888,000 | -24,500,000 | -19,126,000 |
Medical claims payable, end of period | 228,341,000 | ' | ' | ' | 198,429,000 | ' | ' | ' | 228,341,000 | 198,429,000 | 137,973,000 |
Prior years cost of care claims relating to adjustments of block funding to providers | ' | ' | ' | ' | ' | ' | ' | ' | 15,100,000 | ' | ' |
Accrued Liabilities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Disclosure threshold (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | 5.00% | 5.00% | ' |
Accrued employee compensation liabilities | 40,200,000 | ' | ' | ' | 36,500,000 | ' | ' | ' | 40,200,000 | 36,500,000 | ' |
Share-based compensation | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock compensation expense | $6,488,000 | $4,524,000 | $4,602,000 | $5,638,000 | $3,848,000 | $4,468,000 | $4,365,000 | $5,102,000 | $21,252,000 | $17,783,000 | $17,418,000 |
Estimated forfeitures (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | 4.00% | 4.00% | 4.00% |
Vesting period | ' | ' | ' | ' | ' | ' | ' | ' | '3 years | ' | ' |
Recovered_Sheet2
Summary of Significant Accounting Policies (Details 9) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Fair value of financial assets and liabilities required to be measured at fair value on a recurring basis | ' | ' | ' |
Restricted Cash | $236,696,000 | $226,554,000 | $185,794,000 |
Investments | 208,313,000 | 233,690,000 | ' |
Cash held in bank accounts by the Company, unrestricted | 102,200,000 | 87,300,000 | ' |
Cash held in bank accounts by the Company, restricted | 108,400,000 | 143,700,000 | ' |
Level 1 | ' | ' | ' |
Fair value of financial assets and liabilities required to be measured at fair value on a recurring basis | ' | ' | ' |
Total assets measured at fair value on a recurring basis | 1,129,000 | 1,065,000 | ' |
Level 2 | ' | ' | ' |
Fair value of financial assets and liabilities required to be measured at fair value on a recurring basis | ' | ' | ' |
Total assets measured at fair value on a recurring basis | 436,530,000 | 417,601,000 | ' |
Total | ' | ' | ' |
Fair value of financial assets and liabilities required to be measured at fair value on a recurring basis | ' | ' | ' |
Total assets measured at fair value on a recurring basis | 437,659,000 | 418,666,000 | ' |
Fair value measured on recurring basis | Level 1 | U.S. Government and agency securities | ' | ' | ' |
Fair value of financial assets and liabilities required to be measured at fair value on a recurring basis | ' | ' | ' |
Investments | 1,129,000 | 1,065,000 | ' |
Fair value measured on recurring basis | Level 2 | Other than cash held in bank accounts by Company | ' | ' | ' |
Fair value of financial assets and liabilities required to be measured at fair value on a recurring basis | ' | ' | ' |
Cash and Cash Equivalents | 101,028,000 | 102,137,000 | ' |
Restricted Cash | 128,318,000 | 82,839,000 | ' |
Fair value measured on recurring basis | Level 2 | Obligations of government-sponsored enterprises | ' | ' | ' |
Fair value of financial assets and liabilities required to be measured at fair value on a recurring basis | ' | ' | ' |
Investments | 8,440,000 | 6,128,000 | ' |
Fair value measured on recurring basis | Level 2 | Corporate debt securities | ' | ' | ' |
Fair value of financial assets and liabilities required to be measured at fair value on a recurring basis | ' | ' | ' |
Investments | 198,594,000 | 214,547,000 | ' |
Fair value measured on recurring basis | Level 2 | Taxable municipal bonds | ' | ' | ' |
Fair value of financial assets and liabilities required to be measured at fair value on a recurring basis | ' | ' | ' |
Investments | ' | 11,800,000 | ' |
Fair value measured on recurring basis | Level 2 | Certificates of deposit | ' | ' | ' |
Fair value of financial assets and liabilities required to be measured at fair value on a recurring basis | ' | ' | ' |
Investments | 150,000 | 150,000 | ' |
Fair value measured on recurring basis | Total | Other than cash held in bank accounts by Company | ' | ' | ' |
Fair value of financial assets and liabilities required to be measured at fair value on a recurring basis | ' | ' | ' |
Cash and Cash Equivalents | 101,028,000 | 102,137,000 | ' |
Restricted Cash | 128,318,000 | 82,839,000 | ' |
Fair value measured on recurring basis | Total | U.S. Government and agency securities | ' | ' | ' |
Fair value of financial assets and liabilities required to be measured at fair value on a recurring basis | ' | ' | ' |
Investments | 1,129,000 | 1,065,000 | ' |
Fair value measured on recurring basis | Total | Obligations of government-sponsored enterprises | ' | ' | ' |
Fair value of financial assets and liabilities required to be measured at fair value on a recurring basis | ' | ' | ' |
Investments | 8,440,000 | 6,128,000 | ' |
Fair value measured on recurring basis | Total | Corporate debt securities | ' | ' | ' |
Fair value of financial assets and liabilities required to be measured at fair value on a recurring basis | ' | ' | ' |
Investments | 198,594,000 | 214,547,000 | ' |
Fair value measured on recurring basis | Total | Taxable municipal bonds | ' | ' | ' |
Fair value of financial assets and liabilities required to be measured at fair value on a recurring basis | ' | ' | ' |
Investments | ' | 11,800,000 | ' |
Fair value measured on recurring basis | Total | Certificates of deposit | ' | ' | ' |
Fair value of financial assets and liabilities required to be measured at fair value on a recurring basis | ' | ' | ' |
Investments | $150,000 | $150,000 | ' |
Acquisitions_and_Joint_Venture2
Acquisitions and Joint Ventures (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Oct. 02, 2013 | Dec. 31, 2013 | Oct. 02, 2013 | Oct. 02, 2013 | Oct. 02, 2013 | Oct. 02, 2013 | Oct. 02, 2013 | Oct. 02, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 30, 2013 | Dec. 31, 2013 | 17-May-13 | Dec. 30, 2013 | Dec. 31, 2013 | Dec. 30, 2013 | Dec. 31, 2013 |
Partners Rx | Partners Rx | Partners Rx | Partners Rx | Partners Rx | Partners Rx | Partners Rx | Partners Rx | AlphaCare Holdings | AlphaCare Holdings | AlphaCare Holdings | MCCAZ | MCCAZ | MCCAZ | AlphaCare | AlphaCare | AlphaCare | AlphaCare | AlphaCare | AlphaCare | AlphaCare | ||||
Accounts receivable | Customer contracts | Customer contracts | Customer contracts | Tradenames | Non-compete agreements | Cash | Restricted cash | Vanguard/Phoenix Health Plan | AlphaCare Holdings | AlphaCare Holdings | AlphaCare Holdings | AlphaCare Holdings | AlphaCare Holdings | AlphaCare Holdings | AlphaCare Holdings | |||||||||
Minimum | Maximum | Customer contracts | Customer contracts | Provider networks | Provider networks | |||||||||||||||||||
Acquisitions and joint ventures | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of investment in joint venture | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 80.00% | 20.00% | ' | ' | ' | ' | ' | ' | ' |
Investment in equity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount of consideration paid in cash | ' | ' | ' | 100,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Purchase price of restricted stock | ' | ' | ' | 10,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Trading day period to calculate average of the closing prices of the company's stock | ' | ' | ' | '5 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Vesting period of restricted stock issued | ' | ' | ' | '3 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Vesting percentage on the second anniversary of the acquisition | ' | ' | ' | 50.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Vesting percentage on the third anniversary of the acquisition | ' | ' | ' | 50.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Period of amortization of intangible assets acquired | ' | ' | ' | ' | ' | ' | ' | '2 years 6 months | '10 years | '15 months | '5 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | '10 years | ' | '10 years | ' |
Assets acquired | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Current assets | ' | ' | ' | 58,164,000 | ' | 58,038,000 | ' | ' | ' | ' | ' | 15,053,000 | 6,249,000 | 7,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Property and equipment, net | ' | ' | ' | 4,327,000 | ' | ' | ' | ' | ' | ' | ' | 310,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 188,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deferred tax assets | ' | ' | ' | 254,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other identified intangible assets | ' | ' | ' | 40,760,000 | ' | ' | 38,700,000 | ' | ' | 400,000 | 1,700,000 | 4,590,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,800,000 | ' | 800,000 |
Goodwill | 488,206,000 | 426,939,000 | 426,939,000 | 40,385,000 | ' | ' | ' | ' | ' | ' | ' | 20,882,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total assets acquired | ' | ' | ' | 143,890,000 | ' | ' | ' | ' | ' | ' | ' | 41,023,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Liabilities assumed | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Current liabilities | ' | ' | ' | 56,125,000 | ' | ' | ' | ' | ' | ' | ' | 3,323,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deferred tax liabilities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,830,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total liabilities assumed | ' | ' | ' | 56,125,000 | ' | ' | ' | ' | ' | ' | ' | 5,153,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net assets acquired | ' | ' | ' | 87,765,000 | ' | ' | ' | ' | ' | ' | ' | 35,870,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Less: net assets attributable to noncontrolling interest | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -10,554,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net consideration | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 25,316,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount of working capital receivable as reduction to goodwill | ' | ' | ' | ' | 700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of equity interest acquired | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 65.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Equity interest held (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7.00% | ' | ' | ' | ' |
Equity investment in preferred membership units | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,000,000 | ' | ' | ' | ' |
Amount previously loaned to acquiree pursuant to a promissory note | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,900,000 | ' | ' | ' | ' |
Amount of additional Series A Preferred purchased | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 17,400,000 | ' | ' | ' | ' | ' |
Ownership percentage | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 65.00% | ' | ' | ' | ' | ' | ' | 7.00% | ' | ' | ' | ' | ' |
Voting interest of remaining shareholders | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 35.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Incremental interest acquired (as percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 58.00% | ' | ' | ' | ' | ' |
Fair value of the interest immediately before the Closing Date | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,200,000 | ' | ' | ' | ' | ' | ' |
Non-cash gain on acquisition | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 700,000 | ' | ' | ' | ' | ' |
Percentage of remaining shares which the entity may be required to purchase in the event of exercise of put options by other shareholders | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reduction in cash consideration paid due to preliminary working capital adjustment | ' | ' | ' | 1,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Redeemable non-controlling interest | 10,554,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10,600,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Acquisition related costs | ' | ' | ' | ' | 800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 300,000 | ' | ' | ' | ' | ' |
Goodwill deductible for tax purposes | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Benefit_Plans_Details
Benefit Plans (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Benefit Plans | ' | ' | ' |
Maximum contribution to defined contribution retirement plan by employee, as a percentage of compensation | 75.00% | ' | ' |
Employer's matching contribution as a percentage of employee's contribution | 50.00% | ' | ' |
Expense recognized | $7.40 | $6.30 | $5.80 |
Maximum | ' | ' | ' |
Benefit Plans | ' | ' | ' |
Maximum employer matching contribution to defined contribution retirement plan, as a percentage of compensation | 6.00% | ' | ' |
LongTerm_Debt_and_Capital_Leas1
Long-Term Debt and Capital Lease Obligations (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 09, 2011 |
Long-Term Debt and Capital Lease Obligations | ' | ' | ' |
Capital lease obligations | $26.70 | $0 | ' |
Gross cost of capital leased assets | 29.7 | ' | ' |
Revolving Loan borrowings | ' | ' | ' |
Long-Term Debt and Capital Lease Obligations | ' | ' | ' |
Maximum borrowing capacity | ' | ' | 230 |
Commitment commission (as a percent) | 0.38% | ' | ' |
Amount of borrowings outstanding | 0 | 0 | ' |
Revolving Loan borrowings | U.S. dollar denominated loans | Prime rate | ' | ' | ' |
Long-Term Debt and Capital Lease Obligations | ' | ' | ' |
Borrowing margin (as a percent) | 0.75% | ' | ' |
Description of variable rate basis | 'Prime Rate | ' | ' |
Revolving Loan borrowings | U.S. dollar denominated loans | Overnight Federal Funds rate | ' | ' | ' |
Long-Term Debt and Capital Lease Obligations | ' | ' | ' |
Borrowing margin (as a percent) | 0.75% | ' | ' |
Description of variable rate basis | 'Overnight Federal Funds Rate | ' | ' |
Basis spread on variable rate (as a percent) | 0.50% | ' | ' |
Revolving Loan borrowings | U.S. dollar denominated loans | Eurodollar rate for one month | ' | ' | ' |
Long-Term Debt and Capital Lease Obligations | ' | ' | ' |
Borrowing margin (as a percent) | 0.75% | ' | ' |
Description of variable rate basis | 'Eurodollar rate for one month | ' | ' |
Basis spread on variable rate (as a percent) | 1.00% | ' | ' |
Revolving Loan borrowings | Eurodollar denominated loans | Eurodollar rate for selected interest period | ' | ' | ' |
Long-Term Debt and Capital Lease Obligations | ' | ' | ' |
Borrowing margin (as a percent) | 1.75% | ' | ' |
Description of variable rate basis | 'Eurodollar rate for the selected interest period | ' | ' |
Letter of Credit | ' | ' | ' |
Long-Term Debt and Capital Lease Obligations | ' | ' | ' |
Maximum borrowing capacity | ' | ' | 70 |
Stated interest rate (as a percent) | 1.88% | ' | ' |
Letters of credit outstanding | $33.70 | $32 | ' |
Stockholders_Equity_Details
Stockholders' Equity (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Share-based compensation | ' | ' | ' |
Vesting period | '3 years | ' | ' |
Benefits of tax deductions in excess of recognized stock compensation expenses | $3,212,000 | $990,000 | $2,038,000 |
Change to additional paid in capital related to tax net benefits (deficiencies) | 2,300,000 | 100,000 | -1,200,000 |
Deficiency of tax deductions in recognized stock compensation expenses | 3,200,000 | 1,000,000 | 2,000,000 |
Benefit of tax deductions in recognized stock compensation expenses | 900,000 | 900,000 | 3,200,000 |
Stock options | ' | ' | ' |
Share-based compensation | ' | ' | ' |
Vesting period | '3 years | ' | ' |
Life of options (Expiration period) | '10 years | ' | ' |
Stock option activity | ' | ' | ' |
Outstanding, beginning of period (in shares) | 4,268,240 | 3,841,233 | 3,775,586 |
Granted (in shares) | 1,047,133 | 1,402,800 | 1,217,958 |
Forfeited (in shares) | -165,734 | -444,939 | -86,986 |
Exercised (in shares) | -1,139,493 | -530,854 | -1,065,325 |
Outstanding, end of period (in shares) | 4,010,146 | 4,268,240 | 3,841,233 |
Vested and expected to vest end of period (in shares) | 3,971,929 | ' | ' |
Exercisable, end of period (in shares) | 1,971,716 | ' | ' |
Weighted average exercise price of stock options | ' | ' | ' |
Outstanding, beginning of period (in dollars per share) | $44.35 | $42.65 | $39.27 |
Granted (in dollars per share) | $53.18 | $47.54 | $49.30 |
Forfeited (in dollars per share) | $49.66 | $46.08 | $42.13 |
Exercised (in dollars per share) | $41.53 | $39.03 | $38.34 |
Outstanding, end of period (in dollars per share) | $47.23 | $44.35 | $42.65 |
Vested and expected to vest end of period (in dollars per share) | $47.19 | ' | ' |
Exercisable, end of period (in dollars per share) | $43.80 | ' | ' |
Weighted average remaining contractual term | ' | ' | ' |
Outstanding, beginning of period | '7 years 2 months 5 days | ' | ' |
Outstanding, end of period | '7 years 2 months 5 days | ' | ' |
Vested and expected to vest end of period | '7 years 2 months 1 day | ' | ' |
Exercisable, end of period | '5 years 9 months 7 days | ' | ' |
Aggregate intrinsic value | ' | ' | ' |
Outstanding, end of the period | 50,902,000 | ' | ' |
Vested and expected to vest end of period | 50,585,000 | ' | ' |
Exercisable, end of period | 31,763,000 | ' | ' |
Closing stock price (in dollars per share) | $59.91 | ' | ' |
Total pre-tax intrinsic value of options exercised | 18,200,000 | 6,400,000 | 13,100,000 |
Grants in period, weighted average grant date fair value (in dollars per share) | $12.24 | $11.65 | $12.72 |
Estimates used for determining weighted average grant date fair value | ' | ' | ' |
Risk-free interest rate (as a percent) | 0.67% | 0.66% | 1.63% |
Expected life | '4 years | '4 years | '4 years |
Expected volatility (as a percent) | 27.86% | 30.30% | 29.88% |
Expected dividend yield (as a percent) | 0.00% | 0.00% | 0.00% |
Unrecognized compensation expense | 14,300,000 | ' | ' |
Unrecognized compensation expense, period of recognition | '2 years 7 days | ' | ' |
Aggregate fair value of options vested | $11,500,000 | ' | ' |
2011 Management Incentive Plan | ' | ' | ' |
Share-based compensation | ' | ' | ' |
Maximum number of shares available | 5,000,000 | ' | ' |
Multiplier for delivery of shares under full-value awards | 2.29 | ' | ' |
Number of shares available for grant | 2,289,039 | ' | ' |
2011 Employee Stock Purchase Plan | ' | ' | ' |
Share-based compensation | ' | ' | ' |
Maximum number of shares available | 100,000 | ' | ' |
Number of shares available for grant | 47,939 | ' | ' |
Stock option activity | ' | ' | ' |
Granted (in shares) | 28,715 | 23,346 | ' |
Stockholders_Equity_Details_2
Stockholders' Equity (Details 2) (USD $) | 0 Months Ended | 12 Months Ended | ||||||||
In Millions, except Share data, unless otherwise specified | Jan. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2010 | Jan. 05, 2004 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Nonvested restricted stock awards | Nonvested restricted stock awards | Nonvested restricted stock awards | Nonvested restricted stock units | Nonvested restricted stock units | Nonvested restricted stock units | |||||
Nonvested restricted stock awards and units | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding, beginning of period (in shares) | ' | ' | ' | ' | 23,672 | 18,748 | 22,309 | 202,690 | 206,338 | 190,488 |
Awarded (in shares) | ' | ' | ' | ' | 192,165 | 23,672 | 18,748 | 98,580 | 131,913 | 115,003 |
Vested (in shares) | ' | ' | ' | ' | -23,672 | -18,748 | -22,309 | -95,138 | -99,976 | -90,853 |
Forfeited (in shares) | ' | ' | ' | ' | ' | ' | ' | -11,219 | -35,585 | -8,300 |
Outstanding, ending of period (in shares) | ' | ' | ' | ' | 192,165 | 23,672 | 18,748 | 194,913 | 202,690 | 206,338 |
Weighted average exercise price of nonvested restricted stock award and units | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding, beginning of period (in dollars per share) | ' | ' | ' | ' | $42.25 | $52.11 | $39.23 | $47.38 | $44.63 | $38.43 |
Awarded (in dollars per share) | ' | ' | ' | ' | $56.59 | $42.25 | $52.11 | $52.62 | $47.48 | $49.14 |
Vested (in dollars per share) | ' | ' | ' | ' | ($42.25) | $52.11 | $39.23 | $46.72 | $41.81 | $37.50 |
Forfeited (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | $49.79 | $47.43 | $42.94 |
Outstanding, ending of period (in dollars per share) | ' | ' | ' | ' | $56.59 | $42.25 | $52.11 | $50.21 | $47.38 | $44.63 |
Unrecognized compensation expense | ' | ' | ' | ' | $9.50 | ' | ' | $3.50 | ' | ' |
Unrecognized compensation expense, period of recognition | ' | ' | ' | ' | '2 years 7 months 10 days | ' | ' | '2 years 9 months 14 days | ' | ' |
Warrants issued to purchase common stock (in shares) | ' | ' | ' | 570,825 | ' | ' | ' | ' | ' | ' |
Fair value per warrant | ' | ' | ' | $9.44 | ' | ' | ' | ' | ' | ' |
Purchase price of common stock (in dollars per share) | ' | ' | ' | $30.46 | ' | ' | ' | ' | ' | ' |
Warrants outstanding at the end of the period (in shares) | ' | 0 | 44,561 | ' | ' | ' | ' | ' | ' | ' |
Exercise of stock warrants (in shares) | 31,362 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants forfeited (in shares) | 13,199 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stockholders_Equity_Details_3
Stockholders' Equity (Details 3) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Numerator: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income | $18,491 | $47,232 | $31,480 | $28,058 | $37,002 | $66,262 | $26,973 | $20,790 | $125,261 | $151,027 | $129,623 |
Denominator: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average number of common shares outstanding-basic | 27,285,000 | 26,990,000 | 26,829,000 | 27,110,000 | 27,505,000 | 27,521,000 | 27,317,000 | 27,199,000 | 27,054,000 | 27,386,000 | 30,478,000 |
Common stock equivalents-stock options (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | 564,000 | 406,000 | 480,000 |
Common stock equivalents-restricted stock awards (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | 13,000 | 11,000 | 9,000 |
Common stock equivalents-restricted stock units (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | 42,000 | 77,000 | 91,000 |
Common stock equivalents-employee stock purchase plan (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | 2,000 | 2,000 | ' |
Weighted average number of common shares outstanding-diluted | 28,008,000 | 27,704,000 | 27,338,000 | 27,648,000 | 28,020,000 | 28,042,000 | 27,717,000 | 27,747,000 | 27,675,000 | 27,882,000 | 31,058,000 |
Net income per common share-basic (in dollars per share) | $0.68 | $1.75 | $1.17 | $1.03 | $1.35 | $2.41 | $0.99 | $0.76 | $4.63 | $5.51 | $4.25 |
Net income per common share-diluted (in dollars per share) | $0.67 | $1.70 | $1.15 | $1.01 | $1.32 | $2.36 | $0.97 | $0.75 | $4.53 | $5.42 | $4.17 |
Potential dilutive securities excluded from computation of dilutive securities (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | 800,000 | 2,200,000 | 1,000,000 |
Stockholders_Equity_Details_4
Stockholders' Equity (Details 4) (USD $) | 0 Months Ended | 2 Months Ended | 10 Months Ended | 12 Months Ended | 0 Months Ended | |||||||
In Millions, except Share data, unless otherwise specified | Jul. 24, 2013 | Oct. 25, 2011 | Feb. 18, 2011 | Jan. 31, 2011 | Jul. 27, 2010 | Feb. 26, 2014 | Dec. 31, 2011 | Dec. 31, 2010 | Nov. 10, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Oct. 02, 2013 |
Partners Rx | ||||||||||||
Stock Repurchases | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount authorized under stock repurchase plan | $300 | $200 | $450 | ' | $350 | ' | ' | ' | ' | ' | ' | ' |
Increase in amount authorized under stock repurchase plan | ' | ' | 100 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Share repurchases made in open market (in shares) | ' | ' | ' | ' | ' | 177,227 | 671,776 | 1,684,510 | 7,534,766 | 1,159,871 | 459,252 | ' |
Average price of shares repurchased (in dollars per share) | ' | ' | ' | ' | ' | ' | $48.72 | $48.36 | $48.91 | $51.83 | $50.27 | ' |
Aggregate cost of shares repurchased, excluding broker commissions | ' | ' | ' | ' | ' | 10.6 | 32.7 | 81.5 | 368.5 | 60.1 | 23.1 | ' |
Recent Sales of Unregistered Securities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of common stock shares purchased by Blue Shield under share purchase agreement | ' | ' | ' | 416,840 | ' | ' | ' | ' | ' | ' | ' | ' |
Purchase price of common stock acquired by Blue Shield under share purchase agreement | ' | ' | ' | 20 | ' | ' | ' | ' | ' | ' | ' | ' |
Period for which common stock acquired by Blue Shield cannot be transferred under share purchase agreement | ' | ' | ' | '2 years | ' | ' | ' | ' | ' | ' | ' | ' |
Merger Agreement | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of restricted stock purchased by certain principal owners of the acquiree | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 175,596 |
Purchase price of restricted stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $10 |
Trading day period to calculate average of the closing prices of the company's stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '5 days |
Vesting period of restricted stock issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '3 years |
Vesting percentage on the second anniversary of the acquisition | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50.00% |
Vesting percentage on the third anniversary of the acquisition | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50.00% |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Income taxes currently payable: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Federal | ' | ' | ' | ' | ' | ' | ' | ' | $37,691,000 | $18,345,000 | $51,195,000 |
State | ' | ' | ' | ' | ' | ' | ' | ' | 3,445,000 | 2,187,000 | 5,534,000 |
Aggregate income taxes currently payable | ' | ' | ' | ' | ' | ' | ' | ' | 41,136,000 | 20,532,000 | 56,729,000 |
Deferred income taxes (benefits): | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Federal | ' | ' | ' | ' | ' | ' | ' | ' | -1,726,000 | 14,922,000 | 8,644,000 |
State | ' | ' | ' | ' | ' | ' | ' | ' | 514,000 | 2,384,000 | -336,000 |
Aggregate deferred income taxes | ' | ' | ' | ' | ' | ' | ' | ' | -1,212,000 | 17,306,000 | 8,308,000 |
Total income tax expense | 9,888,000 | -10,660,000 | 21,586,000 | 19,110,000 | 21,418,000 | -16,725,000 | 18,611,000 | 14,534,000 | 39,924,000 | 37,838,000 | 65,037,000 |
Statutory federal income tax rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | 35.00% | 35.00% | 35.00% |
Differences between total income tax expense and amount computed using the statutory federal income tax rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Income tax expense at federal statutory rate | ' | ' | ' | ' | ' | ' | ' | ' | 57,815,000 | 67,107,000 | 68,458,000 |
State income taxes, net of federal income tax benefit | ' | ' | ' | ' | ' | ' | ' | ' | 4,412,000 | 6,812,000 | 7,013,000 |
Tax contingencies reversed due to statute closings | ' | ' | ' | ' | ' | ' | ' | ' | -25,299,000 | -37,093,000 | -12,521,000 |
Other-net | ' | ' | ' | ' | ' | ' | ' | ' | 2,996,000 | 1,012,000 | 2,087,000 |
Total income tax expense | 9,888,000 | -10,660,000 | 21,586,000 | 19,110,000 | 21,418,000 | -16,725,000 | 18,611,000 | 14,534,000 | 39,924,000 | 37,838,000 | 65,037,000 |
Deferred tax assets: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Operating loss carryforwards | 8,604,000 | ' | ' | ' | 10,116,000 | ' | ' | ' | 8,604,000 | 10,116,000 | ' |
Share-based compensation | 15,926,000 | ' | ' | ' | 16,225,000 | ' | ' | ' | 15,926,000 | 16,225,000 | ' |
Other accrued compensation | 7,619,000 | ' | ' | ' | 3,891,000 | ' | ' | ' | 7,619,000 | 3,891,000 | ' |
Community reinvestment reserves | 550,000 | ' | ' | ' | 6,276,000 | ' | ' | ' | 550,000 | 6,276,000 | ' |
Claims reserves | 8,005,000 | ' | ' | ' | 7,244,000 | ' | ' | ' | 8,005,000 | 7,244,000 | ' |
Deferred Revenue | 6,708,000 | ' | ' | ' | 2,408,000 | ' | ' | ' | 6,708,000 | 2,408,000 | ' |
Other non-deductible accrued liabilities | 13,018,000 | ' | ' | ' | 8,082,000 | ' | ' | ' | 13,018,000 | 8,082,000 | ' |
Indirect tax benefits | 4,804,000 | ' | ' | ' | 5,897,000 | ' | ' | ' | 4,804,000 | 5,897,000 | ' |
Other deferred tax assets | 987,000 | ' | ' | ' | 1,282,000 | ' | ' | ' | 987,000 | 1,282,000 | ' |
Total deferred tax assets | 66,221,000 | ' | ' | ' | 61,421,000 | ' | ' | ' | 66,221,000 | 61,421,000 | ' |
Valuation allowance | -3,102,000 | ' | ' | ' | -3,130,000 | ' | ' | ' | -3,102,000 | -3,130,000 | ' |
Deferred tax assets after valuation allowance | 63,119,000 | ' | ' | ' | 58,291,000 | ' | ' | ' | 63,119,000 | 58,291,000 | ' |
Deferred tax liabilities: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Depreciation | -43,417,000 | ' | ' | ' | -44,728,000 | ' | ' | ' | -43,417,000 | -44,728,000 | ' |
Amortization of goodwill and intangible assets | -20,615,000 | ' | ' | ' | -15,782,000 | ' | ' | ' | -20,615,000 | -15,782,000 | ' |
Other deferred tax liabilities | -3,603,000 | ' | ' | ' | -169,000 | ' | ' | ' | -3,603,000 | -169,000 | ' |
Total deferred tax liabilities | -67,635,000 | ' | ' | ' | -60,679,000 | ' | ' | ' | -67,635,000 | -60,679,000 | ' |
Net deferred tax assets (liabilities) | -4,516,000 | ' | ' | ' | -2,388,000 | ' | ' | ' | -4,516,000 | -2,388,000 | ' |
Federal | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Income Taxes | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Operating Loss Carryforwards | 3,600,000 | ' | ' | ' | ' | ' | ' | ' | 3,600,000 | ' | ' |
State | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Income Taxes | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Operating Loss Carryforwards | $152,300,000 | ' | ' | ' | ' | ' | ' | ' | $152,300,000 | ' | ' |
Income_Taxes_Details_2
Income Taxes (Details 2) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Reconciliation of the beginning and ending amount of gross unrecognized tax benefits | ' | ' | ' |
Balance as of beginning of period | $56,601,000 | $99,230,000 | $111,594,000 |
Additions for current year tax positions | 2,367,000 | 1,904,000 | 3,240,000 |
Additions for tax positions of prior years | 214,000 | 403,000 | 948,000 |
Reductions for tax positions of prior years | -396,000 | -1,618,000 | -1,492,000 |
Reductions due to lapses of applicable statutes of limitations | -28,606,000 | -43,297,000 | -15,011,000 |
Reductions due to settlements with taxing authorities | -4,000 | -21,000 | -49,000 |
Balance as of end of period | 30,176,000 | 56,601,000 | 99,230,000 |
Unrecognized tax benefits realized that would have reduced income tax expense | 23,300,000 | 45,100,000 | ' |
Accrued interest and penalties related to unrecognized tax benefits | 1,500,000 | 2,700,000 | ' |
Interest and penalties recorded | ($1,200,000) | ($100,000) | ($900,000) |
Income_Taxes_Details_3
Income Taxes (Details 3) (USD $) | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Forecast | Additional Paid in Capital | Additional Paid in Capital | Additional Paid in Capital | Income Tax Expense | Income Tax Expense | Income Tax Expense | Income Tax Expense | Income Tax Expense | ||||
Subsequent event | Forecast | Forecast | State | State | ||||||||
Subsequent event | Subsequent event | |||||||||||
Income tax contingency disclosures | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unrecognized tax benefits reduced due to lapse of statute of limitation | $28,606,000 | $43,297,000 | $15,011,000 | $19,500,000 | $3,900,000 | $6,200,000 | $2,600,000 | $23,200,000 | $35,700,000 | $16,000,000 | $2,100,000 | $800,000 |
Interest expense related to unrecognized tax benefits | ' | ' | ' | ' | ' | ' | ' | $2,100,000 | $1,400,000 | ' | ' | ' |
Supplemental_Cash_Flow_Informa2
Supplemental Cash Flow Information (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Supplemental Cash Flow Information | ' | ' | ' |
Income taxes paid, net of refunds | $65,511 | $57,663 | $50,324 |
Interest paid | 2,264 | 1,594 | 1,521 |
Assets acquired through capital leases | $29,739 | ' | ' |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (USD $) | 12 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2013 |
Specialty Pharmaceutical Management | ' |
Insurance | ' |
Period for which insurance policies have been renewed | '1 year |
General liability | ' |
Insurance | ' |
Period for which insurance policies have been renewed | '1 year |
Per claim un-aggregated self-insured retention | 0.05 |
General liability | Specialty Pharmaceutical Management | ' |
Insurance | ' |
Per claim self-insured retention | 0.05 |
Aggregated self-insured retention | 0.25 |
Professional liability | ' |
Insurance | ' |
Period for which insurance policies have been renewed | '1 year |
Per claim un-aggregated self-insured retention | 0.05 |
Professional liability | Specialty Pharmaceutical Management | ' |
Insurance | ' |
Per claim self-insured retention | 0.05 |
Aggregated self-insured retention | 0.25 |
Professional liability | Behavioral health direct care facilities | ' |
Insurance | ' |
Period for which insurance policies have been renewed | '5 years |
Per claim un-aggregated self-insured retention | 0.5 |
Managed care liability | ' |
Insurance | ' |
Period for which insurance policies have been renewed | '1 year |
Per claim un-aggregated self-insured retention | 1 |
Per class action claim un-aggregated self-insured retention | 10 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details 2) (USD $) | 12 Months Ended | 0 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Jun. 10, 2013 | Jul. 25, 2012 |
Pending Litigation | Pending Litigation | ||||
District of Connecticut, July 2012 Lawsuit | District of Connecticut, July 2012 Lawsuit | ||||
Item | |||||
Loss contingency disclosures | ' | ' | ' | ' | ' |
Number of former employees against whom the entity filed lawsuit | ' | ' | ' | ' | 2 |
Number of former employees owning the corporation against which the entity filed lawsuit | ' | ' | ' | ' | 1 |
Amount of damages alleged by defendant corporation for lost profits | ' | ' | ' | $155 | ' |
Future minimum payments under operating leases | ' | ' | ' | ' | ' |
2014 | 16.8 | ' | ' | ' | ' |
2015 | 15.9 | ' | ' | ' | ' |
2016 | 14.5 | ' | ' | ' | ' |
2017 | 12.4 | ' | ' | ' | ' |
2018 | 11.1 | ' | ' | ' | ' |
2019 and beyond | 35.6 | ' | ' | ' | ' |
Future minimum rentals to be received under operating subleases | ' | ' | ' | ' | ' |
2014 | 0.5 | ' | ' | ' | ' |
2015 | 0.3 | ' | ' | ' | ' |
Rent expense | 15.2 | 19.5 | 19.3 | ' | ' |
Future minimum payments under capital leases net of leasehold improvement allowances | ' | ' | ' | ' | ' |
2014 | 0.9 | ' | ' | ' | ' |
2015 | 2.1 | ' | ' | ' | ' |
2016 | 3.2 | ' | ' | ' | ' |
2017 | 3.3 | ' | ' | ' | ' |
2018 | 3.4 | ' | ' | ' | ' |
2019 and beyond | 21.3 | ' | ' | ' | ' |
Capital lease obligations imputed interest | $7.50 | ' | ' | ' | ' |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details 3) (USD $) | 12 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2013 |
Restructuring activities | ' |
Projected restructuring cost | $17.70 |
Liability associated with employee termination costs | 12.5 |
Public Sector | ' |
Restructuring activities | ' |
Projected restructuring cost | 8.2 |
Restructuring costs | 6.8 |
Commercial | ' |
Restructuring activities | ' |
Projected restructuring cost | 5.7 |
Restructuring costs | 4.7 |
Corporate and Other | ' |
Restructuring activities | ' |
Projected restructuring cost | 3.8 |
Restructuring costs | 3.8 |
Employee termination costs | ' |
Restructuring activities | ' |
Projected restructuring cost | 12.8 |
Asset impairment charges | ' |
Restructuring activities | ' |
Projected restructuring cost | 2.5 |
Employee termination and asset impairment charges | ' |
Restructuring activities | ' |
Restructuring costs | 15.3 |
Lease termination and exit costs | ' |
Restructuring activities | ' |
Projected restructuring cost | $2.40 |
Business_Segment_Information_D
Business Segment Information (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||||||||||||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |||
Operating results by business segment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Managed care and other revenue | $823,627 | $770,113 | $746,720 | $722,589 | $742,950 | $711,092 | $716,998 | $686,059 | $3,063,049 | $2,857,099 | $2,551,991 | |||
PBM and dispensing revenue | 184,583 | 103,485 | 96,028 | 99,172 | 87,324 | 87,345 | 88,475 | 87,154 | 483,268 | 350,298 | 247,409 | |||
Cost of care | -605,782 | -564,537 | -537,630 | -525,027 | -528,529 | -516,238 | -521,830 | -505,293 | -2,232,976 | -2,071,890 | -1,784,724 | |||
Cost of goods sold | -174,411 | -97,503 | -90,175 | -93,512 | -82,859 | -81,662 | -82,855 | -81,038 | -455,601 | -328,414 | -232,038 | |||
Direct service costs and other | -178,588 | -156,834 | -144,497 | -139,627 | -145,016 | -135,574 | -140,333 | -136,589 | -619,546 | [1] | -557,512 | [1] | -529,634 | [1] |
Stock compensation expense | ' | ' | ' | ' | ' | ' | ' | ' | 21,252 | 17,783 | 17,418 | |||
Segment profit (loss) | ' | ' | ' | ' | ' | ' | ' | ' | 259,446 | 267,364 | 270,422 | |||
Identifiable assets by business segment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Restricted cash | 236,696 | ' | ' | ' | 226,554 | ' | ' | ' | 236,696 | 226,554 | 185,794 | |||
Net accounts receivable | 238,185 | ' | ' | ' | 138,253 | ' | ' | ' | 238,185 | 138,253 | 121,606 | |||
Investments | 208,313 | ' | ' | ' | 233,690 | ' | ' | ' | 208,313 | 233,690 | 200,903 | |||
Pharmaceutical inventory | 49,609 | ' | ' | ' | 45,727 | ' | ' | ' | 49,609 | 45,727 | 39,567 | |||
Goodwill | 488,206 | ' | ' | ' | 426,939 | ' | ' | ' | 488,206 | 426,939 | 426,939 | |||
Other intangible assets, net | 69,694 | ' | ' | ' | 34,935 | ' | ' | ' | 69,694 | 34,935 | 44,589 | |||
Public Sector | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Identifiable assets by business segment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Goodwill | 20,882 | ' | ' | ' | ' | ' | ' | ' | 20,882 | ' | ' | |||
Specialty Solutions | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Identifiable assets by business segment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Goodwill | 104,549 | ' | ' | ' | 104,549 | ' | ' | ' | 104,549 | 104,549 | ' | |||
Pharmacy Management | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Identifiable assets by business segment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Goodwill | 242,290 | ' | ' | ' | 201,905 | ' | ' | ' | 242,290 | 201,905 | ' | |||
Operating segments | Commercial | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Operating results by business segment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Managed care and other revenue | ' | ' | ' | ' | ' | ' | ' | ' | 766,841 | 728,512 | 561,780 | |||
Cost of care | ' | ' | ' | ' | ' | ' | ' | ' | -469,478 | -437,518 | -314,178 | |||
Direct service costs and other | ' | ' | ' | ' | ' | ' | ' | ' | -172,491 | -172,035 | -152,760 | |||
Stock compensation expense | ' | ' | ' | ' | ' | ' | ' | ' | 503 | 532 | 839 | |||
Segment profit (loss) | ' | ' | ' | ' | ' | ' | ' | ' | 125,375 | 119,491 | 95,681 | |||
Identifiable assets by business segment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Restricted cash | 25,107 | ' | ' | ' | 18,254 | ' | ' | ' | 25,107 | 18,254 | 18,319 | |||
Net accounts receivable | 50,407 | ' | ' | ' | 39,678 | ' | ' | ' | 50,407 | 39,678 | 26,822 | |||
Investments | 16,491 | ' | ' | ' | 21,273 | ' | ' | ' | 16,491 | 21,273 | 5,320 | |||
Goodwill | 120,485 | ' | ' | ' | 120,485 | ' | ' | ' | 120,485 | 120,485 | 120,485 | |||
Other intangible assets, net | 1,076 | ' | ' | ' | 2,152 | ' | ' | ' | 1,076 | 2,152 | 3,228 | |||
Operating segments | Public Sector | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Operating results by business segment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Managed care and other revenue | ' | ' | ' | ' | ' | ' | ' | ' | 1,757,933 | 1,620,875 | 1,459,659 | |||
Cost of care | ' | ' | ' | ' | ' | ' | ' | ' | -1,523,023 | -1,413,320 | -1,271,532 | |||
Direct service costs and other | ' | ' | ' | ' | ' | ' | ' | ' | -122,819 | -89,129 | -67,227 | |||
Stock compensation expense | ' | ' | ' | ' | ' | ' | ' | ' | 1,038 | 1,111 | 872 | |||
Segment profit (loss) | ' | ' | ' | ' | ' | ' | ' | ' | 113,129 | 119,537 | 121,772 | |||
Identifiable assets by business segment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Restricted cash | 196,651 | ' | ' | ' | 147,766 | ' | ' | ' | 196,651 | 147,766 | 164,479 | |||
Net accounts receivable | 62,977 | ' | ' | ' | 27,415 | ' | ' | ' | 62,977 | 27,415 | 28,331 | |||
Investments | 92,966 | ' | ' | ' | 101,093 | ' | ' | ' | 92,966 | 101,093 | 131,261 | |||
Goodwill | 20,882 | ' | ' | ' | ' | ' | ' | ' | 20,882 | ' | ' | |||
Other intangible assets, net | 4,590 | ' | ' | ' | ' | ' | ' | ' | 4,590 | ' | ' | |||
Operating segments | Specialty Solutions | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Operating results by business segment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Managed care and other revenue | ' | ' | ' | ' | ' | ' | ' | ' | 375,818 | 349,133 | 344,335 | |||
Cost of care | ' | ' | ' | ' | ' | ' | ' | ' | -247,496 | -228,383 | -205,240 | |||
Direct service costs and other | ' | ' | ' | ' | ' | ' | ' | ' | -57,334 | -55,418 | -61,681 | |||
Stock compensation expense | ' | ' | ' | ' | ' | ' | ' | ' | 1,630 | 1,567 | 1,563 | |||
Segment profit (loss) | ' | ' | ' | ' | ' | ' | ' | ' | 72,618 | 66,899 | 78,977 | |||
Identifiable assets by business segment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Net accounts receivable | 7,368 | ' | ' | ' | 7,580 | ' | ' | ' | 7,368 | 7,580 | 1,398 | |||
Pharmaceutical inventory | 49,609 | ' | ' | ' | 45,727 | ' | ' | ' | 49,609 | 45,727 | 39,567 | |||
Goodwill | 104,549 | ' | ' | ' | 104,549 | ' | ' | ' | 104,549 | 104,549 | 104,549 | |||
Other intangible assets, net | 6,123 | ' | ' | ' | 7,877 | ' | ' | ' | 6,123 | 7,877 | 9,632 | |||
Operating segments | Pharmacy Management | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Operating results by business segment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Managed care and other revenue | ' | ' | ' | ' | ' | ' | ' | ' | 228,705 | 227,669 | 268,987 | |||
PBM and dispensing revenue | ' | ' | ' | ' | ' | ' | ' | ' | 483,268 | 350,298 | 247,409 | |||
Cost of care | ' | ' | ' | ' | ' | ' | ' | ' | -59,227 | -61,759 | -76,544 | |||
Cost of goods sold | ' | ' | ' | ' | ' | ' | ' | ' | -455,601 | -328,414 | -232,038 | |||
Direct service costs and other | ' | ' | ' | ' | ' | ' | ' | ' | -128,427 | -111,593 | -127,598 | |||
Stock compensation expense | ' | ' | ' | ' | ' | ' | ' | ' | 1,172 | 1,007 | 817 | |||
Segment profit (loss) | ' | ' | ' | ' | ' | ' | ' | ' | 69,890 | 77,208 | 81,033 | |||
Identifiable assets by business segment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Net accounts receivable | 115,527 | ' | ' | ' | 65,755 | ' | ' | ' | 115,527 | 65,755 | 52,024 | |||
Goodwill | 242,290 | ' | ' | ' | 201,905 | ' | ' | ' | 242,290 | 201,905 | 201,905 | |||
Other intangible assets, net | 57,905 | ' | ' | ' | 24,906 | ' | ' | ' | 57,905 | 24,906 | 31,729 | |||
Corporate and Eliminations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Operating results by business segment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Managed care and other revenue | ' | ' | ' | ' | ' | ' | ' | ' | -66,248 | -69,090 | -82,770 | |||
Cost of care | ' | ' | ' | ' | ' | ' | ' | ' | 66,248 | 69,090 | 82,770 | |||
Direct service costs and other | ' | ' | ' | ' | ' | ' | ' | ' | -138,475 | -129,337 | -120,368 | |||
Stock compensation expense | ' | ' | ' | ' | ' | ' | ' | ' | 16,909 | 13,566 | 13,327 | |||
Segment profit (loss) | ' | ' | ' | ' | ' | ' | ' | ' | -121,566 | -115,771 | -107,041 | |||
Identifiable assets by business segment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Restricted cash | 14,938 | ' | ' | ' | 60,534 | ' | ' | ' | 14,938 | 60,534 | 2,996 | |||
Net accounts receivable | 1,906 | ' | ' | ' | -2,175 | ' | ' | ' | 1,906 | -2,175 | 13,031 | |||
Investments | $98,856 | ' | ' | ' | $111,324 | ' | ' | ' | $98,856 | $111,324 | $64,322 | |||
[1] | Includes stock compensation expense of $17,418, $17,783 and $21,252 for the years ended December 31, 2011, 2012 and 2013, respectively. |
Business_Segment_Information_D1
Business Segment Information (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Reconciliation of segment profit to income before income taxes | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment profit | ' | ' | ' | ' | ' | ' | ' | ' | $259,446 | $267,364 | $270,422 |
Stock compensation expense | -6,488 | -4,524 | -4,602 | -5,638 | -3,848 | -4,468 | -4,365 | -5,102 | -21,252 | -17,783 | -17,418 |
Depreciation and amortization | -21,224 | -17,654 | -16,946 | -16,170 | -15,316 | -15,239 | -15,152 | -14,781 | -71,994 | -60,488 | -58,623 |
Interest expense | -809 | -789 | -792 | -610 | -534 | -537 | -576 | -600 | -3,000 | -2,247 | -2,502 |
Interest and other income | 983 | 291 | 358 | 353 | 400 | 350 | 857 | 412 | 1,985 | 2,019 | 2,781 |
Income before income taxes | $28,379 | $36,572 | $53,066 | $47,168 | $58,420 | $49,537 | $45,584 | $35,324 | $165,185 | $188,865 | $194,660 |
Selected_Quarterly_Financial_D2
Selected Quarterly Financial Data (Unaudited) (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||||||||||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |||
Net revenue: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Managed care and other | $823,627 | $770,113 | $746,720 | $722,589 | $742,950 | $711,092 | $716,998 | $686,059 | $3,063,049 | $2,857,099 | $2,551,991 | |||
PBM and dispensing revenue | 184,583 | 103,485 | 96,028 | 99,172 | 87,324 | 87,345 | 88,475 | 87,154 | 483,268 | 350,298 | 247,409 | |||
Total net revenue | 1,008,210 | 873,598 | 842,748 | 821,761 | 830,274 | 798,437 | 805,473 | 773,213 | 3,546,317 | 3,207,397 | 2,799,400 | |||
Costs and expenses: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
Cost of care | 605,782 | 564,537 | 537,630 | 525,027 | 528,529 | 516,238 | 521,830 | 505,293 | 2,232,976 | 2,071,890 | 1,784,724 | |||
Cost of goods sold | 174,411 | 97,503 | 90,175 | 93,512 | 82,859 | 81,662 | 82,855 | 81,038 | 455,601 | 328,414 | 232,038 | |||
Direct service costs and other operating expenses | 178,588 | 156,834 | 144,497 | 139,627 | 145,016 | 135,574 | 140,333 | 136,589 | 619,546 | [1] | 557,512 | [1] | 529,634 | [1] |
Depreciation and amortization | 21,224 | 17,654 | 16,946 | 16,170 | 15,316 | 15,239 | 15,152 | 14,781 | 71,994 | 60,488 | 58,623 | |||
Interest expense | 809 | 789 | 792 | 610 | 534 | 537 | 576 | 600 | 3,000 | 2,247 | 2,502 | |||
Interest and other income | -983 | -291 | -358 | -353 | -400 | -350 | -857 | -412 | -1,985 | -2,019 | -2,781 | |||
Total costs and expenses | 979,831 | 837,026 | 789,682 | 774,593 | 771,854 | 748,900 | 759,889 | 737,889 | 3,381,132 | 3,018,532 | 2,604,740 | |||
Income before income taxes | 28,379 | 36,572 | 53,066 | 47,168 | 58,420 | 49,537 | 45,584 | 35,324 | 165,185 | 188,865 | 194,660 | |||
Provision for income taxes | 9,888 | -10,660 | 21,586 | 19,110 | 21,418 | -16,725 | 18,611 | 14,534 | 39,924 | 37,838 | 65,037 | |||
Net income | 18,491 | 47,232 | 31,480 | 28,058 | 37,002 | 66,262 | 26,973 | 20,790 | 125,261 | 151,027 | 129,623 | |||
Weighted average number of common shares outstanding-basic | 27,285 | 26,990 | 26,829 | 27,110 | 27,505 | 27,521 | 27,317 | 27,199 | 27,054 | 27,386 | 30,478 | |||
Weighted average number of common shares outstanding-diluted | 28,008 | 27,704 | 27,338 | 27,648 | 28,020 | 28,042 | 27,717 | 27,747 | 27,675 | 27,882 | 31,058 | |||
Net income per common share-basic (in dollars per share) | $0.68 | $1.75 | $1.17 | $1.03 | $1.35 | $2.41 | $0.99 | $0.76 | $4.63 | $5.51 | $4.25 | |||
Net income per common share-diluted (in dollars per share) | $0.67 | $1.70 | $1.15 | $1.01 | $1.32 | $2.36 | $0.97 | $0.75 | $4.53 | $5.42 | $4.17 | |||
Stock compensation expense | $6,488 | $4,524 | $4,602 | $5,638 | $3,848 | $4,468 | $4,365 | $5,102 | $21,252 | $17,783 | $17,418 | |||
[1] | Includes stock compensation expense of $17,418, $17,783 and $21,252 for the years ended December 31, 2011, 2012 and 2013, respectively. |
SCHEDULE_IIVALUATION_AND_QUALI1
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS (Details) (Allowance for doubtful accounts, USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Allowance for doubtful accounts | ' | ' | ' |
Changes in valuation and qualifying accounts | ' | ' | ' |
Balance at Beginning of Period | $4,612 | $3,336 | $1,985 |
Charged to Costs and Expenses | 1,205 | 1,947 | 1,528 |
Charged to Other Accounts | -126 | -346 | -150 |
Addition | 130 | ' | ' |
Deduction | -374 | -325 | -27 |
Balance at End of Period | $5,447 | $4,612 | $3,336 |