Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 12, 2018 | Jun. 30, 2017 | |
Document and Entity Information | |||
Entity Registrant Name | HANGER, INC. | ||
Entity Central Index Key | 722,723 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | No | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 425.8 | ||
Entity Common Stock, Shares Outstanding | 36,328,678 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 7,157 | $ 58,753 |
Net accounts receivable, less allowance for doubtful accounts of $15,521 and $15,027 in 2016 and 2015, respectively | 144,562 | 174,592 |
Inventories | 68,225 | 68,478 |
Income tax receivable | 13,200 | 34,735 |
Other current assets | 19,137 | 21,070 |
Total current assets | 252,281 | 357,628 |
Non-current assets: | ||
Property, plant and equipment, net | 100,467 | 113,274 |
Goodwill | 249,678 | 335,642 |
Other intangible assets, net | 32,941 | 47,128 |
Deferred income taxes | 94,223 | 98,254 |
Other assets | 25,514 | 21,158 |
Total assets | 755,104 | 973,084 |
Current liabilities: | ||
Current portion of long-term debt | 30,944 | 30,385 |
Accounts payable | 50,549 | 56,099 |
Accrued expenses and other current liabilities | 78,950 | 79,860 |
Accrued interest payable | 662 | 3,292 |
Accrued compensation related costs | 36,162 | 48,168 |
Total current liabilities | 197,267 | 217,804 |
Long-term liabilities: | ||
Long-term debt, less current portion | 441,706 | 536,048 |
Other liabilities | 50,717 | 53,986 |
Total liabilities | 689,690 | 807,838 |
Commitments and contingent liabilities (Note Q) | ||
Shareholders' Equity: | ||
Common stock, $.01 par value; 60,000,000 shares authorized, 36,183,894 shares issued and 36,041,073 shares outstanding in 2016, and 35,854,106 shares issued and 35,711,285 shares outstanding in 2015 | 362 | 359 |
Additional paid-in capital | 322,191 | 315,529 |
Accumulated other comprehensive loss | (1,440) | (1,414) |
Retained deficit | (255,003) | (148,532) |
Treasury stock, at cost; 142,821 shares at 2016 and 2015, respectively | (696) | (696) |
Total shareholders' equity | 65,414 | 165,246 |
Total liabilities and shareholders' equity | $ 755,104 | $ 973,084 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
CONSOLIDATED BALANCE SHEETS | ||||||||||
Allowance for doubtful accounts | $ 15,521 | $ 14,418 | $ 15,241 | $ 16,296 | $ 15,027 | $ 14,419 | $ 14,033 | $ 13,225 | $ 9,944 | $ 6,472 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | ||
Common stock, shares authorized | 60,000,000 | 60,000,000 | 60,000,000 | 60,000,000 | 60,000,000 | 60,000,000 | 60,000,000 | 60,000,000 | ||
Common stock, shares issued | 36,183,894 | 36,158,347 | 36,144,560 | 36,044,247 | 35,854,106 | 35,825,040 | 35,816,784 | 35,765,547 | ||
Common stock, shares outstanding | 36,041,073 | 36,015,526 | 36,001,739 | 35,901,426 | 35,711,285 | 35,682,219 | 35,673,963 | 35,622,726 | ||
Treasury stock, shares | 142,821 | 142,821 | 142,821 | 142,821 | 142,821 | 142,821 | 142,821 | 141,154 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME | |||||||||||||||
Net revenue | $ 281,053 | $ 260,084 | $ 264,456 | $ 236,461 | $ 285,653 | $ 275,182 | $ 272,836 | $ 233,501 | $ 500,917 | $ 506,337 | $ 761,001 | $ 781,519 | $ 1,042,054 | $ 1,067,172 | $ 1,012,100 |
Material costs | 86,963 | 85,437 | 82,971 | 76,700 | 88,062 | 85,492 | 85,901 | 76,828 | 159,671 | 162,729 | 245,108 | 248,221 | 332,071 | 336,283 | 324,284 |
Personnel costs | 96,880 | 89,113 | 88,406 | 89,138 | 95,570 | 95,220 | 89,912 | 86,392 | 177,544 | 176,304 | 266,657 | 271,524 | 363,537 | 367,094 | 353,586 |
Other operating costs | 36,154 | 34,139 | 31,970 | 36,761 | 34,039 | 32,764 | 37,604 | 36,431 | 68,731 | 74,035 | 102,870 | 106,799 | 139,024 | 140,839 | 136,885 |
General and administrative expenses | 23,770 | 25,726 | 30,170 | 27,558 | 27,103 | 29,689 | 29,112 | 25,857 | 57,728 | 54,969 | 83,454 | 84,658 | 107,224 | 111,761 | 86,115 |
Professional accounting and legal fees | 9,829 | 9,023 | 10,692 | 11,689 | 9,646 | 9,348 | 4,853 | 4,800 | 22,381 | 9,653 | 31,404 | 19,001 | 41,233 | 28,647 | 44,798 |
Depreciation and amortization | 10,160 | 11,339 | 11,660 | 11,728 | 15,957 | 10,240 | 9,916 | 10,230 | 23,388 | 20,146 | 34,727 | 30,386 | 44,887 | 46,343 | 38,929 |
Impairment of intangible assets | 86,164 | 384,996 | 812 | 812 | 86,164 | 385,807 | 223 | ||||||||
(Loss) income from operations | (68,867) | 5,307 | 8,587 | (17,113) | (369,720) | 11,617 | 15,538 | (7,037) | (8,526) | 8,501 | (3,219) | 20,118 | (72,086) | (349,602) | 27,280 |
Interest expense, net | 13,734 | 12,809 | 9,818 | 8,838 | 7,935 | 7,404 | 7,380 | 7,173 | 18,656 | 14,553 | 31,465 | 21,957 | 45,199 | 29,892 | 28,277 |
Loss on extinguishment of debt | 6,041 | (10) | 7,237 | (10) | 6,031 | 6,031 | 7,237 | ||||||||
Loss from continuing operations before income taxes | (82,601) | (13,543) | (1,221) | (25,951) | (384,892) | 4,213 | 8,158 | (14,210) | (27,172) | (6,052) | (40,715) | (1,839) | (123,316) | (386,731) | (997) |
(Benefit) provision for income taxes | (1,488) | (5,687) | (321) | (8,414) | (69,768) | 1,133 | 228 | 793 | (8,735) | 1,021 | (14,422) | 2,154 | (15,910) | (67,614) | 2,023 |
Loss from continuing operations | (81,113) | (7,856) | (900) | (17,537) | (315,124) | 3,080 | 7,930 | (15,003) | (18,437) | (7,073) | (26,293) | (3,993) | (107,406) | (319,117) | (3,020) |
Income (loss) from discontinued operations, net of income taxes | (15) | 378 | 572 | (664) | (6,343) | (967) | 572 | (7,310) | 950 | (7,310) | 935 | (7,974) | (15,946) | ||
Net loss | (81,128) | (7,478) | (328) | (17,537) | (315,788) | 3,080 | 1,587 | (15,970) | (17,865) | (14,383) | (25,343) | (11,303) | (106,471) | (327,091) | (18,966) |
Other comprehensive (loss) income: | |||||||||||||||
Unrealized (loss) gain on SERP, net of income tax (benefit) provision of $(16), $81 and $(525) for 2016, 2015 and 2014, respectively | (84) | 19 | 19 | 19 | 393 | 27 | 27 | 27 | 38 | 54 | 57 | 81 | (26) | 474 | (868) |
Comprehensive loss | $ (81,212) | $ (7,459) | $ (309) | $ (17,518) | $ (315,395) | $ 3,107 | $ 1,614 | $ (15,943) | $ (17,827) | $ (14,329) | $ (25,286) | $ (11,222) | $ (106,497) | $ (326,617) | $ (19,834) |
Basic and Diluted Per Common Share Data: | |||||||||||||||
Loss from continuing operations | $ (2.25) | $ (0.22) | $ (0.03) | $ (0.49) | $ (0.51) | $ (0.73) | $ (2.99) | $ (8.96) | $ (0.09) | ||||||
Income (loss) from discontinued operations, net of income taxes | 0.01 | 0.02 | 0.01 | 0.02 | 0.03 | (0.22) | (0.45) | ||||||||
Basic and diluted loss per share | $ (2.25) | $ (0.21) | $ (0.01) | $ (0.49) | $ (0.50) | $ (0.71) | $ (2.96) | $ (9.18) | $ (0.54) | ||||||
Shares used to compute basic and diluted per common share amounts | 36,032 | 36,008 | 35,949 | 35,742 | 35,846 | 35,900 | 35,933,222 | 35,635,448 | 35,309,478 |
CONSOLIDATED STATEMENTS OF OPE5
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME | |||
Unrealized (loss) gain on SERP, tax (benefit) provision | $ (16) | $ 81 | $ (525) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Treasury Stock | Total |
Balance at Dec. 31, 2013 | $ 351 | $ 295,113 | $ (1,020) | $ 197,525 | $ (656) | $ 491,313 |
Balance (in shares) at Dec. 31, 2013 | 35,017,000 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net loss | (18,966) | (18,966) | ||||
Issuance of common stock upon vesting of restricted stock units | $ 4 | (4) | ||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 377,000 | |||||
Issuance of common stock in connection with the exercise of stock options | 87 | 87 | ||||
Issuance of common stock in connection with the exercise of stock options (in shares) | 5,000 | |||||
Stock-based compensation expense | 9,773 | 9,773 | ||||
Tax benefit (expense) associated with vesting of restricted stock units | 2,197 | 2,197 | ||||
Tax benefit on unrealized loss on SERP | 525 | 525 | ||||
Total other comprehensive income (loss) | (1,393) | (1,393) | ||||
Balance at Dec. 31, 2014 | $ 355 | 307,166 | (1,888) | 178,559 | (656) | 483,536 |
Balance (in shares) at Dec. 31, 2014 | 35,399,000 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net loss | (15,970) | |||||
Balance at Mar. 31, 2015 | $ 467,800 | |||||
Balance (in shares) at Mar. 31, 2015 | 35,622,726 | |||||
Balance at Dec. 31, 2014 | $ 355 | 307,166 | (1,888) | 178,559 | (656) | $ 483,536 |
Balance (in shares) at Dec. 31, 2014 | 35,399,000 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net loss | (14,383) | |||||
Balance at Jun. 30, 2015 | $ 471,871 | |||||
Balance (in shares) at Jun. 30, 2015 | 35,673,963 | |||||
Balance at Dec. 31, 2014 | $ 355 | 307,166 | (1,888) | 178,559 | (656) | $ 483,536 |
Balance (in shares) at Dec. 31, 2014 | 35,399,000 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net loss | (11,303) | |||||
Balance at Sep. 30, 2015 | $ 477,530 | |||||
Balance (in shares) at Sep. 30, 2015 | 35,682,219 | |||||
Balance at Dec. 31, 2014 | $ 355 | 307,166 | (1,888) | 178,559 | (656) | $ 483,536 |
Balance (in shares) at Dec. 31, 2014 | 35,399,000 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net loss | (327,091) | (327,091) | ||||
Issuance of common stock upon vesting of restricted stock units | $ 3 | (3) | ||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 306,000 | |||||
Issuance of common stock in connection with the exercise of stock options | $ 1 | 1 | ||||
Issuance of common stock in connection with the exercise of stock options (in shares) | 8,000 | |||||
Purchase of treasury stock | 40 | (40) | ||||
Purchase of stock (in shares) | (2,000) | |||||
Stock-based compensation expense | 11,134 | 11,134 | ||||
Tax benefit (expense) associated with vesting of restricted stock units | (596) | (596) | ||||
Effect of shares withheld to cover taxes | 2,212 | (2,212) | ||||
Tax benefit on unrealized loss on SERP | (81) | (81) | ||||
Total other comprehensive income (loss) | 555 | 555 | ||||
Balance at Dec. 31, 2015 | $ 359 | 315,529 | (1,414) | (148,532) | (696) | $ 165,246 |
Balance (in shares) at Dec. 31, 2015 | 35,711,000 | 35,711,285 | ||||
Balance at Mar. 31, 2015 | $ 467,800 | |||||
Balance (in shares) at Mar. 31, 2015 | 35,622,726 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net loss | $ 1,587 | |||||
Balance at Jun. 30, 2015 | $ 471,871 | |||||
Balance (in shares) at Jun. 30, 2015 | 35,673,963 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net loss | $ 3,080 | |||||
Balance at Sep. 30, 2015 | $ 477,530 | |||||
Balance (in shares) at Sep. 30, 2015 | 35,682,219 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net loss | $ (315,788) | |||||
Balance at Dec. 31, 2015 | $ 359 | 315,529 | (1,414) | (148,532) | (696) | $ 165,246 |
Balance (in shares) at Dec. 31, 2015 | 35,711,000 | 35,711,285 | ||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net loss | $ (17,537) | |||||
Balance at Mar. 31, 2016 | $ 148,113 | |||||
Balance (in shares) at Mar. 31, 2016 | 35,901,426 | |||||
Balance at Dec. 31, 2015 | $ 359 | 315,529 | (1,414) | (148,532) | (696) | $ 165,246 |
Balance (in shares) at Dec. 31, 2015 | 35,711,000 | 35,711,285 | ||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net loss | $ (17,865) | |||||
Balance at Jun. 30, 2016 | $ 149,918 | |||||
Balance (in shares) at Jun. 30, 2016 | 36,001,739 | |||||
Balance at Dec. 31, 2015 | $ 359 | 315,529 | (1,414) | (148,532) | (696) | $ 165,246 |
Balance (in shares) at Dec. 31, 2015 | 35,711,000 | 35,711,285 | ||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net loss | $ (25,343) | |||||
Balance at Sep. 30, 2016 | $ 144,503 | |||||
Balance (in shares) at Sep. 30, 2016 | 36,015,526 | |||||
Balance at Dec. 31, 2015 | $ 359 | 315,529 | (1,414) | (148,532) | (696) | $ 165,246 |
Balance (in shares) at Dec. 31, 2015 | 35,711,000 | 35,711,285 | ||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net loss | (106,471) | $ (106,471) | ||||
Issuance of common stock upon vesting of restricted stock units | $ 3 | (3) | ||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 330,000 | |||||
Stock-based compensation expense | 9,763 | 9,763 | ||||
Tax benefit (expense) associated with vesting of restricted stock units | (2,810) | (2,810) | ||||
Effect of shares withheld to cover taxes | (288) | (288) | ||||
Tax benefit on unrealized loss on SERP | 16 | 16 | ||||
Total other comprehensive income (loss) | (42) | (42) | ||||
Balance at Dec. 31, 2016 | $ 362 | 322,191 | (1,440) | (255,003) | (696) | $ 65,414 |
Balance (in shares) at Dec. 31, 2016 | 36,041,000 | 36,041,073 | ||||
Balance at Mar. 31, 2016 | $ 148,113 | |||||
Balance (in shares) at Mar. 31, 2016 | 35,901,426 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net loss | $ (328) | |||||
Balance at Jun. 30, 2016 | $ 149,918 | |||||
Balance (in shares) at Jun. 30, 2016 | 36,001,739 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net loss | $ (7,478) | |||||
Balance at Sep. 30, 2016 | $ 144,503 | |||||
Balance (in shares) at Sep. 30, 2016 | 36,015,526 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net loss | $ (81,128) | |||||
Balance at Dec. 31, 2016 | $ 362 | $ 322,191 | $ (1,440) | $ (255,003) | $ (696) | $ 65,414 |
Balance (in shares) at Dec. 31, 2016 | 36,041,000 | 36,041,073 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | |||
Net loss | $ (106,471) | $ (327,091) | $ (18,966) |
Income (loss) from discontinued operations, net of income taxes | 935 | (7,974) | (15,946) |
Loss from continuing operations | (107,406) | (319,117) | (3,020) |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Depreciation and amortization | 44,887 | 46,343 | 38,929 |
Provision for doubtful accounts | 13,727 | 12,854 | 11,639 |
Impairment of long-lived and intangible assets | 86,164 | 385,807 | 2,425 |
Stock-based compensation expense | 9,763 | 11,134 | 9,642 |
Provision (benefit) for deferred income taxes | 4,031 | (48,926) | (39,214) |
Amortization of debt issuance costs | 4,921 | 3,371 | 2,663 |
Loss (gain) on extinguishment of debt | 6,031 | 7,237 | |
Gain on sale and disposal of fixed assets | (5,055) | (2,384) | (293) |
Contingent consideration gains | (85) | ||
Changes in operating assets and liabilities, net of effects of acquired companies: | |||
Net accounts receivable | 17,612 | (13,625) | (28,797) |
Inventories | 253 | 2,520 | 6,917 |
Other current assets | 849 | 3,913 | 2,917 |
Income taxes | 18,725 | (40,152) | 6,434 |
Accounts payable | (3,133) | 8,084 | (777) |
Accrued expenses and accrued interest payable | (3,333) | (8,475) | 40,186 |
Accrued compensation related costs | (12,006) | 6,877 | (483) |
Other liabilities | (5,797) | 6,940 | 978 |
Net cash provided by operating activities - continuing operations | 70,233 | 62,401 | 50,061 |
Net cash used in operating activities - discontinued operations | (1,425) | (5,098) | (442) |
Net cash provided by operating activities | 68,808 | 57,303 | 49,619 |
Cash flows from investing activities: | |||
Purchase of property, plant and equipment | (21,148) | (27,620) | (27,096) |
Purchase of equipment leased to third parties under operating leases | (2,476) | (4,632) | (4,012) |
Acquisitions, net of cash acquired | (10,215) | (38,097) | |
Restricted cash | 1,615 | (54) | |
Purchase of company-owned life insurance investment | (2,543) | (2,544) | (2,294) |
Proceeds from sale of property, plant and equipment | 5,960 | 4,954 | 2,518 |
Other investing activities, net | (10) | (50) | |
Net cash used in investing activities - continuing operations | (18,602) | (40,161) | (68,981) |
Net cash provided by investing activities - discontinued operations | 1,425 | 4,987 | 2,507 |
Net cash used in investing activities | (17,177) | (35,174) | (66,474) |
Cash flows from financing activities: | |||
Borrowings under term loan | 274,400 | ||
Repayment of term loan | (19,688) | (14,063) | (8,438) |
Borrowings under revolving credit agreement | 23,000 | 155,000 | 331,000 |
Repayments under revolving credit agreement | (155,000) | (93,000) | (286,000) |
Repayment of senior notes | (200,000) | ||
Payment on seller's note and other contingent consideration | (9,128) | (13,561) | (10,260) |
Payment of capital lease obligations | (979) | (1,111) | (1,687) |
Payment of debt issuance costs and fees | (15,832) | (8,340) | |
Excess tax benefit from stock-based compensation | 2,249 | ||
Proceeds from issuance of common stock | 87 | ||
Net cash (used in) provided by financing activities - continuing operations | (103,227) | 24,925 | 26,951 |
Net cash used in financing activities - discontinued operations | (10) | ||
Net cash (used in) provided by financing activities | (103,227) | 24,925 | 26,941 |
(Decrease) increase in cash and cash equivalents | (51,596) | 47,054 | 10,086 |
Cash and cash equivalents, at beginning of year | 58,753 | 11,699 | 1,613 |
Cash and cash equivalents, at end of year | $ 7,157 | $ 58,753 | $ 11,699 |
THE COMPANY
THE COMPANY | 12 Months Ended |
Dec. 31, 2016 | |
THE COMPANY | |
THE COMPANY | NOTE A — THE COMPANY Hanger, Inc. (“the Company,” “we,” “our,” or “us”) is a leading national provider of products and services that assist in enhancing or restoring the physical capabilities of patients with disabilities or injuries. We provide orthotic and prosthetic (“O&P”) services, distribute O&P devices and components, manage O&P networks and provide therapeutic solutions to patients and businesses in acute, post-acute and clinic settings. We operate through two segments, Patient Care and Products & Services. Our Patient Care segment is primarily comprised of Hanger Clinic, which specializes in the design, fabrication and delivery of custom O&P devices through 706 patient care clinics and 115 satellite locations in 45 states and the District of Columbia as of December 31, 2016. On a regular basis, we have been opening, closing and merging patient care clinics and satellite locations. For the two years ended December 31, 2016, we have opened 68 and closed or consolidated 129 patient care clinics, and opened 28 and closed 33 satellite locations. In addition, our Patient Care segment no longer has a clinic or satellite location in the State of Delaware. Our Products & Services segment is comprised of our distribution and therapeutic solutions businesses. As a leading provider of O&P products in the United States, we coordinate through our distribution business the procurement and distribution of a broad catalog of O&P parts, componentry and devices to independent O&P providers nationwide. The other business in our Products & Services segment is our therapeutic solutions business, which develops specialized rehabilitation technologies and provides evidence-based clinical programs for post-acute rehabilitation to patients at approximately 4,000 skilled nursing and post-acute providers nationwide. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE B — SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation Our consolidated financial statements include our accounts and those of our wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in the accompanying consolidated financial statements. Use of Estimates and Assumptions The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires the use of estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and contingencies. Although actual results in subsequent periods may differ from these estimates, such estimates are developed based on the best information available to management and based on management’s best judgments at the time. We base our estimates on historical experience, observable trends and various other assumptions that we believe are reasonable under the circumstances. All significant assumptions and estimates underlying the amounts reported in the consolidated financial statements and accompanying notes are regularly reviewed and updated when necessary. Changes in estimates are reflected prospectively in the consolidated financial statements based upon on-going actual trends, or subsequent settlements and realizations depending on the nature and predictability of the estimates and contingencies. Interim changes in estimates related to annual operating costs are applied prospectively within annual periods. Although we believe that our estimates are reasonable, actual results could differ from these estimates. The most significant assumptions and estimates underlying these consolidated financial statements and accompanying notes involve revenue recognition and accounts receivable valuation, inventories, accounts payable and accrued liabilities (including self-insurance reserves and contingencies), impairments of long-lived assets including goodwill, income taxes, business combinations, leases and stock-based compensation. Revenue Recognition Patient Care Segment Revenues in our Patient Care segment are primarily derived from the sale of O&P devices and are recognized when the patient has received the device or service. At or subsequent to delivery, we issue an invoice to a third party payor, which primarily consists of commercial insurance companies, Medicare, Medicaid, the Veterans Administration and private or patient pay (“Private Pay”). We recognize revenue for the amounts we expect to receive from payors based on expected contractual reimbursement rates, which are net of estimated contractual discounts. Government reimbursement, comprised of Medicare, Medicaid and the U.S. Department of Veterans Affairs, in the aggregate, accounted for approximately, 54.1%, 53.4% and 50.9% of our net revenue in 2016, 2015 and 2014, respectively. These revenue amounts are further revised as claims are adjudicated, which may result in disallowances, or decreases to revenue. We believe that adjustments related to write-offs of receivables should predominantly be recorded as a reduction of revenues, which we refer to as disallowed revenue. This is due to the majority of our revenues being collected from commercial insurance companies, Medicare, Medicaid and the Veterans Administration, most of which are under contractual reimbursement rates. As such, adjustments do not relate to an inability to pay, but to contractual allowances, lack of timely claims submission, insufficient medical documentation or other administrative errors. Amounts recorded to bad debt expense, which are presented within “Other operating costs,” generally relate to commercial payor bankruptcies and private pay balances for which there was an assessment of collectability and collection attempts were made. At the end of each period, we establish allowances for estimated disallowances relating to that period based on prior adjudication experience and record such amounts as an adjustment to revenue. In a similar fashion, we estimate and record allowances for doubtful accounts on unpaid receivables at each period end. We also record a liability, with a corresponding adjustment to revenue, for refunds expected to be paid to our patients or third party payors. Medicare and Medicaid regulations and the various agreements we have with other third party payors, including commercial healthcare providers under which these contractual adjustments and disallowed revenue are calculated, are complex and are subject to interpretation and adjustment and may include multiple reimbursement mechanisms for different types of services. Therefore, the particular O&P devices and related services authorized and provided, and the related reimbursement, are subject to interpretation and adjustment that could result in payments that differ from our estimates. Additionally, updated regulations and reimbursement schedules, and contract renegotiations occur frequently, necessitating regular review and assessment of the estimation process by management. As a result, there is a reasonable possibility that recorded estimates will change materially in the short-term and any related adjustments will be recorded as changes in estimates when they become known. For more information on our use of estimates to calculate allowances for disallowed revenue and doubtful accounts, refer to the “Accounts Receivable, Net” section below. We often invoice patients or payors after a device is delivered. To account for this delay, we record an estimated revenue accrual for devices delivered but not yet invoiced at period end. This estimate is based on a historical look-back analysis of lag times between delivery and invoicing that occur over a period end. Products & Services Segment Revenues in our Products & Services segment are derived from the distribution of O&P components and the leasing and sale of rehabilitation equipment and ancillary consumable supplies combined with equipment maintenance, education, and training. Distribution revenues are recorded upon the delivery of products, net of estimated returns. Equipment leasing and related services revenue are recognized over the applicable term as the customer has the right to use the equipment and as the services are provided. Equipment sales revenue is recognized upon delivery, with any related services revenue deferred and recognized as the services are performed. Sales of consumables are recognized upon delivery. Material Costs Material costs in our Patient Care segment reflect purchases of orthotics and prosthetic componentry and other related costs in connection with the delivery of care through our clinic locations and other patient care operations. Material costs in our Products & Services segment reflect purchases of orthotics and prosthetic materials and other related costs in connection with the distribution of products and services to third party customers. Personnel Costs Personnel costs reflect salaries, benefits, incentive compensation, contract labor, and other personnel costs we incur in connection with our delivery of care through our clinic locations and other patient care operations, or distribution of products and services, and exclude similar costs incurred in connection with general and administrative activities. Other Operating Costs Other operating costs reflect costs we incur in connection with our delivery of care through our clinic locations and other patient care operations or distribution of products and services. Marketing costs, including advertising, are expensed as incurred and are presented within this financial statement caption. We incurred approximately $4.0 million, $3.9 million, and $3.4 million in advertising costs during the years ended December 31, 2016, 2015 and 2014, respectively. Other costs include rent, utilities, and other occupancy costs, general office expenses, bad debt expense, and travel and clinical professional education costs, and exclude similar costs incurred in connection with general and administrative activities. General and Administrative Expenses General and administrative expenses reflect costs we incur in the management and administration of our businesses that are not directly related to the operation of our clinics or provision of products and services. These include personnel costs and other operating costs supporting our general and administrative functions. We incurred approximately $0.6 million, $0.6 million, and $0.7 million in advertising costs during the years ended December 31, 2016, 2015 and 2014, respectively. Professional Accounting and Legal Fees We recognize fees associated with audits of our financial statements in the fiscal period to which the audit relates. All other professional fees are generally recognized as expense in the periods in which services are performed. Please see the “Accounts Payable and Accrued Liabilities” section for legal fees associated with legal contingencies. Depreciation and Amortization Depreciation and amortization expenses reflect all depreciation and amortization expenses, whether incurred in connection with our delivery of care through clinic locations, our distribution of products and services, or in the general management and administration of our business. Cash and Cash Equivalents We consider all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. We maintain cash balances in excess of Federal Deposit Insurance Corporation (“FDIC”) limits at certain financial institutions. We manage this credit risk by concentrating our cash balances in high quality financial institutions and by periodically evaluating the credit quality of the primary financial institutions holding such deposits. With short maturities, the investments present insignificant risk of changes in value because of interest rate changes and are readily convertible to cash. Historically, no losses have been incurred due to such cash concentrations. Restricted cash balances are presented within “Other current assets” in the consolidated balance sheets. See Note I - “Other Current Assets and Other Assets” within these consolidated financial statements. Accounts Receivable, Net Patient Care Segment We establish allowances for accounts receivable to reduce the carrying value of such receivables to their estimated net realizable value. The Patient Care segment’s accounts receivables are recorded net of unapplied cash, estimated allowance for disallowed revenue and estimated allowance for doubtful accounts, as described in the revenue recognition accounting policy above. Both the allowance for disallowed revenue and the allowance for doubtful accounts estimates consider historical collection experience by each of the Medicare and non-Medicare (commercial insurance, Medicaid, Veteran’s Administration and Private Pay) primary payor class groupings. For each payor class grouping, liquidation analysis of historical period end receivable balances are performed to ascertain collections experience by aging category. We believe the use of historical collection experience applied to current period end receivable balances is reasonable. In the absence of an evident adverse trend, we use historical experience rates calculated using an average of four quarters of data with at least twelve months of adjudication. We believe the time periods analyzed provide sufficient time for most balances to adjudicate in the normal course of operations. We will modify the time periods analyzed when significant trends indicate that adjustments should be made. In addition, estimates are adjusted when appropriate for information available up through the issuance of the consolidated financial statements. Products & Services Segment Products & Services segment’s allowance for doubtful accounts is estimated based on the analysis of the segment’s historical write-offs experience, accounts receivable aging and economic status of its customers. Accounts receivable that are deemed uncollectible are written-off to the allowance for doubtful accounts. Accounts receivable are also recorded net of an allowance for estimated sales returns. Inventories Inventories are valued at the lower of estimated cost or net realizable value with cost determined on a first-in, first out (“FIFO”) basis. Provisions have also been made to reduce the carrying value of inventories for excess, obsolete, or otherwise impaired inventory on hand at period-end. Patient Care Segment Substantially all of our Patient Care segment inventories are recorded through a periodic approach whereby inventory quantities are adjusted on the basis of a quarterly physical count. Segment inventories relate primarily to raw materials and work-in-process (“WIP”) at Hanger Clinics. Inventories at Hanger Clinics totaled $29.1 million and $30.1 million at December 31, 2016 and 2015, respectively, with WIP inventory representing $9.0 million and $8.9 million of the total inventory, respectively. Raw materials consists of purchased parts, components, and supplies which are used in the assembly of O&P devices for delivery to patients. In some cases, purchased parts and components are also sold directly to patients. Raw materials are valued based on recent vendor invoices, reduced by estimated vendor rebates. Such rebates are recognized as a reduction of cost of materials in the Consolidated Statements of Operations and Comprehensive (Loss) Income when the related devices or components are delivered to the patient. Approximately 69% and 52% of raw materials at December 31, 2016 and 2015, respectively were purchased from our Products & Services segment. Raw material inventory was $20.1 million and $21.2 million at December 31, 2016 and 2015 respectively. WIP consists of devices which are in the process of assembly at our clinics or fabrication centers. WIP quantities were determined by the physical count of patient orders at the end of every quarter of 2016 and 2015 while the related stage of completion of each order was established by clinic personnel. We do not have an inventory costing system and as a result, the identified WIP quantities were valued on the basis of estimated raw materials, labor, and overhead costs. To estimate such costs, we develop bills of materials for certain categories of devices that we assemble and deliver to patients. Within each bill of material, we estimate (i) the typical types of component parts necessary to assemble each device; (ii) the points in the assembly process when such component parts are added; (iii) the estimated cost of such parts based on historical purchasing data; (iv) the estimated labor costs incurred at each stage of assembly; and (v) the estimated overhead costs applicable to the device. Products & Services Segment Product & Service segment inventories consist primarily of finished goods at its distribution centers as well as raw materials at fabrication facilities, and totaled $39.1 million and $38.4 million as of December 31, 2016 and 2015, respectively. Finished goods include products that are available for sale to third party customers as well as to our Patient Care segment as described above. Such inventories were determined on the basis of perpetual records and a physical count at year end. Inventories in connection with therapeutic services are valued at a weighted average cost. Fair Value Measurements We follow the authoritative guidance for financial assets and liabilities, which establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. The authoritative guidance requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy by which these assets and liabilities must be categorized, based on significant levels of inputs as follows: Level 1 consists of securities for which there are quoted prices in active markets for identical securities; Level 2 consists of securities for which observable inputs other than Level 1 inputs are used, such as quoted prices for similar securities in active markets or quoted prices for identical securities in less active markets and model-derived valuations for which the variables are derived from, or corroborated by, observable market data; and Level 3 consists of securities for which there are no observable inputs to the valuation methodology that are significant to the measurement of the fair value. The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Financial Instruments We hold investments in money market funds which are measured at fair value on a recurring basis. As of December 31, 2016 and 2015, $2.3 million and $3.9 million, respectively of money market funds which are restricted from general use are presented within “Other current assets.” The fair values of our money market funds are based on Level 1 observable market prices and are equivalent to one dollar per share. The carrying value of accounts receivable and accounts payable, approximate their fair values based on the short-term nature of these instruments. The carrying value of our outstanding term loan as of December 31, 2016 and 2015, was $180.0 million and $199.7 million compared to its fair value of $172.6 million and $186.2 million, respectively. The carrying values of our outstanding Term Loan B as of December 31, 2016 was $280.0 million compared to its fair value of $278.6 million. There was no Term Loan B outstanding as of December 31, 2015. Our estimates of fair value are based on debt with similar terms and remaining maturities as of December 31, 2016 and 2015, which represent Level 2 measurements. We had no balances outstanding under revolving credit facilities as of December 31, 2016. The carrying value of the amount outstanding on our revolving credit facilities as of December 31, 2015, was $132.0 million compared to its fair value of $121.6 million. Our estimates of fair value are based on debt with similar terms and remaining maturities as of December 31, 2015, which represent a Level 2 measurement. Our senior notes were redeemed during 2016. The carrying value of the senior notes was $200.0 million as of December 31, 2015 compared to their fair value of $179.2 million. Our estimates of fair value are based on observable market inputs which represent Level 2 measurements. The carrying value of our outstanding subordinated promissory notes issued in connection with acquisitions (“Seller Notes”) as of December 31, 2016 and 2015 was $11.1 million and $19.8 million, respectively. We believe that the carrying value of the Seller Notes approximates their fair values based on a discounted cash flow model using unobservable inputs, primarily, our credit spread for subordinated debt, which represents a Level 3 measurement. Insurance Recoveries Receivable We incur legal and other costs with respect to a variety of issues on an ongoing basis. We record a related receivable when costs are reimbursable under applicable insurance policies, we believe it is probable such costs will be reimbursed and such reimbursements can be reasonably estimated. We record the benefit of related receivables from the insurer as a reduction of costs in the same financial statement caption in which the related loss was recognized in our consolidated statements of operations and comprehensive (loss) income. Loss contingency reserves, which are recorded within accrued liabilities, are not reduced by estimated insurance recoveries. Property, Plant and Equipment, Net Property, plant and equipment are recorded at cost less accumulated depreciation and amortization, with the exception of assets acquired through acquisitions, which are initially recorded at estimated fair value. Equipment acquired under a capital lease is recorded at the present value of the future minimum lease payments. The cost and related accumulated depreciation of assets sold, retired or otherwise disposed of are removed from the respective accounts, and any resulting gains or losses are included in the consolidated statements of operations and comprehensive (loss) income. Depreciation is computed for financial reporting purposes using the straight-line method over the useful lives of the related assets estimated as follows: furniture and fixtures, equipment and information systems, principally five years, buildings ten to forty years, capital leases over the lease term, and leasehold improvements over the shorter of ten years or the lease term. We record maintenance and repairs, including the cost of minor replacements, to maintenance expense. Costs of major repairs that extend the effective useful life of property are capitalized and depreciated accordingly. We capitalize the costs of obtaining or developing internal use software, including external direct costs of materials and services and directly related payroll costs. Amortization begins when the internal use software is ready for its intended use. Costs incurred during the preliminary project and post-implementation stages, as well as maintenance and training costs, are expensed as incurred. Business Combinations We record tangible and intangible assets acquired and liabilities assumed in business combinations under the acquisition method of accounting. Acquisition consideration typically includes cash payments, the issuance of Sellers Notes and in certain instances contingent consideration with payment terms associated with the achievement of designated collection targets of the acquired business. Amounts paid for each acquisition are allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition inclusive of identifiable intangible assets. The estimated fair value of identifiable assets and liabilities, including intangibles, are based on detailed valuations that use information and assumptions available to management. We allocate any excess purchase price over the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed to goodwill. Significant management judgments and assumptions are required in determining the fair value of assets acquired and liabilities assumed, particularly acquired intangible assets, including estimated useful lives. The valuation of purchased intangible assets is based upon estimates of the future performance and discounted cash flows from the acquired business. Each asset acquired or liability assumed is measured at estimated fair value from the perspective of a market participant. Subsequent changes in the estimated fair value of contingent consideration are recognized as “General and administrative expenses” within the consolidated statements of operations and comprehensive (loss) income. Goodwill and Other Intangible Assets, Net Goodwill represents the excess of the purchase price over the estimated fair value of net identifiable assets acquired and liabilities assumed from purchased businesses. We assess goodwill for impairment annually during the fourth quarter, and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. We have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. If it is determined that a two-step goodwill impairment test is necessary or more efficient than a qualitative approach, we will measure the fair value of the reporting units using a combination of income and market approaches. Any impairment would be recognized by a charge to income from operations and a reduction in the carrying value of the goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired, and the second step of the impairment test is not required. The second step, if required, compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. The fair value of a reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination. If the carrying amount of the reporting unit’s goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess. We apply judgment in determining the fair value of our reporting units and the implied fair value of goodwill which is dependent on significant assumptions and estimates regarding expected future cash flows, terminal value, changes in working capital requirements, and discount rates. The fair value of acquired customer intangibles is estimated using an excess earnings model. Key assumptions utilized in the valuation model include pro-forma projected cash flows adjusted for market-participant assumptions, forecasted customer retention curve, and discount rate. Customer intangibles are amortized, using the straight-line method over an estimated useful life of four to ten years. The fair value of non-compete agreements are estimated using a discounted cash flow model. The related intangible assets are amortized, using the straight-line method, over their term which ranges from two to five years. Other definite-lived intangible assets are recorded at cost and are amortized, using the straight-line method, over their estimated useful lives of up to seventeen years. The fair value associated with trade names is estimated using the relief-from-royalty method with the primary assumptions being the royalty rate and expected revenues associated with the trade names. These assets, some of which have indefinite lives, are primarily included in the Products & Services segment. Indefinite lived trade name intangible assets are assessed for impairment in the fourth quarter of each year, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Trade name intangible assets with definite lives are amortized over their estimated useful lives of one to ten years. For the years ended December 31, 2016 and 2015, we recorded impairments of our goodwill totaling $86.0 million and $382.9 million, respectively. See Note H - “Goodwill and Other Intangible Assets” to our consolidated financial statements in this Annual Report on Form 10-K for additional information regarding these charges. In conjunction with our Goodwill impairment testing at December 31, 2015, we reevaluated the estimated useful life of our customer list intangibles. In the fourth quarter of 2015, the estimated useful life of our customer list intangibles was reduced from 10 years to four years in our Patient Care segment and from 14 years to 10 years in our Products & Services segment. This change in the estimated useful lives increased amortization for the years ended December 31, 2015 and 2016 by approximately $6.0 million and $7.0 million, respectively. As described, we apply judgment in the selection of key assumptions used in both steps of the goodwill impairment test and as part of our evaluation of intangible assets tested annually and at interim testing dates as necessary. If these assumptions differ from actual, we could incur additional impairment charges and those charges could be material. Long-Lived Asset Impairment We evaluate the carrying value of long-lived assets to be held and used for impairment whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. The carrying value of a long-lived asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset group. We measure impairment as the amount by which the carrying value exceeds the estimated fair value. Estimated fair value is determined primarily using the projected future cash flows discounted at a rate commensurate with the risk involved. Long-lived assets to be disposed of by sale are classified as held for sale when the applicable criteria are met, and recognized within the consolidated balance sheet at the lower of carrying value or fair value less cost to sell. Depreciation on such assets is ceased. Debt Issuance Costs, Net Debt issuance costs incurred in connection with long-term debt are amortized, on a straight-line basis, which is not materially different from the effective interest method, through the maturity of the related debt instrument. Debt issuance costs are classified as a reduction of debt in the consolidated balance sheets. Amortization of these costs is included within “Interest expense, net” in the consolidated statements of operations and comprehensive (loss) income. Accounts Payable and Accrued Liabilities Accounts payable relating to goods or services received is estimated using various factors including payments made subsequent to period end, vendor invoice dates, shipping terms confirmed by certain vendors or other third party documentation. Accrued liabilities are recorded based on estimates of services received or amounts expected to be paid to third parties. Accrued legal costs for legal contingencies are recorded when they are probable and estimable. Self-Insurance Reserves We maintain insurance programs which include employee health insurance, workers’ compensation, product, professional and general liability. Our employee health insurance program is self-funded, with a stop-loss coverage on claims that exceed $0.4 million for any individually covered claim. We are responsible for workers’ compensation, product, professional and general liability claims up to $0.5 million per individual incident. The insurance and self-insurance accruals reflect the estimate of incurred but not reported losses, historical claims experience and expected costs to settle unpaid claims and are undiscounted. We record amounts due from insurance policies in “Other assets” while recording the estimated liability in self-insurance accruals in our consolidated balance sheets. Leases We lease a majority of our patient care clinics under lease arrangements, certain of which contain renewal options, rent escalation clauses, and/or landlord incentives. Rent expense for noncancellable leases with scheduled rent increases and/or landlord incentives is recognized on a straight-line basis over the lease term, including any applicable rent holidays, beginning on the earlier of the lease commencement date or the date we take control of the leased space. We have certain building leases that are accounted for as financing transactions. In these instances, pursuant to ASC 840-40-55, The Effect of Lessee Involvement in Asset Construction , we are the deemed owner of the property during the construction phase and the associated building assets and financing obligations are recognized on our consolidated balance sheet. Subsequent to construction, the arrangement is evaluated in accordance with ASC 840-40 to determine whether the arrangement qualifies as a sale leaseback. Sale leasebacks of real estate require an analysis to identify indicators of continuing involvement and other factors. If no indicators of continuing involvement are found, the lease is considered to have passed the sales-leaseback criteria and both the asset and the related financing obligation are derecognized. These leases are then assessed for classification at lease inception and reported in accordance with ASC 840. If indicators of continuing involvement are present, these transactions do not qualify for sale accounting and are accounted for as a failed sale-leaseback. In accordance with ASC 840-40, Leases - Sale-Leaseback Transactions, the buildings and related assets, as well as their associated financing obligations, continue to be reflected in our consolidated balance sheet, with the assets depreciated over their remaining useful lives. Payments required under the arrangement are recognized as reductions of the financing obligation and interest expense. At the end of the lease term, the corresponding financing obligation and the remaining net book value of the building are derecognized. When applicable, any associated gain is recognized within “Other operating costs” in our consolidated statements of operations and comprehensive (loss) income. Income Taxes We use the liability method of accounting for income taxes as set forth in |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2016 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE C — EARNINGS PER SHARE Basic earnings per common share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per common share is computed using the weighted average number of common shares outstanding during the period plus any potentially dilutive common shares, such as stock options, restricted stock units and performance-based units calculated using the treasury stock method. Total anti-dilutive shares excluded from the diluted earnings per share were 342,369 of as December 31, 2016 and 46,870 and 8,088 as of December 31, 2015 and 2014, respectively. Our credit agreement restricts the payment of dividends or other distributions to our shareholders with respect to the parent company or any of its subsidiaries. See Note N - “Long-Term Debt” within these consolidated financial statements. The reconciliation of the numerators and denominators used to calculate basic and diluted net (loss) income per share are as follows: Year Ended December 31, (in thousands, except share and per share data) 2016 2015 2014 Loss from continuing operations applicable to common shareholders $ ) $ ) $ ) Income (loss) from discontinued operations, net of income taxes ) ) Net loss applicable to common shareholders $ ) $ ) $ ) Shares of common stock outstanding used to compute basic per common share amounts Effect of dilutive restricted stock units and options (1) — — — Shares used to compute diluted per common share amounts Basic and Diluted: Loss from continuing operations per share applicable to common stock $ ) $ ) $ ) Income (loss) from discontinued operations per share applicable to common stock ) ) Net loss per share applicable to common shareholders $ ) $ ) $ ) (1) Given that we are recognizing a loss from continuing operations, shares used to compute diluted per common share amounts excludes 145,497 shares for 2016, 102,288 shares for 2015, and 256,880 shares for 2014 of potentially dilutive shares related to unvested restricted stock units and unexercised options in accordance with ASC260 - Earnings Per Share. |
ACCOUNTS RECEIVABLE, NET
ACCOUNTS RECEIVABLE, NET | 12 Months Ended |
Dec. 31, 2016 | |
ACCOUNTS RECEIVABLE, NET | |
ACCOUNTS RECEIVABLE, NET | NOTE D — ACCOUNTS RECEIVABLE, NET Accounts receivable are principally from Medicare and Medicaid programs and commercial insurance plans. Our accounts receivables are recorded net of contractual discounts and net of estimated allowances for disallowed revenue and sales returns. These allowances are presented as a reduction of gross accounts receivable. We also record an allowance for doubtful accounts which is deducted from gross accounts receivable to arrive at “Accounts receivable, net.” Accounts receivable, net as of December 31, 2016, and 2015 is comprised of the following: As of December 31, 2016 As of December 31, 2015 (in thousands) Patient Care Products & Consolidated Patient Care Products & Consolidated Accounts receivable, before allowances $ $ $ $ $ $ Allowance for disallowed revenue ) — ) ) — ) Accounts receivable, gross Allowance for doubtful accounts ) ) ) ) ) ) Accounts receivable, net $ $ $ $ $ $ Approximately 48.3% and 49.6% of accounts receivable, before allowances, is due from the Federal Government (Medicare, Medicaid and Veterans Administration) at December 31, 2016 and 2015, respectively. The following tables represent accounts receivable, before allowances, by major payor classification and by aging categories reduced by the allowance for disallowed revenue and allowance for doubtful accounts to accounts receivable, net as of December 31, 2016 and 2015, respectively: December 31, 2016 (in thousands) 0-60 61-120 121-180 Over 180 Total Patient Care Commercial insurance $ $ $ $ $ Private pay Medicaid VA Non-Medicare Medicare Products & Services Accounts receivable, before allowances Allowance for disallowed revenue ) Allowance for doubtful accounts ) Accounts receivable, net $ December 31, 2015 (in thousands) 0-60 61-120 121-180 Over 180 Total Patient Care Commercial insurance $ $ $ $ $ Private pay Medicaid VA Non-Medicare Medicare Products & Services Accounts receivable, before allowances Allowance for disallowed revenue ) Allowance for doubtful accounts ) Accounts receivable, net $ The following table summarizes activities by year for the allowance for disallowed revenue and the allowance for doubtful accounts: (in thousands) Allowance for Allowance for Balance at December 31, 2013 $ $ Additions (1) Reductions ) ) Balance at December 31, 2014 Additions (1) Reductions ) ) Balance at December 31, 2015 Additions (1) Reductions ) ) Balance at December 31, 2016 $ $ (1)The accounts receivables associated with the Dosteon businesses, which are classified as discontinued operations as of each respective date of the consolidated financial statements, were not a part of the disposal transactions. Therefore the associated allowances, additions, and reductions are included in the above table. Dosteon’s bad debt expense included in “Income (loss) from discontinued operations, net of income taxes” were $0 million in 2016, $1.7 million in 2015, and $2.6 million in 2014. Dosteon’s disallowed revenue included in “Income (loss) from discontinued operations, net of income taxes” were $0 million in 2016, $(0.2) million in 2015, and $14.0 million in 2014. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2016 | |
INVENTORIES | |
INVENTORIES | NOTE E — INVENTORIES Our inventories are comprised of the following: As of December 31, (in thousands) 2016 2015 Raw materials $ $ Work in process Finished goods Total inventories $ $ |
PROPERTY PLANT AND EQUIPMENT, N
PROPERTY PLANT AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2016 | |
PROPERTY PLANT AND EQUIPMENT, NET | |
PROPERTY PLANT AND EQUIPMENT, NET | NOTE F — PROPERTY PLANT AND EQUIPMENT, NET Property, plant and equipment, net were comprised of the following: December 31, (in thousands) 2016 2015 Land $ $ Buildings Furniture and fixtures Machinery and equipment Equipment leased to third parties under operating leases Leasehold improvements Computers and software Total property, plant, and equipment, gross Less: Accumulated depreciation ) ) Total property, plant, and equipment, net $ $ Total depreciation expense was approximately $31.0 million, $32.5 million, and $32.8 million for the years ended December 31, 2016, 2015 and 2014, respectively. Included within Buildings was $23.8 million and $26.4 million recorded as an asset for certain build-to-suit leases as of December 31, 2016 and 2015, respectively. Accumulated depreciation on these assets was $7.7 million and $7.2 million as of December 31, 2016 and 2015, respectively. The following table summarizes our investment in equipment leased to third parties under operating leases: December 31, (in thousands) 2016 2015 Program equipment $ $ Less: Accumulated depreciation ) ) Net book value $ $ |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2016 | |
ACQUISITIONS | |
ACQUISITIONS | NOTE G — ACQUISITIONS In the first quarter of 2015, we acquired three O&P businesses operating a total of 15 patient care clinics located in three states. The aggregate purchase price for these businesses was $15.3 million, including $10.2 million in cash, $4.7 million in Seller Notes and $0.4 million of working capital adjustments and other. The assets acquired and liabilities assumed for all acquisitions were recorded at their estimated fair values at the dates of the acquisitions and the results of their operations are included in our consolidated financial statements from their effective dates. The excess of purchase price over the estimated fair values of assets acquired and liabilities assumed was recorded as goodwill. The value of goodwill from acquisitions can be attributed to a number of business factors including, but not limited to, synergies associated with combining the acquired businesses with our existing business. We have made an election to treat the majority of these acquisitions as asset purchases for income tax purposes resulting in approximately $8.2 million of acquired goodwill being deductible for income tax purposes for acquisitions completed in 2015. Acquisition-related expenses for the year ended December 31, 2015 which are included in “General and administrative expenses” in our consolidated statements of operations and comprehensive (loss) income are not significant. We made no acquisitions in 2016. In 2014, we acquired twelve O&P businesses and one distribution business operating a total of 37 patient care clinics and one distribution center located in 11 states. The aggregate purchase price for these businesses was $52.7 million, including $38.1 million in net cash, $14.0 million of Seller Notes and $0.6 million of working capital adjustments and other. The following table summarizes for 2015 acquisitions, the components of the aggregated purchase price the assets acquired and liabilities assumed in the above transactions and recognized at their respective acquisition dates at estimated fair Year Ended December 31, (in thousands) 2015 Net cash $ Issuance of seller notes Other working capital adjustments Aggregate purchase price Net accounts receivable Inventories Intangible assets, excluding goodwill Other assets Liabilities assumed ) Net assets acquired Goodwill $ |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE H — GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill Impairment Testing Under the provisions of ASC 350-10, Intangibles-Goodwill and Other , goodwill is not amortized. Rather, an entity’s goodwill is subject to periodic impairment testing. ASC 350 requires that an entity assign its goodwill to reporting units and test each reporting unit’s goodwill for impairment at least on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Accordingly, we perform our goodwill test annually as of October 1 and between annual tests whenever we identify certain triggering events or circumstances that would more likely than not reduce the fair value of any of our reporting units below its respective carrying value. Step One The first step of the goodwill impairment test compares a reporting unit’s fair value to its carrying amount to identify any potential impairment. In performing step one, we apply judgment in determining the fair value of our reporting units for purposes of performing the goodwill impairment test. We rely on widely accepted valuation techniques, including discounted cash flow and market multiple analyses approaches, which capture both the future income potential of the reporting unit and the market behaviors and actions of market participants in the industry that includes the reporting unit. These types of analyses require us to make assumptions and estimates regarding future cash flows, industry-specific economic factors and the profitability of future business strategies. The discounted cash flow approach uses a projection of estimated operating results and cash flows that are discounted using a weighted average cost of capital. Under the discounted cash flow approach, the projection uses management’s best estimates of the amount and timing of expected future cash flows impacted by economic and market conditions over the projected period for each reporting unit. Significant estimates and assumptions include terminal value growth rates, changes in working capital requirements and weighted average cost of capital. The market multiple analysis estimates fair value by applying revenue and earnings multiples to the reporting unit’s operating results. The multiples are derived from comparable publicly traded companies with similar operating and investment characteristics to the reporting units. We evaluate the reasonableness of the estimated fair value of our reporting units by reconciling the aggregate fair value of all three of our reporting units to our total market capitalization as of our impairment testing date, taking into account an appropriate control premium. The determination of a control premium requires the use of judgment and is based upon control premiums observed in comparable market transactions. If the estimated fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired and the second step of the goodwill impairment test is not necessary. If the carrying amount of a reporting unit is positive and exceeds the reporting unit’s fair value, the second step of the impairment test must be completed to measure the amount of the reporting unit’s goodwill impairment loss, if any. Step Two The second step of the goodwill impairment test requires an assignment of the reporting unit’s fair value to the reporting unit’s assets and liabilities, including any unrecognized intangible assets, using the acquisition method accounting guidance in ASC 805, to determine the implied fair value of the reporting unit’s goodwill. The difference between the reporting unit’s fair value and the fair values assigned to the reporting unit’s individual assets and liabilities, is the implied fair value of the reporting unit’s goodwill. The implied fair value of the reporting unit’s goodwill is then compared with the carrying amount of the reporting unit’s goodwill to determine the goodwill impairment loss to be recognized, if any. An impairment charge is recognized for the excess of the carrying value of goodwill over its implied fair value. The changes in the carrying value of goodwill for the years ended December 31, 2016 and 2015 are as follows: Patient Care Products & Services (in thousands) Gross Accumulated Gross Accumulated Total Balance at December 31, 2014 $ $ ) $ $ — $ Additions due to acquisitions — — — Adjustments to pre-2015 acquisitions — — Goodwill impairment — ) — — ) Balance at December 31, 2015 ) — Goodwill impairment — — — ) ) Balance at December 31, 2016 $ $ ) $ $ ) $ 2016 Goodwill As of October 1, 2016, we tested each of our three reporting units as part of our annual goodwill impairment test. We concluded that the carrying amounts of the Therapeutic and Distribution reporting units within our Products & Services segment exceeded their respective estimated fair values. The second step of the test was then performed to measure the impairment loss, resulting in non-cash goodwill impairment charges of $64.9 million for our Therapeutic reporting unit and $21.1 million for our Distribution reporting unit which is included in “Impairment of intangible assets” in the consolidated statements of operations and comprehensive (loss) income. The fair value of our Patient Care reporting unit exceeded its carrying amount. These goodwill impairment charges had no impact on our cash flow or compliance with debt covenants for 2016. 2015 Goodwill In the fourth quarter of 2015, it became likely that our 2014 financial statements would not be filed by March 19, 2016, our extended due date granted to us by the NYSE. Upon informing the NYSE of a further delay, we were delisted in February 2016. In addition to the decrease in market value due to the delisting, we also anticipated a significant increase in the time and cost for us to recover from these adverse events, and considered this to be a triggering event. We tested each of our three reporting units as of December 31, 2015. We concluded that the carrying amount of the Patient Care reporting unit exceeded its estimated fair value. The second step of the test was then performed to measure the impairment loss, resulting in a non-cash goodwill impairment charge for our Patient Care reporting unit of $382.9 million as of December 31, 2015, which is included in “Impairment of intangible assets” in the consolidated statements of operations and comprehensive (loss) income. The fair value of our Distribution and Therapeutic reporting units exceeded their respective carrying amounts. This goodwill impairment charge had no impact on our cash flow or compliance with debt covenants for 2015. During the third quarter of 2015, we noted a significant decline in our stock price and market capitalization coupled with changes in our earnings expectations that were identified during our 2016 budget process which we considered to be a triggering event. We tested each of our three reporting units as of September 30, 2015. The fair value of each of our three reporting units exceeded their respective carrying amounts. 2014 Goodwill In connection with the restatement of our previously issued consolidated financial statements, we considered the significant impact of the restatement adjustments to be a triggering event. We tested each of our three reporting units as of December 31, 2014, and determined that the fair value of each reporting unit exceeded its respective carrying amount. In the fourth quarter of 2014, our Patient Care reporting unit’s Dosteon businesses met assets held for sale criteria and the requirements to be classified as a discontinued operation. Accordingly, we allocated $8.4 million of the Patient Care reporting unit goodwill to the businesses to be sold based upon the relative fair value of the businesses to be sold to the estimated fair value of the reporting unit. As of October 1, 2014, we tested each of our three reporting units as part of our annual goodwill impairment test, and determined that the fair value of each reporting unit exceeded its respective carrying amount. Intangible Asset Impairment Testing Under the provisions of ASC 360-10, Property, plant, and equipment , an intangible asset that has a finite life should be amortized over its estimated useful life and should be tested for recoverability by comparing the net carrying value of the asset or asset group to the undiscounted net cash flows to be generated from the use and eventual disposition of that asset or asset group when events or changes in circumstances indicate that its carrying amount may not be recoverable. If the carrying amount of a definite-lived asset or asset group is not recoverable, the fair value of the asset or asset group is measured and if the carrying amount exceeds the fair value, an impairment loss is recognized. Under the provisions of ASC 350, Intangibles-goodwill and other, an indefinite-lived intangible asset is not amortized but should be tested for impairment annually and between annual tests if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. The indefinite-lived intangible asset impairment standard allows an entity first to assess qualitative factors to determine if a quantitative impairment test is necessary. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that an indefinite-lived intangible asset’s fair value is less than its carrying amount. The fair value of acquired customer intangibles is estimated using an excess earnings model. Key assumptions utilized in the valuation model include pro-forma projected cash flows adjusted for market-participant assumptions, forecasted customer retention curve, and discount rate. Customer intangibles are amortized, using the straight-line method over an estimated useful life of four to ten years. The fair value of non-compete agreements are estimated using a discounted cash flow model. The related intangible assets are amortized, using the straight-line method, over their term which ranges from two to five years. Other definite-lived intangible assets are recorded at cost and are amortized, using the straight-line method, over their estimated useful lives of up to seventeen years. The fair value associated with trade names is estimated using the relief-from-royalty method with the primary assumptions being the royalty rate and expected revenues associated with the trade names. These assets, some of which have indefinite lives, are primarily included in the Products & Services segment. Indefinite lived trade name intangible assets are assessed for impairment in the fourth quarter of each year, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Trade name intangible assets with definite lives are amortized over their estimated useful lives of one to ten years. The balances related to intangible assets as of December 31, 2016 and 2015 are as follows: December 31, 2016 (in thousands) Gross Carrying Accumulated Accumulated Net Carrying Customer Lists $ $ ) $ — $ Trade Name ) — Patents and Other Intangibles ) — Definite-lived intangible assets ) — Indefinite life - Trade Name — ) Total other intangible assets $ $ ) $ ) $ December 31, 2015 (in thousands) Gross Carrying Accumulated Accumulated Net Carrying Customer Lists $ $ ) $ — $ Trade Name ) — Patents and Other Intangibles ) — Definite-lived intangible assets ) — Indefinite life - Trade Name — ) Total other intangible assets $ $ ) $ ) $ 2016 Intangible Assets As of October 1, 2016, we tested our Therapeutic reporting unit’s indefinite lived tradename as part of our annual impairment test which compared the estimated fair value with the carrying amount of the tradename. The fair value of the intangible asset was estimated using an income approach, specifically the relief-from-royalty method. The cash flows used contain management’s best estimates using appropriate assumptions and projections as of the testing date. The royalty rate was estimated using rates applicable to similar business acquisition transactions. The fair value of the tradename was determined to be less than the carrying amount, resulting in a $0.2 million impairment charge recorded in the fourth quarter of 2016. This charge is included in “Impairment of intangible assets” in the consolidated statements of operations and comprehensive (loss) income. This intangible asset impairment charge had no impact on our cash flow or compliance with debt covenants for 2016. 2015 Intangible Assets In connection with our goodwill impairment testing as of September 30, 2015 and December 31, 2015 due to the triggering events discussed above, we tested our Therapeutic reporting unit’s indefinite-lived tradename intangible asset for impairment as of those dates. The fair value of the tradename was determined to be less than the carrying amount at both dates, resulting in a $0.8 million impairment charge recorded in the third quarter of 2015 and a $2.1 million impairment charge in the fourth quarter of 2015. These charges are included in “Impairment of intangible assets” in the consolidated statements of operations and comprehensive (loss) income. These intangible asset impairment charges had no impact on our cash flow or compliance with debt covenants for 2015. In conjunction with our Goodwill impairment testing at December 31, 2015, we reevaluated the estimated useful life of our customer list intangibles. In the fourth quarter of 2015, the estimated useful life of our customer list intangibles was reduced from 10 years to four years in our Patient Care segment and from 14 years to 10 years in our Products & Services segment. This change in the estimated useful lives increased amortization for the years ended December 31, 2015 and 2016 by approximately $6.0 million and $7.0 million, respectively. Total intangible amortization expense was approximately $13.9 million, $13.8 million, and $7.4 million for the years ended December 31, 2016, 2015 and 2014, respectively, and reflects the impact of our change in the estimated useful lives of our customer list intangible assets beginning in the fourth quarter of 2015. Estimated aggregate amortization expense for definite lived intangible assets for each of the next five years ended December 31 and thereafter is as follows: (in thousands) December 31, 2017 $ 2018 2019 2020 2021 Thereafter Total $ As described, we apply judgment in the selection of key assumptions used in both steps of the goodwill impairment test and as part of our evaluation of intangible assets tested annually and at interim testing dates as necessary. If these assumptions differ from actual, we could incur additional impairment charges and those charges could be material. |
OTHER CURRENT ASSETS AND OTHER
OTHER CURRENT ASSETS AND OTHER ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
OTHER CURRENT ASSETS AND OTHER ASSETS | |
OTHER CURRENT ASSETS AND OTHER ASSETS | NOTE I — OTHER CURRENT ASSETS AND OTHER ASSETS Other current assets consists of the following: As of December 31, (in thousands) 2016 2015 Non-trade receivables $ $ Prepaid rent Prepaid maintenance Restricted cash Prepaid other Prepaid education and training Prepaid insurance Other Total other current assets $ $ Non-trade receivables primarily relate to vendor rebate receivables, tenant improvement allowance receivables, and other non-trade receivables. Prepaid rent relates to amounts of future rent expense paid in advance of the rental period. Prepaid maintenance primarily relates to prepaid software and hardware maintenance and software license fees. Restricted cash relates to funds held by our captive insurance subsidiary and whose use for general purposes is restricted by Nevada state insurance regulations. Prepaid other includes the employer’s portion of health savings accounts, board member fees and tax and accounting services. Prepaid education and training our annual Education Fair event held in the first quarter of each fiscal year. Prepaid insurance are for product and general liability insurance. Other includes prepaid expenses for telecommunication, broker fees and other miscellaneous prepaid expenses. Other assets consists of the following: As of December 31, (in thousands) 2016 2015 Cash surrender value of COLI $ $ Non-trade receivables Deposits Other Total other assets $ $ Company owned life insurance (“COLI”) policies represents the combined cash surrender values of both the policies associated with our Defined Benefit Supplemental Executive Retirement Plan (“SERP”) and our Defined Contribution Supplemental Executive Retirement Plan (“DC SERP”). See Note K - “Employee Benefits” for additional information. Non-trade receivables primarily relate to estimated receivables due from our various business insurance policies. Deposits primarily relate to security deposits made in connection with property leases. Other relates to cash collateral posted for surety bonds. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
INCOME TAXES | |
INCOME TAXES | NOTE J — INCOME TAXES Components of (benefit) provision for income taxes are as follows: Year Ended December 31, (in thousands) 2016 2015 2014 Current: Federal $ ) $ ) $ State Total Current ) ) Deferred: Federal ) ) State ) ) Total Deferred ) ) (Benefit) provision for income taxes from continuing operations $ ) $ ) $ Income tax provision (benefit) attributable to discontinued operations $ $ ) $ ) A reconciliation of the federal statutory tax rate to our effective tax rate applicable to continuing operations is as follows: Year Ended December 31, 2016 2015 2014 Federal statutory tax rate- (benefit) provision )% )% )% State and local income taxes )% )% )% Change in valuation allowance — % % % Domestic manufacturing deduction — % — % )% Research and development credit — % — % )% Change in uncertain tax positions )% )% % Goodwill impairment % % — % Other % % % Effective tax rate applicable to continuing operations )% )% % The significant components of the net deferred income tax asset are as follows: As of December 31, (in thousands) 2016 2015 Deferred tax liabilities: Goodwill amortization $ $ Intangible amortization Prepaid expenses Sec. 481(a) adjustments Other — Deferred tax assets: Deferred benefit plan compensation Provision for doubtful accounts and disallowed revenues Property, plant and equipment Net operating loss carryforwards Accrued expenses Inventory reserves Restricted stock Capital leases Deferred rent Refund liabilities Interest on seller notes Other Valuation allowance ) ) Net deferred tax asset $ $ We have $8.9 million and $8.9 million of U.S. federal and $185.3 million and $156.1 million of state net operating loss carryforwards available at December 31, 2016 and 2015, respectively. These carryforwards will be used to offset future income but may be limited by the change in ownership rules in Section 382 of the Internal Revenue Code. These net operating loss carryforwards will expire in varying amounts between 2017 and 2036. U.S. Federal net operating losses generated in 2016 and 2015 were carried back to tax years 2014 and 2013 and, therefore, were not carried forward. As of December 31, 2016, we had approximately $94.2 million in net deferred tax assets (“DTAs”). These DTAs can be used to offset taxable income in future periods and reduce our income taxes payable in those future periods. At this time, we consider it more likely than not that we will have sufficient taxable income in the future that will allow us to realize these DTAs. However, it is possible that some or all of these DTAs may not be realized unless we are able to generate sufficient taxable income from our operations. If we do not generate sufficient taxable income in the future a substantial valuation allowance to reduce our DTAs may be required, which could materially increase our expenses in the period the allowance is recognized and materially adversely affect our results of operations and statement of financial condition. As of December 31, 2016, we had a valuation allowance of approximately $6.9 million, related primarily to certain state loss carryforwards, which are expected to expire before utilization. We monitor our cumulative loss position and other evidence each quarter to determine the appropriateness of our valuation allowance. Although we believe our estimates are reasonable, the ultimate determination of the appropriate amount of valuation allowance involves significant judgment. The following schedule presents the activity in the valuation allowance: (in thousands) Year Balance at Acquisitions Provision Released Balance at 2016 $ $ — $ $ $ 2015 $ $ — $ $ $ 2014 $ $ — $ $ $ A reconciliation of our liability for unrecognized tax benefits is as follows: (in thousands) 2016 2015 2014 Unrecognized tax benefits, at beginning of the year $ $ $ Additions for tax positions related to the current year Additions for tax positions of prior years — — Decrease related to prior year positions — ) ) Decrease for lapse of applicable statute of limitations ) ) ) Unrecognized tax benefits, at end of the year $ $ $ As of December 31, 2016, the total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is approximately $2.9 million. We expect the amount of unrecognized tax benefits will change by approximately $3.8 million within the next twelve months due primarily to the lapse of statute limitations. We recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of December 31, 2016, 2015 and 2014, the amount of accrued interest and penalties was approximately $0.4 million, $0.5 million and $0.5 million, respectively. We are subject to income tax in the U.S. federal, state and local jurisdictions. With few exceptions, we are no longer subject to U.S. Federal income tax examinations for years prior to 2013, as the statute of limitations has lapsed for 2012 and all preceding years. However, due to acquired net operating losses, tax authorities have the ability to adjust those net operating losses related to closed years. We are currently under income tax audits in various U.S. jurisdictions for the originally filed tax returns for tax years ended 2013-2015. Certain of these returns will be amended, and we believe we have adequate accruals for additional taxes and related interest expense which could result. We believe the ultimate resolution of income tax examinations will not have a material adverse effect on our consolidated financial position, results of operations, or liquidity. On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act (“Tax Reform”) into legislation. Under ASC 740, the effects of changes in tax rates and laws are recognized in the period in which the new legislation is enacted. In the case of US federal income taxes, the enactment date is the date the bill becomes law (i.e., upon presidential signature). With respect to this legislation, we expect a one-time increase in tax expense of $25 million to $35 million, due to a re-measurement of deferred tax assets and liabilities resulting from the decrease in the corporate Federal income tax rate from 35% to 21%. We are in the process of analyzing certain other provisions of this legislation, including the repeal of IRC Section 199, which may result in an overall increase to our effective tax rate. Consistent with the guidance under ASC 740, we will record any impacts from enactment of the Tax Cuts and Jobs Act in the fourth quarter of 2017 subject to Staff Accounting Bulletin (“SAB”) 118 which provides for a measurement period to complete the accounting for certain elements of the tax reform. |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 12 Months Ended |
Dec. 31, 2016 | |
EMPLOYEE BENEFITS | |
EMPLOYEE BENEFITS | NOTE K — EMPLOYEE BENEFITS Savings Plan We maintain a 401(k) Savings and Retirement plan that covers all of our employees. Under the plan, employees may defer a portion of their compensation up to the levels permitted by the Internal Revenue Service. We recorded matching contributions of approximately $6.7 million, $6.6 million and $6.2 million under this plan during 2016, 2015 and 2014, respectively, which were included within “Personnel costs” and “General and administrative expenses” in our consolidated statements of operations and comprehensive (loss) income. Supplemental Executive Retirement Plan (“SERP”) Effective January 2004, we implemented an unfunded noncontributory defined benefit plan (the “Plan”) for certain senior executives. The Plan, which we administer, calls for fifteen annual payments upon retirement with the payment amount based on years of service and final average salary. Benefit costs and liabilities balances are calculated based on certain assumptions including benefits earned, discount rates, interest costs, mortality rates and other factors. We engaged an independent actuary to calculate the related benefit obligation at December 31, 2016 and 2015 as well as net periodic benefit plan expense for the years ended December 31, 2016, 2015, and 2014. As of December 31, 2016 and 2015, the average remaining service period of plan participants is 12.5 and 9.6 years, respectively. We believe the assumptions used are appropriate; however, changes in assumptions or differences in actual experience may affect our benefit obligation and future expenses. Actual results that differ from the assumptions are accumulated and amortized over future periods, affecting the recorded obligation and expense in future periods. The Plan’s net benefit cost is as follows: Change in Benefit Obligation Benefit (in thousands) Obligation Benefit obligation at December 31, 2014 $ Service cost Interest cost Payments ) Actuarial gain ) Benefit obligation at December 31, 2015 Service cost Interest cost Payments ) Actuarial loss Benefit obligation at December 31, 2016 $ Unfunded status $ Unamortized net (gain) loss — Net amount recognized $ Amounts Recognized in the Consolidated Balance Sheets: As of December 31, (in thousands) 2016 2015 Current accrued expenses and other current liabilities $ $ Non-current other liabilities Total accrued liabilities $ $ We recorded gross actuarial (losses) gains under the Plan of approximately $(0.1) million, $0.4 million, and $(1.4) million in 2016, 2015, and 2014, respectively, in other comprehensive (loss) income. Immaterial amounts were recognized within the consolidated statement of operations from accumulated other comprehensive income during 2016, 2015, and 2014. As of December 31, 2016, we do not expect to recognize amounts from accumulated other comprehensive income as a component of net periodic benefit cost in fiscal years 2017. Gain (loss) amounts to be amortized from accumulated other comprehensive income in fiscal year 2017 is immaterial. There were no other components such as prior service costs or transition obligations relating to the Plan costs recorded within accumulated other comprehensive (loss) income during 2016, 2015 or 2014. The following weighted average assumptions were used to determine the benefit obligation as of December 31 of each year. Net periodic benefit cost for each year was determined using the weighted average assumptions as of the prior year. We used a third party actuarial specialist to assist in determining, among other things, the discount rate for all three years presented. Our assumed weighted average discount rate for the defined benefit plan reflects the hypothetical rate at which the projected benefit obligation could be effectively settled or paid out to participants. We determine our discount rate based on a range of factors, including a yield curve composed of rates of return on high-quality, fixed income corporate bonds 2016 2015 2014 2013 Discount rate % % % % Average rate of increase in compensation % % % % At December 31, 2016, the estimated accumulated benefit obligation is $21.3 million. Future payments under the Plan are as follows: (in thousands) 2017 $ 2018 2019 2020 2021 Thereafter Total $ In connection with the SERP obligation, we maintain a COLI policy. The carrying value of the COLI is measured at its cash surrender value and is presented within “Other assets” in our consolidated balance sheets. See Note I - “Other Current Assets and Other Assets” for additional information. Defined Contribution Supplemental Executive Retirement Plan In 2013, we established a Defined Contribution Supplemental Executive Retirement Plan that covers certain of our senior executives. We have a corresponding investment in a company owned life insurance policy. We have not made any explicit or implicit commitments to maintain life insurance on any specific executive that would benefit the executive or his or her beneficiaries. Each participant is given a notional account to manage his or her annual distributions and allocate the funds among various investment options (e.g. mutual funds). These accounts are tracking accounts only for the purpose of calculating the participant’s benefit. The participant does not have ownership of the underlying mutual funds. When a participant initiates or changes the allocation of his or her notional account, we will generally make an allocation of our investments, to match those chosen by the participant. While the allocation of our sub accounts is generally intended to mirror the participant’s account records (i.e. the distributions and gains or losses on those funds), the employee does not have legal ownership of any funds until payout upon retirement. The underlying investments are owned by the insurance company (and we own an insurance policy). As of December 31, 2016 and 2015, the estimated accumulated obligation benefit is $2.0 million and $1.4 million, respectively, of which $1.4 million and $0.8 million is funded and $0.6 million and $0.6 million is unfunded at December 31, 2016 and 2015, respectively. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2016 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | NOTE L — STOCK - BASED COMPENSATION On April 15, 2016, our Board of Directors approved the Hanger, Inc. 2016 Omnibus Incentive Plan (the “2016 Plan”). The 2016 Plan authorizes the issuance of (a) up to 2.3 million shares of Common Stock, plus (b) 0.4 million shares available for issuance under the 2010 Plan that had not been subject to outstanding awards as of the effective date of the 2016 Plan and (c) any shares that would have become available again for new grants under the terms of the 2010 Omnibus Plan (“2010 Plan”) if such plan were still in effect. Upon approval of the 2016 Plan, our 2010 Plan was no longer available for future awards. As of December 31, 2016, approximately 2.1 million shares were available for future issuance. The available shares consisted of (a) 2.3 million shares of common stock authorized for issuance under the 2016 Plan plus (b) 0.4 million shares rolled forward from the 2010 Plan plus (c) 0.3 million shares forfeited and added back to the pool less (d) 0.9 million shares issued for awards. In 2016, shares issued under equity plans are issued from authorized and unissued shares. Total unrecognized stock-based compensation cost related to unvested restricted stock unit awards is approximately $7.6 million as of December 31, 2016, and is expected to be recognized as compensation expense over approximately 2.3 years. On May 13, 2010, our shareholders approved the 2010 Plan and prohibited future awards under the Amended and Restated 2002 Stock Incentive and Bonus Plan (the “2002 Plan”) and 2003 Non-Employee Directors’ Stock Incentive Plan (the “2003 Plan”). For the years ended December 31, 2016, 2015 and 2014, we recognized a total of approximately $9.8 million, $11.1 million and $9.8 million, respectively, of stock-based compensation expense for the 2002, 2003, 2010 and 2016 plans. Of these amounts, approximately $0.2 million, for the year ended December 31, 2014 is associated with the Dosteon business and is included within “Loss from discontinued operations, net of income taxes.” Stock compensation expense, net of estimate forfeiture rate, relates to restricted stock units and performance-based restricted stock units. Restricted Stock Units The summary of restricted stock units, performance-based stock units, and weighted average grant date fair values are as follows: Employee Service-Based Employee Performance- Director Awards Units Weighted Units Weighted Units Weighted Nonvested at December 31, 2014 $ $ $ Granted Vested ) ) ) Forfeited ) ) ) Nonvested at December 31, 2015 Granted Vested ) ) ) Forfeited ) ) — — Nonvested at December 31, 2016 $ $ $ During the years ended December 31, 2016, 2015 and 2014, approximately 0.4 million, 0.4 million, and 0.4 million of restricted common stock units with an intrinsic value of $2.1 million, $9.0 million and $12.8 million, respectively, became fully vested. As of December 31, 2016, total unrecognized compensation expense related to unvested restricted stock units and unvested performance based restricted stock units for which we have concluded the performance condition was probable of achievement was approximately $11.2 million and the related weighted-average period over which it is expected to be recognized is approximately 2.3 years. The aggregate granted units have vesting dates through March 2017. The 2016, 2015 and 2014 aggregate grants had total estimated grant date fair values of $6.2 million, $16.1 million and $12.2 million, respectively. Options The summary of option activity and weighted average exercise prices are as follows: (dollars in thousands) Director Awards Weighted Average Exercise Price Shares Weighted Average Aggregate Weighted Average Outstanding at December 31, 2014 $ $ — — Exercised ) — — Outstanding at December 31, 2015 — $ — $ — — The intrinsic value for options exercised for year ended December 31, 2014 was approximately $0.1 million. No options were exercisable under our stock-based compensation plans at December 31, 2016 and 2015. At December 31, 2014, 7,947 shares were exercisable with a weighted average exercise price of $5.09, average remaining contractual terms of 0.4 years and aggregate intrinsic values of approximately $0.1 million. Cash received related to the exercise of options during the years ended December 31, 2014 amounted to $0.1 million. As of December 31, 2016, 2015 and 2014, there was no unrecognized compensation cost related to stock option awards. There were no options outstanding as of December 31, 2016 and 2015. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2016 | |
LEASES | |
LEASES | NOTE M — LEASES Rent expense under operating leases was approximately $48.1 million, $50.1 million, and $50.1 million, for the years ended December 31, 2016, 2015 and 2014, respectively, which was included within “Other operating costs” and “General and administrative expenses” in our consolidated statements of operations and comprehensive (loss) income. Sublease rental income is not material. The net book value of office equipment under capital leases was approximately $0.8 million and $1.1 million at December 31, 2016 and 2015, respectively. Equipment capital lease obligations are included in long-term debt as a part of “Financing leases and other” in Note N - “Long-Term Debt.” Future minimum rental payments, by year and in the aggregate, under operating and financing obligations with terms of one year or more at December 31, 2016 are as follows: (in thousands) Operating Capital 2017 $ $ 2018 2019 2020 2021 — Thereafter — Total $ $ Future minimum rental payments, by year and in the aggregate, under operating and financing obligations with terms of one year or more at December 31, 2015 are as follows: (in thousands) Operating Capital 2016 $ $ 2017 2018 2019 2020 — Thereafter — Total $ $ |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2016 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | NOTE N — LONG-TERM DEBT Long-term debt as of December 31 was as follows: (in thousands) 2016 2015 Term loan $ $ Term loan B — Revolving credit facility — Senior notes due 2018 — Seller notes Financing leases and other Total debt before unamortized discount and debt issuance costs Unamortized discount ) ) Debt issuance costs, net ) ) Total debt $ $ Reported as: Current portion of long-term debt $ $ Long-term debt Total debt $ $ In accordance with ASU Nos. 2015-03 and 2015-15 debt issuance costs, net have been reclassified from other assets to a direct deduction from long-term debt as of December 31, 2015. We apply ASC No. 470-50, Debt - Modifications and Extinguishments (ASC 470-50), which defines a debt modification. ASC 470-50 establishes that a modification be recorded as a debt discount and amortized to interest expense. Credit Agreement - Revolving Credit Facility and Term Loan On June 17, 2013, we entered into a five year credit agreement (as amended from time to time, the “Credit Agreement”) that provided senior secured facilities of up to $425.0 million. The Credit Agreement originally included a $200.0 million revolving credit facility and a $225.0 million term loan facility both of which mature on June 17, 2018 and were subject to a leverage-based pricing grid in which the applicable interest rate is dependent on our leverage ratio. From January 1, 2015 through December 31, 2016, we entered into seven agreements relating to our Credit Agreement that waived certain actual and potential events of default and amended various covenants and other provisions including, among other things, raising the interest rate and reducing the amounts available pursuant to the revolving credit facility. The Credit Agreement (giving effect to all amendments and waivers) provides for (i) a revolving credit facility with aggregate revolving commitments of $118.3 million as of December 31, 2016 (subject to the mandatory commitment reductions and usage limitations described below) that matures in June 2018, and (ii) a $225.0 million term loan facility due in quarterly principal installments that began at 0.625% of the initial $225.0 million borrowed and then escalated to 1.25% on September 30, 2014, to 1.875% on September 30, 2015, to 2.5% on September 30, 2016, and will escalate to 3.75% on September 30, 2017. A final principal installment of approximately $143.4 million is due at maturity in June 2018. From time to time, mandatory prepayments may be required as a result of the incurrence of certain types of debt, certain asset sales, or other events as defined in the Credit Agreement. No such mandatory prepayments were required during 2016 and 2015. We previously received $34.1 million in federal income tax refunds with respect to tax year 2015 or earlier, and the effect of those previous receipts has been incorporated into the determination of our $118.3 million in aggregate revolving commitments. If we receive additional federal income tax refunds related to tax year 2015 or earlier, then 50% of our net cash proceeds in respect of those refunds will be applied as a further permanent reduction of the aggregate revolving commitments under the Credit Agreement, except that in no event shall the commitment be reduced to less than $108.0 million as a result of such refunds. Until such time as (a) we have achieved a leverage ratio (as described below) for our then most recently ended fiscal quarter, of less than or equal to 4.00 to 1.00, and (b) we have delivered financial information and certain related materials for the fiscal periods ended March 31, 2015, June 30, 2015, September 30, 2015, December 31, 2015 and December 31, 2016, the amount that we can borrow under the Credit Agreement in the form of revolving loans, swing line loans and/or letters of credit is reduced by specified revolving usage limitation amounts depending on the fiscal quarter. The aggregate revolving credit commitment of $118.3 million is reduced by $13.9 million for periods from July 15, 2016 to September 30, 2016; $17.3 million for the three months ending December 31, 2016; $10.7 million for the three months ending March 31, 2017; $20.7 million for the nine months ending December 31, 2017; $10.7 million for the three months ending March 31, 2018; and $20.7 million for periods subsequent to March 31, 2018. Borrowings under the Credit Agreement now bear interest at a variable rate per annum equal to (i) LIBOR plus 5.75%, or (ii) the base rate (which is the highest of (a) the administrative agent’s prime rate, (b) the federal funds rate plus 0.50% or (c) the sum of 1% plus one-month LIBOR) plus 4.75%. Due to various amendments to the debt agreement as mentioned above, the rates have increased from LIBOR plus 2.00% at December 31, 2015 and December 31, 2014. Interest rates on our debt were 5.52%, 2.43% and 2.17% at December 31, 2016, 2015 and 2014, respectively. Upon (a) our delivering the financial information and certain related materials for the fiscal periods ended March 31, 2015, June 30, 2015, September 30, 2015, December 31, 2015 and December 31, 2016, and (b) achievement of a leverage ratio (as described below), for our then most recently ended fiscal quarter, of less than or equal to 4.00 to 1.00, the margin for borrowings based on LIBOR will decrease to 4.00% per annum and the margin for borrowings based on the base rate will decrease to 3.00% per annum. The Credit Agreement as amended on June 23, 2017 requires us to maintain a maximum consolidated leverage ratio (defined as, with certain adjustments, the ratio of our consolidated indebtedness to consolidated net income before interest, taxes, depreciation, amortization, non-cash charges and certain other items as of the end of any period of four consecutive fiscal quarters, as follows: · 5.00 to 1.00 as of the last day of the fiscal quarter ended June 30, 2016; · 5.75 to 1.00 as of the last day of the fiscal quarter ended September 30, 2016; · 5.00 to 1.00 as of the last day of each fiscal quarter thereafter. The minimum interest coverage ratio is, as of the end of our fiscal quarter ending: · 3.50:1.00 as of the last day of the fiscal quarter ended June 30, 2016; · 2:25:1:00 as of the last day of the fiscal quarter ended September 30, 2016; · 2:25:1:00 as of the last day of the fiscal quarter ended December 31, 2016; · 2:25:1:00 as of the last day of the fiscal quarter ended March 31, 2017; · 2:25:1:00 as of the last day of the fiscal quarter ended June 30, 2017; · 2:25:1:00 as of the last day of the fiscal quarter ended September 30, 2017; · 2:25:1:00 as of the last day of the fiscal quarter ended December 31, 2017; · 2:00:1:00 as of the last day of each quarter thereafter. The Credit Agreement also contains other customary events of default and related remedies. Loans outstanding under the Credit Agreement will bear interest at a rate of 2.00% per annum in excess of the otherwise applicable rate (i) upon acceleration of such loans, (ii) while a payment event of default exists or (iii) upon the lenders’ request, during the continuance of any other event of default. Subject to certain exceptions, the facilities under the Credit Agreement are senior obligations and are secured by first priority perfected liens and security interests in substantially all our personal property and each subsidiary guarantor. We had approximately $94.9 million and $10.0 million available under the revolving credit facility as of December 31, 2016 and 2015, respectively. We had outstanding letters of credit against the revolving credit facility of $6.1 million and $4.3 million as of December 31, 2016 and 2015, respectively. We incur an unused commitment fee on the amount of unused commitments under the Credit Agreement in the amount of 0.375% based on average quarterly utilization. The amounts incurred were $0.3 million, $0.2 million and $0.4 million for the years ended December 31, 2016, 2015 and 2014, respectively. The unamortized loan discount is being recorded as additional interest expense on a quarterly basis over the term of the credit agreement. Term B Credit Agreement On August 1, 2016, we entered into a new Term B Credit Agreement (Term B) providing for a new $280.0 million senior unsecured term loan facility due at maturity on August 1, 2019 bearing interest at 11.5% per annum payable quarterly in arrears. On August 31, 2016, we used approximately $205.3 million of the proceeds from the Term B Credit Agreement and from existing cash on hand to redeem all of the Senior Notes (described below) and satisfy and discharge the Indenture, approximately $81.0 million to pay down the revolving credit facility under the Credit Agreement, approximately $7.9 million to pay Term B issuance costs and bank consent fees, and approximately $1.9 million to pay related legal and professional fees. As a result of the repayment of the Senior Notes and the issuance of the Term B debt, we capitalized $6.7 million, which is being amortized to interest expense over the term of the Term B debt and recorded a loss on extinguishment of debt of $6.0 million for the year ended December 31, 2016. We may prepay borrowings under the Term B Credit Agreement in whole or in part at any time. Any voluntary prepayment, certain mandatory prepayments and prepayments in connection with certain repricing transactions of the loans will be subject to the following prepayment premiums: (i) if such prepayment is made before February 1, 2018, an amount equal to the discounted present value as of the date of prepayment, utilizing a comparable U.S. Treasury note yield plus 50 basis points, of the sum of (A) the remaining payments of interest on the principal amount prepaid through February 1, 2018, plus (B) 3.00% of the principal amount prepaid, (ii) if such prepayment is made on or after February 1, 2018, but prior to February 1, 2019, an amount equal to 3.00% of the principal amount prepaid, and (iii) if such prepayment is made on or after February 1, 2019, an amount equal to 1.50% of the principal amount prepaid. The Term B Credit Agreement contains various restrictions and covenants, including restrictions on our ability and certain of our subsidiaries to consolidate or merge, create liens, incur additional indebtedness, dispose of assets, consummate acquisitions, make investments and pay dividends and other distributions. The covenants in the Term B Credit Agreement are similar to those contained in the Credit Agreement, except that the Term B Credit Agreement does not contain any separate financial covenants. Subject to a 90-day grace period, an event of default under the Credit Agreement will cause an event of default under the Term B Credit Agreement. An event of default under the Credit Agreement that results in acceleration of the indebtedness thereunder will cause an immediate event of default under the Term B Credit Agreement. The Term B Credit Agreement also contains customary events of default and related remedies. Loans outstanding under the Term B Credit Agreement will bear interest at a rate of 2.00% per annum in excess of the otherwise applicable rate (i) upon acceleration of such loans, (ii) while a payment event of default exists or (iii) upon the lenders’ request, during the continuance of any other event of default. Senior Notes due 2018 The Senior Notes (the “Senior Notes”) were scheduled to mature on November 15, 2018. During 2016 and 2015, we entered into various amendments and waivers related to the Senior Notes, which among other things, raised the interest rate to 9.125% at November 15, 2015 and to 10.625% at May 15, 2016 and waived certain actual and potential events of default. In securing these amendments and waivers relating to the Credit Agreement and the Senior Notes, we paid $16.8 million and $8.0 million of fees in 2016 and 2015, respectively, to the respective lenders, Senior Note holders and legal and professional advisors. $11.0 million and $3.0 million of these payments were capitalized in 2016 and 2015, respectively, are being amortized over the remaining term of the debt, while $5.8 million and $5.0 million was expensed during 2016 and 2015, respectively. Subsidiary Guarantees The obligations under the Credit Agreement and the Term B Credit Agreement are guaranteed by our material domestic subsidiaries, which incorporates subsidiaries that both make up no less than 90% of our total net revenues and make up no less than 90% of our total assets. Separate condensed consolidating information is not included as the parent company does not have independent assets or operations, and the guarantees are full and unconditional and joint and several. Other Restrictions The Credit Agreement and the Term B Credit Agreement limits our ability to, among other things, purchase capital assets, incur additional indebtedness, create liens, pay dividends on or redeem capital stock, make certain investments, make restricted payments, make certain dispositions of assets, engage in transactions with affiliates, engage in certain business activities, and engage in mergers, consolidations and certain sales of assets. Seller Notes We typically issue subordinated promissory notes (“Seller Notes”) as a part of the consideration transferred when making acquisitions. The Seller Notes are unsecured and are presented net of unamortized discount of $0.6 million and $1.1 million as of December 31, 2016 and 2015, respectively. In accordance with ASC 805, Accounting for Business Combinations , we measure these instruments at their estimated fair values as of the respective acquisition dates. The stated interest rates on these instruments range from 2.00% to 4.00% while the effective interest rate is 6.50%. Principal and interest are payable in monthly, quarterly or annual installments and mature through November 2018. Financing Leases and Other Financing leases relate to agreements when we are deemed the owner of a leased building, typically due to significant involvement during the construction period, and which do not qualify for de-recognition under the sale-leaseback accounting guidance due to one or more prohibited forms of continuing involvement in the property. Such forms of continuing involvement include us paying for a more than insignificant portion of project construction costs, us providing a security interest in the tenant’s personal property located at the premises, and/or we have renewal options for a term that comprises 90% or more of the remaining economic life of the property at a price other than estimated fair value. These liabilities have remaining terms ranging from 1 to 20 years with an average inherent interest rate of approximately 13%. Other obligations include equipment under capital leases. The following tables summarizes for the years ended December 31, 2016 and 2015, the aggregate contractual payments associated with the financing leases and other obligations over the next 5 years and thereafter, including both principal and interest. Included in these amounts are payments for optional renewal periods for which management believes we will exercise our rights to renew, as well as the final non-monetary payment made with the return of the property at the end of the financing term: (in thousands) December 31, 2016 2017 $ 2018 2019 2020 2021 Thereafter Less: amount representing interest ) Total $ (in thousands) December 31, 2015 2016 $ 2017 2018 2019 2020 Thereafter Less: amount representing interest ) Total $ Maturities of long-term debt at December 31, 2016 and the years thereafter are as follows: (in thousands) December 31, 2017 $ 2018 2019 2020 2021 Thereafter Total debt before unamortized discount and debt issuance costs, net Unamortized discount ) Debt issuance costs, net ) Total long-term debt $ Liquidity and Debt Maturity Our Credit Facility, which had $180.0 million in principal outstanding at December 31, 2016, matures on June 17, 2018. Given that we do not produce operating cash flow sufficient to retire this obligation through cash sources arising from our normal operations, it will be necessary for us to raise new indebtedness to repay the $143.4 million in remaining principal amount that will become due as of the maturity date, any borrowings under our revolving credit commitment outstanding at that time, and any fees and expenses related to the new borrowings. At December 31, 2017, we had borrowings of $5.0 million outstanding and remaining availability of $86.4 million under the revolving credit commitment of our Credit Facility. Our ability to continue as a going concern is dependent on our ability to refinance such debt. Additionally, our existing Credit Agreement requires that we provide lenders with our audited financial statements for the year ended December 31, 2017 no later than March 31, 2018. In the event that we are unable to do so, the agreement provides for a thirty-day cure period which would expire on April 30, 2018, at which time we would have an event of default under our Credit Agreement. Should we fail to deliver those audited financial statements by that date, in accordance with their rights and remedies under the Credit Agreement, a majority of the holders of our debt would have the right to accelerate the maturity of our indebtedness. We are currently in the process of refinancing the amounts outstanding under our Credit Facility and repaying the $280.0 million Term Loan B indebtedness, which would otherwise mature on August 1, 2019. As a part of this refinancing, our new indebtedness is currently being structured as a $505.0 million term loan and $100.0 million revolving credit facility. This financing would extend the financial reporting requirement relating to delivery of our audited financial statements for the year ended December 31, 2017 until July 1, 2018 and would contain affirmative and negative covenants that we believe are usual and customary for a credit agreement. We currently expect to consummate this financing late in the first quarter of 2018. We cannot give assurance that the refinancing will be completed on its currently structured terms on favorable terms or at all. We have had a history of refinancing our debt including as recently as August 2016 in which we issued $280.0 million of Term B debt to refinance our existing Senior Notes and to pay down on our revolving credit facility. This history, coupled with our relative level of indebtedness to cash flows which will enable us to service the debt we intend to issue has led us to conclude that the successful completion of our refinancing is probable. ASU 2014-15 Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern requires that we evaluate whether there is substantial doubt about our ability to meet our financial obligations when they become due during the twelve month period from the date these financial statements are available to be issued. Given that we do not believe we will have access to sufficient cash from our operating sources to meet our maturing debt obligation under our Credit Facility, we must then evaluate whether our planned refinancing is probable of being executed prior to our Credit Facility maturity date, and if executed, that such refinancing is probable of mitigating such substantial doubt. We have performed such an evaluation and based on the results of that assessment we believe it is probable that our plan for the refinancing of our indebtedness will be effectively executed late in the first quarter of 2018 which therefore mitigates the relevant conditions or events that raise substantial doubt regarding our ability to continue as a going concern within one year of the date the financial statements are issued. If we are unsuccessful in (a) completing the refinancing by April 30, 2018, (b) delivering the 2017 audited financial statements to the existing lenders by that date, or (c) obtaining a waiver to the related debt covenant by that date, it could have a material adverse effect on our business, financial condition and operating results. |
ACCRUED EXPENSES, OTHER CURRENT
ACCRUED EXPENSES, OTHER CURRENT LIABILITIES AND OTHER LIABILITIES | 12 Months Ended |
Dec. 31, 2016 | |
ACCRUED EXPENSES, OTHER CURRENT LIABILITIES AND OTHER LIABILITIES | |
ACCRUED EXPENSES, OTHER CURRENT LIABILITIES AND OTHER LIABILITIES | NOTE O — ACCRUED EXPENSES, OTHER CURRENT LIABILITIES AND OTHER LIABILITIES Accrued expenses and other current liabilities consists of: As of December 31, (in thousands) 2016 2015 Patient prepayments deposits and refunds payable $ $ Accrued sales taxes and other taxes Accrued professional fees Insurance and self-insurance accruals Other current liabilities Total $ $ Patient prepayment deposits and refunds includes funds received for devices not yet delivered to a patient and refunds for overpayments. Taxes primarily includes accrued sales tax liabilities and other taxes payable. Accrued professional fees primarily relate to accruals for professional accounting and legal fees. Accrued insurance primarily relates to accruals for estimated losses for certain self-insured risks including property, professional liability, general liability and employee health care costs. Other current liabilities are primarily related to accruals for deferred revenue and warranty liabilities. Other liabilities consist of: As of December 31, (in thousands) 2016 2015 Supplemental executive retirement plan obligations $ $ Unrecognized tax benefits Long-term insurance accruals Deferred tenant improvement allowances Deferred rent Asset retirement obligations Other Total $ $ Supplemental executive retirement plan obligations includes obligations due on both the Defined Benefit Supplemental Executive Retirement Plan (“SERP”) and the Defined Contribution Supplemental Executive Retirement Plan. See Note K - “Employee Benefits” within these consolidated financial statements. Unrecognized tax benefits represent the difference between tax positions that we expect to take, or take on our income tax returns and the benefit we recognize on our financial statements. Deferred tenant improvement allowance represents deferred credits associated with receiving lease incentives. Deferred rent represents net deferred credits associated with recognizing rent expense on a straight-line basis for property operating leases whose lease payments escalate over the life of the lease. Both deferred credits are recognized as reductions of rent expense over the term of the associated lease. Asset retirement obligations is the liability to return a leased building to the state before it was occupied. Other includes fair market value lease differential liability, build-to-suit tenant interest accrual and other long-term accrued expenses. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2016 | |
SHAREHOLDERS' EQUITY | |
SHAREHOLDERS' EQUITY | NOTE P — SHAREHOLDERS’ EQUITY Shareholder’s Rights Plan On February 28, 2016, the Board of Directors declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of common stock, par value $0.01 per share (the “Common Stock”). The dividend is payable to the shareholders of record on March 10, 2016 (the “Record Date”). The Rights will not be exercisable until after the public announcement that a person or group of affiliated or associated persons has acquired or obtained the right or obligation to acquire beneficial ownership of 10% or more of our outstanding Common Stock (“Acquiring Person”) or following the commencement of a tender offer or exchange offer that, if consummated, would result in a person or group becoming an Acquiring Person. If a shareholder’s beneficial ownership of our Common Stock as of the time of the public announcement of the Rights Agreement and associated dividend declaration is at or above the applicable threshold, as defined by the Rights Agreement (including through entry into certain derivative positions), that shareholder’s then-existing ownership percentage would be grandfathered, but the rights would become exercisable if at any time after such announcement, the shareholder increases its ownership percentage. Once exercisable, each Right will allow its holder to purchase one one-thousandth of a share of Series A Junior Participating Preferred Stock, par value $0.01 per share (the “Preferred Stock”), for $65.00 (the “Purchase Price”), subject to adjustment. Prior to exercise, the Right does not give its holder any dividend, voting, or liquidation rights. The description and terms of the Rights are set forth in a Rights Agreement, dated as of February 28, 2016, between us and Computershare Inc., as the Rights Agent. The Rights have certain anti-takeover effects. The Rights will cause a substantial dilution to any person or group that attempts to acquire us without the approval of our Board of Directors. As a result, the overall effect of the Rights may be to render more difficult or discourage any attempt to acquire us even if such acquisition may be favorable to the interests of our shareholders. Because our Board of Directors can redeem the Rights and amend the Rights Agreement in any respect prior to a person or group becoming an Acquiring Person, the Rights should not interfere with a merger or other business combination approved by the Board of Directors. The rights were to expire on August 28, 2017. Rights Agreement Amendment On June 23, 2017, we entered into an amendment (the “Rights Agreement Amendment”) to the Rights Agreement to extend the “Final Expiration Date” under the Rights Agreement to December 31, 2018. Pursuant to the terms of the Rights Agreement as amended, we have the ability to redeem the rights prior to the “Final Expiration Date” or to further amend the Rights Agreement to provide for an earlier “Final Expiration Date”. The “Final Expiration Date” under the Rights Agreement was not extended in response to any specific takeover bid or other proposal to acquire control. |
COMMITMENTS AND CONTINGENT LIAB
COMMITMENTS AND CONTINGENT LIABILITIES | 12 Months Ended |
Dec. 31, 2016 | |
COMMITMENTS AND CONTINGENT LIABILITIES | |
COMMITMENTS AND CONTINGENT LIABILITIES | NOTE Q — COMMITMENTS AND CONTINGENT LIABILITIES Commitments In April 2014, in connection with the settlement of a patent infringement dispute, our wholly-owned subsidiary, Southern Prosthetic Supply, Inc. (“SPS”), entered into a non-cancellable agreement to purchase a total of $4.5 million of prosthetic gel liners in five installments. We determined that a portion of the prosthetic gel liners should be reserved as excess and slow-moving inventory, and we accrued a liability and expensed $3.4 million in 2014. As of December 31, 2016, our reserve associated with the non-cancellable purchase commitment was $3.2 million. As of December 31, 2016, $2.5 million of the non-cancellable purchase commitment was outstanding with $1.0 million, $1.0 million, and $0.5 million of purchases due by April of 2017, 2018, and 2019, respectively. Contingencies Legal Proceedings In November 2014, a securities class action complaint was filed in federal district court in Texas against us. The case, City of Pontiac General Employees’ Retirement System v. Hanger, et al. , C.A. No. 1:14-cv-01026-SS, is currently pending before the United States District Court for the Western District of Texas. The complaint names as defendants us and certain of our current and former officers and directors for allegedly making materially false and misleading statements regarding, among other things, our financial statements, Recovery Audit Contractor (“RAC”) audit success rate, our implementation of new financial systems, same-store sales growth, and the adequacy of our internal processes and controls. The complaint alleges violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. The complaint seeks unspecified damages, costs and attorneys’ fees, and equitable relief. On April 1, 2016, the court granted us motion to dismiss the lawsuit for failure to state a claim upon which relief can be granted, and permitted plaintiffs to file an amended complaint. On July 1, 2016, plaintiffs filed an amended complaint. On September 15, 2016, we and certain of the individual defendants filed motions to dismiss the lawsuit. On January 26, 2017, the court granted the defendants’ motions and dismissed with prejudice all claims against all defendants for failure to state a claim. On February 24, 2017, plaintiffs filed a notice of appeal to the United States Court of Appeals for the Fifth Circuit. Appellate briefing was completed on August 18, 2017 and the appeal remains pending. The Court of Appeals has scheduled oral argument for the appeal the week of March 5, 2018. In February and August of 2015, two separate shareholder derivative suits were filed against us in Texas state court related to the announced restatement of our certain financial statements. The cases were subsequently consolidated into Judy v. Asar, et. al., Cause No. D-1-GN-15-000625 . On October 25, 2016, plaintiffs in that action filed an amended complaint, and the case is currently pending before the 345th Judicial District Court of Travis County, Texas. The amended complaint in the consolidated derivative action names as defendants us and certain of our current and former officers and directors. It alleges claims for breach of fiduciary duty based, inter alia , on the defendants’ alleged failure to exercise good faith to ensure that adequate accounting and financial controls were in place and that disclosures regarding our business, financial performance and internal controls were truthful and accurate. The complaint seeks unspecified damages, costs, attorneys’ fees, and equitable relief. As disclosed in our Current Report on Form 8-K filed with the SEC on June 6, 2016, the Board of Directors appointed a Special Litigation Committee of the Board (the “Special Committee”). The Board delegated to the Special Committee the authority to (1) determine whether it is in our best interests to pursue any of the allegations made in the derivative cases filed in Texas state court (which cases were consolidated into the Judy case discussed above), (2) determine whether it is in our best interests to pursue any remedies against any of our current or former employees, officers or directors as a result of the conduct discovered in the Audit Committee investigation concluded on June 6, 2016 (the “Investigation”), and (3) otherwise resolve claims or matters relating to the findings of the Investigation. The Special Committee retained independent legal counsel to assist and advise it in carrying out its duties and reviewed and considered the evidence and various factors relating to our best interests. In accordance with its findings and conclusions, the Special Committee determined that it is not in our best interest to pursue any of the claims in the Judy derivative case. Also in accordance with its findings and conclusions, the Special Committee determined that it is not in our best interests to pursue legal remedies against any of our current or former employees, officers, or directors. On April 14, 2017, we filed a motion to dismiss the consolidated derivative action based on the resolution by the Special Committee that it is not in our best interest to pursue the derivative claims. Counsel for the derivative plaintiffs opposed that motion and moved to compel discovery. In a hearing held on June 12, 2017, the Travis County court denied plaintiffs’ motion to compel, and held that the motion to dismiss would be considered only after appropriate discovery was concluded. The plaintiffs have since subpoenaed counsel for the Special Committee, seeking a copy of the full report prepared by the Special Committee and its independent counsel. Counsel for the Special Committee, as well as our counsel, take the position that the full report is not discoverable under Texas law. Plaintiffs’ counsel has indicated it will file a motion to compel the Special Committee’s counsel to produce the report, but it has not yet done so. Upon resolution of the discovery dispute and completion of discovery, we intend to file a motion to dismiss the consolidated derivative action. Management intends to vigorously defend against the shareholder derivative action and the appeal in the securities class action. At this time, we cannot predict how the Courts will rule on the merits of the claims and/or the scope of the potential loss in the event of an adverse outcome. Should we ultimately be found liable, the resulting damages could have a material adverse effect on our consolidated financial position, liquidity or results of operations. Other Matters In May 2015, one of our clinics received a civil investigative demand for records relating to a sample of claims submitted to Medicare and Medicaid for reimbursement, which we provided. In May 2017, we were informed by an Assistant United States Attorney that it was investigating whether we properly provided and claimed reimbursement for prosthesis skins and covers from July 2013 to the present. We have reviewed the claims, and have cooperated with the government’s investigation. We anticipate this matter will be resolved in 2018 and that any resolution will not have a material impact on any future periods. From time to time we are subject to legal proceedings and claims which arise in the ordinary course of our business, including additional payments under business purchase agreements. In the opinion of management, the amount of ultimate liability, if any, with respect to these actions will not have a materially adverse effect on our consolidated financial position, liquidity or results of our operations. We are in a highly regulated industry and receive regulatory agency inquiries from time to time in the ordinary course of our business, including inquiries relating to our billing activities. No assurance can be given that any discrepancies identified during a regulatory review will not have a material adverse effect on our consolidated financial statements. Guarantees and Indemnifications In the ordinary course of our business, we may enter into service agreements with service providers in which we agree to indemnify or limit the service provider against certain losses and liabilities arising from the service provider’s performance of the agreement. We have reviewed our existing contracts containing indemnification or clauses of guarantees and do not believe that our liability under such agreements is material. |
SEGMENT AND RELATED INFORMATION
SEGMENT AND RELATED INFORMATION | 12 Months Ended |
Dec. 31, 2016 | |
SEGMENT AND RELATED INFORMATION | |
SEGMENT AND RELATED INFORMATION | NOTE R — SEGMENT AND RELATED INFORMATION We have identified two operating segments and both performance evaluation and resource allocation decisions are determined based on each operating segment’s income from operations. The operating segments are described further below: Patient Care - This segment consists of (i) our owned and operated patient care clinics, Dosteon, and CARES, and (ii) our contracting and network management business. Dosteon is presented as a discontinued operation and has therefore been excluded from the summarized financial information below. See Note S- “Discontinued Operations” within these consolidated financial statements. CARES was closed in 2015. The patient care clinics provide services to design and fit O&P devices to patients. These clinics also instruct patients in the use, care and maintenance of the devices. The principal reimbursement sources for our services are: · Commercial private payors and other, which consist of individuals, rehabilitation providers, commercial insurance companies, HMOs, PPOs, hospitals, vocational rehabilitation, workers’ compensation programs and similar sources; · Medicare, a federally funded health insurance program providing health insurance coverage for persons aged 65 or older and certain disabled persons, which provides reimbursement for O&P products and services based on prices set forth in published fee schedules with 10 regional pricing areas for prosthetics and orthotics and by state for durable medical equipment; · Medicaid, a health insurance program jointly funded by federal and state governments providing health insurance coverage for certain persons in financial need, regardless of age, which may supplement Medicare benefits for financially needy persons aged 65 or older; and · U.S. Department of Veterans Affairs. Our contract and network management business, known as Linkia, is the only network management company dedicated solely to serving the O&P market and is focused on managing the O&P services of national and regional insurance companies. We partner with healthcare insurance companies by securing a national or regional contract either as a preferred provider or to manage their O&P network of providers. Products & Services - This segment consists of our distribution business, which distributes and fabricates O&P products and components to sell to both the O&P industry and our own patient care clinics, and our therapeutic solutions business. The therapeutic solutions business leases and sells rehabilitation equipment and ancillary consumable supplies combined with equipment maintenance, education, and training. This segment also develops emerging neuromuscular technologies for the O&P and rehabilitation markets. Corporate & Other - This consists of corporate overhead and includes unallocated expense such as personnel costs, professional fees and corporate offices expenses. The accounting policies of the segments are the same as those described in Note B - “Significant Accounting Policies”. Summarized financial information concerning our reporting segments is shown in the following tables. Segment performance is evaluated based on each segment’s earnings before interest expense, income taxes, and depreciation & amortization expenses (“EBITDA”). Intersegment revenue primarily relates to sales of O&P components from the Products & Services segment to the Patient Care segment. The sales are priced at the cost of the related materials plus overhead. In 2014, intersegment revenue was made at prices which we believe approximate market values but has been reclassified to eliminate intercompany profit to be consistent with intersegment revenue in 2016 and 2015. The reclassification adjustment to eliminate intersegment profit in 2014 is approximately $21.0 million. We had no foreign and export sales and assets for the years ended December 31, 2016 and 2015. Our foreign and export sales and assets located outside of the United States of America were not significant as of December 31, 2014. For the Patient Care segment, government reimbursement, comprised of Medicare, Medicaid and the U.S. Department of Veterans Affairs, in the aggregate, accounted for approximately, 54.1%, 53.4% and 50.9% of their net revenue in 2016, 2015 and 2014, respectively. Additionally, for the Products & Services segment, no single customer accounted for more than 10% of net revenues in 2016, 2015 or 2014, respectively. (in thousands) Patient Care Products & Corporate Consolidating Total 2016 Net revenue Third party $ $ $ — $ — $ Intersegments — — ) — Total net revenue — ) Material costs Third party suppliers — — Intersegments — ) — Total material costs — ) Personnel costs — — Other expenses — Depreciation & amortization — Impairment of intangible assets — — — Income (loss) from operations ) ) — ) Interest expense (income), net ) — Extinguishment of debt — — — Income (loss) from continuing operations before income taxes ) ) — ) Benefit for income taxes — — ) — ) Income (loss) from continuing operations $ $ ) $ ) $ — $ ) EBITDA $ $ ) $ ) $ — $ ) Total assets — Capital expenditures — (in thousands) Patient Care Products & Corporate Consolidating Total 2015 Net revenue Third party $ $ $ — $ — $ Intersegments — — ) — Total net revenue — ) Material costs Third party suppliers — — Intersegments — ) — Total material costs — ) Personnel costs — — Other expenses — Depreciation and amortization — Impairment of intangible assets (Loss) income from operations ) ) — ) Interest expense (income), net ) — Extinguishment of debt — — — (Loss) income from continuing operations before income taxes ) ) — ) Benefit for income taxes — — ) — ) (Loss) income from continuing operations $ ) $ $ ) $ — $ ) EBITDA $ ) $ $ ) $ — $ ) Total assets — Capital expenditures — (in thousands) Patient Products & Corporate Consolidating Total 2014 Net revenue Third party $ $ $ — $ — $ Intersegments — — ) — Total net revenue — ) Material costs Third party suppliers — — Intersegments — ) — Total material costs — ) Personnel costs — — Other expenses — Depreciation and amortization — Impairment of intangible assets — — — Income (loss) from operations ) — Interest expense (income), net ) — Income (loss) from continuing operations before income taxes ) — ) Provision for income taxes — — — Income (loss) from continuing operations $ $ $ ) $ — $ ) EBITDA $ $ $ ) $ — $ Total assets — Capital expenditures — |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 12 Months Ended |
Dec. 31, 2016 | |
DISCONTINUED OPERATIONS | |
DISCONTINUED OPERATIONS | NOTE S — DISCONTINUED OPERATIONS On November 5, 2014, the Audit Committee of the Board of Directors approved a plan to sell and/or otherwise dispose of the Dosteon distribution product group (“Dosteon”), a component of our Patient Care segment. This action was taken following the conclusion of our strategic evaluation of this business in the fourth quarter of 2014. In accordance with ASC 205-20, Presentation of Financial Statements - Discontinued Operations , ASC 360-10 Property, Plant and Equipment - Overall, and ASC 350-20 , Intangibles - Goodwill and Other - Goodwill, the operating results and cash flows of Dosteon have been presented separately as discontinued operations in the consolidated statements of operations and comprehensive (loss) income and the consolidated statements of cash flows, respectively, for the years ended December 31, 2016, December 31, 2015 and all comparable periods. We entered into a definitive agreement in 2014 to sell one of the Dosteon businesses for approximately $2.7 million. The remaining portions of Dosteon businesses were sold in 2015 for aggregate cash proceeds of approximately $4.9 million. Associated with the disposal of these businesses, we recorded a $1.3 million loss on disposal and a $0.6 million inventory impairment loss associated with writing down the inventory to expected fair value within “Income (loss) from discontinued operations, net of income taxes” in 2015. Costs associated with exit and disposal related to Dosteon were immaterial in 2015 and 2016. In 2016, $1.4 million of contingent consideration gains resulting from the disposal of Dosteon in prior years was recorded in “Income (loss) from discontinued operations, net of income taxes” in our consolidated statements of operations and comprehensive (loss) income. The following is a summary of our operating results for discontinued operations: Year Ended December 31, (in thousands) 2016 2015 2014 Net revenue $ — $ $ Income (loss) before income taxes from discontinued operations ) ) Income tax provision (benefit) ) ) Income (loss) from discontinued operations, net of income taxes $ $ ) $ ) |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 12 Months Ended |
Dec. 31, 2016 | |
SUPPLEMENTAL CASH FLOW INFORMATION | |
SUPPLEMENTAL CASH FLOW INFORMATION | NOTE T — SUPPLEMENTAL CASH FLOW INFORMATION The supplemental disclosure requirements for the statements of cash flows are as follows: Year Ended December 31, (in thousands) 2016 2015 2014 Cash paid during the period for: Interest paid $ $ $ Income taxes (refunds received) paid $ ) $ $ Non-cash financing and investing activities: Issuance of seller notes in connection with acquisitions $ — $ $ Additions to property, plant and equipment acquired through financing obligations $ $ $ Retirements of financed property, plant and equipment and related financing obligations $ $ $ Purchase of property, plant and equipment in accounts payable $ $ $ |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2016 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE U — SUBSEQUENT EVENTS Rights Agreement Amendment On June 23, 2017, we entered into an amendment to the Rights Agreement dated February 28, 2016 to extend the “Final Expiration Date” under the Rights Agreement to December 31, 2018. Pursuant to the terms of the Rights Agreement as amended by the Rights Agreement Amendment, we have the ability to redeem the rights prior to the “Final Expiration Date” or to further amend the Rights Agreement to provide for an earlier “Final Expiration Date.” See Note P - “Shareholders’ Equity” within these consolidated financial statements. Amendment to Term B Credit Agreement as of June 23, 2017 On June 2, 2017, we entered into an Amendment (the “Term B Amendment”) to our Credit Agreement. The Term B Amendment became effective on June 23, 2017. The Term B Amendment extends the deadline by which we must deliver to the Term B Agent our audited financial statements, the related audit report and a consolidated budget, in each case, for the fiscal year ended December 31, 2016, from August 15, 2017 to February 15, 2018. The Amendment also extends the deadline by which the Compliance Date (as defined in the Term B Credit Agreement) must occur from August 15, 2017 to February 15, 2018. We are otherwise required to comply with all other obligations and covenants contained in the Term B Credit Agreement, including the timely delivery to our lenders future financial statements and related information. Sixth Amendment to Credit Agreement as of June 22, 2017 On June 22, 2017, we entered into a Sixth Amendment (the “Sixth Amendment”) to our Credit Agreement that extends the deadline by which we must deliver to the Agent the Required Financial Information from August 15, 2017 to February 15, 2018. The Sixth Amendment amended the maximum permitted leverage ratio covenant to be as of the end of any period of four consecutive fiscal quarters, as follows: · 5.00 to 1.00 as of the last day of the fiscal quarter ended June 30, 2016; · 5.75 to 1.00 as of the last day of the fiscal quarter ended September 30, 2016; · 5.00 to 1.00 as of the last day of each fiscal quarter thereafter. The Sixth Amendment also amended the minimum interest coverage ratio covenant to be, as of the end of our fiscal quarter ending: · 3.50:1.00 as of the last day of the fiscal quarter ended June 30, 2016; · 2:25:1:00 as of the last day of the fiscal quarter ended September 30, 2016; · 2:25:1:00 as of the last day of the fiscal quarter ended December 31, 2016; · 2:25:1:00 as of the last day of the fiscal quarter ended March 31, 2017; · 2:25:1:00 as of the last day of the fiscal quarter ended June 30, 2017; · 2:25:1:00 as of the last day of the fiscal quarter ended September 30, 2017; · 2:25:1:00 as of the last day of the fiscal quarter ended December 31, 2017; · 2:00:1:00 as of the last day of each quarter thereafter. We are otherwise required to comply with all the other obligations and covenants contained in the Credit Amendment, as amended through the Sixth Amendment including the timely delivery to our lenders future financial statements and related information. See Note N - “Long-term Debt” within these consolidated financial statement. Special Equity Plan The Compensation Committee of the Board of Directors, with the advice of its compensation consultants, developed the terms of a special equity plan, which was adopted by the Board on May 19, 2017. The Hanger, Inc. Special Equity Plan (the “Special Equity Plan”) has the purpose of retaining and incentivizing key employees and officers. The Special Equity Plan will provide participants the opportunity to acquire shares of our common stock (“Common Stock”) and is intended to operate completely independent from our 2016 Omnibus Incentive Plan. The Special Equity Plan authorizes the issuance of up to 1,500,000 shares of Common Stock. All awards under the Special Equity Plan were made on May 19, 2017, and no further grants of awards will be authorized under the Special Equity Plan. The total number of awards issued to all officers and employees under the Special Equity Plan was 1,117,228 made up of 728,020 stock options and 319,208 performance-based stock awards. The maximum number of shares issuable under these awards is 1,436,436 shares of Common Stock if certain performance targets are met. The performance measure will be the three year absolute Common Stock price compounded annual growth rate (“CAGR”). Pursuant to the Executive Restricted Stock Unit Agreement and the Employee Restricted Stock Unit Agreement, participants will be eligible to earn performance-based Restricted Stock Units based on the following achievement of the performance measure: Percent of Target CAGR Result on 3rd Performance-Based Anniversary of Grant Date Restricted Stock Units Earned Threshold 10% 50% Target 20% 100% Maximum 30% or above 200% To date no options have been exercised and no performance based awards have vested. |
QUARTERLY FINANCIAL INFORMATION
QUARTERLY FINANCIAL INFORMATION | 12 Months Ended |
Dec. 31, 2016 | |
QUARTERLY FINANCIAL INFORMATION | |
QUARTERLY FINANCIAL INFORMATION | NOTE V — QUARTERLY FINANCIAL INFORMATION (UNAUDITED) The tables below present summarized unaudited quarterly financial statements for the years ended December 31, 2016 and 2015. In lieu of filing Quarterly Reports on Form 10-Q for each quarter of 2016 and 2015, quarterly financial information is included in this report in the tables that follow. Amounts are computed independently each quarter, therefore, the sum of the quarterly amounts may not equal the total amount for the respective year due to rounding. HANGER, INC. QUARTERLY CONSOLIDATED BALANCE SHEETS (dollars in thousands, except par value and share amounts) (Unaudited) As of As of As of March 31, June 30, September 30, 2016 2016 2016 ASSETS Current assets: Cash and cash equivalents $ $ $ Net accounts receivable, less allowance for doubtful accounts of $16,296 at March 31, 2016, $15,241 at June 30, 2016, and $14,418 at September 30, 2016 Inventories Income taxes receivable Other current assets Total current assets Non-current assets: Property, plant and equipment, net Goodwill Other intangible assets, net Deferred income taxes Other assets Total assets $ $ $ LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Current portion of long-term debt $ $ $ Accounts payable Accrued expenses and other current liabilities Accrued interest payable Accrued compensation related costs Total current liabilities Long-term liabilities: Long-term debt, less current portion Other liabilities Total liabilities Shareholders’ Equity: Common stock, $.01 par value; 60,000,000 shares authorized, 36,044,247 shares, 36,144,560 shares, and 36,158,347 shares issued and 35,901,426 shares, 36,001,739 shares and 36,015,526 shares outstanding at March 31, June 30, and September 30, 2016, respectively Additional paid-in capital Accumulated other comprehensive loss ) ) ) Retained deficit ) ) ) Treasury stock, at cost 142,821 shares at March 31, June 30, and September 30, 2016, respectively ) ) ) Total shareholders’ equity Total liabilities and shareholders’ equity $ $ $ HANGER, INC. QUARTERLY CONSOLIDATED BALANCE SHEETS (dollars in thousands, except par value and share amounts) (Unaudited) As of As of As of March 31, June 30, September 30, 2015 2015 2015 ASSETS Current assets: Cash and cash equivalents $ $ $ Net accounts receivable, less allowance for doubtful accounts of $13,225 at March 31, 2015, $14,033 at June 30, 2015, and $14,419 at September 30, 2015 Inventories Income taxes receivable Other current assets Assets held for sale — — Total current assets Non-current assets: Property, plant and equipment, net Goodwill Other intangible assets, net Deferred income taxes Other assets Total assets $ $ $ LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Current portion of long-term debt $ $ $ Accounts payable Accrued expenses and other current liabilities Accrued interest payable Accrued compensation related costs Total current liabilities Long-term liabilities: Long-term debt, less current portion Other liabilities Total liabilities Shareholders’ Equity: Common stock, $.01 par value; 60,000,000 shares authorized, 35,765,547 shares, 35,816,784 shares, and 35,825,040 shares issued and 35,622,726 shares, 35,673,963 shares and 35,682,219 shares outstanding at March 31, June 30, and September 30, 2015, respectively Additional paid-in capital Accumulated other comprehensive loss ) ) ) Retained earnings Treasury stock, at cost 141,154 shares at March 31, 2015, 142,821 at June 30, 2015 and 142,821 at September 30, 2015 ) ) ) Total shareholders’ equity Total liabilities and shareholders’ equity $ $ $ HANGER, INC. QUARTERLY CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (dollars and shares in thousands, except per share amounts) (Unaudited) Three Months Three Months Six Months Three Months Nine Months Three Months March 31, June 30, June 30, September 30, September 30, December 31, 2016 2016 2016 2016 2016 2016 Net revenue $ $ $ $ $ $ Material costs Personnel costs Other operating costs General and administrative expenses Professional accounting and legal fees Depreciation and amortization Impairment of intangible assets — — — — — (Loss) income from operations ) ) ) ) Interest expense, net Loss on extinguishment of debt — ) ) — Loss from continuing operations before income taxes ) ) ) ) ) ) Benefit for income taxes ) ) ) ) ) ) Loss from continuing operations ) ) ) ) ) ) Income (loss) from discontinued operations, net of income taxes — ) Net loss $ ) $ ) $ ) $ ) $ ) $ ) Other comprehensive loss: Unrealized income (loss) on SERP, net of tax $ $ $ $ $ $ ) Comprehensive loss $ ) $ ) $ ) $ ) $ ) $ ) Basic and Diluted Per Common Share Data: Loss from continuing operations $ ) $ ) $ ) $ ) $ ) $ ) Income from discontinued operations, net of income taxes — — Basic loss per share $ ) $ ) $ ) $ ) $ ) $ ) Shares used to compute basic per common share amounts HANGER, INC. QUARTERLY CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (dollars and shares in thousands, except per share amounts) (Unaudited) Three Months Three Months Six Months Three Months Nine Months Three Months March 31, June 30, June 30, September 30, September 30, December 31, 2015 2015 2015 2015 2015 2015 Net revenue $ $ $ $ $ $ Material costs Personnel costs Other operating costs General and administrative expenses Professional accounting and legal fees Depreciation and amortization Impairment of intangible assets — — — (Loss) income from operations ) ) Interest expense, net Loss on extinguishment of debt — — — — — (Loss) income from continuing operations ) ) ) ) Provision (benefit) for income taxes ) (Loss) income from continuing operations ) ) ) ) (Loss) income from discontinued operations, net of income taxes ) ) ) — ) ) Net (loss) income $ ) $ $ ) $ $ ) $ ) Other comprehensive (loss) income: Unrealized income on SERP, net of tax $ $ $ $ $ $ Comprehensive (loss) income $ ) $ $ ) $ $ ) $ ) Basic Per Common Share Data: (Loss) income from operations $ ) $ $ ) $ $ ) $ ) (Loss) income from discontinued operations, net of income taxes ) ) ) — ) ) Basic (loss) income per share $ ) $ $ ) $ $ ) $ ) Shares used to compute basic per common share amounts Diluted Per Common Share Data: (Loss) income from continuing operations $ ) $ $ ) $ $ ) $ ) (Loss) income from discontinued operations, net of income taxes ) ) ) — ) ) Diluted (loss) income per share $ ) $ $ ) $ $ ) $ ) Shares used to compute diluted per common share amounts HANGER, INC. QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (Unaudited) Three Months Ended Six Months Ended Nine Months Ended March 31, 2016 June 30, 2016 September 30, 2016 Cash flows from operating activities: Net loss $ ) $ ) $ ) Income from discontinued operations, net of income taxes — Loss from continuing operations ) ) ) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization Provision for doubtful accounts Stock-based compensation expense Amortization of debt issuance costs Loss (gain) on extinguishment of debt — ) Gain on sale and disposal of fixed assets ) ) ) Changes in operating assets and liabilities, net of effects of acquired companies: Net accounts receivable Inventories ) ) ) Other current assets ) ) Income taxes ) ) Accounts payable ) Accrued expenses and accrued interest payable ) Accrued compensation related costs ) ) ) Other liabilities ) ) ) Net cash (used in) provided by operating activities - continuing operations ) Net cash used in operating activities - discontinued operations — ) ) Net cash (used in) provided by operating activities ) Cash flows from investing activities: Purchase of property, plant and equipment ) ) ) Purchase of equipment leased to third parties under operating leases ) ) ) Restricted cash Purchase of company-owned life insurance investment ) ) ) Proceeds from sale of property, plant and equipment Other investing activities, net ) ) ) Net cash used in investing activities - continuing operations ) ) ) Net cash provided by investing activities - discontinued operations — Net cash used in investing activities ) ) ) Cash flows from financing activities: Borrowings under term loan — — Repayment of term loan ) ) ) Borrowings under revolving credit agreement — — Repayments under revolving credit agreement — — ) Payment of senior notes — — ) Payment on seller’s note and other contingent consideration ) ) ) Payment of capital lease obligations ) ) ) Payment of debt issuance costs and fees ) ) ) Net cash used in financing activities - continuing operations ) ) ) Decrease in cash and cash equivalents ) ) ) Cash and cash equivalents, at beginning of year Cash and cash equivalents, at end of period $ $ $ SUPPLEMENTAL CASH FLOW FINANCIAL INFORMATION: Cash paid during the period for: Interest $ $ $ Income taxes paid (refunds received) ) Non-cash financing and investing activities: Additions to property, plant and equipment acquired through finance obligations Retirements of financed property, plant and equipment Purchase of property, plant and equipment in accounts payable HANGER, INC. QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (Unaudited) Three Months Ended Six Months Ended Nine Months Ended March 31, 2015 June 30, 2015 September 30, 2015 Cash flows from operating activities: Net loss $ ) $ ) $ ) Loss from discontinued operations, net of income taxes ) ) ) Loss from continuing operations ) ) ) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization Provision for doubtful accounts Impairment of long-lived and intangible assets — — Stock-based compensation expense Benefit for deferred income taxes ) ) ) Amortization of debt issuance costs Gain on sale and disposal of fixed assets ) ) ) Changes in operating assets and liabilities, net of effects of acquired companies: Net accounts receivable ) Inventories ) ) ) Other current assets ) Income taxes ) ) ) Accounts payable Accrued expenses and accrued interest payable Accrued compensation related costs ) ) ) Other liabilities Net cash (used in) provided by operating activities - continuing operations ) Net cash used in operating activities - discontinued operations ) ) ) Net cash (used in) provided by operating activities ) ) Cash flows from investing activities: Purchase of property, plant and equipment ) ) ) Purchase of equipment leased to third parties under operating leases ) ) ) Acquisitions, net of cash acquired ) ) ) Restricted cash Purchase of company-owned life insurance investment ) ) ) Proceeds from sale of property, plant and equipment Other investing activities, net ) ) ) Net cash used in investing activities - continuing operations ) ) ) Net cash provided by investing activities - discontinued operations Net cash used in investing activities ) ) ) Cash flows from financing activities: Repayment of term loan ) ) ) Borrowings under revolving credit agreement Repayments under revolving credit agreement ) ) ) Payment on seller’s note and other contingent consideration ) ) ) Payment of capital lease obligations ) ) ) Payment of debt issuance costs and fees ) ) ) Net cash provided by financing activities - continuing operations Increase in cash and cash equivalents Cash and cash equivalents, at beginning of year Cash and cash equivalents, at end of period $ $ $ SUPPLEMENTAL CASH FLOW FINANCIAL INFORMATION: Cash paid during the period for: Interest $ $ $ Income taxes paid Non-cash financing and investing activities: Issuance of seller notes in connection with acquisitions Additions to property, plant and equipment acquired through finance obligations Retirements of financed property, plant and equipment Purchase of property, plant and equipment in accounts payable |
SIGNIFICANT ACCOUNTING POLICI30
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation | Principles of Consolidation Our consolidated financial statements include our accounts and those of our wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in the accompanying consolidated financial statements. |
Use of Estimates and Assumptions | Use of Estimates and Assumptions The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires the use of estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and contingencies. Although actual results in subsequent periods may differ from these estimates, such estimates are developed based on the best information available to management and based on management’s best judgments at the time. We base our estimates on historical experience, observable trends and various other assumptions that we believe are reasonable under the circumstances. All significant assumptions and estimates underlying the amounts reported in the consolidated financial statements and accompanying notes are regularly reviewed and updated when necessary. Changes in estimates are reflected prospectively in the consolidated financial statements based upon on-going actual trends, or subsequent settlements and realizations depending on the nature and predictability of the estimates and contingencies. Interim changes in estimates related to annual operating costs are applied prospectively within annual periods. Although we believe that our estimates are reasonable, actual results could differ from these estimates. The most significant assumptions and estimates underlying these consolidated financial statements and accompanying notes involve revenue recognition and accounts receivable valuation, inventories, accounts payable and accrued liabilities (including self-insurance reserves and contingencies), impairments of long-lived assets including goodwill, income taxes, business combinations, leases and stock-based compensation. |
Revenue Recognition | Revenue Recognition Patient Care Segment Revenues in our Patient Care segment are primarily derived from the sale of O&P devices and are recognized when the patient has received the device or service. At or subsequent to delivery, we issue an invoice to a third party payor, which primarily consists of commercial insurance companies, Medicare, Medicaid, the Veterans Administration and private or patient pay (“Private Pay”). We recognize revenue for the amounts we expect to receive from payors based on expected contractual reimbursement rates, which are net of estimated contractual discounts. Government reimbursement, comprised of Medicare, Medicaid and the U.S. Department of Veterans Affairs, in the aggregate, accounted for approximately, 54.1%, 53.4% and 50.9% of our net revenue in 2016, 2015 and 2014, respectively. These revenue amounts are further revised as claims are adjudicated, which may result in disallowances, or decreases to revenue. We believe that adjustments related to write-offs of receivables should predominantly be recorded as a reduction of revenues, which we refer to as disallowed revenue. This is due to the majority of our revenues being collected from commercial insurance companies, Medicare, Medicaid and the Veterans Administration, most of which are under contractual reimbursement rates. As such, adjustments do not relate to an inability to pay, but to contractual allowances, lack of timely claims submission, insufficient medical documentation or other administrative errors. Amounts recorded to bad debt expense, which are presented within “Other operating costs,” generally relate to commercial payor bankruptcies and private pay balances for which there was an assessment of collectability and collection attempts were made. At the end of each period, we establish allowances for estimated disallowances relating to that period based on prior adjudication experience and record such amounts as an adjustment to revenue. In a similar fashion, we estimate and record allowances for doubtful accounts on unpaid receivables at each period end. We also record a liability, with a corresponding adjustment to revenue, for refunds expected to be paid to our patients or third party payors. Medicare and Medicaid regulations and the various agreements we have with other third party payors, including commercial healthcare providers under which these contractual adjustments and disallowed revenue are calculated, are complex and are subject to interpretation and adjustment and may include multiple reimbursement mechanisms for different types of services. Therefore, the particular O&P devices and related services authorized and provided, and the related reimbursement, are subject to interpretation and adjustment that could result in payments that differ from our estimates. Additionally, updated regulations and reimbursement schedules, and contract renegotiations occur frequently, necessitating regular review and assessment of the estimation process by management. As a result, there is a reasonable possibility that recorded estimates will change materially in the short-term and any related adjustments will be recorded as changes in estimates when they become known. For more information on our use of estimates to calculate allowances for disallowed revenue and doubtful accounts, refer to the “Accounts Receivable, Net” section below. We often invoice patients or payors after a device is delivered. To account for this delay, we record an estimated revenue accrual for devices delivered but not yet invoiced at period end. This estimate is based on a historical look-back analysis of lag times between delivery and invoicing that occur over a period end. Products & Services Segment Revenues in our Products & Services segment are derived from the distribution of O&P components and the leasing and sale of rehabilitation equipment and ancillary consumable supplies combined with equipment maintenance, education, and training. Distribution revenues are recorded upon the delivery of products, net of estimated returns. Equipment leasing and related services revenue are recognized over the applicable term as the customer has the right to use the equipment and as the services are provided. Equipment sales revenue is recognized upon delivery, with any related services revenue deferred and recognized as the services are performed. Sales of consumables are recognized upon delivery. |
Material Costs | Material Costs Material costs in our Patient Care segment reflect purchases of orthotics and prosthetic componentry and other related costs in connection with the delivery of care through our clinic locations and other patient care operations. Material costs in our Products & Services segment reflect purchases of orthotics and prosthetic materials and other related costs in connection with the distribution of products and services to third party customers. |
Personnel Costs | Personnel Costs Personnel costs reflect salaries, benefits, incentive compensation, contract labor, and other personnel costs we incur in connection with our delivery of care through our clinic locations and other patient care operations, or distribution of products and services, and exclude similar costs incurred in connection with general and administrative activities. |
Other Operating Costs | Other Operating Costs Other operating costs reflect costs we incur in connection with our delivery of care through our clinic locations and other patient care operations or distribution of products and services. Marketing costs, including advertising, are expensed as incurred and are presented within this financial statement caption. We incurred approximately $4.0 million, $3.9 million, and $3.4 million in advertising costs during the years ended December 31, 2016, 2015 and 2014, respectively. Other costs include rent, utilities, and other occupancy costs, general office expenses, bad debt expense, and travel and clinical professional education costs, and exclude similar costs incurred in connection with general and administrative activities. |
General and Administrative Expenses | General and Administrative Expenses General and administrative expenses reflect costs we incur in the management and administration of our businesses that are not directly related to the operation of our clinics or provision of products and services. These include personnel costs and other operating costs supporting our general and administrative functions. We incurred approximately $0.6 million, $0.6 million, and $0.7 million in advertising costs during the years ended December 31, 2016, 2015 and 2014, respectively. |
Professional Accounting and Legal Fees | Professional Accounting and Legal Fees We recognize fees associated with audits of our financial statements in the fiscal period to which the audit relates. All other professional fees are generally recognized as expense in the periods in which services are performed. Please see the “Accounts Payable and Accrued Liabilities” section for legal fees associated with legal contingencies. |
Depreciation and Amortization | Depreciation and Amortization Depreciation and amortization expenses reflect all depreciation and amortization expenses, whether incurred in connection with our delivery of care through clinic locations, our distribution of products and services, or in the general management and administration of our business. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. We maintain cash balances in excess of Federal Deposit Insurance Corporation (“FDIC”) limits at certain financial institutions. We manage this credit risk by concentrating our cash balances in high quality financial institutions and by periodically evaluating the credit quality of the primary financial institutions holding such deposits. With short maturities, the investments present insignificant risk of changes in value because of interest rate changes and are readily convertible to cash. Historically, no losses have been incurred due to such cash concentrations. Restricted cash balances are presented within “Other current assets” in the consolidated balance sheets. See Note I - “Other Current Assets and Other Assets” within these consolidated financial statements. |
Accounts Receivable, Net | Accounts Receivable, Net Patient Care Segment We establish allowances for accounts receivable to reduce the carrying value of such receivables to their estimated net realizable value. The Patient Care segment’s accounts receivables are recorded net of unapplied cash, estimated allowance for disallowed revenue and estimated allowance for doubtful accounts, as described in the revenue recognition accounting policy above. Both the allowance for disallowed revenue and the allowance for doubtful accounts estimates consider historical collection experience by each of the Medicare and non-Medicare (commercial insurance, Medicaid, Veteran’s Administration and Private Pay) primary payor class groupings. For each payor class grouping, liquidation analysis of historical period end receivable balances are performed to ascertain collections experience by aging category. We believe the use of historical collection experience applied to current period end receivable balances is reasonable. In the absence of an evident adverse trend, we use historical experience rates calculated using an average of four quarters of data with at least twelve months of adjudication. We believe the time periods analyzed provide sufficient time for most balances to adjudicate in the normal course of operations. We will modify the time periods analyzed when significant trends indicate that adjustments should be made. In addition, estimates are adjusted when appropriate for information available up through the issuance of the consolidated financial statements. Products & Services Segment Products & Services segment’s allowance for doubtful accounts is estimated based on the analysis of the segment’s historical write-offs experience, accounts receivable aging and economic status of its customers. Accounts receivable that are deemed uncollectible are written-off to the allowance for doubtful accounts. Accounts receivable are also recorded net of an allowance for estimated sales returns. |
Inventories | Inventories Inventories are valued at the lower of estimated cost or net realizable value with cost determined on a first-in, first out (“FIFO”) basis. Provisions have also been made to reduce the carrying value of inventories for excess, obsolete, or otherwise impaired inventory on hand at period-end. Patient Care Segment Substantially all of our Patient Care segment inventories are recorded through a periodic approach whereby inventory quantities are adjusted on the basis of a quarterly physical count. Segment inventories relate primarily to raw materials and work-in-process (“WIP”) at Hanger Clinics. Inventories at Hanger Clinics totaled $29.1 million and $30.1 million at December 31, 2016 and 2015, respectively, with WIP inventory representing $9.0 million and $8.9 million of the total inventory, respectively. Raw materials consists of purchased parts, components, and supplies which are used in the assembly of O&P devices for delivery to patients. In some cases, purchased parts and components are also sold directly to patients. Raw materials are valued based on recent vendor invoices, reduced by estimated vendor rebates. Such rebates are recognized as a reduction of cost of materials in the Consolidated Statements of Operations and Comprehensive (Loss) Income when the related devices or components are delivered to the patient. Approximately 69% and 52% of raw materials at December 31, 2016 and 2015, respectively were purchased from our Products & Services segment. Raw material inventory was $20.1 million and $21.2 million at December 31, 2016 and 2015 respectively. WIP consists of devices which are in the process of assembly at our clinics or fabrication centers. WIP quantities were determined by the physical count of patient orders at the end of every quarter of 2016 and 2015 while the related stage of completion of each order was established by clinic personnel. We do not have an inventory costing system and as a result, the identified WIP quantities were valued on the basis of estimated raw materials, labor, and overhead costs. To estimate such costs, we develop bills of materials for certain categories of devices that we assemble and deliver to patients. Within each bill of material, we estimate (i) the typical types of component parts necessary to assemble each device; (ii) the points in the assembly process when such component parts are added; (iii) the estimated cost of such parts based on historical purchasing data; (iv) the estimated labor costs incurred at each stage of assembly; and (v) the estimated overhead costs applicable to the device. Products & Services Segment Product & Service segment inventories consist primarily of finished goods at its distribution centers as well as raw materials at fabrication facilities, and totaled $39.1 million and $38.4 million as of December 31, 2016 and 2015, respectively. Finished goods include products that are available for sale to third party customers as well as to our Patient Care segment as described above. Such inventories were determined on the basis of perpetual records and a physical count at year end. Inventories in connection with therapeutic services are valued at a weighted average cost. |
Fair Value Measurements | Fair Value Measurements We follow the authoritative guidance for financial assets and liabilities, which establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. The authoritative guidance requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy by which these assets and liabilities must be categorized, based on significant levels of inputs as follows: Level 1 consists of securities for which there are quoted prices in active markets for identical securities; Level 2 consists of securities for which observable inputs other than Level 1 inputs are used, such as quoted prices for similar securities in active markets or quoted prices for identical securities in less active markets and model-derived valuations for which the variables are derived from, or corroborated by, observable market data; and Level 3 consists of securities for which there are no observable inputs to the valuation methodology that are significant to the measurement of the fair value. The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement. |
Financial Instruments | Financial Instruments We hold investments in money market funds which are measured at fair value on a recurring basis. As of December 31, 2016 and 2015, $2.3 million and $3.9 million, respectively of money market funds which are restricted from general use are presented within “Other current assets.” The fair values of our money market funds are based on Level 1 observable market prices and are equivalent to one dollar per share. The carrying value of accounts receivable and accounts payable, approximate their fair values based on the short-term nature of these instruments. The carrying value of our outstanding term loan as of December 31, 2016 and 2015, was $180.0 million and $199.7 million compared to its fair value of $172.6 million and $186.2 million, respectively. The carrying values of our outstanding Term Loan B as of December 31, 2016 was $280.0 million compared to its fair value of $278.6 million. There was no Term Loan B outstanding as of December 31, 2015. Our estimates of fair value are based on debt with similar terms and remaining maturities as of December 31, 2016 and 2015, which represent Level 2 measurements. We had no balances outstanding under revolving credit facilities as of December 31, 2016. The carrying value of the amount outstanding on our revolving credit facilities as of December 31, 2015, was $132.0 million compared to its fair value of $121.6 million. Our estimates of fair value are based on debt with similar terms and remaining maturities as of December 31, 2015, which represent a Level 2 measurement. Our senior notes were redeemed during 2016. The carrying value of the senior notes was $200.0 million as of December 31, 2015 compared to their fair value of $179.2 million. Our estimates of fair value are based on observable market inputs which represent Level 2 measurements. The carrying value of our outstanding subordinated promissory notes issued in connection with acquisitions (“Seller Notes”) as of December 31, 2016 and 2015 was $11.1 million and $19.8 million, respectively. We believe that the carrying value of the Seller Notes approximates their fair values based on a discounted cash flow model using unobservable inputs, primarily, our credit spread for subordinated debt, which represents a Level 3 measurement. |
Insurance Recoveries Receivable | Insurance Recoveries Receivable We incur legal and other costs with respect to a variety of issues on an ongoing basis. We record a related receivable when costs are reimbursable under applicable insurance policies, we believe it is probable such costs will be reimbursed and such reimbursements can be reasonably estimated. We record the benefit of related receivables from the insurer as a reduction of costs in the same financial statement caption in which the related loss was recognized in our consolidated statements of operations and comprehensive (loss) income. Loss contingency reserves, which are recorded within accrued liabilities, are not reduced by estimated insurance recoveries. |
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net Property, plant and equipment are recorded at cost less accumulated depreciation and amortization, with the exception of assets acquired through acquisitions, which are initially recorded at estimated fair value. Equipment acquired under a capital lease is recorded at the present value of the future minimum lease payments. The cost and related accumulated depreciation of assets sold, retired or otherwise disposed of are removed from the respective accounts, and any resulting gains or losses are included in the consolidated statements of operations and comprehensive (loss) income. Depreciation is computed for financial reporting purposes using the straight-line method over the useful lives of the related assets estimated as follows: furniture and fixtures, equipment and information systems, principally five years, buildings ten to forty years, capital leases over the lease term, and leasehold improvements over the shorter of ten years or the lease term. We record maintenance and repairs, including the cost of minor replacements, to maintenance expense. Costs of major repairs that extend the effective useful life of property are capitalized and depreciated accordingly. We capitalize the costs of obtaining or developing internal use software, including external direct costs of materials and services and directly related payroll costs. Amortization begins when the internal use software is ready for its intended use. Costs incurred during the preliminary project and post-implementation stages, as well as maintenance and training costs, are expensed as incurred. |
Business Combinations | Business Combinations We record tangible and intangible assets acquired and liabilities assumed in business combinations under the acquisition method of accounting. Acquisition consideration typically includes cash payments, the issuance of Sellers Notes and in certain instances contingent consideration with payment terms associated with the achievement of designated collection targets of the acquired business. Amounts paid for each acquisition are allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition inclusive of identifiable intangible assets. The estimated fair value of identifiable assets and liabilities, including intangibles, are based on detailed valuations that use information and assumptions available to management. We allocate any excess purchase price over the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed to goodwill. Significant management judgments and assumptions are required in determining the fair value of assets acquired and liabilities assumed, particularly acquired intangible assets, including estimated useful lives. The valuation of purchased intangible assets is based upon estimates of the future performance and discounted cash flows from the acquired business. Each asset acquired or liability assumed is measured at estimated fair value from the perspective of a market participant. Subsequent changes in the estimated fair value of contingent consideration are recognized as “General and administrative expenses” within the consolidated statements of operations and comprehensive (loss) income. |
Goodwill and Other Intangible Assets, Net | Goodwill and Other Intangible Assets, Net Goodwill represents the excess of the purchase price over the estimated fair value of net identifiable assets acquired and liabilities assumed from purchased businesses. We assess goodwill for impairment annually during the fourth quarter, and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. We have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. If it is determined that a two-step goodwill impairment test is necessary or more efficient than a qualitative approach, we will measure the fair value of the reporting units using a combination of income and market approaches. Any impairment would be recognized by a charge to income from operations and a reduction in the carrying value of the goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired, and the second step of the impairment test is not required. The second step, if required, compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. The fair value of a reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination. If the carrying amount of the reporting unit’s goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess. We apply judgment in determining the fair value of our reporting units and the implied fair value of goodwill which is dependent on significant assumptions and estimates regarding expected future cash flows, terminal value, changes in working capital requirements, and discount rates. The fair value of acquired customer intangibles is estimated using an excess earnings model. Key assumptions utilized in the valuation model include pro-forma projected cash flows adjusted for market-participant assumptions, forecasted customer retention curve, and discount rate. Customer intangibles are amortized, using the straight-line method over an estimated useful life of four to ten years. The fair value of non-compete agreements are estimated using a discounted cash flow model. The related intangible assets are amortized, using the straight-line method, over their term which ranges from two to five years. Other definite-lived intangible assets are recorded at cost and are amortized, using the straight-line method, over their estimated useful lives of up to seventeen years. The fair value associated with trade names is estimated using the relief-from-royalty method with the primary assumptions being the royalty rate and expected revenues associated with the trade names. These assets, some of which have indefinite lives, are primarily included in the Products & Services segment. Indefinite lived trade name intangible assets are assessed for impairment in the fourth quarter of each year, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Trade name intangible assets with definite lives are amortized over their estimated useful lives of one to ten years. For the years ended December 31, 2016 and 2015, we recorded impairments of our goodwill totaling $86.0 million and $382.9 million, respectively. See Note H - “Goodwill and Other Intangible Assets” to our consolidated financial statements in this Annual Report on Form 10-K for additional information regarding these charges. In conjunction with our Goodwill impairment testing at December 31, 2015, we reevaluated the estimated useful life of our customer list intangibles. In the fourth quarter of 2015, the estimated useful life of our customer list intangibles was reduced from 10 years to four years in our Patient Care segment and from 14 years to 10 years in our Products & Services segment. This change in the estimated useful lives increased amortization for the years ended December 31, 2015 and 2016 by approximately $6.0 million and $7.0 million, respectively. As described, we apply judgment in the selection of key assumptions used in both steps of the goodwill impairment test and as part of our evaluation of intangible assets tested annually and at interim testing dates as necessary. If these assumptions differ from actual, we could incur additional impairment charges and those charges could be material. |
Long-Lived Asset Impairment | Long-Lived Asset Impairment We evaluate the carrying value of long-lived assets to be held and used for impairment whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. The carrying value of a long-lived asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset group. We measure impairment as the amount by which the carrying value exceeds the estimated fair value. Estimated fair value is determined primarily using the projected future cash flows discounted at a rate commensurate with the risk involved. Long-lived assets to be disposed of by sale are classified as held for sale when the applicable criteria are met, and recognized within the consolidated balance sheet at the lower of carrying value or fair value less cost to sell. Depreciation on such assets is ceased. |
Debt Issuance Costs, Net | Debt Issuance Costs, Net Debt issuance costs incurred in connection with long-term debt are amortized, on a straight-line basis, which is not materially different from the effective interest method, through the maturity of the related debt instrument. Debt issuance costs are classified as a reduction of debt in the consolidated balance sheets. Amortization of these costs is included within “Interest expense, net” in the consolidated statements of operations and comprehensive (loss) income. |
Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities Accounts payable relating to goods or services received is estimated using various factors including payments made subsequent to period end, vendor invoice dates, shipping terms confirmed by certain vendors or other third party documentation. Accrued liabilities are recorded based on estimates of services received or amounts expected to be paid to third parties. Accrued legal costs for legal contingencies are recorded when they are probable and estimable. |
Self-Insurance Reserves | Self-Insurance Reserves We maintain insurance programs which include employee health insurance, workers’ compensation, product, professional and general liability. Our employee health insurance program is self-funded, with a stop-loss coverage on claims that exceed $0.4 million for any individually covered claim. We are responsible for workers’ compensation, product, professional and general liability claims up to $0.5 million per individual incident. The insurance and self-insurance accruals reflect the estimate of incurred but not reported losses, historical claims experience and expected costs to settle unpaid claims and are undiscounted. We record amounts due from insurance policies in “Other assets” while recording the estimated liability in self-insurance accruals in our consolidated balance sheets. |
Leases | Leases We lease a majority of our patient care clinics under lease arrangements, certain of which contain renewal options, rent escalation clauses, and/or landlord incentives. Rent expense for noncancellable leases with scheduled rent increases and/or landlord incentives is recognized on a straight-line basis over the lease term, including any applicable rent holidays, beginning on the earlier of the lease commencement date or the date we take control of the leased space. We have certain building leases that are accounted for as financing transactions. In these instances, pursuant to ASC 840-40-55, The Effect of Lessee Involvement in Asset Construction , we are the deemed owner of the property during the construction phase and the associated building assets and financing obligations are recognized on our consolidated balance sheet. Subsequent to construction, the arrangement is evaluated in accordance with ASC 840-40 to determine whether the arrangement qualifies as a sale leaseback. Sale leasebacks of real estate require an analysis to identify indicators of continuing involvement and other factors. If no indicators of continuing involvement are found, the lease is considered to have passed the sales-leaseback criteria and both the asset and the related financing obligation are derecognized. These leases are then assessed for classification at lease inception and reported in accordance with ASC 840. If indicators of continuing involvement are present, these transactions do not qualify for sale accounting and are accounted for as a failed sale-leaseback. In accordance with ASC 840-40, Leases - Sale-Leaseback Transactions, the buildings and related assets, as well as their associated financing obligations, continue to be reflected in our consolidated balance sheet, with the assets depreciated over their remaining useful lives. Payments required under the arrangement are recognized as reductions of the financing obligation and interest expense. At the end of the lease term, the corresponding financing obligation and the remaining net book value of the building are derecognized. When applicable, any associated gain is recognized within “Other operating costs” in our consolidated statements of operations and comprehensive (loss) income. |
Income Taxes | Income Taxes We use the liability method of accounting for income taxes as set forth in the authoritative guidance for accounting for income taxes. Under this method, we recognize deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the respective carrying amounts and tax basis of our assets and liabilities. We recognize a valuation allowance on deferred tax assets if it is more likely than not that the assets will not be realized in future years. Significant accounting judgment is required in determining the provision for income taxes and related consolidated balance sheet accounts. We believe that our tax positions are consistent with applicable tax law, but certain positions may be challenged by taxing authorities. In the ordinary course of business, there are transactions and calculations where the ultimate tax outcome is uncertain. In addition, we are subject to periodic audits and examinations by the Internal Revenue Service and other state and local taxing authorities. In these cases, we record the financial statement effects of a tax position when it is more-likely-than-not, based on the technical merits, that the position will be sustained upon examination. We record the largest amount of tax benefit that is greater than fifty percent likely of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. If not paid, the liability for uncertain tax positions is reversed as a reduction of income tax expense at the earlier of the period when the position is effectively settled or when the statute of limitations has expired. Although we believe that our estimates are reasonable, actual results could differ from these estimates. Interest and penalties, when applicable, are recorded within the income tax provision. |
Interest Expense, Net | Interest Expense, Net We record interest expense net of interest income which was $0.1 million in each of the years ended December 31, 2016, 2015 and 2014 in our consolidated statements of operations and comprehensive (loss) income. |
Stock-Based Compensation | Stock - Based Compensation We primarily issue restricted common stock units under one active stock-based compensation plan. Shares of common stock issued under this plan are issued from our authorized and unissued shares. We measure and recognize compensation expense, net of estimated forfeiture, for all stock-based payments at fair value. Our outstanding awards are primarily comprised of restricted stock units and performance-based restricted stock units. All employee stock options are fully vested as of December 31, 2016 and 2015, and all associated compensation expense has been recognized in prior years. The restricted stock units are subject to a service condition or vesting period ranging from one to four years. The performance-based restricted stock units include both performance and service conditions. The performance conditions are based on annual earnings per share targets. Compensation expense associated with restricted stock units is recognized on a straight-line basis over the requisite service period. Compensation expense associated with performance-based restricted stock units is recognized on a graded vesting or accelerated basis over the requisite service period when the performance condition is probable of being achieved. |
Segment Information | Segment Information We have two segments, Patient Care and Products & Services. Except for the segment specific policies described above, the segments follow the same accounting policies as followed in the consolidated financial statements. We apply the “management approach” to disclosure of segment information. The management approach designates the internal organization that is used by management for making operating decisions and assessing performance as the basis of our reportable segments. The description of our reportable segments and the disclosure of segment information are presented in Note R “Segment and Related Information” to these consolidated financial statements. Intersegment revenue represents sales of O&P components from our Products & Services segment to our Patient Care segment and are recorded at prices that approximate material cost plus overhead. In 2014, intersegment revenues reflect prices which we believed approximated market values but has been reclassed to eliminate intercompany profit to be consistent with intersegment revenue in 2015 and 2016. The reclassification adjustment to eliminate intersegment profit in 2014 approximates $21.0 million. |
Discontinued Operations | Discontinued Operations We reported our Dosteon product group as a discontinued operation in accordance with ASC 205-20, Presentation of Financial Statements-Discontinued Operations , ASC 360-10 Property, Plant and Equipment-Overall, and ASC 350-20 , Intangibles -Goodwill and Other - Goodwill as of December 31, 2014 and all subsequent periods. Proceeds from the sale of Dosteon businesses are recorded in the consolidated statement of cash flows within the “Net cash provided by investing activities - discontinued operations” caption. Also included within this caption are any impairments and losses on disposal. See Note S - “Discontinued Operations” within these consolidated financial statements. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies what constitutes a modification of a share-based payment award. The ASU is intended to provide clarity and reduce both diversity in practice and cost and complexity when applying the guidance in Topic 718 to a change to the terms or conditions of a share-based payment award. ASU 2017-09 is effective for public entities for annual periods beginning after December 15, 2017, and interim periods within those fiscal years. We plan to adopt ASU 2017-09 on January 1, 2018, and we do not anticipate that the adoption of ASU 2017-09 will have a material impact on our financial conditions or results of operations. In March 2017, the FASB issued ASU No. 2017-7, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost, which include interest cost and prior service cost or credit, among others, are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. This ASU is effective for our fiscal year 2018, including interim periods. We are currently evaluating the effects that the adoption of this ASU will have on our consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-4 , Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU simplifies how an entity is required to test goodwill for impairment by eliminating Step Two from the goodwill impairment test. Step Two measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under this standard, an entity will recognize an impairment charge for the amount by which the carrying value of a reporting unit exceeds it fair value. The amendments in this ASU are effective for us in fiscal year 2020 with early adoption permitted beginning in 2017. We plan to adopt ASU 2017-04 on January 1, 2017. Future impairments, if any, of our goodwill will be impacted by our adoption of this ASU, however any impact cannot be estimated at this time. In January 2017, the FASB issued ASU No. 2017-3 , Accounting Changes and Error Corrections (Topic 250) and Investments-Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings. This ASU expands disclosures regarding potential material effects to our consolidated financial statements that may occur when adopting ASU’s in the future. When a company cannot reasonably estimate the impact of adopting an ASU, disclosures are to be expanded to include qualitative disclosures including a description to the effect to the company’s accounting policies, a comparison to the existing policies, the status of its process to implement the new standard and any significant implementation matters yet to be addressed. This standard will generally require more disclosure in the consolidated financial statements when adopted. In January 2017, the FASB issued ASU No. 2017-1 , Business Combinations (Topic 805): Clarifying the Definition of a Business. This ASU clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This ASU is effective for our fiscal year 2018, including interim periods. The adoption of this standard is not expected to have a material impact on our consolidated financial statements, but may have an impact to the conclusion of future acquisitions. In November 2016, the FASB issued ASU No. 2016-18 , Statement of Cash Flows (Topic 230): Restricted Cash. This ASU provides guidance on presenting restricted cash in the statement of cash flows. Restricted cash and cash equivalents are to be included in cash and cash equivalents when reconciling the changes during the period, while separately identifying the changes in restricted cash and cash equivalents. This ASU is effective for our fiscal year 2018, including interim periods and will require a retrospective transition. Early adoption is permitted. The adoption of this standard will result in restricted cash being included in cash and cash equivalents. In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This ASU requires the recognition of the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The amendments in this ASU should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The adoption of this standard is not expected to have a material impact on our consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments . The purpose of this ASU is to reduce the diversity in practice regarding how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This ASU is effective for fiscal year 2018. Early adoption is permitted. A retrospective transition method is to be used in the application of this amendment. The adoption of this standard is not expected to have a material impact on our consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-9, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This ASU simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016, although early adoption is permitted. We plan to adopt ASU No. 2016-9 on January 1, 2017, and once effective, we anticipate the primary impact of adopting ASU 2016-9 will be the recognition of excess tax benefits and tax deficiencies resulting from our stock awards to be included in our provision for income taxes, whereas previously these amounts were taken directly to additional paid-in capital. Additionally, these amounts are required to appear in the statement of cash flow under operating activities, whereas previously these amounts were reported as financing activities. We do not anticipate any impact to our classification of awards as either equity or liabilities. Upon the adoption of this ASU, we will elect to account for forfeitures as they occur. In February 2016, the FASB issued ASU No. 2016-2 , Leases (Topic 842). The amendments in this ASU revise the accounting for leases. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases that extend beyond 12 months. The asset and liability will initially be measured at the present value of the lease payments. The new lease guidance also simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. The amendments in this ASU are effective for fiscal year 2019 and will be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements. Early adoption is permitted. We are currently evaluating the effects that the adoption of this ASU will have on our consolidated financial statements. We have not yet concluded how the new standard will impact the consolidated financial statements. Nonetheless, it is anticipated that there will be a material increase to assets and lease liabilities for existing property leases representing our nationwide retail locations that are not already included on our consolidated balance sheet through failed sale-leaseback accounting treatment. In January 2016, the FASB issued ASU No. 2016-1, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities . The amendments in this ASU revise the accounting related to (i) the classification and measurement of investments in equity securities and (ii) the presentation of certain fair value changes for financial liabilities at fair value. The amendments in this ASU are effective for us beginning on January 1, 2018 and should be applied through a cumulative-effect adjustment to the consolidated balance sheet. Early adoption is permitted under certain circumstances. The adoption of this standard is not expected to have a material impact on our consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which requires that all deferred income tax assets and liabilities be presented as noncurrent in the Company’s consolidated balance sheet. Prior to the issuance of ASU 2015-17, deferred tax liabilities and assets were required to be separately classified into a current amount and a noncurrent amount in the balance sheet. ASU 2015-17 represents a change in accounting principle and is effective for fiscal years, and the interim periods within those years, beginning after December 15, 2016. Early adoption is permitted and the Company elected to early adopt ASU 2015-17 as of December 31, 2015 and applied the guidance retrospectively to all periods presented. The adoption of this guidance resulted in the reclassification of deferred income taxes from a current asset to being reported as a non-current asset. In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, which eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. The acquirer must record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. This guidance is effective for fiscal years beginning after December 15, 2015, and early adoption is permitted. We adopted ASU 2015-16 prospectively effective January 1, 2015. Adoption of ASU 2015-16 did not have a material effect on our consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory . This ASU simplifies the measurement of inventory. Under this new standard, inventory should be measured using the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonable predictable costs of completion, disposal and transportation. Early adoption is permitted and this ASU was implemented effective January 1, 2015. The adoption of this standard did not have a material impact on our consolidated financial statements. In May 2015, the FASB issued ASU No. 2015-7, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) . This ASU removes certain requirements related to valuing assets where fair value is measured using the net asset value per share practical expedient. This ASU was effective on January 1, 2016. The adoption of this standard did not have a material impact on our consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-05, Intangibles — Goodwill and Other — Internal-Use Software — Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (“ASU 2015-05”). ASU 2015-05 provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance does not change the accounting for a customer’s service contracts. We adopted ASU 2015-05 prospectively effective January 1, 2015. Adoption of ASU 2015-05 did not have a material effect on our consolidated financial statements. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments in this ASU provide guidance on management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern. We adopted this pronouncement on December 31, 2016, see Note N - “Long-term Debt” for additional information. The adoption of this standard did not have a material effect on our consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-9, Revenue from Contracts with Customers (Topic 606). This ASU provides a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer in an amount that reflects the consideration it expects to receive in exchange for those goods or services. Additional disclosures are required regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The FASB issued additional related ASU’s providing guidance on principal versus agent considerations, identification of performance obligations and the implementation guidance for licensing. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial adoption. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date which deferred the effective date until fiscal year 2018. We have assembled a revenue task forced composed of internal employees and external consultants to evaluate the impact on the different revenue streams in our consolidated financial statements and related disclosures. We continue to evaluate the impact that the adoption of this new standard may have on our consolidated financial statements and the related disclosures. We expect to adopt any changes resulting from these guidelines effective January 1, 2018. In April 2014, the FASB issued ASU 2014-8, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This ASU changed the requirements for reporting discontinued operations to include a strategic shift that has a major effect on an entity’s operations and financial results. Entities are required to provide additional disclosures about individually significant components that are disposed of, or held for sale, but do not meet the discontinued operations criteria. The ASU was effective prospectively for all disposals or classifications as held for sale that occur within annual periods beginning January 1, 2015. The adoption of this standard did not have a material impact on our consolidated financial statements. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
EARNINGS PER SHARE | |
Schedule of reconciliation of the numerators and denominators used to calculate basic and diluted net (loss) income per share | Year Ended December 31, (in thousands, except share and per share data) 2016 2015 2014 Loss from continuing operations applicable to common shareholders $ ) $ ) $ ) Income (loss) from discontinued operations, net of income taxes ) ) Net loss applicable to common shareholders $ ) $ ) $ ) Shares of common stock outstanding used to compute basic per common share amounts Effect of dilutive restricted stock units and options (1) — — — Shares used to compute diluted per common share amounts Basic and Diluted: Loss from continuing operations per share applicable to common stock $ ) $ ) $ ) Income (loss) from discontinued operations per share applicable to common stock ) ) Net loss per share applicable to common shareholders $ ) $ ) $ ) (1) Given that we are recognizing a loss from continuing operations, shares used to compute diluted per common share amounts excludes 145,497 shares for 2016, 102,288 shares for 2015, and 256,880 shares for 2014 of potentially dilutive shares related to unvested restricted stock units and unexercised options in accordance with ASC260 - Earnings Per Share. |
ACCOUNTS RECEIVABLE, NET (Table
ACCOUNTS RECEIVABLE, NET (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
ACCOUNTS RECEIVABLE, NET | |
Schedule of accounts receivable allowances | As of December 31, 2016 As of December 31, 2015 (in thousands) Patient Care Products & Consolidated Patient Care Products & Consolidated Accounts receivable, before allowances $ $ $ $ $ $ Allowance for disallowed revenue ) — ) ) — ) Accounts receivable, gross Allowance for doubtful accounts ) ) ) ) ) ) Accounts receivable, net $ $ $ $ $ $ |
Schedule of gross accounts receivable by major payor classification | December 31, 2016 (in thousands) 0-60 61-120 121-180 Over 180 Total Patient Care Commercial insurance $ $ $ $ $ Private pay Medicaid VA Non-Medicare Medicare Products & Services Accounts receivable, before allowances Allowance for disallowed revenue ) Allowance for doubtful accounts ) Accounts receivable, net $ December 31, 2015 (in thousands) 0-60 61-120 121-180 Over 180 Total Patient Care Commercial insurance $ $ $ $ $ Private pay Medicaid VA Non-Medicare Medicare Products & Services Accounts receivable, before allowances Allowance for disallowed revenue ) Allowance for doubtful accounts ) Accounts receivable, net $ |
Schedule of activities by year for the Allowance for Disallowed Revenue and the Allowance for Doubtful Accounts | (in thousands) Allowance for Allowance for Balance at December 31, 2013 $ $ Additions (1) Reductions ) ) Balance at December 31, 2014 Additions (1) Reductions ) ) Balance at December 31, 2015 Additions (1) Reductions ) ) Balance at December 31, 2016 $ $ (1)The accounts receivables associated with the Dosteon businesses, which are classified as discontinued operations as of each respective date of the consolidated financial statements, were not a part of the disposal transactions. Therefore the associated allowances, additions, and reductions are included in the above table. Dosteon’s bad debt expense included in “Income (loss) from discontinued operations, net of income taxes” were $0 million in 2016, $1.7 million in 2015, and $2.6 million in 2014. Dosteon’s disallowed revenue included in “Income (loss) from discontinued operations, net of income taxes” were $0 million in 2016, $(0.2) million in 2015, and $14.0 million in 2014. |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
INVENTORIES | |
Schedule of inventories | As of December 31, (in thousands) 2016 2015 Raw materials $ $ Work in process Finished goods Total inventories $ $ |
PROPERTY PLANT AND EQUIPMENT,34
PROPERTY PLANT AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
PROPERTY PLANT AND EQUIPMENT, NET | |
Schedule of Property, plant and equipment | December 31, (in thousands) 2016 2015 Land $ $ Buildings Furniture and fixtures Machinery and equipment Equipment leased to third parties under operating leases Leasehold improvements Computers and software Total property, plant, and equipment, gross Less: Accumulated depreciation ) ) Total property, plant, and equipment, net $ $ |
Schedule of equipment leased to third parties under operating leases | December 31, (in thousands) 2016 2015 Program equipment $ $ Less: Accumulated depreciation ) ) Net book value $ $ |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
ACQUISITIONS | |
Summary of assets acquired and liabilities assumed | Year Ended December 31, (in thousands) 2015 Net cash $ Issuance of seller notes Other working capital adjustments Aggregate purchase price Net accounts receivable Inventories Intangible assets, excluding goodwill Other assets Liabilities assumed ) Net assets acquired Goodwill $ |
GOODWILL AND OTHER INTANGIBLE36
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Schedule of goodwill allocated to the Company's reportable segments | Patient Care Products & Services (in thousands) Gross Accumulated Gross Accumulated Total Balance at December 31, 2014 $ $ ) $ $ — $ Additions due to acquisitions — — — Adjustments to pre-2015 acquisitions — — Goodwill impairment — ) — — ) Balance at December 31, 2015 ) — Goodwill impairment — — — ) ) Balance at December 31, 2016 $ $ ) $ $ ) $ |
Schedule of balances related to intangible assets | December 31, 2016 (in thousands) Gross Carrying Accumulated Accumulated Net Carrying Customer Lists $ $ ) $ — $ Trade Name ) — Patents and Other Intangibles ) — Definite-lived intangible assets ) — Indefinite life - Trade Name — ) Total other intangible assets $ $ ) $ ) $ December 31, 2015 (in thousands) Gross Carrying Accumulated Accumulated Net Carrying Customer Lists $ $ ) $ — $ Trade Name ) — Patents and Other Intangibles ) — Definite-lived intangible assets ) — Indefinite life - Trade Name — ) Total other intangible assets $ $ ) $ ) $ |
Schedule of estimated aggregate amortization expense for definite-lived intangible assets | (in thousands) December 31, 2017 $ 2018 2019 2020 2021 Thereafter Total $ |
OTHER CURRENT ASSETS AND OTHE37
OTHER CURRENT ASSETS AND OTHER ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
OTHER CURRENT ASSETS AND OTHER ASSETS | |
Schedule of Other current assets | As of December 31, (in thousands) 2016 2015 Non-trade receivables $ $ Prepaid rent Prepaid maintenance Restricted cash Prepaid other Prepaid education and training Prepaid insurance Other Total other current assets $ $ |
Schedule of Other assets | As of December 31, (in thousands) 2016 2015 Cash surrender value of COLI $ $ Non-trade receivables Deposits Other Total other assets $ $ |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
INCOME TAXES | |
Schedule of components of (benefit) provision for income taxes | Year Ended December 31, (in thousands) 2016 2015 2014 Current: Federal $ ) $ ) $ State Total Current ) ) Deferred: Federal ) ) State ) ) Total Deferred ) ) (Benefit) provision for income taxes from continuing operations $ ) $ ) $ Income tax provision (benefit) attributable to discontinued operations $ $ ) $ ) |
Schedule of reconciliation of the federal statutory tax rate to our effective tax rate applicable to continuing operations | Year Ended December 31, 2016 2015 2014 Federal statutory tax rate- (benefit) provision )% )% )% State and local income taxes )% )% )% Change in valuation allowance — % % % Domestic manufacturing deduction — % — % )% Research and development credit — % — % )% Change in uncertain tax positions )% )% % Goodwill impairment % % — % Other % % % Effective tax rate applicable to continuing operations )% )% % |
Schedule of components of net deferred income tax asset and liability | As of December 31, (in thousands) 2016 2015 Deferred tax liabilities: Goodwill amortization $ $ Intangible amortization Prepaid expenses Sec. 481(a) adjustments Other — Deferred tax assets: Deferred benefit plan compensation Provision for doubtful accounts and disallowed revenues Property, plant and equipment Net operating loss carryforwards Accrued expenses Inventory reserves Restricted stock Capital leases Deferred rent Refund liabilities Interest on seller notes Other Valuation allowance ) ) Net deferred tax asset $ $ |
Schedule of activity in the valuation allowance | (in thousands) Year Balance at Acquisitions Provision Released Balance at 2016 $ $ — $ $ $ 2015 $ $ — $ $ $ 2014 $ $ — $ $ $ |
Summary of reconciliation of liability for unrecognized tax benefits | (in thousands) 2016 2015 2014 Unrecognized tax benefits, at beginning of the year $ $ $ Additions for tax positions related to the current year Additions for tax positions of prior years — — Decrease related to prior year positions — ) ) Decrease for lapse of applicable statute of limitations ) ) ) Unrecognized tax benefits, at end of the year $ $ $ |
EMPLOYEE BENEFITS (Tables)
EMPLOYEE BENEFITS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
EMPLOYEE BENEFITS | |
Schedule of Change in Benefit Obligation | Benefit (in thousands) Obligation Benefit obligation at December 31, 2014 $ Service cost Interest cost Payments ) Actuarial gain ) Benefit obligation at December 31, 2015 Service cost Interest cost Payments ) Actuarial loss Benefit obligation at December 31, 2016 $ Unfunded status $ Unamortized net (gain) loss — Net amount recognized $ |
Schedule of Amounts Recognized in the Consolidated Balance Sheets | As of December 31, (in thousands) 2016 2015 Current accrued expenses and other current liabilities $ $ Non-current other liabilities Total accrued liabilities $ $ |
Schedule of weighted average assumptions were used to determine the benefit obligation | 2016 2015 2014 2013 Discount rate % % % % Average rate of increase in compensation % % % % |
Schedule of Future payments under the Plan | (in thousands) 2017 $ 2018 2019 2020 2021 Thereafter Total $ |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
STOCK-BASED COMPENSATION | |
Summary of restricted stock units, performance-based stock units, and weighted average grant date fair values | Employee Service-Based Employee Performance- Director Awards Units Weighted Units Weighted Units Weighted Nonvested at December 31, 2014 $ $ $ Granted Vested ) ) ) Forfeited ) ) ) Nonvested at December 31, 2015 Granted Vested ) ) ) Forfeited ) ) — — Nonvested at December 31, 2016 $ $ $ |
Summary of option activity and weighted average exercise prices | (dollars in thousands) Director Awards Weighted Average Exercise Price Shares Weighted Average Aggregate Weighted Average Outstanding at December 31, 2014 $ $ — — Exercised ) — — Outstanding at December 31, 2015 — $ — $ — — |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
LEASES | |
Schedule of future minimum rental payments, by year and in the aggregate, under operating and financing obligations with terms of one year or more | Future minimum rental payments, by year and in the aggregate, under operating and financing obligations with terms of one year or more at December 31, 2016 are as follows: (in thousands) Operating Capital 2017 $ $ 2018 2019 2020 2021 — Thereafter — Total $ $ Future minimum rental payments, by year and in the aggregate, under operating and financing obligations with terms of one year or more at December 31, 2015 are as follows: (in thousands) Operating Capital 2016 $ $ 2017 2018 2019 2020 — Thereafter — Total $ $ |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
LONG-TERM DEBT | |
Schedule of long-term debt | (in thousands) 2016 2015 Term loan $ $ Term loan B — Revolving credit facility — Senior notes due 2018 — Seller notes Financing leases and other Total debt before unamortized discount and debt issuance costs Unamortized discount ) ) Debt issuance costs, net ) ) Total debt $ $ Reported as: Current portion of long-term debt $ $ Long-term debt Total debt $ $ |
Schedule of aggregate contractual payments associated with the financing obligations | (in thousands) December 31, 2016 2017 $ 2018 2019 2020 2021 Thereafter Less: amount representing interest ) Total $ (in thousands) December 31, 2015 2016 $ 2017 2018 2019 2020 Thereafter Less: amount representing interest ) Total $ |
Schedule of maturities of long-term debt | Maturities of long-term debt at December 31, 2016 and the years thereafter are as follows: (in thousands) December 31, 2017 $ 2018 2019 2020 2021 Thereafter Total debt before unamortized discount and debt issuance costs, net Unamortized discount ) Debt issuance costs, net ) Total long-term debt $ |
ACCRUED EXPENSES, OTHER CURRE43
ACCRUED EXPENSES, OTHER CURRENT LIABILITIES AND OTHER LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
ACCRUED EXPENSES, OTHER CURRENT LIABILITIES AND OTHER LIABILITIES | |
Schedule of accrued expenses and other current liabilities | As of December 31, (in thousands) 2016 2015 Patient prepayments deposits and refunds payable $ $ Accrued sales taxes and other taxes Accrued professional fees Insurance and self-insurance accruals Other current liabilities Total $ $ |
Schedule of other liabilities | As of December 31, (in thousands) 2016 2015 Supplemental executive retirement plan obligations $ $ Unrecognized tax benefits Long-term insurance accruals Deferred tenant improvement allowances Deferred rent Asset retirement obligations Other Total $ $ |
SEGMENT AND RELATED INFORMATI44
SEGMENT AND RELATED INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
SEGMENT AND RELATED INFORMATION | |
Summary of financial information concerning the Company's operating segments | (in thousands) Patient Care Products & Corporate Consolidating Total 2016 Net revenue Third party $ $ $ — $ — $ Intersegments — — ) — Total net revenue — ) Material costs Third party suppliers — — Intersegments — ) — Total material costs — ) Personnel costs — — Other expenses — Depreciation & amortization — Impairment of intangible assets — — — Income (loss) from operations ) ) — ) Interest expense (income), net ) — Extinguishment of debt — — — Income (loss) from continuing operations before income taxes ) ) — ) Benefit for income taxes — — ) — ) Income (loss) from continuing operations $ $ ) $ ) $ — $ ) EBITDA $ $ ) $ ) $ — $ ) Total assets — Capital expenditures — (in thousands) Patient Care Products & Corporate Consolidating Total 2015 Net revenue Third party $ $ $ — $ — $ Intersegments — — ) — Total net revenue — ) Material costs Third party suppliers — — Intersegments — ) — Total material costs — ) Personnel costs — — Other expenses — Depreciation and amortization — Impairment of intangible assets (Loss) income from operations ) ) — ) Interest expense (income), net ) — Extinguishment of debt — — — (Loss) income from continuing operations before income taxes ) ) — ) Benefit for income taxes — — ) — ) (Loss) income from continuing operations $ ) $ $ ) $ — $ ) EBITDA $ ) $ $ ) $ — $ ) Total assets — Capital expenditures — (in thousands) Patient Products & Corporate Consolidating Total 2014 Net revenue Third party $ $ $ — $ — $ Intersegments — — ) — Total net revenue — ) Material costs Third party suppliers — — Intersegments — ) — Total material costs — ) Personnel costs — — Other expenses — Depreciation and amortization — Impairment of intangible assets — — — Income (loss) from operations ) — Interest expense (income), net ) — Income (loss) from continuing operations before income taxes ) — ) Provision for income taxes — — — Income (loss) from continuing operations $ $ $ ) $ — $ ) EBITDA $ $ $ ) $ — $ Total assets — Capital expenditures — |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
DISCONTINUED OPERATIONS | |
Schedule of assets held for sale and operating results of discontinued operations | Year Ended December 31, (in thousands) 2016 2015 2014 Net revenue $ — $ $ Income (loss) before income taxes from discontinued operations ) ) Income tax provision (benefit) ) ) Income (loss) from discontinued operations, net of income taxes $ $ ) $ ) |
SUPPLEMENTAL CASH FLOW INFORM46
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
SUPPLEMENTAL CASH FLOW INFORMATION | |
Schedule of supplemental disclosure requirements for the statements of cash flows | Year Ended December 31, (in thousands) 2016 2015 2014 Cash paid during the period for: Interest paid $ $ $ Income taxes (refunds received) paid $ ) $ $ Non-cash financing and investing activities: Issuance of seller notes in connection with acquisitions $ — $ $ Additions to property, plant and equipment acquired through financing obligations $ $ $ Retirements of financed property, plant and equipment and related financing obligations $ $ $ Purchase of property, plant and equipment in accounts payable $ $ $ |
SUBSEQUENT EVENTS (Tables)
SUBSEQUENT EVENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
SUBSEQUENT EVENTS | |
Schedule of performance-based Restricted Stock Units based on the achievement of the performance measure | Percent of Target CAGR Result on 3rd Performance-Based Anniversary of Grant Date Restricted Stock Units Earned Threshold 10% 50% Target 20% 100% Maximum 30% or above 200% |
QUARTERLY FINANCIAL INFORMATI48
QUARTERLY FINANCIAL INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
QUARTERLY FINANCIAL INFORMATION | |
Summary of quarterly financial information | HANGER, INC. QUARTERLY CONSOLIDATED BALANCE SHEETS (dollars in thousands, except par value and share amounts) (Unaudited) As of As of As of March 31, June 30, September 30, 2016 2016 2016 ASSETS Current assets: Cash and cash equivalents $ $ $ Net accounts receivable, less allowance for doubtful accounts of $16,296 at March 31, 2016, $15,241 at June 30, 2016, and $14,418 at September 30, 2016 Inventories Income taxes receivable Other current assets Total current assets Non-current assets: Property, plant and equipment, net Goodwill Other intangible assets, net Deferred income taxes Other assets Total assets $ $ $ LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Current portion of long-term debt $ $ $ Accounts payable Accrued expenses and other current liabilities Accrued interest payable Accrued compensation related costs Total current liabilities Long-term liabilities: Long-term debt, less current portion Other liabilities Total liabilities Shareholders’ Equity: Common stock, $.01 par value; 60,000,000 shares authorized, 36,044,247 shares, 36,144,560 shares, and 36,158,347 shares issued and 35,901,426 shares, 36,001,739 shares and 36,015,526 shares outstanding at March 31, June 30, and September 30, 2016, respectively Additional paid-in capital Accumulated other comprehensive loss ) ) ) Retained deficit ) ) ) Treasury stock, at cost 142,821 shares at March 31, June 30, and September 30, 2016, respectively ) ) ) Total shareholders’ equity Total liabilities and shareholders’ equity $ $ $ HANGER, INC. QUARTERLY CONSOLIDATED BALANCE SHEETS (dollars in thousands, except par value and share amounts) (Unaudited) As of As of As of March 31, June 30, September 30, 2015 2015 2015 ASSETS Current assets: Cash and cash equivalents $ $ $ Net accounts receivable, less allowance for doubtful accounts of $13,225 at March 31, 2015, $14,033 at June 30, 2015, and $14,419 at September 30, 2015 Inventories Income taxes receivable Other current assets Assets held for sale — — Total current assets Non-current assets: Property, plant and equipment, net Goodwill Other intangible assets, net Deferred income taxes Other assets Total assets $ $ $ LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Current portion of long-term debt $ $ $ Accounts payable Accrued expenses and other current liabilities Accrued interest payable Accrued compensation related costs Total current liabilities Long-term liabilities: Long-term debt, less current portion Other liabilities Total liabilities Shareholders’ Equity: Common stock, $.01 par value; 60,000,000 shares authorized, 35,765,547 shares, 35,816,784 shares, and 35,825,040 shares issued and 35,622,726 shares, 35,673,963 shares and 35,682,219 shares outstanding at March 31, June 30, and September 30, 2015, respectively Additional paid-in capital Accumulated other comprehensive loss ) ) ) Retained earnings Treasury stock, at cost 141,154 shares at March 31, 2015, 142,821 at June 30, 2015 and 142,821 at September 30, 2015 ) ) ) Total shareholders’ equity Total liabilities and shareholders’ equity $ $ $ HANGER, INC. QUARTERLY CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (dollars and shares in thousands, except per share amounts) (Unaudited) Three Months Three Months Six Months Three Months Nine Months Three Months March 31, June 30, June 30, September 30, September 30, December 31, 2016 2016 2016 2016 2016 2016 Net revenue $ $ $ $ $ $ Material costs Personnel costs Other operating costs General and administrative expenses Professional accounting and legal fees Depreciation and amortization Impairment of intangible assets — — — — — (Loss) income from operations ) ) ) ) Interest expense, net Loss on extinguishment of debt — ) ) — Loss from continuing operations before income taxes ) ) ) ) ) ) Benefit for income taxes ) ) ) ) ) ) Loss from continuing operations ) ) ) ) ) ) Income (loss) from discontinued operations, net of income taxes — ) Net loss $ ) $ ) $ ) $ ) $ ) $ ) Other comprehensive loss: Unrealized income (loss) on SERP, net of tax $ $ $ $ $ $ ) Comprehensive loss $ ) $ ) $ ) $ ) $ ) $ ) Basic and Diluted Per Common Share Data: Loss from continuing operations $ ) $ ) $ ) $ ) $ ) $ ) Income from discontinued operations, net of income taxes — — Basic loss per share $ ) $ ) $ ) $ ) $ ) $ ) Shares used to compute basic per common share amounts HANGER, INC. QUARTERLY CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (dollars and shares in thousands, except per share amounts) (Unaudited) Three Months Three Months Six Months Three Months Nine Months Three Months March 31, June 30, June 30, September 30, September 30, December 31, 2015 2015 2015 2015 2015 2015 Net revenue $ $ $ $ $ $ Material costs Personnel costs Other operating costs General and administrative expenses Professional accounting and legal fees Depreciation and amortization Impairment of intangible assets — — — (Loss) income from operations ) ) Interest expense, net Loss on extinguishment of debt — — — — — (Loss) income from continuing operations ) ) ) ) Provision (benefit) for income taxes ) (Loss) income from continuing operations ) ) ) ) (Loss) income from discontinued operations, net of income taxes ) ) ) — ) ) Net (loss) income $ ) $ $ ) $ $ ) $ ) Other comprehensive (loss) income: Unrealized income on SERP, net of tax $ $ $ $ $ $ Comprehensive (loss) income $ ) $ $ ) $ $ ) $ ) Basic Per Common Share Data: (Loss) income from operations $ ) $ $ ) $ $ ) $ ) (Loss) income from discontinued operations, net of income taxes ) ) ) — ) ) Basic (loss) income per share $ ) $ $ ) $ $ ) $ ) Shares used to compute basic per common share amounts Diluted Per Common Share Data: (Loss) income from continuing operations $ ) $ $ ) $ $ ) $ ) (Loss) income from discontinued operations, net of income taxes ) ) ) — ) ) Diluted (loss) income per share $ ) $ $ ) $ $ ) $ ) Shares used to compute diluted per common share amounts HANGER, INC. QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (Unaudited) Three Months Ended Six Months Ended Nine Months Ended March 31, 2016 June 30, 2016 September 30, 2016 Cash flows from operating activities: Net loss $ ) $ ) $ ) Income from discontinued operations, net of income taxes — Loss from continuing operations ) ) ) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization Provision for doubtful accounts Stock-based compensation expense Amortization of debt issuance costs Loss (gain) on extinguishment of debt — ) Gain on sale and disposal of fixed assets ) ) ) Changes in operating assets and liabilities, net of effects of acquired companies: Net accounts receivable Inventories ) ) ) Other current assets ) ) Income taxes ) ) Accounts payable ) Accrued expenses and accrued interest payable ) Accrued compensation related costs ) ) ) Other liabilities ) ) ) Net cash (used in) provided by operating activities - continuing operations ) Net cash used in operating activities - discontinued operations — ) ) Net cash (used in) provided by operating activities ) Cash flows from investing activities: Purchase of property, plant and equipment ) ) ) Purchase of equipment leased to third parties under operating leases ) ) ) Restricted cash Purchase of company-owned life insurance investment ) ) ) Proceeds from sale of property, plant and equipment Other investing activities, net ) ) ) Net cash used in investing activities - continuing operations ) ) ) Net cash provided by investing activities - discontinued operations — Net cash used in investing activities ) ) ) Cash flows from financing activities: Borrowings under term loan — — Repayment of term loan ) ) ) Borrowings under revolving credit agreement — — Repayments under revolving credit agreement — — ) Payment of senior notes — — ) Payment on seller’s note and other contingent consideration ) ) ) Payment of capital lease obligations ) ) ) Payment of debt issuance costs and fees ) ) ) Net cash used in financing activities - continuing operations ) ) ) Decrease in cash and cash equivalents ) ) ) Cash and cash equivalents, at beginning of year Cash and cash equivalents, at end of period $ $ $ SUPPLEMENTAL CASH FLOW FINANCIAL INFORMATION: Cash paid during the period for: Interest $ $ $ Income taxes paid (refunds received) ) Non-cash financing and investing activities: Additions to property, plant and equipment acquired through finance obligations Retirements of financed property, plant and equipment Purchase of property, plant and equipment in accounts payable HANGER, INC. QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (Unaudited) Three Months Ended Six Months Ended Nine Months Ended March 31, 2015 June 30, 2015 September 30, 2015 Cash flows from operating activities: Net loss $ ) $ ) $ ) Loss from discontinued operations, net of income taxes ) ) ) Loss from continuing operations ) ) ) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization Provision for doubtful accounts Impairment of long-lived and intangible assets — — Stock-based compensation expense Benefit for deferred income taxes ) ) ) Amortization of debt issuance costs Gain on sale and disposal of fixed assets ) ) ) Changes in operating assets and liabilities, net of effects of acquired companies: Net accounts receivable ) Inventories ) ) ) Other current assets ) Income taxes ) ) ) Accounts payable Accrued expenses and accrued interest payable Accrued compensation related costs ) ) ) Other liabilities Net cash (used in) provided by operating activities - continuing operations ) Net cash used in operating activities - discontinued operations ) ) ) Net cash (used in) provided by operating activities ) ) Cash flows from investing activities: Purchase of property, plant and equipment ) ) ) Purchase of equipment leased to third parties under operating leases ) ) ) Acquisitions, net of cash acquired ) ) ) Restricted cash Purchase of company-owned life insurance investment ) ) ) Proceeds from sale of property, plant and equipment Other investing activities, net ) ) ) Net cash used in investing activities - continuing operations ) ) ) Net cash provided by investing activities - discontinued operations Net cash used in investing activities ) ) ) Cash flows from financing activities: Repayment of term loan ) ) ) Borrowings under revolving credit agreement Repayments under revolving credit agreement ) ) ) Payment on seller’s note and other contingent consideration ) ) ) Payment of capital lease obligations ) ) ) Payment of debt issuance costs and fees ) ) ) Net cash provided by financing activities - continuing operations Increase in cash and cash equivalents Cash and cash equivalents, at beginning of year Cash and cash equivalents, at end of period $ $ $ SUPPLEMENTAL CASH FLOW FINANCIAL INFORMATION: Cash paid during the period for: Interest $ $ $ Income taxes paid Non-cash financing and investing activities: Issuance of seller notes in connection with acquisitions Additions to property, plant and equipment acquired through finance obligations Retirements of financed property, plant and equipment Purchase of property, plant and equipment in accounts payable |
THE COMPANY (Details)
THE COMPANY (Details) | 12 Months Ended | 36 Months Ended |
Dec. 31, 2016segmentstateitemlocationclinic | Dec. 31, 2016statelocationclinic | |
THE COMPANY | ||
Number of segments | segment | 2 | |
Minimum number of O&P provider network of clinics managed | clinic | 706 | 706 |
Number of O&P patient-care clinic locations | 115 | 115 |
Number of states in which patient-care clinics are located | state | 45 | 45 |
Number of patient care clinics opened | 68 | |
Number of patient care clinics closed | 129 | |
Number of satellite locations opened | 28 | |
Number of satellite locations closed | 33 | |
Minimum number of long-term care facilities and other sub-acute rehabilitation providers served | item | 4,000 |
SIGNIFICANT ACCOUNTING POLICI50
SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Patient Care | |||
Revenue Recognition | |||
Government reimbursement to net revenue (as a percent) | 54.10% | 53.40% | 50.90% |
SIGNIFICANT ACCOUNTING POLICI51
SIGNIFICANT ACCOUNTING POLICIES - Other Operating Costs and General (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Other Operating Costs | |||
Marketing costs, including advertising | $ 4 | $ 3.9 | $ 3.4 |
SIGNIFICANT ACCOUNTING POLICI52
SIGNIFICANT ACCOUNTING POLICIES - General and Administrative Expenses (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
General and Administrative Expenses | |||
Advertising costs | $ 0.6 | $ 0.6 | $ 0.7 |
SIGNIFICANT ACCOUNTING POLICI53
SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable, net (Details) | 12 Months Ended |
Dec. 31, 2016 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Minimum period of receivable balances for which an evaluation of its collectability is performed | 1 year |
Adjudication period of receivable balances for which an evaluation of its collectability is performed | 12 months |
SIGNIFICANT ACCOUNTING POLICI54
SIGNIFICANT ACCOUNTING POLICIES - Inventories (Details) - USD ($) $ in Thousands | 12 Months Ended | |||||||
Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |
Inventories | ||||||||
Inventories | $ 68,225 | $ 68,478 | $ 74,563 | $ 71,092 | $ 69,163 | $ 74,687 | $ 73,041 | $ 73,113 |
WIP inventory | 9,009 | 8,914 | ||||||
Raw material inventory | 21,277 | 22,134 | ||||||
Hanger Clinics | ||||||||
Inventories | ||||||||
Inventories | 29,100 | 30,100 | ||||||
Products & Services | ||||||||
Inventories | ||||||||
Inventories | $ 39,100 | $ 38,400 | ||||||
Percentage of raw materials inventory purchased from the Products and Services segment | 69.00% | 52.00% |
SIGNIFICANT ACCOUNTING POLICI55
SIGNIFICANT ACCOUNTING POLICIES - Financial Instruments (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
FAIR VALUE MEASUREMENTS | |||
Outstanding amount of debt | $ 489,355 | $ 572,660 | |
Redemption of Senior Notes | $ 200,000 | 200,000 | |
Credit Agreement | Term Loan | |||
FAIR VALUE MEASUREMENTS | |||
Outstanding amount of debt | 180,000 | 199,688 | |
Credit Agreement | Revolving Credit Facility | |||
FAIR VALUE MEASUREMENTS | |||
Outstanding amount of debt | 132,000 | ||
Senior Notes due 2018 | |||
FAIR VALUE MEASUREMENTS | |||
Outstanding amount of debt | 200,000 | ||
Sellers notes | |||
FAIR VALUE MEASUREMENTS | |||
Outstanding amount of debt | $ 11,110 | 19,838 | |
Recurring basis | Level 1 | Money market funds | |||
FAIR VALUE MEASUREMENTS | |||
Market price (in dollars per share) | $ 1 | ||
Recurring basis | Level 1 | Money market funds | Other current assets | |||
FAIR VALUE MEASUREMENTS | |||
Fair value of assets | $ 2,300 | 3,900 | |
Recurring basis | Level 2 | Credit Agreement | Term Loan | |||
FAIR VALUE MEASUREMENTS | |||
Fair value of the debt | 172,600 | 186,200 | |
Recurring basis | Level 2 | Credit Agreement | Term Loan B | |||
FAIR VALUE MEASUREMENTS | |||
Outstanding amount of debt | 280,000 | 0 | |
Fair value of the debt | $ 278,600 | ||
Recurring basis | Level 2 | Credit Agreement | Revolving Credit Facility | |||
FAIR VALUE MEASUREMENTS | |||
Fair value of the debt | 121,600 | ||
Recurring basis | Level 2 | Senior Notes due 2018 | |||
FAIR VALUE MEASUREMENTS | |||
Fair value of the debt | $ 179,200 |
SIGNIFICANT ACCOUNTING POLICI56
SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment, Net (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Furniture and fixtures | |
Property, Plant and Equipment, Net | |
Estimated life | 5 years |
Equipment and information systems | |
Property, Plant and Equipment, Net | |
Estimated life | 5 years |
Buildings | Minimum | |
Property, Plant and Equipment, Net | |
Estimated life | 10 years |
Buildings | Maximum | |
Property, Plant and Equipment, Net | |
Estimated life | 40 years |
Leasehold improvements | Maximum | |
Property, Plant and Equipment, Net | |
Estimated life | 10 years |
SIGNIFICANT ACCOUNTING POLICI57
SIGNIFICANT ACCOUNTING POLICIES - Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Jun. 30, 2015 | Mar. 31, 2015 |
Goodwill and Other Intangible Assets, Net | |||||||||||||
Non-cash goodwill impairment charge | $ 85,964 | $ 382,860 | |||||||||||
Goodwill | $ 718,503 | $ 249,678 | $ 335,642 | $ 718,503 | $ 718,503 | 249,678 | 335,642 | $ 710,053 | $ 335,642 | $ 335,642 | $ 335,642 | $ 718,413 | $ 718,343 |
Impairment of intangible assets | 86,164 | 384,996 | 812 | $ 812 | 86,164 | 385,807 | 223 | ||||||
Amortization expense | 13,900 | 13,800 | 7,400 | ||||||||||
Patient Care | |||||||||||||
Goodwill and Other Intangible Assets, Net | |||||||||||||
Non-cash goodwill impairment charge | 382,860 | ||||||||||||
Goodwill | 625,011 | 625,011 | 625,011 | 625,011 | 616,572 | ||||||||
Impairment of intangible assets | 382,860 | ||||||||||||
Patient Care | Dosteon | |||||||||||||
Goodwill and Other Intangible Assets, Net | |||||||||||||
Goodwill | 8,400 | ||||||||||||
Therapeutic | |||||||||||||
Goodwill and Other Intangible Assets, Net | |||||||||||||
Non-cash goodwill impairment charge | 64,900 | ||||||||||||
Therapeutic | Trade Names | |||||||||||||
Goodwill and Other Intangible Assets, Net | |||||||||||||
Accumulated Impairment | 200 | 2,100 | $ 800 | ||||||||||
Distribution | |||||||||||||
Goodwill and Other Intangible Assets, Net | |||||||||||||
Non-cash goodwill impairment charge | 21,100 | ||||||||||||
Products & Services | |||||||||||||
Goodwill and Other Intangible Assets, Net | |||||||||||||
Non-cash goodwill impairment charge | 85,964 | ||||||||||||
Goodwill | $ 139,299 | $ 139,299 | 139,299 | 139,299 | 139,289 | ||||||||
Impairment of intangible assets | $ 86,164 | 2,947 | $ 223 | ||||||||||
Customer Lists | Minimum | |||||||||||||
Goodwill and Other Intangible Assets, Net | |||||||||||||
Amortized period of intangible assets | 4 years | ||||||||||||
Customer Lists | Maximum | |||||||||||||
Goodwill and Other Intangible Assets, Net | |||||||||||||
Amortized period of intangible assets | 10 years | ||||||||||||
Trade Names | Minimum | |||||||||||||
Goodwill and Other Intangible Assets, Net | |||||||||||||
Amortized period of intangible assets | 1 year | ||||||||||||
Trade Names | Maximum | |||||||||||||
Goodwill and Other Intangible Assets, Net | |||||||||||||
Amortized period of intangible assets | 10 years | ||||||||||||
Trade Names | Intangible assets with definite lives | Minimum | |||||||||||||
Goodwill and Other Intangible Assets, Net | |||||||||||||
Amortized period of intangible assets | 1 year | ||||||||||||
Trade Names | Intangible assets with definite lives | Maximum | |||||||||||||
Goodwill and Other Intangible Assets, Net | |||||||||||||
Amortized period of intangible assets | 10 years | ||||||||||||
Non-compete agreements | Minimum | |||||||||||||
Goodwill and Other Intangible Assets, Net | |||||||||||||
Amortized period of intangible assets | 2 years | ||||||||||||
Non-compete agreements | Maximum | |||||||||||||
Goodwill and Other Intangible Assets, Net | |||||||||||||
Amortized period of intangible assets | 5 years | ||||||||||||
Other definite-lived intangible assets | Maximum | |||||||||||||
Goodwill and Other Intangible Assets, Net | |||||||||||||
Amortized period of intangible assets | 17 years | ||||||||||||
Change in estimated useful lives | Customer Lists | |||||||||||||
Goodwill and Other Intangible Assets, Net | |||||||||||||
Amortization expense | $ 7,000 | $ 6,000 | |||||||||||
Change in estimated useful lives | Customer Lists | Patient Care | |||||||||||||
Goodwill and Other Intangible Assets, Net | |||||||||||||
Amortized period of intangible assets | 10 years | 4 years | |||||||||||
Change in estimated useful lives | Customer Lists | Products & Services | |||||||||||||
Goodwill and Other Intangible Assets, Net | |||||||||||||
Amortized period of intangible assets | 14 years | 10 years |
SIGNIFICANT ACCOUNTING POLICI58
SIGNIFICANT ACCOUNTING POLICIES - Self-Insurance Reserves (Details) $ in Millions | Dec. 31, 2016USD ($) |
SIGNIFICANT ACCOUNTING POLICIES | |
Maximum amount of stop-loss coverage on claims | $ 0.4 |
Maximum amount of liability claims for workers' compensation, product, professional and general per individual incident | $ 0.5 |
SIGNIFICANT ACCOUNTING POLICI59
SIGNIFICANT ACCOUNTING POLICIES - Interest Expense, Net (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Interest Expense, Net | |||
Interest expense net of interest income | $ 0.1 | $ 0.1 | $ 0.1 |
SIGNIFICANT ACCOUNTING POLICI60
SIGNIFICANT ACCOUNTING POLICIES - Stock Based Compensation (Details) shares in Millions | 12 Months Ended |
Dec. 31, 2016planshares | |
Stock-Based Compensation | |
Number of stock-based compensation plans | plan | 1 |
Number of shares of available for future issuance | shares | 2.1 |
Restricted stock units | Minimum | |
Stock-Based Compensation | |
Period for vesting of awards | 1 year |
Restricted stock units | Maximum | |
Stock-Based Compensation | |
Period for vesting of awards | 4 years |
SIGNIFICANT ACCOUNTING POLICI61
SIGNIFICANT ACCOUNTING POLICIES - Segment Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2016USD ($)segment | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Segment Information | |||||||||||||||
Number of segments | segment | 2 | ||||||||||||||
Revenue | $ 281,053 | $ 260,084 | $ 264,456 | $ 236,461 | $ 285,653 | $ 275,182 | $ 272,836 | $ 233,501 | $ 500,917 | $ 506,337 | $ 761,001 | $ 781,519 | $ 1,042,054 | $ 1,067,172 | $ 1,012,100 |
Intersegments | |||||||||||||||
Segment Information | |||||||||||||||
Revenue | $ (21,000) |
EARNINGS PER SHARE - Paragaphs
EARNINGS PER SHARE - Paragaphs (Details) - shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Earnings per share | |||
Total anti-dilutive shares (in shares) | 342,369 | 46,870 | 8,088 |
Unvested restricted stock units and unexercised options | |||
Earnings per share | |||
Total anti-dilutive shares (in shares) | 145,497 | 102,288 | 256,880 |
EARNINGS PER SHARE - Table (Det
EARNINGS PER SHARE - Table (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
EARNINGS PER SHARE | |||||||||||||||
Net loss from continuing operations applicable to common shareholders | $ (81,113) | $ (7,856) | $ (900) | $ (17,537) | $ (315,124) | $ 3,080 | $ 7,930 | $ (15,003) | $ (18,437) | $ (7,073) | $ (26,293) | $ (3,993) | $ (107,406) | $ (319,117) | $ (3,020) |
Income (loss) from discontinued operations, net of income taxes | (15) | 378 | 572 | (664) | (6,343) | (967) | 572 | (7,310) | 950 | (7,310) | 935 | (7,974) | (15,946) | ||
Net loss | $ (81,128) | $ (7,478) | $ (328) | $ (17,537) | $ (315,788) | $ 3,080 | $ 1,587 | $ (15,970) | $ (17,865) | $ (14,383) | $ (25,343) | $ (11,303) | $ (106,471) | $ (327,091) | $ (18,966) |
Shares of common stock outstanding used to compute basic per common share amounts | 35,697 | 35,678 | 35,661 | 35,498 | 35,579 | 35,614 | 35,933,222 | 35,635,448 | 35,309,478 | ||||||
Shares used to compute diluted per common share amounts | 35,697 | 35,748 | 35,733 | 35,498 | 35,579 | 35,614 | 35,933,222 | 35,635,448 | 35,309,478 | ||||||
Basic and Diluted: | |||||||||||||||
Loss from continuing operations | $ (2.25) | $ (0.22) | $ (0.03) | $ (0.49) | $ (0.51) | $ (0.73) | $ (2.99) | $ (8.96) | $ (0.09) | ||||||
Income (loss) from discontinued operations, net of income taxes | 0.01 | 0.02 | 0.01 | 0.02 | 0.03 | (0.22) | (0.45) | ||||||||
Basic and diluted loss per share | $ (2.25) | $ (0.21) | $ (0.01) | $ (0.49) | $ (0.50) | $ (0.71) | $ (2.96) | $ (9.18) | $ (0.54) |
ACCOUNTS RECEIVABLE, NET - Allo
ACCOUNTS RECEIVABLE, NET - Allowances (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Accounts Receivable, net | ||||||||||
Accounts receivable, before allowances | $ 221,220 | $ 270,925 | ||||||||
Allowance for disallowed revenue | 61,137 | 81,306 | $ 87,192 | $ 52,277 | ||||||
Accounts receivable, gross | 160,083 | 189,619 | ||||||||
Allowance for doubtful accounts | 15,521 | $ 14,418 | $ 15,241 | $ 16,296 | 15,027 | $ 14,419 | $ 14,033 | $ 13,225 | $ 9,944 | $ 6,472 |
Accounts receivable, net | 144,562 | $ 139,203 | $ 145,605 | $ 149,816 | 174,592 | $ 166,058 | $ 163,635 | $ 159,244 | ||
Patient Care | ||||||||||
Accounts Receivable, net | ||||||||||
Accounts receivable, before allowances | 193,835 | 245,923 | ||||||||
Allowance for disallowed revenue | 61,137 | 81,306 | ||||||||
Accounts receivable, gross | 132,698 | 164,617 | ||||||||
Allowance for doubtful accounts | 10,575 | 13,371 | ||||||||
Accounts receivable, net | 122,123 | 151,246 | ||||||||
Products & Services | ||||||||||
Accounts Receivable, net | ||||||||||
Accounts receivable, before allowances | 27,385 | 25,002 | ||||||||
Accounts receivable, gross | 27,385 | 25,002 | ||||||||
Allowance for doubtful accounts | 4,946 | 1,656 | ||||||||
Accounts receivable, net | $ 22,439 | $ 23,346 |
ACCOUNTS RECEIVABLE, NET - Conc
ACCOUNTS RECEIVABLE, NET - Concentration Risk (Details) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Federal Government | Gross Accounts Receivable | Credit Concentration Risk | ||
Concentration Risk | ||
Concentration risk (as a percent) | 48.30% | 49.60% |
ACCOUNTS RECEIVABLE, NET - Agei
ACCOUNTS RECEIVABLE, NET - Ageing Categories (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Accounts Receivable, net | ||||||||||
0-60 Days | $ 116,146 | $ 130,193 | ||||||||
61-120 Days | 28,156 | 36,269 | ||||||||
121-180 Days | 15,082 | 18,680 | ||||||||
Over 180 Days | 61,836 | 85,783 | ||||||||
Accounts receivable, before allowances | 221,220 | 270,925 | ||||||||
Allowance for disallowed revenue | (61,137) | (81,306) | $ (87,192) | $ (52,277) | ||||||
Allowance for doubtful accounts | (15,521) | $ (14,418) | $ (15,241) | $ (16,296) | (15,027) | $ (14,419) | $ (14,033) | $ (13,225) | $ (9,944) | $ (6,472) |
Accounts receivable, net | 144,562 | $ 139,203 | $ 145,605 | $ 149,816 | 174,592 | $ 166,058 | $ 163,635 | $ 159,244 | ||
Patient Care | ||||||||||
Accounts Receivable, net | ||||||||||
Accounts receivable, before allowances | 193,835 | 245,923 | ||||||||
Allowance for disallowed revenue | (61,137) | (81,306) | ||||||||
Allowance for doubtful accounts | (10,575) | (13,371) | ||||||||
Accounts receivable, net | 122,123 | 151,246 | ||||||||
Patient Care | Non-medicare | ||||||||||
Accounts Receivable, net | ||||||||||
0-60 Days | 67,040 | 75,427 | ||||||||
61-120 Days | 16,653 | 21,070 | ||||||||
121-180 Days | 8,996 | 11,202 | ||||||||
Over 180 Days | 24,623 | 40,742 | ||||||||
Accounts receivable, before allowances | 117,312 | 148,441 | ||||||||
Patient Care | Commercial insurance | ||||||||||
Accounts Receivable, net | ||||||||||
0-60 Days | 48,568 | 55,173 | ||||||||
61-120 Days | 11,677 | 14,744 | ||||||||
121-180 Days | 6,050 | 7,663 | ||||||||
Over 180 Days | 17,453 | 28,492 | ||||||||
Accounts receivable, before allowances | 83,748 | 106,072 | ||||||||
Patient Care | Private pay | ||||||||||
Accounts Receivable, net | ||||||||||
0-60 Days | 897 | 1,193 | ||||||||
61-120 Days | 547 | 715 | ||||||||
121-180 Days | 441 | 641 | ||||||||
Over 180 Days | 1,034 | 2,718 | ||||||||
Accounts receivable, before allowances | 2,919 | 5,267 | ||||||||
Patient Care | Medicaid | ||||||||||
Accounts Receivable, net | ||||||||||
0-60 Days | 13,937 | 14,714 | ||||||||
61-120 Days | 3,554 | 4,534 | ||||||||
121-180 Days | 2,110 | 2,309 | ||||||||
Over 180 Days | 5,415 | 7,510 | ||||||||
Accounts receivable, before allowances | 25,016 | 29,067 | ||||||||
Patient Care | VA | ||||||||||
Accounts Receivable, net | ||||||||||
0-60 Days | 3,638 | 4,347 | ||||||||
61-120 Days | 875 | 1,077 | ||||||||
121-180 Days | 395 | 589 | ||||||||
Over 180 Days | 721 | 2,022 | ||||||||
Accounts receivable, before allowances | 5,629 | 8,035 | ||||||||
Patient Care | Medicare | ||||||||||
Accounts Receivable, net | ||||||||||
0-60 Days | 32,980 | 39,423 | ||||||||
61-120 Days | 4,813 | 8,765 | ||||||||
121-180 Days | 3,055 | 5,285 | ||||||||
Over 180 Days | 35,675 | 44,009 | ||||||||
Accounts receivable, before allowances | 76,523 | 97,482 | ||||||||
Products & Services | ||||||||||
Accounts Receivable, net | ||||||||||
Accounts receivable, before allowances | 27,385 | 25,002 | ||||||||
Allowance for doubtful accounts | (4,946) | (1,656) | ||||||||
Accounts receivable, net | 22,439 | 23,346 | ||||||||
Products & Services | Trade accounts receivable | ||||||||||
Accounts Receivable, net | ||||||||||
0-60 Days | 16,126 | 15,343 | ||||||||
61-120 Days | 6,690 | 6,434 | ||||||||
121-180 Days | 3,031 | 2,193 | ||||||||
Over 180 Days | 1,538 | 1,032 | ||||||||
Accounts receivable, before allowances | $ 27,385 | $ 25,002 |
ACCOUNTS RECEIVABLE, NET - Al67
ACCOUNTS RECEIVABLE, NET - Allowance for Disallowed Revenue And Allowance for Doubtful Accounts(Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Allowance for Disallowed Revenue | |||
Balance at the beginning | $ 81,306 | $ 87,192 | $ 52,277 |
Additions | 48,961 | 60,076 | 95,464 |
Reductions | (69,130) | (65,962) | (60,549) |
Balance at the end | 61,137 | 81,306 | 87,192 |
Allowance for Doubtful Accounts | |||
Balance at the beginning | 15,027 | 9,944 | 6,472 |
Additions | 13,727 | 14,515 | 14,241 |
Reductions | (13,233) | (9,432) | (10,769) |
Balance at the end | 15,521 | 15,027 | 9,944 |
Dosteon | Loss on discontinued operations net of income tax | |||
Allowance for Doubtful Accounts | |||
Bad debts expense | 0 | 1,700 | 2,600 |
Disallowed revenue | $ 0 | $ (200) | $ 14,000 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 |
Inventories | ||||||||
Raw materials | $ 21,277 | $ 22,134 | ||||||
Work in process | 9,009 | 8,914 | ||||||
Finished goods | 37,939 | 37,430 | ||||||
Total inventories | $ 68,225 | $ 74,563 | $ 71,092 | $ 69,163 | $ 68,478 | $ 74,687 | $ 73,041 | $ 73,113 |
PROPERTY PLANT AND EQUIPMENT (D
PROPERTY PLANT AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |
Property, Plant and Equipment, Net | |||||||||
Total property, plant, and equipment, gross | $ 282,541 | $ 280,352 | |||||||
Less: Accumulated depreciation | (182,074) | (167,078) | |||||||
Total property, plant, and equipment, net | 100,467 | 113,274 | $ 102,485 | $ 105,286 | $ 109,124 | $ 113,510 | $ 115,314 | $ 113,651 | |
Depreciation expense | 31,000 | 32,500 | $ 32,800 | ||||||
Land | |||||||||
Property, Plant and Equipment, Net | |||||||||
Total property, plant, and equipment, gross | 704 | 704 | |||||||
Buildings | |||||||||
Property, Plant and Equipment, Net | |||||||||
Total property, plant, and equipment, gross | 28,160 | 30,689 | |||||||
Assets under capital leases | |||||||||
Assets under capital leases | 23,800 | 26,400 | |||||||
Accumulated depreciation of assets under capital leases | 7,700 | 7,200 | |||||||
Furniture and fixtures | |||||||||
Property, Plant and Equipment, Net | |||||||||
Total property, plant, and equipment, gross | 12,312 | 12,057 | |||||||
Machinery and equipment | |||||||||
Property, Plant and Equipment, Net | |||||||||
Total property, plant, and equipment, gross | 26,173 | 25,678 | |||||||
Equipment leased to third parties under operating leases | |||||||||
Property, Plant and Equipment, Net | |||||||||
Total property, plant, and equipment, gross | 32,669 | 38,712 | |||||||
Less: Accumulated depreciation | (22,850) | (24,428) | |||||||
Total property, plant, and equipment, net | 9,819 | 14,284 | |||||||
Leasehold improvements | |||||||||
Property, Plant and Equipment, Net | |||||||||
Total property, plant, and equipment, gross | 95,376 | 86,733 | |||||||
Computers and software | |||||||||
Property, Plant and Equipment, Net | |||||||||
Total property, plant, and equipment, gross | $ 87,147 | $ 85,779 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Mar. 31, 2015USD ($)stateitemclinic | Jun. 30, 2015USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($)stateitemclinic | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | |
Acquisitions | |||||||||
Number of businesses acquired | item | 0 | ||||||||
Components of the aggregated purchase price the assets acquired and liabilities assumed | |||||||||
Issuance of seller notes | $ 4,662 | $ 4,662 | $ 4,662 | $ 4,662 | $ 13,964 | ||||
Goodwill | $ 718,343 | $ 718,413 | $ 718,503 | $ 249,678 | 335,642 | $ 710,053 | $ 335,642 | $ 335,642 | $ 335,642 |
O & P and Distribution companies | |||||||||
Acquisitions | |||||||||
Number of states where the acquired entities operate | state | 11 | ||||||||
Amount of goodwill deductible for tax purposes | 8,200 | ||||||||
Components of the aggregated purchase price the assets acquired and liabilities assumed | |||||||||
Net cash | 10,215 | $ 38,100 | |||||||
Issuance of seller notes | 4,662 | 14,000 | |||||||
Other working capital adjustments | 376 | 600 | |||||||
Aggregate purchase price | 15,253 | $ 52,700 | |||||||
Net accounts receivable | 1,045 | ||||||||
Inventories | 481 | ||||||||
Intangible assets, excluding goodwill | 5,455 | ||||||||
Other assets | 112 | ||||||||
Liabilities assumed | (15) | ||||||||
Net assets acquired | 7,078 | ||||||||
Goodwill | $ 8,175 | ||||||||
O & P company | |||||||||
Acquisitions | |||||||||
Number of businesses acquired | item | 3 | 12 | |||||||
Number of patient care clinics operated by acquiree | clinic | 15 | 37 | |||||||
Number of states where the acquired entities operate | state | 3 | ||||||||
Working capital adjustments and contingent consideration | $ 400 | ||||||||
Components of the aggregated purchase price the assets acquired and liabilities assumed | |||||||||
Consideration paid in cash | 10,200 | ||||||||
Issuance of seller notes | 4,700 | ||||||||
Aggregate purchase price | $ 15,300 | ||||||||
Distribution company | |||||||||
Acquisitions | |||||||||
Number of businesses acquired | item | 1 |
GOODWILL AND OTHER INTANGIBLE71
GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill (Details) $ in Thousands | Oct. 01, 2016USD ($)item | Dec. 31, 2015USD ($)item | Sep. 30, 2015USD ($)item | Dec. 31, 2014USD ($)item | Oct. 01, 2014item | Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) |
Goodwill and other intangible assets | |||||||
Number of reporting units tested | item | 3 | 3 | 3 | 3 | 3 | 3 | |
Goodwill allocated | |||||||
Balance as of beginning of the year | $ 335,642 | $ 335,642 | $ 710,053 | ||||
Additions due to acquisitions | 8,175 | ||||||
Adjustments | 274 | ||||||
Goodwill impairment | (85,964) | (382,860) | |||||
Balance as of end of the year | $ 335,642 | $ 718,503 | $ 710,053 | 249,678 | 335,642 | ||
Patient Care | |||||||
Goodwill allocated | |||||||
Balance as of beginning of the year | 625,011 | 616,572 | |||||
Additions due to acquisitions | 8,175 | ||||||
Adjustments | 264 | ||||||
Goodwill impairment | (382,860) | ||||||
Balance as of end of the year | 625,011 | 616,572 | 625,011 | 625,011 | |||
Goodwill, Accumulated Impairment | (428,668) | (45,808) | (428,668) | (428,668) | |||
Products & Services | |||||||
Goodwill allocated | |||||||
Balance as of beginning of the year | 139,299 | 139,289 | |||||
Adjustments | 10 | ||||||
Goodwill impairment | (85,964) | ||||||
Balance as of end of the year | $ 139,299 | $ 139,289 | 139,299 | $ 139,299 | |||
Goodwill, Accumulated Impairment | (85,964) | ||||||
Therapeutic | |||||||
Goodwill allocated | |||||||
Goodwill impairment | (64,900) | ||||||
Distribution | |||||||
Goodwill allocated | |||||||
Goodwill impairment | $ (21,100) |
GOODWILL AND OTHER INTANGIBLE72
GOODWILL AND OTHER INTANGIBLE ASSETS - Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Jun. 30, 2015 | Mar. 31, 2015 |
Intangible assets | ||||||||||||
Gross Carrying Amount | $ 59,200 | $ 67,556 | $ 59,200 | $ 67,556 | ||||||||
Accumulated Amortization | (31,959) | (26,328) | (31,959) | (26,328) | ||||||||
Net Carrying Amount | 27,241 | 41,228 | 27,241 | 41,228 | ||||||||
Gross Carrying Amount | 68,270 | 76,626 | 68,270 | 76,626 | ||||||||
Accumulated Impairment | (3,370) | (3,170) | (3,370) | (3,170) | ||||||||
Net Carrying Amount | 32,941 | 47,128 | 32,941 | 47,128 | ||||||||
Goodwill | $ 718,503 | 249,678 | 335,642 | $ 718,503 | 249,678 | 335,642 | $ 710,053 | $ 335,642 | $ 335,642 | $ 335,642 | $ 718,413 | $ 718,343 |
Amortization expense | 13,900 | 13,800 | 7,400 | |||||||||
Patient Care | ||||||||||||
Intangible assets | ||||||||||||
Goodwill | 625,011 | 625,011 | 625,011 | 625,011 | 616,572 | |||||||
Patient Care | Dosteon | ||||||||||||
Intangible assets | ||||||||||||
Goodwill | 8,400 | |||||||||||
Products & Services | ||||||||||||
Intangible assets | ||||||||||||
Goodwill | 139,299 | 139,299 | 139,299 | 139,299 | $ 139,289 | |||||||
Trade Names | ||||||||||||
Intangible assets | ||||||||||||
Indefinite life, Gross Carrying Amount | 9,070 | 9,070 | 9,070 | 9,070 | ||||||||
Indefinite life, Accumulated Impairment | (3,370) | (3,170) | (3,370) | (3,170) | ||||||||
Indefinite life, Net Carrying Amount | 5,700 | 5,900 | 5,700 | 5,900 | ||||||||
Trade Names | Therapeutic | ||||||||||||
Intangible assets | ||||||||||||
Impairment of intangible assets | 200 | 2,100 | $ 800 | |||||||||
Customer Lists | ||||||||||||
Intangible assets | ||||||||||||
Gross Carrying Amount | 43,380 | 51,031 | 43,380 | 51,031 | ||||||||
Accumulated Amortization | (23,051) | (18,422) | (23,051) | (18,422) | ||||||||
Net Carrying Amount | 20,329 | 32,609 | $ 20,329 | 32,609 | ||||||||
Customer Lists | Minimum | ||||||||||||
Intangible assets | ||||||||||||
Amortized period of intangible assets | 4 years | |||||||||||
Customer Lists | Maximum | ||||||||||||
Intangible assets | ||||||||||||
Amortized period of intangible assets | 10 years | |||||||||||
Non-compete agreements | Minimum | ||||||||||||
Intangible assets | ||||||||||||
Amortized period of intangible assets | 2 years | |||||||||||
Non-compete agreements | Maximum | ||||||||||||
Intangible assets | ||||||||||||
Amortized period of intangible assets | 5 years | |||||||||||
Other definite-lived intangible assets | Maximum | ||||||||||||
Intangible assets | ||||||||||||
Amortized period of intangible assets | 17 years | |||||||||||
Patents and Other Intangibles | ||||||||||||
Intangible assets | ||||||||||||
Gross Carrying Amount | 15,358 | 15,422 | $ 15,358 | 15,422 | ||||||||
Accumulated Amortization | (8,660) | (7,213) | (8,660) | (7,213) | ||||||||
Net Carrying Amount | 6,698 | 8,209 | 6,698 | 8,209 | ||||||||
Trade Names | ||||||||||||
Intangible assets | ||||||||||||
Gross Carrying Amount | 462 | 1,103 | 462 | 1,103 | ||||||||
Accumulated Amortization | (248) | (693) | (248) | (693) | ||||||||
Net Carrying Amount | $ 214 | $ 410 | $ 214 | 410 | ||||||||
Trade Names | Minimum | ||||||||||||
Intangible assets | ||||||||||||
Amortized period of intangible assets | 1 year | |||||||||||
Trade Names | Maximum | ||||||||||||
Intangible assets | ||||||||||||
Amortized period of intangible assets | 10 years | |||||||||||
Change in estimated useful lives | Customer Lists | ||||||||||||
Intangible assets | ||||||||||||
Amortization expense | $ 7,000 | $ 6,000 | ||||||||||
Change in estimated useful lives | Customer Lists | Patient Care | ||||||||||||
Intangible assets | ||||||||||||
Amortized period of intangible assets | 10 years | 4 years | ||||||||||
Change in estimated useful lives | Customer Lists | Products & Services | ||||||||||||
Intangible assets | ||||||||||||
Amortized period of intangible assets | 14 years | 10 years |
GOODWILL AND OTHER INTANGIBLE73
GOODWILL AND OTHER INTANGIBLE ASSETS - Estimated Amortization (Details) $ in Thousands | Dec. 31, 2014USD ($) |
Estimated aggregate amortization expense for definite-lived intangible assets | |
2,017 | $ 9,587 |
2,018 | 6,749 |
2,019 | 3,763 |
2,020 | 3,513 |
2,021 | 927 |
Thereafter | 2,702 |
Net Carrying Amount | $ 27,241 |
OTHER CURRENT ASSETS AND OTHE74
OTHER CURRENT ASSETS AND OTHER ASSETS - Other Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 |
OTHER CURRENT ASSETS AND OTHER ASSETS | ||||||||
Income tax receivable | $ 13,200 | $ 10,999 | $ 41,736 | $ 41,066 | $ 34,735 | $ 15,899 | $ 16,750 | $ 9,696 |
Non-trade receivables | 6,223 | 9,961 | ||||||
Prepaid rent | 4,070 | 73 | ||||||
Prepaid maintenance | 3,914 | 3,567 | ||||||
Restricted cash | 2,255 | 3,870 | ||||||
Prepaid other | 1,542 | 1,247 | ||||||
Prepaid education and training | 398 | 1,186 | ||||||
Prepaid insurance | 447 | 344 | ||||||
Other | 288 | 822 | ||||||
Total other current assets | $ 19,137 | $ 18,102 | $ 19,199 | $ 24,014 | $ 21,070 | $ 22,603 | $ 20,907 | $ 23,242 |
OTHER CURRENT ASSETS AND OTHE75
OTHER CURRENT ASSETS AND OTHER ASSETS - Other Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 |
OTHER CURRENT ASSETS AND OTHER ASSETS | ||||||||
Cash Surrender Value of COLI | $ 17,573 | $ 14,386 | ||||||
Non-trade receivables | 3,401 | 4,574 | ||||||
Deposits | 2,038 | 2,196 | ||||||
Other miscellaneous | 2,502 | 2 | ||||||
Total other assets | $ 25,514 | $ 25,582 | $ 25,413 | $ 23,680 | $ 21,158 | $ 21,498 | $ 22,602 | $ 23,069 |
INCOME TAXES - Expense (Details
INCOME TAXES - Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Current: | |||||||||||||||
Federal | $ (18,812) | $ (21,721) | $ 36,147 | ||||||||||||
State | 694 | 1,720 | 5,479 | ||||||||||||
Total Current | (18,118) | (20,001) | 41,626 | ||||||||||||
Deferred: | |||||||||||||||
Federal | 3,008 | (41,372) | (39,712) | ||||||||||||
State | (800) | (6,241) | 109 | ||||||||||||
Total Deferred | 2,208 | (47,613) | (39,603) | ||||||||||||
(Benefit) provision for income taxes from continuing operations | $ (1,488) | $ (5,687) | $ (321) | $ (8,414) | $ (69,768) | $ 1,133 | $ 228 | $ 793 | $ (8,735) | $ 1,021 | $ (14,422) | $ 2,154 | (15,910) | (67,614) | 2,023 |
Income tax provision (benefit) attributable to discontinued operations | $ 490 | $ (3,249) | $ (8,914) |
INCOME TAXES - Rate Reconciliat
INCOME TAXES - Rate Reconciliation (Details) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of the federal statutory tax rate to the Company's effective tax rate | |||
Federal statutory tax rate - (benefit) provision (as a percent) | (35.00%) | (35.00%) | (35.00%) |
State and local income taxes (as a percent) | (0.40%) | (1.60%) | (53.20%) |
Change in valuation allowance (as a percent) | 0.30% | 455.60% | |
Domestic manufacturing deduction (as a percent) | (206.90%) | ||
Research and development credit (as a percent) | (14.30%) | ||
Change in uncertain tax positions (as a percent) | (0.90%) | (0.20%) | 54.60% |
Goodwill impairment (as a percent) | 22.30% | 18.40% | |
Other (as a percent) | 1.10% | 0.60% | 2.10% |
Effective tax rate applicable to continuing operations | (12.90%) | (17.50%) | 202.90% |
INCOME TAXES - Deferred Tax Lia
INCOME TAXES - Deferred Tax Liability (Asset) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred tax liabilities: | ||
Goodwill amortization | $ 4,962 | $ 4,405 |
Intangible amortization | 3,580 | 8,078 |
Prepaid expenses | 1,581 | 1,638 |
Sec. 481(a) adjustments | 172 | 360 |
Other | 32 | |
Total deferred tax liabilities | 10,295 | 14,513 |
Deferred tax assets: | ||
Deferred benefit plan compensation | 8,816 | 8,807 |
Provision for doubtful accounts and disallowed revenues | 30,203 | 37,927 |
Property, plant and equipment | 14,596 | 9,867 |
Net operating loss carryforwards | 11,157 | 9,933 |
Accrued expenses | 30,307 | 35,255 |
Inventory reserves | 3,318 | 5,126 |
Restricted stock | 4,286 | 4,417 |
Capital leases | 439 | 557 |
Deferred rent | 2,117 | 1,994 |
Refund liabilities | 3,456 | 3,438 |
Interest on seller notes | 1,408 | 1,190 |
Other | 1,310 | 1,109 |
Total deferred tax assets | 111,413 | 119,620 |
Valuation allowance | (6,895) | (6,853) |
Net deferred tax assets | 104,518 | 112,767 |
Net deferred tax asset | $ 94,223 | $ 98,254 |
INCOME TAXES - Net Operating Lo
INCOME TAXES - Net Operating Loss (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Federal | ||
Income Taxes | ||
Net operating loss carryforwards under the (tax effected) of U.S. federal and state tax laws | $ 8.9 | $ 8.9 |
State | ||
Income Taxes | ||
Net operating loss carryforwards under the (tax effected) of U.S. federal and state tax laws | $ 185.3 | $ 156.1 |
INCOME TAXES - Activity in Valu
INCOME TAXES - Activity in Valuation Allowance (Details) - Deferred tax asset valuation allowance - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Valuation allowance activities | |||
Balance at beginning of year | $ 6,853 | $ 5,692 | $ 1,259 |
Provision | 377 | 1,195 | 5,365 |
Released | 335 | 34 | 932 |
Balance at end of year | $ 6,895 | $ 6,853 | $ 5,692 |
INCOME TAXES - Unrecognized Tax
INCOME TAXES - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | Dec. 22, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Reconciliation of beginning and ending balances of unrecognized tax benefits | ||||
Unrecognized tax benefits, at beginning of the year | $ 7,567 | $ 7,605 | $ 7,475 | |
Additions for tax positions related to the current year | 47 | 279 | 623 | |
Additions for tax positions of prior years | 1,415 | |||
Decrease related to prior year positions | (1,472) | (476) | ||
Decrease for lapse of applicable statute of limitations | (2,950) | (260) | (17) | |
Unrecognized tax benefits, at end of the year | 4,664 | 7,567 | 7,605 | |
Total amount of unrecognized tax benefits, if recognized, would affect the effective tax rate | 2,900 | |||
Unrecognized tax benefits that the Company expects would change significantly over the next 12 months | 3,800 | |||
Accrued interest and penalties | $ 400 | $ 500 | $ 500 | |
Corporate federal income tax rate (as a percent) | 35.00% | 35.00% | 35.00% | |
Forecast | ||||
Reconciliation of beginning and ending balances of unrecognized tax benefits | ||||
Corporate federal income tax rate (as a percent) | 21.00% | |||
Forecast | Minimum | ||||
Reconciliation of beginning and ending balances of unrecognized tax benefits | ||||
One-time increase in tax expense | $ 25,000 | |||
Forecast | Maximum | ||||
Reconciliation of beginning and ending balances of unrecognized tax benefits | ||||
One-time increase in tax expense | $ 35,000 |
EMPLOYEE BENEFITS (Details)
EMPLOYEE BENEFITS (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | |||||||
Jan. 31, 2004payment | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013 | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2012USD ($) | |
EMPLOYEE BENEFITS | |||||||||
Matching employer contributions under 401(k) Savings and Retirement plan | $ 6,700 | $ 6,600 | $ 6,200 | ||||||
Supplemental Executive Retirement Plan (SERP) | |||||||||
Number of annual payments upon retirement | payment | 15 | ||||||||
Average remaining service period | 12 years 6 months | 9 years 7 months 6 days | |||||||
Change in Benefit Obligation | |||||||||
Benefit obligation at the beginning of the year | $ 21,885 | $ 23,054 | |||||||
Service cost | 390 | 386 | |||||||
Interest cost | 740 | 703 | |||||||
Payments | (1,847) | (1,853) | |||||||
Actuarial loss (gain) | 136 | (405) | |||||||
Benefit obligation at the end of the year | $ 21,304 | $ 21,885 | $ 23,054 | ||||||
Unfunded status | $ 21,304 | ||||||||
Net amount recognized | 21,304 | ||||||||
Amounts Recognized in the Consolidated Balance Sheet | |||||||||
Current accrued expenses and other current liabilities | 1,913 | $ 1,847 | |||||||
Non-current other liabilities | 19,391 | 20,038 | |||||||
Total accrued liabilities | 21,304 | 21,885 | |||||||
Other comprehensive (loss) income - gross actuarial gains (losses) | $ (100) | $ 400 | $ (1,400) | ||||||
Weighted average assumptions used to determine the benefit obligation and net benefit cost | |||||||||
Discount rate, to determine the benefit obligation (as a percent) | 4.03% | 3.54% | 3.64% | 3.34% | |||||
Discount rate, to determine net benefit cost (as a percent) | 3.54% | 3.64% | 3.34% | 4.03% | |||||
Average rate of increase in compensation, to determine the benefit obligation (as a percent) | 3.00% | 3.00% | 3.00% | 3.00% | |||||
Average rate of increase in compensation, to determine net benefit cost (as a percent) | 3.00% | 3.00% | 3.00% | 3.00% | |||||
Future payments under the Plan | |||||||||
2,017 | $ 1,913 | ||||||||
2,018 | 1,913 | ||||||||
2,019 | 1,913 | ||||||||
2,020 | 1,913 | ||||||||
2,021 | 1,913 | ||||||||
Thereafter | 11,739 | ||||||||
Total | $ 21,885 | $ 23,054 | $ 23,054 | 21,304 | $ 21,885 | $ 23,054 | |||
Estimated accumulated obligation benefit | 2,000 | 1,400 | |||||||
Funded estimated accumulated obligation benefit | 1,400 | 800 | |||||||
Unfunded estimated accumulated obligation benefit | $ 600 | $ 600 |
STOCK-BASED COMPENSATION - Plan
STOCK-BASED COMPENSATION - Plans (Details) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Apr. 15, 2016 | |
Stock-Based Compensation | ||||
Shares issued | 0.9 | |||
Number of issued shares forfeited | 0.3 | |||
Number of shares of available for future issuance | 2.1 | |||
Stock-based compensation expense | $ 9.8 | $ 11.1 | $ 9.8 | |
2016 Omnibus Incentive Plan | ||||
Stock-Based Compensation | ||||
Shares of common stock authorized for issuance under the share-based compensation plan | 2.3 | 2.3 | ||
2010 Plan | ||||
Stock-Based Compensation | ||||
Shares of common stock authorized for issuance under the share-based compensation plan | 0.4 | 0.4 | ||
Restricted stock units | 2016 Omnibus Incentive Plan | ||||
Stock-Based Compensation | ||||
Unrecognized stock-based compensation expense related to non-vested stock | $ 7.6 | |||
Weighted- average period over which unrecognized stock-based compensation cost will be expensed | 2 years 3 months 18 days | |||
Restricted stock and performance-based restricted stock units | ||||
Stock-Based Compensation | ||||
Unrecognized stock-based compensation expense related to non-vested stock | $ 11.2 | |||
Weighted- average period over which unrecognized stock-based compensation cost will be expensed | 2 years 3 months 18 days | |||
Discontinued Operations | Loss from discontinued operations, net of income taxes | Dosteon | Restricted stock and performance-based restricted stock units | ||||
Stock-Based Compensation | ||||
Stock-based compensation expense | $ 0.2 |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Restricted stock and performance-based restricted stock units | |||
Other disclosures | |||
Unrecognized stock-based compensation expense related to non-vested stock | $ 11.2 | ||
Weighted- average period over which unrecognized stock-based compensation cost will be expensed | 2 years 3 months 18 days | ||
Restricted stock units | |||
Units | |||
Vested (in units) | (400,000) | (400,000) | (400,000) |
Other disclosures | |||
Intrinsic value of shares fully vested during the period | $ 2.1 | $ 9 | $ 12.8 |
Total estimated grant date fair values | $ 6.2 | $ 16.1 | $ 12.2 |
Restricted stock units | Employee Awards | |||
Units | |||
Nonvested at the beginning of the year (in units) | 810,840 | 670,735 | |
Granted (in units) | 631,011 | 474,108 | |
Vested (in units) | (279,421) | (281,587) | |
Forfeited (in units) | (95,832) | (52,416) | |
Nonvested at the end of the year (in units) | 1,066,598 | 810,840 | 670,735 |
Weighted Average Grant Date Fair Value | |||
Nonvested at the beginning of the year (in dollars per unit) | $ 26.90 | $ 28.99 | |
Granted (in dollars per unit) | 6.90 | 24.48 | |
Vested (in dollars per unit) | 26.64 | 27.46 | |
Forfeited (in dollars per unit) | 20.69 | 28.73 | |
Nonvested at the end of the year (in dollars per unit) | $ 16.30 | $ 26.90 | $ 28.99 |
Restricted stock units | Director Awards | |||
Units | |||
Nonvested at the beginning of the year (in units) | 94,169 | 72,832 | |
Granted (in units) | 71,000 | 92,155 | |
Vested (in units) | (93,704) | (56,797) | |
Forfeited (in units) | (14,021) | ||
Nonvested at the end of the year (in units) | 71,465 | 94,169 | 72,832 |
Weighted Average Grant Date Fair Value | |||
Nonvested at the beginning of the year (in dollars per unit) | $ 18.25 | $ 29.46 | |
Granted (in dollars per unit) | 6.53 | 14.46 | |
Vested (in dollars per unit) | 18.16 | 26.17 | |
Forfeited (in dollars per unit) | 19.48 | ||
Nonvested at the end of the year (in dollars per unit) | $ 6.72 | $ 18.25 | $ 29.46 |
Performance-based stock units | Employee Awards | |||
Units | |||
Nonvested at the beginning of the year (in units) | 145,451 | 75,661 | |
Granted (in units) | 192,600 | 120,178 | |
Vested (in units) | (19,722) | (49,775) | |
Forfeited (in units) | (192,600) | (613) | |
Nonvested at the end of the year (in units) | 125,729 | 145,451 | 75,661 |
Weighted Average Grant Date Fair Value | |||
Nonvested at the beginning of the year (in dollars per unit) | $ 25.83 | $ 24.70 | |
Granted (in dollars per unit) | 6.90 | 25.95 | |
Vested (in dollars per unit) | 23.99 | 24.37 | |
Forfeited (in dollars per unit) | 6.90 | 29.66 | |
Nonvested at the end of the year (in dollars per unit) | $ 26.11 | $ 25.83 | $ 24.70 |
STOCK-BASED COMPENSATION - Opti
STOCK-BASED COMPENSATION - Options Activity (Details) - Director Awards - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2016 | |
Shares | |||
Outstanding at the beginning of the year (in shares) | 7,947 | ||
Exercised (in shares) | (7,947) | ||
Outstanding at the end of the year (in shares) | 7,947 | ||
Weighted Average Exercise Price | |||
Outstanding at the beginning of the year (in dollars per share) | $ 5.09 | ||
Exercised (in dollars per share) | $ 5.09 | ||
Outstanding at the end of the year (in dollars per share) | $ 5.09 | ||
Options outstanding and exercisable (in share) | 0 | 7,947 | 0 |
Other Disclosures | |||
Intrinsic value of options exercised | $ 0.1 | ||
Weighted average exercise price of options exercisable (in dollars per share) | $ 5.09 | ||
Average remaining contractual term of options exercisable | 4 months 24 days | ||
Aggregate intrinsic value of exercisable options | $ 0.1 | ||
Cash received related to exercise of options | 0.1 | ||
Incentive stock options | |||
Other Disclosures | |||
Unrecognized stock-based compensation expense related to non-vested stock | $ 0 | $ 0 | $ 0 |
LEASES (Details)
LEASES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |
Leases | |||||||||
Rent expense | $ 48,100 | $ 50,100 | $ 50,100 | ||||||
Net book value | 100,467 | 113,274 | $ 102,485 | $ 105,286 | $ 109,124 | $ 113,510 | $ 115,314 | $ 113,651 | |
Future minimum rental payments, by year and in the aggregate, under operating leases | |||||||||
First year | 39,581 | 39,001 | |||||||
Second year | 32,507 | 32,276 | |||||||
Third year | 25,192 | 26,081 | |||||||
Fourth year | 17,226 | 19,486 | |||||||
Fifth year | 11,556 | 12,607 | |||||||
Thereafter | 16,147 | 21,826 | |||||||
Total | 142,209 | 151,277 | |||||||
Future minimum rental payments, by year and in the aggregate, under Capital Lease Obligations | |||||||||
First year | 467 | 489 | |||||||
Second year | 268 | 411 | |||||||
Third year | 121 | 188 | |||||||
Fourth year | 39 | 41 | |||||||
Total | 895 | 1,129 | |||||||
Office equipment under capital leases | |||||||||
Leases | |||||||||
Net book value | $ 800 | $ 1,100 |
LONG TERM DEBT (Details)
LONG TERM DEBT (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Sep. 30, 2016 | Aug. 01, 2016 | Jun. 30, 2016 | May 15, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Nov. 15, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 |
Long-Term Debt | |||||||||||
Total debt before unamortized discount and debt issuance costs | $ 489,355 | $ 572,660 | |||||||||
Unamortized discount | (7,511) | (1,820) | |||||||||
Debt issuance costs, net | (9,194) | (4,407) | |||||||||
Total debt | 472,650 | 566,433 | |||||||||
Current portion of long-term debt | 30,944 | $ 28,833 | $ 29,713 | $ 29,447 | 30,385 | $ 29,384 | $ 29,904 | $ 28,577 | |||
Long-term debt | 441,706 | $ 457,021 | $ 519,952 | $ 525,521 | 536,048 | $ 516,743 | $ 534,012 | $ 540,882 | |||
Credit Agreement | Term Loan | |||||||||||
Long-Term Debt | |||||||||||
Total debt before unamortized discount and debt issuance costs | 180,000 | 199,688 | |||||||||
Credit Agreement | Revolving Credit Facility | |||||||||||
Long-Term Debt | |||||||||||
Total debt before unamortized discount and debt issuance costs | 132,000 | ||||||||||
Term B Credit Agreement | |||||||||||
Long-Term Debt | |||||||||||
Debt issuance costs, net | (6,700) | ||||||||||
Interest rate stated percentage | 11.50% | ||||||||||
Term B Credit Agreement | Term Loan B | |||||||||||
Long-Term Debt | |||||||||||
Total debt before unamortized discount and debt issuance costs | 280,000 | ||||||||||
Senior Notes due 2018 | |||||||||||
Long-Term Debt | |||||||||||
Total debt before unamortized discount and debt issuance costs | 200,000 | ||||||||||
Interest rate stated percentage | 10.625% | 9.125% | |||||||||
Sellers notes | |||||||||||
Long-Term Debt | |||||||||||
Total debt before unamortized discount and debt issuance costs | 11,110 | 19,838 | |||||||||
Unamortized discount | (600) | (1,100) | |||||||||
Financing leases and other | |||||||||||
Long-Term Debt | |||||||||||
Total debt before unamortized discount and debt issuance costs | 18,245 | 21,134 | |||||||||
Credit Agreement and Senior Notes | |||||||||||
Long-Term Debt | |||||||||||
Debt issuance costs, net | $ (11,000) | $ (3,000) |
LONG TERM DEBT - Credit Agreeme
LONG TERM DEBT - Credit Agreement (Details) $ in Thousands | Sep. 30, 2017 | Jun. 23, 2017 | Sep. 30, 2016 | Jul. 15, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | Jun. 17, 2013USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2016USD ($)agreement |
Long-Term Debt | |||||||||||
Quarterly principal payments, as a percent to initial amount borrowed | 1.25% | ||||||||||
Final amount due in 2018 | $ 155,749 | $ 155,749 | |||||||||
Federal income tax refunds | $ 34,100 | ||||||||||
Percentage tax refunds to be applied to reduce revolving commitments | 50.00% | ||||||||||
Credit Agreement | |||||||||||
Long-Term Debt | |||||||||||
Term of agreement | 5 years | ||||||||||
Maximum borrowing capacity | $ 425,000 | ||||||||||
Number of agreements entered into | agreement | 7 | ||||||||||
Minimum commitment as a result of tax refunds | $ 108,000 | $ 108,000 | |||||||||
Maximum leverage ratio to use maximum credit facility | 4 | ||||||||||
Interest rate margin (as a percent) | 5.52% | 2.43% | 2.17% | ||||||||
Increase in interest rate | 2.00% | 2.00% | |||||||||
Credit Agreement | Last day of the fiscal quarter ending June 30, 2016 | |||||||||||
Long-Term Debt | |||||||||||
Consolidated leverage ratio | 5.00% | ||||||||||
Interest coverage ratio | 3.50 | ||||||||||
Credit Agreement | Last day of the fiscal quarter ending September 30, 2016 | |||||||||||
Long-Term Debt | |||||||||||
Consolidated leverage ratio | 5.75% | ||||||||||
Credit Agreement | Last day of each fiscal quarter after September 30, 2016 | |||||||||||
Long-Term Debt | |||||||||||
Consolidated leverage ratio | 5.00% | ||||||||||
Credit Agreement | LIBOR | |||||||||||
Long-Term Debt | |||||||||||
Interest rate margin (as a percent) | 5.75% | ||||||||||
Interest rate margin contingent on delivery of financial information and leverage ratio of 4.00 to 1.00 | 4.00% | ||||||||||
Credit Agreement | Base rate | |||||||||||
Long-Term Debt | |||||||||||
Interest rate margin contingent on delivery of financial information and leverage ratio of 4.00 to 1.00 | 3.00% | ||||||||||
Credit Agreement | Federal funds rate | |||||||||||
Long-Term Debt | |||||||||||
Interest rate margin (as a percent) | 0.50% | ||||||||||
Credit Agreement | One-month LIBOR | |||||||||||
Long-Term Debt | |||||||||||
Interest rate margin (as a percent) | 4.75% | ||||||||||
Fixed interest rate of debt | 1.00% | 1.00% | |||||||||
Revolving Credit Facility | Credit Agreement | |||||||||||
Long-Term Debt | |||||||||||
Maximum borrowing capacity | 200,000 | ||||||||||
Available credit facility | $ 118,300 | $ 118,300 | |||||||||
Letters of credit outstanding amount | $ 6,100 | $ 4,300 | 6,100 | ||||||||
Unused commitment fee (as a percent) | 0.375 | ||||||||||
Unused commitment fee | $ 300 | 200 | $ 400 | ||||||||
Balance available under the credit facility | 94,900 | $ 10,000 | 94,900 | ||||||||
Revolving Credit Facility | Credit Agreement | From July 15, 2016 to September 30, 2016 | |||||||||||
Long-Term Debt | |||||||||||
Reduction of the available credit facility depending on fiscal quarter results | 13,900 | 13,900 | |||||||||
Revolving Credit Facility | Credit Agreement | Three month period ending December 31, 2016 | |||||||||||
Long-Term Debt | |||||||||||
Reduction of the available credit facility depending on fiscal quarter results | 17,300 | 17,300 | |||||||||
Revolving Credit Facility | Credit Agreement | Three month period ending March 31, 2017 | |||||||||||
Long-Term Debt | |||||||||||
Reduction of the available credit facility depending on fiscal quarter results | 10,700 | 10,700 | |||||||||
Revolving Credit Facility | Credit Agreement | Nine month period ending December 31, 2017 | |||||||||||
Long-Term Debt | |||||||||||
Reduction of the available credit facility depending on fiscal quarter results | 20,700 | 20,700 | |||||||||
Revolving Credit Facility | Credit Agreement | Three months period ending March 31, 2018 | |||||||||||
Long-Term Debt | |||||||||||
Reduction of the available credit facility depending on fiscal quarter results | 10,700 | 10,700 | |||||||||
Revolving Credit Facility | Credit Agreement | Periods subsequent to March 31, 2018 | |||||||||||
Long-Term Debt | |||||||||||
Available credit facility | 20,700 | 20,700 | |||||||||
Term Loan | Credit Agreement | |||||||||||
Long-Term Debt | |||||||||||
Maximum borrowing capacity | 225,000 | ||||||||||
Available credit facility | 225,000 | 225,000 | |||||||||
Initial amount borrowed | $ 225,000 | ||||||||||
Quarterly principal payments, as a percent to initial amount borrowed | 3.75% | 2.50% | 1.875% | 0.625% | |||||||
Final amount due in 2018 | $ 143,400 | $ 143,400 | |||||||||
Interest rate in excess of applicable rate upon acceleration and default | 2.00% |
LONG TERM DEBT - Term B Credit
LONG TERM DEBT - Term B Credit Agreement and Senior Debt (Details) - USD ($) $ in Thousands | Aug. 31, 2016 | Aug. 01, 2016 | Aug. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Dec. 31, 2015 | Jun. 30, 2016 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | May 15, 2016 | Nov. 15, 2015 | Jun. 17, 2013 |
Long-Term Debt | |||||||||||||
Fees related to the amendment of the credit agreement | $ 15,832 | $ 8,340 | |||||||||||
Deferred Finance Costs, Net | $ 4,407 | 9,194 | 4,407 | ||||||||||
Loss on extinguishment of debt | $ (6,041) | $ 10 | (7,237) | $ 10 | $ (6,031) | (6,031) | (7,237) | ||||||
Term B Credit Agreement | |||||||||||||
Long-Term Debt | |||||||||||||
Maximum borrowing capacity | $ 280,000 | ||||||||||||
Interest rate stated percentage | 11.50% | ||||||||||||
Fees related to the amendment of the credit agreement | $ 7,900 | ||||||||||||
Legal and professional fees | 1,900 | ||||||||||||
Deferred Finance Costs, Net | 6,700 | ||||||||||||
Loss on extinguishment of debt | 6,000 | ||||||||||||
Grace period | 90 days | ||||||||||||
Interest rate in excess of applicable rate upon acceleration and default | 2.00% | ||||||||||||
Term B Credit Agreement | Before February 1, 2018 | |||||||||||||
Long-Term Debt | |||||||||||||
Basis point spread to U.S. Treasury not to calculate present value at date of prepayment | 0.50% | ||||||||||||
Prepayment penalty, as a percent of principal | 3.00% | ||||||||||||
Term B Credit Agreement | On or after February 1, 2018 but prior to February 1, 2019 | |||||||||||||
Long-Term Debt | |||||||||||||
Prepayment penalty, as a percent of principal | 3.00% | ||||||||||||
Term B Credit Agreement | On or after February 1, 2019 | |||||||||||||
Long-Term Debt | |||||||||||||
Prepayment penalty, as a percent of principal | 1.50% | ||||||||||||
Credit Agreement | |||||||||||||
Long-Term Debt | |||||||||||||
Maximum borrowing capacity | $ 425,000 | ||||||||||||
Credit Agreement | Revolving Credit Facility | |||||||||||||
Long-Term Debt | |||||||||||||
Maximum borrowing capacity | $ 200,000 | ||||||||||||
Revolving credit facility pay down | $ 81,000 | ||||||||||||
Senior Notes due 2018 | |||||||||||||
Long-Term Debt | |||||||||||||
Interest rate stated percentage | 10.625% | 9.125% | |||||||||||
Redemption of senior notes | $ 205,300 | ||||||||||||
Credit Agreement and Senior Notes | |||||||||||||
Long-Term Debt | |||||||||||||
Deferred Finance Costs, Net | 3,000 | 11,000 | 3,000 | ||||||||||
Payment for debt amendments and waivers | 16,800 | 8,000 | |||||||||||
Debt instrument unamortized expenses | $ 5,000 | $ 5,800 | $ 5,000 |
LONG TERM DEBT - Subsidiary Gua
LONG TERM DEBT - Subsidiary Guarantees Details) - Credit Agreement and Senior Notes - Minimum | Dec. 31, 2016 |
Long-Term Debt | |
Subsidiary guarantors' percentage of revenue | 90.00% |
Subsidiary guarantors' percentage of assets | 90.00% |
LONG TERM DEBT - Seller Notes (
LONG TERM DEBT - Seller Notes (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Long-Term Debt | ||
Unamortized discount | $ 7,511 | $ 1,820 |
Sellers notes | ||
Long-Term Debt | ||
Unamortized discount | $ 600 | $ 1,100 |
Effective interest rate | 6.50% | |
Sellers notes | Minimum | ||
Long-Term Debt | ||
Interest rate stated percentage | 2.00% | |
Sellers notes | Maximum | ||
Long-Term Debt | ||
Interest rate stated percentage | 4.00% |
LONG-TERM DEBT - Financing Leas
LONG-TERM DEBT - Financing Leases and Other (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Aggregate contractual payments associated with the financing obligations | ||
First year | $ 4,836 | $ 3,588 |
Second year | 3,636 | 4,771 |
Third year | 5,097 | 3,548 |
Fourth year | 2,903 | 5,013 |
Fifth year | 2,575 | 2,864 |
Thereafter | 16,546 | 19,121 |
Less: amount representing interest | (17,348) | (17,771) |
Total | 18,245 | 21,134 |
Maturities of long-term debt | ||
2,017 | 34,472 | |
2,018 | 155,749 | |
2,019 | 285,294 | |
2,020 | 1,961 | |
2,021 | 1,209 | |
Thereafter | 10,670 | |
Total debt before unamortized discount | 489,355 | 572,660 |
Unamortized discount | (7,511) | (1,820) |
Debt issuance costs, net | (9,194) | (4,407) |
Total debt | 472,650 | 566,433 |
Financing leases and other | ||
Maturities of long-term debt | ||
Total debt before unamortized discount | $ 18,245 | $ 21,134 |
Leased building | Financing leases and other | Minimum | ||
Lease commitment terms | 1 year | |
Effective interest rate | 13.00% | |
Leased building | Financing leases and other | Maximum | ||
Lease commitment terms | 20 years |
LONG TERM DEBT - Liquidity and
LONG TERM DEBT - Liquidity and Debt Maturity (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2015 | |
Long-Term Debt | ||||
Minimum amount of new indebtedness to raise to pay the principal amount of debt that will become due | $ 143.4 | |||
Term Loan | ||||
Long-Term Debt | ||||
Borrowing capacity being structured | $ 505 | |||
Revolving Credit Facility | ||||
Long-Term Debt | ||||
Borrowing capacity being structured | $ 100 | |||
Credit Agreement | ||||
Long-Term Debt | ||||
Cure period in event of failure to provide audited financial statements | 30 days | |||
Credit Agreement | Term Loan | ||||
Long-Term Debt | ||||
Outstanding amount | $ 180 | |||
Credit Agreement | Revolving Credit Facility | ||||
Long-Term Debt | ||||
Balance available under the credit facility | 94.9 | $ 10 | ||
Term B Credit Agreement | ||||
Long-Term Debt | ||||
Outstanding amount | $ 280 | |||
Revolving Credit Facility | ||||
Long-Term Debt | ||||
Outstanding amount | $ 5 | |||
Balance available under the credit facility | $ 86.4 |
ACCRUED EXPENSES, OTHER CURRE94
ACCRUED EXPENSES, OTHER CURRENT LIABILITIES AND OTHER LIABILITIES - Accrued expenses and other current liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 |
ACCRUED EXPENSES, OTHER CURRENT LIABILITIES AND OTHER LIABILITIES | ||||||||
Patient prepayments deposits and refunds payable | $ 28,895 | $ 24,169 | ||||||
Accrued sales taxes and other taxes | 5,716 | 5,888 | ||||||
Accrued professional fees | 25,912 | 32,824 | ||||||
Insurance and self-insurance accruals | 9,866 | 7,495 | ||||||
Other current liabilities | 8,561 | 9,484 | ||||||
Total accrued expenses and other current liabilities | $ 78,950 | $ 75,443 | $ 78,026 | $ 81,934 | $ 79,860 | $ 91,798 | $ 91,117 | $ 86,465 |
ACCRUED EXPENSES, OTHER CURRE95
ACCRUED EXPENSES, OTHER CURRENT LIABILITIES AND OTHER LIABILITIES - Other liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 |
ACCRUED EXPENSES, OTHER CURRENT LIABILITIES AND OTHER LIABILITIES | ||||||||
Supplemental executive retirement plan obligations | $ 21,478 | $ 21,419 | ||||||
Unrecognized tax benefits | 5,015 | 7,961 | ||||||
Long-term Insurance accruals | 9,088 | 9,172 | ||||||
Deferred tenant improvement allowances | 7,345 | 6,002 | ||||||
Deferred rent | 5,433 | 5,119 | ||||||
Asset retirement obligations | 1,464 | 1,646 | ||||||
Other | 894 | 2,667 | ||||||
Total other liabilities | $ 50,717 | $ 53,803 | $ 54,925 | $ 55,304 | $ 53,986 | $ 48,307 | $ 48,095 | $ 47,918 |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) - $ / shares | Feb. 28, 2016 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 |
Shareholder's Rights Plan | |||||||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | |
Series A Junior Participating Preferred Stock | |||||||||
Shareholder's Rights Plan | |||||||||
Number of shares of Preferred Stock each Right entitles a holder to purchase | 0.001 | ||||||||
Purchase price per right | $ 65 | ||||||||
Common Stock | |||||||||
Shareholder's Rights Plan | |||||||||
Common stock, par value (in dollars per share) | $ 0.01 | ||||||||
Minimum threshold percentage of common stock for rights exercisable | 10.00% | ||||||||
Preferred Stock | Series A Junior Participating Preferred Stock | |||||||||
Shareholder's Rights Plan | |||||||||
Preferred stock, par value (in dollars per share) | $ 0.01 | ||||||||
Right | |||||||||
Shareholder's Rights Plan | |||||||||
Preferred share purchase right | 1 |
COMMITMENTS AND CONTINGENT LI97
COMMITMENTS AND CONTINGENT LIABILITIES - Commitments (Details) - USD ($) $ in Millions | 1 Months Ended | ||
Apr. 30, 2014 | Dec. 31, 2016 | Dec. 31, 2014 | |
COMMITMENTS AND CONTINGENT LIABILITIES | |||
Outstanding purchase commitments | $ 4.5 | $ 2.5 | |
Covered period of purchase commitment | 5 years | ||
Reserve associated with non-cancellable purchase commitment | 3.2 | ||
Due in April 2017 | 1 | ||
Due in April 2018 | 1 | ||
Due in April 2019 | $ 0.5 | ||
Estimated loss on purchase commitment | $ (3.4) |
COMMITMENTS AND CONTINGENT LI98
COMMITMENTS AND CONTINGENT LIABILITIES - Contingencies (Details) | 7 Months Ended | |
Aug. 31, 2015lawsuit | May 31, 2015clinic | |
COMMITMENTS AND CONTINGENT LIABILITIES | ||
Number of law suits filed | lawsuit | 2 | |
Number of clinics that received investigative demand for record | clinic | 1 |
SEGMENT AND RELATED INFORMATI99
SEGMENT AND RELATED INFORMATION - Paragraphs (Details) - Net Revenues - Customer Concentration - customer | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Patient Care | Federal Government | |||
Segment Reporting Information [Line Items] | |||
Concentration risk (as a percent) | 54.10% | 53.40% | 50.90% |
Products & Services | |||
Segment Reporting Information [Line Items] | |||
Number of customers | 0 | 0 | 0 |
SEGMENT AND RELATED INFORMAT100
SEGMENT AND RELATED INFORMATION - (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2016USD ($)area | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2016USD ($)segmentarea | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Segment and related information | |||||||||||||||
Number of operating segments | segment | 2 | ||||||||||||||
Revenue from foreign exports | $ 0 | $ 0 | |||||||||||||
Foreign Assets | $ 0 | $ 0 | 0 | 0 | |||||||||||
Net revenue | 281,053 | $ 260,084 | $ 264,456 | $ 236,461 | 285,653 | $ 275,182 | $ 272,836 | $ 233,501 | $ 500,917 | $ 506,337 | $ 761,001 | $ 781,519 | 1,042,054 | 1,067,172 | $ 1,012,100 |
Material costs | 86,963 | 85,437 | 82,971 | 76,700 | 88,062 | 85,492 | 85,901 | 76,828 | 159,671 | 162,729 | 245,108 | 248,221 | 332,071 | 336,283 | 324,284 |
Personnel costs | 96,880 | 89,113 | 88,406 | 89,138 | 95,570 | 95,220 | 89,912 | 86,392 | 177,544 | 176,304 | 266,657 | 271,524 | 363,537 | 367,094 | 353,586 |
Other expenses | 287,481 | 281,247 | 267,798 | ||||||||||||
Depreciation and amortization | 10,160 | 11,339 | 11,660 | 11,728 | 15,957 | 10,240 | 9,916 | 10,230 | 23,388 | 20,146 | 34,727 | 30,386 | 44,887 | 46,343 | 38,929 |
Impairment of intangible assets | 86,164 | 384,996 | 812 | 812 | 86,164 | 385,807 | 223 | ||||||||
Income (loss) from operations | (68,867) | 5,307 | 8,587 | (17,113) | (369,720) | 11,617 | 15,538 | (7,037) | (8,526) | 8,501 | (3,219) | 20,118 | (72,086) | (349,602) | 27,280 |
Interest expense (income), net | 13,734 | 12,809 | 9,818 | 8,838 | 7,935 | 7,404 | 7,380 | 7,173 | 18,656 | 14,553 | 31,465 | 21,957 | 45,199 | 29,892 | 28,277 |
Extinguishment of debt | 6,041 | (10) | 7,237 | (10) | 6,031 | 6,031 | 7,237 | ||||||||
Income (loss) from continuing operations before income taxes | (82,601) | (13,543) | (1,221) | (25,951) | (384,892) | 4,213 | 8,158 | (14,210) | (27,172) | (6,052) | (40,715) | (1,839) | (123,316) | (386,731) | (997) |
Provision (benefit) for income taxes | (1,488) | (5,687) | (321) | (8,414) | (69,768) | 1,133 | 228 | 793 | (8,735) | 1,021 | (14,422) | 2,154 | (15,910) | (67,614) | 2,023 |
Income (loss) from continuing operations | (81,113) | (7,856) | (900) | (17,537) | (315,124) | 3,080 | 7,930 | (15,003) | (18,437) | (7,073) | (26,293) | (3,993) | (107,406) | (319,117) | (3,020) |
EBITDA | (27,199) | (303,259) | 66,209 | ||||||||||||
Total assets | 755,104 | $ 841,463 | $ 930,470 | $ 913,899 | 973,084 | $ 1,264,200 | $ 1,258,398 | $ 1,259,468 | $ 930,470 | $ 1,258,398 | $ 841,463 | $ 1,264,200 | 755,104 | 973,084 | 1,235,733 |
Capital expenditures | 21,148 | 27,620 | 27,096 | ||||||||||||
Operating segments | |||||||||||||||
Segment and related information | |||||||||||||||
Net revenue | 1,042,054 | 1,067,172 | 1,012,100 | ||||||||||||
Material costs | 332,071 | 336,283 | 324,284 | ||||||||||||
Other | |||||||||||||||
Segment and related information | |||||||||||||||
Other expenses | 104,649 | 92,520 | 88,124 | ||||||||||||
Depreciation and amortization | 8,414 | 8,786 | 8,138 | ||||||||||||
Income (loss) from operations | (113,063) | (101,306) | (96,262) | ||||||||||||
Interest expense (income), net | (979) | (16,899) | (18,267) | ||||||||||||
Extinguishment of debt | 6,031 | 7,237 | |||||||||||||
Income (loss) from continuing operations before income taxes | (118,115) | (91,644) | (77,995) | ||||||||||||
Provision (benefit) for income taxes | (15,910) | (67,614) | 2,023 | ||||||||||||
Income (loss) from continuing operations | (102,205) | (24,030) | (80,018) | ||||||||||||
EBITDA | (104,649) | (92,520) | (88,124) | ||||||||||||
Total assets | $ 175,855 | 246,869 | 175,855 | 246,869 | 124,920 | ||||||||||
Capital expenditures | 5,747 | 8,178 | 11,724 | ||||||||||||
Intersegments | |||||||||||||||
Segment and related information | |||||||||||||||
Net revenue | (21,000) | ||||||||||||||
Consolidating Adjustments | |||||||||||||||
Segment and related information | |||||||||||||||
Net revenue | (175,539) | (137,282) | (162,636) | ||||||||||||
Material costs | $ (175,539) | (137,282) | (162,636) | ||||||||||||
Patient Care | |||||||||||||||
Segment and related information | |||||||||||||||
Medicare reimbursement for O&P products and services based on prices set forth in fee schedules, number of regional pricing areas | area | 10 | 10 | |||||||||||||
Net revenue | $ 840,130 | 874,960 | 837,080 | ||||||||||||
Material costs | 230,957 | 242,714 | 240,685 | ||||||||||||
Personnel costs | 315,892 | 317,927 | 305,651 | ||||||||||||
Other expenses | 150,604 | 163,240 | 152,176 | ||||||||||||
Depreciation and amortization | 24,873 | 25,674 | 18,769 | ||||||||||||
Impairment of intangible assets | 382,860 | ||||||||||||||
Income (loss) from operations | 92,749 | (277,068) | 100,212 | ||||||||||||
Interest expense (income), net | 33,081 | 33,677 | 33,465 | ||||||||||||
Income (loss) from continuing operations before income taxes | 59,668 | (310,745) | 66,747 | ||||||||||||
Income (loss) from continuing operations | 59,668 | (310,745) | 66,747 | ||||||||||||
EBITDA | 117,622 | (251,394) | 118,981 | ||||||||||||
Total assets | $ 419,895 | 468,575 | 419,895 | 468,575 | 848,092 | ||||||||||
Capital expenditures | 14,581 | 16,505 | 14,067 | ||||||||||||
Patient Care | Operating segments | |||||||||||||||
Segment and related information | |||||||||||||||
Net revenue | 840,130 | 874,960 | 837,080 | ||||||||||||
Material costs | 256,012 | 262,327 | 260,272 | ||||||||||||
Patient Care | Intersegments | |||||||||||||||
Segment and related information | |||||||||||||||
Material costs | 25,055 | 19,613 | 19,587 | ||||||||||||
Products & Services | |||||||||||||||
Segment and related information | |||||||||||||||
Net revenue | 201,924 | 192,212 | 175,020 | ||||||||||||
Material costs | 101,114 | 93,569 | 83,599 | ||||||||||||
Personnel costs | 47,645 | 49,167 | 47,935 | ||||||||||||
Other expenses | 32,228 | 25,487 | 27,498 | ||||||||||||
Depreciation and amortization | 11,600 | 11,883 | 12,022 | ||||||||||||
Impairment of intangible assets | 86,164 | 2,947 | 223 | ||||||||||||
Income (loss) from operations | (51,772) | 28,772 | 23,330 | ||||||||||||
Interest expense (income), net | 13,097 | 13,114 | 13,079 | ||||||||||||
Income (loss) from continuing operations before income taxes | (64,869) | 15,658 | 10,251 | ||||||||||||
Income (loss) from continuing operations | (64,869) | 15,658 | 10,251 | ||||||||||||
EBITDA | (40,172) | 40,655 | 35,352 | ||||||||||||
Total assets | $ 159,354 | $ 257,640 | 159,354 | 257,640 | 262,721 | ||||||||||
Capital expenditures | 820 | 2,937 | 1,305 | ||||||||||||
Products & Services | Operating segments | |||||||||||||||
Segment and related information | |||||||||||||||
Net revenue | 377,463 | 329,494 | 337,656 | ||||||||||||
Material costs | 251,598 | 211,238 | 226,648 | ||||||||||||
Products & Services | Intersegments | |||||||||||||||
Segment and related information | |||||||||||||||
Net revenue | 175,539 | 137,282 | 162,636 | ||||||||||||
Material costs | $ 150,484 | $ 117,669 | $ 143,049 |
DISCONTINUED OPERATIONS (Detail
DISCONTINUED OPERATIONS (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Dec. 31, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($)facility | |
DISCONTINUED OPERATIONS | |||||||||||||
Contingent consideration gains resulting from the disposal | $ 85 | ||||||||||||
Income (loss) from discontinued operations, net of income taxes | $ (15) | $ 378 | $ 572 | $ (664) | $ (6,343) | $ (967) | $ 572 | $ (7,310) | $ 950 | $ (7,310) | $ 935 | $ (7,974) | $ (15,946) |
Dosteon | Discontinued Operations | |||||||||||||
DISCONTINUED OPERATIONS | |||||||||||||
Number of business sold | facility | 1 | ||||||||||||
Proceeds from sale of business | 4,900 | $ 2,700 | |||||||||||
Loss from sale of business | (1,300) | ||||||||||||
Inventory impairment loss associated with writing down the inventory to expected fair value | 600 | ||||||||||||
Contingent consideration gains resulting from the disposal | 1,400 | ||||||||||||
Net revenue | 5,547 | 37,856 | |||||||||||
Income (loss) before income taxes from discontinued operations | 1,425 | (11,223) | (24,860) | ||||||||||
Income tax provision (benefit) | 490 | (3,249) | (8,914) | ||||||||||
Income (loss) from discontinued operations, net of income taxes | $ 935 | $ (7,974) | $ (15,946) |
SUPPLEMENTAL CASH FLOW INFOR102
SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Mar. 31, 2016 | Mar. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash paid during the period for: | |||||||||
Interest paid | $ 3,759 | $ 3,077 | $ 15,111 | $ 12,584 | $ 30,850 | $ 16,102 | $ 42,345 | $ 26,070 | $ 25,341 |
Income taxes (refunds received) paid | 168 | 9,665 | 1,077 | 17,540 | (33,821) | 17,873 | (35,092) | 18,106 | 25,433 |
Non-cash financing and investing activities: | |||||||||
Issuance of seller notes in connection with acquisitions | 4,662 | 4,662 | 4,662 | 4,662 | 13,964 | ||||
Additions to property, plant and equipment acquired through financing obligations | 162 | 1,835 | 213 | 3,197 | 269 | 3,416 | 374 | 3,743 | 3,461 |
Retirements of financed property, plant and equipment and related financing obligations | 1,663 | 171 | 2,157 | 374 | 2,228 | 1,076 | 2,381 | 1,434 | 2,071 |
Purchase of property, plant and equipment in accounts payable | $ 747 | $ 1,613 | $ 998 | $ 1,153 | $ 1,900 | $ 1,665 | $ 728 | $ 2,746 | $ 1,588 |
SUBSEQUENT EVENTS - Debt (Detai
SUBSEQUENT EVENTS - Debt (Details) - Credit Agreement | Jun. 23, 2017 |
Last day of the fiscal quarter ending June 30, 2016 | |
SUBSEQUENT EVENTS | |
Consolidated leverage ratio | 5.00% |
Interest coverage ratio | 3.50 |
Last day of the fiscal quarter ending September 30, 2016 | |
SUBSEQUENT EVENTS | |
Consolidated leverage ratio | 5.75% |
Last day of each fiscal quarter after September 30, 2016 | |
SUBSEQUENT EVENTS | |
Consolidated leverage ratio | 5.00% |
Subsequent Events | Sixth Amendment | Last day of the fiscal quarter ending June 30, 2016 | |
SUBSEQUENT EVENTS | |
Consolidated leverage ratio | 5.00% |
Interest coverage ratio | 3.50 |
Subsequent Events | Sixth Amendment | Last day of the fiscal quarter ending September 30, 2016 | |
SUBSEQUENT EVENTS | |
Consolidated leverage ratio | 5.75% |
Subsequent Events | Sixth Amendment | Last day of each fiscal quarter after September 30, 2016 | |
SUBSEQUENT EVENTS | |
Consolidated leverage ratio | 5.00% |
SUBSEQUENT EVENTS - Special Equ
SUBSEQUENT EVENTS - Special Equity Plan (Details) - shares | May 19, 2017 | Jan. 19, 2018 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Restricted stock units | |||||
SUBSEQUENT EVENTS | |||||
Shares vested | 400,000 | 400,000 | 400,000 | ||
Subsequent Events | Special Equity Plan | |||||
SUBSEQUENT EVENTS | |||||
Number of awards issued | 1,117,228 | ||||
Subsequent Events | Restricted stock units | Special Equity Plan | |||||
SUBSEQUENT EVENTS | |||||
Shares of common stock authorized | 1,500,000 | ||||
Number of additional common stock authorized | 0 | ||||
Maximum number of shares issuable | 1,436,436 | ||||
Subsequent Events | Incentive stock options | Special Equity Plan | |||||
SUBSEQUENT EVENTS | |||||
Number of awards issued | 728,020 | ||||
Options exercised | 0 | ||||
Subsequent Events | Performance-based stock units | Special Equity Plan | |||||
SUBSEQUENT EVENTS | |||||
Number of awards issued | 319,208 | ||||
Shares vested | 0 | ||||
Subsequent Events | Performance-based stock units | 10% CAGR Result on 3rd Anniversary of Grant Date | Minimum | Special Equity Plan | |||||
SUBSEQUENT EVENTS | |||||
CAGR Result on 3rd Anniversary of Grant Date (as percent) | 10.00% | ||||
Percent of Target Performance-Based Restricted Stock Units Earned | 50.00% | ||||
Subsequent Events | Performance-based stock units | 20% CAGR Result on 3rd Anniversary of Grant Date | Special Equity Plan | |||||
SUBSEQUENT EVENTS | |||||
CAGR Result on 3rd Anniversary of Grant Date (as percent) | 20.00% | ||||
Percent of Target Performance-Based Restricted Stock Units Earned | 100.00% | ||||
Subsequent Events | Performance-based stock units | 30% or above CAGR Result on 3rd Anniversary of Grant Date | Maximum | Special Equity Plan | |||||
SUBSEQUENT EVENTS | |||||
CAGR Result on 3rd Anniversary of Grant Date (as percent) | 30.00% | ||||
Percent of Target Performance-Based Restricted Stock Units Earned | 200.00% |
QUARTERLY FINANCIAL INFORMAT105
QUARTERLY FINANCIAL INFORMATION - BALANCE SHEETS (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Current assets: | ||||||||||
Cash and cash equivalents | $ 7,157 | $ 1,003 | $ 49,011 | $ 19,962 | $ 58,753 | $ 24,632 | $ 18,178 | $ 26,403 | $ 11,699 | $ 1,613 |
Accounts Receivable, net | 144,562 | 139,203 | 145,605 | 149,816 | 174,592 | 166,058 | 163,635 | 159,244 | ||
Allowance for doubtful accounts | 15,521 | 14,418 | 15,241 | 16,296 | 15,027 | 14,419 | 14,033 | 13,225 | 9,944 | 6,472 |
Inventories | 68,225 | 74,563 | 71,092 | 69,163 | 68,478 | 74,687 | 73,041 | 73,113 | ||
Income tax receivable | 13,200 | 10,999 | 41,736 | 41,066 | 34,735 | 15,899 | 16,750 | 9,696 | ||
Other current assets | 19,137 | 18,102 | 19,199 | 24,014 | 21,070 | 22,603 | 20,907 | 23,242 | ||
Assets held for sale | 1,201 | |||||||||
Total current assets | 252,281 | 243,870 | 326,643 | 304,021 | 357,628 | 303,879 | 292,511 | 292,899 | ||
Non-current assets: | ||||||||||
Property, plant and equipment, net | 100,467 | 102,485 | 105,286 | 109,124 | 113,274 | 113,510 | 115,314 | 113,651 | ||
Goodwill | 249,678 | 335,642 | 335,642 | 335,642 | 335,642 | 718,503 | 718,413 | 718,343 | 710,053 | |
Other intangible assets, net | 32,941 | 35,630 | 39,232 | 43,178 | 47,128 | 57,109 | 59,857 | 61,805 | ||
Deferred income taxes | 94,223 | 98,254 | 98,254 | 98,254 | 98,254 | 49,701 | 49,701 | 49,701 | ||
Other assets | 25,514 | 25,582 | 25,413 | 23,680 | 21,158 | 21,498 | 22,602 | 23,069 | ||
Total assets | 755,104 | 841,463 | 930,470 | 913,899 | 973,084 | 1,264,200 | 1,258,398 | 1,259,468 | 1,235,733 | |
Current liabilities: | ||||||||||
Current portion of long-term debt | 30,944 | 28,833 | 29,713 | 29,447 | 30,385 | 29,384 | 29,904 | 28,577 | ||
Accounts payable | 50,549 | 59,113 | 68,909 | 40,813 | 56,099 | 52,957 | 52,324 | 54,765 | ||
Accrued expenses and other current liabilities | 78,950 | 75,443 | 78,026 | 81,934 | 79,860 | 91,798 | 91,117 | 86,465 | ||
Accrued interest payable | 662 | 554 | 5,255 | 7,636 | 3,292 | 6,197 | 3,065 | 5,906 | ||
Accrued compensation related costs | 36,162 | 22,193 | 23,772 | 25,131 | 48,168 | 41,284 | 28,010 | 27,155 | ||
Total current liabilities | 197,267 | 186,136 | 205,675 | 184,961 | 217,804 | 221,620 | 204,420 | 202,868 | ||
Long-term liabilities: | ||||||||||
Long-term debt, less current portion | 441,706 | 457,021 | 519,952 | 525,521 | 536,048 | 516,743 | 534,012 | 540,882 | ||
Other liabilities | 50,717 | 53,803 | 54,925 | 55,304 | 53,986 | 48,307 | 48,095 | 47,918 | ||
Total liabilities | 689,690 | 696,960 | 780,552 | 765,786 | 807,838 | 786,670 | 786,527 | 791,668 | ||
Shareholders' Equity: | ||||||||||
Common stock, $.01 par value; 60,000,000 shares authorized | $ 362 | $ 362 | $ 362 | $ 361 | $ 359 | $ 359 | $ 359 | $ 359 | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | ||
Common stock, shares authorized | 60,000,000 | 60,000,000 | 60,000,000 | 60,000,000 | 60,000,000 | 60,000,000 | 60,000,000 | 60,000,000 | ||
Common stock, shares issued | 36,183,894 | 36,158,347 | 36,144,560 | 36,044,247 | 35,854,106 | 35,825,040 | 35,816,784 | 35,765,547 | ||
Common stock, shares outstanding | 36,041,073 | 36,015,526 | 36,001,739 | 35,901,426 | 35,711,285 | 35,682,219 | 35,673,963 | 35,622,726 | ||
Additional paid-in capital | $ 322,191 | $ 320,065 | $ 318,022 | $ 315,908 | $ 315,529 | $ 312,418 | $ 309,865 | $ 307,368 | ||
Accumulated other comprehensive loss | (1,440) | (1,356) | (1,376) | (1,394) | (1,414) | (1,808) | (1,834) | (1,862) | ||
Retained deficit | (255,003) | (173,872) | (166,394) | (166,066) | (148,532) | 167,257 | 164,177 | 162,591 | ||
Treasury stock, at cost | (696) | (696) | (696) | (696) | (696) | (696) | (696) | (656) | ||
Total shareholders' equity | 65,414 | 144,503 | 149,918 | 148,113 | 165,246 | 477,530 | 471,871 | 467,800 | $ 483,536 | $ 491,313 |
Total liabilities and shareholders' equity | $ 755,104 | $ 841,463 | $ 930,470 | $ 913,899 | $ 973,084 | $ 1,264,200 | $ 1,258,398 | $ 1,259,468 | ||
Treasury stock, shares | 142,821 | 142,821 | 142,821 | 142,821 | 142,821 | 142,821 | 142,821 | 141,154 |
QUARTERLY FINANCIAL INFORMAT106
QUARTERLY FINANCIAL INFORMATION - STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
QUARTERLY FINANCIAL INFORMATION | |||||||||||||||
Net revenue | $ 281,053 | $ 260,084 | $ 264,456 | $ 236,461 | $ 285,653 | $ 275,182 | $ 272,836 | $ 233,501 | $ 500,917 | $ 506,337 | $ 761,001 | $ 781,519 | $ 1,042,054 | $ 1,067,172 | $ 1,012,100 |
Material costs | 86,963 | 85,437 | 82,971 | 76,700 | 88,062 | 85,492 | 85,901 | 76,828 | 159,671 | 162,729 | 245,108 | 248,221 | 332,071 | 336,283 | 324,284 |
Personnel costs | 96,880 | 89,113 | 88,406 | 89,138 | 95,570 | 95,220 | 89,912 | 86,392 | 177,544 | 176,304 | 266,657 | 271,524 | 363,537 | 367,094 | 353,586 |
Other operating costs | 36,154 | 34,139 | 31,970 | 36,761 | 34,039 | 32,764 | 37,604 | 36,431 | 68,731 | 74,035 | 102,870 | 106,799 | 139,024 | 140,839 | 136,885 |
General and administrative expenses | 23,770 | 25,726 | 30,170 | 27,558 | 27,103 | 29,689 | 29,112 | 25,857 | 57,728 | 54,969 | 83,454 | 84,658 | 107,224 | 111,761 | 86,115 |
Professional accounting and legal fees | 9,829 | 9,023 | 10,692 | 11,689 | 9,646 | 9,348 | 4,853 | 4,800 | 22,381 | 9,653 | 31,404 | 19,001 | 41,233 | 28,647 | 44,798 |
Depreciation and amortization | 10,160 | 11,339 | 11,660 | 11,728 | 15,957 | 10,240 | 9,916 | 10,230 | 23,388 | 20,146 | 34,727 | 30,386 | 44,887 | 46,343 | 38,929 |
Impairment of intangible assets | 86,164 | 384,996 | 812 | 812 | 86,164 | 385,807 | 223 | ||||||||
(Loss) income from operations | (68,867) | 5,307 | 8,587 | (17,113) | (369,720) | 11,617 | 15,538 | (7,037) | (8,526) | 8,501 | (3,219) | 20,118 | (72,086) | (349,602) | 27,280 |
Interest expense, net | 13,734 | 12,809 | 9,818 | 8,838 | 7,935 | 7,404 | 7,380 | 7,173 | 18,656 | 14,553 | 31,465 | 21,957 | 45,199 | 29,892 | 28,277 |
Loss on extinguishment of debt | 6,041 | (10) | 7,237 | (10) | 6,031 | 6,031 | 7,237 | ||||||||
Loss from continuing operations before income taxes | (82,601) | (13,543) | (1,221) | (25,951) | (384,892) | 4,213 | 8,158 | (14,210) | (27,172) | (6,052) | (40,715) | (1,839) | (123,316) | (386,731) | (997) |
Provision (benefit) for income taxes | (1,488) | (5,687) | (321) | (8,414) | (69,768) | 1,133 | 228 | 793 | (8,735) | 1,021 | (14,422) | 2,154 | (15,910) | (67,614) | 2,023 |
Loss from continuing operations | (81,113) | (7,856) | (900) | (17,537) | (315,124) | 3,080 | 7,930 | (15,003) | (18,437) | (7,073) | (26,293) | (3,993) | (107,406) | (319,117) | (3,020) |
Income (loss) from discontinued operations, net of income taxes | (15) | 378 | 572 | (664) | (6,343) | (967) | 572 | (7,310) | 950 | (7,310) | 935 | (7,974) | (15,946) | ||
Net loss | (81,128) | (7,478) | (328) | (17,537) | (315,788) | 3,080 | 1,587 | (15,970) | (17,865) | (14,383) | (25,343) | (11,303) | (106,471) | (327,091) | (18,966) |
Other Comprehensive (Loss) Income: | |||||||||||||||
Unrealized gain (loss) on SERP, net of income tax provision (benefit) | (84) | 19 | 19 | 19 | 393 | 27 | 27 | 27 | 38 | 54 | 57 | 81 | (26) | 474 | (868) |
Comprehensive loss | $ (81,212) | $ (7,459) | $ (309) | $ (17,518) | $ (315,395) | $ 3,107 | $ 1,614 | $ (15,943) | $ (17,827) | $ (14,329) | $ (25,286) | $ (11,222) | $ (106,497) | $ (326,617) | $ (19,834) |
Basic and Diluted Per Common Share Data: | |||||||||||||||
Loss from continuing operations | $ (2.25) | $ (0.22) | $ (0.03) | $ (0.49) | $ (0.51) | $ (0.73) | $ (2.99) | $ (8.96) | $ (0.09) | ||||||
Income from discontinued operations, net of income taxes | 0.01 | 0.02 | 0.01 | 0.02 | 0.03 | (0.22) | (0.45) | ||||||||
Basic and diluted loss per share | $ (2.25) | $ (0.21) | $ (0.01) | $ (0.49) | $ (0.50) | $ (0.71) | $ (2.96) | $ (9.18) | $ (0.54) | ||||||
Shares used to compute basic and diluted per common share amounts | 36,032 | 36,008 | 35,949 | 35,742 | 35,846 | 35,900 | 35,933,222 | 35,635,448 | 35,309,478 | ||||||
Basic Per Common Share Data: | |||||||||||||||
Net (loss) income from continuing operations | $ (8.83) | $ 0.09 | $ 0.22 | $ (0.42) | $ (0.20) | $ (0.11) | |||||||||
Net (loss) income from discontinued operations | (0.02) | (0.18) | (0.03) | (0.20) | (0.21) | ||||||||||
Basic loss per share | $ (8.85) | $ 0.09 | $ 0.04 | $ (0.45) | $ (0.40) | $ (0.32) | |||||||||
Shares used to compute basic per common share amounts (in shares) | 35,697 | 35,678 | 35,661 | 35,498 | 35,579 | 35,614 | 35,933,222 | 35,635,448 | 35,309,478 | ||||||
Diluted Per Common Share Data | |||||||||||||||
Net (loss) income from continuing operations | $ (8.83) | $ 0.09 | $ 0.22 | $ (0.42) | $ (0.20) | $ (0.11) | |||||||||
Net (loss) income from discontinued operations | (0.02) | (0.18) | (0.03) | (0.20) | (0.21) | ||||||||||
Diluted loss per share | $ (8.85) | $ 0.09 | $ 0.04 | $ (0.45) | $ (0.40) | $ (0.32) | |||||||||
Shares used to compute diluted per common share amounts (in shares) | 35,697 | 35,748 | 35,733 | 35,498 | 35,579 | 35,614 | 35,933,222 | 35,635,448 | 35,309,478 |
QUARTERLY FINANCIAL INFORMAT107
QUARTERLY FINANCIAL INFORMATION - STATEMENTS OF CASH FLOWS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | |||||||||||||||
Net loss | $ (81,128) | $ (7,478) | $ (328) | $ (17,537) | $ (315,788) | $ 3,080 | $ 1,587 | $ (15,970) | $ (17,865) | $ (14,383) | $ (25,343) | $ (11,303) | $ (106,471) | $ (327,091) | $ (18,966) |
Income (loss) from discontinued operations, net of income taxes | (15) | 378 | 572 | (664) | (6,343) | (967) | 572 | (7,310) | 950 | (7,310) | 935 | (7,974) | (15,946) | ||
Loss from continuing operations | (81,113) | (7,856) | (900) | (17,537) | (315,124) | 3,080 | 7,930 | (15,003) | (18,437) | (7,073) | (26,293) | (3,993) | (107,406) | (319,117) | (3,020) |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | |||||||||||||||
Depreciation and amortization | 10,160 | 11,339 | 11,660 | 11,728 | 15,957 | 10,240 | 9,916 | 10,230 | 23,388 | 20,146 | 34,727 | 30,386 | 44,887 | 46,343 | 38,929 |
Provision for doubtful accounts | 4,249 | 3,696 | 5,780 | 6,935 | 7,546 | 9,983 | 13,727 | 12,854 | 11,639 | ||||||
Impairment of long-lived and intangible assets | 812 | 86,164 | 385,807 | 2,425 | |||||||||||
Stock-based compensation expense | 2,948 | 2,500 | 5,425 | 5,069 | 7,552 | 7,731 | 9,763 | 11,134 | 9,642 | ||||||
Benefit for deferred income taxes | (373) | (373) | (373) | 4,031 | (48,926) | (39,214) | |||||||||
Amortization of debt issuance costs | 766 | 580 | 1,618 | 1,327 | 2,845 | 2,097 | 4,921 | 3,371 | 2,663 | ||||||
Loss (gain) on extinguishment of debt | 6,041 | (10) | 7,237 | (10) | 6,031 | 6,031 | 7,237 | ||||||||
Gain on sale and disposal of fixed assets | (704) | (216) | (1,213) | (776) | (1,901) | (1,649) | (5,055) | (2,384) | (293) | ||||||
Changes in operating assets and liabilities, net of effects of acquired companies: | |||||||||||||||
Net accounts receivable | 20,522 | 10,917 | 23,102 | 3,284 | 28,336 | (2,432) | 17,612 | (13,625) | (28,797) | ||||||
Inventories | (685) | (2,115) | (2,614) | (2,043) | (6,085) | (3,689) | 253 | 2,520 | 6,917 | ||||||
Other current assets | (2,055) | (1,251) | (602) | 815 | 421 | 623 | 849 | 3,913 | 2,917 | ||||||
Income taxes | (8,640) | (14,745) | (9,671) | (21,896) | 20,994 | (21,095) | 18,725 | (40,152) | 6,434 | ||||||
Accounts payable | (13,287) | 6,647 | 14,608 | 5,289 | 4,259 | 5,899 | (3,133) | 8,084 | (777) | ||||||
Accrued expenses and accrued interest payable | 6,301 | 1,130 | 134 | 1,981 | (7,152) | 6,079 | (3,333) | (8,475) | 40,186 | ||||||
Accrued compensation related costs | (23,037) | (14,136) | (24,396) | (13,281) | (25,975) | (7) | (12,006) | 6,877 | (483) | ||||||
Other liabilities | (223) | 7,284 | (1,230) | 3,402 | (2,060) | 2,717 | (5,797) | 6,940 | 978 | ||||||
Net cash provided by operating activities - continuing operations | (19,654) | (4,855) | 15,882 | 2,806 | 43,245 | 33,089 | 70,233 | 62,401 | 50,061 | ||||||
Net cash used in operating activities - discontinued operations | (3,348) | (850) | (4,425) | (1,425) | (4,942) | (1,425) | (5,098) | (442) | |||||||
Net cash provided by operating activities | (19,654) | (8,203) | 15,032 | (1,619) | 41,820 | 28,147 | 68,808 | 57,303 | 49,619 | ||||||
Cash flows from investing activities: | |||||||||||||||
Purchase of property, plant and equipment | (6,364) | (8,583) | (9,963) | (16,150) | (13,943) | (22,133) | (21,148) | (27,620) | (27,096) | ||||||
Purchase of equipment leased to third parties under operating leases | (608) | (1,007) | (1,190) | (2,525) | (1,914) | (3,324) | (2,476) | (4,632) | (4,012) | ||||||
Acquisitions, net of cash acquired | (10,215) | (10,215) | (10,215) | (10,215) | (38,097) | ||||||||||
Restricted cash | 4 | 20 | 2,676 | 978 | 2,716 | 1,031 | 1,615 | (54) | |||||||
Purchase of company-owned life insurance investment | (2,543) | (2,544) | (2,543) | (2,544) | (2,543) | (2,544) | (2,543) | (2,544) | (2,294) | ||||||
Proceeds from sale of property, plant and equipment | 1,136 | 2,087 | 1,922 | 2,410 | 2,647 | 3,960 | 5,960 | 4,954 | 2,518 | ||||||
Other investing activities, net | (10) | (4) | (10) | (36) | (10) | (43) | (10) | (50) | |||||||
Net cash used in investing activities - continuing operations | (8,385) | (20,246) | (9,108) | (28,082) | (13,047) | (33,268) | (18,602) | (40,161) | (68,981) | ||||||
Net cash provided by investing activities - discontinued operations | 3,286 | 850 | 4,393 | 1,425 | 4,831 | 1,425 | 4,987 | 2,507 | |||||||
Net cash used in investing activities | (8,385) | (16,960) | (8,258) | (23,689) | (11,622) | (28,437) | (17,177) | (35,174) | (66,474) | ||||||
Cash flows from financing activities: | |||||||||||||||
Borrowings under term loan | 274,400 | 274,400 | |||||||||||||
Repayment of term loan | (4,219) | (2,813) | (8,438) | (5,626) | (14,063) | (9,845) | (19,688) | (14,063) | (8,438) | ||||||
Borrowings under revolving credit agreement | 72,000 | 95,000 | 20,000 | 120,000 | 23,000 | 155,000 | 331,000 | ||||||||
Repayments under revolving credit agreement | (23,000) | (48,000) | (144,000) | (83,000) | (155,000) | (93,000) | (286,000) | ||||||||
Repayment of senior notes | (200,000) | (200,000) | |||||||||||||
Payment on seller's note and other contingent consideration | (4,536) | (5,297) | (5,817) | (7,852) | (7,751) | (11,314) | (9,128) | (13,561) | (10,260) | ||||||
Payment of capital lease obligations | (230) | (305) | (494) | (624) | (702) | (826) | |||||||||
Payment of debt issuance costs and fees | (1,767) | (718) | (1,767) | (1,111) | (15,832) | (1,792) | |||||||||
Net cash (used in) provided by financing activities | (10,752) | 39,867 | (16,516) | 31,787 | (87,948) | 13,223 | (103,227) | 24,925 | 26,941 | ||||||
(Decrease) increase in cash and cash equivalents | (38,791) | 14,704 | (9,742) | 6,479 | (57,750) | 12,933 | (51,596) | 47,054 | 10,086 | ||||||
Cash and cash equivalents, at beginning of year | 1,003 | 49,011 | 19,962 | 58,753 | 24,632 | 18,178 | 26,403 | 11,699 | 58,753 | 11,699 | 58,753 | 11,699 | 58,753 | 11,699 | 1,613 |
Cash and cash equivalents, at end of year | $ 7,157 | $ 1,003 | $ 49,011 | 19,962 | $ 58,753 | $ 24,632 | $ 18,178 | 26,403 | 49,011 | 18,178 | 1,003 | 24,632 | 7,157 | 58,753 | 11,699 |
Cash paid during the period for: | |||||||||||||||
Interest | 3,759 | 3,077 | 15,111 | 12,584 | 30,850 | 16,102 | 42,345 | 26,070 | 25,341 | ||||||
Income taxes (net of refunds) | 168 | 9,665 | 1,077 | 17,540 | (33,821) | 17,873 | (35,092) | 18,106 | 25,433 | ||||||
Non-cash financing and investing activities: | |||||||||||||||
Issuance of seller notes in connection with acquisitions | 4,662 | 4,662 | 4,662 | 4,662 | 13,964 | ||||||||||
Additions to property, plant and equipment acquired through financing obligations | 162 | 1,835 | 213 | 3,197 | 269 | 3,416 | 374 | 3,743 | 3,461 | ||||||
Retirements of financed property, plant and equipment | 1,663 | 171 | 2,157 | 374 | 2,228 | 1,076 | 2,381 | 1,434 | 2,071 | ||||||
Purchase of property, plant and equipment in accounts payable | $ 747 | $ 1,613 | $ 998 | $ 1,153 | $ 1,900 | $ 1,665 | $ 728 | $ 2,746 | $ 1,588 |