Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 03, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | Press Ganey Holdings, Inc. | |
Entity Central Index Key | 1,633,142 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 52,698,465 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash | $ 23,793 | $ 6,962 |
Accounts receivable, net of allowances of $749 and $531 at September 30, 2015 and December 31, 2014, respectively | 50,381 | 44,444 |
Other receivables | 2,661 | 1,782 |
Prepaid expenses and other assets | 5,815 | 2,741 |
Income taxes receivable | 5,445 | 2,916 |
Total current assets | 88,095 | 58,845 |
Property and equipment, net | 61,503 | 59,610 |
Deferred financing fees, net | 945 | 810 |
Intangible assets, net | 366,890 | 375,391 |
Goodwill | 410,517 | 402,934 |
Assets, Total | 927,950 | 897,590 |
Current liabilities: | ||
Current portion of long-term debt | 9,250 | 4,279 |
Current portion of capital lease obligations | 4,187 | 4,373 |
Accounts payable | 7,206 | 13,232 |
Accrued payroll and related liabilities | 13,507 | 11,704 |
Accrued expenses and other liabilities | 1,755 | 1,581 |
Deferred income taxes | 1,099 | 712 |
Deferred revenue | 37,146 | 26,208 |
Total current liabilities | 74,150 | 62,089 |
Long-term debt, less current portion | 173,418 | 402,888 |
Capital lease obligations, less current portion | 6,373 | 6,779 |
Equity-based compensation liability | 19,423 | |
Deferred income taxes | 119,505 | 125,767 |
Total liabilities | 373,446 | 616,946 |
SHAREHOLDER’S EQUITY | ||
Common stock, $0.01 par value; 350,000,000 and 44,800,000 shares authorized, and 52,661,538 and 43,313,200 shares issued and outstanding as of September 30, 2015 and December 31, 2014, respectively | 527 | 433 |
Additional paid‑in capital | 594,271 | 270,847 |
Retained earnings (accumulated deficit) | (40,294) | 9,364 |
Total shareholder’s equity | 554,504 | 280,644 |
Total liabilities and shareholder’s equity | $ 927,950 | $ 897,590 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Condensed Consolidated Balance Sheets | ||
Accounts receivable, allowances (in dollars) | $ 749 | $ 531 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 350,000,000 | 44,800,000 |
Common stock, shares issued | 52,661,538 | 43,313,200 |
Common stock, shares outstanding | 52,661,538 | 43,313,200 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Condensed Consolidated Statements of Income | ||||
Revenue | $ 80,730 | $ 71,713 | $ 233,079 | $ 205,482 |
Operating expenses: | ||||
Cost of revenue, excluding depreciation and amortization | 34,772 | 30,618 | 109,311 | 87,342 |
General and administrative | 22,720 | 17,918 | 120,123 | 52,306 |
Depreciation and amortization | 10,528 | 8,779 | 30,624 | 25,825 |
Loss (gain) on disposal of property and equipment | 1 | 504 | (30) | 1,595 |
Total operating expenses | 68,021 | 57,819 | 260,028 | 167,068 |
Income (loss) from operations | 12,709 | 13,894 | (26,949) | 38,414 |
Other income (expense): | ||||
Interest expense, net | (1,567) | (4,706) | (9,921) | (15,136) |
Extinguishment of debt | (1,112) | (8) | (1,750) | (2,894) |
Management fee of related party | (230) | (553) | (690) | |
Total other income (expense), net | (2,679) | (4,944) | (12,224) | (18,720) |
Income (loss) before income taxes | 10,030 | 8,950 | (39,173) | 19,694 |
Provision for income taxes | 2,614 | 4,174 | 1,254 | 9,185 |
Net income (loss) | $ 7,416 | $ 4,776 | $ (40,427) | $ 10,509 |
Earnings (net loss) per share: | ||||
Basic (in dollars per share) | $ 0.14 | $ 0.11 | $ (0.85) | $ 0.24 |
Diluted (in dollars per share) | $ 0.14 | $ 0.11 | $ (0.85) | $ 0.24 |
Weighted average shares of common stock outstanding: | ||||
Basic (in dollars per share) | 52,620 | 43,313 | 47,616 | 43,313 |
Diluted (in dollars per share) | 52,950 | 43,313 | 47,616 | 43,313 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Shareholder’s Equity - 9 months ended Sep. 30, 2015 - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Total |
Balance at beginning of period at Dec. 31, 2014 | $ 433 | $ 270,847 | $ 9,364 | $ 280,644 |
Balance at beginning of period (in shares) at Dec. 31, 2014 | 43,313,200 | 43,313,200 | ||
Change in Stockholders' Equity | ||||
Sales of equity interests | 100 | $ 100 | ||
Purchase of equity interests | (731) | (731) | ||
Equity-based compensation | 79,735 | 79,735 | ||
Impact of liquidation of PG Holdco, LLC | $ (10) | 10 | ||
Impact of liquidation of PG Holdco, LLC (in shares) | (1,028,122) | |||
Conversion of equity-based compensation liability | 21,008 | 21,008 | ||
Vesting of restricted stock | $ 2 | (1) | 1 | |
Vesting of restricted stock (in shares) | 189,651 | |||
Cancellation of restricted stock units (in shares) | (7,365) | |||
Taxes paid for net settlements of restricted stock vesting | (11,763) | (11,763) | ||
Taxes paid for net settlements of restricted stock (in shares) | (40,826) | |||
Distribution payments | (8,500) | (8,500) | ||
Initial public offering of common stock, net of issuance costs | $ 102 | 234,335 | 234,437 | |
Initial public offering of common stock, net of issuance costs (in shares) | 10,235,000 | |||
Net loss | (40,427) | (40,427) | ||
Balance at end of period at Sep. 30, 2015 | $ 527 | $ 594,271 | $ (40,294) | $ 554,504 |
Balance at end of period (in shares) at Sep. 30, 2015 | 52,661,538 | 52,661,538 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Operating activities | ||
Net income (loss) | $ (40,427) | $ 10,509 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 30,624 | 25,825 |
Amortization of deferred financing costs and debt discount | 511 | 694 |
Equity-based compensation | 81,466 | 7,565 |
Extinguishment of debt | 1,750 | 2,894 |
Provision for doubtful accounts | 421 | 329 |
Loss (gain) on disposal of property and equipment | (30) | 1,595 |
Deferred income taxes | (5,875) | (90) |
Changes in assets and liabilities: | ||
Accounts receivable | (5,020) | (3,400) |
Other receivables | 2 | (280) |
Prepaid expenses and other assets | (3,071) | (2,034) |
Accounts payable | (2,363) | (3,832) |
Accrued payroll and related liabilities | 1,497 | 565 |
Accrued expenses and other liabilities | 174 | 4 |
Deferred revenue | 9,185 | 1,675 |
Income taxes receivable | (2,529) | (2,485) |
Net cash provided by operating activities | 66,315 | 39,534 |
Investing activities | ||
Acquisitions of businesses, net of cash acquired | (11,721) | (27,846) |
Purchases of property and equipment | (20,904) | (12,178) |
Net cash used in investing activities | (32,625) | (40,024) |
Financing activities | ||
Proceeds from the issuance of long‑term debt | 185,000 | 41,825 |
Payments on long‑term debt | (408,456) | (63,592) |
Deferred financing payments | (3,441) | (508) |
Payments on capital lease obligations | (3,505) | (1,328) |
Proceeds from sale of equity interests | 100 | 250 |
Purchases of equity interests | (731) | (3,543) |
Taxes paid for net settlements of restricted stock vesting | (11,763) | |
Distribution payments | (8,500) | |
Proceeds from the issuance of common stock in initial public offering, net of fees | 234,437 | |
Net cash used in financing activities | (16,859) | (26,896) |
Net increase (decrease) in cash | 16,831 | (27,386) |
Cash at beginning of period | 6,962 | 32,635 |
Cash at end of period | 23,793 | 5,249 |
Supplemental disclosure of cash flow information | ||
Cash paid during the period for interest | 9,420 | 14,377 |
Cash paid during the period for income taxes | 9,578 | 11,321 |
Disposal of property and equipment acquired through capital leases | 333 | |
Property and equipment acquired through capital leases | 3,246 | 367 |
Purchase of property and equipment in accounts payable | $ 2,712 | $ 1,759 |
Basis of Presentation of Interi
Basis of Presentation of Interim Financial Information | 9 Months Ended |
Sep. 30, 2015 | |
Basis of Presentation of Interim Financial Information | |
Basis of Presentation | 1. Basis of Presentation of Interim Financial Information Press Ganey Holdings, Inc. (the “Company”) is a leading provider of performance measurement, analysis, benchmarking, and quality improvement services primarily to the United States healthcare industry. The consolidated financial statements include the financial statements of Press Ganey Holdings, Inc. and its wholly owned subsidiary, Press Ganey Associates (“Associates”), and Associates’ wholly owned subsidiaries, PatientImpact LLC; Data Advantage LLC; Center for Performance Services, Inc.; Morehead Associates, Inc.; On The Spot Systems, Inc.; Dynamic Clinical Systems, Inc.; and Healthcare Performance Improvement, LLC. All significant intercompany balances and transactions have been eliminated in consolidation. Prior to the initial public offering (discussed below), the Company was a wholly owned subsidiary of PG Holdco, LLC (the “Parent”). Effective May 8, 2015, the name of the Company was changed from PGA Holdings, Inc. to Press Ganey Holdings, Inc. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal and recurring accruals necessary to present fairly the financial statements in accordance with GAAP. Operating results for the three and nine months ended September 30, 2015 and 2014 are not necessarily indicative of results to be expected for any other interim period or for the full year. The preparation of the consolidated financial statements in accordance with GAAP requires management to make certain estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results could materially differ from those estimates. Initial Public Offering In May 2015, the Company completed its initial public offering (the “IPO”) of 8,900,000 shares of common stock and, upon the underwriters’ exercise of their option to purchase additional shares, issued an additional 1,335,000 shares for a total of 10,235,000 shares issued at an offering price of $25.00 per share. Proceeds from the IPO were approximately $234.4 million, net of underwriting discounts and commissions and offering-related transaction costs incurred. In connection with the IPO: (i) the Parent was liquidated and its sole asset, the shares of the Company’s common stock, was distributed to the equity holders based on their relative rights under the limited liability company agreement, (ii) the Company recognized $70.4 million of equity-based compensation expense for the modification of certain units of the Parent, (iii) the Company paid a one-time transaction advisory fee of $8.5 million to Vestar, and (iv) the Company recognized a loss on extinguishment of debt of $638,000 related to the write-off of deferred financing fees, loss on original issue discount and lender fees as a result of the partial repayment of its term loan facility with the net proceeds of the IPO. Stock Split On May 8, 2015, the Company’s common stock was split at a 2,800 -for-one ratio. The authorized shares were increased to 350.0 million. Accordingly, all references to numbers of common shares and per-share data in the accompanying unaudited condensed consolidated financial statements have been adjusted to reflect the stock split on a retroactive basis. Preferred Stock On May 27, 2015, the Company amended and restated its certificate of incorporation to, among other things, authorize 50.0 million shares of preferred stock with a par value of $0.01 . |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies A complete listing of the Company’s significant accounting policies is discussed in Note 2 – Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements included in the Company’s prospectus filed with the SEC on May 22, 2015 pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU 2014 ‑09, “Revenue from Contracts with Customers (Topic 606)”. This ASU requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In August 2015, the FASB deferred the effective date by one year to annual and interim reporting periods beginning after December 15, 2017. The FASB is permitting early adoption of the standard, but not until annual and interim reporting periods beginning after December 15, 2016, the original effective date. An entity may choose to adopt this ASU either retrospectively or through a cumulative effect adjustment as of the start of the first period for which it applies the standard. The Company is currently in the process of evaluating the impact that this new guidance will have on its consolidated financial statements and its method of adoption. In April 2015, the FASB issued ASU 2015-05, “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement”. This ASU 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. In addition, this update changes the accounting for software licenses to be consistent with other licenses of intangible assets. This standard is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. An entity may choose to adopt this ASU either retrospectively or prospectively to all arrangements entered into or materially modified after the effective date. The Company is currently in the process of evaluating the impact the adoption of this standard will have on its consolidated financial statements and its method of adoption. In April 2015, the FASB issued ASU 2015 ‑03, “Simplifying the Presentation of Debt Issuance Costs”. This ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This standard is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. The Company adopted ASU 2015-03 during the three months ended September 30, 2015 and prior period amounts have been reclassified to conform to the current period presentation. As of December 31, 2014, debt issuance costs of $977,000 were reclassified from deferred financing fees, net to long-term debt, less current portion in the Condensed Consolidated Balance Sheet. The adoption of ASU 2015-03 did not impact the Company’s consolidated financial position, results of operations or cash flows. In August 2015, the FASB issued ASU 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements”. This ASU added an SEC paragraph addressing the presentation of debt issuance costs related to line-of-credit arrangements since ASU 2015-03 does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff does not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company adopted ASU 2015-15 during the three months ended September 30, 2015. There were no adjustments to the presentation of debt issuance costs relating to the line-of-credit arrangement and no impact on the Company’s financial position, results of operations or cash flows upon adoption of the new standard. In September 2015, the FASB issued ASU 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments”. This ASU requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this ASU require that the acquirer 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 standard is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. The Company is currently in the process of evaluating the impact the adoption of this standard will have on our consolidated financial statements. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2015 | |
Property and Equipment | |
Property and Equipment | 3. Property and Equipment Property and equipment, net consist of the following: September 30, December 31, 2015 2014 Furniture, fixtures, and leasehold improvements $ $ Office equipment Office equipment held under capital lease Computer equipment and software Construction in progress Accumulated amortization of office equipment held under capital leases Accumulated depreciation $ $ Depreciation and amortization of property and equipment was $6.4 million and $4.6 million for the three months ended September 30, 2015 and 2014 , respectively, and $18.2 million and $14.0 million for the nine months ended September 30, 2015 and 2014 , respectively. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Measurements | |
Fair Value Measurements | 4. Fair Value Measurements The Company measures and reports its financial assets and liabilities on the basis of fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A three ‑level hierarchy for disclosure has been established to show the extent and level of judgment used to estimate fair value measurements, as follows: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Significant other observable inputs (quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability). Level 3: Significant unobservable inputs for the asset or liability. These values are generally determined using pricing models which utilize management estimates of market participant assumptions. Valuation techniques for assets and liabilities measured using Level 3 inputs may include methodologies such as the market approach, the income approach or the cost approach, and may use unobservable inputs such as projections, estimates and management’s interpretation of current market data. These unobservable inputs are only utilized to the extent that observable inputs are not available or cost ‑effective to obtain. The Company had no Level 3 assets or liabilities at September 30, 2015 and December 31, 2014, except for the Level 3 measurements of the acquired net assets of the business acquired (Note 5) . Financial Instruments The recorded values of accounts receivable, accounts payable, and other liabilities approximate fair value because of the short maturity of these financial instruments. The recorded values of the variable rate Term Loan and First Lien Term Loan approximate fair value because the interest rates fluctuate with market rates. |
Business Combination
Business Combination | 9 Months Ended |
Sep. 30, 2015 | |
Business Combination | |
Business Combination | 5. Business Combination On September 1, 2015, the Company acquired all of the membership interests of Healthcare Performance Improvement, LLC (“HPI”) in exchange for cash of $11.7 million, net of cash acquired. HPI provides patient safety and reliability consulting and coaching services. The acquisition brings the critical dimension of safety to the Company’s ability to help its clients reduce patient suffering. The acquisition was accounted for under the purchase method of accounting and the total purchase price was preliminarily allocated to the net tangible and identifiable intangible assets based on their estimated fair values (based on Level 3 measurements) as of September 1, 2015. The excess purchase price over the net tangible and intangible assets was recorded to goodwill. The goodwill balance is primarily attributed to assembled workforce and is expected to be deductible for tax purposes. The estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed. The Company believes that information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but the Company is waiting for additional information necessary to finalize those fair values. Therefore, the provisional measurements of fair value reflected are subject to change and such changes could be significant. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date. The following table summarizes the preliminary allocation of the fair value of the acquisition: Current assets $ Property and equipment Goodwill Intangible assets: Trade name Customer relationships Other Total assets acquired Liabilities assumed: Deferred revenue Other current liabilities Net assets acquired $ Transaction expenses of $277,000 relating to the purchase are included in general and administrative expenses for both the three and nine months ended September 30, 2015. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | 6. Goodwill and Intangible Assets Goodwill Goodwill represents the excess of costs over fair value of net assets of businesses acquired. Goodwill and intangible assets acquired in connection with business combinations accounted for as a purchase and determined to have indefinite lives are not amortized, but are instead tested for impairment at least annually. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives and reviewed for impairment when impairment indicators are present. The Company believes that no such impairment indicators existed during the three and nine months ended September 30, 2015 and 2014 . Intangible Assets Intangible assets consist of the following: September 30, 2015 December 31, 2014 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying Amount Amortization Amount Amount Amortization Amount Trade name (indefinite life) $ $ — $ $ $ — $ Trade names (finite life) Customer relationships Proprietary technology Other $ $ $ $ $ $ Intangible asset amortization expense for the three months ended September 30, 2015 and 2014 was $4.1 million and $4.2 million, respectively. Intangible asset amortization expense for the nine months ended September 30, 2015 and 2014 was $12.4 million and $11.8 million, respectively. The Company cannot reliably determine the pattern for which it consumes the benefit of its customer relationship intangible assets. As such, the Company amortizes its customer relationship intangible assets using the straight ‑line method over the estimated lives based upon the Company’s historical customer retention and recurring revenue base. The remaining estimated intangible asset amortization expense is $4.2 million in 2015, $16.5 million in 2016, $15.5 million in 2017, $14.0 million in 2018, $13.4 million in 2019 and $103.3 million thereafter. These amounts are based upon intangible assets recorded as of September 30, 2015 and actual amortization expense could differ from these estimates as a result of future acquisitions and other factors. |
Revolving Line of Credit and Lo
Revolving Line of Credit and Long Term Debt | 9 Months Ended |
Sep. 30, 2015 | |
Revolving Line of Credit and Long Term Debt | |
Revolving Line of Credit and Long Term Debt | 7. Revolving Line of Credit and Long ‑Term Debt As of September 30, 2015 and December 31, 2014 , the Company’s long ‑term debt consisted of the following: September 30, December 31, 2015 2014 Term Loan $ $ — First Lien Term Loan — Unamortized deferred financing fees Unamortized original issue discount — Less current portion Long-term debt $ $ Unamortized deferred financing fees related to the Company’s Revolver and Revolving Credit Facility (as defined below) were $945,000 and $810,000 at September 30, 2015 and December 31, 2014, respectively, and are classified as deferred financing fees, net in the condensed consolidated balance sheets. 2015 Credit Agreement On July 31, 2015, the Company entered into a new credit agreement (“2015 Credit Agreement”). The 2015 Credit Agreement consists of a five -year $185.0 million term loan (“Term Loan”) and a five -year $75.0 million revolving credit facility (“Revolver”). The Company used the proceeds from the Term Loan to repay the outstanding First Lien Term Loan (as defined below) balance of $183.2 million, which resulted in a loss on extinguishment of debt of $1.1 million, consisting of unamortized deferred financing fees of $995,000 and a loss on original issue discount of $117,000 . At the discretion of the Company, interest accrues on outstanding borrowings under the 2015 Credit Agreement at either the London Interbank Offered Rate (“LIBOR”) plus an applicable margin, currently 1.75% , or the adjusted base rate (“ABR”) plus an applicable margin, currently 0.75% . The applicable margins for both the LIBOR and ABR are variable based upon stipulated ranges of the secured net leverage ratio, as defined in the agreement. The Company is required to repay the outstanding principal amount of the Term Loan in equal quarterly amounts of $2.3 million, commencing on December 31, 2015 . The remaining Term Loan balance and any outstanding balances on the Revolver will be due upon maturity on July 31, 2020. The Term Loan and Revolver are secured by substantially all of the assets of the Company. There were no borrowings outstanding on the Revolver at September 30, 2015; however, the Company had a letter of credit outstanding of approximately $65,000 at September 30, 2015, which reduced the borrowing capacity of the Revolver to $74.9 million. The Company is charged a loan commitment fee, currently 0.375% , for unused amounts on the Revolver. The 2015 Credit Agreement contains certain restrictive and financial covenants which the Company must comply with on a quarterly basis, including a maximum secured net leverage ratio, as defined in the agreement. The Company is also limited in its ability to incur additional indebtedness or liens; pay dividends or make certain other restricted payments, enter into certain transactions with affiliates, merge or consolidate with another entity; or sell, assign, transfer, convey, or otherwise dispose of all or substantially all of its assets. The Company was in compliance with these restrictive and financial covenants as of September 30, 2015. First and Second Lien Credit Agreements Prior to the 2015 Credit Agreement, the Company was party to a First Lien Credit Agreement (the “First Lien Agreement”) and a Second Lien Credit Agreement (the “Second Lien Agreement”). The First Lien Agreement consisted of a $30 million revolving credit facility (the “Revolving Credit Facility”) and a $345 million term loan (the “First Lien Term Loan”), which was issued at an original issue discount of $3.5 million. The Second Lien Agreement consisted of a $95 million term loan (the “Second Lien Term Loan”), which was issued at an original issue discount of $950,000 . On May 9, 2013, the Company amended the First Lien Agreement to borrow an additional $50 million, lower interest rates, and adjust certain financial covenants. Proceeds from the additional borrowings were used to pay down the principal balance of the Second Lien Term Loan. On May 9, 2014, the Company amended the First Lien Agreement to borrow an additional $35 million in the form of an incremental term loan increase. Proceeds from the additional borrowings and $10 million of cash were used to pay off the remaining balance of the Second Lien Term Loan. The transactions resulted in a loss on extinguishment of debt of $2.9 million, consisting of unamortized deferred financing fees of $1.5 million, payments of fees to lenders of $497,000 and loss on original issue discount of $921,000 , which are recorded as extinguishment of debt in other expense, net, in the consolidated statement of operations for the nine months ended September 30, 2014. During the second quarter of 2015, the Company used proceeds from the IPO to pay down $223.0 million of the principal balance of the First Lien Term Loan. The transactions resulted in a loss on extinguishment of debt of $638,000 , consisting of unamortized deferred financing fees of $489,000 and loss on original issue discount of $149,000 , which are recorded as extinguishment of debt in other expense, net, in the consolidated statement of operations for the nine months ended September 30, 2015. At the discretion of the Company, interest accrued on borrowings on the First Lien Term Loan and Revolving Credit Facility at either LIBOR plus an applicable margin or the ABR plus an applicable margin, each as defined in the First Lien Agreement. LIBOR had a floor of 1.00% plus an applicable margin for outstanding borrowings under the First Lien Term Loan. The Company was required to make quarterly principal payments of $863,000 from June 2012 through March 31, 2013, payments of $979,000 from June 30, 2013 through March 31, 2014, and payments of $1.1 million from June 30, 2014 through April 20, 2018, when the First Lien Agreement was to mature, and to make interest payments. There were no borrowings outstanding under the Revolving Credit Facility at December 31, 2014 . The Company was charged a loan commitment fee of 0.50% for unused amounts on the Revolving Credit Facility. The First Lien Agreement contained certain restrictive and financial covenants which the Company was required to comply with on a quarterly basis, including a maximum net leverage ratio and a minimum interest coverage ratio, as defined in the agreement. The Company was in compliance with these restrictive and financial covenants as of December 31, 2014 . |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income Taxes | |
Income Taxes | 8. Income Taxes For the three months ended September 30, 2015 , the Company recorded income tax expense of $2.6 million compared to expense of $4.2 million for the three months ended September 30, 2014 . The Company’s effective tax rate was 26.1% for the three months ended September 30, 2015 compared to 46.6% for the three months ended September 30, 2014 . The lower effective tax rate for the three months ended September 30, 2015 was primarily due to adjustments to reduce tax liabilities after a review of the Company’s future required tax payments and the impact of nondeductible equity-based compensation. For the nine months ended September 30, 2015 , the Company recorded income tax expense of $1. 3 million compared to expense of $9.2 million for the nine months ended September 30, 2014 . The Company’s effective tax rate was 3.2% for the nine months ended September 30, 2015 compared to 46.6% for the nine months ended September 30, 2014 . The lower effective tax rate for the nine months ended September 30, 2015 primarily reflects the inability to realize a tax benefit from the nondeductible equity-based compensation expense incurred in connection with the modification of equity awards as a result of the Company’s IPO. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2015 | |
Segment Information | |
Segment Information | 9. Segment Information An operating segment is a component of an enterprise that engages in business activities and has discrete financial information that is regularly reviewed by the enterprise’s chief operating decision maker to assess performance of the individual component and make decisions about allocating resources to the component. The Company produces one set of financial information at the enterprise level that is regularly reviewed by the Company’s chief operating decision maker. Discrete financial information is not produced or reviewed by the Company’s chief operating decision maker at a level lower than the enterprise level. As such, the Company has one operating segment as of September 30, 2015 and 2014 . The Company’s identifiable assets are located in the United States and over 99% of the Company’s revenues are located in the United States. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions | |
Related Party Transactions | 10 . Related Party Transactions The Company was charged an annual management fee that was payable quarterly to its majority shareholder, Vestar Capital Partners, LLC (“Vestar”). The annual management fee is no longer required after the effective date of the IPO. The Company incurred management fees of $0 and $230,000 for the three months ended September 30, 2015 and 2014 , respectively, and $553,000 and $690,000 for the nine months ended September 30, 2015 and 2014 , respectively. In connection with the IPO, the Company paid a one-time transaction advisory fee to Vestar of $8.5 million. This fee was reflected as a distribution payment on the condensed consolidated statement of cash flows for the nine months ended September 30, 2015 , and reduced retained earnings on the condensed consolidated balance sheet as of September 30, 2015. |
Equity-Based Compensation
Equity-Based Compensation | 9 Months Ended |
Sep. 30, 2015 | |
Equity-Based Compensation | |
Equity-Based Compensation | 11. Equity-Based Compensation The Company measures its stock-based compensation costs based on the grant date fair value of the awards and recognizes these costs in the consolidated financial statements over the requisite service or performance vesting period. Total equity-based compensation expense recorded in the condensed consolidated statements of operations for the periods indicated is as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Cost of revenue $ $ $ $ General and administrative Total equity-based compensation expense $ $ $ $ Parent Equity-Based Compensation Plan The Company’s former parent company, PG Holdco, LLC, had adopted an equity-based compensation plan (the “Parent Plan”), which authorized the granting of various equity awards of the Parent’s Preferred units, Class A common units, Class B common units, and Class C common units to employees and directors of the Company. The awards of the Parent were recorded as compensation expense in the accounts of the Company because the recipients are employees and directors of the Company. In connection with the closing of the IPO, the Parent was liquidated and its sole asset, shares of the Company’s common stock, were distributed to its equity holders based on their relative rights under its limited liability agreement. The equity holders of the Parent received the number of shares of the Company’s common stock in the liquidation of the Parent that they would have held in the Company’s common stock directly immediately before the distribution, with no issuance of additional shares by the Company. Vested units of the Parent converted to shares of the Company’s common stock in the distribution. Unvested common units of the Parent that were subject to time-vesting conditions were converted to 1,028,122 unvested restricted shares of the Company’s common stock in the distribution and will continue to vest based on the amended vesting schedule of the respective unit class. The liquidation and distribution of the Parent resulted in $70.4 million of equity-based compensation expense for the nine months ended September 30, 2015 due to the following outstanding award modifications: · Performance-based Class A and Class C common units of the Parent – vesting of $40.4 million triggered by achievement of performance threshold as a result of the IPO · Class A common units of the Parent – modification of $19.4 million due to change from cliff-vesting awards to quarterly-vesting awards with resulting change from liability treatment to equity treatment · Preferred, Class A and Class B common units purchased with loans – modification of $9.1 million due to repayment of the loan, which was a cancellation of option treatment and replacement with new awards with resulting change from liability treatment to equity treatment · Loan forgiveness – modification of $1.5 million due to forgiveness of loans used to purchase units with resulting change from liability treatment to equity treatment The total liability outstanding associated with the Parent Plan equity-based compensation awards not classified in equity but as liabilities was $0 and $19.4 million at September 30, 2015 and December 31, 2014, respectively. 2015 Incentive Award Plan The Company’s 2015 Incentive Award Plan (the “2015 Plan”) provides for the grant of stock options, restricted stock, dividend equivalents, stock payments, restricted stock units, stock appreciation rights, and other stock or cash based awards. The 2015 Plan authorized 7,120,000 shares of common stock for issuance pursuant to awards under the plan. Restricted Stock On May 21, 2015, the Company granted shares of restricted stock with vesting terms summarized as follows: 4-year service vesting ( 20% for years 1 -2, 30% for years 3 -4) 3-year performance vesting (cliff) 2-year service vesting (quarterly) 1-year service vesting During the nine months ended September 30, 2015 , the Company granted the following restricted stock with various performance and time vesting conditions: Weighted Average Fair Value at Grant Shares Date Nonvested at January 1, 2015 — $ — Converted from liquidation of Parent Granted Vested Forfeited Nonvested at September 30, 2015 $ As of September 30, 2015 , $51.3 million of total unrecognized compensation costs related to outstanding nonvested restricted stock was expected to be recognized over a weighted average period of 2.8 years. Stock Options The Company granted options to purchase 19,088 shares of the Company’s common stock during the nine months ended September 30, 2015. Options to purchase shares of common stock were granted with exercise prices equal to the fair value of the common stock on the date of grant. The fair value of the stock options granted was estimated using a Black-Scholes valuation model. The weighted average fair value of the options granted during the nine months ended September 30, 2015 is estimated at $13.97 per share on the date of grant using the following weighted average assumptions: risk-free interest rate of 1.5%; an expected term of approximately 5 years; expected volatility of 35.15%; and dividend yield of 0.0% over the expected life of the option. The risk-free interest rate assumptions were based on the U.S. Treasury yield curve in effect at the time of grant. The expected volatility was based on historical monthly price changes of the Company’s common stock based on the expected life of the options at the date of grant. The expected life of options is the average number of years the Company estimates that options will be outstanding. Earnings (Net Loss) Per Share For the three months ended September 30, 2015, 330,000 common stock equivalents comprising restricted stock calculated using the treasury stock method were included in the computation of diluted earnings per share. For the nine months ended September 30, 2015, aggregate stock options and restricted stock awards of approximately 2,630,545 shares were excluded from the computation of diluted net loss per share, as they are anti-dilutive because of the loss for the period. For the three and nine month periods ended September 30, 2014, there were no outstanding unvested stock options or restricted stock awards to include in the computation of diluted earnings per share. |
Basis of Presentation of Inte18
Basis of Presentation of Interim Financial Information (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Basis of Presentation of Interim Financial Information | |
Basis of Presentation of Interim Financial Information | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal and recurring accruals necessary to present fairly the financial statements in accordance with GAAP. Operating results for the three and nine months ended September 30, 2015 and 2014 are not necessarily indicative of results to be expected for any other interim period or for the full year. The preparation of the consolidated financial statements in accordance with GAAP requires management to make certain estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results could materially differ from those estimates. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Summary of Significant Accounting Policies | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU 2014 ‑09, “Revenue from Contracts with Customers (Topic 606)”. This ASU requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In August 2015, the FASB deferred the effective date by one year to annual and interim reporting periods beginning after December 15, 2017. The FASB is permitting early adoption of the standard, but not until annual and interim reporting periods beginning after December 15, 2016, the original effective date. An entity may choose to adopt this ASU either retrospectively or through a cumulative effect adjustment as of the start of the first period for which it applies the standard. The Company is currently in the process of evaluating the impact that this new guidance will have on its consolidated financial statements and its method of adoption. In April 2015, the FASB issued ASU 2015-05, “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement”. This ASU 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. In addition, this update changes the accounting for software licenses to be consistent with other licenses of intangible assets. This standard is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. An entity may choose to adopt this ASU either retrospectively or prospectively to all arrangements entered into or materially modified after the effective date. The Company is currently in the process of evaluating the impact the adoption of this standard will have on its consolidated financial statements and its method of adoption. In April 2015, the FASB issued ASU 2015 ‑03, “Simplifying the Presentation of Debt Issuance Costs”. This ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This standard is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. The Company adopted ASU 2015-03 during the three months ended September 30, 2015 and prior period amounts have been reclassified to conform to the current period presentation. As of December 31, 2014, debt issuance costs of $977,000 were reclassified from deferred financing fees, net to long-term debt, less current portion in the Condensed Consolidated Balance Sheet. The adoption of ASU 2015-03 did not impact the Company’s consolidated financial position, results of operations or cash flows. In August 2015, the FASB issued ASU 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements”. This ASU added an SEC paragraph addressing the presentation of debt issuance costs related to line-of-credit arrangements since ASU 2015-03 does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff does not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company adopted ASU 2015-15 during the three months ended September 30, 2015. There were no adjustments to the presentation of debt issuance costs relating to the line-of-credit arrangement and no impact on the Company’s financial position, results of operations or cash flows upon adoption of the new standard. In September 2015, the FASB issued ASU 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments”. This ASU requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this ASU require that the acquirer 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 standard is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. The Company is currently in the process of evaluating the impact the adoption of this standard will have on our consolidated financial statements. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Property and Equipment | |
Schedule of Property and equipment, net | September 30, December 31, 2015 2014 Furniture, fixtures, and leasehold improvements $ $ Office equipment Office equipment held under capital lease Computer equipment and software Construction in progress Accumulated amortization of office equipment held under capital leases Accumulated depreciation $ $ |
Business Combination (Tables)
Business Combination (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Business Combination | |
Schedule of preliminary allocation of the fair value of the acquisition | Current assets $ Property and equipment Goodwill Intangible assets: Trade name Customer relationships Other Total assets acquired Liabilities assumed: Deferred revenue Other current liabilities Net assets acquired $ |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets | |
Schedule of intangible assets | September 30, 2015 December 31, 2014 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying Amount Amortization Amount Amount Amortization Amount Trade name (indefinite life) $ $ — $ $ $ — $ Trade names (finite life) Customer relationships Proprietary technology Other $ $ $ $ $ $ |
Revolving Line of Credit and 23
Revolving Line of Credit and Long Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Revolving Line of Credit and Long Term Debt | |
Schedule of long-term debt | September 30, December 31, 2015 2014 Term Loan $ $ — First Lien Term Loan — Unamortized deferred financing fees Unamortized original issue discount — Less current portion Long-term debt $ $ |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Equity-Based Compensation | |
Schedule of equity-based compensation expense in condensed consolidated statements of operations | Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Cost of revenue $ $ $ $ General and administrative Total equity-based compensation expense $ $ $ $ |
Schedule of restricted stock with vesting terms | 4-year service vesting ( 20% for years 1 -2, 30% for years 3 -4) 3-year performance vesting (cliff) 2-year service vesting (quarterly) 1-year service vesting |
Schedule of changes in nonvested restricted stock | Weighted Average Fair Value at Grant Shares Date Nonvested at January 1, 2015 — $ — Converted from liquidation of Parent Granted Vested Forfeited Nonvested at September 30, 2015 $ |
Basis of Presentation of Inte25
Basis of Presentation of Interim Financial Information - Initial Public Offering (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Jul. 31, 2015 | May. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 |
Initial Public Offering | ||||||
Equity-based compensation | $ 81,466 | $ 7,565 | ||||
Transaction advisory fee | 8,500 | |||||
Extinguishment of debt | $ 1,112 | $ 8 | 1,750 | $ 2,894 | ||
First Lien Credit Agreement | ||||||
Initial Public Offering | ||||||
Extinguishment of debt | $ 1,100 | |||||
First Lien Credit Agreement | Term Loan | ||||||
Initial Public Offering | ||||||
Extinguishment of debt | 638 | |||||
Transaction Advisory Fee | Vestar | ||||||
Initial Public Offering | ||||||
Transaction advisory fee | $ 8,500 | |||||
IPO | ||||||
Initial Public Offering | ||||||
Equity-based compensation | $ 70,400 | |||||
IPO | First Lien Credit Agreement | Term Loan | ||||||
Initial Public Offering | ||||||
Extinguishment of debt | 638 | |||||
IPO | Transaction Advisory Fee | Vestar | ||||||
Initial Public Offering | ||||||
Transaction advisory fee | $ 8,500 | |||||
IPO | Common | ||||||
Initial Public Offering | ||||||
Shares issued in offering | 10,235 | |||||
Share price (in dollars per share) | $ 25 | |||||
Proceeds from the issuance of common stock in initial public offering, net of fees | $ 234,400 | |||||
IPO, excluding Underwriters' Option | Common | ||||||
Initial Public Offering | ||||||
Shares issued in offering | 8,900 | |||||
Underwriters' Option | Common | ||||||
Initial Public Offering | ||||||
Shares issued in offering | 1,335 |
Basis of Presentation of Inte26
Basis of Presentation of Interim Financial Information - Stock Split and Preferred Stock (Details) | May. 08, 2015shares | Sep. 30, 2015shares | May. 27, 2015$ / sharesshares | Dec. 31, 2014shares |
Stock split | ||||
Common stock, shares authorized | 350,000,000 | 44,800,000 | ||
Preferred Stock | ||||
Preferred, shares authorized | 50,000,000 | |||
Preferred, par value (in dollars per share) | $ / shares | $ 0.01 | |||
Common | ||||
Stock split | ||||
Stock split, conversion ratio | 2,800 | |||
Common stock, shares authorized | 350,000,000 |
Summary of Significant Accoun27
Summary of Significant Accounting Policies - New Accounting Pronouncements (Details) - Reclassification - USD ($) | 3 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
ASU 2015-03 | Deferred financing fees, net | 2015 Credit Agreement | ||
New accounting pronouncements | ||
Impact of adoption of new accounting pronouncement | $ 0 | |
ASU 2015-15 | Deferred financing fees, net | ||
New accounting pronouncements | ||
Impact of adoption of new accounting pronouncement | $ (977,000) | |
ASU 2015-15 | Long-term debt, less current portion | ||
New accounting pronouncements | ||
Impact of adoption of new accounting pronouncement | $ 977,000 |
Property and Equipment - Compon
Property and Equipment - Components (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Property and equipment, net | ||
Property and equipment, gross | $ 134,261 | $ 119,011 |
Accumulated amortization on office equipment held under capital leases | (9,029) | (6,244) |
Accumulated depreciation | (63,729) | (53,157) |
Property and equipment, net | 61,503 | 59,610 |
Furniture, fixtures, and leasehold improvements | ||
Property and equipment, net | ||
Property and equipment, gross | 9,431 | 6,249 |
Office equipment | ||
Property and equipment, net | ||
Property and equipment, gross | 19,398 | 15,214 |
Office equipment held under capital lease | ||
Property and equipment, net | ||
Property and equipment, gross | 20,806 | 18,531 |
Computer equipment and software | ||
Property and equipment, net | ||
Property and equipment, gross | 69,433 | 57,389 |
Construction in progress | ||
Property and equipment, net | ||
Property and equipment, gross | $ 15,193 | $ 21,628 |
Property and Equipment - Deprec
Property and Equipment - Depreciation (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Depreciation and amortization | ||||
Depreciation and amortization | $ 6.4 | $ 4.6 | $ 18.2 | $ 14 |
Fair Value Measurements - Level
Fair Value Measurements - Level 3 Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Fair Value Measurements | ||
Level 3 assets | $ 0 | $ 0 |
Level 3 liabilities | $ 0 | $ 0 |
Business Combination - Consider
Business Combination - Consideration (Details) - USD ($) $ in Thousands | Sep. 01, 2015 | Sep. 30, 2015 | Sep. 30, 2014 |
2015 Acquisitions | |||
Acquisitions of businesses, net of cash acquired | $ 11,721 | $ 27,846 | |
HPI | |||
2015 Acquisitions | |||
Acquisitions of businesses, net of cash acquired | $ 11,700 |
Business Combination - Recogniz
Business Combination - Recognized Assets & Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Sep. 01, 2015 | Dec. 31, 2014 |
Preliminary allocation of fair value of the acquisition: | |||
Goodwill | $ 410,517 | $ 402,934 | |
HPI | |||
Preliminary allocation of fair value of the acquisition: | |||
Current assets | $ 2,222 | ||
Property and equipment | 23 | ||
Goodwill | 7,583 | ||
Intangibles: | |||
Total assets acquired | 13,718 | ||
Liabilities assumed: | |||
Deferred revenue | (1,753) | ||
Other current liabilities | (244) | ||
Net assets acquired | 11,721 | ||
HPI | Trade names | |||
Intangibles: | |||
Intangibles | 280 | ||
HPI | Customer relationships | |||
Intangibles: | |||
Intangibles | 2,480 | ||
HPI | Other | |||
Intangibles: | |||
Intangibles | $ 1,130 |
Business Combination - Transact
Business Combination - Transaction Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2015 | Sep. 30, 2015 | |
HPI | General and administrative | ||
Other information | ||
Transaction expenses | $ 277 | $ 277 |
Goodwill and Intangible Asset34
Goodwill and Intangible Assets - Goodwill and Intangibles, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Finite-Lived Intangible Assets, Net | ||
Accumulated Amortization | $ (108,760) | $ (96,369) |
Intangible Assets, Net (Excluding Goodwill) | ||
Gross Carrying Value | 475,650 | 471,760 |
Accumulated Amortization | (108,760) | (96,369) |
Intangible assets, net | 366,890 | 375,391 |
Trade names | ||
Finite-Lived Intangible Assets, Net | ||
Gross Carrying Value (finite life) | 2,410 | 2,130 |
Accumulated Amortization | (1,432) | (1,167) |
Intangible Assets, Net (finite life) | 978 | 963 |
Intangible Assets, Net (Excluding Goodwill) | ||
Accumulated Amortization | (1,432) | (1,167) |
Customer relationships | ||
Finite-Lived Intangible Assets, Net | ||
Gross Carrying Value (finite life) | 237,780 | 235,300 |
Accumulated Amortization | (91,588) | (82,010) |
Intangible Assets, Net (finite life) | 146,192 | 153,290 |
Intangible Assets, Net (Excluding Goodwill) | ||
Accumulated Amortization | (91,588) | (82,010) |
Proprietary technology | ||
Finite-Lived Intangible Assets, Net | ||
Gross Carrying Value (finite life) | 32,240 | 32,240 |
Accumulated Amortization | (14,048) | (11,645) |
Intangible Assets, Net (finite life) | 18,192 | 20,595 |
Intangible Assets, Net (Excluding Goodwill) | ||
Accumulated Amortization | (14,048) | (11,645) |
Other | ||
Finite-Lived Intangible Assets, Net | ||
Gross Carrying Value (finite life) | 3,220 | 2,090 |
Accumulated Amortization | (1,692) | (1,547) |
Intangible Assets, Net (finite life) | 1,528 | 543 |
Intangible Assets, Net (Excluding Goodwill) | ||
Accumulated Amortization | (1,692) | (1,547) |
Trade names | ||
Indefinite-Lived Intangible Assets (Excluding Goodwill) | ||
Indefinite-lived intangible assets | $ 200,000 | $ 200,000 |
Goodwill and Intangible Asset35
Goodwill and Intangible Assets - Amortization (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Amortization expense | ||||
Amortization expense | $ 4.1 | $ 4.2 | $ 12.4 | $ 11.8 |
Estimated remaining amortization expense | ||||
2,015 | 4.2 | 4.2 | ||
2,016 | 16.5 | 16.5 | ||
2,017 | 15.5 | 15.5 | ||
2,018 | 14 | 14 | ||
2,019 | 13.4 | 13.4 | ||
Thereafter | $ 103.3 | $ 103.3 |
Revolving Line of Credit and 36
Revolving Line of Credit and Long Term Debt - Components (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Jul. 30, 2015 | Dec. 31, 2014 |
Long-term debt | |||
Unamortized deferred financing fees | $ (945) | $ (810) | |
Less current portion | (9,250) | (4,279) | |
Long-term debt | 173,418 | 402,888 | |
2015 Credit Agreement | |||
Long-term debt | |||
Unamortized deferred financing fees | (2,332) | ||
Total debt | 182,668 | ||
Less current portion | (9,250) | ||
Long-term debt | 173,418 | ||
2015 Credit Agreement | Term Loan | |||
Long-term debt | |||
Long‑term debt, gross | $ 185,000 | ||
First Lien Credit Agreement | |||
Long-term debt | |||
Long‑term debt, gross | 408,456 | ||
Unamortized deferred financing fees | (977) | ||
Unamortized original issue discount | (312) | ||
Total debt | 407,167 | ||
Less current portion | (4,279) | ||
Long-term debt | $ 402,888 | ||
First Lien Credit Agreement | Term Loan | |||
Long-term debt | |||
Unamortized original issue discount | $ (3,500) |
Revolving Line of Credit and 37
Revolving Line of Credit and Long Term Debt - Unamortized deferred financing fees (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Long-term debt | ||
Deferred financing fees, net | $ 945 | $ 810 |
2015 Credit Agreement | ||
Long-term debt | ||
Deferred financing fees, net | 2,332 | |
2015 Credit Agreement | Revolver | ||
Long-term debt | ||
Deferred financing fees, net | $ 945 | |
First Lien Credit Agreement | ||
Long-term debt | ||
Deferred financing fees, net | 977 | |
First Lien Credit Agreement | Revolver | ||
Long-term debt | ||
Deferred financing fees, net | $ 810 |
Revolving Line of Credit and 38
Revolving Line of Credit and Long Term Debt - Terms (Details) - USD ($) | Jul. 31, 2015 | May. 09, 2014 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Jul. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Mar. 31, 2014 | Mar. 31, 2013 | Jul. 30, 2015 | Dec. 31, 2014 | May. 09, 2013 |
Long-term debt | |||||||||||||
Loss on extinguishment of debt | $ 1,112,000 | $ 8,000 | $ 1,750,000 | $ 2,894,000 | |||||||||
First Lien Credit Agreement | |||||||||||||
Long-term debt | |||||||||||||
Loss on extinguishment of debt | $ 1,100,000 | ||||||||||||
Write-off of deferred financing fees, loss on original issue discount and lender fees excluded from pro forma earnings per share | 995,000 | ||||||||||||
Loss on original issue discount | $ 117,000 | ||||||||||||
Long-term debt, amount outstanding | $ 408,456,000 | ||||||||||||
Original issue discount | 312,000 | ||||||||||||
First Lien Credit Agreement | LIBOR - Eurodollar rate | |||||||||||||
Long-term debt | |||||||||||||
Variable rate basis, floor (as a percent) | 1.00% | ||||||||||||
First Lien Credit Agreement May 2013 Amendment | |||||||||||||
Long-term debt | |||||||||||||
Increase in borrowing capacity | $ 50,000,000 | ||||||||||||
Term Loan | 2015 Credit Agreement | |||||||||||||
Long-term debt | |||||||||||||
Term of debt instrument | 5 years | ||||||||||||
Face amount of debt | $ 185,000,000 | ||||||||||||
Frequency of periodic payment | quarterly | ||||||||||||
Periodic payment required | $ 2,300,000 | ||||||||||||
Commencement date of payments | Dec. 31, 2015 | ||||||||||||
Long-term debt, amount outstanding | $ 185,000,000 | 185,000,000 | 185,000,000 | ||||||||||
Term Loan | First Lien Credit Agreement | |||||||||||||
Long-term debt | |||||||||||||
Face amount of debt | $ 345,000,000 | $ 345,000,000 | |||||||||||
Payments on debt | $ 183,200,000 | 223,000,000 | |||||||||||
Loss on extinguishment of debt | 638,000 | ||||||||||||
Write-off of deferred financing fees, loss on original issue discount and lender fees excluded from pro forma earnings per share | 489,000 | ||||||||||||
Loss on original issue discount | 149,000 | ||||||||||||
Original issue discount | 3,500,000 | $ 3,500,000 | |||||||||||
Term Loan | First Lien Credit Agreement | June 2012 through March 31, 2013 | |||||||||||||
Long-term debt | |||||||||||||
Frequency of periodic payment | quarterly | ||||||||||||
Periodic payment required | $ 863,000 | ||||||||||||
Term Loan | First Lien Credit Agreement | June 30, 2013 through March 31, 2014 | |||||||||||||
Long-term debt | |||||||||||||
Frequency of periodic payment | quarterly | ||||||||||||
Periodic payment required | $ 979,000 | ||||||||||||
Term Loan | First Lien Credit Agreement | June 30, 2014 through April 20, 2018 | |||||||||||||
Long-term debt | |||||||||||||
Frequency of periodic payment | quarterly | ||||||||||||
Periodic payment required | $ 1,100,000 | ||||||||||||
Term Loan | First Lien Credit Agreement May 2014 Amendment | |||||||||||||
Long-term debt | |||||||||||||
Increase in borrowing capacity | $ 35,000,000 | ||||||||||||
Term Loan | Second Lien Credit Agreement | |||||||||||||
Long-term debt | |||||||||||||
Face amount of debt | 95,000,000 | 95,000,000 | |||||||||||
Payments on debt | $ 10,000,000 | ||||||||||||
Loss on extinguishment of debt | 2,900,000 | ||||||||||||
Write-off of deferred financing fees, loss on original issue discount and lender fees excluded from pro forma earnings per share | 1,500,000 | ||||||||||||
Loss on original issue discount | 921,000 | ||||||||||||
Original issue discount | 950,000 | 950,000 | |||||||||||
Lenders fees for extinguishment of debt | $ 497,000 | ||||||||||||
Revolver | 2015 Credit Agreement | |||||||||||||
Long-term debt | |||||||||||||
Term of debt instrument | 5 years | ||||||||||||
Maximum borrowing capacity | $ 75,000,000 | ||||||||||||
Long-term debt, amount outstanding | 0 | 0 | 0 | ||||||||||
Letters of credit outstanding | 65,000 | 65,000 | 65,000 | ||||||||||
Available borrowing capacity | $ 74,900,000 | 74,900,000 | 74,900,000 | ||||||||||
Commitment fee, unused amounts (as a percent) | 0.375% | ||||||||||||
Revolver | 2015 Credit Agreement | LIBOR | |||||||||||||
Long-term debt | |||||||||||||
Variable rate, basis spread (as a percent) | 1.75% | ||||||||||||
Revolver | 2015 Credit Agreement | Adjusted Base Rate (ABR) | |||||||||||||
Long-term debt | |||||||||||||
Variable rate, basis spread (as a percent) | 0.75% | ||||||||||||
Revolver | First Lien Credit Agreement | |||||||||||||
Long-term debt | |||||||||||||
Maximum borrowing capacity | $ 30,000,000 | $ 30,000,000 | |||||||||||
Long-term debt, amount outstanding | $ 0 | $ 0 | $ 0 | $ 0 | |||||||||
Commitment fee, unused amounts (as a percent) | 0.50% |
Income Taxes - Effective Tax Ra
Income Taxes - Effective Tax Rate (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income tax expense | ||||
Income tax expense | $ 2,614 | $ 4,174 | $ 1,254 | $ 9,185 |
Effective income tax reconciliation | ||||
Effective income tax rate, expense (benefit) | 26.10% | 46.60% | 3.20% | 46.60% |
Segment Information (Details)
Segment Information (Details) - Operating - segment | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Information | ||
Number of operating segments | 1 | 1 |
Revenues | Geographic Concentration Risk | US | ||
Segment Information | ||
Revenues by location, as a percent | 99.00% | 99.00% |
Related Party Transactions - Ma
Related Party Transactions - Management Fees (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Related Party Transactions | ||||
Related party expenses | $ 230 | $ 553 | $ 690 | |
Transaction advisory fee | 8,500 | |||
Vestar | Management Fees | ||||
Related Party Transactions | ||||
Related party expenses | $ 0 | $ 230 | 553 | $ 690 |
Vestar | Transaction Advisory Fee | ||||
Related Party Transactions | ||||
Transaction advisory fee | $ 8,500 |
Equity-Based Compensation - All
Equity-Based Compensation - Allocated Equity-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Equity-based compensation expense | ||||
Total equity-based compensation expense | $ 6,469 | $ 2,658 | $ 81,466 | $ 7,565 |
Cost of revenue, excluding depreciation and amortization | ||||
Equity-based compensation expense | ||||
Total equity-based compensation expense | 1,075 | 726 | 12,431 | 2,090 |
General and administrative | ||||
Equity-based compensation expense | ||||
Total equity-based compensation expense | $ 5,394 | $ 1,932 | $ 69,035 | $ 5,475 |
Equity-Based Compensation - Par
Equity-Based Compensation - Parent Equity-Based Compensation Plan (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
May. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Equity-based compensation | |||||
Equity-based compensation | $ 81,466 | $ 7,565 | |||
Equity-based compensation liability | $ 19,423 | ||||
Parent Plan | |||||
Equity-based compensation | |||||
Equity-based compensation | $ 70,400 | 70,400 | |||
Equity-based compensation liability | 0 | 0 | $ 19,400 | ||
Award Modification, Principal Forgiveness | Parent Plan | |||||
Equity-based compensation | |||||
Equity-based compensation | 1,500 | 1,500 | |||
Common Units | Performance-based Class A and Class C common units | Parent Plan | |||||
Equity-based compensation | |||||
Equity-based compensation | 40,400 | 40,400 | |||
Common Units | Cliff-vesting awards | Parent Plan | |||||
Equity-based compensation | |||||
Equity-based compensation | 19,400 | 19,400 | |||
Preferred, Class A and Class B Common Units | Award Modification, Preferred and Common Units Purchased with Loans | Parent Plan | |||||
Equity-based compensation | |||||
Equity-based compensation | $ 9,100 | $ 9,100 | |||
PG Holdco, LLC | Common Units | Time-vesting conditions | Parent Plan | |||||
Equity-based compensation | |||||
Unvested common units converted upon dissolution | 1,028,122 |
Equity-Based Compensation - 201
Equity-Based Compensation - 2015 Incentive Award Plan (Details) - Restricted stock - 2015 Plan - $ / shares | May. 21, 2015 | Sep. 30, 2015 |
Equity-based compensation | ||
Shares authorized for issuance | 7,120,000 | |
Nonvested awards | ||
Nonvested at beginning of period (in shares) | 0 | |
Converted from Parent Plan (in shares) | 1,028,122 | |
Granted (in shares) | 1,754,000 | 1,806,120 |
Vested (in shares) | (189,651) | |
Forfeited (in shares) | (33,134) | |
Nonvested at end of period (in shares) | 2,611,457 | |
Weighted Average Fair Value at Grant Date | ||
Nonvested at beginning of period (in dollars per share) | $ 0 | |
Converted from Parent Plan (in dollars per share) | 25 | |
Granted (in dollars per share) | 25.14 | |
Vested (in dollars per share) | 25 | |
Forfeited (in dollars per share) | 25 | |
Nonvested at end of period (in dollars per share) | $ 25.10 | |
4-year service vesting | ||
Nonvested awards | ||
Granted (in shares) | 807,000 | |
Service vesting, year 1 | ||
Vesting terms | ||
Vesting percentage | 20.00% | |
Service vesting, year 2 | ||
Vesting terms | ||
Vesting percentage | 20.00% | |
Service vesting, year 3 | ||
Vesting terms | ||
Vesting percentage | 30.00% | |
Service vesting, year 4 | ||
Vesting terms | ||
Vesting percentage | 30.00% | |
3-year performance vesting (cliff) | ||
Nonvested awards | ||
Granted (in shares) | 807,000 | |
2-year performance vesting (quarterly) | ||
Nonvested awards | ||
Granted (in shares) | 120,000 | |
1-year service vesting | ||
Nonvested awards | ||
Granted (in shares) | 20,000 |
Equity-Based Compensation - Unr
Equity-Based Compensation - Unrecognized Compensation Costs (Details) - Restricted stock $ in Millions | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Unrecognized compensation | |
Unrecognized compensation costs | $ 51.3 |
Unrecognized compensation costs, weighted average period for recognition | 2 years 9 months 18 days |
Equity-Based Compensation - Sto
Equity-Based Compensation - Stock Options (Details) | 9 Months Ended |
Sep. 30, 2015$ / sharesshares | |
Stock Options | |
Grants (in shares) | 19,088 |
Weighted-average grant date fair value (in dollars per share) | $ / shares | $ 13.97 |
Stock Options | |
Fair value assumptions, Black-Scholes valuation model | |
Risk-free interest rate (as a percent) | 1.50% |
Expected term (in years) | 5 years |
Expected volatility (as a percent) | 35.15% |
Dividend yield (as a percent) | 0.00% |
Equity-Based Compensation - Dil
Equity-Based Compensation - Dilutive and Antidilutive securities (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Stock options and Restricted stock | ||||
Earnings Per Share - Dilutive and Antidilutive securities | ||||
Antidilutive shares excluded from computation of diluted earnings per share | 2,630,545 | |||
Restricted stock | ||||
Earnings Per Share - Dilutive and Antidilutive securities | ||||
Dilutive shares | 330,000 | 0 | 0 | |
Stock Options | ||||
Earnings Per Share - Dilutive and Antidilutive securities | ||||
Dilutive shares | 0 | 0 |