Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Feb. 26, 2016 | Jun. 30, 2015 | |
Document and Entity Information | |||
Entity Registrant Name | Press Ganey Holdings, Inc. | ||
Entity Central Index Key | 1,633,142 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Public Float | $ 578 | ||
Entity Common Stock, Shares Outstanding | 52,803,214 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash | $ 35,235 | $ 6,962 |
Accounts receivable, net of allowances of $774 and $531 at December 31, 2015 and December 31, 2014 | 53,568 | 44,444 |
Other receivables | 2,993 | 1,782 |
Prepaid expenses and other assets | 4,603 | 2,741 |
Income taxes receivable | 4,603 | 2,916 |
Total current assets | 101,002 | 58,845 |
Property and equipment, net | 60,262 | 59,610 |
Deferred financing fees, net | 897 | 810 |
Intangible assets, net | 362,465 | 375,391 |
Goodwill | 411,203 | 402,934 |
Total assets | 935,829 | 897,590 |
Current liabilities: | ||
Current portion of long-term debt | 9,250 | 4,279 |
Current portion of capital lease obligations | 4,626 | 4,373 |
Accounts payable | 9,420 | 13,232 |
Accrued payroll and related liabilities | 15,830 | 11,704 |
Accrued expenses and other liabilities | 1,969 | 1,581 |
Deferred revenue | 31,555 | 26,208 |
Total current liabilities | 72,650 | 61,377 |
Long-term debt, less current portion | 171,226 | 402,888 |
Capital lease obligations, less current portion | 4,165 | 6,779 |
Equity-based compensation liability | 19,423 | |
Deferred income taxes | 125,179 | 126,479 |
Total liabilities | 373,220 | 616,946 |
SHAREHOLDER’S EQUITY | ||
Common stock, $0.01 par value; 350,000,000 and 44,800,000 shares authorized, and 52,770,722 and 43,313,200 shares issued and outstanding as of December 31, 2015 and December 31, 2014, respectively | 528 | 433 |
Additional paid‑in capital | 598,575 | 270,847 |
Retained earnings (accumulated deficit) | (36,494) | 9,364 |
Total shareholder’s equity | 562,609 | 280,644 |
Total liabilities and shareholder’s equity | $ 935,829 | $ 897,590 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Condensed Consolidated Balance Sheets | ||
Accounts receivable, allowances (in dollars) | $ 774 | $ 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 | 52,770,722 | 43,313,200 |
Common stock, shares outstanding | 52,770,722 | 43,313,200 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Condensed Consolidated Statements of Income | |||
Revenue | $ 318,694 | $ 281,612 | $ 260,420 |
Operating expenses: | |||
Cost of revenue | 149,235 | 121,807 | 113,675 |
General and administrative | 143,561 | 70,432 | 71,926 |
Depreciation and amortization | 41,224 | 35,102 | 32,468 |
Impairment charges | 2,579 | ||
Loss on disposal of property and equipment | 307 | 1,719 | 274 |
Total operating expenses | 334,327 | 229,060 | 220,922 |
Income (loss) from operations | (15,633) | 52,552 | 39,498 |
Other income (expense): | |||
Interest expense, net | (11,163) | (19,832) | (24,644) |
Extinguishment of debt | (1,750) | (2,894) | (7,922) |
Management fee of related party | (553) | (1,047) | (907) |
Total other income (expense), net | (13,466) | (23,773) | (33,473) |
Income (loss) before income taxes | (29,099) | 28,779 | 6,025 |
Provision for income taxes | 7,528 | 13,196 | 5,926 |
Net income (loss) | $ (36,627) | $ 15,583 | $ 99 |
Earnings (net loss) per share: | |||
Basic (in dollars per share) | $ (0.75) | $ 0.36 | $ 0 |
Diluted (in dollars per share) | $ (0.75) | $ 0.36 | $ 0 |
Weighted average shares of common stock outstanding: | |||
Basic (in shares) | 48,891,327 | 43,313,200 | 43,313,200 |
Diluted (in shares) | 48,891,327 | 43,313,200 | 43,313,200 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Shareholder’s Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Total |
Balance at beginning of period at Dec. 31, 2012 | $ 433 | $ 264,891 | $ (296) | $ 265,028 |
Balance at beginning of period (in shares) at Dec. 31, 2012 | 43,313,200 | |||
Change in Stockholders' Equity | ||||
Sales of equity interests | 1,189 | 1,189 | ||
Purchase of equity interests | (2,314) | (2,314) | ||
Equity-based compensation | 2,205 | 2,205 | ||
Net loss | 99 | 99 | ||
Balance at end of period at Dec. 31, 2013 | $ 433 | 268,285 | (2,511) | 266,207 |
Balance at end of period (in shares) at Dec. 31, 2013 | 43,313,200 | |||
Change in Stockholders' Equity | ||||
Sales of equity interests | 500 | 500 | ||
Purchase of equity interests | (3,708) | (3,708) | ||
Equity-based compensation | 2,062 | 2,062 | ||
Net loss | 15,583 | 15,583 | ||
Balance at end of period at Dec. 31, 2014 | $ 433 | 270,847 | 9,364 | $ 280,644 |
Balance at end 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 | 85,014 | 85,014 | ||
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 | $ 3 | (3) | ||
Vesting of restricted stock (in shares) | 328,429 | |||
Cancellation of shares | (7,365) | |||
Taxes paid for net settlements of restricted stock vesting | (12,736) | (12,736) | ||
Taxes paid for net settlements of restricted stock (in shares) | (70,420) | |||
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 | (36,627) | (36,627) | ||
Balance at end of period at Dec. 31, 2015 | $ 528 | $ 598,575 | $ (36,494) | $ 562,609 |
Balance at end of period (in shares) at Dec. 31, 2015 | 52,770,722 | 52,770,722 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Operating activities | |||
Net income (loss) | $ (36,627) | $ 15,583 | $ 99 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 41,224 | 35,102 | 32,468 |
Amortization of deferred financing costs and debt discount | 682 | 879 | 1,531 |
Equity-based compensation | 86,745 | 8,034 | 9,787 |
Extinguishment of debt | 1,750 | 2,894 | 7,922 |
Provision for doubtful accounts | 521 | 289 | 400 |
Impairment charges | 2,579 | ||
Loss on disposal of property and equipment | 307 | 1,719 | 274 |
Deferred income taxes | (1,300) | (4,807) | 4,453 |
Changes in assets and liabilities: | |||
Accounts receivable | (8,317) | (2,420) | (3,380) |
Other receivables | (329) | (623) | (596) |
Prepaid expenses and other assets | (1,859) | 1,319 | (406) |
Accounts payable | (225) | (3) | (2,785) |
Accrued payroll and related liabilities | 3,774 | 678 | 3,770 |
Accrued expenses and other liabilities | 388 | 342 | 121 |
Deferred revenue | 3,594 | (5,183) | (1,782) |
Income taxes receivable | (1,687) | 965 | (544) |
Net cash provided by operating activities | 88,641 | 54,768 | 53,911 |
Investing activities | |||
Acquisitions of businesses, net of cash acquired | (12,146) | (28,177) | (2,813) |
Purchases of property and equipment | (26,197) | (19,414) | (17,230) |
Net cash used in investing activities | (38,343) | (47,591) | (20,043) |
Financing activities | |||
Proceeds from the issuance of long‑term debt | 185,000 | 41,825 | 50,000 |
Payments on long‑term debt | (410,769) | (67,662) | (55,337) |
Deferred financing payments | (3,441) | (508) | (851) |
Payments on capital lease obligations | (5,385) | (3,297) | (1,641) |
Contingent purchase consideration | (124) | ||
Proceeds from sale of equity interests | 100 | 500 | 1,189 |
Purchases of equity interests | (731) | (3,708) | (2,314) |
Taxes paid for net settlements of restricted stock vesting | (12,736) | ||
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 | (22,025) | (32,850) | (9,078) |
Net increase (decrease) in cash | 28,273 | (25,673) | 24,790 |
Cash at beginning of period | 6,962 | 32,635 | 7,845 |
Cash at end of period | 35,235 | 6,962 | 32,635 |
Supplemental disclosure of cash flow information | |||
Cash paid during the period for interest | 10,500 | 18,888 | 22,858 |
Cash paid during the period for income taxes | 10,329 | 16,933 | 2,195 |
Disposal of property and equipment acquired through capital leases | 333 | ||
Property and equipment acquired through capital leases | 3,357 | 10,117 | 1,680 |
Purchase of property and equipment in accounts payable | $ 2,782 | $ 6,459 | $ 911 |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Dec. 31, 2015 | |
Basis of Presentation | |
Basis of Presentation | 1 . Basis of Presentation Press Ganey Holdings, Inc. (the “Company”) is a leading provider of patient experience and caregiver measurement, performance analytics and strategic advisory solutions for healthcare organizations across the continuum of care. 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. 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 Capital Partners, LLC (“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 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 . Use of Estimates The preparation of the consolidated financial statements in accordance with U.S. generally accepted accounting principles 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 Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Cash The Company places its cash with institutions with high credit quality. However, at certain times, such cash may be in excess of Federal Deposit Insurance Corporation and Securities Investor Protection Corporation insurance limits. Accounts Receivable Accounts receivable are carried at sales value less an allowance for doubtful accounts. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company periodically evaluates accounts receivable and establishes an allowance for doubtful accounts based on a combination of specific customer circumstances, credit conditions and the history of write ‑ offs and collections. The Company evaluates items on an individual basis when determining accounts receivable write ‑offs. In general, the Company’s policy is to not charge interest on trade receivables after the invoice becomes past due. A receivable is considered past due if payment has not been received within agreed upon invoice terms. Account balances are charged off against the allowance after all normal means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off ‑balance ‑sheet credit exposure related to its customers, and collateral is generally not required. Property and Equipment Property and equipment consists of leasehold improvements, furniture, fixtures, equipment and capitalized internal software development costs. Property and equipment is stated at cost, less accumulated depreciation and amortization. Plant and equipment under capital leases are stated at the present value of their minimum lease payments. Computer software development costs that are incurred in the preliminary project stage are expensed as incurred. During the development stage, direct consulting costs and payroll and payroll related costs for employees that are directly associated with each project are capitalized and amortized over the estimated useful life of the software once placed into operation. Replacements and major improvements are capitalized, while maintenance and repairs are charged to expense as incurred. Depreciation is computed on a straight ‑line basis over the estimated useful lives of the respective assets. Amortization of leasehold improvements is computed on a straight ‑line basis over the shorter of the lease term or estimated useful life of the asset and is included in depreciation expense. The estimated useful lives of property and equipment are as follows: Computer equipment and software years Furniture and fixtures - years Leasehold improvements Shorter of lease term or useful life Office equipment - years Operating Leases The Company leases its office space and various office equipment under operating lease agreements. In general, the leases contain renewal options and require the Company to pay executory costs (real estate taxes, insurance, and repairs). Some of the leases contain future rent increases, free rent periods, or periods in which rent payments are reduced. The total amount of rental payments due over the lease term is charged to rent expense on a straight ‑line basis over the term of the lease. The difference between rent expense recorded and the amount paid is credited or charged to accrued expenses and other liabilities in the consolidated balance sheet. Fair Value of Financial Instruments 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. Deferred Financing Fees Costs incurred related to obtaining financing arrangements are capitalized and amortized over the term of the financing arrangement as a component of interest expense using the effective interest method. Deferred financing fees related to term loan borrowings are presented in the consolidated balance sheet as a direct deduction from the carrying amount of the debt liability and deferred financing fees related to the Company’s revolving credit facility are presented as an asset. Write ‑offs of unamortized deferred financing fees associated with debt amendments and refinancings are included as extinguishment of debt in the consolidated statements of operations. The Company recognized interest expense for the amortization of financing costs of $635,000 , $728,000 , and $1.1 million for the years ended December 31, 2015, 2014, and 2013, respectively. Business Combinations The Company accounts for acquisitions of businesses under the purchase method of accounting and allocates the purchase price to the tangible assets, specifically identifiable intangible assets and liabilities assumed based upon their respective fair values. The excess of the purchase price over these estimated fair values is allocated to goodwill. The operating results of the businesses acquired are included in the consolidated statements of operations from the date of acquisition. Goodwill and Intangible Assets 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 and determined to have indefinite lives are not amortized, but are instead tested for impairment at least annually. The Company evaluates goodwill first using a qualitative assessment to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount. If the qualitative assessment indicates that the fair value of the reporting unit may be less than its carrying amount, the Company evaluates goodwill using a two ‑step impairment test; otherwise, the Company concludes that there is no impairment and does not perform the two ‑step impairment test. If the qualitative assessment concludes that the two ‑step impairment test is necessary, the Company first compares the book value of the reporting unit, including goodwill, with its fair value. The fair value is estimated based on a market approach and a discounted cash flow analysis, also known as the income approach, and is reconciled back to the estimated equity value for the Company to ensure that the implied control premium is reasonable. If the book value of a reporting unit exceeds its fair value, the Company performs the second step to estimate an implied fair value of the reporting unit’s goodwill by allocating the fair value of the reporting unit to all of the assets and liabilities other than goodwill (including any unrecognized intangible assets). The difference between the total fair value of the reporting unit and the fair value of all the assets and liabilities other than goodwill is the implied fair value of that goodwill. The amount of impairment loss is equal to the excess of the book value of the goodwill over the implied fair value of that goodwill. The Company evaluates indefinite ‑lived intangible assets using a qualitative assessment to determine whether it is more likely than not that the fair value of the indefinite ‑lived intangible asset is less than its carrying amount. If the qualitative assessment indicates that the fair value may be less than its carrying amount, the fair value of the intangible asset is estimated and compared to its carrying value to determine if impairment exists. Otherwise, the Company concludes that there is no impairment and does not perform the quantitative test. When the qualitative assessment is not utilized and a quantitative test is performed, the Company estimates the fair value of these intangible assets using the relief ‑from ‑royalty method, which requires assumptions related to royalty rates that the owner would otherwise be willing to pay to use the asset, as well as projected revenues from the Company’s long-range plan. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives and reviewed for impairment when impairment indicators are present. Long ‑Lived Assets Long ‑lived assets, such as property, plant, and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Revenue Recognition Revenue relates to services provided typically under annually renewable contracts, primarily summarizing and benchmarking hospital patient experience surveys and quality improvement services. For annual service contracts, revenue is recognized on a ratable basis over the life of the contract. The contracts are generally cancelable on short or no notice by the customer without penalty. The Company offers a variety of billing arrangements to its customers. Any amounts billed in excess of the revenue recognized result in deferred revenue. The Company recognizes revenue for services that have been earned but not billed. These unbilled amounts are recorded in other receivables on the consolidated balance sheets. Sales and Marketing Sales and marketing expenses consist primarily of employee ‑related expenses including salaries, benefits, commissions, employment taxes, severance and equity ‑based compensation costs for employees engaged in sales, sales support, business development and marketing. Sales and marketing expenses also include operating expenses for marketing programs, trade shows and public relations costs. Sales and marketing expenses are expensed as incurred and are included in general and administrative expenses. Equity ‑Based Compensation Prior to the IPO, the Parent adopted an equity ‑based compensation plan, or the Plan, which authorized the granting of various equity awards of preferred units, Class A common units, Class A ‑1 common units, Class B common units, and Class C common units of the Parent to the Company’s employees and directors. The fair value of the awards of the Parent was reflected as expense on the accounts of the Company because the recipients were employees of the Company. On an annual basis, the Company determined the fair value of each class of its Parent’s equity units using an enterprise value allocation methodology. In order to determine the enterprise value, the Company used a variety of widely accepted valuation techniques which considered a number of factors such as its financial performance, the values of comparable companies and the lack of marketability of the Parent’s equity instruments. Significant assumptions included the expected term in which the units would be realized; a risk ‑free interest rate equal to the U.S. federal treasury bond rate consistent with the term assumption; expected dividend yield, for which there was none; and expected volatility based on the historical data of equity instruments of comparable companies. The Company classified immature awards as liabilities due to the Parent’s right to repurchase the awards from the employee and the Parent’s history of exercising such rights. The Company funded the Parent’s repurchase obligations as the Parent was dependent upon the Company to meet its obligations. The Parent’s repurchase right permitted an employee to avoid the risks and rewards normally associated with equity ownership. The Company recorded compensation expense as units vested based upon the fair value of the respective award and adjusted the accumulated immature awards to fair value in cost of revenue and general and administrative expenses in the consolidated statement of operations. The Company accounts for equity-based compensation, primarily consisting of restricted stock, based on the fair value of the award at grant date, which is typically the closing stock price, and recognizes compensation expense over the requisite service period. Income Taxes The Company accounts for income taxes using the asset and liability approach. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company expenses any penalties or interest associated with tax obligations as general and administrative expense. Reclassifications Certain amounts in the prior periods have been reclassified to conform to the current period financial statement presentation. These reclassifications have no effect on previously reported net income, assets or earnings per share. 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 will adopt this standard in the first quarter of 2016 on a prospective basis. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. 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 year ended December 31, 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 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 year ended December 31, 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 will adopt this standard in the first quarter of 2016 on a prospective basis. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes”. This ASU requires that deferred tax liabilities and assets be classified as noncurrent in a classified balance sheet. This standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. The Company adopted ASU 2015-17 during the year ended December 31, 2015 and prior period amounts were reclassified to conform to the current period presentation. As of December 31, 2014 and 2013, deferred income tax liabilities of $712,000 and $1.6 million, respectively, were reclassified from current to noncurrent on the consolidated balance sheet. The adoption of ASU 2015-17 did not impact the Company’s consolidated financial position, results of operations or cash flows. In February 2016, the FASB issued ASU 2016-02, “Leases”. This ASU requires that a lessee record an operating lease in the balance sheet with a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. This standard is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. Adoption of this standard will be on a modified retrospective approach, which includes a number of optional practical expedients that the Company may elect to apply. 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. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2015 | |
Property and Equipment | |
Property and Equipment | 3. Property and Equipment Property and equipment, net consist of the following: 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 (including amortization of office equipment under capital leases) was $24.6 million, $19.1 million, and $17.2 million for the years ended December 31, 2015, 2014, and 2013 , respectively. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 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 December 31, 2015 and 2014 . 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 | 12 Months Ended |
Dec. 31, 2015 | |
Business Combination | |
Business Combination | 5. Business Combinations Healthcare Performance Improvement, LLC On September 1, 2015, the Company acquired all of the membership interests of Healthcare Performance Improvement, LLC (“HPI”). HPI provides patient safety and high 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 purchase price for HPI’s membership interests was $13.0 million before post-closing adjustments for working capital. Based on estimated working capital, the amount paid at closing on September 1, 2015 was $11.7 million, net of cash acquired. Closing adjustments for working capital were agreed upon, resulting in additional cash payment of $426,000 in the fourth quarter of 2015, bringing the final purchase price to $12.1 million, net of cash acquired. The acquisition was accounted for under the purchase method of accounting and the total purchase price was 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 following table summarizes the allocation of the fair value of the acquisition which was finalized during the year ended December 31, 2015: 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 $346,000 relating to the purchase are included in general and administrative expenses for the year ended December 31, 2015 . National Database of Nursing Quality Indicators On June 10, 2014, the Company acquired all of the assets of The National Database of Nursing Quality Indicators (NDNQI) from the American Nurses Association, Inc. in exchange for cash of $24.9 million. NDNQI is the leading quality improvement and nurse engagement tool developed by the American Nurses Association and managed by The University of Kansas School of Nursing. The acquisition strengthens the Company’s ability to empower nurses and nursing leaders in their mission to reduce patient suffering and improve the patient experience. The acquisition was accounted for under the purchase method of accounting and the total purchase price was allocated to the net tangible and identifiable intangible assets based on their fair values (based on Level 3 measurements) as of June 10, 2014. The excess purchase price over the net tangible and identifiable intangible assets was recorded to goodwill. The goodwill balance is primarily attributed to expanded market opportunities and is expected to be deductible for tax purposes. The assumed liabilities include deferred revenue, which was adjusted down from a book value at the acquisition date of $6.5 million to an estimated fair value of $6.2 million. The $300,000 write ‑down of deferred revenue resulted in lower revenues than would have otherwise been recognized for such services. The following table summarizes the allocation of the fair value of the acquisition: Current assets $ Software Goodwill Intangibles: Trade name Customer relationships Proprietary technology Total assets acquired Liabilities assumed: Deferred revenue Other current liabilities Net assets acquired $ Transaction expenses of $246,000 relating to the purchase are included in general and administrative expenses in 2014. Dynamic Clinical Systems, Inc. On April 24, 2014, the Company acquired all of Dynamic Clinical Systems, Inc.’s capital stock in exchange for cash of $3.3 million. Dynamic Clinical Systems, Inc. provides patient ‑reported outcomes services and solutions. The acquisition provides the Company with an expanded portfolio for healthcare organizations with the ability to collect, measure and analyze patient ‑reported data. The acquisition was accounted for under the purchase method of accounting and the total purchase price was allocated to the net tangible and identifiable intangible assets based on their estimated fair values (based on Level 3 measurements) as of April 24, 2014. The excess purchase price over the net tangible and identifiable intangible assets was recorded to goodwill. The goodwill balance is primarily attributed to assembled workforce and is expected to be deductible for tax purposes. This acquisition has an earnout feature for which no value has been recorded due to the remote probability of the performance targets being achieved. The following table summarizes the allocation of the fair value of the acquisition: Current assets $ Goodwill Intangibles: Trade name Customer relationships Proprietary technology Other Total assets acquired Liabilities assumed: Deferred revenue Other current liabilities Deferred income tax liability Net assets acquired $ Transaction expenses of $118,000 relating to the purchase are included in general and administrative expenses in 2014. On The Spot Systems, Inc. On December 30, 2013, the Company acquired all of On The Spot Systems, Inc. (OTSS)’s capital stock in exchange for cash of $2.8 million. OTSS is a point ‑of ‑care survey technology firm that enables organizations to capture real ‑time patient feedback. The acquisition expands the Company’s portfolio of products by adding point ‑of ‑care surveying to existing modes of mail, phones, and eSurvey. The acquisition was accounted for under the purchase method of accounting and the total purchase price was allocated to the net tangible and identifiable intangible assets based on their fair values (based on Level 3 measurements) as of December 30, 2013. The excess purchase price over the net tangible and identifiable intangible assets was recorded to goodwill. The goodwill balance is primarily attributed to assembled workforce and expanded market opportunities. Goodwill is not expected to be deductible for tax purposes. The following table summarizes the allocation of the fair value of the acquisition: Current assets $ Deferred income tax asset Goodwill Proprietary technology intangible asset Total assets acquired Liabilities assumed: Deferred revenue Other current liabilities Net assets acquired $ Transaction expenses of $37,000 and $55,000 relating to the purchase are included in general and administrative expenses in 2014 and 2013, respectively. For the acquisitions noted above, the Company used the purchase method of accounting and the results of operations of these entities have been included in the consolidated financial statements since their respective acquisition dates. Additionally, none of these acquisitions are considered material to the Company and, therefore, pro ‑forma information has not been presented. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | 6. Goodwill and Intangible Assets Goodwill The Company performed its annual goodwill impairment assessment as of October 1, 2015 and 2014, and determined there was no impairment of goodwill. Changes in the carrying amount of goodwill for the years ended December 31, 2015, 2014 and 2013 were as follows: Balance as of January 1, 2013 $ OTSS acquisition Morehead adjustments Balance as of December 31, 2013 $ OTSS adjustments DCS acquisition NDNQI acquisition Balance as of December 31, 2014 $ HPI acquisition Balance as of December 31, 2015 $ Intangible Assets The Company performed its annual indefinite-life intangible asset impairment assessment as of October 1, 2015 and 2014, and determined there was no impairment of the indefinite-life intangible asset. The following table summarizes the Company’s intangible assets at December 31, 2015 and 2014: December 31, 2015 December 31, 2014 Weighted Average Gross Net Gross Net Remaining Carrying Accumulated Carrying Carrying Accumulated Carrying Useful Life Amount Amortization Amount Amount Amortization Amount Trade name (indefinite life) — $ $ — $ $ $ — $ Trade names (finite life) Customer relationships Proprietary technology Other $ $ $ $ $ $ Amortization expense was $16.6 million, $16.0 million, and $15.3 million, for the years ended December 31, 2015, 2014, and 2013, 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 estimated remaining amortization expense related to intangible assets with finite lives for each of the five succeeding years and thereafter is as follows at December 31, 2015 : 2016 $ 2017 2018 2019 2020 Thereafter $ |
Impairment Charges
Impairment Charges | 12 Months Ended |
Dec. 31, 2015 | |
Impairment Charge | |
Impairment Charges | 7 . Impairment Charges In 2013, during the strategic review of its product offerings, the Company decided to discontinue three products. In connection with discontinuing these products, the Company considered the recoverability of the carrying value of certain fixed assets (primarily software) and certain intangible assets held for use (primarily customer relationships), which resulted in an impairment charge of $2.6 million. These losses reflect the amounts by which the carrying values of these assets exceed their estimated fair values determined by their estimated future discounted cash flows and are recorded as impairment charges on the consolidated statement of operations. There were no impairment charges related to long ‑lived assets during 2015 and 2014 . |
Revolving Line of Credit and Lo
Revolving Line of Credit and Long Term Debt | 12 Months Ended |
Dec. 31, 2015 | |
Revolving Line of Credit and Long Term Debt | |
Revolving Line of Credit and Long Term Debt | 8 . Revolving Credit Facility and Long ‑Term Debt As of December 31, 2015 and 2014, the Company’s long ‑term debt consisted of the following: 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 Revolving Credit Facility (as defined below) and prior revolving credit facility were $897,000 and $810,000 at December 31, 2015 and 2014 , respectively, and are classified as deferred financing fees, net in the consolidated balance sheets. The aggregate maturities of long ‑term debt for years subsequent to December 31, 2015 , are as follows: Year ending December 31: 2016 $ 2017 2018 2019 2020 Total debt $ 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 (“Revolving Credit Facility”). 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 the write off of unamortized deferred financing fees of $995,000 and a loss on original issue discount of $117,000 . In connection with the refinancing, the Company capitalized $3.4 million of deferred financing fees. 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 1.50% , or the adjusted base rate (“ABR”) plus an applicable margin, currently 0.50% . 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 2015 Credit Agreement. The Company is required to repay the outstanding principal amount of the Term Loan in equal quarterly amounts of $2.3 million, which commenced on December 31, 2015 . The remaining Term Loan balance and any outstanding balances on the Revolving Credit Facility will be due upon maturity on July 31, 2020. The Term Loan and Revolving Credit Facility are secured by substantially all of the assets of the Company. There were no borrowings outstanding on the Revolving Credit Facility at December 31, 2015 ; however, the Company had a letter of credit outstanding of approximately $65,000 at December 31, 2015 , which reduced the borrowing capacity of the Revolving Credit Facility to $74.9 million. The Company is charged a loan commitment fee, currently 0.375% , for unused amounts on the Revolving Credit Facility. 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 of no more than 3.75 , 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 December 31, 2015, with a secured net leverage ratio of 1.3 as calculated per the covenant definition in the agreement . 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 initially consisted of a $30 million 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 initially 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 in the form of an incremental increase to the First Lien Term Loan, 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. The transaction resulted in a loss on extinguishment of debt of $7.9 million, consisting of the write off of unamortized deferred financing fees of $4.1 million, payments of fees to lenders of $1.5 million and loss on original issuance discount of $2.3 million, which are recorded as extinguishment of debt in other expense, net, in the consolidated statement of operations for the year ended December 31, 2013. In connection with the amendment, the Company capitalized $365,000 of deferred financing fees. The Company also amended the First Lien Agreement on June 17, 2013, to allow for certain corporate structure changes. In connection with the amendment, the Company capitalized $486,000 of deferred financing fees. On May 9, 2014, the Company amended the First Lien Agreement to borrow an additional $35 million in the form of an incremental increase to the First Lien Term Loan. 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 the write off 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 year ended December 31, 2014. In connection with the amendment, the Company capitalized $508,000 of deferred financing fees. 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 the write off 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 year ended December 31, 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. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2015 | |
Leases | |
Leases | 9 . Leases The Company leases certain office furniture, computer equipment, and office space under operating and capital leases. Generally, the leases contain renewal terms at the option of the Company at rates reflecting market rates at the time of renewal. Minimum annual lease payments under noncancelable lease arrangements at December 31, 2015 , are as follows: Capital Operating Leases Leases Year ending December 31: 2016 $ $ 2017 2018 2019 2020 Thereafter — Total minimum lease payments $ $ Less amount representing interest Present value of future minimum lease payments Less current installments of obligations under capital leases Long-term capital lease obligations $ Total rent expense charged to operations under terms of these operating leases was $3.2 million, $3.4 million, and $3.3 million for the years ended December 31, 2015, 2014, and 2013 , respectively. Amortization of the capital leases of $4.6 million, $2.3 million, and $1.9 million for the years ended December 31, 2015, 2014, and 2013 , respectively, is included in depreciation and amortization expense on the consolidated statements of operations. |
Defined Contribution Retirement
Defined Contribution Retirement Plan | 12 Months Ended |
Dec. 31, 2015 | |
Defined Contribution Retirement Plan | |
Defined Contribution Retirement Plan | 10 . Defined Contribution Retirement Plan The Company has a qualified defined contribution retirement plan that covers substantially all of its employees. Expense for the Company’s matching contributions, which in part are based on amounts of compensation contributed by plan participants, was $2.6 million, $2.2 million, and $2.3 million for the years ended December 31, 2015, 2014, and 2013 , respectively. |
Equity-Based Compensation
Equity-Based Compensation | 12 Months Ended |
Dec. 31, 2015 | |
Equity-Based Compensation | |
Equity-Based Compensation | 11 . Equity-Based Compensation The Company measures its equity-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 consolidated statements of operations for the periods indicated is as follows: December 31, 2015 2014 2013 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 year ended December 31, 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; and · 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 December 31, 2015 and 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 year ended December 31, 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 December 31, 2015 $ As of December 31, 2015 , $46.4 million of total unrecognized compensation costs related to outstanding nonvested restricted stock was expected to be recognized over a weighted average period of 2.7 years. Stock Options The Company granted options to purchase 36,304 shares of the Company’s common stock during the year ended December 31, 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 year ended December 31, 2015 is estimated at $12.79 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 weighted average volatility was developed using the historical volatility of several peer companies to Press Ganey Holdings, Inc. for periods equal to 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 Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share | |
Earnings Per Share | 12 . Earnings Per Share Basic earnings (net loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings (net loss) per share is computed by dividing net income (loss) by the weighted average number of common shares and common equivalent shares outstanding during the period. The weighted average number of common equivalent shares outstanding has been determined in accordance with the treasury stock method. Common equivalent shares consist of common stock issuable on the exercise of outstanding options and vesting of restricted stock units when dilutive. The following table sets forth the computation of basic and diluted earnings (net loss) per share: Year Ended December 31, 2015 2014 2013 Net income (loss) $ $ $ Weighted average shares outstanding, basic Weighted average common equivalent shares — — — Weighted average shares outstanding, diluted Net earnings (loss) per share, basic and diluted $ $ $ Equity instruments excluded from diluted net earnings (loss) per share calculation as the effect would have been anti-dilutive: Stock options — — Restricted stock — — |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes | |
Income Taxes | 13 . Income Taxes Income tax expense (benefit) for the years ended December 31 consists of the following: Current Deferred Total 2015 U.S. federal $ $ $ State and local $ $ $ Current Deferred Total 2014 U.S. federal $ $ $ State and local $ $ $ Current Deferred Total 2013 U.S. federal $ $ $ State and local $ $ $ Income tax expense differed from the amounts computed by applying the U.S. federal income tax rate of 35% to pretax income as a result of the following: December 31, 2015 2014 2013 Tax at federal statutory rate $ $ $ State and local income taxes, net of federal income tax benefit Effect of state rate changes Nondeductible equity-based compensation Nondeductible equity-based compensation plan modification — — Nondeductible expenses, tax reserve adjustments, and other, net $ $ $ The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31 are presented below: 2015 2014 Deferred tax assets: Accounts receivable $ $ Accrued liabilities Net operating loss carryforward Equity-based compensation expense Total gross deferred tax assets Deferred tax liabilities: Prepaid expenses Capital lease Property and equipment Intangible assets and goodwill Total gross deferred tax liabilities Net deferred tax liabilities $ $ In assessing the reliability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the planned reversal of deferred tax liabilities and the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes, as of December 31, 2015, it is more likely than not that the Company will realize the benefits of these deductible differences. At December 31, 2015 , the Company has available unused net operating loss carryforwards of approximately $900,000 that may be applied against future taxable income and expire in years ending December 31, 2025 through 2033 . The Company has not recorded a valuation allowance as sufficient positive evidence exists to support the Company’s conclusion that it will generate enough taxable income to utilize the net operating loss carryforwards prior to their expiration. At December 31, 2015 and 2014 , no liability has been recorded for uncertain tax positions. It is reasonably possible that the amount of unrecognized tax benefits may significantly change in the next 12 months due to audit activity, tax payments, or final decisions in matters that are the subject of controversy in various taxing jurisdictions in which the Company operates. The Company is not able to reasonably estimate the amount or the future periods in which changes in unrecognized tax benefits will be required. The Company files income tax returns in the U.S. and various state and local jurisdictions and is therefore subject to periodic audits by these tax authorities. The Company is subject to examination by the Internal Revenue Service for 2012 and later years. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2015 | |
Segment Information | |
Segment Information | 14 . Segment and Geographic 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 December 31, 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. The Company’s revenues are generated primarily from performance improvement services provided to clients in the healthcare industry. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies | |
Commitments and Contingencies | 15 . Commitments and Contingencies Litigation The Company is involved in various legal actions in the ordinary course of its operations. Management believes that any liability resulting from these matters will not have a material impact on the consolidated financial position or results of operations of the Company. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions | |
Related Party Transactions | 16 . Related Party Transactions The Company was charged an annual management fee that was payable quarterly to its majority shareholder, Vestar. The annual management fee is no longer charged after the effective date of the IPO. The Company incurred management fees of $553,000, $1.0 million, and $907,000 for the years ended December 31, 2015, 2014 and 2013, 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 consolidated statement of cash flows for the year ended December 31, 2015 , and reduced retained earnings on the consolidated balance sheet as of December 31, 2015. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events | |
Subsequent Events | 17. Subsequent Events The Company evaluated subsequent events after December 31, 2015 through the date of issuance. The Company concluded that no material events or transactions occurred subsequent to December 31, 2015, that provide additional evidence about conditions that existed at December 31, 2015, or after, that require adjustment to or disclosure in the consolidated financial statements. |
Schedule II Valuation and Quali
Schedule II Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2015 | |
Schedule II: Valuation and Qualifying Accounts | |
Schedule II: Valuation and Qualifying Accounts | The table below details the activity of the allowance for doubtful accounts for the three years ended December 31, 2015 (in thousands): Balance at Additions Balance at Beginning Charged to End of of Year Expense Deductions Year Year Ended December 31, 2015 $ $ $ $ Year Ended December 31, 2014 $ $ $ $ Year Ended December 31, 2013 $ $ $ $ |
Basis of Presentation of Interi
Basis of Presentation of Interim Financial Information (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Basis of Presentation | |
Basis of Presentation | Basis of Presentation Press Ganey Holdings, Inc. (the “Company”) is a leading provider of patient experience and caregiver measurement, performance analytics and strategic advisory solutions for healthcare organizations across the continuum of care. 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. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in accordance with U.S. generally accepted accounting principles 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 Accoun26
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies | |
Cash | Cash The Company places its cash with institutions with high credit quality. However, at certain times, such cash may be in excess of Federal Deposit Insurance Corporation and Securities Investor Protection Corporation insurance limits. |
Accounts Receivable | Accounts Receivable Accounts receivable are carried at sales value less an allowance for doubtful accounts. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company periodically evaluates accounts receivable and establishes an allowance for doubtful accounts based on a combination of specific customer circumstances, credit conditions and the history of write ‑ offs and collections. The Company evaluates items on an individual basis when determining accounts receivable write ‑offs. In general, the Company’s policy is to not charge interest on trade receivables after the invoice becomes past due. A receivable is considered past due if payment has not been received within agreed upon invoice terms. Account balances are charged off against the allowance after all normal means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off ‑balance ‑sheet credit exposure related to its customers, and collateral is generally not required. |
Property and Equipment | Property and Equipment Property and equipment consists of leasehold improvements, furniture, fixtures, equipment and capitalized internal software development costs. Property and equipment is stated at cost, less accumulated depreciation and amortization. Plant and equipment under capital leases are stated at the present value of their minimum lease payments. Computer software development costs that are incurred in the preliminary project stage are expensed as incurred. During the development stage, direct consulting costs and payroll and payroll related costs for employees that are directly associated with each project are capitalized and amortized over the estimated useful life of the software once placed into operation. Replacements and major improvements are capitalized, while maintenance and repairs are charged to expense as incurred. Depreciation is computed on a straight ‑line basis over the estimated useful lives of the respective assets. Amortization of leasehold improvements is computed on a straight ‑line basis over the shorter of the lease term or estimated useful life of the asset and is included in depreciation expense. The estimated useful lives of property and equipment are as follows: Computer equipment and software years Furniture and fixtures - years Leasehold improvements Shorter of lease term or useful life Office equipment - years |
Operating Leases | Operating Leases The Company leases its office space and various office equipment under operating lease agreements. In general, the leases contain renewal options and require the Company to pay executory costs (real estate taxes, insurance, and repairs). Some of the leases contain future rent increases, free rent periods, or periods in which rent payments are reduced. The total amount of rental payments due over the lease term is charged to rent expense on a straight ‑line basis over the term of the lease. The difference between rent expense recorded and the amount paid is credited or charged to accrued expenses and other liabilities in the consolidated balance sheet. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments 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. |
Deferred Financing Fees | Deferred Financing Fees Costs incurred related to obtaining financing arrangements are capitalized and amortized over the term of the financing arrangement as a component of interest expense using the effective interest method. Deferred financing fees related to term loan borrowings are presented in the consolidated balance sheet as a direct deduction from the carrying amount of the debt liability and deferred financing fees related to the Company’s revolving credit facility are presented as an asset. Write ‑offs of unamortized deferred financing fees associated with debt amendments and refinancings are included as extinguishment of debt in the consolidated statements of operations. The Company recognized interest expense for the amortization of financing costs of $635,000 , $728,000 , and $1.1 million for the years ended December 31, 2015, 2014, and 2013, respectively. |
Business Combinations | Business Combinations The Company accounts for acquisitions of businesses under the purchase method of accounting and allocates the purchase price to the tangible assets, specifically identifiable intangible assets and liabilities assumed based upon their respective fair values. The excess of the purchase price over these estimated fair values is allocated to goodwill. The operating results of the businesses acquired are included in the consolidated statements of operations from the date of acquisition. |
Goodwill and Intangible Assets | 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 and determined to have indefinite lives are not amortized, but are instead tested for impairment at least annually. The Company evaluates goodwill first using a qualitative assessment to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount. If the qualitative assessment indicates that the fair value of the reporting unit may be less than its carrying amount, the Company evaluates goodwill using a two ‑step impairment test; otherwise, the Company concludes that there is no impairment and does not perform the two ‑step impairment test. If the qualitative assessment concludes that the two ‑step impairment test is necessary, the Company first compares the book value of the reporting unit, including goodwill, with its fair value. The fair value is estimated based on a market approach and a discounted cash flow analysis, also known as the income approach, and is reconciled back to the estimated equity value for the Company to ensure that the implied control premium is reasonable. If the book value of a reporting unit exceeds its fair value, the Company performs the second step to estimate an implied fair value of the reporting unit’s goodwill by allocating the fair value of the reporting unit to all of the assets and liabilities other than goodwill (including any unrecognized intangible assets). The difference between the total fair value of the reporting unit and the fair value of all the assets and liabilities other than goodwill is the implied fair value of that goodwill. The amount of impairment loss is equal to the excess of the book value of the goodwill over the implied fair value of that goodwill. The Company evaluates indefinite ‑lived intangible assets using a qualitative assessment to determine whether it is more likely than not that the fair value of the indefinite ‑lived intangible asset is less than its carrying amount. If the qualitative assessment indicates that the fair value may be less than its carrying amount, the fair value of the intangible asset is estimated and compared to its carrying value to determine if impairment exists. Otherwise, the Company concludes that there is no impairment and does not perform the quantitative test. When the qualitative assessment is not utilized and a quantitative test is performed, the Company estimates the fair value of these intangible assets using the relief ‑from ‑royalty method, which requires assumptions related to royalty rates that the owner would otherwise be willing to pay to use the asset, as well as projected revenues from the Company’s long-range plan. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives and reviewed for impairment when impairment indicators are present. |
Long Lived Assets | Long ‑Lived Assets Long ‑lived assets, such as property, plant, and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. |
Revenue Recognition | Revenue Recognition Revenue relates to services provided typically under annually renewable contracts, primarily summarizing and benchmarking hospital patient experience surveys and quality improvement services. For annual service contracts, revenue is recognized on a ratable basis over the life of the contract. The contracts are generally cancelable on short or no notice by the customer without penalty. The Company offers a variety of billing arrangements to its customers. Any amounts billed in excess of the revenue recognized result in deferred revenue. The Company recognizes revenue for services that have been earned but not billed. These unbilled amounts are recorded in other receivables on the consolidated balance sheets. |
Sales and Marketing | Sales and Marketing Sales and marketing expenses consist primarily of employee ‑related expenses including salaries, benefits, commissions, employment taxes, severance and equity ‑based compensation costs for employees engaged in sales, sales support, business development and marketing. Sales and marketing expenses also include operating expenses for marketing programs, trade shows and public relations costs. Sales and marketing expenses are expensed as incurred and are included in general and administrative expenses. |
Equity Based Compensation | Equity ‑Based Compensation Prior to the IPO, the Parent adopted an equity ‑based compensation plan, or the Plan, which authorized the granting of various equity awards of preferred units, Class A common units, Class A ‑1 common units, Class B common units, and Class C common units of the Parent to the Company’s employees and directors. The fair value of the awards of the Parent was reflected as expense on the accounts of the Company because the recipients were employees of the Company. On an annual basis, the Company determined the fair value of each class of its Parent’s equity units using an enterprise value allocation methodology. In order to determine the enterprise value, the Company used a variety of widely accepted valuation techniques which considered a number of factors such as its financial performance, the values of comparable companies and the lack of marketability of the Parent’s equity instruments. Significant assumptions included the expected term in which the units would be realized; a risk ‑free interest rate equal to the U.S. federal treasury bond rate consistent with the term assumption; expected dividend yield, for which there was none; and expected volatility based on the historical data of equity instruments of comparable companies. The Company classified immature awards as liabilities due to the Parent’s right to repurchase the awards from the employee and the Parent’s history of exercising such rights. The Company funded the Parent’s repurchase obligations as the Parent was dependent upon the Company to meet its obligations. The Parent’s repurchase right permitted an employee to avoid the risks and rewards normally associated with equity ownership. The Company recorded compensation expense as units vested based upon the fair value of the respective award and adjusted the accumulated immature awards to fair value in cost of revenue and general and administrative expenses in the consolidated statement of operations. The Company accounts for equity-based compensation, primarily consisting of restricted stock, based on the fair value of the award at grant date, which is typically the closing stock price, and recognizes compensation expense over the requisite service period. |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability approach. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company expenses any penalties or interest associated with tax obligations as general and administrative expense. |
Reclassifications | Reclassifications Certain amounts in the prior periods have been reclassified to conform to the current period financial statement presentation. These reclassifications have no effect on previously reported net income, assets or earnings per share. |
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 will adopt this standard in the first quarter of 2016 on a prospective basis. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. 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 year ended December 31, 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 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 year ended December 31, 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 will adopt this standard in the first quarter of 2016 on a prospective basis. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes”. This ASU requires that deferred tax liabilities and assets be classified as noncurrent in a classified balance sheet. This standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. The Company adopted ASU 2015-17 during the year ended December 31, 2015 and prior period amounts were reclassified to conform to the current period presentation. As of December 31, 2014 and 2013, deferred income tax liabilities of $712,000 and $1.6 million, respectively, were reclassified from current to noncurrent on the consolidated balance sheet. The adoption of ASU 2015-17 did not impact the Company’s consolidated financial position, results of operations or cash flows. In February 2016, the FASB issued ASU 2016-02, “Leases”. This ASU requires that a lessee record an operating lease in the balance sheet with a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. This standard is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. Adoption of this standard will be on a modified retrospective approach, which includes a number of optional practical expedients that the Company may elect to apply. 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. |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies | |
Schedule of estimated useful lives of property and equipment | Computer equipment and software years Furniture and fixtures - years Leasehold improvements Shorter of lease term or useful life Office equipment - years |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property and Equipment | |
Schedule of Property and equipment, net | 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) | 12 Months Ended |
Dec. 31, 2015 | |
HPI | |
BusinessCombinationDescriptionAbstract | |
Schedule of 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 $ |
NDNQI | |
BusinessCombinationDescriptionAbstract | |
Schedule of allocation of the fair value of the acquisition | Current assets $ Software Goodwill Intangibles: Trade name Customer relationships Proprietary technology Total assets acquired Liabilities assumed: Deferred revenue Other current liabilities Net assets acquired $ |
Dynamic Clinical Systems, Inc | |
BusinessCombinationDescriptionAbstract | |
Schedule of allocation of the fair value of the acquisition | Current assets $ Goodwill Intangibles: Trade name Customer relationships Proprietary technology Other Total assets acquired Liabilities assumed: Deferred revenue Other current liabilities Deferred income tax liability Net assets acquired $ |
OTSS | |
BusinessCombinationDescriptionAbstract | |
Schedule of allocation of the fair value of the acquisition | Current assets $ Deferred income tax asset Goodwill Proprietary technology intangible asset Total assets acquired Liabilities assumed: Deferred revenue Other current liabilities Net assets acquired $ |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets | |
Schedule of changes in goodwill | Balance as of January 1, 2013 $ OTSS acquisition Morehead adjustments Balance as of December 31, 2013 $ OTSS adjustments DCS acquisition NDNQI acquisition Balance as of December 31, 2014 $ HPI acquisition Balance as of December 31, 2015 $ |
Schedule of intangible assets | December 31, 2015 December 31, 2014 Weighted Average Gross Net Gross Net Remaining Carrying Accumulated Carrying Carrying Accumulated Carrying Useful Life Amount Amortization Amount Amount Amortization Amount Trade name (indefinite life) — $ $ — $ $ $ — $ Trade names (finite life) Customer relationships Proprietary technology Other $ $ $ $ $ $ |
Schedule of estimated remaining amortization expense related to finite-lived intangible assets | 2016 $ 2017 2018 2019 2020 Thereafter $ |
Revolving Line of Credit and 31
Revolving Line of Credit and Long Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Revolving Line of Credit and Long Term Debt | |
Schedule of long-term debt | 2015 2014 Term Loan $ $ — First Lien Term Loan — Unamortized deferred financing fees Unamortized original issue discount — Less current portion Long-term debt $ $ |
Schedule of aggregate maturities of long term debt | Year ending December 31: 2016 $ 2017 2018 2019 2020 Total debt $ |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Leases | |
Schedule of minimum annual lease payments under noncancelable lease arrangements | Capital Operating Leases Leases Year ending December 31: 2016 $ $ 2017 2018 2019 2020 Thereafter — Total minimum lease payments $ $ Less amount representing interest Present value of future minimum lease payments Less current installments of obligations under capital leases Long-term capital lease obligations $ |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Equity-Based Compensation | |
Schedule of equity-based compensation expense in condensed consolidated statements of operations | December 31, 2015 2014 2013 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 December 31, 2015 $ |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share | |
Schedule of basic and diluted earnings (net loss) per share | Year Ended December 31, 2015 2014 2013 Net income (loss) $ $ $ Weighted average shares outstanding, basic Weighted average common equivalent shares — — — Weighted average shares outstanding, diluted Net earnings (loss) per share, basic and diluted $ $ $ Equity instruments excluded from diluted net earnings (loss) per share calculation as the effect would have been anti-dilutive: Stock options — — Restricted stock — — |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes | |
Schedule of components of income tax expense (benefit) by jurisdiction | Current Deferred Total 2015 U.S. federal $ $ $ State and local $ $ $ Current Deferred Total 2014 U.S. federal $ $ $ State and local $ $ $ Current Deferred Total 2013 U.S. federal $ $ $ State and local $ $ $ |
Schedule of reconciliation of effective income tax rate | December 31, 2015 2014 2013 Tax at federal statutory rate $ $ $ State and local income taxes, net of federal income tax benefit Effect of state rate changes Nondeductible equity-based compensation Nondeductible equity-based compensation plan modification — — Nondeductible expenses, tax reserve adjustments, and other, net $ $ $ |
Schedule of the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities | 2015 2014 Deferred tax assets: Accounts receivable $ $ Accrued liabilities Net operating loss carryforward Equity-based compensation expense Total gross deferred tax assets Deferred tax liabilities: Prepaid expenses Capital lease Property and equipment Intangible assets and goodwill Total gross deferred tax liabilities Net deferred tax liabilities $ $ |
Basis of Presentation of Inte36
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 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Initial Public Offering | |||||
Equity-based compensation | $ 86,745 | $ 8,034 | $ 9,787 | ||
Transaction advisory fee | 8,500 | ||||
Extinguishment of debt | 1,750 | $ 2,894 | $ 7,922 | ||
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 Inte37
Basis of Presentation of Interim Financial Information - Stock Split and Preferred Stock (Details) | May. 08, 2015shares | Dec. 31, 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 Accoun38
Summary of Significant Accounting Policies - Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2015 | |
Computer equipment and software | |
Property and equipment, net | |
Useful life | 3 years |
Furniture and fixtures | Minimum | |
Property and equipment, net | |
Useful life | 5 years |
Furniture and fixtures | Maximum | |
Property and equipment, net | |
Useful life | 7 years |
Leasehold improvements | |
Property and equipment, net | |
Useful life | Shorter of lease term or useful life |
Office equipment | Minimum | |
Property and equipment, net | |
Useful life | 3 years |
Office equipment | Maximum | |
Property and equipment, net | |
Useful life | 5 years |
Summary of Significant Accoun39
Summary of Significant Accounting Policies - Deferred Financing Fees (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
First and Second Lien Credit Agreement | Interest Expense | |||
Deferred Financing Fees | |||
Amortization of financing costs | $ 635 | $ 728 | $ 1,100 |
Summary of Significant Accoun40
Summary of Significant Accounting Policies - Equity-Based Compensation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Equity-based compensation | |||
Equity-based compensation | $ 86,745 | $ 8,034 | $ 9,787 |
Parent Plan | |||
Equity-based compensation | |||
Equity-based compensation | $ 70,400 |
Summary of Significant Accoun41
Summary of Significant Accounting Policies - New Accounting Pronouncements (Details) - Reclassification - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
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 | ||
ASU 2015-17 | Deferred income tax, current | |||
New accounting pronouncements | |||
Impact of adoption of new accounting pronouncement | (712,000) | $ (1,600,000) | |
ASU 2015-17 | Deferred income tax, noncurrent | |||
New accounting pronouncements | |||
Impact of adoption of new accounting pronouncement | $ 712,000 | $ 1,600,000 |
Property and Equipment - Compon
Property and Equipment - Components (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Property and equipment, net | ||
Property and equipment, gross | $ 139,395 | $ 119,011 |
Accumulated amortization on office equipment held under capital leases | (10,143) | (6,244) |
Accumulated depreciation | (68,990) | (53,157) |
Property and equipment, net | 60,262 | 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 | 19,619 | 15,214 |
Office equipment held under capital lease | ||
Property and equipment, net | ||
Property and equipment, gross | 20,916 | 18,531 |
Computer equipment and software | ||
Property and equipment, net | ||
Property and equipment, gross | 74,844 | 57,389 |
Construction in progress | ||
Property and equipment, net | ||
Property and equipment, gross | $ 14,585 | $ 21,628 |
Property and Equipment - Deprec
Property and Equipment - Depreciation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Depreciation and amortization | |||
Depreciation and amortization | $ 24.6 | $ 19.1 | $ 17.2 |
Fair Value Measurements - Level
Fair Value Measurements - Level 3 Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Fair Value Measurements | ||
Level 3 assets | $ 0 | $ 0 |
Level 3 liabilities | $ 0 | $ 0 |
Business Combination - HPI (Det
Business Combination - HPI (Details) - USD ($) $ in Thousands | Sep. 01, 2015 | Dec. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Business Acquisitions | ||||||
Acquisitions of businesses, net of cash acquired | $ 12,146 | $ 28,177 | $ 2,813 | |||
Preliminary allocation of fair value of the acquisition: | ||||||
Goodwill | $ 411,203 | 411,203 | $ 402,934 | $ 385,750 | $ 384,341 | |
HPI | ||||||
Business Acquisitions | ||||||
Purchase price | $ 13,000 | |||||
Acquisitions of businesses, net of cash acquired | $ 11,700 | 12,100 | ||||
Working capital adjustments paid | 426 | |||||
Preliminary allocation of fair value of the acquisition: | ||||||
Current assets | 2,213 | 2,213 | ||||
Property and equipment | 23 | 23 | ||||
Goodwill | 8,269 | 8,269 | ||||
Intangibles: | ||||||
Total assets acquired | 14,195 | 14,195 | ||||
Liabilities assumed: | ||||||
Deferred revenue | 1,753 | 1,753 | ||||
Other current liabilities | 296 | 296 | ||||
Net assets acquired | 12,146 | 12,146 | ||||
HPI | Trade names | ||||||
Intangibles: | ||||||
Intangibles | 280 | 280 | ||||
HPI | Customer relationships | ||||||
Intangibles: | ||||||
Intangibles | 2,320 | 2,320 | ||||
HPI | Other | ||||||
Intangibles: | ||||||
Intangibles | $ 1,090 | 1,090 | ||||
General and administrative | HPI | ||||||
Other information | ||||||
Transaction expenses | $ 346 |
Business Combination - NDNQI (D
Business Combination - NDNQI (Details) - USD ($) $ in Thousands | Jun. 10, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Business Acquisitions | |||||
Acquisitions of businesses, net of cash acquired | $ 12,146 | $ 28,177 | $ 2,813 | ||
Preliminary allocation of fair value of the acquisition: | |||||
Goodwill | $ 411,203 | 402,934 | $ 385,750 | $ 384,341 | |
NDNQI | |||||
Business Acquisitions | |||||
Acquisitions of businesses, net of cash acquired | $ 24,900 | ||||
Preliminary allocation of fair value of the acquisition: | |||||
Current assets | 478 | ||||
Goodwill | 14,647 | ||||
Intangibles: | |||||
Total assets acquired | 31,211 | ||||
Liabilities assumed: | |||||
Deferred revenue | 6,180 | ||||
Other current liabilities | 181 | ||||
Net assets acquired | 24,850 | ||||
NDNQI | Book value | |||||
Liabilities assumed: | |||||
Deferred revenue | 6,500 | ||||
NDNQI | Fair value | |||||
Liabilities assumed: | |||||
Deferred revenue | 6,200 | ||||
NDNQI | Fair Value Adjustment | |||||
Liabilities assumed: | |||||
Deferred revenue | $ 300 | ||||
NDNQI | Trade names | |||||
Intangibles: | |||||
Intangibles | 300 | ||||
NDNQI | Customer relationships | |||||
Intangibles: | |||||
Intangibles | 2,800 | ||||
NDNQI | Proprietary technology | |||||
Intangibles: | |||||
Intangibles | 11,800 | ||||
NDNQI | Software | |||||
Preliminary allocation of fair value of the acquisition: | |||||
Property and equipment | 1,186 | ||||
General and administrative | NDNQI | |||||
Other information | |||||
Transaction expenses | $ 246 |
Business Combination - Dynamic
Business Combination - Dynamic Clinical Systems, Inc (Details) - USD ($) | Apr. 24, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Business Acquisitions | |||||
Acquisitions of businesses, net of cash acquired | $ 12,146,000 | $ 28,177,000 | $ 2,813,000 | ||
Preliminary allocation of fair value of the acquisition: | |||||
Goodwill | $ 411,203,000 | 402,934,000 | $ 385,750,000 | $ 384,341,000 | |
Dynamic Clinical Systems, Inc | |||||
Business Acquisitions | |||||
Acquisitions of businesses, net of cash acquired | $ 3,300,000 | ||||
Preliminary allocation of fair value of the acquisition: | |||||
Current assets | 186,000 | ||||
Goodwill | 2,162,000 | ||||
Intangibles: | |||||
Total assets acquired | 4,188,000 | ||||
Liabilities assumed: | |||||
Deferred revenue | 210,000 | ||||
Other current liabilities | 302,000 | ||||
Deferred income tax liability | 358,000 | ||||
Net assets acquired | 3,318,000 | ||||
Dynamic Clinical Systems, Inc | Trade names | |||||
Intangibles: | |||||
Intangibles | 100,000 | ||||
Dynamic Clinical Systems, Inc | Customer relationships | |||||
Intangibles: | |||||
Intangibles | 1,200,000 | ||||
Dynamic Clinical Systems, Inc | Proprietary technology | |||||
Intangibles: | |||||
Intangibles | 380,000 | ||||
Dynamic Clinical Systems, Inc | Other | |||||
Intangibles: | |||||
Intangibles | 160,000 | ||||
Earnout feature | Dynamic Clinical Systems, Inc | |||||
Contingent consideration | |||||
Contingent consideration | $ 0 | ||||
General and administrative | Dynamic Clinical Systems, Inc | |||||
Other information | |||||
Transaction expenses | $ 118,000 |
Business Combination - OTSS (De
Business Combination - OTSS (Details) - USD ($) | Dec. 30, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Business Acquisitions | |||||
Acquisitions of businesses, net of cash acquired | $ 12,146,000 | $ 28,177,000 | $ 2,813,000 | ||
Preliminary allocation of fair value of the acquisition: | |||||
Goodwill | $ 411,203,000 | 402,934,000 | 385,750,000 | $ 384,341,000 | |
OTSS | |||||
Business Acquisitions | |||||
Acquisitions of businesses, net of cash acquired | $ 2,800,000 | ||||
Goodwill, amount expected to be tax deductible | $ 0 | ||||
Preliminary allocation of fair value of the acquisition: | |||||
Current assets | 39,000 | ||||
Deferred income tax asset | 34,000 | ||||
Goodwill | 1,763,000 | ||||
Intangibles: | |||||
Total assets acquired | 2,836,000 | ||||
Liabilities assumed: | |||||
Deferred revenue | 13,000 | ||||
Other current liabilities | 10,000 | ||||
Net assets acquired | 2,813,000 | ||||
OTSS | Proprietary technology | |||||
Intangibles: | |||||
Intangibles | 1,000,000 | ||||
General and administrative | OTSS | |||||
Other information | |||||
Transaction expenses | $ 37,000 | $ 55,000 |
Goodwill and Intangible Asset49
Goodwill and Intangible Assets - Goodwill (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Goodwill | |||
Goodwill, impairment | $ 0 | $ 0 | |
Changes in carrying amount of goodwill | |||
Goodwill, Beginning Balance | 402,934,000 | 385,750,000 | $ 384,341,000 |
Goodwill, Ending Balance | 411,203,000 | 402,934,000 | 385,750,000 |
OTSS | |||
Changes in carrying amount of goodwill | |||
Goodwill, Beginning Balance | 1,763,000 | ||
Goodwill acquired | 1,388,000 | ||
Adjustments | 375,000 | ||
Goodwill, Ending Balance | 1,763,000 | ||
Morehead | |||
Changes in carrying amount of goodwill | |||
Adjustments | $ 21,000 | ||
Dynamic Clinical Systems, Inc | |||
Changes in carrying amount of goodwill | |||
Goodwill, Beginning Balance | 2,162,000 | ||
Goodwill acquired | 2,162,000 | ||
Goodwill, Ending Balance | 2,162,000 | ||
NDNQI | |||
Changes in carrying amount of goodwill | |||
Goodwill, Beginning Balance | 14,647,000 | ||
Goodwill acquired | 14,647,000 | ||
Goodwill, Ending Balance | $ 14,647,000 | ||
HPI | |||
Changes in carrying amount of goodwill | |||
Goodwill acquired | 8,269,000 | ||
Goodwill, Ending Balance | $ 8,269,000 |
Goodwill and Intangible Asset50
Goodwill and Intangible Assets - Intangibles, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets, Net | ||
Accumulated Amortization | $ (112,985) | $ (96,369) |
Intangible Assets, Net (finite life) | 162,465 | |
Intangible Assets, Net (Excluding Goodwill) | ||
Gross Carrying Value | 475,450 | 471,760 |
Accumulated Amortization | (112,985) | (96,369) |
Intangible assets, net | $ 362,465 | 375,391 |
Trade names | ||
Finite-Lived Intangible Assets, Net | ||
Average Remaining Useful Life (in years) | 4 years 2 months 12 days | |
Gross Carrying Value (finite life) | $ 2,410 | 2,130 |
Accumulated Amortization | (1,509) | (1,167) |
Intangible Assets, Net (finite life) | 901 | 963 |
Intangible Assets, Net (Excluding Goodwill) | ||
Accumulated Amortization | $ (1,509) | (1,167) |
Customer relationships | ||
Finite-Lived Intangible Assets, Net | ||
Average Remaining Useful Life (in years) | 12 years 3 months 18 days | |
Gross Carrying Value (finite life) | $ 237,620 | 235,300 |
Accumulated Amortization | (94,851) | (82,010) |
Intangible Assets, Net (finite life) | 142,769 | 153,290 |
Intangible Assets, Net (Excluding Goodwill) | ||
Accumulated Amortization | $ (94,851) | (82,010) |
Proprietary technology | ||
Finite-Lived Intangible Assets, Net | ||
Average Remaining Useful Life (in years) | 9 years | |
Gross Carrying Value (finite life) | $ 32,240 | 32,240 |
Accumulated Amortization | (14,849) | (11,645) |
Intangible Assets, Net (finite life) | 17,391 | 20,595 |
Intangible Assets, Net (Excluding Goodwill) | ||
Accumulated Amortization | $ (14,849) | (11,645) |
Other | ||
Finite-Lived Intangible Assets, Net | ||
Average Remaining Useful Life (in years) | 7 years 10 months 24 days | |
Gross Carrying Value (finite life) | $ 3,180 | 2,090 |
Accumulated Amortization | (1,776) | (1,547) |
Intangible Assets, Net (finite life) | 1,404 | 543 |
Intangible Assets, Net (Excluding Goodwill) | ||
Accumulated Amortization | (1,776) | (1,547) |
Trade names | ||
Indefinite-Lived Intangible Assets (Excluding Goodwill) | ||
Indefinite-lived intangible assets | $ 200,000 | $ 200,000 |
Goodwill and Intangible Asset51
Goodwill and Intangible Assets - Amortization (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Amortization expense | |||
Amortization expense | $ 16,600 | $ 16,000 | $ 15,300 |
Estimated remaining amortization expense | |||
2,016 | 16,470 | ||
2,017 | 15,527 | ||
2,018 | 13,939 | ||
2,019 | 13,393 | ||
2,020 | 12,965 | ||
Thereafter | 90,171 | ||
Intangible Assets, Net (finite life) | $ 162,465 |
Impairment Charges (Details)
Impairment Charges (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2013USD ($)product | |
Impairment Charge | |
Number of products discontinued | product | 3 |
Impairment charges | $ | $ 2,579 |
Revolving Line of Credit and 53
Revolving Line of Credit and Long Term Debt - Components (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Jul. 30, 2015 | Dec. 31, 2014 |
Long-term debt | |||
Long‑term debt, gross | $ 182,688 | ||
Unamortized deferred financing fees | (897) | $ (810) | |
Less current portion | (9,250) | (4,279) | |
Long-term debt | 171,226 | 402,888 | |
2015 Credit Agreement | |||
Long-term debt | |||
Unamortized deferred financing fees | (2,212) | ||
Total debt | 180,476 | ||
Less current portion | (9,250) | ||
Long-term debt | 171,226 | ||
2015 Credit Agreement | Term Loan | |||
Long-term debt | |||
Long‑term debt, gross | $ 182,688 | ||
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 54
Revolving Line of Credit and Long Term Debt - Unamortized deferred financing fees (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Long-term debt | ||
Deferred financing fees, net | $ 897 | $ 810 |
2015 Credit Agreement | ||
Long-term debt | ||
Deferred financing fees, net | 2,212 | |
2015 Credit Agreement | Revolver | ||
Long-term debt | ||
Deferred financing fees, net | $ 897 | |
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 55
Revolving Line of Credit and Long Term Debt - Future Maturities (Details) $ in Thousands | Dec. 31, 2015USD ($) |
Aggregate maturities | |
2,016 | $ 9,250 |
2,017 | 9,250 |
2,018 | 9,250 |
2,019 | 9,250 |
2,020 | 145,688 |
Total debt | $ 182,688 |
Revolving Line of Credit and 56
Revolving Line of Credit and Long Term Debt - Terms (Details) | Jul. 31, 2015USD ($) | May. 09, 2014USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Jul. 30, 2015USD ($) | Mar. 31, 2014USD ($) | Mar. 31, 2013USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Jul. 30, 2015USD ($) | Jun. 17, 2013USD ($) | May. 09, 2013USD ($) |
Long-term debt | |||||||||||||
Loss on extinguishment of debt | $ 1,750,000 | $ 2,894,000 | $ 7,922,000 | ||||||||||
Long-term debt, amount outstanding | $ 182,688,000 | ||||||||||||
2015 Credit Agreement | |||||||||||||
Long-term debt | |||||||||||||
Deferred financing fees | $ 3,400,000 | ||||||||||||
2015 Credit Agreement | Actual | |||||||||||||
Long-term debt | |||||||||||||
Secured net leverage ratio | 1.3 | ||||||||||||
2015 Credit Agreement | Maximum | |||||||||||||
Long-term debt | |||||||||||||
Secured net leverage ratio | 3.75 | ||||||||||||
First Lien Credit Agreement | |||||||||||||
Long-term debt | |||||||||||||
Loss on extinguishment of debt | 1,100,000 | ||||||||||||
Write-off of unamortized deferred financing fees | 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% | ||||||||||||
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 | $ 182,688,000 | ||||||||||||
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 unamortized deferred financing fees | 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 2013 Amendment | |||||||||||||
Long-term debt | |||||||||||||
Deferred financing fees | $ 365,000 | ||||||||||||
Increase in borrowing capacity | $ 50,000,000 | ||||||||||||
Term Loan | First Lien Credit Agreement June 2013 Amendment | |||||||||||||
Long-term debt | |||||||||||||
Deferred financing fees | $ 486,000 | ||||||||||||
Term Loan | First Lien Credit Agreement May 2014 Amendment | |||||||||||||
Long-term debt | |||||||||||||
Deferred financing fees | $ 508,000 | ||||||||||||
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 | 7,900,000 | |||||||||||
Write-off of unamortized deferred financing fees | 1,500,000 | 4,100,000 | |||||||||||
Loss on original issue discount | 921,000 | 2,300,000 | |||||||||||
Original issue discount | 950,000 | 950,000 | |||||||||||
Lenders fees for extinguishment of debt | 497,000 | $ 1,500,000 | |||||||||||
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 | ||||||||||||
Letters of credit outstanding | 65,000 | ||||||||||||
Available borrowing capacity | $ 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) | 1.50% | ||||||||||||
Revolver | 2015 Credit Agreement | Adjusted Base Rate (ABR) | |||||||||||||
Long-term debt | |||||||||||||
Variable rate, basis spread (as a percent) | 0.50% | ||||||||||||
Revolver | First Lien Credit Agreement | |||||||||||||
Long-term debt | |||||||||||||
Maximum borrowing capacity | $ 30,000,000 | $ 30,000,000 | |||||||||||
Long-term debt, amount outstanding | $ 0 | ||||||||||||
Commitment fee, unused amounts (as a percent) | 0.50% |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Capital Leases - Future Minimum Lease Payments | |||
2,016 | $ 5,174 | ||
2,017 | 3,051 | ||
2,018 | 789 | ||
2,019 | 477 | ||
2,020 | 40 | ||
Total minimum lease payments | 9,531 | ||
Less amount representing interest | 740 | ||
Present value of future minimum lease payments | 8,791 | ||
Less current installments of obligations under capital leases | 4,626 | $ 4,373 | |
Long-term capital lease obligations | 4,165 | 6,779 | |
Operating Leases - Future Minimum Lease Payments | |||
2,016 | 3,214 | ||
2,017 | 2,445 | ||
2,018 | 1,310 | ||
2,019 | 1,129 | ||
2,020 | 654 | ||
Thereafter | 41 | ||
Total minimum lease payments | 8,793 | ||
Operating Leases - additional information | |||
Rent expense | 3,200 | 3,400 | $ 3,300 |
Capital Leases - additional information | |||
Amortization expense | $ 4,600 | $ 2,300 | $ 1,900 |
Defined Contribution Retireme58
Defined Contribution Retirement Plan (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Defined Contribution Retirement Plan | |||
Contribution expense | $ 2.6 | $ 2.2 | $ 2.3 |
Equity-Based Compensation - All
Equity-Based Compensation - Allocated Equity-Based Compensation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Equity-based compensation expense | |||
Total equity-based compensation expense | $ 86,745 | $ 8,034 | $ 9,787 |
Cost of revenue, excluding depreciation and amortization | |||
Equity-based compensation expense | |||
Total equity-based compensation expense | 13,342 | 2,506 | 2,704 |
General and administrative | |||
Equity-based compensation expense | |||
Total equity-based compensation expense | $ 73,403 | $ 5,528 | $ 7,083 |
Equity-Based Compensation - Par
Equity-Based Compensation - Parent Equity-Based Compensation Plan (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
May. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Equity-based compensation | ||||
Equity-based compensation | $ 86,745 | $ 8,034 | $ 9,787 | |
Equity-based compensation liability | 19,423 | |||
Parent Plan | ||||
Equity-based compensation | ||||
Equity-based compensation | 70,400 | |||
Equity-based compensation liability | 0 | $ 19,400 | ||
Award Modification, Principal Forgiveness | Parent Plan | ||||
Equity-based compensation | ||||
Equity-based compensation | 1,500 | |||
Common Units | Performance-based Class A and Class C common units | Parent Plan | ||||
Equity-based compensation | ||||
Equity-based compensation | 40,400 | |||
Common Units | Cliff-vesting awards | Parent Plan | ||||
Equity-based compensation | ||||
Equity-based compensation | 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 | |||
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 | Dec. 31, 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 | 1,820,114 |
Vested (in shares) | (328,429) | |
Forfeited (in shares) | (264,126) | |
Nonvested at end of period (in shares) | 2,255,681 | |
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) | 25.19 | |
Vested (in dollars per share) | 25 | |
Forfeited (in dollars per share) | 25 | |
Nonvested at end of period (in dollars per share) | $ 25.15 | |
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 | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Unrecognized compensation | |
Unrecognized compensation costs | $ 46.4 |
Unrecognized compensation costs, weighted average period for recognition | 2 years 8 months 12 days |
Equity-Based Compensation - Sto
Equity-Based Compensation - Stock Options (Details) | 12 Months Ended |
Dec. 31, 2015$ / sharesshares | |
Stock Options | |
Grants (in shares) | shares | 36,304 |
Weighted-average grant date fair value (in dollars per share) | $ / shares | $ 12.79 |
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% |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Computaton of basic and diluted earnings (net loss) per share | |||
Net income (loss) | $ (36,627) | $ 15,583 | $ 99 |
Weighted average shares outstanding, basic | 48,891,327 | 43,313,200 | 43,313,200 |
Weighted average shares outstanding, diluted | 48,891,327 | 43,313,200 | 43,313,200 |
Net earnings (loss) per share, basic and diluted | $ (0.75) | $ 0.36 | $ 0 |
Stock Options | |||
Equity instruments excluded from diluted net earnings (loss) per share calculation as the effect would have been anti-dilutive: | |||
Antidilutive shares excluded from computation of diluted earnings per share | 36,304 | ||
Restricted stock | |||
Equity instruments excluded from diluted net earnings (loss) per share calculation as the effect would have been anti-dilutive: | |||
Antidilutive shares excluded from computation of diluted earnings per share | 183,974 |
Income Taxes - Components of In
Income Taxes - Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Current | |||
U.S. federal | $ 5,659 | $ 13,553 | $ 717 |
State and local | 3,169 | 4,450 | 756 |
Total current income tax expense | 8,828 | 18,003 | 1,473 |
Deferred | |||
U.S. federal | (3,808) | (2,416) | 3,478 |
State and local | 2,508 | (2,391) | 975 |
Total deferred income tax expense | (1,300) | (4,807) | 4,453 |
Income tax expense (benefit) | |||
U.S. federal | 1,851 | 11,137 | 4,195 |
State and local | 5,677 | 2,059 | 1,731 |
Income tax expense, total | $ 7,528 | $ 13,196 | $ 5,926 |
Income Taxes - Effective Tax Ra
Income Taxes - Effective Tax Rate Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income tax reconciliation of effective tax rate | |||
Federal statutory rate (as a percent) | 35.00% | 35.00% | 35.00% |
Tax at federal statutory rate | $ (10,185) | $ 10,073 | $ 2,109 |
State and local income taxes, net of federal income tax benefit | 1,335 | 2,144 | 830 |
Effect of state rate changes | 1,263 | (89) | 1,036 |
Nondeductible equity-based compensation | 1,316 | 728 | 1,725 |
Nondeductible expenses, tax reserve adjustments, and other, net | 684 | 340 | 226 |
Income tax expense, total | $ 7,528 | $ 13,196 | $ 5,926 |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred tax assets: | ||
Accounts receivable | $ 319 | $ 257 |
Accrued liabilities | 806 | 188 |
Net operating loss carryforward | 320 | 610 |
Equity based compensation expense | 9,054 | 4,002 |
Total gross deferred tax assets | 10,499 | 5,057 |
Deferred tax liabilities: | ||
Prepaid expenses | 1,764 | 1,158 |
Capital lease | 877 | 523 |
Property and equipment | 6,031 | 4,113 |
Intangible assets and goodwill | 127,006 | 125,742 |
Total gross deferred tax liabilities | 135,678 | 131,536 |
Net deferred tax liabilities | $ 125,179 | $ 126,479 |
Income Taxes - Operating Loss C
Income Taxes - Operating Loss Carryforwards (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Net operating loss carryforwards | |
Net operating loss carryforwards | $ 900 |
Minimum | |
Net operating loss carryforwards | |
NOL Expiration dates | Dec. 31, 2025 |
Maximum | |
Net operating loss carryforwards | |
NOL Expiration dates | Dec. 31, 2033 |
Income Taxes - Uncertain Tax Po
Income Taxes - Uncertain Tax Positions (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Uncertain tax positions | ||
Liability for uncertain tax positions | $ 0 | $ 0 |
Segment Information (Details)
Segment Information (Details) - Operating - segment | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 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 | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Related Party Transactions | |||
Related party expenses | $ 553 | $ 1,047 | $ 907 |
Transaction advisory fee | 8,500 | ||
Vestar | Management Fees | |||
Related Party Transactions | |||
Related party expenses | 553 | $ 1,000 | $ 907 |
Vestar | Transaction Advisory Fee | |||
Related Party Transactions | |||
Transaction advisory fee | $ 8,500 |
Schedule II Valuation and Qua72
Schedule II Valuation and Qualifying Accounts (Details) - Allowance for Doubtful Accounts - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Activity of the allowance for doubtful accounts | |||
Balance at Beginning of Year | $ 531 | $ 596 | $ 623 |
Additions Charged to Expense | 520 | 290 | 400 |
Deductions | (277) | (355) | (427) |
Balance at End of Year | $ 774 | $ 531 | $ 596 |