Document and Entity Information
Document and Entity Information | 3 Months Ended |
Mar. 31, 2018shares | |
Document and Entity Information | |
Entity Registrant Name | Cotiviti Holdings, Inc. |
Entity Central Index Key | 1,657,197 |
Document Type | 10-Q |
Document Period End Date | Mar. 31, 2018 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 92,941,484 |
Document Fiscal Year Focus | 2,018 |
Document Fiscal Period Focus | Q1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 189,297 | $ 165,518 |
Restricted cash | 13,941 | 11,383 |
Accounts receivable, net of allowance for doubtful accounts of $17 and $176 at March 31, 2018 and December 31, 2017, respectively; and net of estimated allowance for refunds and appeals of $43,690 and $35,434 at March 31, 2018 and December 31, 2017, respectively | 73,509 | 83,756 |
Prepaid expenses and other current assets | 19,758 | 15,314 |
Total current assets | 296,505 | 275,971 |
Property and equipment, net | 81,684 | 77,340 |
Goodwill | 1,251,549 | 1,251,364 |
Intangible assets, net | 477,630 | 492,040 |
Other long-term assets | 3,248 | 2,514 |
TOTAL ASSETS | 2,110,616 | 2,099,229 |
Current liabilities: | ||
Current maturities of long-term debt | 19,563 | 18,000 |
Customer deposits | 13,941 | 11,383 |
Accounts payable and accrued other expenses | 30,259 | 25,906 |
Accrued compensation costs | 28,006 | 42,725 |
Estimated liability for refunds and appeals | 9,367 | 61,607 |
Total current liabilities | 101,136 | 159,621 |
Long-term liabilities: | ||
Long-term debt | 744,070 | 749,618 |
Other long-term liabilities | 5,819 | 5,474 |
Deferred tax liabilities | 88,900 | 83,048 |
Total long-term liabilities | 838,789 | 838,140 |
Total liabilities | 939,925 | 997,761 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock ($0.001 par value; 600,000,000 shares authorized, 92,941,484 and 92,299,294 issued and outstanding at March 31, 2018 and December 31, 2017, respectively) | 93 | 92 |
Additional paid-in capital | 948,247 | 933,710 |
Retained earnings | 226,597 | 172,120 |
Accumulated other comprehensive loss | (4,246) | (4,454) |
Total stockholders' equity | 1,170,691 | 1,101,468 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 2,110,616 | $ 2,099,229 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Consolidated Balance Sheets | ||
Allowance for doubtful accounts | $ 17 | $ 176 |
Estimated allowance for refunds and appeals | $ 43,690 | $ 35,434 |
Common stock, par value per share | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 600,000,000 | 600,000,000 |
Common stock, shares issued | 92,941,484 | 92,299,294 |
Common stock, shares outstanding | 92,941,484 | 92,299,294 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Consolidated Statements of Comprehensive Income | ||
Net revenue | $ 219,034 | $ 160,133 |
Cost of revenue (exclusive of depreciation and amortization, stated separately below): | ||
Compensation | 58,092 | 56,288 |
Other costs of revenue | 6,473 | 6,686 |
Total cost of revenue | 64,565 | 62,974 |
Selling, general and administrative expenses (exclusive of depreciation and amortization, stated separately below): | ||
Compensation | 35,180 | 24,693 |
Other selling, general and administrative expenses | 18,766 | 16,879 |
Total selling, general and administrative expenses | 53,946 | 41,572 |
Depreciation and amortization of property and equipment | 7,242 | 5,575 |
Amortization of intangible assets | 14,396 | 15,199 |
Transaction-related expenses | 214 | 731 |
Total operating expenses | 140,363 | 126,051 |
Operating income | 78,671 | 34,082 |
Other expense (income): | ||
Interest expense | 9,177 | 8,421 |
Other non-operating (income) expense | (335) | (453) |
Total other expense (income) | 8,842 | 7,968 |
Income before income taxes | 69,829 | 26,114 |
Income tax expense (benefit) | 15,902 | (861) |
Net income | 53,927 | 26,975 |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation adjustments | 208 | 57 |
Change in fair value of derivative instruments | (62) | |
Total other comprehensive income (loss) | 208 | (5) |
Comprehensive income | $ 54,135 | $ 26,970 |
Earnings per share: | ||
Basic (in dollars per share) | $ 0.58 | $ 0.30 |
Diluted (in dollars per share) | $ 0.57 | $ 0.28 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 53,927 | $ 26,975 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Deferred income taxes | 5,758 | 1,877 |
Depreciation and amortization | 21,638 | 20,774 |
Stock-based compensation expense | 8,646 | 2,083 |
Amortization of debt issuance costs | 515 | 645 |
Accretion of asset retirement obligations | 51 | 48 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 10,247 | 5,663 |
Other assets | (5,209) | (2,612) |
Accrued compensation | (14,719) | (29,210) |
Accounts payable and accrued other expenses | 5,515 | (841) |
Estimated liability for refunds and appeals | (52,240) | (774) |
Other long-term liabilities | 338 | 247 |
Other | 249 | (303) |
Net cash provided by operating activities | 34,716 | 24,572 |
Cash flows from investing activities: | ||
Expenditures for property and equipment | (12,385) | (9,660) |
Net cash used in investing activities | (12,385) | (9,660) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock under equity plans | 5,923 | 7,360 |
Repayment of debt | (4,500) | (4,500) |
Net cash provided by financing activities | 1,423 | 2,860 |
Effect of foreign exchanges on cash and cash equivalents | 25 | 51 |
Net increase in cash, cash equivalents and restricted cash | 23,779 | 17,823 |
Cash, cash equivalents and restricted cash at beginning of period | 165,518 | 110,635 |
Cash, cash equivalents and restricted cash at end of the period | 189,297 | 128,458 |
Supplemental disclosures of cash flow information: | ||
Cash paid for income taxes | 1,030 | 649 |
Cash paid for interest | 7,900 | 7,587 |
Noncash investing activities (accrued property and equipment purchases) | $ 4,750 | $ 6,738 |
Description of Business
Description of Business | 3 Months Ended |
Mar. 31, 2018 | |
Description of Business | |
Description of Business | Note 1. Description of Business Cotiviti Holdings, Inc. (collectively with its subsidiaries, “we,” “our,” “Cotiviti” or the “Company”) is a leading provider of payment accuracy and analytics-driven solutions that help payers, other risk-bearing healthcare organizations and retailers achieve their business objectives. Through a combination of analytics, technology and deep industry expertise, our solutions create insights that unlock value from the complex interactions between clients and their stakeholders. We serve a majority of the top 25 U.S. healthcare payers and a majority of the top ten U.S. retailers. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Basis of Presentation Our accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP. All significant intercompany balances and transactions have been eliminated in consolidation. These consolidated financial statements are unaudited and have been prepared by us following the rules and regulations of the SEC. In our opinion they reflect all adjustments, including normal recurring items, that are necessary to present fairly the results of interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations; however, we believe that the disclosures are adequate to make the information presented not misleading. Operating results for the periods presented herein are not necessarily indicative of the results that may be expected for other interim periods or the entire fiscal year. Certain prior year amounts have been reclassified to conform to the current year presentation. Restricted Cash In connection with providing services to certain clients, we maintain a series of lockbox accounts with certain financial institutions. These lockbox accounts exist to receive funds we collect on behalf of our clients resulting from services provided. When client funds are received and deposited into the lockbox accounts, we record a corresponding customer deposit liability. These funds are included as both restricted cash in current assets and customer deposits in current liabilities on our Consolidated Balance Sheets and are included in beginning and ending cash, cash equivalents and restricted cash on our Consolidated Statements of Cash Flows. The following table reconciles cash, cash equivalents and restricted cash per the Consolidated Statements of Cash Flows to the Consolidated Balance Sheets. March 31, 2018 December 31, 2017 March 31, 2017 December 31, 2016 Cash and cash equivalents $ $ $ $ Restricted cash Customer deposits (13,941) (11,383) (7,232) Total cash, cash equivalents and restricted cash $ $ $ $ Recently Issued Accounting Standards In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”) which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act. We early adopted the provisions of ASU 2018-02 during the first quarter 2018. As of March 31, 2018, we reclassified $550 from accumulated other comprehensive loss to retained earnings in the Consolidated Balance Sheets. In November 2016, the FASB issued ASU 2016-18, Restricted Cash (“ASU 2016-18”), which requires that restricted cash be included with cash and cash equivalents when reconciling the beginning and end of period total amounts shown on the statement of cash flows. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2017, including interim periods within those annual periods. We retrospectively adopted the provisions of ASU 2016-18 effective January 1, 2018. This guidance did not have a significant impact on our consolidated financial statements. Refer to “Restricted Cash” above for further information. In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”) which changes the accounting recognition, measurement and disclosure for leases in order to increase transparency. ASU 2016-02 requires lease assets and liabilities to be recognized on the balance sheet and key information about leasing arrangements to be disclosed. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We are evaluating this guidance and its impact on our consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes existing revenue recognition guidance and provides clarification of principles for recognizing revenue from contracts with customers. ASU 2014-09 sets forth a five-step model for determining when and how revenue is recognized. The core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Additional disclosures will be required to describe the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. The two permitted transition methods under ASU 2014-09 are the full retrospective method, in which case the new guidance would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of the initial application. The guidance is effective for public companies with annual periods beginning after December 15, 2017, including interim periods within that reporting period. We adopted the provisions of ASC 606 and related amendments as of January 1, 2018 using the modified retrospective method. The adoption of ASC 606 did not result in any significant changes to the timing of revenue recognition in prior, current or future periods therefore there was no cumulative adjustment as a result of adoption. Refer to Note 3 for more information on revenue recognition. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2018 | |
Revenue Recognition | |
Revenue Recognition | Note 3. Revenue Recognition Revenue Revenue is comprised of services we provide in our Healthcare and Global Retail and Other operating segments under contracts that contain various fee structures, including performance fee based contracts and fixed fee arrangements. We account for revenue in accordance with ASC 606. Through our Healthcare segment, we offer prospective and retrospective claims accuracy solutions to healthcare payers in the United States. We also provide a network efficiency solution to payers and providers as well as, on a limited basis, certain analytics-based solutions unrelated to our healthcare payment accuracy solutions in the United States. Through our Global Retail and Other segment, we provide retrospective claims accuracy solutions to retailers primarily in the United States, with additional clients in Canada and the United Kingdom. Net revenue generated in the United States accounted for approximately 99% of total net revenue for each of the three months ended March 31, 2018 and 2017. During the three months ended March 31, 2018, we made the decision to exit our retail operations in the United Kingdom by the end of 2018. Three Months Ended March 31, 2018 % 2017 % Healthcare Retrospective claims accuracy $ 133,923 61.2 $ 77,516 48.4 Prospective claims accuracy 58,285 26.6 59,717 37.3 Other 8,163 3.7 2,570 1.6 Total Healthcare 200,371 91.5 139,803 87.3 Global Retail and Other Retrospective claims accuracy 18,663 8.5 19,674 12.3 Other — — 656 0.4 Total Global Retail and Other 18,663 8.5 20,330 12.7 Consolidated net revenue $ 219,034 100.0 $ 160,133 100.0 Performance obligations – The unit of measure under ASC 606 is a performance obligation, which is a promise in a contract to transfer a distinct or series of distinct goods or services to the client. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Our contracts have either a single performance obligation as the promise to transfer services is not separately identifiable from other promises in the contracts and is, therefore, not distinct, or have multiple performance obligations, most commonly due to the contract covering multiple service offerings. For contracts with multiple performance obligations, the contract’s transaction price can generally be readily allocated to each performance obligation based upon the selling price of each distinct service in the contract. In cases where estimates are needed to allocate the transaction price, we use historical experience and projections based on currently available information. Retrospective and Prospective claims accuracy - Performance obligations for our retrospective and prospective claims accuracy solutions are satisfied at a point in time when our clients realize the economic benefits from our services. Our clients realize economic benefits when they take credits against their existing accounts payable based on when we identify cost savings, when they receive refund checks based on overpayments, or when they acknowledge payment reductions based on cost savings. Clients pay for our services once they realize the economic benefit. Other - Performance obligations for our other healthcare solutions are generally satisfied over time as the services are delivered. Clients generally pay once the services have been rendered, although certain clients, on a limited basis, pay in advance of the services being rendered in which case we record cash received as deferred revenue and recognize upon satisfaction of the performance obligation. Estimated Liability for Refunds and Appeals Historically, there has been a certain amount of revenue with respect to which, even though we had met the requirements for revenue recognition, the claim is ultimately rejected. In such cases, our clients may request a refund or offset if their providers or vendors ultimately reject the payment inaccuracies we find or if our clients determine not to pursue reimbursement from their providers or vendors even though we may have collected fees. We record an estimate for refund liabilities as a reduction of revenue based on actual historical refund data by client type. We satisfy such refund liabilities either by offsets to accounts receivable or by cash payments to clients. We also calculate client specific refund liabilities in excess of the estimated historical refund liabilities when we determine additional amounts may ultimately be required to be returned to the client. Under the Medicare Recovery Audit Program, in which we are one of the Medicare RACs for CMS, healthcare providers have the right to appeal a claim and may pursue additional appeals if the initial appeal is found in favor of CMS. We currently have Medicare RAC contracts related to CMS Regions 2 and 3; our original Medicare RAC contract was related to the former CMS Region C. We accrue an estimated liability for appeals based on the amount of fees that are subject to appeals, closures or other adjustments and those which we estimate are probable of being returned to CMS following a successful appeal by the providers. Our estimates are based on our historical experience with the Medicare RAC appeal process. The liability is included in the estimated liability for refunds and appeals on our Consolidated Balance Sheets. Our original Medicare RAC contract with CMS expired on January 31, 2018. In connection with the expiration of the contract, we determined that we have no obligation to CMS with respect to any appeals resolved in the providers’ favor after the expiration date and, in addition, we have no obligation to CMS in connection with the hospital settlement processes as initiated by CMS. Refer to Note 7 of the Notes to Consolidated Financial Statements included in our 2017 Annual Report on Form 10-K for further details on the hospital settlement processes. Accordingly, we released $46,556 of the total $56,089 liability to revenue during the three months ended March 31, 2018. The remaining estimated liability for refunds and appeals related to the original Medicare RAC contract of approximately $4,200 as of March 31, 2018 represents management’s best estimate of any appeals overturned prior to the expiration of the contract term. For all refund and appeals liabilities, to the extent the amount to be returned to providers following a successful appeal process exceeds or is less than the amount recorded, revenue in the applicable period would be reduced or increased, respectively, by such amount. Any future changes to any of our client contracts may require different assumptions to be applied that could materially affect our revenue and estimated liability for refunds and appeals in future periods. We record periodic changes in refund liabilities as adjustments to revenue. The estimated liability for refunds and appeals representing our estimate of claims that may be overturned related to revenue which has already been received is included in the estimated liability for refunds and appeals in current liabilities on our Consolidated Balance Sheets. The estimated allowance for refunds and appeals representing our estimate of claims that may be overturned related to amounts in accounts receivable is included in accounts receivable on our Consolidated Balance Sheets. The table below presents the activity of the estimated liability for refunds and appeals. Three Months Ended March 31, 2018 2017 Balance at beginning of period, January 1 Estimated allowance for refunds and appeals $ 35,434 $ 41,020 Estimated liability for refunds and appeals 61,607 62,539 Total balance at beginning of period, January 1 97,041 103,559 Provision 32,593 19,076 Refunds settled with client (28,753) (22,042) Refunds recovered (1,268) (3,309) Original Medicare RAC contract release of liability (46,556) - Total balance at end of period, March 31 $ 53,057 $ 97,284 Less: estimated allowance for refunds and appeals 43,690 35,518 Estimated liability for refunds and appeals $ 9,367 $ 61,766 Costs to obtain and/or fulfill a contract Incremental costs of obtaining a contract include costs incurred by an entity to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. A select group of employees are eligible for sales commissions, which are directly related to obtaining certain client contracts. We have recorded an asset related to the amount of commissions to be paid to employees in the future and a corresponding liability. The asset is amortized to expense over the life of the underlying contract and the liability is relieved as payments are made to the employees. As of March 31, 2018, there is approximately $545 included in prepaid expenses and other current assets, $463 included in other long-term assets and $1,003 included in accrued compensation costs on our Consolidated Balance Sheets. Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. We accrue an allowance against accounts receivable related to fees yet to be collected, based on historical losses adjusted for current market conditions, our clients’ financial condition, the amount of any receivables in dispute, the current receivables aging and current payment patterns. We record changes in our estimate to the allowance for doubtful accounts through bad debt expense and relieve the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Write-offs for all periods presented have not been significant. Unbilled receivables represent revenue recognized related to claims for which clients have received economic value that were not invoiced at the balance sheet date. Unbilled receivables were approximately $65,402 and $62,294 as of March 31, 2018 and December 31, 2017, respectively and are included in accounts receivable on our Consolidated Balance Sheets. We record any periodic changes in unbilled receivables as adjustments to revenue. Certain unbilled receivables arise when a portion of our earned fee is deferred at the time of the initial invoice. At a later date (which can be up to a year after original invoice, and at other times during the year after completion of the audit period based on contractual terms or as agreed with our client), we invoice the unbilled receivable amount. Notwithstanding the deferred due date, our clients acknowledge we have earned this unbilled receivable at the time of the original invoice, but we have agreed to defer billing the client for the related services. Unbilled receivables of this nature were approximately $4,472 and $4,958 as of March 31, 2018 and December 31, 2017, respectively, and are included in accounts receivable on our Consolidated Balance Sheets. |
Acquisition
Acquisition | 3 Months Ended |
Mar. 31, 2018 | |
Acquisition | |
Acquisition | Note 4. Acquisition On July 14, 2017, we acquired all of the outstanding equity of RowdMap. Based in Louisville, Kentucky, RowdMap is a payer-provider, value-based analytics company that helps health plans and providers identify and reduce low-value care from inefficient and unnecessary services. We paid approximately $74,000 in cash, subject to certain adjustments and funded entirely with available liquidity. We also issued an aggregate of 768,021 shares of restricted common stock to certain employees of RowdMap in connection with their continued employment with us. Half of these shares are subject to continued employment and performance-based vesting requirements. The other half are subject to continued employment, with one-third vesting on each of the first three anniversaries of the closing of the acquisition. We will record stock-based compensation expense related to this restricted stock ratably over the vesting period or to the extent it is probable the performance criteria will be achieved. This stock-based compensation expense will not be deductible for income tax purposes. As part of the RowdMap Acquisition, we allocated the purchase price to the identifiable net assets acquired, including intangible assets and liabilities assumed, based on the estimated fair values at the date of acquisition. The excess of the purchase price over the amount allocated to the identifiable assets and liabilities was recorded as goodwill. Goodwill represents the value of acquired assembled workforce, specialized processes and procedures and operating synergies, none of which qualify as separate intangible assets. We believe these specialized processes and procedures will enhance our long history of innovation and help expand our solution offerings. We determined the estimated fair values of intangible assets acquired using estimates of future discounted cash flows to be generated by the business over the estimated duration of those cash flows. We based the estimated cash flows on our projections of future revenue, operating expenses, capital expenditures, working capital needs and tax rates. We estimated the duration of the cash flows based on the projected useful lives of the assets acquired. The discount rate was determined based on specific business risk, cost of capital and other factors. The purchase price allocation is preliminary and subject to change up to one year after the date of acquisition and could result in changes to the amounts recorded below. The preliminary allocation of the purchase price to the fair values of the assets acquired and liabilities assumed at the date of the acquisition was as follows: July 14, 2017 Cash $ 4,107 Accounts receivable 2,526 Prepaid expenses and other assets 1,212 Other long-term assets 12 Property and equipment 263 Intangible assets 19,510 Total identifiable assets acquired 27,630 Accounts payable and accrued liabilities 4,491 Deferred tax liabilities 3,688 Total liabilities assumed 8,179 Net identifiable assets acquired 19,451 Goodwill 54,673 Net assets acquired $ 74,124 The $19,510 of acquired intangible assets include acquired software of $6,310 (5 year useful life) and customer relationships of $13,200 (5 year useful life). For federal income tax purposes, the RowdMap Acquisition was treated as a stock acquisition. The goodwill and the intangible assets recognized are not deductible for income tax purposes. In connection with the RowdMap Acquisition, a preliminary liability of $1,068 is included in accounts payable and accrued other expenses on the Consolidated Balance Sheets as of March 31, 2018, for payments due to the former stockholders of RowdMap, some of whom are now our employees. We recorded approximately $700 of transaction costs primarily related to professional services associated with the acquisition as transaction-related expenses within our Consolidated Statements of Comprehensive Income during the year ended December 31, 2017. The acquisition was not significant to our consolidated financial statements, therefore, pro forma results of operations related to this business acquisition have not been presented. The financial results of RowdMap have been included in our consolidated financial statements since the date of the acquisition. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2018 | |
Property and Equipment | |
Property and Equipment | Note 5. Property and Equipment Property and equipment by major asset class for the periods presented consisted of the following: March 31, December 31, 2018 2017 Computer equipment $ 48,642 $ 46,731 Software 69,962 67,511 Furniture and fixtures 11,284 9,199 Leasehold improvements 8,710 5,256 Projects in progress 11,934 10,295 Property and equipment, gross $ 150,532 $ 138,992 Less: accumulated depreciation and amortization 68,848 61,652 Property and equipment, net $ 81,684 $ 77,340 In December 2015, we purchased a perpetual software license, which is included in the software total above. We paid for this software over a two year period ended in January 2018. As such, there is approximately $3,351 included in accounts payable and accrued other expenses on our Consolidated Balance Sheets as of December 31, 2017. Total depreciation and amortization expense related to property and equipment, including capitalized software costs, was $7,242 and $5,575 for the three months ended March 31, 2018 and 2017, respectively. |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2018 | |
Intangible Assets | |
Intangible Assets | Note 6. Intangible Assets Intangible asset balances by major asset class for the periods presented were as follows: Weighted Gross Net Average Carrying Accumulated Carrying Amortization Amount Amortization Impairment Amount Period March 31, 2018: Customer relationships $ 650,927 $ 204,251 $ — $ 446,676 years Acquired software 54,210 27,456 — 26,754 years Connolly trademark 4,200 — — 4,200 indefinite-lived Total $ 709,337 $ 231,707 $ — $ 477,630 years December 31, 2017: Customer relationships $ 650,954 $ 190,572 $ 1,322 $ 459,060 years Acquired software 54,210 25,430 — 28,780 years Connolly trademark 4,200 — — 4,200 indefinite-lived Total $ 709,364 $ 216,002 $ 1,322 $ 492,040 years Amortization expense was $14,396 and $15,199 for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018 amortization expense for the next 5 years is expected to be: Remainder of 2018 $ 43,189 2019 57,585 2020 57,585 2021 53,262 2022 48,954 |
Goodwill
Goodwill | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill | |
Goodwill | Note 7. Goodwill Total goodwill in our Consolidated Balance Sheets was $1,251,549 and $1,251,364 as of March 31, 2018 and December 31, 2017, respectively. Changes in the carrying amount of goodwill by our Healthcare and Global Retail and Other segments for the three months ended March 31, 2018 were as follows: Global Retail Healthcare and Other December 31, 2017 $ 1,202,444 $ 48,920 Foreign currency translation — 185 March 31, 2018 $ 1,202,444 $ 49,105 There was no impairment related to goodwill for any period presented. |
Long-term Debt
Long-term Debt | 3 Months Ended |
Mar. 31, 2018 | |
Long-term Debt | |
Long-term Debt | Note 8. Long‑term Debt Long‑term debt for the periods presented was as follows: March 31, December 31, 2018 2017 First Lien Term A Loans $ 231,122 $ 234,237 First Lien Term B Loans 539,322 540,585 Revolver — — Total debt 770,444 774,822 Less: debt issuance costs 6,811 7,204 Less: current portion 19,563 18,000 Total long-term debt $ 744,070 $ 749,618 The Restated Credit Agreement includes certain binding affirmative and negative covenants, including delivery of financial statements and other reports, maintenance of existence and transactions with affiliates. The negative covenants restrict our ability, among other things, to incur indebtedness, grant liens, make investments, sell or otherwise dispose of assets or enter into a merger, pay dividends or repurchase stock. There is a required financial covenant applicable only to the Revolver and the First Lien Term A Loans, pursuant to which we agree not to permit our Secured Leverage Ratio (as defined in the Restated Credit Agreement) to exceed 5.50:1.00 through September 2018, 5.25:1.00 through September 2019 and 5.00:1.00 through June 2021. In addition, the Restated Credit Agreement includes certain events of default including payment defaults, failure to perform affirmative covenants, failure to refrain from actions or omissions prohibited by negative covenants, the inaccuracy of representations or warranties, bankruptcy and insolvency related defaults and a change of control default. We were in compliance with all such covenants as of March 31, 2018 and December 31, 2017, respectively. The Restated Credit Agreement requires mandatory prepayments based upon our leverage ratio at the time payment is required and an annual excess cash flow calculation commencing with the year ended December 31, 2017. The mandatory prepayment is contingently payable in the second quarter of each year based on an annual excess cash flow calculation for the preceding year as defined within the Restated Credit Agreement. We were not required to make a mandatory prepayment during 2018. As of March 31, 2018, the aggregate maturities of long‑term debt (excluding any amounts that may become payable with respect to the aforementioned mandatory prepayment provision for annual excess cash flows) for each of the next five years are expected to be $13,500 for the remainder of 2018, $24,250 in 2019, $30,500 in 2020, $183,625 in 2021 and $5,500 in 2022. |
Derivative Instruments
Derivative Instruments | 3 Months Ended |
Mar. 31, 2018 | |
Derivative Instruments | |
Derivative Instruments | Note 9. Derivative Instruments We are exposed to fluctuations in interest rates on our long‑term debt. We manage our exposure to fluctuations in the 3‑month LIBOR through the use of interest rate cap agreements designated as cash flow hedges. We are meeting our objective by hedging the risk of changes in cash flows related to changes in LIBOR by capping the interest on our floating rate debt linked to LIBOR to approximately 3%. We do not utilize derivatives for speculative or trading purposes. As of March 31, 2018 and December 31, 2017, we had $435,000 in notional debt outstanding related to these interest rate caps, which cover quarterly interest payments through September 2019. The notional amount decreases over time. Refer to Note 8 for more information regarding the debt outstanding related to these agreements. All of our outstanding interest rate cap contracts qualify for cash flow hedge accounting treatment in accordance with ASC 815, Derivatives and Hedging . Cash flow hedge accounting treatment allows for gains and losses on the effective portion of qualifying hedges to be deferred in accumulated other comprehensive income (loss) until the underlying transaction occurs, rather than recognizing the gains and losses on these instruments in earnings during each period they are outstanding. When the actual interest payments are made on our variable rate debt as described in Note 8 and the related derivative contract settles, any effective portion of realized interest rate hedging derivative gains and losses previously recorded in accumulated other comprehensive income (loss) is recognized in interest expense. All cash flows related to our interest rate cap agreements are classified as operating cash flows. The table below reflects the effect of our derivative instruments on our Consolidated Statements of Comprehensive Income: Three Months Ended March 31, 2018 2017 Interest expense $ 612 $ 201 Any outstanding derivative instruments expose us to credit loss in the event of nonperformance by the counterparties to the agreements, but we do not expect that the counterparty will fail to meet their obligations. The amount of such credit exposure is generally the positive fair value of our outstanding contracts. To manage credit risks, we select counterparties based on credit assessments, limit our overall exposure to any single counterparty and monitor the market position of any counterparty. The table below reflects quantitative information related to the fair value of our derivative instruments and where these amounts are recorded in our consolidated financial statements as of the period presented: March 31, December 31, 2018 2017 Liability fair value recorded in other long-term liabilities $ 577 $ 951 Liability fair value recorded in accounts payable and accrued other expenses 908 979 Estimated amount of existing losses expected to be reclassified into earnings in the next 12 months (2,367) (2,440) We record deferred hedge premiums which are being paid over the life of the hedge in accumulated other comprehensive income (loss) until the related hedge ultimately settles and interest payments are made on the underlying debt. As of March 31, 2018, we have made payments of $4,357 related to these deferred premiums. We expect to pay an additional $2,038 in deferred premiums through 2019 related to our outstanding interest rate cap agreements which is reflected in the fair value of these derivatives in the table above. Comprehensive income includes changes in the fair value of our interest rate cap agreements which qualify for hedge accounting. Changes in other comprehensive income (loss) for the periods presented related to derivative instruments classified as cash flow hedges were as follows: Three Months Ended March 31, 2018 2017 Balance at beginning of period, January 1 $ (2,556) $ (3,334) Reclassifications in earnings, net of tax of $149 and $76, respectively 463 125 Change in fair value of derivative instrument, net of tax of $28 and $112, respectively 87 (187) Reclassification of stranded tax effect to retained earnings upon adoption of ASU 2018-02 (550) — Balance at end of period, March 31 $ (2,556) $ (3,396) |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Measurements | |
Fair Value Measurements | Note 10. Fair Value Measurements We measure assets and liabilities at fair value based on assumptions market participants would use in pricing an asset or liability in the principal or most advantageous market. Authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value whereby inputs are assigned a hierarchical level. The hierarchical levels are: Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. Level 2: Observable prices, other than quoted prices included in Level 1 inputs for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. Level 3: Unobservable inputs for the asset or liability used to measure fair value to the extent observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. The following table summarizes our financial instruments measured at fair value within the Consolidated Balance Sheets: March 31, 2018 December 31, 2017 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Liabilities: Long-term debt $ — $ — $ 770,444 $ — $ — $ 774,822 Interest rate cap agreements — 1,485 — — 1,930 — Total $ — $ 1,485 $ 770,444 $ — $ 1,930 $ 774,822 The fair value of our private debt is determined based on fluctuations in current interest rates, the trends in market yields of debt instruments with similar credit ratings, general economic conditions and other quantitative and qualitative factors. The carrying value of our debt approximates its fair value. Refer to Note 8 for more information on our long-term debt. The fair value of the interest rate cap agreements is determined using the market standard methodology of discounting the future expected variable cash receipts that would occur if interest rates rose above the strike rate of the caps. The analysis reflects the contractual terms of the derivatives, including period to maturity and remaining deferred premium payments, and uses observable market‑based inputs, including interest rates and implied volatilities. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rates. As such, the estimated fair values of these liabilities are classified as Level 2 in the fair value hierarchy. Refer to Note 9 for more information on our interest rate cap agreements. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Taxes | |
Income Taxes | Note 11. Income Taxes The following table presents our income tax provision and effective income tax rate: Three Months Ended March 31, 2018 2017 Income tax expense (benefit) $ 15,902 $ (861) Effective income tax rate 22.8 % (3.3) % Our effective income tax rate was 22.8% and (3.3)% for the three months ended March 31, 2018 and 2017, respectively. The increase in income tax expense of $16,763 was primarily the result of an increase in pre-tax income for the three months ended March 31, 2018, partially offset by a $2,600 tax benefit related to stock option exercises and vesting of restricted stock units. In addition, a valuation allowance of $191 was recorded to reflect the portion of the deferred tax asset on state tax credits that is not more likely than not to be realized. The impact of these items relative to the pre-tax income for the three months ended March 31, 2018 resulted in the increase to the effective tax rate. Additionally, during the three months ended March 31, 2017, we recorded a $10,422 tax benefit related to stock option exercises and vesting of restricted stock units. The effective tax rate for the three months ended March 31, 2017 was impacted by this tax benefit relative to the pre-tax income for the three months ended March 31, 2017. On December 22, 2017, the U.S. government enacted the Tax Act, reducing the federal tax rate on U.S. earnings to 21%, effective January 1, 2018, and moves from a global taxation regime to a modified territorial regime. In accordance with SAB 118, we recognized the provisional tax impacts associated with the revaluation of our net deferred tax liabilities and one-time transition tax on our unremitted foreign earnings and profits during the year ended December 31, 2017. As of March 31, 2018, we have not made any additional adjustments related to these items. Given the significant complexity of the Tax Act, anticipated guidance from the U.S. Treasury about implementing the Tax Act, and the potential for additional guidance from the SEC or the FASB related to the Tax Act, we will continue to evaluate the accounting for the tax effects related to the enactment of the Tax Act. Upon completion of our 2017 U.S. tax return, we will be able to conclude whether any further adjustments are required to our deferred tax liabilities, as well as the liability associated with the one-time mandatory tax. Any adjustments to these provisional amounts will be reported as a component of tax (benefit) expense in the reporting period in which any such adjustments are determined, which will be no later than the fourth quarter of 2018. We file income taxes with the U.S. federal government and various states and foreign jurisdictions. We operate in a number of state and local jurisdictions and as such are subject to state and local income tax examinations based upon various statutes of limitations in each jurisdiction. |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2018 | |
Earnings per Share | |
Earnings per Share | Note 12. Earnings per Share Basic EPS is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period. For all periods presented, potentially dilutive outstanding shares consisted of equity incentive awards. Restricted stock issued in connection with the RowdMap Acquisition was also included in the calculation of dilutive potential common shares for the three months ended March 31, 2018. Our potential common shares consist of the incremental common shares issuable upon the exercise of stock options or vesting of RSUs and restricted stock. The dilutive effect of outstanding equity incentive awards is reflected in diluted earnings per share by application of the treasury stock method. For all periods presented, all outstanding common stock consisted of a single class. Basic and diluted earnings per share are computed as follows: Three Months Ended March 31, 2018 2017 Net income available to common stockholders $ 53,927 $ 26,975 Weighted average outstanding shares of common stock 92,568,047 91,138,356 Dilutive effect of stock-based awards and restricted stock 2,683,927 3,766,874 Adjusted weighted average outstanding and assumed conversions for diluted EPS 95,251,974 94,905,230 Earnings per share: Basic $ 0.58 $ 0.30 Diluted 0.57 0.28 Employee stock options, RSUs and restricted stock that were excluded from the calculation of diluted earnings per share because their effect is anti‑dilutive for the periods presented were as follows: Three Months Ended March 31, 2018 2017 Employee stock-based awards and restricted stock 911,052 361,566 Performance-based restricted stock of 40,954 shares were not included in the calculation of diluted earnings per share for the three months ended March 31, 2018 as the vesting conditions were not probable of occurring. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2018 | |
Stock-Based Compensation | |
Stock-Based Compensation | N ote 13. S tock ‑B ased C ompensation S tock O ptions T he following is a summary of stock option activity under the Equity Plans : Weighted Weighted average average remaining Aggregate Outstanding exercise price contractual life Intrinsic Value Options per share (Years) (in thousands) Outstanding at December 31, 2017 4,574,607 $ 13.89 6.65 $ 85,138 Granted 593,766 34.70 Forfeited (115,173) 18.69 Exercised (611,104) 10.65 Expired — — Outstanding at March 31, 2018 4,442,096 $ 17.00 7.01 $ 77,856 Vested and exercisable at March 31, 2018 2,629,289 $ 11.37 5.99 $ 60,652 A ggregate intrinsic value represents the difference between our estimated fair value of common stock and the exercise price of outstanding in‑the‑money options . T he fair value per share of common stock was $34.44 as of March 31, 2018 based upon the closing price of our common stock on the NYSE . T he total intrinsic value of stock options exercised was $14,664 and $33,482 for the three months ended March 31, 2018 and 2017, respectively. R estricted S tock U nits T he following is a summary of RSU activity under the 2016 Plan: Weighted average grant date fair value Number of Awards per share Nonvested at December 31, 2017 379,274 $ 33.56 Granted 413,703 34.68 Forfeited (12,587) 34.78 Vested and converted to shares (48,845) 34.39 Nonvested at March 31, 2018 731,545 $ 34.12 Expected to vest at March 31, 2018 731,471 $ 34.12 R estricted S tock W e issued an aggregate of 768,021 shares of restricted common stock to certain employees of RowdMap at a fair market value of $43.27 per share. H alf of these shares are subject to continued employment and performance-based vesting requirements and, if achieved, will vest on the one year anniversary of the closing date of the RowdMap Acquisition . T he other half are subject to continued employment with us, with one-third vesting on each of the first three anniversaries of the closing of the RowdMap Acquisition. E mployee S tock P urchase P lan W e have an ESPP, which became effective January 1, 2017, for U.S. and non-U.S. employees , both of which have a series of six month offering periods, with a new offering period beginning on the first day of J anuary and J uly each year . T he ESPP was adopted by our Board of Directors in August 2016 and approved by shareholders in M ay 2017. E mployees may contribute up to 10% of their pay towards the purchase of common stock via payroll deductions to a maximum of $10 per year, or $5 per offering period . P urchase dates occur on the last business day of J une and D ecember of each year and shares are purchased at a 10% discount off the closing price on the NYSE on the date of purchase. Employees must hold the shares purchased for a minimum of 90 days. The ESPP had 1,260,000 shares of our common stock initially reserved for issuance upon its inception. The reserve automatically increases each January by an amount equal to the lesser of 1,260,000 or approximately 1.5% of total common shares outstanding on the first day of January. A summary of ESPP share reserve activity for the three months ended March 31, 2018 is as follows: Shares Available for future purchases, beginning of period 1,197,306 Shares reserved for issuance 1,260,000 Common stock purchased — Available for future purchases, end of period 2,457,306 S tock C ompensation E xpense W e used the weighted average assumptions to estimate the fair value of stock options granted for the periods presented as follows: Three Months Ended March 31, Expected term (years) 6.25 Expected volatility 40.00 % Expected dividend yield 0.00 % Weighted average risk-free interest rate 2.56 % Weighted average grant date fair value $ 14.99 Total fair market value related to the restricted stock issued in connection with the RowdMap Acquisition is $33,232 based on the closing price of our common stock on the date of grant. For the time-based shares, stock-based compensation expense is being recorded ratably over the three year vesting period. For the performance-based shares, stock-based compensation expense will be recorded over the one year vesting period to the extent it is probable the performance criteria will be achieved. We recorded approximately $4,404 in stock-based compensation expense for the three months ended March 31, 2018, related to the performance awards that we estimate are probable of achieving the performance criteria. We recorded total stock‑based compensation expense of $8,646 and $2,083 for the three months ended March 31, 2018 and 2017, respectively. A s of March 31, 2018, we had total unrecognized compensation cost related to 3,270,139 unvested stock options and RSUs under the Equity Plans as well as restricted stock of $58,040 which we expect to recognize over the next 2.6 years. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2018 | |
Segment Information | |
Segment Information | Note 14. Segment Information Operating segments are components of an enterprise for which separate financial information is available that is evaluated regularly by our Chief Operating Decision Maker in deciding how to allocate resources and in assessing financial performance. We conduct our business through two reportable business segments: Healthcare and Global Retail and Other. We evaluate the performance of each segment based on segment net revenue and segment operating income. Operating income is calculated as net revenue less operating expenses and is not affected by other expense (income) or by income taxes. Indirect costs are generally allocated to the segments based on the segments’ proportionate share of revenue and expenses directly related to the operation of the segment. We do not allocate interest expense, other non-operating (income) expense or the provision for income taxes, since these items are not considered in evaluating the segment’s overall operating performance. Our Chief Operating Decision Maker does not receive or utilize asset information to evaluate performance of operating segments. Accordingly, asset related information has not been presented. Refer to Note 3 for operating segment net revenue by product type. Our operating segment results for the periods presented were as follows: Three Months Ended March 31, 2018 2017 Net Revenue Healthcare $ 200,371 $ 139,803 Global Retail and Other 18,663 20,330 Consolidated net revenue $ 219,034 $ 160,133 Operating Income Healthcare $ 74,774 $ 31,161 Global Retail and Other 3,897 2,921 Consolidated operating income $ 78,671 $ 34,082 |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation Our accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP. All significant intercompany balances and transactions have been eliminated in consolidation. These consolidated financial statements are unaudited and have been prepared by us following the rules and regulations of the SEC. In our opinion they reflect all adjustments, including normal recurring items, that are necessary to present fairly the results of interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations; however, we believe that the disclosures are adequate to make the information presented not misleading. Operating results for the periods presented herein are not necessarily indicative of the results that may be expected for other interim periods or the entire fiscal year. Certain prior year amounts have been reclassified to conform to the current year presentation. |
Restricted Cash | Restricted Cash In connection with providing services to certain clients, we maintain a series of lockbox accounts with certain financial institutions. These lockbox accounts exist to receive funds we collect on behalf of our clients resulting from services provided. When client funds are received and deposited into the lockbox accounts, we record a corresponding customer deposit liability. These funds are included as both restricted cash in current assets and customer deposits in current liabilities on our Consolidated Balance Sheets and are included in beginning and ending cash, cash equivalents and restricted cash on our Consolidated Statements of Cash Flows. The following table reconciles cash, cash equivalents and restricted cash per the Consolidated Statements of Cash Flows to the Consolidated Balance Sheets. March 31, 2018 December 31, 2017 March 31, 2017 December 31, 2016 Cash and cash equivalents $ $ $ $ Restricted cash Customer deposits (13,941) (11,383) (7,232) Total cash, cash equivalents and restricted cash $ $ $ $ |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”) which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act. We early adopted the provisions of ASU 2018-02 during the first quarter 2018. As of March 31, 2018, we reclassified $550 from accumulated other comprehensive loss to retained earnings in the Consolidated Balance Sheets. In November 2016, the FASB issued ASU 2016-18, Restricted Cash (“ASU 2016-18”), which requires that restricted cash be included with cash and cash equivalents when reconciling the beginning and end of period total amounts shown on the statement of cash flows. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2017, including interim periods within those annual periods. We retrospectively adopted the provisions of ASU 2016-18 effective January 1, 2018. This guidance did not have a significant impact on our consolidated financial statements. Refer to “Restricted Cash” above for further information. In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”) which changes the accounting recognition, measurement and disclosure for leases in order to increase transparency. ASU 2016-02 requires lease assets and liabilities to be recognized on the balance sheet and key information about leasing arrangements to be disclosed. The guidance is effective for public companies with annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We are evaluating this guidance and its impact on our consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes existing revenue recognition guidance and provides clarification of principles for recognizing revenue from contracts with customers. ASU 2014-09 sets forth a five-step model for determining when and how revenue is recognized. The core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Additional disclosures will be required to describe the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. The two permitted transition methods under ASU 2014-09 are the full retrospective method, in which case the new guidance would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of the initial application. The guidance is effective for public companies with annual periods beginning after December 15, 2017, including interim periods within that reporting period. We adopted the provisions of ASC 606 and related amendments as of January 1, 2018 using the modified retrospective method. The adoption of ASC 606 did not result in any significant changes to the timing of revenue recognition in prior, current or future periods therefore there was no cumulative adjustment as a result of adoption. Refer to Note 3 for more information on revenue recognition. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies | |
Reconciliation of cash, cash equivalents and restricted cash | March 31, 2018 December 31, 2017 March 31, 2017 December 31, 2016 Cash and cash equivalents $ $ $ $ Restricted cash Customer deposits (13,941) (11,383) (7,232) Total cash, cash equivalents and restricted cash $ $ $ $ |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenue Recognition | |
Schedule of disaggregation of revenue | Three Months Ended March 31, 2018 % 2017 % Healthcare Retrospective claims accuracy $ 133,923 61.2 $ 77,516 48.4 Prospective claims accuracy 58,285 26.6 59,717 37.3 Other 8,163 3.7 2,570 1.6 Total Healthcare 200,371 91.5 139,803 87.3 Global Retail and Other Retrospective claims accuracy 18,663 8.5 19,674 12.3 Other — — 656 0.4 Total Global Retail and Other 18,663 8.5 20,330 12.7 Consolidated net revenue $ 219,034 100.0 $ 160,133 100.0 |
Schedule of estimated liability for refunds and appeals | Three Months Ended March 31, 2018 2017 Balance at beginning of period, January 1 Estimated allowance for refunds and appeals $ 35,434 $ 41,020 Estimated liability for refunds and appeals 61,607 62,539 Total balance at beginning of period, January 1 97,041 103,559 Provision 32,593 19,076 Refunds settled with client (28,753) (22,042) Refunds recovered (1,268) (3,309) Original Medicare RAC contract release of liability (46,556) - Total balance at end of period, March 31 $ 53,057 $ 97,284 Less: estimated allowance for refunds and appeals 43,690 35,518 Estimated liability for refunds and appeals $ 9,367 $ 61,766 |
Acquisition (Tables)
Acquisition (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Acquisition | |
Schedule of estimated fair values of the assets acquired and liabilities assumed | July 14, 2017 Cash $ 4,107 Accounts receivable 2,526 Prepaid expenses and other assets 1,212 Other long-term assets 12 Property and equipment 263 Intangible assets 19,510 Total identifiable assets acquired 27,630 Accounts payable and accrued liabilities 4,491 Deferred tax liabilities 3,688 Total liabilities assumed 8,179 Net identifiable assets acquired 19,451 Goodwill 54,673 Net assets acquired $ 74,124 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Property and Equipment | |
Schedule of property and equipment by major asset class | March 31, December 31, 2018 2017 Computer equipment $ 48,642 $ 46,731 Software 69,962 67,511 Furniture and fixtures 11,284 9,199 Leasehold improvements 8,710 5,256 Projects in progress 11,934 10,295 Property and equipment, gross $ 150,532 $ 138,992 Less: accumulated depreciation and amortization 68,848 61,652 Property and equipment, net $ 81,684 $ 77,340 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Intangible Assets | |
Intangible asset balances by major asset class | Weighted Gross Net Average Carrying Accumulated Carrying Amortization Amount Amortization Impairment Amount Period March 31, 2018: Customer relationships $ 650,927 $ 204,251 $ — $ 446,676 years Acquired software 54,210 27,456 — 26,754 years Connolly trademark 4,200 — — 4,200 indefinite-lived Total $ 709,337 $ 231,707 $ — $ 477,630 years December 31, 2017: Customer relationships $ 650,954 $ 190,572 $ 1,322 $ 459,060 years Acquired software 54,210 25,430 — 28,780 years Connolly trademark 4,200 — — 4,200 indefinite-lived Total $ 709,364 $ 216,002 $ 1,322 $ 492,040 years |
Schedule of intangible asset amortization expense | Remainder of 2018 $ 43,189 2019 57,585 2020 57,585 2021 53,262 2022 48,954 |
Goodwill (Tables)
Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill | |
Schedule of changes in the carrying amount of goodwill by segment | Global Retail Healthcare and Other December 31, 2017 $ 1,202,444 $ 48,920 Foreign currency translation — 185 March 31, 2018 $ 1,202,444 $ 49,105 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Long-term Debt | |
Schedule of long-term debt | March 31, December 31, 2018 2017 First Lien Term A Loans $ 231,122 $ 234,237 First Lien Term B Loans 539,322 540,585 Revolver — — Total debt 770,444 774,822 Less: debt issuance costs 6,811 7,204 Less: current portion 19,563 18,000 Total long-term debt $ 744,070 $ 749,618 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Derivative Instruments | |
Schedule of derivative instruments | Three Months Ended March 31, 2018 2017 Interest expense $ 612 $ 201 |
Schedule of fair value and location of derivative instruments | March 31, December 31, 2018 2017 Liability fair value recorded in other long-term liabilities $ 577 $ 951 Liability fair value recorded in accounts payable and accrued other expenses 908 979 Estimated amount of existing losses expected to be reclassified into earnings in the next 12 months (2,367) (2,440) |
Schedule of changes in other comprehensive income related to derivative instruments classified as cash flow hedges | Three Months Ended March 31, 2018 2017 Balance at beginning of period, January 1 $ (2,556) $ (3,334) Reclassifications in earnings, net of tax of $149 and $76, respectively 463 125 Change in fair value of derivative instrument, net of tax of $28 and $112, respectively 87 (187) Reclassification of stranded tax effect to retained earnings upon adoption of ASU 2018-02 (550) — Balance at end of period, March 31 $ (2,556) $ (3,396) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Measurements | |
Summary of financial instruments measured at fair value | March 31, 2018 December 31, 2017 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Liabilities: Long-term debt $ — $ — $ 770,444 $ — $ — $ 774,822 Interest rate cap agreements — 1,485 — — 1,930 — Total $ — $ 1,485 $ 770,444 $ — $ 1,930 $ 774,822 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Income Taxes | |
Schedule of income tax (benefit) expense from continuing operations | Three Months Ended March 31, 2018 2017 Income tax expense (benefit) $ 15,902 $ (861) Effective income tax rate 22.8 % (3.3) % |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings per Share | |
Schedule of computation of basic and diluted earnings per share | Three Months Ended March 31, 2018 2017 Net income available to common stockholders $ 53,927 $ 26,975 Weighted average outstanding shares of common stock 92,568,047 91,138,356 Dilutive effect of stock-based awards and restricted stock 2,683,927 3,766,874 Adjusted weighted average outstanding and assumed conversions for diluted EPS 95,251,974 94,905,230 Earnings per share: Basic $ 0.58 $ 0.30 Diluted 0.57 0.28 |
Schedule of antidilutive securities excluded from earnings per share | Three Months Ended March 31, 2018 2017 Employee stock-based awards and restricted stock 911,052 361,566 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Stock-Based Compensation | |
Summary of stock options outstanding, vested and exercisable | Weighted Weighted average average remaining Aggregate Outstanding exercise price contractual life Intrinsic Value Options per share (Years) (in thousands) Outstanding at December 31, 2017 4,574,607 $ 13.89 6.65 $ 85,138 Granted 593,766 34.70 Forfeited (115,173) 18.69 Exercised (611,104) 10.65 Expired — — Outstanding at March 31, 2018 4,442,096 $ 17.00 7.01 $ 77,856 Vested and exercisable at March 31, 2018 2,629,289 $ 11.37 5.99 $ 60,652 |
Summary of restricted stock units activity | Weighted average grant date fair value Number of Awards per share Nonvested at December 31, 2017 379,274 $ 33.56 Granted 413,703 34.68 Forfeited (12,587) 34.78 Vested and converted to shares (48,845) 34.39 Nonvested at March 31, 2018 731,545 $ 34.12 Expected to vest at March 31, 2018 731,471 $ 34.12 |
Summary of ESPP share reserve activity | Shares Available for future purchases, beginning of period 1,197,306 Shares reserved for issuance 1,260,000 Common stock purchased — Available for future purchases, end of period 2,457,306 |
Schedule of weighted average assumptions to estimate the fair value of stock options granted | Three Months Ended March 31, Expected term (years) 6.25 Expected volatility 40.00 % Expected dividend yield 0.00 % Weighted average risk-free interest rate 2.56 % Weighted average grant date fair value $ 14.99 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Information | |
Schedule of operating segment results | Three Months Ended March 31, 2018 2017 Net Revenue Healthcare $ 200,371 $ 139,803 Global Retail and Other 18,663 20,330 Consolidated net revenue $ 219,034 $ 160,133 Operating Income Healthcare $ 74,774 $ 31,161 Global Retail and Other 3,897 2,921 Consolidated operating income $ 78,671 $ 34,082 |
Summary of Significant Accoun34
Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Summary of Significant Accounting Policies | ||||
Cash and cash equivalents | $ 189,297 | $ 165,518 | $ 128,458 | $ 110,635 |
Restricted cash | 13,941 | 11,383 | 7,232 | 9,103 |
Customer deposits | (13,941) | (11,383) | (7,232) | (9,103) |
Total cash, cash equivalents and restricted cash | $ 189,297 | $ 165,518 | $ 128,458 | $ 110,635 |
Summary of Significant Accoun35
Summary of Significant Accounting Policies - Recently Issued Accounting Standards - ASU 2014-09 (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
2018-02 | Early adoption | |
New Accounting Pronouncement, Early Adoption [Line Items] | |
Reclassification from AOCI | $ 550 |
Revenue Recognition - (Details)
Revenue Recognition - (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Disaggregation of Revenue [Line Items] | |||
Consolidated net revenue | $ 219,034 | $ 160,133 | |
Estimated Liability for Refunds and Appeals | |||
Total liability expected to be released | 56,089 | ||
Remaining estimated liability for refunds and appeals, Medicare RAC contract | 4,200 | ||
Estimated allowance for refunds and appeals at beginning of period | 35,434 | 41,020 | |
Estimated liability for refunds and appeals at beginning of period | 61,607 | 62,539 | |
Total balance at beginning of period | 97,041 | 103,559 | |
Provision | 32,593 | 19,076 | |
Refunds settled with client | (28,753) | (22,042) | |
Refunds recovered | (1,268) | (3,309) | |
Original Medicare RAC contract release of liability | (46,556) | ||
Total balance at end of period | 53,057 | 97,284 | |
Less: estimated allowance for refunds and appeals at end of period | 43,690 | 35,518 | |
Estimated liability for refunds and appeals at end of period | 9,367 | 61,766 | |
Prepaid expenses and other current assets | |||
Estimated Liability for Refunds and Appeals | |||
Capitalized contract cost, current included in prepaid expenses and other current assets | 545 | ||
Other long-term assets | |||
Estimated Liability for Refunds and Appeals | |||
Capitalized contract cost, noncurrent included in other long-term assets | 463 | ||
Accrued compensation cost | |||
Estimated Liability for Refunds and Appeals | |||
Liability | 1,003 | ||
Accounts receivable | |||
Estimated Liability for Refunds and Appeals | |||
Unbilled receivables | 65,402 | $ 62,294 | |
Unbilled receivables arising from deferred billing | 4,472 | $ 4,958 | |
Product | Total net revenue | |||
Disaggregation of Revenue [Line Items] | |||
Consolidated net revenue | $ 219,034 | $ 160,133 | |
Proportionate share of total (as a percent) | 100.00% | 100.00% | |
Product | Total net revenue | United States | |||
Disaggregation of Revenue [Line Items] | |||
Proportionate share of total (as a percent) | 99.00% | 99.00% | |
Healthcare | |||
Disaggregation of Revenue [Line Items] | |||
Consolidated net revenue | $ 200,371 | $ 139,803 | |
Healthcare | Product | Total net revenue | |||
Disaggregation of Revenue [Line Items] | |||
Consolidated net revenue | $ 200,371 | $ 139,803 | |
Proportionate share of total (as a percent) | 91.50% | 87.30% | |
Global Retail and Other | |||
Disaggregation of Revenue [Line Items] | |||
Consolidated net revenue | $ 18,663 | $ 20,330 | |
Global Retail and Other | Product | Total net revenue | |||
Disaggregation of Revenue [Line Items] | |||
Consolidated net revenue | $ 18,663 | $ 20,330 | |
Proportionate share of total (as a percent) | 8.50% | 12.70% | |
Retrospective claims accuracy | Healthcare | Product | Total net revenue | |||
Disaggregation of Revenue [Line Items] | |||
Consolidated net revenue | $ 133,923 | $ 77,516 | |
Proportionate share of total (as a percent) | 61.20% | 48.40% | |
Retrospective claims accuracy | Global Retail and Other | Product | Total net revenue | |||
Disaggregation of Revenue [Line Items] | |||
Consolidated net revenue | $ 18,663 | $ 19,674 | |
Proportionate share of total (as a percent) | 8.50% | 12.30% | |
Prospective claims accuracy | Healthcare | Product | Total net revenue | |||
Disaggregation of Revenue [Line Items] | |||
Consolidated net revenue | $ 58,285 | $ 59,717 | |
Proportionate share of total (as a percent) | 26.60% | 37.30% | |
Other | Healthcare | Product | Total net revenue | |||
Disaggregation of Revenue [Line Items] | |||
Consolidated net revenue | $ 8,163 | $ 2,570 | |
Proportionate share of total (as a percent) | 3.70% | 1.60% | |
Other | Global Retail and Other | Product | Total net revenue | |||
Disaggregation of Revenue [Line Items] | |||
Consolidated net revenue | $ 656 | ||
Proportionate share of total (as a percent) | 0.40% |
Acquisition - Consideration Tra
Acquisition - Consideration Transferred (Details) - RowdMap $ in Thousands | Jul. 14, 2017USD ($)shares |
Consideration transferred | |
Cash paid | $ | $ 74,000 |
Common stock | Restricted Stock | |
Consideration transferred | |
Shares issued (in shares) | shares | 768,021 |
Common stock | Restricted stock, performance-based | |
Consideration transferred | |
Percentage of total shares awarded | 50.00% |
Vesting period (in years) | 1 year |
Common stock | Restricted stock, time-based | |
Consideration transferred | |
Percentage of total shares awarded | 50.00% |
Percentage vesting each anniversary | 33.30% |
Vesting period (in years) | 3 years |
Acquisition - Net Assets Acquir
Acquisition - Net Assets Acquired (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | Jul. 14, 2017 |
Preliminary allocation of the purchase price | |||
Goodwill | $ 1,251,549 | $ 1,251,364 | |
RowdMap | |||
Preliminary allocation of the purchase price | |||
Cash | $ 4,107 | ||
Accounts receivable | 2,526 | ||
Prepaid expenses and other assets | 1,212 | ||
Other long-term assets | 12 | ||
Property and equipment | 263 | ||
Intangible assets | 19,510 | ||
Total identifiable assets acquired | 27,630 | ||
Accounts payable and accrued liabilities | 4,491 | ||
Deferred tax liabilities | 3,688 | ||
Total liabilities assumed | 8,179 | ||
Net identifiable assets acquired | 19,451 | ||
Goodwill | 54,673 | ||
Net assets acquired | $ 74,124 |
Acquisition - Acquired Intangib
Acquisition - Acquired Intangible Assets (Details) - RowdMap $ in Thousands | Jul. 14, 2017USD ($) |
Finite-Lived Intangible Assets | |
Finite-lived intangible assets acquired | $ 19,510 |
Goodwill acquired, tax deductible amount | 0 |
Acquired software | |
Finite-Lived Intangible Assets | |
Finite-lived intangible assets acquired | $ 6,310 |
Weighted-average useful life of acquired intangible assets | 5 years |
Customer relationships | |
Finite-Lived Intangible Assets | |
Finite-lived intangible assets acquired | $ 13,200 |
Weighted-average useful life of acquired intangible assets | 5 years |
Acquisition - Other Acquisition
Acquisition - Other Acquisition Related Disclosures (Details) - RowdMap - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Acquisition | ||
Transaction costs | $ 700 | |
Accounts payable and accrued other expenses | Former stockholders | ||
Acquisition | ||
Payable to related parties | $ 1,068 |
Property and Equipment - Balanc
Property and Equipment - Balances by Major Asset Class (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Property and equipment | ||
Property and equipment, gross | $ 150,532 | $ 138,992 |
Less: Accumulated depreciation and amortization | 68,848 | 61,652 |
Property and equipment, net | 81,684 | 77,340 |
Computer equipment | ||
Property and equipment | ||
Property and equipment, gross | 48,642 | 46,731 |
Software | ||
Property and equipment | ||
Property and equipment, gross | 69,962 | 67,511 |
Furniture and fixtures | ||
Property and equipment | ||
Property and equipment, gross | 11,284 | 9,199 |
Leasehold improvements | ||
Property and equipment | ||
Property and equipment, gross | 8,710 | 5,256 |
Projects in progress | ||
Property and equipment | ||
Property and equipment, gross | $ 11,934 | $ 10,295 |
Property and Equipment - Perpet
Property and Equipment - Perpetual Software License (Details) - Perpetual software license - USD ($) $ in Thousands | 1 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2017 | |
Recorded obligation | ||
Remaining payment period | 2 years | |
Accounts payable and accrued other expenses | ||
Recorded obligation | ||
License obligation | $ 3,351 |
Property and Equipment - Deprec
Property and Equipment - Depreciation and Amortization Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Property and Equipment | ||
Depreciation and amortization expense related to property and equipment | $ 7,242 | $ 5,575 |
Intangible Assets - Intangible
Intangible Assets - Intangible Asset Balances by Major Asset Class (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Intangible assets with finite lives | ||
Accumulated Amortization | $ 231,707 | $ 216,002 |
Impairment | 1,322 | |
Intangible assets with indefinite lives | ||
Total intangible assets, gross | 709,337 | 709,364 |
Net carrying amount | 477,630 | 492,040 |
Connolly Trademark | ||
Intangible assets with indefinite lives | ||
Gross Carrying Amount | 4,200 | 4,200 |
Net carrying amount | $ 4,200 | $ 4,200 |
Weighted average | ||
Intangible assets with indefinite lives | ||
Amortization period | 13 years | 13 years |
Customer relationships | ||
Intangible assets with finite lives | ||
Gross Carrying Amount | $ 650,927 | $ 650,954 |
Accumulated Amortization | 204,251 | 190,572 |
Impairment | 1,322 | |
Net carrying amount | $ 446,676 | $ 459,060 |
Customer relationships | Weighted average | ||
Intangible assets with indefinite lives | ||
Amortization period | 13 years 6 months | 13 years 6 months |
Acquired software | ||
Intangible assets with finite lives | ||
Gross Carrying Amount | $ 54,210 | $ 54,210 |
Accumulated Amortization | 27,456 | 25,430 |
Net carrying amount | $ 26,754 | $ 28,780 |
Acquired software | Weighted average | ||
Intangible assets with indefinite lives | ||
Amortization period | 6 years 9 months 18 days | 6 years 9 months 18 days |
Intangible Assets - Amortizatio
Intangible Assets - Amortization (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Intangible assets, net | ||
Amortization expense | $ 14,396 | $ 15,199 |
Intangible Assets - Future Amor
Intangible Assets - Future Amortization (Details) $ in Thousands | Mar. 31, 2018USD ($) |
Amortization expense for the next 5 years | |
Remainder of 2018 | $ 43,189 |
2,019 | 57,585 |
2,020 | 57,585 |
2,021 | 53,262 |
2,022 | $ 48,954 |
Goodwill - Changes in carrying
Goodwill - Changes in carrying amount (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Changes in the carrying amount of goodwill | |
Beginning balance | $ 1,251,364 |
Ending balance | 1,251,549 |
Healthcare | |
Changes in the carrying amount of goodwill | |
Beginning balance | 1,202,444 |
Ending balance | 1,202,444 |
Global Retail and Other | |
Changes in the carrying amount of goodwill | |
Beginning balance | 48,920 |
Foreign currency translation and other | 185 |
Ending balance | $ 49,105 |
Goodwill - Impairment (Details)
Goodwill - Impairment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Goodwill | ||
Impairment related to goodwill | $ 0 | $ 0 |
Long-term Debt - Summary of Com
Long-term Debt - Summary of Components (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Long-term debt components | ||
Total debt | $ 770,444 | $ 774,822 |
Less: debt issuance costs | 6,811 | 7,204 |
Less: current portion | 19,563 | 18,000 |
Total long-term debt | 744,070 | 749,618 |
First Lien Term A Loans | Restated Credit Agreement | ||
Long-term debt components | ||
Total debt | 231,122 | 234,237 |
First Lien Term B Loans | Restated Credit Agreement | ||
Long-term debt components | ||
Total debt | $ 539,322 | $ 540,585 |
Long-term Debt - Other Covenant
Long-term Debt - Other Covenant Terms (Details) - Restated Credit Agreement - Maximum | 3 Months Ended |
Mar. 31, 2018 | |
First Lien Term A Loans | |
Ratio requirements | |
Secured Leverage Ratio covenant, through September 2018 | 5.50 |
Secured Leverage Ratio covenant, through September 2019 | 5.25 |
Secured Leverage Ratio covenant, through June 2021 | 5 |
Revolver | |
Ratio requirements | |
Secured Leverage Ratio covenant, through September 2018 | 5.50 |
Secured Leverage Ratio covenant, through September 2019 | 5.25 |
Secured Leverage Ratio covenant, through June 2021 | 5 |
Long-term Debt - Aggregate Matu
Long-term Debt - Aggregate Maturities (Details) $ in Thousands | Mar. 31, 2018USD ($) |
Aggregate maturities of long term debt | |
Remainder of 2018 | $ 13,500 |
2,019 | 24,250 |
2,020 | 30,500 |
2,021 | 183,625 |
2,022 | $ 5,500 |
Derivative Instruments - Intere
Derivative Instruments - Interest Rate Cap Contracts (Details) - Interest rate cap agreements - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Interest expenses | Cash flow hedge | |||
Cash flow hedge activity | |||
Expense recognized | $ 612 | $ 201 | |
Designated as Hedge | |||
Interest rate derivatives | |||
Notional amount | $ 435,000 | $ 435,000 | |
Designated as Hedge | LIBOR | |||
Interest rate derivatives | |||
Interest rate cap on floating rate debt (as a percent) | 3.00% |
Derivative Instruments - Quanti
Derivative Instruments - Quantitative Information Related to Fair Value (Details) - Interest rate cap agreements - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Interest rate cash flow hedges | ||
Estimated amount of existing losses expected to be reclassified into earnings in the next 12 months | $ (2,367) | $ (2,440) |
Deferred hedge premiums paid and recorded in accumulated other comprehensive (loss) income | 4,357 | |
Expected additional payments of deferred premiums | 2,038 | |
Designated as Hedge | Other long-term liabilities | ||
Interest rate cash flow hedges | ||
Derivative liability | 577 | 951 |
Designated as Hedge | Accounts payable and accrued other expenses | ||
Interest rate cash flow hedges | ||
Derivative liability | $ 908 | $ 979 |
Derivative Instruments - Change
Derivative Instruments - Changes in Other Comprehensive Income Related to Cash Flow Hedges (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Changes in other comprehensive income related to derivative instruments classified as cash flow hedges | ||
Balance at beginning of period | $ 1,101,468 | |
Balance at end of period | 1,170,691 | |
Derivative instruments classified as cash flow hedges | ||
Changes in other comprehensive income related to derivative instruments classified as cash flow hedges | ||
Balance at beginning of period | (2,556) | $ (3,334) |
Reclassifications in earnings, net of tax of $149 and $76, respectively | 463 | 125 |
Change in fair value of derivative instrument, net of tax of $578 and $112, respectively | 87 | (187) |
Reclassification of stranded tax effect to retained earnings upon adoption of ASU 2018-02 | (550) | |
Balance at end of period | (2,556) | (3,396) |
Other comprehensive income, tax effect | ||
Reclassifications in earnings, tax | 149 | 76 |
Change in fair value of derivative instrument, tax | $ 28 | $ 112 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Level 2 | ||
Liabilities | ||
Interest rate cap agreements | $ 1,485 | $ 1,930 |
Total | 1,485 | 1,930 |
Level 3 | ||
Liabilities | ||
Long-term debt | 770,444 | 774,822 |
Total | $ 770,444 | $ 774,822 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | Jan. 02, 2017 | Mar. 31, 2018 | Mar. 31, 2017 |
Income tax provision and effective tax rate | |||
Income tax expense (benefit) | $ 15,902 | $ (861) | |
Effective income tax rate (as a percent) | 21.00% | 22.80% | (3.30%) |
Other information | |||
Increase in income tax expense | $ 16,763 | ||
Tax benefit related to stock option exercises and vesting of restricted stock | 2,600 | $ 10,422 | |
Deferred tax asset valuation allowance | $ 191 |
Earnings per Share - Basic and
Earnings per Share - Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Basic and diluted earnings per share computation | ||
Net income available to common stockholders | $ 53,927 | $ 26,975 |
Weighted average outstanding shares of common stock | 92,568,047 | 91,138,356 |
Dilutive effect of stock-based awards and restricted stock | 2,683,927 | 3,766,874 |
Adjusted weighted average outstanding and assumed conversions for diluted EPS | 95,251,974 | 94,905,230 |
Earnings per share: | ||
Basic (in dollars per share) | $ 0.58 | $ 0.30 |
Diluted (in dollars per share) | $ 0.57 | $ 0.28 |
Earnings per Share - Awards Exc
Earnings per Share - Awards Excluded from Diluted Calculation (Details) - Employee stock-based awards and restricted stock - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Anti-dilutive securities and other information | ||
Stock-based awards excluded from calculation of diluted earnings per share (in shares) | 911,052 | 361,566 |
Restricted stock, performance-based | ||
Anti-dilutive securities and other information | ||
Share-based awards excluded because vesting conditions not satisfied | 40,954 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Shares | |||
Outstanding at beginning of period (in shares) | 4,574,607 | ||
Granted (in shares) | 593,766 | ||
Forfeited (in shares) | (115,173) | ||
Exercised (in shares) | (611,104) | ||
Outstanding at end of period (in shares) | 4,442,096 | 4,574,607 | |
Vested and exercisable at end of period, exercisable (in shares) | 2,629,289 | ||
Weighted average exercise price | |||
Outstanding at beginning of period (in dollars per share) | $ 13.89 | ||
Granted (in dollars per share) | 34.70 | ||
Forfeited (in dollars per share) | 18.69 | ||
Exercised (in dollars per share) | 10.65 | ||
Outstanding at end of period (in dollars per share) | 17 | $ 13.89 | |
Vested and exercisable (in dollars per share) | $ 11.37 | ||
Weighted Average Remaining Contractual Term | |||
Outstanding | 7 years 4 days | 6 years 7 months 24 days | |
Vested and exercisable at end of period, exercisable (in years) | 5 years 11 months 27 days | ||
Aggregate Intrinsic Value | |||
Outstanding | $ 77,856 | $ 85,138 | |
Vested and exercisable at end of period, exercisable | 60,652 | ||
Total intrinsic value of options exercised | $ 14,664 | $ 33,482 | |
Common stock | |||
Aggregate Intrinsic Value | |||
Fair value per share (in dollars per share) | $ 34.44 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Units Vesting and Activity (Details) - 2016 Plan - Restricted stock units | 3 Months Ended |
Mar. 31, 2018$ / sharesshares | |
Shares | |
Nonvested at beginning of period (in shares) | shares | 379,274 |
Granted (in shares) | shares | 413,703 |
Forfeited (in shares) | shares | (12,587) |
Vested and converted to shares (in shares) | shares | (48,845) |
Nonvested at end of period (in shares) | shares | 731,545 |
Expected to vest at March 31, 2018 (in shares) | shares | 731,471 |
Weighted average grant date fair value | |
Nonvested at beginning of period (in dollars per share) | $ / shares | $ 33.56 |
Granted (in dollars per share) | $ / shares | 34.68 |
Forfeited (in dollars per share) | $ / shares | 34.78 |
Vested and converted to shares (in dollars per share) | $ / shares | 34.39 |
Nonvested at end of period (in dollars per share) | $ / shares | 34.12 |
Expected to vest at March 31, 2018 (in dollars per share) | $ / shares | $ 34.12 |
Stock-Based Compensation - Re61
Stock-Based Compensation - Restricted Stock (Details) - Common stock - RowdMap | Jul. 14, 2017$ / sharesshares |
Restricted Stock | |
Acquisition | |
Shares issued (in shares) | shares | 768,021 |
Fair market value per share | $ / shares | $ 43.27 |
Restricted stock, performance-based | |
Acquisition | |
Percentage of total shares awarded | 50.00% |
Vesting period (in years) | 1 year |
Restricted stock, time-based | |
Acquisition | |
Percentage of total shares awarded | 50.00% |
Percentage vesting each anniversary | 33.30% |
Vesting period (in years) | 3 years |
Stock-Based Compensation - Empl
Stock-Based Compensation - Employee Stock Purchase Plan (Details) - Employee Stock Purchase Plan $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($)shares | |
Employee Stock Purchase Plan | |
Offering period | 6 months |
Contribution maximum percentage of pay | 10.00% |
Contribution maximum amount per year | $ | $ 10 |
Contribution maximum amount per offering period | $ | $ 5 |
Discount applied to closing price, percentage | 10.00% |
Holding period (in days) | 90 days |
Available for future purchases, beginning of year (in shares) | 1,197,306 |
Shares reserved for issuance | 1,260,000 |
Available for future purchases, end of year (in shares) | 2,457,306 |
Minimum | |
Employee Stock Purchase Plan | |
Threshold increase in number of shares reserved for issuance | 1,260,000 |
Percentage of total common shares outstanding used as determination of threshold for increase in shares reserved for issuance | 1.50% |
Stock-Based Compensation - Weig
Stock-Based Compensation - Weighted Average Assumptions to Estimate Fair Value of Stock Options (Details) - Stock options - Weighted average | 3 Months Ended |
Mar. 31, 2018$ / shares | |
Assumptions used to estimate fair value of stock options granted | |
Expected term (years) | 6 years 3 months |
Expected volatility (as a percent) | 40.00% |
Expected dividend yield (as a percent) | 0.00% |
Weighted average risk-free interest rate | 2.56% |
Weighted average grant date fair value (in dollars per share) | $ 14.99 |
Stock-Based Compensation - Expe
Stock-Based Compensation - Expense Recorded (Details) - USD ($) $ in Thousands | Jul. 14, 2017 | Mar. 31, 2018 | Mar. 31, 2017 |
Stock-based compensation expense | |||
Stock-based compensation expense | $ 8,646 | $ 2,083 | |
Employee stock-based awards and restricted stock | |||
Stock-based compensation expense | |||
Period of recognition of unrecognized compensation cost | 2 years 7 months 6 days | ||
Restricted Stock | |||
Stock-based compensation expense | |||
Unrecognized compensation cost | $ 58,040 | ||
Stock options | |||
Stock-based compensation expense | |||
Unvested service-based stock options and RSU awards (in shares) | 3,270,139 | ||
RowdMap | Restricted Stock | |||
Stock-based compensation expense | |||
Fair value of equity interests issued | $ 33,232 | ||
RowdMap | Restricted stock, time-based | |||
Stock-based compensation expense | |||
Vesting period | 3 years | ||
RowdMap | Restricted stock, performance-based | |||
Stock-based compensation expense | |||
Vesting period | 1 year | ||
Stock-based compensation expense | $ 4,404 |
Segment Information - Operating
Segment Information - Operating Segment Results (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018USD ($)segment | Mar. 31, 2017USD ($) | |
Segment information | ||
Number of reportable segments | segment | 2 | |
Net revenue | $ 219,034 | $ 160,133 |
Operating Income | 78,671 | 34,082 |
Healthcare | ||
Segment information | ||
Net revenue | 200,371 | 139,803 |
Operating Income | 74,774 | 31,161 |
Global Retail and Other | ||
Segment information | ||
Net revenue | 18,663 | 20,330 |
Operating Income | $ 3,897 | $ 2,921 |