Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 30, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | HANGER, INC. | |
Entity Central Index Key | 0000722723 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 37,239,511 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 20,511 | $ 95,114 |
Accounts receivable, net | 136,891 | 143,986 |
Inventories | 70,036 | 67,690 |
Income taxes receivable | 734 | 379 |
Other current assets | 17,058 | 18,731 |
Total current assets | 245,230 | 325,900 |
Non-current assets: | ||
Property, plant and equipment, net | 81,951 | 89,489 |
Goodwill | 226,632 | 198,742 |
Other intangible assets, net | 16,415 | 15,478 |
Deferred income taxes | 69,738 | 65,635 |
Operating lease right-of-use assets | 103,676 | |
Other assets | 8,392 | 7,766 |
Total assets | 752,034 | 703,010 |
Current liabilities: | ||
Current portion of long-term debt | 8,677 | 8,583 |
Accounts payable | 50,173 | 55,797 |
Accrued expenses and other current liabilities | 53,311 | 51,783 |
Accrued compensation related costs | 22,228 | 55,111 |
Current portion of operating lease liabilities | 33,675 | |
Total current liabilities | 168,064 | 171,274 |
Long-term liabilities: | ||
Long-term debt, less current portion | 490,623 | 502,090 |
Operating lease liabilities | 83,693 | |
Other liabilities | 40,259 | 51,570 |
Total liabilities | 782,639 | 724,934 |
Commitments and contingencies (Note R) | ||
Shareholders' deficit: | ||
Common stock, $0.01 par value; 60,000,000 shares authorized; 37,413,845 shares issued and 37,271,024 shares outstanding in 2019, and 37,063,995 shares issued and 36,921,174 shares outstanding in 2018 | 374 | 371 |
Additional paid-in capital | 343,591 | 343,955 |
Accumulated other comprehensive loss | (7,461) | (4,531) |
Accumulated deficit | (366,413) | (361,023) |
Treasury stock, at cost; 142,821 shares at 2019 and 2018, respectively | (696) | (696) |
Total shareholders' deficit | (30,605) | (21,924) |
Total liabilities and shareholders' deficit | $ 752,034 | $ 703,010 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 37,413,845 | 37,063,995 |
Common stock, shares outstanding | 37,271,024 | 36,921,174 |
Treasury stock, shares | 142,821 | 142,821 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Net revenues | $ 236,419 | $ 233,995 |
Material costs | 78,377 | 76,356 |
Personnel costs | 86,711 | 86,108 |
Other operating costs | 33,555 | 31,096 |
General and administrative expenses | 28,282 | 25,636 |
Professional accounting and legal fees | 2,700 | 4,846 |
Depreciation and amortization | 8,773 | 9,330 |
(Loss) income from operations | (1,979) | 623 |
Interest expense, net | 8,538 | 12,263 |
Loss on extinguishment of debt | 16,998 | |
Non-service defined benefit plan expense | 173 | 176 |
Loss before income taxes | (10,690) | (28,814) |
Benefit for income taxes | (3,739) | (6,196) |
Net loss | $ (6,951) | $ (22,618) |
Basic and Diluted Per Common Share Data: | ||
Basic and diluted loss per share | $ (0.19) | $ (0.62) |
Weighted average shares used to compute basic and diluted earnings per common share | 37,001,977 | 36,498,482 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||
Net loss | $ (6,951) | $ (22,618) |
Other comprehensive loss: | ||
Unrealized loss on cash flow hedges (net of tax benefit of $924 for three months ended March 31, 2019 and tax benefit of $702 for three months ended March 31, 2018) | (2,936) | (2,290) |
Unrealized gain (loss) on defined benefit plan (net of tax provision of $2 for three months ended March 31, 2019 and tax benefit of $105 for three months ended March 31, 2018) | 6 | (292) |
Total other comprehensive loss | (2,930) | (2,582) |
Comprehensive loss | $ (9,881) | $ (25,200) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||
Unrealized loss on cash flow hedges tax | $ 924 | $ 702 |
Unrealized gain (loss) on defined benefit plan tax | $ 2 | $ 105 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Treasury Stock | Total |
Balance at Dec. 31, 2017 | $ 365 | $ 333,738 | $ (1,686) | $ (359,772) | $ (696) | $ (28,051) |
Balance (in shares) at Dec. 31, 2017 | 36,372,000 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Cumulative effect of a change in accounting | ASU 2014-09 | (759) | (759) | ||||
Balance at Jan. 01, 2018 | $ 365 | 333,738 | (1,686) | (360,531) | (696) | (28,810) |
Balance (in shares) at Jan. 01, 2018 | 36,372,000 | |||||
Balance at Dec. 31, 2017 | $ 365 | 333,738 | (1,686) | (359,772) | (696) | (28,051) |
Balance (in shares) at Dec. 31, 2017 | 36,372,000 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net loss | (22,618) | (22,618) | ||||
Share-based compensation expense | 2,585 | 2,585 | ||||
Issuance of common stock upon vesting of restricted stock units | $ 4 | (4) | ||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 372,000 | |||||
Effect of shares withheld to cover taxes | (2,150) | (2,150) | ||||
Total other comprehensive loss | (2,582) | (2,582) | ||||
Balance at Mar. 31, 2018 | $ 369 | 334,169 | (4,268) | (383,149) | (696) | (53,575) |
Balance (in shares) at Mar. 31, 2018 | 36,744,000 | |||||
Balance at Dec. 31, 2018 | $ 371 | 343,955 | (4,531) | (361,023) | (696) | $ (21,924) |
Balance (in shares) at Dec. 31, 2018 | 36,921,000 | 36,921,174 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Cumulative effect of a change in accounting | ASU 2016-02 | 1,561 | $ 1,561 | ||||
Balance at Jan. 01, 2019 | $ 371 | 343,955 | (4,531) | (359,462) | (696) | (20,363) |
Balance (in shares) at Jan. 01, 2019 | 36,921,000 | |||||
Balance at Dec. 31, 2018 | $ 371 | 343,955 | (4,531) | (361,023) | (696) | $ (21,924) |
Balance (in shares) at Dec. 31, 2018 | 36,921,000 | 36,921,174 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net loss | (6,951) | $ (6,951) | ||||
Share-based compensation expense | 3,265 | 3,265 | ||||
Issuance of common stock upon vesting of restricted stock units | $ 3 | (3) | ||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 350,000 | |||||
Effect of shares withheld to cover taxes | (3,626) | (3,626) | ||||
Total other comprehensive loss | (2,930) | (2,930) | ||||
Balance at Mar. 31, 2019 | $ 374 | $ 343,591 | $ (7,461) | $ (366,413) | $ (696) | $ (30,605) |
Balance (in shares) at Mar. 31, 2019 | 37,271,000 | 37,271,024 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flow used in operating activities: | ||
Net loss | $ (6,951) | $ (22,618) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 8,773 | 9,330 |
Amortization of right-of-use assets | 9,161 | |
Benefit for doubtful accounts | (20) | (94) |
Stock-based compensation expense | 3,265 | 2,585 |
Deferred income taxes | (3,749) | (6,355) |
Amortization of debt discounts and issuance costs | 375 | 1,701 |
Loss on extinguishment of debt | 16,998 | |
Gain on sale and disposal of fixed assets | (481) | (594) |
Changes in operating assets and liabilities (Note T) | (43,173) | (9,426) |
Net cash used in operating activities | (32,800) | (8,473) |
Cash flows used in investing activities | ||
Purchase of property, plant, and equipment | (6,897) | (4,388) |
Purchase of therapeutic program equipment leased to third parties under operating leases | (1,429) | (2,034) |
Acquisitions, net of cash acquired | (27,679) | |
Purchase of company-owned life insurance investment | (598) | |
Proceeds from sale of property, plant and equipment | 980 | 840 |
Net cash used in investing activities | (35,025) | (6,180) |
Cash flows (used in ) provided by financing activities | ||
Borrowings under term loan, net of discount | 501,467 | |
Repayment of term loan | (1,263) | (431,875) |
Borrowings under revolving credit agreement | 3,000 | |
Repayments under revolving credit agreement | (8,000) | |
Payment of employee taxes on stock-based compensation | (3,626) | (2,150) |
Payment on seller notes | (1,773) | (1,749) |
Payment of financing lease obligations | (116) | (364) |
Payment of debt issuance costs | (6,757) | |
Payment of debt extinguishment costs | (8,436) | |
Net cash (used in) provided by financing activities | (6,778) | 45,136 |
(Decrease) increase in cash, cash equivalents and restricted cash | (74,603) | 30,483 |
Cash, cash equivalents, and restricted cash, at beginning of period | 95,114 | 4,779 |
Cash, cash equivalents, and restricted cash, at end of period | 20,511 | 35,262 |
Reconciliation of Cash, Cash Equivalents, and Restricted Cash: | ||
Cash and cash equivalents, at beginning of period | 95,114 | 1,508 |
Restricted cash, at beginning of period | 3,271 | |
Cash, cash equivalents, and restricted cash, at beginning of period | 95,114 | 4,779 |
Cash and cash equivalents, at end of period | 20,511 | 32,913 |
Restricted cash, at end of period | 2,349 | |
Cash, cash equivalents, and restricted cash, at end of period | $ 20,511 | $ 35,262 |
ORGANIZATION AND SUMMARY OF SIG
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2019 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE A — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business Hanger, Inc. (“we,” “our,” or “us”) is a leading national provider of products and services that assist in enhancing or restoring the physical capabilities of patients with disabilities or injuries. We provide orthotic and prosthetic (“O&P”) services, distribute O&P devices and components, and provide therapeutic solutions to patients and businesses in acute, post-acute, and clinic settings. We operate through two segments: Patient Care and Products & Services. Basis of Presentation The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X, and, therefore, do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2018 (the "2018 Form 10-K"), as previously filed with the Securities and Exchange Commission (“SEC”). In our opinion, the information contained herein reflects all adjustments necessary for a fair statement of our results of operations, financial position, and cash flows. All such adjustments are of a normal, recurring nature. The results of operations for the interim periods are not necessarily indicative of those to be expected for the full year. A detailed description of our significant accounting policies and management judgments is contained in our 2018 Form 10-K. Recent Accounting Pronouncements Adopted Leases We lease a majority of our patient care clinics and warehouses under lease arrangements, certain of which contain renewal options, rent escalation clauses, and/or landlord incentives. Rent expense for noncancellable leases with scheduled rent increases and/or landlord incentives is recognized on a straight-line basis over the lease term, including any applicable rent holidays, beginning on the lease commencement date. We exclude leases with a term of one year or less from our balance sheet, and do not separate non-lease components from our real estate leases. Our leases may include variable payments for maintenance, which are expensed as incurred. In addition, we are the lessor of therapeutic program equipment to patients and businesses in acute, post-acute, and clinic settings. The therapeutic program equipment and related services revenue are recognized over the applicable term the customer has the right to use the equipment and as the services are provided. These operating lease agreements are typically for twelve months and have a 30-day cancellation policy. We do not separate non-lease components, consisting primarily of training, for these leases. Effect of Adoption of ASC 842 We adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases (ASC 842), and related clarifying standards, as of January 1, 2019, using the modified retrospective approach. This approach allows us to apply the standard as of the adoption date and record a cumulative-effect adjustment to the opening balance of Accumulated deficit at January 1, 2019. The new lease standard requires lessees to recognize a right-of-use (“ROU”) asset and a lease liability on the balance sheet for all leases (with the exception of short-term leases, defined as leases with a term of 12 months or less) at the lease commencement date and recognize expenses on the consolidated statement of income on a straight-line basis. In addition, we elected the package of practical expedients available under the transition provisions of the new lease standard, including (i) not reassessing whether expired or existing contracts contain leases, (ii) carrying forward lease classification under legacy guidance, 2 nd (iii) not revaluing initial direct costs for existing leases. By electing the modified retrospective approach on adoption date, prior period results will continue to be presented under legacy guidance based on the accounting standards originally in effect for such period. We have elected to keep leases with an initial term of 12 months or less off of the balance sheet and recognize those lease payments in the consolidated statements of income on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, and have elected to utilize the practical expedient to account for lease and non-lease components together as a single combined lease component for real estate and therapeutic program equipment, from both a lessee and lessor perspective. From a lessor perspective, the timing and pattern of transfer are the same for the non-lease components and associated lease component and, the lease component, if accounted for separately, would be classified as an operating lease. The accounting for our finance leases and leases where we are the lessor remained substantially unchanged. The lease liability was measured as the present value of the unpaid lease payments and the right-of-use asset was derived from the calculation of the lease liability. As the rate implicit in the lease is generally not readily determinable for our operating leases, the discount rates used to determine the present value of our lease liability are based on our incremental borrowing rate at the lease commencement date and commensurate with the remaining lease term. Our incremental borrowing rate for a lease is the rate of interest we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Our lease term may include options to extend or terminate if the exercise of that option is reasonably certain to occur. We rent or sublease certain real estate to third parties. Our sublease portfolio consists mainly of operating leases on small medical office locations. The most significant impact of the new lease standard will be on the balance sheet, where values have been added for real estate operating leases, which increases both assets and liabilities. The capital leases associated with equipment were already reflected on our balance sheet and did not add any incremental assets or liabilities under the new lease standard. The adoption of the new lease standard did not have an impact on our compliance with existing debt covenants because the impact of changes in accounting standards is excluded from debt covenant calculations. The impact of applying the new lease standard to our results of operations and cash flows is not significant. Additionally, we have determined that the leases previously identified as build-to-suit leasing arrangements under legacy lease accounting were to be derecognized pursuant to the transition guidance provided for build-to-suit leases in ASC 842. Accordingly, these leases have been reassessed as operating leases as of January 1, 2019. The legacy guidance was based on a risks and rewards model which contained several prescriptive provisions designed to assess lessee ownership during construction. The ASC 842 model has eliminated these prescriptive rules and replaced them with a model based on control. Under ASC 842, we did not demonstrate control as the lessee and therefore the leases were derecognized at January 1, 2019. The resulting cumulative effect recognized at adoption to Accumulated deficit was $1.6 million, net of tax. Upon adoption of ASC 842, the cumulative effect of the changes made to our condensed consolidated balance sheet as of January 1, 2019 was as follows: December 31, 2018 Effects of January 1, 2019 (in thousands) As reported adoption After adoption Assets Other current assets $ 18,731 $ (3,987) $ 14,744 Total current assets 325,900 (3,987) 321,913 Property, plant and equipment, net 89,489 (8,068) 81,421 Other intangible assets, net 15,478 (220) 15,258 Deferred income taxes 65,635 (570) 65,065 Operating lease right-of-use assets — 103,378 103,378 Other assets 7,766 538 8,304 Total assets 703,010 91,071 794,081 Liabilities Current liabilities: Current portion of long-term debt 8,583 (619) 7,964 Accrued expenses and other current liabilities 51,783 (1,352) 50,431 Current portion of operating lease liabilities — 33,393 33,393 Total current liabilities 171,274 31,422 202,696 Long-term liabilities: Long-term debt, less current portion 502,090 (12,493) 489,597 Operating lease liabilities — 83,662 83,662 Other liabilities 51,570 (13,081) 38,489 Total liabilities 724,934 89,510 814,444 Shareholders' deficit: Accumulated deficit (361,023) 1,561 (359,462) Total shareholders' deficit (21,924) 1,561 (20,363) Total liabilities and shareholders' deficit $ 703,010 $ 91,071 $ 794,081 Recent Accounting Pronouncements, Not Yet Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and related clarifying standards, which replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This new standard is effective for us beginning December 15, 2019, with early adoption permitted. We are currently evaluating the effects that the adoption of this guidance will have on our consolidated financial statements and the related disclosures. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) , which modifies the disclosures on fair value measurements by removing the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for timing of such transfers. The ASU expands the disclosure requirements for Level 3 fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income. The ASU is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the effects that the adoption of this guidance will have on our consolidated financial statements and the related disclosures. In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715) . This ASU modifies the disclosure requirements for defined benefit and other postretirement plans. This ASU eliminates certain disclosures associated with accumulated other comprehensive income, plan assets, related parties, and the effects of interest rate basis point changes on assumed health care costs; while other disclosures have been added to address significant gains and losses related to changes in benefit obligations. This ASU also clarifies disclosure requirements for projected benefit and accumulated benefit obligations. The amendments in this ASU are effective for fiscal years ending after December 15, 2020 and for interim periods therein with early adoption permitted. We are currently evaluating the effects that the adoption of this guidance will have on our consolidated financial statements and the related disclosures. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Topic 220) . The ASU is intended to improve the recognition and measurement of financial instruments. The new guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This ASU is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the effects that the adoption of this guidance will have on our consolidated financial statements and the related disclosures. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2019 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE B — EARNINGS PER SHARE Basic earnings per common share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per common share is computed using the weighted average number of common shares outstanding during the period plus any potentially dilutive common shares, such as stock options, restricted stock units, and performance-based units calculated using the treasury stock method. Total anti-dilutive shares excluded from the diluted earnings per share were zero as of March 31, 2019 and 208,510 as of March 31, 2018. Our credit agreement restricts the payment of dividends or other distributions to our shareholders with respect to Hanger, Inc., or any of its subsidiaries. The reconciliation of the numerators and denominators used to calculate basic and diluted net loss per share are as follows: For the Three Months Ended March 31, (in thousands except per share data) 2019 2018 Net loss $ (6,951) $ (22,618) Weighted average shares outstanding - basic 37,001,977 36,498,482 Effect of potentially dilutive restricted stock units and options (1) — — Weighted average shares outstanding - diluted 37,001,977 36,498,482 Basic and diluted loss per share $ (0.19) $ (0.62) (1) In accordance with ASC 260 - Earnings Per Share, during periods of a net loss, shares used to compute diluted per share amounts exclude potentially dilutive shares related to unvested restricted stock units and unexercised options. For the three months ended March 31, 2019, shares excluded were 889,093. For the three months ended March 31, 2018, shares excluded were 537,497. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 3 Months Ended |
Mar. 31, 2019 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | NOTE C — REVENUE RECOGNITION Patient Care Segment Revenue in our Patient Care segment is primarily derived from contracts with third party payors for the provision of O&P devices and is recognized upon the transfer of control of promised products or services to the patient at the time the patient receives the device. At, or subsequent to delivery, we issue an invoice to the third party payor, which primarily consists of commercial insurance companies, Medicare, Medicaid, the U.S. Department of Veterans Affairs, and private or patient pay (“Private Pay”) individuals. We recognize revenue for the amounts we expect to receive from payors based on expected contractual reimbursement rates, which are net of estimated contractual discounts and implicit price concessions. These revenue amounts are further revised as claims are adjudicated, which may result in additional disallowances. The following table disaggregates revenue from contracts with customers in our Patient Care segment for the three months ended March 31, 2019 and 2018: For the Three Months Ended March 31, (in thousands) 2019 2018 Patient Care Segment Medicare $ 57,776 $ 57,531 Medicaid 30,147 29,711 Commercial Insurance/ Managed Care (excluding Medicare and Medicaid Managed Care) 70,218 70,582 Veterans Administration 18,322 16,731 Private Pay 14,138 13,952 Total $ 190,601 $ 188,507 The impact to revenue related to prior period performance obligations was not material for the three months ended March 31, 2019. Products & Services Segment Revenue in our Products & Services segment is derived from the distribution of O&P components and the leasing and sale of rehabilitation equipment and ancillary consumable supplies combined with equipment maintenance, education, and training. The following table disaggregates revenue from contracts with customers in our Product & Services segment for the three months ended March 31, 2019 and 2018: For the Three Months Ended March 31, (in thousands) 2019 2018 Products & Services Segment Distribution services, net of intersegment revenue eliminations $ 33,195 $ 31,351 Therapeutic solutions 12,623 14,137 Total $ 45,818 $ 45,488 |
ACCOUNTS RECEIVABLE, NET
ACCOUNTS RECEIVABLE, NET | 3 Months Ended |
Mar. 31, 2019 | |
ACCOUNTS RECEIVABLE, NET | |
ACCOUNTS RECEIVABLE, NET | NOTE D — ACCOUNTS RECEIVABLE, NET Accounts receivable, net represents outstanding amounts we expect to collect from the transfer of our products and services. Principally, these amounts are comprised of receivables from Medicare, Medicaid, and commercial insurance plans. Our accounts receivable represent amounts outstanding from our gross billings, net of contractual discounts and other implicit price concessions including estimates for payor disallowances, sales returns, and patient non-payments. An allowance for doubtful accounts is also recorded for our Products & Services segment which is deducted from gross accounts receivable to arrive at “Accounts receivable, net.” Accounts receivable, net as of March 31, 2019 and December 31, 2018 is comprised of the following: As of March 31, 2019 As of December 31, 2018 Products & Products & (in thousands) Patient Care Services Consolidated Patient Care Services Consolidated Accounts receivable, before allowances $ 176,705 $ 24,981 $ 201,686 $ 182,338 $ 24,542 $ 206,880 Allowances for estimated implicit price concessions arising from: Payor disallowances (55,385) — (55,385) (53,378) — (53,378) Patient non-payments (7,245) — (7,245) (7,244) — (7,244) Accounts receivable, gross 114,075 24,981 139,056 121,716 24,542 146,258 Allowance for doubtful accounts — (2,165) (2,165) — (2,272) (2,272) Accounts receivable, net $ 114,075 $ 22,816 $ 136,891 $ 121,716 $ 22,270 $ 143,986 |
INVENTORIES
INVENTORIES | 3 Months Ended |
Mar. 31, 2019 | |
INVENTORIES | |
INVENTORIES | NOTE E — INVENTORIES Our inventories are comprised of the following: (in thousands) As of March 31, 2019 As of December 31, 2018 Raw materials $ 20,401 $ 19,632 Work in process 12,711 9,278 Finished goods 36,924 38,780 Total inventories $ 70,036 $ 67,690 |
PROPERTY PLANT AND EQUIPMENT, N
PROPERTY PLANT AND EQUIPMENT, NET | 3 Months Ended |
Mar. 31, 2019 | |
PROPERTY PLANT AND EQUIPMENT, NET | |
PROPERTY PLANT AND EQUIPMENT, NET | NOTE F — PROPERTY PLANT AND EQUIPMENT, NET Property, plant, and equipment, net were comprised of the following: (in thousands) As of March 31, 2019 As of December 31, 2018 Land $ 634 $ 644 Buildings (1) 3,979 24,558 Furniture and fixtures 13,273 13,121 Machinery and equipment 26,568 27,452 Equipment leased to third parties under operating leases 29,402 30,093 Leasehold improvements 125,280 111,247 Computers and software 69,579 69,173 Total property, plant, and equipment, gross 268,715 276,288 Less: accumulated depreciation (186,764) (186,799) Total property, plant, and equipment, net $ 81,951 $ 89,489 (1) As discussed in Note A - “Organization and Summary of Significant Accounting Policies”, the new lease standard resulted in the removal of assets associated with build-to-suit leases. Total depreciation expense was approximately $7.5 million and $7.4 million for the three months ended March 31, 2019 and 2018, respectively. |
ACQUISITIONS
ACQUISITIONS | 3 Months Ended |
Mar. 31, 2019 | |
ACQUISITIONS | |
ACQUISITIONS | NOTE G — ACQUISTIONS 2019 Acquisition Activity On January 28, 2019, we acquired all of the outstanding equity interests of an O&P business for a total aggregate purchase price of $32.5 million, of which $27.7 million was cash consideration, net of cash acquired, $4.5 million was issued in the form of notes to the shareholders at fair value, and $0.3 million of estimated additional consideration expected to be paid in the second quarter of 2019. The notes to shareholders are unsecured and payable in quarterly installments over a period of three years. The primary reason for the acquisition was to expand our continuum of patient care through the acquisition of high quality O&P providers in new geographic markets. We accounted for this transaction under the acquisition method of accounting and have reported the results of operations of the acquisition as of the date of the acquisition. The estimated fair values of intangible assets was based on an income approach utilizing primarily discounted cash flow techniques for non-compete agreements and an income approach utilizing the excess earnings method for customer relationships. The income approach utilizes management's estimates of future operating results and cash flows using a weighted average cost of capital that reflects market participant assumptions. Other significant judgments used in the valuation of tangible assets acquired in the acquisition include estimated selling price of inventory and estimated replacement cost for acquired property, plant and equipment. For all other assets acquired and liabilities assumed, the fair value reflects the carrying value of the asset or liability due to their short maturity. The excess of the fair value of the consideration transferred in the acquisition over the fair value of net assets acquired was recorded as goodwill. The goodwill reflects our expectations of favorable future growth opportunities, anticipated synergies through the scale of our O&P operations, and the assembled workforce. We expect that substantially all of the Goodwill, which has been assigned to our Patient Care reporting unit, will be deductible for federal income tax purposes. Acquisition-related costs of $0.2 million for the three months ended March 31, 2019 related to the acquisition are included in General and administrative expenses in our consolidated statement of operations. We have not presented pro forma combined results for this acquisition because the impact on previously reported statements of operations would not have been material. Purchase Price Allocation The Company has performed a preliminary valuation analysis of the fair market value of the assets and liabilities acquired in the acquisition. The final purchase price allocation will be determined when we have completed and fully reviewed the detailed valuation and could differ materially from the preliminary allocation. The final allocation may include changes in allocations of acquired intangible assets as well as goodwill and other changes to assets and liabilities including deferred taxes. The estimated useful lives of acquired intangible assets are also preliminary. The aggregate purchase price of this acquisition was allocated on a preliminary basis as follows: For the Three Months Ended (in thousands) March 31, 2019 Cash paid, net of cash acquired $ 27,679 Issuance of seller notes 4,451 Additional consideration (1) 345 Aggregate purchase price 32,475 Accounts receivable, net 3,318 Inventories 1,466 Customer relationships (Useful life of 3.0 years) 1,963 Non-compete agreements (Weighted average useful life of 4.9 years) 349 Other assets 329 Accounts payable (1,191) Accrued expenses and other liabilities (1,649) Net assets acquired 4,585 Goodwill $ 27,890 (1) Represents additional consideration payable to the seller in the second quarter of 2019 subject to agreement of certain tax elections with the seller. 2018 Acquisition Activity In the fourth quarter of 2018, we acquired two O&P businesses for an aggregate purchase price of $3.1 million, net of cash acquired. These acquisitions were accounted for using the acquisition method of accounting whereby assets acquired and liabilities assumed were recognized at fair value on the date of the transaction. The aggregate purchase price for these acquisitions was allocated as follows: For The Year Ended (in thousands) December 31, 2018 Cash paid, net of cash acquired $ 1,978 Issuance of seller notes 1,120 Aggregate purchase price 3,098 Accounts receivable, net 256 Inventories 302 Customer relationships (Weighted average useful life of 4.0 years) 260 Non-compete agreements (Weighted average useful life of 4.6 years) 214 Other assets 90 Accounts payable (59) Accrued expenses and other liabilities (364) Net assets acquired 699 Goodwill $ 2,399 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2019 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE H — GOODWILL AND OTHER INTANGIBLE ASSETS We assess goodwill and indefinite-lived intangible assets for impairment annually on October 1st, and between annual tests if an event occurs, or circumstances change, that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value. The following table summarizes the activity in goodwill for the periods indicated: For the Three Months Ended March 31, 2019 Patient Care Products & Services Consolidated Goodwill, Accumulated Goodwill, Goodwill, Accumulated Goodwill, Goodwill, Accumulated Goodwill, (in thousands) Gross Impairment Net Gross Impairment Net Gross Impairment Net As of December 31, 2018 $ 627,410 $ (428,668) 198,742 $ 139,299 $ (139,299) — $ 766,709 $ (567,967) 198,742 Additions from acquisitions 27,890 — 27,890 — — — 27,890 — 27,890 As of March 31, 2019 $ 655,300 $ (428,668) $ 226,632 $ 139,299 $ (139,299) $ — $ 794,599 $ (567,967) $ 226,632 For the Year Ended December 31, 2018 Patient Care Products & Services Consolidated Goodwill, Accumulated Goodwill, Goodwill, Accumulated Goodwill, Goodwill, Accumulated Goodwill, (in thousands) Gross Impairment Net Gross Impairment Net Gross Impairment Net As of December 31, 2017 $ 625,011 $ (428,668) $ 196,343 $ 139,299 $ (139,299) $ — $ 764,310 $ (567,967) $ 196,343 Additions from acquisitions 2,399 — 2,399 — — — 2,399 — 2,399 As of December 31, 2018 $ 627,410 $ (428,668) $ 198,742 $ 139,299 $ (139,299) $ — $ 766,709 $ (567,967) $ 198,742 The balances related to intangible assets as of March 31, 2019 and December 31, 2018 are as follows: As of March 31, 2019 Gross Carrying Accumulated Accumulated Net Carrying (in thousands) Amount Amortization Impairment Amount Customer lists $ 27,420 $ (19,443) $ — $ 7,977 Trade name 255 (132) — 123 Patents and other intangibles 9,238 (5,040) — 4,198 Definite-lived intangible assets 36,913 (24,615) — 12,298 Indefinite-lived trade names 9,070 — (4,953) 4,117 Total other intangible assets $ 45,983 $ (24,615) $ (4,953) $ 16,415 As of December 31, 2018 Gross Carrying Accumulated Accumulated Net Carrying (in thousands) Amount Amortization Impairment Amount Customer lists $ 26,036 $ (19,051) $ — $ 6,985 Trade name 255 (125) — 130 Patents and other intangibles 9,391 (5,145) — 4,246 Definite-lived intangible assets 35,682 (24,321) — 11,361 Indefinite-lived trade names 9,070 — (4,953) 4,117 Total other intangible assets $ 44,752 $ (24,321) $ (4,953) $ 15,478 Total intangible amortization expense was approximately $1.2 million and $2.0 million for the three months ended March 31, 2019 and 2018, respectively. Estimated aggregate amortization expense for definite-lived intangible assets for each of the next five years ended December 31st and thereafter is as follows: (in thousands) 2019 (remainder of the year) $ 3,652 2020 4,601 2021 1,118 2022 964 2023 855 Thereafter 1,108 Total $ 12,298 |
OTHER CURRENT ASSETS AND OTHER
OTHER CURRENT ASSETS AND OTHER ASSETS | 3 Months Ended |
Mar. 31, 2019 | |
OTHER CURRENT ASSETS AND OTHER ASSETS | |
OTHER CURRENT ASSETS AND OTHER ASSETS | NOTE I — OTHER CURRENT ASSETS AND OTHER ASSETS Other current assets consist of the following: (in thousands) As of March 31, 2019 As of December 31, 2018 Non-trade receivables $ 8,561 $ 7,848 Prepaid rent 657 4,442 Prepaid maintenance 3,554 3,330 Prepaid insurance 1,723 258 Prepaid other 994 1,101 Prepaid purchase orders 934 998 Prepaid education and training 518 597 Prepaid benefits 117 157 Total other current assets $ 17,058 $ 18,731 Other assets consist of the following: (in thousands) As of March 31, 2019 As of December 31, 2018 Cash surrender value of company owned life insurance $ 3,045 $ 2,918 Non-trade receivables 1,822 1,904 Deposits 1,753 1,698 Surety bond collateral 1,000 1,000 Finance lease right-of-use assets 541 — Other 231 246 Total other assets $ 8,392 $ 7,766 |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES AND OTHER LIABILITIES | 3 Months Ended |
Mar. 31, 2019 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES AND OTHER LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES AND OTHER LIABILITIES | NOTE J — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES AND OTHER LIABILITIES Accrued expenses and other current liabilities consist of: (in thousands) As of March 31, 2019 As of December 31, 2018 Patient prepayments, deposits and refunds payable $ 24,187 $ 24,563 Insurance and self-insurance accruals 8,610 8,886 Accrued sales taxes and other taxes 7,283 6,810 Accrued professional fees 3,685 3,751 Education expenses 2,315 — Derivative liability 1,205 724 Accrued interest payable 487 332 Other current liabilities 5,539 6,717 Total accrued expenses and other current liabilities $ 53,311 $ 51,783 Other liabilities consist of: (in thousands) As of March 31, 2019 As of December 31, 2018 Supplemental executive retirement plan obligations $ 18,661 $ 20,195 Long-term insurance accruals 8,437 8,713 Derivative liability 6,515 3,134 Unrecognized tax benefits, and related interest and penalties 5,523 5,458 Asset retirement obligations 1,113 980 Deferred tenant improvement allowances — 8,570 Deferred rent — 4,455 Other 10 65 Total other liabilities $ 40,259 $ 51,570 |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2019 | |
INCOME TAXES | |
INCOME TAXES | NOTE K — INCOME TAXES We recorded a benefit from income tax of $3.7 million and $6.2 million for the three months ended March 31, 2019 and 2018, respectively. The effective tax rate was 35.0% and 21.5% for the three months ended March 31, 2019 and 2018, respectively. The increase in the effective tax rate for the three months ended March 31, 2019 compared with the three months ended March 31, 2018 is primarily attributable to the change from the discrete method in the three months ended March 31, 2018 to the annual effective tax rate for the three months ended March 31, 2019, an increased estimated annual income, and the windfall from stock-based compensation recorded as a discrete item during the period. Our effective tax rate for the three months ended March 31, 2019 differed from the federal statutory tax rate of 21% primarily due to non-deductible expenses and the windfall from stock-based compensation recorded as a discrete item during the period. Our effective tax rate for the three months ended March 31, 2018 differed from the federal statutory tax rate of 21% primarily due to non-deductible expenses and the shortfall from stock-based compensation recorded as a discrete item during the period. |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2019 | |
LEASES | |
LEASES | NOTE L — LEASES The information pertaining to leases on the condensed consolidated balance sheet is as follows: As of March 31, (in thousands) Classification 2019 Assets Operating lease right-of-use assets Operating lease right-of-use assets $ 103,676 Finance lease right-of-use assets Other assets 541 Total lease assets $ 104,217 Liabilities Current Operating Current portion of operating lease liabilities $ 33,675 Finance Current portion of long-term debt 246 Noncurrent Operating Operating lease liabilities 83,693 Finance Long-term debt, less current portion 321 Total lease liabilities $ 117,935 The components of lease cost recognized in the condensed consolidated statement of operations are as follows: For the Three Months Ended (in thousands) March 31, 2019 Operating lease cost $ 10,836 Finance lease cost Amortization of right-of-use assets 75 Interest on lease liabilities 6 Sublease income (33) Short-term lease cost 368 Variable lease cost 1,217 Total lease cost $ 12,469 Future minimum rental payments, by year and in the aggregate, under operating and financing obligations with terms of one year or more at March 31, 2019 are as follows: Finance Operating (in thousands) Leases Leases Total Leases 2019 (remainder of year) $ $ 29,609 $ 29,815 2020 208 35,411 35,619 2021 136 26,294 26,430 2022 50 18,741 18,791 2023 2 12,019 12,021 2024 — 5,826 5,826 Thereafter — 4,593 4,593 Total future minimum lease payments 602 132,493 133,095 Imputed interest (35) (15,125) (15,160) Total $ 567 $ 117,368 $ 117,935 The lease term and discount rates are as follows: For the Three Months Ended March 31, 2019 Weighted average remaining lease term (years) Operating leases 3.98 Finance leases 2.60 Weighted average discount rate Operating leases 5.73 % Finance leases 4.20 % Supplemental cash flow information related to leases is as follows: For the Three Months Ended (in thousands) March 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 11,787 Operating cash flows from finance leases 6 Financing cash flows from finance leases 80 Right-of-use assets obtained in exchange for lease obligations: Operating leases 10,394 Finance leases 76 Future minimum rental payments, by year and in the aggregate, under operating and financing obligations with terms of one year or more at December 31, 2018 are as follows: Operating Capital (in thousands) Leases Leases 2019 $ 39,378 $ 249 2020 29,641 175 2021 21,303 109 2022 14,479 28 2023 9,193 — Thereafter 10,008 — $ 124,002 $ 561 |
DEBT AND OTHER OBLIGATIONS
DEBT AND OTHER OBLIGATIONS | 3 Months Ended |
Mar. 31, 2019 | |
DEBT AND OTHER OBLIGATIONS | |
DEBT AND OTHER OBLIGATIONS | NOTE M — DEBT AND OTHER OBLIGATIONS Debt consists of the following: (in thousands) As of March 31, 2019 As of December 31, 2018 Debt: Term Loan B $ 499,950 $ 501,213 Seller notes 7,402 4,506 Financing leases and other 1,212 14,361 Total debt before unamortized discount and debt issuance costs 508,564 520,080 Unamortized discount and debt issuance costs, net (9,264) (9,407) Total debt $ 499,300 $ 510,673 Current portion of long-term debt: Term Loan B $ 5,050 $ 5,050 Seller notes 3,288 2,513 Financing leases and other 339 1,020 Total current portion of long-term debt 8,677 8,583 Long-term debt: $ 490,623 $ 502,090 Refinancing of Credit Agreement and Term B Borrowings On March 6, 2018, we entered into a $605.0 million Senior Credit Facility (the “Credit Agreement”). The Credit Agreement provides for (i) a revolving credit facility with an initial maximum aggregate amount of availability of $100.0 million that matures in March 2023 and (ii) a $505.0 million Term Loan B facility due in quarterly principal installments commencing June 29, 2018, with all remaining outstanding principal due at maturity in March 2025. Availability under the revolving credit facility is reduced by outstanding letters of credit, which were approximately $5.2 million as of March 31, 2019. We may (a) increase the aggregate principal amount of any outstanding tranche of term loans or add one or more additional tranches of term loans under the loan documents, and/or (b) increase the aggregate principal amount of revolving commitments or add one or more additional revolving loan facilities under the loan documents by an aggregate amount of up to the sum of (1) $125.0 million and (2) an amount such that, after giving effect to such incurrence of such amount (but excluding the cash proceeds of such incremental facilities and certain other indebtedness, and treating all commitments in respect of revolving indebtedness as fully drawn), the consolidated first lien net leverage ratio is equal to or less than 3.80 to 1.00, if certain conditions are satisfied, including the absence of a default or an event of default under the Credit Agreement at the time of the increase and that we obtain the consent of each lender providing any incremental facility. Our obligations under the Credit Agreement are currently guaranteed by our material domestic subsidiaries and will from time to time be guaranteed by, subject in each case to certain exceptions, any domestic subsidiaries that may become material in the future. Subject to certain exceptions, the Credit Agreement is secured by first-priority perfected liens and security interests in substantially all of our personal property and each subsidiary guarantor. Borrowings under the Credit Agreement bear interest at a variable rate equal to (i) LIBOR plus a specified margin, or (ii) the base rate (which is the highest of (a) Bank of America, N.A.’s prime rate, (b) the federal funds rate plus 0.50% or (c) the sum of 1% plus one-month LIBOR) plus a specified margin. For the three months ended March 31, 2019, the weighted average interest rate on outstanding borrowings under our Term Loan B facility was approximately 6.0%. We have entered into interest rate swap agreements to hedge certain of our interest rate exposures, as more fully disclosed in Note O - " Derivative Financial Instruments ." We must also pay (i) an unused commitment fee ranging from 0.375% to 0.500% per annum of the average daily unused portion of the aggregate revolving credit commitments under the Credit Agreement, and (ii) a per annum fee equal to (a) for each performance standby letter of credit outstanding under the Credit Agreement with respect to nonfinancial contractual obligations, 50% of the applicable margin over LIBOR under the revolving credit facility in effect from time to time multiplied by the daily amount available to be drawn under such letter of credit, and (b) for each other letter of credit outstanding under the Credit Agreement, the applicable margin over LIBOR under the revolving credit facility in effect from time to time multiplied by the daily amount available to be drawn for such letter of credit. The Credit Agreement contains various restrictions and covenants, including: i) requirements that we maintain certain financial ratios at prescribed levels, ii) a prohibition on payment of dividends and other distributions and iii) restrictions on our ability and certain of our subsidiaries to consolidate or merge, create liens, incur additional indebtedness, dispose of assets, or consummate acquisitions outside the healthcare industry. The Credit Agreement includes the following financial covenants applicable for so long as any revolving loans and/or revolving commitments remain outstanding under the Credit Agreement: (i) a maximum consolidated first lien net leverage ratio (defined as, with certain adjustments and exclusions, the ratio of consolidated first-lien indebtedness to consolidated net income before interest, taxes, depreciation, amortization, non-cash charges and certain other items ("EBITDA") for the most recently ended period of four fiscal quarters for which financial statements are available) of 5.00 to 1.00 for the fiscal quarter ended March 31, 2019; 4.75 to 1.00 for the fiscal quarters ended June 30, 2019 through March 31, 2020; 4.50 to 1.00 for the fiscal quarters ended June 30, 2020 through March 31, 2021; 4.25 to 1.00 for the fiscal quarters ended June 30, 2021 through March 31, 2022; and 3.75 to 1.00 for the fiscal quarter ended June 30, 2022 and the last day of each fiscal quarter thereafter; and (ii) a minimum interest coverage ratio (defined as, with certain adjustments, the ratio of our EBITDA to consolidated interest expense to the extent paid or payable in cash) of 2.75 to 1.00 as of the last day of any fiscal quarter. We were in compliance with all covenants at March 31, 2019. The Credit Agreement also contains customary events of default. If an event of default under the Credit Agreement occurs and is continuing, then the lenders may declare any outstanding obligations under the Credit Agreement to be immediately due and payable; provided, however, that the occurrence of an event of default as a result of a breach of a financial covenant under the Credit Agreement does not constitute a default or event of default with respect to any term facility under the Credit Agreement unless and until the required revolving lenders shall have terminated their revolving commitments and declared all amounts outstanding under the revolving credit facility to be due and payable. In addition, if we or any subsidiary guarantor becomes the subject of voluntary or involuntary proceedings under any bankruptcy, insolvency, or similar law, then any outstanding obligations under the Credit Agreement will automatically become immediately due and payable. Loans outstanding under the Credit Agreement will bear interest at a rate of 2.00% per annum in excess of the otherwise applicable rate (i) upon acceleration of such loans, (ii) while a payment event of default exists or (iii) upon the lenders’ request, during the continuance of any other event of default. Seller Notes We typically issue subordinated promissory notes ("Seller Notes") as a part of the consideration transferred when making acquisitions. The Seller Notes are unsecured and are presented net of unamortized discount of $0.3 million and $0.2 million as of March 31, 2019 and December 31, 2018, respectively. We measure these instruments at their estimated fair values as of the respective acquisition dates. The stated interest rates on these instruments range from 2.00% to 3.00%. Principal and interest are payable in monthly, quarterly, or annual installments and mature through November 2023. Scheduled maturities of debt at March 31, 2019 were as follows: (in thousands) 2019 (remainder of year) $ 5,974 2020 8,220 2021 7,193 2022 5,849 2023 5,329 Thereafter 475,999 Total debt before unamortized discount and debt issuance costs, net 508,564 Unamortized discount and debt issuance costs, net (9,264) Total debt $ 499,300 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2019 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE N — FAIR VALUE MEASUREMENTS Financial Instruments In March 2018, we refinanced our credit facilities with the Credit Agreement. The carrying value (excluding unamortized discounts and debt issuance costs of $9.3 million) of our outstanding term loan as of March 31, 2019 was $500.0 million compared to its fair value of $498.7 million. The carrying value of our outstanding term loan as of December 31, 2018 (excluding unamortized discounts and debt issuance costs of $9.4 million) was $501.2 million compared to its fair value of $491.2 million. Our estimates of fair value are based on a discounted cash flow model and indicative quote using unobservable inputs, primarily, our risk-adjusted credit spread, which represents a Level 3 measurement. As of March 31, 2019 and December 31, 2018, we had no amounts outstanding on our revolving credit facility. In March 2018, we entered into interest rate swap agreements with notional values of $325.0 million at inception, which reduces $12.5 million annually until the swaps mature on March 6, 2024. The notional value outstanding as of March 31, 2019 was $312.5 million. The interest rate swap agreements are designated as cash flow hedges and are measured at fair value based on inputs other than quoted market prices that are observable, which represents a Level 2 measurement. See Note M - “Debt” and Note O - “Derivative Financial Instruments” for further information. The carrying value of our Seller Notes as of March 31, 2019 and December 31, 2018 was $7.4 million and $4.5 million, respectively. We believe that the carrying value of the Seller Notes approximates their fair values based on a discounted cash flow model using unobservable inputs, primarily, our credit spread for subordinated debt, which represents a Level 3 measurement. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 3 Months Ended |
Mar. 31, 2019 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
DERIVATIVE FINANCIAL INSTRUMENTS | NOTE O — DERIVATIVE FINANCIAL INSTRUMENTS We are exposed to certain risks arising from both our business operations and economic conditions. We manage economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of our debt funding and the use of derivative financial instruments. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash payments principally related to our borrowings. Cash Flow Hedges of Interest Rate Risk Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish these objectives, we primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counter-party in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The change in the fair value of derivatives designated and that qualify as cash flow hedges is recorded on our consolidated balance sheet in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. As of March 31, 2019, our swaps had a notional value outstanding of $312.5 million. As of December 31, 2018, our swaps had a notional value outstanding of $325.0 million. Change in Net Loss on Cash Flow Hedges Including Accumulated Other Comprehensive Loss The following table presents the activity of cash flow hedges included in accumulated other comprehensive loss for the three months ended March 31, 2019 and March 31, 2018: (in thousands) Cash Flow Hedges Balance as of December 31, 2018 $ 2,936 Unrealized loss recognized in other comprehensive loss, net of tax 3,151 Reclassification to interest expense, net (215) Balance as of March 31, 2019 $ 5,872 Balance as of December 31, 2017 $ — Unrealized loss recognized in other comprehensive loss, net of tax 2,538 Reclassification to interest expense, net (248) Balance as of March 31, 2018 $ 2,290 The following table presents the fair value of derivative assets and liabilities within the condensed consolidated balance sheets as of March 31, 2019 and December 31, 2018: As of March 31, 2019 As of December 31, 2018 (in thousands) Assets Liabilities Assets Liabilities Derivatives designated as cash flow hedging instruments: Accrued expenses and other current liabilities $ — $ 1,205 $ — $ 724 Other liabilities — 6,515 — 3,134 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2019 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | NOTE P — STOCK-BASED COMPENSATION The Hanger, Inc. 2016 Omnibus Incentive Plan (the “2016 Plan”), as amended by our Board of Directors (the “Board”) in May 2018 authorizes the issuance of up to 2,625,000 shares of Common Stock, plus (i) the number of shares available for issuance under our prior equity incentive plan, the Hanger, Inc. 2010 Omnibus Incentive Plan (the “2010 Plan”), that had not been made subject to outstanding awards as of the effective date of the 2016 Plan and (ii) any shares that would have become available again for new grants under the terms of the 2010 Plan if such plan were still in effect. We recognized a total of approximately $3.3 million and $2.6 million, respectively, of stock-based compensation expense for the three months ended March 31, 2019 and 2018. Stock compensation expense, net of forfeitures, relates to restricted stock units, performance-based restricted stock units, and stock options. |
SUPPLEMENTAL EXECUTIVE RETIREME
SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS | 3 Months Ended |
Mar. 31, 2019 | |
SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS | |
SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS | NOTE Q — SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS Defined Benefit Supplemental Executive Retirement Plan Effective January 2004, we implemented an unfunded noncontributory defined benefit plan (“DB SERP”) for certain senior executives. The DB SERP, which we administer, calls for fifteen annual payments upon retirement with the payment amount based on years of service and final average salary. Benefit costs and liability balances are calculated based on certain assumptions including benefits earned, discount rates, interest costs, mortality rates, and other factors. Actual results that differ from the assumptions are accumulated and amortized over future periods, affecting the recorded obligation and expense in future periods. We believe the assumptions used are appropriate; however, changes in assumptions or differences in actual experience may affect our benefit obligation and future expenses. The DB SERP's change in net benefit cost and obligation during the three months ended March 31, 2019 and 2018 is as follows: Change in Benefit Obligation: (in thousands) 2019 2018 Benefit obligation as of December 31, 2018 and 2017, respectively $ 18,927 $ 20,793 Service cost 84 92 Interest cost 165 150 Payments (1,877) (1,877) Benefit Obligation as of March 31 $ 17,299 $ 19,158 Amounts Recognized in the Condensed Consolidated Balance Sheets: As of March 31, As of December 31, (in thousands) 2019 2018 Accrued expenses and other current liabilities $ 1,913 $ 1,913 Other liabilities 15,386 17,014 Total accrued liabilities $ 17,299 $ 18,927 Defined Contribution Supplemental Executive Retirement Plan In 2013, we established a defined contribution plan (“DC SERP”) that covers certain of our senior executives. Each participant is given a notional account to manage his or her annual distributions and allocate the funds among various investment options (e.g. mutual funds). These accounts are tracking accounts only for the purpose of calculating the participant’s benefit. The participant does not have ownership of the underlying mutual funds. When a participant initiates or changes the allocation of his or her notional account, we will generally make an allocation of our investments to match those chosen by the participant. While the allocation of our sub accounts is generally intended to mirror the participant’s account records (i.e. the distributions and gains or losses on those funds), the employee does not have legal ownership of any funds until payout upon retirement. The underlying investments are owned by the insurance company with which we own an insurance policy. As of March 31, 2019 and December 31, 2018, the estimated accumulated obligation benefit is $3.1 million and $3.0 million, respectively, of which $3.0 million and $2.4 million is funded and $0.1 million and $0.6 million is unfunded at March 31, 2019 and December 31, 2018, respectively. In connection with the DC SERP benefit obligation, we maintain a company owned life insurance policy (“COLI”). The carrying value of the COLI is measured at its cash surrender value and is presented within “Other assets” in our consolidated balance sheets. See Note I - “Other Current Assets and Other Assets” for additional information. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE R — COMMITMENTS AND CONTINGENCIES Guarantees and Indemnification In the ordinary course of our business, we may enter into service agreements with service providers in which we agree to indemnify or limit the service provider against certain losses and liabilities arising from the service provider's performance of the agreement. We have reviewed our existing contracts containing indemnification or clauses of guarantees and do not believe that our liability under such agreements is material. Legal Proceedings Securities and Derivative Litigation In November 2014, a securities class action complaint, City of Pontiac General Employees’ Retirement System v. Hanger, et al ., C.A. No. 1:14-cv-01026-SS, was filed against us in the United States District Court for the Western District of Texas. The complaint named us and certain of our current and former officers for allegedly making materially false and misleading statements regarding, inter alia, our financial statements, RAC audit success rate, the implementation of new financial systems, same-store sales growth, and the adequacy of our internal processes and controls. The complaint alleged violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. The complaint sought unspecified damages, costs, attorneys’ fees, and equitable relief. On April 1, 2016, the court granted our motion to dismiss the lawsuit for failure to state a claim upon which relief can be granted, and permitted plaintiffs to file an amended complaint. On July 1, 2016, plaintiffs filed an amended complaint. On September 15, 2016, we and certain of the individual defendants filed motions to dismiss the lawsuit. On January 26, 2017, the court granted the defendants’ motions and dismissed with prejudice all claims against all defendants for failure to state a claim. On February 24, 2017, plaintiffs filed a notice of appeal to the United States Court of Appeals for the Fifth Circuit. On August 6, 2018, the Court of Appeals affirmed in part and reversed in part. The Court of Appeals affirmed the dismissal of the case against individual defendants Vinit Asar, our current President and Chief Executive Officer, and Thomas Kirk, our former President and Chief Executive Officer, but reversed the dismissal of the case against George McHenry, our former Chief Financial Officer, and Hanger, Inc. On August 20, 2018, Hanger, Inc. and George McHenry filed a petition for panel rehearing and a petition for rehearing en banc with the Court of Appeals. On April 10, 2019 the Court of Appeals granted the petition for panel rehearing, withdrew its previous panel decision, and substituted a new panel decision in its place that affirmed the District Court's dismissal with prejudice of all claims against all the defendants for failure to state a claim. Plaintiffs did not petition the Court of Appeals for a panel rehearing or a rehearing en banc. Should plaintiffs decide to continue the litigation, their sole remaining option is to petition the United States Supreme Court to review the new Fifth Circuit panel decision issued on April 10, 2019. The deadline for such petition is July 9, 2019. In February and August of 2015, two separate shareholder derivative suits were filed in Texas state court against us related to the announced restatement of certain of our financial statements. The cases were subsequently consolidated into Judy v. Asar, et. al., Cause No. D-1-GN-15-000625. On October 25, 2016, plaintiffs in that action filed an amended complaint, and the case is currently pending before the 459th Judicial District Court of Travis County, Texas. The amended complaint in the consolidated derivative action names us and certain of our current and former officers and directors as defendants. It alleges claims for breach of fiduciary duty based, inter alia, on the defendants’ alleged failure to exercise good faith to ensure that we had in place adequate accounting and financial controls and that disclosures regarding our business, financial performance and internal controls were truthful and accurate. The complaint seeks unspecified damages, costs, attorneys’ fees, and equitable relief. As disclosed in our Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on June 6, 2016, the Board of Directors appointed a Special Litigation Committee of the Board (the “Special Committee”). The Board delegated to the Special Committee the authority to (1) determine whether it is in our best interests to pursue any of the allegations made in the derivative cases filed in Texas state court (which cases were consolidated into the Judy case discussed above), (2) determine whether it is in our best interests to pursue any remedies against any of our current or former employees, officers or directors as a result of the conduct discovered in the Audit Committee investigation concluded on June 6, 2016 (the “Investigation”), and (3) otherwise resolve claims or matters relating to the findings of the Investigation. The Special Committee retained independent legal counsel to assist and advise it in carrying out its duties and reviewed and considered the evidence and various factors relating to our best interests. In accordance with its findings and conclusions, the Special Committee determined that it is not in our best interest to pursue any of the claims in the Judy derivative case. Also in accordance with its findings and conclusions, the Special Committee determined that it is not in our best interests to pursue legal remedies against any of our current or former employees, officers, or directors. On April 14, 2017, we filed a motion to dismiss the consolidated derivative action based on the resolution by the Special Committee that it is not in our best interest to pursue the derivative claims. Counsel for the derivative plaintiffs opposed that motion and moved to compel discovery. In a hearing held on June 12, 2017, the Travis County court denied plaintiffs’ motion to compel, and held that the motion to dismiss would be considered only after appropriate discovery was concluded. The plaintiffs subsequently subpoenaed counsel for the Special Committee, seeking a copy of the full report prepared by the Special Committee and its independent counsel. Counsel for the Special Committee, as well as our counsel, took the position that the full report is not discoverable under Texas law. Plaintiffs’ counsel filed a motion to compel the Special Committee’s counsel to produce the full report. We opposed the motion. On July 20, 2018, the Travis County court ruled that only a redacted version of the report is discoverable, and counsel for the Special Committee provided a redacted version of the report to plaintiffs' counsel. Plaintiffs objected to the redacted version of the report, and on February 4, 2019, the Travis County court appointed a Special Master to review plaintiffs' objections to the redacted report. On March 22, 2019, the Special Master submitted a report to the Travis County Court recommending that the Court order that the entire Special Committee report be produced. On April 2, 2019 we filed an objection to the Special Master's report and recommendation, and requested a hearing on the matter. The Travis County Court scheduled a hearing for May 15, 2019 regarding our objection. Upon completion of discovery, we intend to file a motion to dismiss the consolidated derivative action. Management intends to continue to vigorously defend against the shareholder derivative action. At this time, if the derivative action were to go to trial, we cannot predict how the Travis County Court would rule on the merits of the claims and/or the scope of the potential loss in the event of an adverse outcome. Should we ultimately be found liable, the resulting damages could have a material adverse effect on our consolidated financial position, liquidity or our results of operations. Other Matters From time to time we are subject to legal proceedings and claims which arise in the ordinary course of our business, and are also subject to additional payments under business purchase agreements. In the opinion of management, the amount of ultimate liability, if any, with respect to these actions will not have a materially adverse effect on our consolidated financial position, liquidity or results of our operations. We operate in a highly regulated industry and receive regulatory agency inquiries from time to time in the ordinary course of our business, including inquiries relating to our billing activities. No assurance can be given that any discrepancies identified during a regulatory review will not have a material adverse effect on our consolidated financial statements. |
SEGMENT AND RELATED INFORMATION
SEGMENT AND RELATED INFORMATION | 3 Months Ended |
Mar. 31, 2019 | |
SEGMENT AND RELATED INFORMATION | |
SEGMENT AND RELATED INFORMATION | NOTE S — SEGMENT AND RELATED INFORMATION We have identified two operating segments and both performance evaluation and resource allocation decisions are determined based on each operating segment’s income from operations. The operating segments are described further below: Patient Care — This segment consists of our owned and operated patient care clinics. The patient care clinics provide services to design and fit O&P devices to patients. These clinics also instruct patients in the use, care and maintenance of the devices. The principal reimbursement sources for our services are: · Commercial private payors and other, which consist of individuals, rehabilitation providers, commercial insurance companies, health management organizations (“HMOs”), preferred provider organizations (“PPOs”), hospitals, vocational rehabilitation, workers’ compensation programs, and similar sources; · Medicare, a federally funded health insurance program providing health insurance coverage for persons aged 65 or older and certain disabled persons, which provides reimbursement for O&P products and services based on prices set forth in published fee schedules with 10 regional pricing areas for prosthetics and orthotics and by state for durable medical equipment; · Medicaid, a health insurance program jointly funded by federal and state governments providing health insurance coverage for certain persons in financial need, regardless of age, which may supplement Medicare benefits for financially needy persons aged 65 or older; and · U.S. Department of Veterans Affairs. Our contract and network management business, known as Linkia, is the only network management company dedicated solely to serving the O&P market and is focused on managing the O&P services of national and regional insurance companies. We partner with healthcare insurance companies by securing a national or regional contract either as a preferred provider or to manage their O&P network of providers. Products & Services - This segment consists of our distribution services business, which distributes and fabricates O&P products and components to sell to both the O&P industry and our own patient care clinics, and our therapeutic solutions business. The therapeutic solutions business provides and sells rehabilitation equipment and ancillary consumable supplies combined with equipment maintenance, education, and training. This segment also develops emerging neuromuscular technologies for the O&P and rehabilitation markets. Corporate & Other - This consists of corporate overhead and includes unallocated expenses such as personnel costs, professional fees, and corporate offices expenses. The accounting policies of the segments are the same as those described in Note A - “Organization and Summary of Significant Accounting Policies” in our 2018 Form 10-K. Intersegment revenue primarily relates to sales of O&P components from the Products & Services segment to the Patient Care segment. The sales are priced at the cost of the related materials plus overhead. Summarized financial information concerning our reporting segments is shown in the following tables. Total assets for each of the segments has not materially changed from December 31, 2018. Patient Care Products & Services For the Three Months Ended For the Three Months Ended March 31, March 31, (in thousands) 2019 2018 2019 2018 Net revenues Third party $ 190,601 $ 188,507 $ 45,818 $ 45,488 Intersegments — — 44,879 42,522 Total net revenue 190,601 188,507 90,697 88,010 Material costs Third party suppliers 53,355 52,175 25,022 24,181 Intersegments 5,795 5,724 39,084 36,798 Total material costs 59,150 57,899 64,106 60,979 Personnel expenses 73,709 73,613 13,002 12,495 Other expenses 37,433 35,004 6,948 6,155 Depreciation & amortization 4,552 4,898 2,543 2,502 Segment income from operations $ 15,757 $ 17,093 $ 4,098 $ 5,879 A reconciliation of the total of the reportable segments' income (loss) from operations to consolidated loss from operations is as follows: For the Three Months Ended March 31, (in thousands) 2019 2018 (Loss) income from operations: Patient Care $ 15,757 $ 17,093 Products & Services 4,098 5,879 Corporate & other (21,834) (22,349) (Loss) income from operations (1,979) 623 Interest expense, net 8,538 12,263 Loss on extinguishment of debt — 16,998 Non-service defined benefit plan expense 173 176 Loss before income taxes (10,690) (28,814) Benefit for income taxes (3,739) (6,196) Net loss $ (6,951) $ (22,618) A reconciliation of the reportable segment net revenue to consolidated net revenue is as follows: For the Three Months Ended March 31, (in thousands) 2019 2018 Net revenues Patient Care $ 190,601 $ 188,507 Products & Services 90,697 88,010 Corporate & other — — Consolidating adjustments (44,879) (42,522) Consolidated net revenue $ 236,419 $ 233,995 A reconciliation of the reportable segment material costs to consolidated material costs is as follows: For the Three Months Ended March 31, (in thousands) 2019 2018 Material costs Patient Care $ 59,150 $ 57,899 Products & Services 64,106 60,979 Corporate & other — — Consolidating adjustments (44,879) (42,522) Consolidated material costs $ 78,377 $ 76,356 |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 3 Months Ended |
Mar. 31, 2019 | |
SUPPLEMENTAL CASH FLOW INFORMATION | |
SUPPLEMENTAL CASH FLOW INFORMATION | NOTE T — SUPPLEMENTAL CASH FLOW INFORMATION Changes in operating assets and liabilities on cash flows from operating activities is as follows: For the Three Months Ended March 31, (in thousands) 2019 2018 Accounts receivable, net $ 10,395 $ 19,425 Inventories (880) 1,085 Other current assets and other assets (1,433) 650 Income taxes (355) 12,255 Accounts payable (6,511) 552 Accrued expenses and other current liabilities 492 (5,067) Accrued compensation related costs (32,970) (35,789) Other liabilities (1,829) (2,537) Operating lease liabilities (10,082) — Changes in operating assets and liabilities on cash flows from operating activities $ (43,173) $ (9,426) The supplemental disclosure requirements for the statements of cash flows are as follows: For the Three Months Ended March 31, (in thousands) 2019 2018 Issuance of seller notes in connection with acquisitions $ 4,451 $ — Additions to property, plant and equipment acquired through financing obligations — 1,208 Retirements of financed property, plant and equipment and related obligations — 2,246 Purchase of property, plant and equipment in accounts payable at period end 4,443 545 |
ORGANIZATION AND SUMMARY OF S_2
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X, and, therefore, do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2018 (the "2018 Form 10-K"), as previously filed with the Securities and Exchange Commission (“SEC”). In our opinion, the information contained herein reflects all adjustments necessary for a fair statement of our results of operations, financial position, and cash flows. All such adjustments are of a normal, recurring nature. The results of operations for the interim periods are not necessarily indicative of those to be expected for the full year. A detailed description of our significant accounting policies and management judgments is contained in our 2018 Form 10-K. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Adopted Leases We lease a majority of our patient care clinics and warehouses under lease arrangements, certain of which contain renewal options, rent escalation clauses, and/or landlord incentives. Rent expense for noncancellable leases with scheduled rent increases and/or landlord incentives is recognized on a straight-line basis over the lease term, including any applicable rent holidays, beginning on the lease commencement date. We exclude leases with a term of one year or less from our balance sheet, and do not separate non-lease components from our real estate leases. Our leases may include variable payments for maintenance, which are expensed as incurred. In addition, we are the lessor of therapeutic program equipment to patients and businesses in acute, post-acute, and clinic settings. The therapeutic program equipment and related services revenue are recognized over the applicable term the customer has the right to use the equipment and as the services are provided. These operating lease agreements are typically for twelve months and have a 30-day cancellation policy. We do not separate non-lease components, consisting primarily of training, for these leases. Effect of Adoption of ASC 842 We adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases (ASC 842), and related clarifying standards, as of January 1, 2019, using the modified retrospective approach. This approach allows us to apply the standard as of the adoption date and record a cumulative-effect adjustment to the opening balance of Accumulated deficit at January 1, 2019. The new lease standard requires lessees to recognize a right-of-use (“ROU”) asset and a lease liability on the balance sheet for all leases (with the exception of short-term leases, defined as leases with a term of 12 months or less) at the lease commencement date and recognize expenses on the consolidated statement of income on a straight-line basis. In addition, we elected the package of practical expedients available under the transition provisions of the new lease standard, including (i) not reassessing whether expired or existing contracts contain leases, (ii) carrying forward lease classification under legacy guidance, 2 nd (iii) not revaluing initial direct costs for existing leases. By electing the modified retrospective approach on adoption date, prior period results will continue to be presented under legacy guidance based on the accounting standards originally in effect for such period. We have elected to keep leases with an initial term of 12 months or less off of the balance sheet and recognize those lease payments in the consolidated statements of income on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, and have elected to utilize the practical expedient to account for lease and non-lease components together as a single combined lease component for real estate and therapeutic program equipment, from both a lessee and lessor perspective. From a lessor perspective, the timing and pattern of transfer are the same for the non-lease components and associated lease component and, the lease component, if accounted for separately, would be classified as an operating lease. The accounting for our finance leases and leases where we are the lessor remained substantially unchanged. The lease liability was measured as the present value of the unpaid lease payments and the right-of-use asset was derived from the calculation of the lease liability. As the rate implicit in the lease is generally not readily determinable for our operating leases, the discount rates used to determine the present value of our lease liability are based on our incremental borrowing rate at the lease commencement date and commensurate with the remaining lease term. Our incremental borrowing rate for a lease is the rate of interest we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Our lease term may include options to extend or terminate if the exercise of that option is reasonably certain to occur. We rent or sublease certain real estate to third parties. Our sublease portfolio consists mainly of operating leases on small medical office locations. The most significant impact of the new lease standard will be on the balance sheet, where values have been added for real estate operating leases, which increases both assets and liabilities. The capital leases associated with equipment were already reflected on our balance sheet and did not add any incremental assets or liabilities under the new lease standard. The adoption of the new lease standard did not have an impact on our compliance with existing debt covenants because the impact of changes in accounting standards is excluded from debt covenant calculations. The impact of applying the new lease standard to our results of operations and cash flows is not significant. Additionally, we have determined that the leases previously identified as build-to-suit leasing arrangements under legacy lease accounting were to be derecognized pursuant to the transition guidance provided for build-to-suit leases in ASC 842. Accordingly, these leases have been reassessed as operating leases as of January 1, 2019. The legacy guidance was based on a risks and rewards model which contained several prescriptive provisions designed to assess lessee ownership during construction. The ASC 842 model has eliminated these prescriptive rules and replaced them with a model based on control. Under ASC 842, we did not demonstrate control as the lessee and therefore the leases were derecognized at January 1, 2019. The resulting cumulative effect recognized at adoption to Accumulated deficit was $1.6 million, net of tax. Upon adoption of ASC 842, the cumulative effect of the changes made to our condensed consolidated balance sheet as of January 1, 2019 was as follows: December 31, 2018 Effects of January 1, 2019 (in thousands) As reported adoption After adoption Assets Other current assets $ 18,731 $ (3,987) $ 14,744 Total current assets 325,900 (3,987) 321,913 Property, plant and equipment, net 89,489 (8,068) 81,421 Other intangible assets, net 15,478 (220) 15,258 Deferred income taxes 65,635 (570) 65,065 Operating lease right-of-use assets — 103,378 103,378 Other assets 7,766 538 8,304 Total assets 703,010 91,071 794,081 Liabilities Current liabilities: Current portion of long-term debt 8,583 (619) 7,964 Accrued expenses and other current liabilities 51,783 (1,352) 50,431 Current portion of operating lease liabilities — 33,393 33,393 Total current liabilities 171,274 31,422 202,696 Long-term liabilities: Long-term debt, less current portion 502,090 (12,493) 489,597 Operating lease liabilities — 83,662 83,662 Other liabilities 51,570 (13,081) 38,489 Total liabilities 724,934 89,510 814,444 Shareholders' deficit: Accumulated deficit (361,023) 1,561 (359,462) Total shareholders' deficit (21,924) 1,561 (20,363) Total liabilities and shareholders' deficit $ 703,010 $ 91,071 $ 794,081 Recent Accounting Pronouncements, Not Yet Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and related clarifying standards, which replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This new standard is effective for us beginning December 15, 2019, with early adoption permitted. We are currently evaluating the effects that the adoption of this guidance will have on our consolidated financial statements and the related disclosures. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) , which modifies the disclosures on fair value measurements by removing the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for timing of such transfers. The ASU expands the disclosure requirements for Level 3 fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income. The ASU is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the effects that the adoption of this guidance will have on our consolidated financial statements and the related disclosures. In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715) . This ASU modifies the disclosure requirements for defined benefit and other postretirement plans. This ASU eliminates certain disclosures associated with accumulated other comprehensive income, plan assets, related parties, and the effects of interest rate basis point changes on assumed health care costs; while other disclosures have been added to address significant gains and losses related to changes in benefit obligations. This ASU also clarifies disclosure requirements for projected benefit and accumulated benefit obligations. The amendments in this ASU are effective for fiscal years ending after December 15, 2020 and for interim periods therein with early adoption permitted. We are currently evaluating the effects that the adoption of this guidance will have on our consolidated financial statements and the related disclosures. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Topic 220) . The ASU is intended to improve the recognition and measurement of financial instruments. The new guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This ASU is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the effects that the adoption of this guidance will have on our consolidated financial statements and the related disclosures. |
Leases | Leases We lease a majority of our patient care clinics and warehouses under lease arrangements, certain of which contain renewal options, rent escalation clauses, and/or landlord incentives. Rent expense for noncancellable leases with scheduled rent increases and/or landlord incentives is recognized on a straight-line basis over the lease term, including any applicable rent holidays, beginning on the lease commencement date. We exclude leases with a term of one year or less from our balance sheet, and do not separate non-lease components from our real estate leases. Our leases may include variable payments for maintenance, which are expensed as incurred. In addition, we are the lessor of therapeutic program equipment to patients and businesses in acute, post-acute, and clinic settings. The therapeutic program equipment and related services revenue are recognized over the applicable term the customer has the right to use the equipment and as the services are provided. These operating lease agreements are typically for twelve months and have a 30-day cancellation policy. We do not separate non-lease components, consisting primarily of training, for these leases. Effect of Adoption of ASC 842 We adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases (ASC 842), and related clarifying standards, as of January 1, 2019, using the modified retrospective approach. This approach allows us to apply the standard as of the adoption date and record a cumulative-effect adjustment to the opening balance of Accumulated deficit at January 1, 2019. The new lease standard requires lessees to recognize a right-of-use (“ROU”) asset and a lease liability on the balance sheet for all leases (with the exception of short-term leases, defined as leases with a term of 12 months or less) at the lease commencement date and recognize expenses on the consolidated statement of income on a straight-line basis. In addition, we elected the package of practical expedients available under the transition provisions of the new lease standard, including (i) not reassessing whether expired or existing contracts contain leases, (ii) carrying forward lease classification under legacy guidance, 2 nd (iii) not revaluing initial direct costs for existing leases. By electing the modified retrospective approach on adoption date, prior period results will continue to be presented under legacy guidance based on the accounting standards originally in effect for such period. We have elected to keep leases with an initial term of 12 months or less off of the balance sheet and recognize those lease payments in the consolidated statements of income on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, and have elected to utilize the practical expedient to account for lease and non-lease components together as a single combined lease component for real estate and therapeutic program equipment, from both a lessee and lessor perspective. From a lessor perspective, the timing and pattern of transfer are the same for the non-lease components and associated lease component and, the lease component, if accounted for separately, would be classified as an operating lease. The accounting for our finance leases and leases where we are the lessor remained substantially unchanged. The lease liability was measured as the present value of the unpaid lease payments and the right-of-use asset was derived from the calculation of the lease liability. As the rate implicit in the lease is generally not readily determinable for our operating leases, the discount rates used to determine the present value of our lease liability are based on our incremental borrowing rate at the lease commencement date and commensurate with the remaining lease term. Our incremental borrowing rate for a lease is the rate of interest we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Our lease term may include options to extend or terminate if the exercise of that option is reasonably certain to occur. We rent or sublease certain real estate to third parties. Our sublease portfolio consists mainly of operating leases on small medical office locations. The most significant impact of the new lease standard will be on the balance sheet, where values have been added for real estate operating leases, which increases both assets and liabilities. The capital leases associated with equipment were already reflected on our balance sheet and did not add any incremental assets or liabilities under the new lease standard. The adoption of the new lease standard did not have an impact on our compliance with existing debt covenants because the impact of changes in accounting standards is excluded from debt covenant calculations. The impact of applying the new lease standard to our results of operations and cash flows is not significant. Additionally, we have determined that the leases previously identified as build-to-suit leasing arrangements under legacy lease accounting were to be derecognized pursuant to the transition guidance provided for build-to-suit leases in ASC 842. Accordingly, these leases have been reassessed as operating leases as of January 1, 2019. The legacy guidance was based on a risks and rewards model which contained several prescriptive provisions designed to assess lessee ownership during construction. The ASC 842 model has eliminated these prescriptive rules and replaced them with a model based on control. Under ASC 842, we did not demonstrate control as the lessee and therefore the leases were derecognized at January 1, 2019. The resulting cumulative effect recognized at adoption to Accumulated deficit was $1.6 million, net of tax. Upon adoption of ASC 842, the cumulative effect of the changes made to our condensed consolidated balance sheet as of January 1, 2019 was as follows: December 31, 2018 Effects of January 1, 2019 (in thousands) As reported adoption After adoption Assets Other current assets $ 18,731 $ (3,987) $ 14,744 Total current assets 325,900 (3,987) 321,913 Property, plant and equipment, net 89,489 (8,068) 81,421 Other intangible assets, net 15,478 (220) 15,258 Deferred income taxes 65,635 (570) 65,065 Operating lease right-of-use assets — 103,378 103,378 Other assets 7,766 538 8,304 Total assets 703,010 91,071 794,081 Liabilities Current liabilities: Current portion of long-term debt 8,583 (619) 7,964 Accrued expenses and other current liabilities 51,783 (1,352) 50,431 Current portion of operating lease liabilities — 33,393 33,393 Total current liabilities 171,274 31,422 202,696 Long-term liabilities: Long-term debt, less current portion 502,090 (12,493) 489,597 Operating lease liabilities — 83,662 83,662 Other liabilities 51,570 (13,081) 38,489 Total liabilities 724,934 89,510 814,444 Shareholders' deficit: Accumulated deficit (361,023) 1,561 (359,462) Total shareholders' deficit (21,924) 1,561 (20,363) Total liabilities and shareholders' deficit $ 703,010 $ 91,071 $ 794,081 |
ORGANIZATION AND SUMMARY OF S_3
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
ASU 2016-02 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of impact of adoption on our condensed consolidated balance sheet | December 31, 2018 Effects of January 1, 2019 (in thousands) As reported adoption After adoption Assets Other current assets $ 18,731 $ (3,987) $ 14,744 Total current assets 325,900 (3,987) 321,913 Property, plant and equipment, net 89,489 (8,068) 81,421 Other intangible assets, net 15,478 (220) 15,258 Deferred income taxes 65,635 (570) 65,065 Operating lease right-of-use assets — 103,378 103,378 Other assets 7,766 538 8,304 Total assets 703,010 91,071 794,081 Liabilities Current liabilities: Current portion of long-term debt 8,583 (619) 7,964 Accrued expenses and other current liabilities 51,783 (1,352) 50,431 Current portion of operating lease liabilities — 33,393 33,393 Total current liabilities 171,274 31,422 202,696 Long-term liabilities: Long-term debt, less current portion 502,090 (12,493) 489,597 Operating lease liabilities — 83,662 83,662 Other liabilities 51,570 (13,081) 38,489 Total liabilities 724,934 89,510 814,444 Shareholders' deficit: Accumulated deficit (361,023) 1,561 (359,462) Total shareholders' deficit (21,924) 1,561 (20,363) Total liabilities and shareholders' deficit $ 703,010 $ 91,071 $ 794,081 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
EARNINGS PER SHARE | |
Schedule of reconciliation of numerators and denominators used to calculate basic and diluted net loss per share | For the Three Months Ended March 31, (in thousands except per share data) 2019 2018 Net loss $ (6,951) $ (22,618) Weighted average shares outstanding - basic 37,001,977 36,498,482 Effect of potentially dilutive restricted stock units and options (1) — — Weighted average shares outstanding - diluted 37,001,977 36,498,482 Basic and diluted loss per share $ (0.19) $ (0.62) (1) In accordance with ASC 260 - Earnings Per Share, during periods of a net loss, shares used to compute diluted per share amounts exclude potentially dilutive shares related to unvested restricted stock units and unexercised options. For the three months ended March 31, 2019, shares excluded were 889,093. For the three months ended March 31, 2018, shares excluded were 537,497. |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Patient Care | |
REVENUE RECOGNITION | |
Schedule of disaggregates of revenue from contracts with customers | For the Three Months Ended March 31, (in thousands) 2019 2018 Patient Care Segment Medicare $ 57,776 $ 57,531 Medicaid 30,147 29,711 Commercial Insurance/ Managed Care (excluding Medicare and Medicaid Managed Care) 70,218 70,582 Veterans Administration 18,322 16,731 Private Pay 14,138 13,952 Total $ 190,601 $ 188,507 |
Products & Services | |
REVENUE RECOGNITION | |
Schedule of disaggregates of revenue from contracts with customers | For the Three Months Ended March 31, (in thousands) 2019 2018 Products & Services Segment Distribution services, net of intersegment revenue eliminations $ 33,195 $ 31,351 Therapeutic solutions 12,623 14,137 Total $ 45,818 $ 45,488 |
ACCOUNTS RECEIVABLE, NET (Table
ACCOUNTS RECEIVABLE, NET (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
ACCOUNTS RECEIVABLE, NET | |
Schedule of accounts receivable, net | As of March 31, 2019 As of December 31, 2018 Products & Products & (in thousands) Patient Care Services Consolidated Patient Care Services Consolidated Accounts receivable, before allowances $ 176,705 $ 24,981 $ 201,686 $ 182,338 $ 24,542 $ 206,880 Allowances for estimated implicit price concessions arising from: Payor disallowances (55,385) — (55,385) (53,378) — (53,378) Patient non-payments (7,245) — (7,245) (7,244) — (7,244) Accounts receivable, gross 114,075 24,981 139,056 121,716 24,542 146,258 Allowance for doubtful accounts — (2,165) (2,165) — (2,272) (2,272) Accounts receivable, net $ 114,075 $ 22,816 $ 136,891 $ 121,716 $ 22,270 $ 143,986 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
INVENTORIES | |
Schedule of inventories | (in thousands) As of March 31, 2019 As of December 31, 2018 Raw materials $ 20,401 $ 19,632 Work in process 12,711 9,278 Finished goods 36,924 38,780 Total inventories $ 70,036 $ 67,690 |
PROPERTY PLANT AND EQUIPMENT,_2
PROPERTY PLANT AND EQUIPMENT, NET (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
PROPERTY PLANT AND EQUIPMENT, NET | |
Schedule of property, plant and equipment, net | (in thousands) As of March 31, 2019 As of December 31, 2018 Land $ 634 $ 644 Buildings (1) 3,979 24,558 Furniture and fixtures 13,273 13,121 Machinery and equipment 26,568 27,452 Equipment leased to third parties under operating leases 29,402 30,093 Leasehold improvements 125,280 111,247 Computers and software 69,579 69,173 Total property, plant, and equipment, gross 268,715 276,288 Less: accumulated depreciation (186,764) (186,799) Total property, plant, and equipment, net $ 81,951 $ 89,489 (1) As discussed in Note A - “Organization and Summary of Significant Accounting Policies”, the new lease standard resulted in the removal of assets associated with build-to-suit leases. |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
2019 Acquisition Activity, prosthetic and orthotic business | |
Schedule of aggregate purchase price of acquisition allocated on a preliminary basis | For the Three Months Ended (in thousands) March 31, 2019 Cash paid, net of cash acquired $ 27,679 Issuance of seller notes 4,451 Additional consideration (1) 345 Aggregate purchase price 32,475 Accounts receivable, net 3,318 Inventories 1,466 Customer relationships (Useful life of 3.0 years) 1,963 Non-compete agreements (Weighted average useful life of 4.9 years) 349 Other assets 329 Accounts payable (1,191) Accrued expenses and other liabilities (1,649) Net assets acquired 4,585 Goodwill $ 27,890 (1) Represents additional consideration payable to the seller in the second quarter of 2019 subject to agreement of certain tax elections with the seller. |
2018 Acquisition Activity, two O&P businesses | |
Schedule of aggregate purchase price of acquisition allocated on a preliminary basis | For The Year Ended (in thousands) December 31, 2018 Cash paid, net of cash acquired $ 1,978 Issuance of seller notes 1,120 Aggregate purchase price 3,098 Accounts receivable, net 256 Inventories 302 Customer relationships (Weighted average useful life of 4.0 years) 260 Non-compete agreements (Weighted average useful life of 4.6 years) 214 Other assets 90 Accounts payable (59) Accrued expenses and other liabilities (364) Net assets acquired 699 Goodwill $ 2,399 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Schedule of goodwill allocated to the Company's reportable segments | For the Three Months Ended March 31, 2019 Patient Care Products & Services Consolidated Goodwill, Accumulated Goodwill, Goodwill, Accumulated Goodwill, Goodwill, Accumulated Goodwill, (in thousands) Gross Impairment Net Gross Impairment Net Gross Impairment Net As of December 31, 2018 $ 627,410 $ (428,668) 198,742 $ 139,299 $ (139,299) — $ 766,709 $ (567,967) 198,742 Additions from acquisitions 27,890 — 27,890 — — — 27,890 — 27,890 As of March 31, 2019 $ 655,300 $ (428,668) $ 226,632 $ 139,299 $ (139,299) $ — $ 794,599 $ (567,967) $ 226,632 For the Year Ended December 31, 2018 Patient Care Products & Services Consolidated Goodwill, Accumulated Goodwill, Goodwill, Accumulated Goodwill, Goodwill, Accumulated Goodwill, (in thousands) Gross Impairment Net Gross Impairment Net Gross Impairment Net As of December 31, 2017 $ 625,011 $ (428,668) $ 196,343 $ 139,299 $ (139,299) $ — $ 764,310 $ (567,967) $ 196,343 Additions from acquisitions 2,399 — 2,399 — — — 2,399 — 2,399 As of December 31, 2018 $ 627,410 $ (428,668) $ 198,742 $ 139,299 $ (139,299) $ — $ 766,709 $ (567,967) $ 198,742 |
Schedule of balances related to intangible assets | As of March 31, 2019 Gross Carrying Accumulated Accumulated Net Carrying (in thousands) Amount Amortization Impairment Amount Customer lists $ 27,420 $ (19,443) $ — $ 7,977 Trade name 255 (132) — 123 Patents and other intangibles 9,238 (5,040) — 4,198 Definite-lived intangible assets 36,913 (24,615) — 12,298 Indefinite-lived trade names 9,070 — (4,953) 4,117 Total other intangible assets $ 45,983 $ (24,615) $ (4,953) $ 16,415 As of December 31, 2018 Gross Carrying Accumulated Accumulated Net Carrying (in thousands) Amount Amortization Impairment Amount Customer lists $ 26,036 $ (19,051) $ — $ 6,985 Trade name 255 (125) — 130 Patents and other intangibles 9,391 (5,145) — 4,246 Definite-lived intangible assets 35,682 (24,321) — 11,361 Indefinite-lived trade names 9,070 — (4,953) 4,117 Total other intangible assets $ 44,752 $ (24,321) $ (4,953) $ 15,478 |
Schedule of estimated aggregate amortization expense for definite-lived intangible assets | (in thousands) 2019 (remainder of the year) $ 3,652 2020 4,601 2021 1,118 2022 964 2023 855 Thereafter 1,108 Total $ 12,298 |
OTHER CURRENT ASSETS AND OTHE_2
OTHER CURRENT ASSETS AND OTHER ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
OTHER CURRENT ASSETS AND OTHER ASSETS | |
Schedule of other current assets | (in thousands) As of March 31, 2019 As of December 31, 2018 Non-trade receivables $ 8,561 $ 7,848 Prepaid rent 657 4,442 Prepaid maintenance 3,554 3,330 Prepaid insurance 1,723 258 Prepaid other 994 1,101 Prepaid purchase orders 934 998 Prepaid education and training 518 597 Prepaid benefits 117 157 Total other current assets $ 17,058 $ 18,731 |
Schedule of other assets | (in thousands) As of March 31, 2019 As of December 31, 2018 Cash surrender value of company owned life insurance $ 3,045 $ 2,918 Non-trade receivables 1,822 1,904 Deposits 1,753 1,698 Surety bond collateral 1,000 1,000 Finance lease right-of-use assets 541 — Other 231 246 Total other assets $ 8,392 $ 7,766 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES AND OTHER LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES AND OTHER LIABILITIES | |
Schedule of accrued expenses and other current liabilities | (in thousands) As of March 31, 2019 As of December 31, 2018 Patient prepayments, deposits and refunds payable $ 24,187 $ 24,563 Insurance and self-insurance accruals 8,610 8,886 Accrued sales taxes and other taxes 7,283 6,810 Accrued professional fees 3,685 3,751 Education expenses 2,315 — Derivative liability 1,205 724 Accrued interest payable 487 332 Other current liabilities 5,539 6,717 Total accrued expenses and other current liabilities $ 53,311 $ 51,783 |
Schedule of other liabilities | (in thousands) As of March 31, 2019 As of December 31, 2018 Supplemental executive retirement plan obligations $ 18,661 $ 20,195 Long-term insurance accruals 8,437 8,713 Derivative liability 6,515 3,134 Unrecognized tax benefits, and related interest and penalties 5,523 5,458 Asset retirement obligations 1,113 980 Deferred tenant improvement allowances — 8,570 Deferred rent — 4,455 Other 10 65 Total other liabilities $ 40,259 $ 51,570 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
LEASES | |
Schedule of Balance sheet information related to leases | As of March 31, (in thousands) Classification 2019 Assets Operating lease right-of-use assets Operating lease right-of-use assets $ 103,676 Finance lease right-of-use assets Other assets 541 Total lease assets $ 104,217 Liabilities Current Operating Current portion of operating lease liabilities $ 33,675 Finance Current portion of long-term debt 246 Noncurrent Operating Operating lease liabilities 83,693 Finance Long-term debt, less current portion 321 Total lease liabilities $ 117,935 |
Schedule of lease expense | For the Three Months Ended (in thousands) March 31, 2019 Operating lease cost $ 10,836 Finance lease cost Amortization of right-of-use assets 75 Interest on lease liabilities 6 Sublease income (33) Short-term lease cost 368 Variable lease cost 1,217 Total lease cost $ 12,469 |
Schedule of future minimum rental payments | Finance Operating (in thousands) Leases Leases Total Leases 2019 (remainder of year) $ $ 29,609 $ 29,815 2020 208 35,411 35,619 2021 136 26,294 26,430 2022 50 18,741 18,791 2023 2 12,019 12,021 2024 — 5,826 5,826 Thereafter — 4,593 4,593 Total future minimum lease payments 602 132,493 133,095 Imputed interest (35) (15,125) (15,160) Total $ 567 $ 117,368 $ 117,935 |
Schedule of weighted average lease term and discount rates | For the Three Months Ended March 31, 2019 Weighted average remaining lease term (years) Operating leases 3.98 Finance leases 2.60 Weighted average discount rate Operating leases 5.73 % Finance leases 4.20 % |
Schedule of supplemental cash flow information | For the Three Months Ended (in thousands) March 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 11,787 Operating cash flows from finance leases 6 Financing cash flows from finance leases 80 Right-of-use assets obtained in exchange for lease obligations: Operating leases 10,394 Finance leases 76 |
Schedule of future minimum rental payments, by year and in the aggregate, under operating and financing obligations with terms of one year or more | Operating Capital (in thousands) Leases Leases 2019 $ 39,378 $ 249 2020 29,641 175 2021 21,303 109 2022 14,479 28 2023 9,193 — Thereafter 10,008 — $ 124,002 $ 561 |
DEBT AND OTHER OBLIGATIONS (Tab
DEBT AND OTHER OBLIGATIONS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
DEBT AND OTHER OBLIGATIONS | |
Schedule of debt | (in thousands) As of March 31, 2019 As of December 31, 2018 Debt: Term Loan B $ 499,950 $ 501,213 Seller notes 7,402 4,506 Financing leases and other 1,212 14,361 Total debt before unamortized discount and debt issuance costs 508,564 520,080 Unamortized discount and debt issuance costs, net (9,264) (9,407) Total debt $ 499,300 $ 510,673 Current portion of long-term debt: Term Loan B $ 5,050 $ 5,050 Seller notes 3,288 2,513 Financing leases and other 339 1,020 Total current portion of long-term debt 8,677 8,583 Long-term debt: $ 490,623 $ 502,090 |
Schedule of maturities of debt | (in thousands) 2019 (remainder of year) $ 5,974 2020 8,220 2021 7,193 2022 5,849 2023 5,329 Thereafter 475,999 Total debt before unamortized discount and debt issuance costs, net 508,564 Unamortized discount and debt issuance costs, net (9,264) Total debt $ 499,300 |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
Schedule of activity of cash flow hedges included in accumulated other comprehensive loss | (in thousands) Cash Flow Hedges Balance as of December 31, 2018 $ 2,936 Unrealized loss recognized in other comprehensive loss, net of tax 3,151 Reclassification to interest expense, net (215) Balance as of March 31, 2019 $ 5,872 Balance as of December 31, 2017 $ — Unrealized loss recognized in other comprehensive loss, net of tax 2,538 Reclassification to interest expense, net (248) Balance as of March 31, 2018 $ 2,290 |
Schedule of fair value of derivative liabilities within the consolidated balance sheets | As of March 31, 2019 As of December 31, 2018 (in thousands) Assets Liabilities Assets Liabilities Derivatives designated as cash flow hedging instruments: Accrued expenses and other current liabilities $ — $ 1,205 $ — $ 724 Other liabilities — 6,515 — 3,134 |
SUPPLEMENTAL EXECUTIVE RETIRE_2
SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS | |
Schedule of Change in Benefit Obligation | (in thousands) 2019 2018 Benefit obligation as of December 31, 2018 and 2017, respectively $ 18,927 $ 20,793 Service cost 84 92 Interest cost 165 150 Payments (1,877) (1,877) Benefit Obligation as of March 31 $ 17,299 $ 19,158 |
Schedule of Amounts Recognized in the Consolidated Balance Sheets | As of March 31, As of December 31, (in thousands) 2019 2018 Accrued expenses and other current liabilities $ 1,913 $ 1,913 Other liabilities 15,386 17,014 Total accrued liabilities $ 17,299 $ 18,927 |
SEGMENT AND RELATED INFORMATI_2
SEGMENT AND RELATED INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
SEGMENT AND RELATED INFORMATION | |
Summary of financial information concerning the Company's reporting segments | Patient Care Products & Services For the Three Months Ended For the Three Months Ended March 31, March 31, (in thousands) 2019 2018 2019 2018 Net revenues Third party $ 190,601 $ 188,507 $ 45,818 $ 45,488 Intersegments — — 44,879 42,522 Total net revenue 190,601 188,507 90,697 88,010 Material costs Third party suppliers 53,355 52,175 25,022 24,181 Intersegments 5,795 5,724 39,084 36,798 Total material costs 59,150 57,899 64,106 60,979 Personnel expenses 73,709 73,613 13,002 12,495 Other expenses 37,433 35,004 6,948 6,155 Depreciation & amortization 4,552 4,898 2,543 2,502 Segment income from operations $ 15,757 $ 17,093 $ 4,098 $ 5,879 |
Schedule of reconciliation of reportable segments | A reconciliation of the total of the reportable segments' income (loss) from operations to consolidated loss from operations is as follows: For the Three Months Ended March 31, (in thousands) 2019 2018 (Loss) income from operations: Patient Care $ 15,757 $ 17,093 Products & Services 4,098 5,879 Corporate & other (21,834) (22,349) (Loss) income from operations (1,979) 623 Interest expense, net 8,538 12,263 Loss on extinguishment of debt — 16,998 Non-service defined benefit plan expense 173 176 Loss before income taxes (10,690) (28,814) Benefit for income taxes (3,739) (6,196) Net loss $ (6,951) $ (22,618) A reconciliation of the reportable segment net revenue to consolidated net revenue is as follows: For the Three Months Ended March 31, (in thousands) 2019 2018 Net revenues Patient Care $ 190,601 $ 188,507 Products & Services 90,697 88,010 Corporate & other — — Consolidating adjustments (44,879) (42,522) Consolidated net revenue $ 236,419 $ 233,995 A reconciliation of the reportable segment material costs to consolidated material costs is as follows: For the Three Months Ended March 31, (in thousands) 2019 2018 Material costs Patient Care $ 59,150 $ 57,899 Products & Services 64,106 60,979 Corporate & other — — Consolidating adjustments (44,879) (42,522) Consolidated material costs $ 78,377 $ 76,356 |
SUPPLEMENTAL CASH FLOW INFORM_2
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
SUPPLEMENTAL CASH FLOW INFORMATION | |
Schedule of changes in operating assets and liabilities on cash flows from operating activities and supplemental disclosure requirements for the statements of cash flows | Changes in operating assets and liabilities on cash flows from operating activities is as follows: For the Three Months Ended March 31, (in thousands) 2019 2018 Accounts receivable, net $ 10,395 $ 19,425 Inventories (880) 1,085 Other current assets and other assets (1,433) 650 Income taxes (355) 12,255 Accounts payable (6,511) 552 Accrued expenses and other current liabilities 492 (5,067) Accrued compensation related costs (32,970) (35,789) Other liabilities (1,829) (2,537) Operating lease liabilities (10,082) — Changes in operating assets and liabilities on cash flows from operating activities $ (43,173) $ (9,426) The supplemental disclosure requirements for the statements of cash flows are as follows: For the Three Months Ended March 31, (in thousands) 2019 2018 Issuance of seller notes in connection with acquisitions $ 4,451 $ — Additions to property, plant and equipment acquired through financing obligations — 1,208 Retirements of financed property, plant and equipment and related obligations — 2,246 Purchase of property, plant and equipment in accounts payable at period end 4,443 545 |
ORGANIZATION AND SUMMARY OF S_4
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Description of Business (Details) | 3 Months Ended |
Mar. 31, 2019segment | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Number of operating segments | 2 |
ORGANIZATION AND SUMMARY OF S_5
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |||||
Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Package of practical expedients | true | |||||
Assets | ||||||
Other current assets | $ 17,058 | $ 14,744 | $ 18,731 | |||
Total current assets | 245,230 | 321,913 | 325,900 | |||
Property, plant and equipment, net | 81,951 | 81,421 | 89,489 | |||
Other intangible assets, net | 16,415 | 15,258 | 15,478 | |||
Deferred income taxes | 69,738 | 65,065 | 65,635 | |||
Operating lease right-of-use assets | 103,676 | 103,378 | ||||
Other assets | 8,392 | 8,304 | 7,766 | |||
Total assets | 752,034 | 794,081 | 703,010 | |||
Current liabilities: | ||||||
Current portion of long-term debt | 8,677 | 7,964 | 8,583 | |||
Accrued expenses and other current liabilities | 53,311 | 50,431 | 51,783 | |||
Current portion of operating lease liabilities | 33,675 | 33,393 | ||||
Total current liabilities | 168,064 | 202,696 | 171,274 | |||
Long-term debt, less current portion | 490,623 | 489,597 | 502,090 | |||
Operating lease liabilities | 83,693 | 83,662 | ||||
Other liabilities | 40,259 | 38,489 | 51,570 | |||
Total liabilities | 782,639 | 814,444 | 724,934 | |||
Shareholders' deficit: | ||||||
Retained Earnings (Accumulated Deficit) | (366,413) | (359,462) | (361,023) | |||
Total shareholders' deficit | (30,605) | (20,363) | (21,924) | $ (53,575) | $ (28,810) | $ (28,051) |
Total liabilities and shareholders' deficit | $ 752,034 | 794,081 | $ 703,010 | |||
ASU 2016-02 | Restatement Adjustments | ||||||
Assets | ||||||
Other current assets | (3,987) | |||||
Total current assets | (3,987) | |||||
Property, plant and equipment, net | (8,068) | |||||
Other intangible assets, net | (220) | |||||
Deferred income taxes | (570) | |||||
Operating lease right-of-use assets | 103,378 | |||||
Other assets | 538 | |||||
Total assets | 91,071 | |||||
Current liabilities: | ||||||
Current portion of long-term debt | (619) | |||||
Accrued expenses and other current liabilities | (1,352) | |||||
Current portion of operating lease liabilities | 33,393 | |||||
Total current liabilities | 31,422 | |||||
Long-term debt, less current portion | (12,493) | |||||
Operating lease liabilities | 83,662 | |||||
Other liabilities | (13,081) | |||||
Total liabilities | 89,510 | |||||
Shareholders' deficit: | ||||||
Retained Earnings (Accumulated Deficit) | 1,561 | |||||
Total shareholders' deficit | 1,561 | |||||
Total liabilities and shareholders' deficit | $ 91,071 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Earnings Per Share | ||
Net loss | $ (6,951) | $ (22,618) |
Weighted average shares outstanding - basic | 37,001,977 | 36,498,482 |
Weighted average shares outstanding - diluted | 37,001,977 | 36,498,482 |
Total anti-dilutive shares (in shares) | 0 | 208,510 |
Basic and diluted: | ||
Basic and diluted loss per share | $ (0.19) | $ (0.62) |
Unvested restricted stock units and unexercised options | ||
Earnings Per Share | ||
Total anti-dilutive shares (in shares) | 889,093 | 537,497 |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
REVENUE RECOGNITION | ||
Net revenues | $ 236,419 | $ 233,995 |
Patient Care | ||
REVENUE RECOGNITION | ||
Net revenues | 190,601 | 188,507 |
Patient Care | Medicare | ||
REVENUE RECOGNITION | ||
Net revenues | 57,776 | 57,531 |
Patient Care | Medicaid | ||
REVENUE RECOGNITION | ||
Net revenues | 30,147 | 29,711 |
Patient Care | Commercial Insurance/ Managed Care (excluding Medicare and Medicaid Managed Care) | ||
REVENUE RECOGNITION | ||
Net revenues | 70,218 | 70,582 |
Patient Care | Veterans Administration | ||
REVENUE RECOGNITION | ||
Net revenues | 18,322 | 16,731 |
Patient Care | Private Pay | ||
REVENUE RECOGNITION | ||
Net revenues | 14,138 | 13,952 |
Patient Care | Operating segments | ||
REVENUE RECOGNITION | ||
Net revenues | 190,601 | 188,507 |
Products & Services | ||
REVENUE RECOGNITION | ||
Net revenues | 90,697 | 88,010 |
Products & Services | Operating segments | ||
REVENUE RECOGNITION | ||
Net revenues | 45,818 | 45,488 |
Products & Services | Operating segments | Distribution services, net of intersegment revenue eliminations | ||
REVENUE RECOGNITION | ||
Net revenues | 33,195 | 31,351 |
Products & Services | Operating segments | Therapeutic solutions | ||
REVENUE RECOGNITION | ||
Net revenues | $ 12,623 | $ 14,137 |
ACCOUNTS RECEIVABLE, NET - (Det
ACCOUNTS RECEIVABLE, NET - (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Accounts Receivable, net | ||
Accounts receivable, before allowances | $ 201,686 | $ 206,880 |
Allowances for estimated implicit price concessions arising from: | ||
Payor disallowances | (55,385) | (53,378) |
Patient non-payments | (7,245) | (7,244) |
Accounts receivable, gross | 139,056 | 146,258 |
Allowance for doubtful accounts | (2,165) | (2,272) |
Accounts receivable, net | 136,891 | 143,986 |
Patient Care | ||
Accounts Receivable, net | ||
Accounts receivable, before allowances | 176,705 | 182,338 |
Allowances for estimated implicit price concessions arising from: | ||
Payor disallowances | (55,385) | (53,378) |
Patient non-payments | (7,245) | (7,244) |
Accounts receivable, gross | 114,075 | 121,716 |
Accounts receivable, net | 114,075 | 121,716 |
Products & Services | ||
Accounts Receivable, net | ||
Accounts receivable, before allowances | 24,981 | 24,542 |
Allowances for estimated implicit price concessions arising from: | ||
Accounts receivable, gross | 24,981 | 24,542 |
Allowance for doubtful accounts | (2,165) | (2,272) |
Accounts receivable, net | $ 22,816 | $ 22,270 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Inventories | ||
Raw materials | $ 20,401 | $ 19,632 |
Work in process | 12,711 | 9,278 |
Finished goods | 36,924 | 38,780 |
Total inventories | $ 70,036 | $ 67,690 |
PROPERTY PLANT AND EQUIPMENT,_3
PROPERTY PLANT AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Jan. 01, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment, Net | ||||
Total property, plant, and equipment, gross | $ 268,715 | $ 276,288 | ||
Less: accumulated depreciation and amortization | (186,764) | (186,799) | ||
Total property, plant, and equipment, net | 81,951 | $ 81,421 | 89,489 | |
Depreciation expense | 7,500 | $ 7,400 | ||
Land | ||||
Property, Plant and Equipment, Net | ||||
Total property, plant, and equipment, gross | 634 | 644 | ||
Buildings | ||||
Property, Plant and Equipment, Net | ||||
Total property, plant, and equipment, gross | 3,979 | 24,558 | ||
Furniture and fixtures | ||||
Property, Plant and Equipment, Net | ||||
Total property, plant, and equipment, gross | 13,273 | 13,121 | ||
Machinery and equipment | ||||
Property, Plant and Equipment, Net | ||||
Total property, plant, and equipment, gross | 26,568 | 27,452 | ||
Equipment leased to third parties under operating leases | ||||
Property, Plant and Equipment, Net | ||||
Total property, plant, and equipment, gross | 29,402 | 30,093 | ||
Leasehold improvements | ||||
Property, Plant and Equipment, Net | ||||
Total property, plant, and equipment, gross | 125,280 | 111,247 | ||
Computers and software | ||||
Property, Plant and Equipment, Net | ||||
Total property, plant, and equipment, gross | $ 69,579 | $ 69,173 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) $ in Thousands | Jan. 28, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($)item | Dec. 31, 2018USD ($) |
Aggregate purchase price of this acquisition was allocated on a preliminary basis | |||||
Issuance of seller notes | $ 4,451 | ||||
Goodwill | 27,890 | $ 2,399 | |||
2019 Acquisition Activity, prosthetic and orthotic business | |||||
Acquisitions | |||||
Notes payable to share holders in quarterly installments period | 3 years | ||||
Acquisition-related costs | 200 | ||||
Aggregate purchase price of this acquisition was allocated on a preliminary basis | |||||
Cash paid, net of cash acquired | $ 27,700 | 27,679 | |||
Issuance of seller notes | 4,500 | 4,451 | |||
Additional consideration | 345 | ||||
Aggregate purchase price | $ 32,500 | 32,475 | |||
Accounts receivable, net | 3,318 | ||||
Inventories | 1,466 | ||||
Other assets | 329 | ||||
Accounts payable | (1,191) | ||||
Accrued expenses and other liabilities | (1,649) | ||||
Net assets acquired | 4,585 | ||||
Goodwill | 27,890 | ||||
2019 Acquisition Activity, prosthetic and orthotic business | Customer Relationships | |||||
Aggregate purchase price of this acquisition was allocated on a preliminary basis | |||||
Other intangible assets, net | $ 1,963 | ||||
Useful life | 3 years | ||||
2019 Acquisition Activity, prosthetic and orthotic business | Non-compete agreements | |||||
Aggregate purchase price of this acquisition was allocated on a preliminary basis | |||||
Other intangible assets, net | $ 349 | ||||
Useful life | 4 years 10 months 24 days | ||||
2019 Acquisition Activity, prosthetic and orthotic business | Forecast | |||||
Aggregate purchase price of this acquisition was allocated on a preliminary basis | |||||
Additional consideration | $ 300 | ||||
2018 Acquisition Activity, two O&P businesses | |||||
Acquisitions | |||||
Number of businesses acquired | item | 2 | ||||
Aggregate purchase price of this acquisition was allocated on a preliminary basis | |||||
Cash paid, net of cash acquired | $ 1,978 | 1,978 | |||
Issuance of seller notes | 1,120 | ||||
Aggregate purchase price | 3,100 | 3,098 | |||
Accounts receivable, net | 256 | 256 | |||
Inventories | 302 | 302 | |||
Other assets | 90 | 90 | |||
Accounts payable | (59) | (59) | |||
Accrued expenses and other liabilities | (364) | (364) | |||
Net assets acquired | 699 | 699 | |||
Goodwill | 2,399 | ||||
2018 Acquisition Activity, two O&P businesses | Customer Relationships | |||||
Aggregate purchase price of this acquisition was allocated on a preliminary basis | |||||
Other intangible assets, net | 260 | $ 260 | |||
Useful life | 4 years | ||||
2018 Acquisition Activity, two O&P businesses | Non-compete agreements | |||||
Aggregate purchase price of this acquisition was allocated on a preliminary basis | |||||
Other intangible assets, net | $ 214 | $ 214 | |||
Useful life | 4 years 7 months 6 days |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill | |||
Goodwill, Gross as of beginning of the year | $ 766,709 | $ 764,310 | |
Goodwill, Accumulated Impairment | (567,967) | (567,967) | $ (567,967) |
Goodwill, Net as of beginning of the year | 198,742 | 196,343 | |
Additions from acquisitions | 27,890 | 2,399 | |
Goodwill, Gross as of end of the year | 794,599 | 766,709 | |
Goodwill, Net as of end of the year | 226,632 | 198,742 | |
Patient Care | |||
Goodwill | |||
Goodwill, Gross as of beginning of the year | 627,410 | 625,011 | |
Goodwill, Accumulated Impairment | (428,668) | (428,668) | (428,668) |
Goodwill, Net as of beginning of the year | 198,742 | 196,343 | |
Additions from acquisitions | 27,890 | 2,399 | |
Goodwill, Gross as of end of the year | 655,300 | 627,410 | |
Goodwill, Net as of end of the year | 226,632 | 198,742 | |
Products & Services | |||
Goodwill | |||
Goodwill, Gross as of beginning of the year | 139,299 | 139,299 | |
Goodwill, Accumulated Impairment | (139,299) | (139,299) | $ (139,299) |
Goodwill, Gross as of end of the year | $ 139,299 | $ 139,299 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Intangibles (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |||
Definite-lived, Gross Carrying Amount | $ 36,913 | $ 35,682 | |
Definite-lived, Accumulated Amortization | (24,615) | (24,321) | |
Definite-lived, Net Carrying Amount | 12,298 | 11,361 | |
Total other intangible assets, Gross Carrying Amount | 45,983 | 44,752 | |
Total other intangible assets, Accumulated Impairment | (4,953) | (4,953) | |
Total other intangible assets, Net Carrying Amount | 16,415 | 15,478 | |
Amortization expense | 1,200 | $ 2,000 | |
Trade name | |||
GOODWILL AND OTHER INTANGIBLE ASSETS | |||
Indefinite lived, Gross Carrying Amount | 9,070 | 9,070 | |
Indefinite lived, Accumulated Impairment | (4,953) | (4,953) | |
Indefinite lived, Net Carrying Amount | 4,117 | 4,117 | |
Customer lists | |||
GOODWILL AND OTHER INTANGIBLE ASSETS | |||
Definite-lived, Gross Carrying Amount | 27,420 | 26,036 | |
Definite-lived, Accumulated Amortization | (19,443) | (19,051) | |
Definite-lived, Net Carrying Amount | 7,977 | 6,985 | |
Trade name | |||
GOODWILL AND OTHER INTANGIBLE ASSETS | |||
Definite-lived, Gross Carrying Amount | 255 | 255 | |
Definite-lived, Accumulated Amortization | (132) | (125) | |
Definite-lived, Net Carrying Amount | 123 | 130 | |
Patents and other intangibles | |||
GOODWILL AND OTHER INTANGIBLE ASSETS | |||
Definite-lived, Gross Carrying Amount | 9,238 | 9,391 | |
Definite-lived, Accumulated Amortization | (5,040) | (5,145) | |
Definite-lived, Net Carrying Amount | $ 4,198 | $ 4,246 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS - Estimated Amortization (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Estimated aggregate amortization expense for definite-lived intangible assets | |
2019 (remainder of the year) | $ 3,652 |
2020 | 4,601 |
2021 | 1,118 |
2022 | 964 |
2023 | 855 |
Thereafter | 1,108 |
Total | $ 12,298 |
OTHER CURRENT ASSETS AND OTHE_3
OTHER CURRENT ASSETS AND OTHER ASSETS - Other Current Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
OTHER CURRENT ASSETS AND OTHER ASSETS | |||
Non-trade receivables | $ 8,561 | $ 7,848 | |
Prepaid rent | 657 | 4,442 | |
Prepaid maintenance | 3,554 | 3,330 | |
Prepaid insurance | 1,723 | 258 | |
Prepaid other | 994 | 1,101 | |
Prepaid purchase orders | 934 | 998 | |
Prepaid education and training | 518 | 597 | |
Prepaid benefits | 117 | 157 | |
Total other current assets | $ 17,058 | $ 14,744 | $ 18,731 |
OTHER CURRENT ASSETS AND OTHE_4
OTHER CURRENT ASSETS AND OTHER ASSETS - Other Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
OTHER CURRENT ASSETS AND OTHER ASSETS | |||
Cash surrender value of company owned life insurance | $ 3,045 | $ 2,918 | |
Non-trade receivables | 1,822 | 1,904 | |
Deposits | 1,753 | 1,698 | |
Surety bond collateral | 1,000 | 1,000 | |
Finance lease right-of-use assets | 541 | ||
Other | 231 | 246 | |
Total other assets | $ 8,392 | $ 8,304 | $ 7,766 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES AND OTHER LIABILITIES - Accrued expenses and other current liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES AND OTHER LIABILITIES | |||
Patient prepayments, deposits and refunds payable | $ 24,187 | $ 24,563 | |
Insurance and self-insurance accruals | 8,610 | 8,886 | |
Accrued sales taxes and other taxes | 7,283 | 6,810 | |
Accrued professional fees | 3,685 | 3,751 | |
Education expenses | 2,315 | ||
Derivative liability | 1,205 | 724 | |
Accrued interest payable | 487 | 332 | |
Other current liabilities | 5,539 | 6,717 | |
Total accrued expenses and other current liabilities | $ 53,311 | $ 50,431 | $ 51,783 |
ACCRUED EXPENSES AND OTHER CU_4
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES AND OTHER LIABILITIES - Other liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES AND OTHER LIABILITIES | |||
Supplemental executive retirement plan obligations | $ 18,661 | $ 20,195 | |
Long-term insurance accruals | 8,437 | 8,713 | |
Derivative liability | 6,515 | 3,134 | |
Unrecognized tax benefits, and related interest and penalties | 5,523 | 5,458 | |
Asset retirement obligations | 1,113 | 980 | |
Deferred tenant improvement allowances | 8,570 | ||
Deferred rent | 4,455 | ||
Other | 10 | 65 | |
Total other liabilities | $ 40,259 | $ 38,489 | $ 51,570 |
INCOME TAXES - (Details)
INCOME TAXES - (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
INCOME TAXES | ||
Benefit for income taxes | $ (3,739) | $ (6,196) |
Effective tax rate | 35.00% | 21.50% |
Federal statutory tax rate (as a percent) | 21.00% | 21.00% |
LEASES - Condensed Consolidated
LEASES - Condensed Consolidated balance sheet information (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 01, 2019 |
Balance sheet information related to leases | ||
Operating lease right-of-use assets | $ 103,676 | $ 103,378 |
Operating lease right-of-use assets (Classification) | Us-gaap:OperatingLeaseRightOfUseAsset | |
Finance lease right-of-use assets | $ 541 | |
Finance lease right-of-use assets (Classification) | Us-gaap:OtherAssets | |
Total lease assets | $ 104,217 | |
Operating | $ 33,675 | 33,393 |
Operating (Classification) | Us-gaap:OperatingLeaseLiabilityCurrent | |
Finance (Classification) | Us-gaap:FinanceLeaseLiabilityCurrent | |
Operating | $ 83,693 | $ 83,662 |
Operating (Classification) | Us-gaap:OperatingLeaseLiabilityNoncurrent | |
Finance (Classification) | Us-gaap:FinanceLeaseLiabilityNoncurrent | |
Total lease liabilities | $ 117,935 |
LEASES - Lease Cost (Details)
LEASES - Lease Cost (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
LEASES | |
Operating lease cost | $ 10,836 |
Finance lease cost | |
Amortization of right-of-use assets | 75 |
Interest of lease liabilities | 6 |
Sublease income | (33) |
Short-term lease cost | 368 |
Variable lease cost | 1,217 |
Total lease cost | $ 12,469 |
LEASES - Future minimum rental
LEASES - Future minimum rental payments (Details) $ in Thousands | Mar. 31, 2019USD ($) |
LEASES | |
2019 (remainder of year) | $ 206 |
2020 | 208 |
2021 | 136 |
2022 | 50 |
2023 | 2 |
Total future minimum lease payments | 602 |
Imputed interest | (35) |
Total | 567 |
2019 (remainder of year) | 29,609 |
2020 | 35,411 |
2021 | 26,294 |
2022 | 18,741 |
2023 | 12,019 |
2024 | 5,826 |
Thereafter | 4,593 |
Total future minimum lease payments | 132,493 |
Imputed interest | (15,125) |
Operating Lease, Liability, Total | 117,368 |
2019 (remainder of year) | 29,815 |
2020 | 35,619 |
2021 | 26,430 |
2022 | 18,791 |
2023 | 12,021 |
2024 | 5,826 |
Thereafter | 4,593 |
Total future minimum lease payments | 133,095 |
Imputed interest | (15,160) |
Total | $ 117,935 |
LEASES - Lease term and discoun
LEASES - Lease term and discount rates information (Details) | Mar. 31, 2019 |
LEASES | |
Operating leases (in years) | 3 years 11 months 23 days |
Finance leases (in years) | 2 years 7 months 6 days |
Operating leases (as a percent) | 5.73% |
Finance leases (as a percent) | 4.20% |
LEASES - Supplemental cash flow
LEASES - Supplemental cash flow information (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
LEASES | |
Operating cash flows from operating leases | $ 11,787 |
Operating cash flows from finance leases | 6 |
Financing cash flows from finance leases | 80 |
Operating leases | 10,394 |
Finance leases | $ 76 |
LEASES - Future minimum renta_2
LEASES - Future minimum rental payments at previous year (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Future minimum rental payments, by year and in the aggregate, under operating leases | |
2019 | $ 39,378 |
2020 | 29,641 |
2021 | 21,303 |
2022 | 14,479 |
2023 | 9,193 |
Thereafter | 10,008 |
Total | 124,002 |
Future minimum rental payments, by year and in the aggregate, under Capital Lease Obligations | |
2019 | 249 |
2020 | 175 |
2021 | 109 |
2022 | 28 |
Total | $ 561 |
DEBT AND OTHER OBLIGATIONS (Det
DEBT AND OTHER OBLIGATIONS (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
DEBT AND OTHER OBLIGATIONS | |||
Total debt before unamortized discount and debt issuance costs | $ 508,564 | $ 520,080 | |
Unamortized discount and debt issuance costs, net | (9,264) | (9,407) | |
Total debt | 499,300 | 510,673 | |
Current portion of long-term debt | 8,677 | $ 7,964 | 8,583 |
Long-term debt | 490,623 | $ 489,597 | 502,090 |
Term Loan B | |||
DEBT AND OTHER OBLIGATIONS | |||
Total debt before unamortized discount and debt issuance costs | 499,950 | 501,213 | |
Current portion of long-term debt | 5,050 | 5,050 | |
Seller Notes | |||
DEBT AND OTHER OBLIGATIONS | |||
Total debt before unamortized discount and debt issuance costs | 7,402 | 4,506 | |
Current portion of long-term debt | 3,288 | 2,513 | |
Financing leases and other | |||
DEBT AND OTHER OBLIGATIONS | |||
Total debt before unamortized discount and debt issuance costs | 1,212 | 14,361 | |
Current portion of long-term debt | $ 339 | $ 1,020 |
DEBT AND OTHER OBLIGATIONS - Re
DEBT AND OTHER OBLIGATIONS - Refinancing of Credit Agreement and Term B Borrowings (Details) - USD ($) $ in Thousands | Mar. 06, 2018 | Mar. 31, 2019 | Dec. 31, 2018 |
DEBT AND OTHER OBLIGATIONS | |||
Outstanding amount of debt | $ 508,564 | $ 520,080 | |
Letters of credit outstanding amount | $ 5,200 | ||
Credit Agreement, dated March 6, 2018, Term Loan B | |||
DEBT AND OTHER OBLIGATIONS | |||
Outstanding amount of debt | 505,000 | ||
Weighted average interest rate | 6.00% | ||
Revolving Credit Facility | |||
DEBT AND OTHER OBLIGATIONS | |||
Maximum borrowing capacity | 605,000 | ||
Increase in additional borrowing capacity | $ 125,000 | ||
Maximum leverage ratio to use maximum credit facility | 3.80 | ||
Increase in margin(as a percent) | 50.00% | ||
Interest rate in excess of applicable rate upon acceleration and default ( as a percent) | 2.00% | ||
Revolving Credit Facility | Minimum | |||
DEBT AND OTHER OBLIGATIONS | |||
Unused commitment fee (as a percent) | 0.375% | ||
Revolving Credit Facility | Maximum | |||
DEBT AND OTHER OBLIGATIONS | |||
Unused commitment fee (as a percent) | 0.50% | ||
Revolving Credit Facility | LIBOR | |||
DEBT AND OTHER OBLIGATIONS | |||
Interest rate margin (as a percent) | 1.00% | ||
Revolving Credit Facility | Federal funds rate | |||
DEBT AND OTHER OBLIGATIONS | |||
Interest rate margin (as a percent) | 0.50% | ||
Revolving Credit Facility | Fiscal quarter ended March 31, 2019 | |||
DEBT AND OTHER OBLIGATIONS | |||
Consolidated leverage ratio | 5.00% | ||
Revolving Credit Facility | Fiscal quarters ended June 30, 2019 through March 31, 2020 | |||
DEBT AND OTHER OBLIGATIONS | |||
Consolidated leverage ratio | 4.75% | ||
Revolving Credit Facility | Fiscal quarters ended June 30, 2020 through March 31, 2021 | |||
DEBT AND OTHER OBLIGATIONS | |||
Consolidated leverage ratio | 4.50% | ||
Revolving Credit Facility | Fiscal quarters ended June 30, 2021 through March 31, 2022 | |||
DEBT AND OTHER OBLIGATIONS | |||
Consolidated leverage ratio | 4.25% | ||
Revolving Credit Facility | Fiscal quarters ended June 30, 2022 and the last day of each fiscal quarter thereafter | |||
DEBT AND OTHER OBLIGATIONS | |||
Consolidated leverage ratio | 3.75% | ||
Revolving Credit Facility | Last day of any fiscal quarter | |||
DEBT AND OTHER OBLIGATIONS | |||
Consolidated leverage ratio | 2.75% | ||
Revolving Credit Facility | Revolving Credit Facility | |||
DEBT AND OTHER OBLIGATIONS | |||
Maximum borrowing capacity | $ 100,000 |
DEBT AND OTHER OBLIGATIONS - Se
DEBT AND OTHER OBLIGATIONS - Seller Notes (Details) - Seller Notes - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
DEBT AND OTHER OBLIGATIONS | ||
Unamortized discount | $ 0.3 | $ 0.2 |
Minimum | ||
DEBT AND OTHER OBLIGATIONS | ||
Interest rate stated percentage | 2.00% | |
Maximum | ||
DEBT AND OTHER OBLIGATIONS | ||
Interest rate stated percentage | 3.00% |
DEBT AND OTHER OBLIGATIONS - Ma
DEBT AND OTHER OBLIGATIONS - Maturities of Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Maturities of debt | ||
2019 (remainder of year) | $ 5,974 | |
2020 | 8,220 | |
2021 | 7,193 | |
2022 | 5,849 | |
2023 | 5,329 | |
Thereafter | 475,999 | |
Total debt before unamortized discount and debt issuance costs, net | 508,564 | $ 520,080 |
Unamortized discount and debt issuance costs, net | (9,264) | (9,407) |
Total debt | $ 499,300 | $ 510,673 |
FAIR VALUE MEASUREMENTS - Finan
FAIR VALUE MEASUREMENTS - Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 |
FAIR VALUE MEASUREMENTS | |||
Unamortized discount and debt issuance costs, net | $ 9,264 | $ 9,407 | |
Interest rate swap agreements | Cash flow hedges | |||
FAIR VALUE MEASUREMENTS | |||
Notional amount of derivative instrument | 312,500 | $ 325,000 | |
Annual reduction in notional amount of derivative | $ 12,500 | ||
Revolving Credit Facility | |||
FAIR VALUE MEASUREMENTS | |||
Outstanding amount | 0 | 0 | |
Credit Agreement, dated March 6, 2018, Term Loan B | |||
FAIR VALUE MEASUREMENTS | |||
Unamortized discount and debt issuance costs, net | 9,300 | 9,400 | |
Credit Agreement, dated March 6, 2018, Term Loan B | Carrying Value | |||
FAIR VALUE MEASUREMENTS | |||
Debt | 500,000 | 501,200 | |
Credit Agreement, dated March 6, 2018, Term Loan B | Recurring basis | Level 3 | Fair Value | |||
FAIR VALUE MEASUREMENTS | |||
Debt | 498,700 | 491,200 | |
Seller Notes | Carrying Value | |||
FAIR VALUE MEASUREMENTS | |||
Debt | $ 7,400 | $ 4,500 |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS - Cash Flow Hedge (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Mar. 31, 2018 |
Interest rate swap agreements | Cash flow hedges | ||
DERIVATIVE FINANCIAL INSTRUMENTS | ||
Notional amount of derivative instrument | $ 312.5 | $ 325 |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS - Changes in Net Gain or Loss on Cash Flow Hedges Included in Accumulated Other Comprehensive Loss (Details) - Interest rate swap agreements - Cash flow hedges - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Changes in Net Gain or Loss on Cash Flow Hedges Included in Accumulated Other Comprehensive Loss | ||
Balance at the beginning of the period | $ 2,936 | |
Unrealized loss recognized in other comprehensive loss, net of tax | 3,151 | $ 2,538 |
Reclassification to interest expense, net | (215) | (248) |
Balance at the end of the period | $ 5,872 | $ 2,290 |
DERIVATIVE FINANCIAL INSTRUME_5
DERIVATIVE FINANCIAL INSTRUMENTS - Fair Value of Derivative Assets and Liabilities (Details) - Cash flow hedges - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Accrued expenses and other current liabilities | ||
Derivatives designated as cash flow hedging instruments: | ||
Liabilities | $ 1,205 | $ 724 |
Other liabilities | ||
Derivatives designated as cash flow hedging instruments: | ||
Liabilities | $ 6,515 | $ 3,134 |
STOCK-BASED COMPENSATION - (Det
STOCK-BASED COMPENSATION - (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | May 31, 2018 | |
STOCK BASED COMPENSATION | |||
Stock-based compensation expense | $ 3.3 | $ 2.6 | |
2016 Omnibus Incentive Plan | |||
STOCK BASED COMPENSATION | |||
Shares of common stock authorized for issuance under the share-based compensation plan | 2,625,000 |
SUPPLEMENTAL EXECUTIVE RETIRE_3
SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS (Details) - Plan Details and Change in Benefit Obligation $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019USD ($)payment | Mar. 31, 2018USD ($) | Dec. 31, 2018USD ($) | |
SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS | |||
Number of annual payments | payment | 15 | ||
Change in Benefit Obligation | |||
Benefit obligation at the beginning of the period | $ 18,927 | $ 20,793 | |
Service cost | 84 | 92 | |
Interest cost | 165 | 150 | |
Payments | (1,877) | (1,877) | |
Benefit Obligation at the end of the period | 17,299 | $ 19,158 | |
Amounts Recognized in the Consolidated Balance Sheets: | |||
Accrued expenses and other current liabilities | 1,913 | $ 1,913 | |
Other liabilities | 15,386 | 17,014 | |
Total accrued liabilities | $ 17,299 | $ 18,927 |
SUPPLEMENTAL EXECUTIVE RETIRE_4
SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS (Details) - Defined Contribution Supplemental Executive Retirement Plan - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS | ||
Estimated accumulated benefit obligation | $ 3.1 | $ 3 |
Funded estimated accumulated benefit obligation | 3 | 2.4 |
Unfunded estimated accumulated benefit obligation | $ 0.1 | $ 0.6 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Contingencies (Details) | 7 Months Ended |
Aug. 31, 2015lawsuit | |
COMMITMENTS AND CONTINGENCIES | |
Number of law suits filed | 2 |
SEGMENT AND RELATED INFORMATI_3
SEGMENT AND RELATED INFORMATION - Paragraphs (Details) | 3 Months Ended |
Mar. 31, 2019segmentarea | |
SEGMENT AND RELATED INFORMATION | |
Number of operating segments | segment | 2 |
Patient Care | |
SEGMENT AND RELATED INFORMATION | |
Medicare reimbursement for O&P products and services based on prices set forth in fee schedules, number of regional pricing areas | area | 10 |
SEGMENT AND RELATED INFORMATI_4
SEGMENT AND RELATED INFORMATION - Financial Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
SEGMENT AND RELATED INFORMATION | ||
Net revenues | $ 236,419 | $ 233,995 |
Material costs | 78,377 | 76,356 |
Personnel expenses | 86,711 | 86,108 |
Depreciation & amortization | 8,773 | 9,330 |
Segment income from operations | (1,979) | 623 |
Purchase of property, plant and equipment | 6,897 | 4,388 |
Patient Care | ||
SEGMENT AND RELATED INFORMATION | ||
Net revenues | 190,601 | 188,507 |
Material costs | 59,150 | 57,899 |
Personnel expenses | 73,709 | 73,613 |
Other expenses | 37,433 | 35,004 |
Depreciation & amortization | 4,552 | 4,898 |
Segment income from operations | 15,757 | 17,093 |
Patient Care | Operating segments | ||
SEGMENT AND RELATED INFORMATION | ||
Net revenues | 190,601 | 188,507 |
Material costs | 53,355 | 52,175 |
Patient Care | Intersegments | ||
SEGMENT AND RELATED INFORMATION | ||
Material costs | 5,795 | 5,724 |
Products & Services | ||
SEGMENT AND RELATED INFORMATION | ||
Net revenues | 90,697 | 88,010 |
Material costs | 64,106 | 60,979 |
Personnel expenses | 13,002 | 12,495 |
Other expenses | 6,948 | 6,155 |
Depreciation & amortization | 2,543 | 2,502 |
Segment income from operations | 4,098 | 5,879 |
Products & Services | Operating segments | ||
SEGMENT AND RELATED INFORMATION | ||
Net revenues | 45,818 | 45,488 |
Material costs | 25,022 | 24,181 |
Products & Services | Intersegments | ||
SEGMENT AND RELATED INFORMATION | ||
Net revenues | 44,879 | 42,522 |
Material costs | $ 39,084 | $ 36,798 |
SEGMENT AND RELATED INFORMATI_5
SEGMENT AND RELATED INFORMATION - Reconciliation of the Reportable Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
SEGMENT AND RELATED INFORMATION | ||
(Loss) income from operations | $ (1,979) | $ 623 |
Interest expense, net | 8,538 | 12,263 |
Loss on extinguishment of debt | 16,998 | |
Non-service defined benefit plan expense | 173 | 176 |
Loss before income taxes | (10,690) | (28,814) |
Benefit for income taxes | (3,739) | (6,196) |
Net loss | (6,951) | (22,618) |
Consolidated net revenue | 236,419 | 233,995 |
Consolidated material costs | 78,377 | 76,356 |
Corporate & other | ||
SEGMENT AND RELATED INFORMATION | ||
(Loss) income from operations | (21,834) | (22,349) |
Consolidating adjustments | ||
SEGMENT AND RELATED INFORMATION | ||
Consolidated net revenue | (44,879) | (42,522) |
Consolidated material costs | (44,879) | (42,522) |
Patient Care | ||
SEGMENT AND RELATED INFORMATION | ||
(Loss) income from operations | 15,757 | 17,093 |
Consolidated net revenue | 190,601 | 188,507 |
Consolidated material costs | 59,150 | 57,899 |
Patient Care | Operating segments | ||
SEGMENT AND RELATED INFORMATION | ||
Consolidated net revenue | 190,601 | 188,507 |
Consolidated material costs | 53,355 | 52,175 |
Products & Services | ||
SEGMENT AND RELATED INFORMATION | ||
(Loss) income from operations | 4,098 | 5,879 |
Consolidated net revenue | 90,697 | 88,010 |
Consolidated material costs | 64,106 | 60,979 |
Products & Services | Operating segments | ||
SEGMENT AND RELATED INFORMATION | ||
Consolidated net revenue | 45,818 | 45,488 |
Consolidated material costs | $ 25,022 | $ 24,181 |
SUPPLEMENTAL CASH FLOW INFORM_3
SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Changes in operating assets and liabilities | ||
Accounts receivable, net | $ 10,395 | $ 19,425 |
Inventories | (880) | 1,085 |
Other current assets and other assets | (1,433) | 650 |
Income taxes | (355) | 12,255 |
Accounts payable | (6,511) | 552 |
Accrued expenses and other current liabilities | 492 | (5,067) |
Accrued compensation related costs | (32,970) | (35,789) |
Other liabilities | (1,829) | (2,537) |
Operating lease liabilities | (10,082) | |
Changes in operating assets and liabilities on cash flows from operating activities | (43,173) | (9,426) |
Non-cash financing and investing activities: | ||
Issuance of seller notes in connection with acquisitions | 4,451 | |
Additions to property, plant and equipment acquired through financing obligations | 1,208 | |
Retirements of financed property, plant and equipment and related obligations | 2,246 | |
Purchase of property, plant and equipment in accounts payable at period end | $ 4,443 | $ 545 |