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DERIVATIVE INSTRUMENTS
 12 Months Ended
Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments DERIVATIVE INSTRUMENTS
The Company utilizes derivative financial instruments for hedging and non-trading purposes to limit the Company’s exposure to its variable interest rate risk. Use of derivative financial instruments in hedging strategies subjects the Company to certain risks, such as market and credit risks. Market risk represents the possibility that the value of the derivative financial instrument will change. Credit risk related to a derivative financial instrument represents the possibility that the counterparty will not fulfill the terms of the contract. The notional, or contractual, amount of the Company’s derivative financial instruments is used to measure interest to be paid or received and does not represent the Company’s exposure due to credit risk. Credit risk is monitored through established approval procedures, including reviewing credit ratings when appropriate.
In August 2019, the Company entered into interest rate swap agreements that reduce the variability in the interest rates on the newly-issued debt obligations following the Merger with BioScrip. The first interest rate swap for $925.0 million notional was effective in August 2019 with $911.1 million designated as a cash flow hedge against the underlying interest rate on the First Lien Term Loan interest payments indexed to one-month LIBOR through August 2021. In accordance with ASU 2017-12, Targeted Improvements to Accounting for Hedges, the Company had determined that the $911.1 million designated cash flow hedge is perfectly effective. The remaining $13.9 million notional amount of the first interest rate swap is not designated as a hedging instrument. The first interest rate swap expired in August 2021. The second interest rate swap of $400.0 million notional was effective in November 2019 and was designated as a cash flow hedge against the underlying interest rate on the Second Lien Notes interest payments indexed to three-month LIBOR through November 2020.
In May 2020, the Company elected to PIK the Second Lien Notes’ quarterly interest payment due in August 2020. Upon making the PIK election, the Company determined that the hedged interest payment would no longer occur, resulting in an ineffective hedge, so the Company discontinued hedge accounting on its $400.0 million notional interest rate swap. As a result, the Company reclassified accumulated comprehensive loss of $3.7 million to interest expense, net in the consolidated statements of comprehensive income (loss). The gains and losses associated with the $400.0 million notional swap were recognized in net income (loss) through interest expense until the swap expired in November 2020.
In October 2021, the Company entered into an interest rate cap hedge with a notional amount of $300.0 million for a 5-year term beginning November 30, 2021. The hedge partially offsets risk associated with the First Lien Term Loan’s variable interest rate. The interest rate cap instrument perfectly offsets the terms of the interest rates associated with the variable interest rate of the First Lien Term Loan.
The following table summarizes the amount and location of the Company’s derivative instruments in the consolidated balance sheets (in thousands):
Fair Value - Derivatives in Asset Position
DerivativeBalance Sheet CaptionDecember 31, 2022December 31, 2021
Interest rate cap designated as cash flow hedgePrepaid expenses and other current assets$10,926 $— 
Interest rate cap designated as cash flow hedgeOther noncurrent assets17,342 — 
Total derivatives$28,268 $— 
Fair Value - Derivatives in Liability Position
DerivativeBalance Sheet CaptionDecember 31, 2022December 31, 2021
Interest rate cap designated as cash flow hedgeAccrued expenses and other current liabilities$— $601 
Total derivatives$— $601 
The gain and loss associated with the changes in the fair value of the effective portion of hedging instruments are recorded into other comprehensive income (loss). The gain and loss associated with the changes in the fair value of the hedging instruments not designated are recognized in net income (loss) through interest expense. The following table presents the pre-tax gains (losses) from derivative instruments recognized in other comprehensive income (loss) in the Company’s consolidated statements of comprehensive income (loss) (in thousands):
Year Ended December 31,
Derivative202220212020
Interest rate cap designated as cash flow hedge$28,869 $(601)$— 
Interest rate swaps designated as cash flow hedges— 11,172 (7,723)
Interest rate swaps that discontinued hedge accounting— —3,746
Total$28,869 $10,571 $(3,977)
The following table presents the amount and location of pre-tax income (loss) recognized in the Company’s consolidated statement of comprehensive income (loss) related to the Company’s derivative instruments (in thousands):
Year Ended December 31,
DerivativeIncome Statement Caption202220212020
Interest rate cap designated as cash flow hedgeInterest expense$1,090 $(239)$— 
Interest rate swaps designated as cash flow hedgesInterest expense— (11,298)(12,799)
Interest rate swaps not designated as hedgesInterest expense— (2)(34)
Interest rate swaps that discontinued hedge accountingInterest expense— — (3,746)
Total$1,090 $(11,539)$(16,579)
The Company expects to reclassify $2.8 million of total interest rate costs from accumulated other comprehensive income against interest expense during the next 12 months.