10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2016

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from              to            

Commission File Number 001-34583

Team Health Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware	36-4276525
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

265 Brookview Centre Way

Suite 400

Knoxville, Tennessee 37919

(865) 693-1000

(Address, zip code, and telephone number, including area code, of registrant’s principal executive office)

 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 and 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of October 31, 2016, there were outstanding 74,464,838 shares of common stock of Team Health Holdings, Inc., with a par value of $0.01.

FORWARD LOOKING STATEMENTS

Statements made in this Form 10-Q that are not historical facts and that reflect the current view of Team Health Holdings, Inc. (the Company) about future events and financial performance are hereby identified as “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Some of these statements can be identified by terms and phrases such as “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “could,” “should,” “may,” “plan,” “project,” “predict” and similar expressions. The Company cautions readers of this Form 10-Q that such “forward looking statements,” including without limitation, those relating to the Company’s future business prospects, revenue, working capital, professional liability expense, liquidity, capital needs, interest costs and income, wherever they occur in this Form 10-Q or in other statements attributable to the Company, are necessarily estimates reflecting the judgment of the Company’s senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the “forward looking statements.” Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to:

• the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement between the Company and funds affiliated with The Blackstone Group L.P.;

• the inability to complete the proposed merger between the Company and funds affiliated with The Blackstone Group L.P. (the Merger) due to the failure to obtain stockholder approval for the proposed Merger or the failure to satisfy other conditions to completion of the proposed Merger, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transaction;

• risks related to disruption of management's attention from our ongoing business operations due to the transaction;

• the effect of the announcement of the proposed Merger on the Company's relationships with its customers, operating results and business generally;

• the risk that the proposed Merger will not be consummated in a timely manner;

• exceeding the expected costs of the proposed Merger;

• the current U.S. and global economic conditions;

• the current U.S. and state healthcare reform legislative initiatives;

• our exposure to financial risk under the BPCI program and other value based payment programs;

• our ability to find suitable acquisition candidates or successfully integrate completed acquisitions, including our acquisition of IPC Healthcare, Inc. (IPC);

• our ability to realize the expected benefits of the acquisition of IPC.;

• the risk that the IPC acquisition disrupts current plans and operations and disrupts our relationship with payors, physicians and other healthcare professionals;

• our ability to realize the value of intangible assets, including goodwill, recognized in connection with our acquisitions;

• the effect and interpretation of current or future government regulation of the healthcare industry, and our ability to comply with these regulations;

• our exposure to billing investigations, audits and/or litigation by private payors and federal and state authorities, as well as auditing contractors for governmental programs;

• our exposure to professional liability lawsuits;

• the adequacy of our insurance reserves;

• our reliance on reimbursements by third-party payors, as well as payments by individuals;

• the impact of recent or potential federal and state legislation that restricts our ability to balance bill patients, or prescribes how potential out of network charges are calculated and reimbursed;

• change in rates or methods of government payments for our services;

• the general level of emergency department patient volumes at our clients’ facilities;

• our exposure to the financial risks associated with fee for service contracts;

• our ability to timely or accurately bill for services;

• our ability to timely enroll healthcare professionals in the Medicare program;

• a reclassification of independent contractor physicians by tax authorities;

• the concentration of a significant number of our programs in certain states, particularly Florida, Ohio, Tennessee and Texas;

• any loss of or failure to renew contracts within the Military Health System Program, which are subject to a competitive bidding process;

• our exposure to litigation;

2

• fluctuations in our quarterly operating results, which could affect our ability to raise new capital for our business;

• effect on our revenues if we experience a net loss of contracts;

• our ability to accurately assess the costs we will incur under new contracts;

• our ability to implement our business strategy and manage our growth effectively;

• our future capital needs and ability to raise capital when needed;

• our ability to successfully recruit and retain qualified healthcare professionals;

• enforceability of our non-competition and non-solicitation contractual arrangements with some affiliated physicians and professional corporations;

• the high level of competition in our industry;

• our dependence on numerous complex information systems and our ability to maintain these systems or implement new systems or any disruptions in our information systems;

• our ability to protect our proprietary technology and services;

• our loss of key personnel and/or ability to attract and retain highly qualified personnel;

• our ability to comply with privacy regulations regarding the use and disclosure of patient information;

• our ability to comply with federal or state anti-kickback laws, the False Claims Act and other statutes and regulations that may be applicable to our business;

• our ability to comply with federal and state physician self-referral laws and regulations or issuance of additional legislative restrictions;

• changes in existing laws or regulations, adverse judicial or administrative interpretations of these laws and regulations or enactment of new legislation;

• changes in accounting standards, rules and interpretations or inaccurate estimates or assumptions in the application of accounting policies and the impact on our financial statements;

• our exposure to a loss of contracts with our physicians or termination of relationships with our affiliated professional corporations in order to comply with antitrust laws;

• our substantial indebtedness and ability to incur substantially more debt;

• our ability to generate sufficient cash to service our debt; and

• restrictive covenants in our debt agreements, which may restrict our ability to pursue our business strategies and our ability to comply with them.

For a more detailed discussion of these factors, see the information under the caption “Risk Factors” herein and in the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the SEC), as such risk factors may be updated from time to time in our periodic filings with the SEC, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein and in the Company’s most recent Annual Report on Form 10-K filed on February 22, 2016.

The Company’s forward-looking statements speak only as of the date of this report or as of the date they are made. The Company disclaims any intent or obligation to update any “forward looking statement” made in this Form 10-Q to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.

3

TEAM HEALTH HOLDINGS, INC.

QUARTERLY REPORT FOR THE NINE MONTHS

ENDED SEPTEMBER 30, 2016

TABLE OF CONTENTS

		Page
Part I. Financial Information
Item 1.	Financial Statements (Unaudited)	5
	Consolidated Balance Sheets—December 31, 2015 and September 30, 2016	5
	Consolidated Statements of Comprehensive Earnings—Three Months Ended September 30, 2015 and 2016	6
	Consolidated Statements of Comprehensive Earnings—Nine Months Ended September 30, 2015 and 2016	7
	Consolidated Statements of Cash Flows—Nine Months Ended September 30, 2015 and 2016	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 4.	Controls and Procedures	50
Part II. Other Information
Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	53
Signatures		54

4

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TEAM HEALTH HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

	December 31, 2015			September 30, 2016
	(Unaudited) (In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	28,563		$	15,315
Short-term investments	1,985			1,581
Accounts receivable, less allowance for uncollectibles of $500,645 and $653,070 in 2015 and 2016, respectively	730,459			821,963
Prepaid expenses and other current assets	73,807			65,138
Receivables under insured programs	36,004			38,913
Income tax receivable	28,791			3,287
Total current assets	899,609			946,197
Insurance subsidiaries' and other investments	111,940			99,939
Property and equipment, net	87,907			84,141
Other intangibles, net	335,637			320,477
Goodwill	2,427,802			2,485,591
Deferred income taxes	50,250			48,625
Receivables under insured programs	90,747			102,272
Other	56,950			383,333
	$	4,060,842		$	4,470,575
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	66,358		$	57,060
Accrued compensation and physician payable	337,455			323,709
Other accrued liabilities	257,651			305,931
Current maturities of long-term debt	68,900			390,120
Total current liabilities	730,364			1,076,820
Long-term debt, less current maturities	2,337,363			2,298,985
Other non-current liabilities	346,427			376,619
Shareholders’ equity:
Common stock, ($0.01 par value; 100,000 shares authorized, 73,092 and 74,285 shares issued and outstanding at December 31, 2015 and September 30, 2016, respectively)	731			743
Additional paid-in capital	836,458			876,908
Accumulated deficit	(196,144		)	(166,211		)
Accumulated other comprehensive earnings	1,503			2,172
Team Health Holdings, Inc. shareholders’ equity	642,548			713,612
Noncontrolling interests	4,140			4,539
Total shareholders' equity including noncontrolling interests	646,688			718,151
	$	4,060,842		$	4,470,575

See accompanying notes to consolidated financial statements.

5

TEAM HEALTH HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

	Three Months Ended September 30,
	2015			2016
	(Unaudited) (In thousands, except per share data)
Net revenues before provision for uncollectibles	$	1,525,409		$	1,925,775
Provision for uncollectibles	626,228			784,281
Net revenues	899,181			1,141,494
Cost of services rendered (exclusive of depreciation and amortization shown separately below)
Professional service expenses	707,871			909,712
Professional liability costs	27,474			33,912
General and administrative expenses (includes contingent purchase and other acquisition compensation expense of $(3,530) and $9,818 in 2015 and 2016, respectively)	67,066			101,323
Other (income) expense, net	2,137			(6,337		)
Depreciation	6,290			8,979
Amortization	20,633			23,772
Interest expense, net	5,572			28,525
Transaction, integration, and reorganization costs	3,869			20,836
Earnings before income taxes	58,269			20,772
Provision for income taxes	22,837			10,216
Net earnings	35,432			10,556
Net (loss) earnings attributable to noncontrolling interests	(10		)	75
Net earnings attributable to Team Health Holdings, Inc.	$	35,442		$	10,481
Net earnings per share of Team Health Holdings, Inc.
Basic	$	0.49		$	0.14
Diluted	$	0.48		$	0.14
Weighted average shares outstanding
Basic	72,361			74,166
Diluted	73,687			75,304
Other comprehensive earnings, net of tax:
Net change in fair value of investments, net of tax of $124 and $(133) for 2015 and 2016, respectively	230			(242		)
Comprehensive earnings	35,662			10,314
Comprehensive (loss) earnings attributable to noncontrolling interests	(10		)	75
Comprehensive earnings attributable to Team Health Holdings, Inc.	$	35,672		$	10,239

See accompanying notes to consolidated financial statements.

6

TEAM HEALTH HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

	Nine Months Ended September 30,
	2015			2016
	(Unaudited) (In thousands, except per share data)
Net revenues before provision for uncollectibles	$	4,390,682		$	5,581,210
Provision for uncollectibles	1,773,062			2,181,499
Net revenues	2,617,620			3,399,711
Cost of services rendered (exclusive of depreciation and amortization shown separately below)
Professional service expenses	2,058,876			2,703,436
Professional liability costs	81,371			114,351
General and administrative expenses (includes contingent purchase and other acquisition compensation expense of $12,230 and $28,669 in 2015 and 2016, respectively)	219,214			300,925
Other (income) expense, net	(182		)	(7,947		)
Depreciation	17,423			25,081
Amortization	62,085			71,425
Interest expense, net	14,132			90,255
Transaction, integration, and reorganization costs	7,170			48,337
Loss on refinancing of debt	—			1,069
Earnings before income taxes	157,531			52,779
Provision for income taxes	65,178			22,579
Net earnings	92,353			30,200
Net (loss) earnings attributable to noncontrolling interests	(78		)	266
Net earnings attributable to Team Health Holdings, Inc.	$	92,431		$	29,934
Net earnings per share of Team Health Holdings, Inc.
Basic	$	1.29		$	0.41
Diluted	$	1.26		$	0.40
Weighted average shares outstanding
Basic	71,900			73,823
Diluted	73,351			75,225
Other comprehensive earnings, net of tax:
Net change in fair value of investments, net of tax of $(213) and $359 for 2015 and 2016, respectively	(370		)	669
Comprehensive earnings	91,983			30,869
Comprehensive (loss) earnings attributable to noncontrolling interests	(78		)	266
Comprehensive earnings attributable to Team Health Holdings, Inc.	$	92,061		$	30,603

See accompanying notes to consolidated financial statements.

7

TEAM HEALTH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
	Nine Months Ended September 30,
	2015			2016
	(Unaudited) (In thousands)
Operating Activities
Net earnings	$	92,353		$	30,200
Adjustments to reconcile net earnings:
Depreciation	17,423			25,081
Amortization	62,085			71,425
Amortization of deferred financing costs	2,142			6,674
Equity based compensation expense	13,197			24,470
Provision for uncollectibles	1,773,062			2,181,499
Deferred income taxes	(34,140		)	(2,400		)
Non-cash loss on refinancing of debt	—			905
(Gain) loss on sale of investments and other assets	(1,879		)	34
Net gain on joint venture deconsolidation	—			(4,346		)
Equity in joint venture income	(2,856		)	(4,446		)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	(1,846,532		)	(2,281,334		)
Prepaids and other assets	(9,774		)	(2,720		)
Income tax accounts	29,585			20,947
Accounts payable	8,624			(9,684		)
Accrued compensation and physician payable	2,439			(5,430		)
Contingent purchase liabilities	(13		)	22,943
Other accrued liabilities	(3,034		)	3,635
Professional liability reserves	29,261			29,972
Net cash provided by operating activities	131,943			107,425
Investing Activities
Purchases of property and equipment	(31,123		)	(22,189		)
Net proceeds from disposition of assets	1,189			50
Cash paid for acquisitions, net of cash acquired	(116,314		)	(395,085		)
Payments for the purchase of investments	—			(458		)
Proceeds from the sale of investments	7,332			2,532
Purchases of investments at insurance subsidiaries	(67,887		)	(50,961		)
Proceeds from investments at insurance subsidiaries	79,422			62,318
Net proceeds from joint venture deconsolidation	—			2,754
Net cash used in investing activities	(127,381		)	(401,039		)
Financing Activities
Payments on long-term debt	(11,250		)	(32,348		)
Proceeds from note payable	—			288
Payments on revolving credit facility	(989,500		)	(697,700		)
Proceeds from revolving credit facility	950,500			1,007,700
Payments of financing costs	—			(1,587		)
Payments related to contingent purchase obligations	—			(18,397		)
Contributions from noncontrolling interests	1,683			1,989
Proceeds from the issuance of common stock under stock purchase plans	3,445			4,952
Proceeds from exercise of stock options	23,185			17,938
Tax benefit from exercise of stock options	15,475			1,263
Payments related to settlement of equity based awards	—			(3,732		)
Net cash (used in) provided by financing activities	(6,462		)	280,366
Net decrease in cash and cash equivalents	(1,900		)	(13,248		)
Cash and cash equivalents, beginning of period	20,094			28,563
Cash and cash equivalents, end of period	$	18,194		$	15,315
Supplemental cash flow information:
Interest paid	$	13,619		$	78,746
Taxes paid, net of refunds	$	52,120		$	3,752

See accompanying notes to consolidated financial statements.

8

TEAM HEALTH HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Organization and Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of Team Health Holdings, Inc. (the Company) its subsidiaries and its affiliates, including its affiliated medical groups, and have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial reporting, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring items) necessary for a fair presentation of results for the interim periods presented. The results of operations for any interim period are not necessarily indicative of results for the full year. The consolidated balance sheet of the Company at December 31, 2015 has been derived from the audited financial statements at that date, but does not include all of the information and disclosures required by U.S. GAAP for complete financial statements. These financial statements and the notes thereto should be read in conjunction with the December 31, 2015 audited consolidated financial statements and the notes thereto included in our annual report on Form 10-K for fiscal year 2015 filed with the Securities and Exchange Commission (the SEC).

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements and notes. Actual results could differ from those estimates. Certain amounts for the prior year have been reclassified to conform to the current year’s presentation.

Note 2. Recently Adopted and Recently Issued Accounting Guidance

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (FASB) in the form of accounting standards updates (ASUs) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company's consolidated financial position or results of operations.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” which establishes a comprehensive revenue recognition standard for virtually all industries under U.S. GAAP. The standard is effective for public entities for annual reporting periods beginning after December 15, 2017, including interim periods therein, with early adoption permitted for annual reporting periods beginning after December 15, 2016, including interim periods therein. The Company is in the process of evaluating the impact that adoption of this new accounting standard may have on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which will change how companies account for and present lease arrangements. The guidance requires companies to recognize leased assets and liabilities for both capital and operating leases. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, and interim periods therein, and early adoption is permitted. Companies are required to adopt the guidance on a modified retrospective method. The Company is in the process of evaluating the impact that adoption of this new accounting standard may have on the Company's consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting,” which requires companies to recognize the income tax effects of awards in the income statement when the awards vest or are settled (i.e., additional paid-in-capital pools will be eliminated). In addition, the new guidance changes the limit that companies are allowed to withhold for employees without triggering liability classification and allows companies to make a policy election to either recognize forfeitures as they occur or estimate them. The new guidance is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods, and early adoption is permitted. The required transition methods for each aspect of the new guidance varies between prospective, retrospective and modified retrospective. The Company has not yet determined which method of adoption it will select and is in the process of evaluating the impact that adoption of this new accounting standard may have on the Company's consolidated financial statements.

9

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments,” which clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. ASU 2016-15 is effective for annual reporting periods beginning after December 15, 2017, and interim periods therein, and early adoption is permitted. Companies are required to adopt the guidance on a retrospective method, unless impracticable, at which point prospective application is appropriate. The Company is in the process of evaluating the impact that adoption of this new accounting standard may have on the Company's consolidated financial statements.

The Company has implemented all new accounting pronouncements that are in effect and that could materially impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued, but are not yet effective, that might have a material impact on the consolidated financial statements of the Company unless otherwise noted in prior updates or above.

Note 3. Acquisitions and Contingent Purchase Obligations

Acquisitions

During the nine months ended September 30, 2016, the Company completed nine acquisitions of emergency medicine, anesthesia services and hospital medicine businesses with operations in California, Connecticut, Florida, Michigan, Ohio and Rhode Island for total consideration of $83.2 million, which expanded the Company's presence in those respective markets. The results of operations of the acquired businesses have been included in the Company’s consolidated financial statements beginning on the respective acquisition dates. The Consolidated Statements of Comprehensive Earnings for the nine months ended September 30, 2016 includes net revenues of $17.7 million related to acquisitions completed during this period. Pro forma results of operations have not been presented because the effect of these acquisitions is not material to the Company’s consolidated results of operations individually or in the aggregate.

The purchase price for these acquisitions was allocated, based on management’s estimates, in accordance with ASC Topic 805, “Business Combinations” (ASC 805). The Company’s purchase price allocation for business combinations completed during recent periods is preliminary and may be subject to revision as additional information about the fair value of acquired working capital becomes available. Additional information, which existed as of the acquisition date but at that time was unknown to the Company, may become known to the Company during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date. The purchase price for these acquisitions completed during the nine months ended September 30, 2016 was allocated as shown in the table below (in thousands):

	September 30, 2016
Accounts receivable	$	3,024
Prepaid expenses and other assets	70
Other intangibles (consisting of physician and hospital agreements)	34,564
Goodwill (of which $29.1 million is tax deductible)	51,955
Accounts payable	(1,165		)
Accrued compensation and physician payable	(1,493		)
Other accrued liabilities	(718		)
Contingent purchase liability	(1,050		)
Net deferred income taxes	(2,025		)
Total purchase price	$	83,162

IPC Healthcare, Inc. (IPC) Acquisition

On November 23, 2015, the Company completed the acquisition of IPC in a cash transaction. At closing, the Company paid approximately $1.60 billion in cash to the former owners of IPC in exchange for all of the outstanding equity interests of IPC.

The accounting for the acquisition of IPC will be completed within the timeframe prescribed by the provisions of ASC 805. The Company continues to obtain information relative to the fair values of assets acquired and liabilities assumed. Acquired assets and assumed liabilities include, but are not limited to, accounts receivable, other intangible assets, current and noncurrent taxes payable, deferred taxes, contingent purchase liabilities, and other accrued liabilities. The valuations are based on appraisal reports or other appropriate valuation techniques to determine the fair value of the assets acquired or liabilities assumed.

10

During 2016, factors became known that resulted in changes to the purchase price allocation of assets and liabilities existing at the date of the IPC transaction. The estimated fair values of assets acquired and liabilities assumed, specifically accounts receivable, current and noncurrent taxes payable, deferred taxes, contingent purchase liability and other intangible assets, may be subject to change as additional information is received. The purchase price allocation adjustments for this acquisition are summarized as follows (in thousands):

	As of			Adjustments to			As of
	December 31, 2015			Purchase Price Allocation			September 30, 2016
Short term investments	$	1,985		$	—		$	1,985
Accounts receivable	127,265			(11,355		)	115,910
Prepaid expenses and other assets	6,347			(316		)	6,031
Receivables under insured programs	36,255			—			36,255
Property and equipment	10,541			216			10,757
Income tax receivable	12,528			—			12,528
Net deferred income taxes	64,301			(1,936		)	62,365
Other intangibles (consisting of marketing-related and technology-based intangibles and physician and hospital agreements)	4,975			21,700			26,675
Goodwill (of which the tax deductible amount was $368,283)	1,574,757			5,594			1,580,351
Accounts payable	(15,627		)	313			(15,314		)
Accrued compensation and physician payable	(43,856		)	—			(43,856		)
Other accrued liabilities	(63,809		)	(13,260		)	(77,069		)
Contingent purchase liability	(30,639		)	(2,768		)	(33,407		)
Assumed notes payable	(148,249		)	—			(148,249		)
Other non-current liabilities	(61,894		)	1,812			(60,082		)
Total consideration paid, net of acquired cash and cash equivalents of $28,059	$	1,474,880		$	—		$	1,474,880

Subsequent Acquisitions

Effective October 1, 2016, the first day of the fourth quarter of fiscal year 2016, the Company acquired the operations of an emergency medicine business located in Florida for a purchase price of approximately $311.9 million, which the Company funded on September 30, 2016. As of September 30, 2016, the cash paid for this acquisition was classified within other assets in the Consolidated Balance Sheets. In addition to the cash paid, there are potential future contingent purchase obligations of $26.7 million related to this acquisition. The Company's operating results for the reported periods were not impacted by this acquisition as it was completed subsequent to September 30, 2016.

During October 2016, the company completed the acquisition of the operations of an emergency medicine business located in Illinois that provides care to approximately 48,000 patients each year. The Company is still in the process of completing the purchase price allocation for this acquisition.

11

Contingent Purchase Obligations

In accordance with ASC 805, the Company records its contingent consideration as a component of the opening balance sheet unless there is a continuing employment provision. Contingent consideration with a continuing employment provision is recognized ratably over the defined performance period as compensation expense which is included as a component of general and administrative expense (and parenthetically disclosed with other acquisition-related compensation expense) in the results of the Company’s operations. The payment of contingent purchase obligations is included as a component of financing, unless there is a continuing employment provision, in which case it is included as a component of operating cash flows.

As of September 30, 2016, the Company estimates it may have to pay $88.3 million (excluding $26.7 million related to the acquisition funded on September 30, 2016, but effective October 1, 2016) in future contingent payments for acquisitions made prior to September 30, 2016, based upon the current projected performance of the acquired operations of which $65.5 million is recorded as a liability in other liabilities and other non-current liabilities on the Company’s Consolidated Balance Sheet. The remaining estimated liability of $22.9 million will be recorded as contingent purchase compensation expense over the remaining performance periods. The current estimate of future contingent payments could increase or decrease depending upon the actual performance of the acquisition over the respective performance periods. These payments will be made should the acquired operations achieve the financial targets or certain contract terms as agreed to in the respective acquisition agreements, including the requirements for continuing employment. When measured on a recurring basis, this liability is considered Level 3 in the fair value hierarchy due to the use of unobservable inputs to measure fair value.

The contingent purchase and other acquisition compensation expense recognized for the nine months ended September 30,2015 and 2016 was $12.2 million and $28.7 million, respectively.

The changes to the Company’s accumulated contingent purchase liability for the nine months ended September 30, 2016 are as follows (in thousands):

Contingent purchase liability at December 31, 2015	$	57,080
Payments	(24,047		)
Contingent purchase and other acquisition compensation expense recognized	28,669
Adjustments to contingent purchase liability recognized at acquisition date	3,756
Contingent purchase liability at September 30, 2016	$	65,458

Estimated unrecognized contingent purchase compensation expense as of September 30, 2016 is as follows (in thousands):

For the remainder of the year ended December 31, 2016	$	6,025
For the year ended December 31, 2017	11,069
For the year ended December 31, 2018	3,635
For the year ended December 31, 2019	1,515
For the year ended December 31, 2020	625
	$	22,869

Note 4. Fair Value Measurements

The Company applies the provisions of FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” (ASC Topic 820), in determining the fair value of its financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements.

ASC Topic 820 prioritizes the inputs used in measuring fair value into the following hierarchy:

Level 1	Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2	Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable;
Level 3	Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.

12

The following table provides information on those assets and liabilities the Company currently measures at fair value on a recurring basis as of December 31, 2015 and September 30, 2016 (in thousands):

	Carrying Amount in Consolidated Balance Sheet December 31, 2015		Fair Value December 31, 2015		Fair Value Level 1		Fair Value Level 2		Fair Value Level 3
Insurance subsidiaries' and other investments:
Money market funds	$	18,238	$	18,238	$	18,238	$	—	$	—
Municipal bonds	87,121		87,121		—		87,121		—
Mutual funds	64		64		—		64		—
Private investments	2,818		2,818		—		—		2,818
Corporate bonds	3,699		3,699		—		3,699		—
Total investments of insurance subsidiaries	$	111,940	$	111,940	$	18,238	$	90,884	$	2,818
Supplemental employee retirement plan investments:
Mutual funds	$	45,868	$	45,868	$	—	$	45,868	$	—

	Carrying Amount in Consolidated Balance Sheet September 30, 2016		Fair Value September 30, 2016		Fair Value Level 1		Fair Value Level 2		Fair Value Level 3
Insurance subsidiaries' and other investments:
Money market funds	$	7,539	$	7,539	$	7,539	$	—	$	—
Municipal bonds	83,016		83,016		—		83,016		—
Mutual funds	48		48		—		48		—
Private investments	1,947		1,947		—		—		1,947
Corporate bonds	7,389		7,389		—		7,389		—
Total investments of insurance subsidiaries	$	99,939	$	99,939	$	7,539	$	90,453	$	1,947
Supplemental employee retirement plan investments:
Mutual funds	$	55,655	$	55,655	$	—	$	55,655	$	—

The Company’s insurance subsidiaries' and other investments are valued using market prices on active markets (Level 1) and less active markets (Level 2), in addition to using alternative information when market data is not available (Level 3). Level 1 investment valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 investment valuations are obtained from readily available pricing sources for comparable investments or identical investments in less active markets. The fair values of the Company’s supplemental employee retirement investments are based on quoted prices. Level 3 investment valuations require significant management judgment and are based on transaction price, company performance, and market conditions. For the nine months ended September 30, 2016 there were no transfers between Levels 1, 2 or 3. See Note 5 for more information regarding the Company’s investments.

The Company classified its municipal bonds, mutual funds, and corporate bonds within Level 2 because these securities were valued based on quoted prices in markets that are less active, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency.

The Company classified its private investments within Level 3 because active market pricing is not readily available and, as such, the Company uses net asset values as an estimate of fair value as a practical expedient. The valuation of non-public private equity investments requires significant management judgment due to the absence of observable quoted market prices, inherent lack of liquidity, and the long-term nature of such assets. These investments are valued initially based upon transaction price. In determining valuation adjustments resulting from the investment review process, emphasis is placed on current company performance and market conditions.

13

In addition to the preceding disclosures prescribed by the provisions of FASB ASC Topic 820, ASC Topic 825 “Financial Instruments” requires the disclosure of the estimated fair value of financial instruments. The Company’s short term financial instruments include cash and cash equivalents, short term investments, accounts receivable, and accounts payable. The carrying value of the short term financial instruments approximates the fair value due to their short term nature. These financial instruments have no stated maturities or the financial instruments have short term maturities that approximate market.

The fair value of the Company's debt is estimated using quoted market prices when available. When quoted market prices are not available, fair value is estimated based on current market interest rates for debt with similar maturities (Level 2). At September 30, 2016, the estimated fair value of the Company’s outstanding debt was $2.77 billion compared to a carrying value of $2.74 billion.

Note 5. Investments

Investments are primarily comprised of securities held by the Company and its captive insurance subsidiaries in connection with its participant directed supplemental employee retirement plan. Investments held by the Company and its captive insurance subsidiaries are classified as available-for-sale securities. The unrealized gains or losses of investments held by the Company and its captive insurance subsidiaries are included in accumulated other comprehensive earnings as a separate component of shareholders’ equity, unless the decline in value is deemed to be other-than-temporary and the Company does not have the intent and ability to hold such securities until their full cost can be recovered, in which case such securities are written down to fair value and the loss is charged to current period earnings.

The investments held by the Company in connection with its participant directed supplemental employee retirement plan are classified as trading securities; therefore, changes in fair value associated with these investments are recognized as a component of earnings.

At December 31, 2015 and September 30, 2016, amortized cost basis and aggregate fair value of the Company’s available-for-sale securities by investment type were as follows (in thousands):

	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2015
Money market funds	$	18,238	$	—	$	—		$	18,238
Municipal bonds	84,983		2,411		(273		)	87,121
Mutual funds	64		—		—			64
Private investments	2,712		106		—			2,818
Corporate bonds	3,718		6		(25		)	3,699
	$	109,715	$	2,523	$	(298	)	$	111,940
September 30, 2016
Money market funds	$	7,539	$	—	$	—		$	7,539
Municipal bonds	80,187		3,001		(172		)	83,016
Mutual funds	48		—		—			48
Private Investments	1,711		236		—			1,947
Corporate bonds	7,204		185		—			7,389
	$	96,689	$	3,422	$	(172	)	$	99,939

14

At December 31, 2015 and September 30, 2016, the amortized cost basis and aggregate fair value of the Company’s available-for-sale securities by contractual maturities were as follows (in thousands):

	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2015
Due in less than one year	$	24,099	$	35	$	(54	)	$	24,080
Due after one year through five years	57,537		1,647		(79		)	59,105
Due after five years through ten years	23,389		674		(56		)	24,007
Due after ten years	1,914		61		(109		)	1,866
Total	$	106,939	$	2,417	$	(298	)	$	109,058
September 30, 2016
Due in less than one year	$	16,987	$	89	$	—		$	17,076
Due after one year through five years	60,055		2,082		(90		)	62,047
Due after five years through ten years	17,888		1,015		(82		)	18,821
Total	$	94,930	$	3,186	$	(172	)	$	97,944

A summary of the Company’s temporarily impaired available-for-sale investment securities as of December 31, 2015 and September 30, 2016 follows (in thousands):

	Impaired Less Than 12 Months					Impaired Over 12 Months					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
December 31, 2015
Municipal bonds	$	13,189	$	(103	)	$	2,575	$	(170	)	$	15,764	$	(273	)
Corporate bonds	3,120		(25		)	—		—			3,120		(25		)
Total investment	$	16,309	$	(128	)	$	2,575	$	(170	)	$	18,884	$	(298	)
September 30, 2016
Municipal bonds	$	3,389	$	(72	)	$	2,433	$	(100	)	$	5,822	$	(172	)
Total investment	$	3,389	$	(72	)	$	2,433	$	(100	)	$	5,822	$	(172	)

The unrealized losses resulted from changes in market interest rates, not from changes in the probability of contractual cash flows. Because the Company has the ability and intent to hold the investments until a recovery of carrying value and full collection of the amounts due according to the contractual terms of the investments is expected, the Company does not consider these investments to be other-than-temporarily impaired at September 30, 2016.

During the nine months ended September 30, 2016, the Company recorded a gain of approximately $0.4 million on the sale of specifically identified investments.

15

As of December 31, 2015 and September 30, 2016, the investments related to the participant directed supplemental employee retirement plan totaled $45.9 million and $55.7 million, respectively, and are included in other assets in the accompanying consolidated balance sheets. The net trading gains on those investments for the nine months ended September 30, 2015 and September 30, 2016 that were still held by the Company as of September 30, 2015 and September 30, 2016 were as follows (in thousands):

	2015			2016
Net (losses) gains recognized during the nine months ended September 30, 2015 and 2016, respectively on trading securities	$	(1,467	)	$	1,259
Less: Net gains (losses) recognized during the period on trading securities sold during the nine months ended September 30, 2015 and 2016, respectively	(35		)	(120		)
Unrealized (losses) gains recognized on trading securities still held at September 30, 2015 and 2016, respectively	$	(1,432	)	$	1,379

The Company has an investment in a variable interest entity that operates urgent care clinics. The Company was previously the primary beneficiary of the entity and consolidated the entity’s operations, but the Company sold a portion of its ownership to the other joint venture partner in the third quarter of 2016 for $3.3 million, which resulted in a gain of $4.3 million. As a result, the Company determined that it is no longer the primary beneficiary of the entity as it does not have the power to direct the activities that most significantly impact the economic performance of the entity nor the responsibility to absorb a majority of the expected losses. The entity is not consolidated and the investment is accounted for under the equity method, which is classified in other assets in the accompanying consolidated balance sheets and measured at fair value. The determination of whether the Company is the primary beneficiary was performed at the time of our initial investment and performed again when the entity was deconsolidated from the Company’s financial statements. As of September 30, 2016, the fair value of this investment was $0.9 million.

Note 6. Net Revenues

Net revenues consists of fee for service revenue, contract revenue and other revenue. The Company’s net revenues are principally derived from the provision of healthcare staffing services to patients within healthcare facilities and is recorded in the period the services are rendered. Under the fee for service arrangements, the Company bills patients for services provided and receives payment from patients or their third-party payors. Fee for service revenue reflects gross fee for service charges less contractual allowances and policy discounts, where applicable. Contractual adjustments represent the Company’s estimate of discounts and other adjustments to be recognized from gross fee for service charges under contractual payment arrangements, primarily with commercial, managed care and governmental payment plans such as Medicare and Medicaid when the Company’s providers participate in such plans. Contractual adjustments are not reflected in self-pay fee for service revenue. Contract revenue represents revenue generated under contracts in which the Company provides physician and other healthcare staffing and administrative services in return for a contractually negotiated fee. Contract revenue consists primarily of billings based on hours of healthcare staffing provided at agreed-to hourly rates, monthly contractual rates, or certain operational or financial metrics. Revenue in such cases is recognized as the hours are worked by the Company’s affiliated staff and contractors or as metrics are realized. Other revenue consists primarily of revenue from management and billing services provided to outside parties. Revenue is recognized for such services pursuant to the terms of the contracts with customers. The Company also records a provision for uncollectible accounts based primarily on historical collection experience to record accounts receivables at the estimated amounts expected to be collected.

16

Net revenues consisted of the following (in thousands):

	Three Months Ended September 30,										Nine Months Ended September 30,
	2015					2016					2015					2016
Medicare	$	183,120		20.4	%	$	344,660		30.2	%	$	530,047		20.2	%	$	1,032,522		30.4	%
Medicaid	166,015			18.5		206,896			18.1		476,151			18.2		606,707			17.8
Commercial and managed care	462,652			51.5		551,960			48.4		1,322,652			50.5		1,612,048			47.4
Self-pay	496,910			55.3		568,418			49.8		1,405,252			53.7		1,582,967			46.6
Other	21,576			2.4		26,301			2.3		61,777			2.4		73,263			2.2
Unbilled	2,369			0.3		4,948			0.4		15,979			0.6		7,532			0.2
Net fee for service revenue before provision for uncollectibles	1,332,642			148.2		1,703,183			149.2		3,811,858			145.6		4,915,039			144.6
Contract revenue before provision for uncollectibles	182,631			20.3		211,986			18.6		549,998			21.0		618,931			18.2
Other	10,136			1.1		10,606			0.9		28,826			1.1		47,240			1.4
Net revenues before provision for uncollectibles	1,525,409			169.6		1,925,775			168.7		4,390,682			167.7		5,581,210			164.2
Provision for uncollectibles	(626,228		)	(69.6	)	(784,281		)	(68.7	)	(1,773,062		)	(67.7	)	(2,181,499		)	(64.2	)
Net revenues	$	899,181		100.0	%	$	1,141,494		100.0	%	$	2,617,620		100.0	%	$	3,399,711		100.0	%

The Company employs several methodologies for determining its allowance for uncollectibles depending on the nature of the net revenues before provision for uncollectibles recognized. The Company initially determines gross revenue for its fee for service patient visits based upon established fee schedule prices. Such gross revenue is reduced for estimated contractual allowances for those patient visits covered by contractual insurance arrangements to result in estimated net revenues before provision for uncollectibles. Net revenues before provision for uncollectibles is then reduced for management’s estimate of uncollectible amounts. Fee for service net revenues represents estimated cash to be collected from such patient visits and is net of management’s estimate of account balances estimated to be uncollectible. The provision for uncollectible fee for service patient visits is based on historical experience resulting from approximately 25 million fee for service patient visits and procedures over the last twelve months. The significant volume of patient visits and the terms of thousands of commercial and managed care contracts and the various reimbursement policies relating to governmental healthcare programs do not make it feasible to evaluate fee for service accounts receivable on a specific account basis. Fee for service accounts receivable collection estimates are reviewed on a quarterly basis for each fee for service contract by period of accounts receivable origination. Such reviews include the use of historical cash collection percentages by contract adjusted for the lapse of time since the date of the patient visit. In addition, when actual collection percentages differ from expected results, on a contract by contract basis, supplemental detailed reviews of the outstanding accounts receivable balances may be performed by the Company’s billing operations to determine whether there are facts and circumstances existing that may cause a different conclusion as to the estimate of the collectibility of that contract’s accounts receivable from the estimate resulting from using the historical collection experience. Contract-related net revenues are billed based on the terms of the contract at amounts expected to be collected. Such billings are typically submitted on a monthly basis and aged trial balances are prepared. Allowances for estimated uncollectible amounts related to such contract billings are made based upon periodic reviews of specific accounts and invoices once it is concluded that such amounts are not likely to be collected. Approximately 98% of the Company’s allowance for doubtful accounts is related to receivables for fee for service patient visits. The principal exposure for uncollectible fee for service visits is centered in self-pay patients and, to a lesser extent, for co-payments and deductibles from patients with insurance. While the Company does not specifically allocate the allowance for doubtful accounts to individual accounts or specific payor classifications, the portion of the allowance, excluding IPC, associated with fee for service charges as of September 30, 2016 was equal to approximately 93% of outstanding self-pay fee for service patient accounts. The methodologies employed to compute allowances for doubtful accounts were unchanged between 2015 and 2016.

17

Note 7. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill during the year ended December 31, 2015 and the nine months ended September 30, 2016 were as follows (in thousands):

Goodwill	$	869,038
Accumulated impairment loss	(144,579		)
Additions through acquisitions	1,703,343
Balance, December 31, 2015	$	2,427,802
Goodwill	$	2,572,381
Accumulated impairment loss	(144,579		)
Increases from prior year acquisition purchase price allocation adjustments	5,834
Additions through current year acquisitions	51,955
Balance, September 30, 2016	$	2,485,591

The following is a summary of intangible assets and related amortization as of December 31, 2015 and September 30, 2016 (in thousands):

	Gross Carrying Amount		Accumulated Amortization
As of December 31, 2015:
Contracts	$	494,569	$	(170,873	)
Other	21,716		(9,775		)
Total	$	516,285	$	(180,648	)
As of September 30, 2016:
Contracts	$	517,686	$	(214,821	)
Other	31,161		(13,549		)
Total	$	548,847	$	(228,370	)
Aggregate amortization expense:
For the nine months ended September 30, 2016			$	71,425
Estimated amortization expense:
For the remainder of the year ended December 31, 2016			$	23,777
For the year ended December 31, 2017			91,249
For the year ended December 31, 2018			75,555
For the year ended December 31, 2019			66,521
For the year ended December 31, 2020			46,679
For the years ended December 31, 2021 and thereafter			16,696
Total			$	320,477

Intangible assets are amortized over their estimated life, which is approximately one to six years. As of September 30, 2016, the weighted average remaining amortization period for intangible assets was 3.4 years.

18

Note 8. Long-Term Debt

Long-term debt as of September 30, 2016 consisted of the following (in thousands):

Tranche A Term Loan Facility	$	555,000
Tranche B Term Loan Facility	1,305,440
7.25% Senior Notes due 2023	545,000
Revolving Credit Facility	332,000
Total outstanding debt	2,737,440
Debt issuance costs	(48,335		)
	2,689,105
Less current portion	(390,120		)
	$	2,298,985

The Company's senior secured credit facilities (Credit Facility) consist of a $600.0 million tranche A term loan facility (Tranche A Term Loan Facility), a $1.31 billion tranche B term loan facility (Tranche B Term Loan Facility) and a $650.0 million revolving credit facility (Revolving Credit Facility). The Tranche A Term Loan and Revolving Credit Facility have a maturity date of October 2, 2019. The Tranche B Term Loan Facility has a maturity date of November 23, 2022. The maturity dates under the Credit Facility are subject to extension with lender consent according to the terms of the senior credit agreement (the Senior Credit Agreement).

The interest rate on any outstanding Revolving Credit Facility borrowings and Tranche A Term Loan Facility borrowings, and the commitment fee applicable to undrawn revolving commitments, is priced off a grid based upon the Company’s first lien net leverage ratio and is currently LIBOR + 2.00% in the case of revolving credit borrowings under the Revolving Credit Facility and Tranche A Term Loan Facility and 0.35% in the case of unused revolving commitments. The weighted average interest rate for the nine months ended September 30, 2016 was 2.70% for amounts outstanding under the Tranche A Term Loan Facility.

On June 2, 2016, the Company amended its Senior Credit Agreement (the Amendment) to reduce the interest rate applicable to any outstanding Tranche B Term Loans from LIBOR plus 3.75% to LIBOR plus 3.00%. The Company effected this reduction in pricing through a refinancing of the existing Tranche B Term Loan Facility. The Amendment also requires the Company to pay a 1.0% prepayment penalty on any amount prepaid if the Tranche B Term Loan Facility is repriced in order to effect a reduction in pricing prior to December 2, 2016. Other significant terms and conditions of the Senior Credit Agreement, including the maturity date of November 23, 2022 and the LIBOR floor of 0.75%, did not change under the amendment.

The Company had $332.0 million borrowings outstanding under the Revolving Credit Facility as of September 30, 2016, and the Company had $6.8 million of standby letters of credit outstanding against the Revolving Credit Facility commitment.

The Credit Facility agreement contains both affirmative and negative covenants, including limitations on the Company’s ability to incur additional indebtedness, sell material assets, retire, redeem or otherwise reacquire its capital stock, acquire the capital stock or assets of another business and pay dividends, and requires the Company to comply with a maximum total leverage ratio, tested quarterly. At September 30, 2016, the Company was in compliance with all of its covenants under the senior credit facility agreement. The Credit Facility is secured by substantially all of the Company’s U. S. subsidiaries’ assets.

Senior Notes and Indenture

On November 23, 2015, Team Health, Inc., a wholly-owned subsidiary of the Company (the Issuer), completed the private placement of $545.0 million aggregate principal amount of 7.25% Senior Notes due 2023 (the Notes). The Notes are senior unsecured obligations and are fully and unconditionally guaranteed on a senior unsecured basis by the Company and, subject to certain exceptions, each of its existing and future material domestic wholly-owned restricted subsidiaries, referred to, collectively, as “Guarantors.”

The Notes bear interest at 7.25% per annum and mature on December 15, 2023. Interest is payable semi-annually on June 15 and December 15 of each year, beginning on June 15, 2016, to holders of record at the close of business on June 1 or December 1, as the case may be, immediately preceding each such interest payment date.

Prior to December 15, 2018, the Issuer may redeem some or all of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus accrued and unpaid interest to, but excluding, the redemption date, if any, plus

19

the “make-whole” premium set forth in the indenture. On and after December 15, 2018, the Company may redeem the Notes, in whole or in part, at the redemption prices set forth in the indenture, plus accrued and unpaid interest to, but excluding, the redemption date. In addition, prior to December 15, 2018, the Company may also redeem up to 40% of the aggregate principal amount of the Notes at a redemption price equal to 107.25% of the aggregate principal amount thereof, in each case, using an amount not to exceed the net cash proceeds from certain equity offerings, plus accrued and unpaid interest to, but excluding, the redemption date.

The indenture governing the Notes due 2023 contains restrictive covenants that limit among other things, the ability of us and our restricted subsidiaries to incur or guarantee additional debt or issue disqualified stock or certain preferred stock; pay dividends and make other distributions on, or redeem or repurchase, capital stock; make certain investments; incur certain liens; enter into certain transactions with affiliates; merge or consolidate; enter into agreements that restrict the ability of certain restricted subsidiaries to make dividends or other payments to us or each of our existing and future material domestic wholly-owned restricted subsidiaries, referred to, collectively, as “Guarantors”; designate restricted subsidiaries as unrestricted subsidiaries; and transfer or sell certain assets. These covenants are subject to a number of important limitations and exceptions. The Indenture also contains customary events of default which would permit the holders of the Notes to declare those Notes to be immediately due and payable if not cured within applicable grace periods, including the failure to make timely payments on the Notes or other material indebtedness, the failure to satisfy covenants and specified events of bankruptcy and insolvency.

Aggregate annual maturities of long-term debt as of September 30, 2016 are as follows (in thousands):

2016	$	390,120
2017	73,120
2018	58,120
2019	418,120
2020 and thereafter	1,797,960

Note 9. Professional Liability Insurance

The Company’s professional liability loss reserves included in other accrued liabilities and other non-current liabilities in the accompanying consolidated balance sheets consisted of the following (in thousands):

	December 31, 2015		September 30, 2016
Estimated losses under self-insured programs	$	245,070	$	273,655
Estimated losses under commercial insurance programs	126,751		141,185
	371,821		414,840
Less estimated payable within one year	105,028		102,478
	$	266,793	$	312,362

The changes to the Company’s estimated losses under self-insured programs as of September 30, 2016 were as follows (in thousands):

Balance, December 31, 2015	$	245,070
Reserves related to current period	62,802
Changes related to prior year reserves	14,284
Assumed liabilities	(1,812		)
Payments for current period reserves	(880		)
Payments for prior period reserves	(45,809		)
Balance, September 30, 2016	$	273,655

The Company provides for its estimated professional liability losses through a combination of self-insurance and commercial insurance programs. Losses under commercial insurance programs in excess of the limit of coverage remain as a self-insured obligation of the Company. A portion of the professional liability loss risks that have been provided for through

20

self-insurance (claims-made basis) are transferred to and funded into captive insurance companies. The accounts of the captive insurance companies are fully consolidated with those of the other operations of the Company in the accompanying consolidated financial statements.

The self-insurance components of our risk management program include reserves for future claims incurred but not reported (IBNR). As of December 31, 2015, of the $245.1 million of estimated losses under self-insured programs, approximately $157.4 million represented an estimate of IBNR claims and expenses and additional loss development, with the remaining $87.7 million representing specific case reserves. Of the specific case reserves as of December 31, 2015, $3.0 million represented case reserves that had settled but not yet funded, and $84.7 million reflected unsettled case reserves.

As of September 30, 2016, of the $273.7 million of estimated losses under self-insurance programs, approximately $160.7 million represented an estimate of IBNR claims and expenses and additional loss development, with the remaining $113.0 million representing specific case reserves. Of the specific case reserves as of September 30, 2016, $3.4 million represented case reserves that had been settled but not yet funded, and $109.6 million reflected unsettled case reserves.

The Company’s provisions for losses under its self-insurance components are estimated using the results of periodic actuarial studies. Such actuarial studies include numerous underlying estimates and assumptions, including assumptions as to future claim losses, the severity and frequency of such projected losses, loss development factors and others. The Company’s provisions for losses under its self-insured components are subject to subsequent adjustment should future actuarial projected results for such periods indicate projected losses greater or less than previously projected.

During the first quarter of 2016, the Company reserved $14.3 million to settle two separate professional liability claims originating from prior years in excess of coverage limits, which was fully funded as of September 30, 2016. See Note 10 for more information regarding these settlements.

The Company’s most recent actuarial valuation was completed in October 2016. Based on the results of the actuarial study completed in October 2016, management determined no additional change was necessary in the consolidated reserves for professional liability losses during the third quarter of 2016 related to prior year loss estimates. The discount rate on professional liability reserves (including IPC as noted below) was 1.1% at September 30, 2016 compared to 1.6% at December 31, 2015.

IPC Professional Liability Reserves

IPC is fully insured on a claims-made basis up to policy limits through a third party malpractice insurance policy, which ends December 31 of each year. The Company has established reserves for this segment for claims incurred and reported and IBNR during the policy period. These reserves of $25.8 million as of September 30, 2016 and the timing of payment of such amounts are estimated based upon actuarial loss projections, which are updated semi-annually, and discounted using the current weighted average Treasury rate over a 10 year period.

Note 10. Contingencies

Litigation

The Company is currently a party to various legal proceedings arising in the ordinary course of business. The legal proceedings the Company is involved in from time to time include lawsuits, claims, audits and investigations with government and non-government parties, including those arising out of services provided, personal injury claims, professional liability claims, the Company's billing, collection and marketing practices, employment disputes and contractual claims, and seek monetary and other relief, including statutory damages and penalties.. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on the Company's net earnings in the period in which the ruling occurs. The estimate of the potential impact from such legal proceedings on the Company's financial position or overall results of operations could change in the future.

On August 14, 2015, a purported stockholder of IPC filed a putative class action complaint in the Court of Chancery of the State of Delaware (the Court of Chancery), captioned Smukler v. IPC Healthcare, Inc., et al., C.A. No. 11392-CB.  On August 18, 2015, a second purported stockholder of IPC filed a putative class action in the Court of Chancery, captioned Crescente v. Singer, et al., C.A. No. 11405-CB.  On September 11, 2015, the Court of Chancery entered an order (the Consolidation Order) consolidating the two actions under the caption In re IPC Healthcare, Inc., Consolidated C.A. No. 11392-CB (the Consolidated Action), and a consolidated class action complaint (the Consolidated Complaint) was filed on September 18, 2015.  The Consolidated Complaint named as defendants the members of IPC’s board of directors, the Company, and Intrepid Merger Sub, Inc. (Merger Sub).  The Consolidated Complaint alleged that the IPC directors breached their fiduciary

21

duties, and that the Company and Merger Sub aided and abetted those breaches, by failing to disclose certain material information in the IPC Preliminary Schedule 14A relating to the proposed acquisition of IPC by the Company (the Transaction).  The Consolidated Complaint sought, among other relief, a preliminary injunction and recovery of the costs of the Consolidated Action, including reasonable attorneys’ fees and expenses.

On November 6, 2015, plaintiffs’ counsel and defendants’ counsel executed a memorandum of understanding, or MOU, memorializing the terms of an agreement in principle pursuant to which IPC agreed to make certain supplemental disclosures relating to the Transaction in a Form 8-K, and plaintiffs agreed to dismissal of the Consolidated Action with prejudice and the release of certain claims.  On November 6, 2015, IPC filed a Form 8-K with the supplemental disclosures with the SEC.

On April 11, 2016, following a series of rulings by the Court of Chancery in other actions challenging mergers, plaintiffs and defendants agreed to replace the MOU with an agreement that plaintiffs would voluntarily dismiss the Consolidated Action on the basis that it was mooted by the supplemental disclosures contained in the Form 8-K.  On April 12, 2016, the Court of Chancery entered a Stipulation and Order Concerning Plaintiffs’ Voluntary Dismissal of the Action and Plaintiffs’ Counsel’s Anticipated Application for an Award of Attorneys’ Fees and Expenses (the Dismissal Order).  The Dismissal Order dismissed the Consolidated Action as moot and dismissed the claims asserted in the Consolidated Complaint with prejudice as to the named plaintiffs and without prejudice as to other members of the purported class.  The Court of Chancery retained jurisdiction over the Consolidated Action solely for the purpose of adjudicating the anticipated application by plaintiffs’ counsel for an award of fees and expenses. 

On May 19, 2016, plaintiffs filed their application for an award of fees and expenses, in the total amount of $350,000. The Company filed its opposition to such application on June 30, 2016, and, on July 14, 2016, plaintiffs filed their reply papers. Subsequent to the filing of plaintiffs' reply papers, plaintiffs’ counsel and defendants’ counsel engaged in arm’s-length discussions regarding the payment of attorneys’ fees and reimbursement of expenses to plaintiffs' counsel. The Company has agreed to pay plaintiffs' counsel attorneys' fees in the amount of $100,000, inclusive of expenses.

On October 31, 2016, the Court of Chancery approved a Stipulation and Order Concerning Dismissal of the Consolidated Action and Approving Notice of Payment of Attorneys’ Fees and Expenses, entered into by the parties, which provided for the payment of $100,000 in attorneys’ fees and expenses to plaintiffs’ counsel, the final dismissal and closing of the Consolidated Action, and the provision of notice to stockholders of the payment to plaintiffs’ counsel.  The Court of Chancery has not been asked to review, and will pass no judgment on, the payment or amount of the agreed-upon fee to plaintiffs’ counsel or its reasonableness.

On November 13, 2015, the U.S. District Court for the Eastern District of Wisconsin ordered the unsealing and service of a qui tam complaint, filed on March 27, 2014, and captioned United States of America, ex rel. John Mamalakis, M.D., the States of California, Colorado, Delaware, Florida, Georgia, Hawaii, Iowa, Maryland, Michigan, Nevada, New Jersey, North Carolina, Oklahoma, Tennessee, Texas, Wisconsin and the District of Columbia v. Anesthetix Management, LLC, d/b/a Anesthetix of TeamHealth, Team Health Holdings, Inc., Sonya Pease, M.D., John Ippolito, M.D., Edward Lee, M.D., Howard Stroup, M.D., Sammy Dean, M.D., and Jacqueline Peters, M.D. (Defendants) (Case No. 2:14cv00349-CNC). On June 11, 2014, the United States gave notice of its intention, and the intention of all of the other states and the District of Columbia, not to intervene in the lawsuit. On March 10, 2016, Team Health Holdings, Inc. was served with the complaint. The complaint alleges that the defendants submitted false claims to federal and state health insurance programs for “medical direction” of anesthesia services (rather than “medical supervision”) that were provided at Wheaton Franciscan Hospital-All Saints Hospital (All Saints) in Racine, Wisconsin, as well as numerous other non-identified hospitals and clinics from 2010 to the present. Plaintiff also claims retaliatory termination, alleging that he was terminated from his employment for voicing his concerns about the anesthesia services. Plaintiff seeks recovery of all Medicare and Medicaid reimbursement that the defendants received as a result of the allegedly false claims and treble damages under the False Claims Act, as well as a civil penalty for each such false Medicare and Medicaid claim. On April 15, 2016, plaintiff amended his complaint, removing all of the individual defendants as well as the claims filed on behalf of Delaware, Georgia, Hawaii, Iowa, Maryland, Nevada, North Carolina, Oklahoma, Tennessee and Texas. On May 2, 2016, Defendants filed a motion to dismiss the entirety of the complaint pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6), or in the alternative, to compel arbitration of the retaliatory discharge claim. On July 1, 2016, Relator filed his opposition to the motion. Defendants filed their reply in support of the motion on July 18, 2016. The Motion remains under advisement and the Company expects the Court to decide it soon. The Company intends to vigorously defend against the allegations in this matter. The Company does not believe that the final outcome of this matter will be material.

In August 2011, a medical malpractice suit was filed against three of the Company’s affiliates and one of its physicians along with other co-defendants, including a hospital, in the Superior Court of New Jersey, Camden County, alleging a failure to diagnose sepsis in 2010. In July 2012, a medical malpractice suit was filed in the Court of Common Pleas, Luzerne, Pennsylvania against one Company affiliate and one of its physicians and a co-defendant hospital, alleging a failure to diagnose a stroke in 2010. In March 2016, both cases resulted in settlements in excess of insurance coverage limits where the Company

22

was required to fund a total of $14.3 million, which represents the Company's contribution to the overall settlements that includes the other defendants. As of September 30, 2016, these settlements have been fully funded.

Healthcare Regulatory Matters

Laws and regulations governing the Medicare and Medicaid programs are complex and subject to interpretation. Compliance with such laws and regulations can be subject to future governmental review and interpretation as well as significant regulatory action. From time to time, governmental regulatory agencies will conduct inquiries and audits of the Company’s practices. It is the Company’s current practice and future intent to cooperate with such inquiries.

In addition to laws and regulations governing the Medicare and Medicaid programs, there are a number of federal and state laws and regulations governing such matters as the corporate practice of medicine and fee splitting arrangements, anti-kickback statutes, physician self-referral laws, false or fraudulent claims filing and patient privacy requirements. The failure to comply with any of such laws or regulations could have an adverse impact on the Company's operations and financial results.

Government Claim

On June 7, 2010, the Company's subsidiary, IPC, received a civil investigative demand (CID) issued by the Department of Justice (DOJ), U.S. Attorney’s Office for the Northern District of Illinois. The CID requested information concerning claims that IPC had submitted to Medicare and Medicaid. The CID covered the period from January 1, 2003, through June 4, 2010, and requested production of a range of documents relating to IPC’s Medicare and Medicaid participation, physician arrangements, operations, billings and compliance programs. IPC produced responsive documents and was in contact with representatives of the DOJ who informed IPC that the inquiry related to a qui tam whistleblower action filed under court seal in the U.S. District Court for the Northern District of Illinois (Chicago). The case is captioned United States ex rel. Oughatiyan v. IPC The Hospitalist Company, Inc. (Civ. No. 09-C-5418). IPC also was informed that several state attorneys general were examining its Medicaid claims in coordination with the DOJ.

On December 5, 2013, the U.S. District Court partially lifted the seal on the civil False Claims Act case related to this investigation. The unsealed portions of the Court docket at that time included the whistleblower’s Complaint which contains allegations of improper billing to Medicare and Medicaid, a Notice of Election to Intervene filed by the federal government and a Notice of Election to Decline Intervention filed by the State of Illinois and 12 other states that participated in the investigation. On June 16, 2014, the federal government filed its Complaint in Intervention against IPC and several of its subsidiaries in the U.S. District Court. The Complaint in Intervention contains allegations of improper billing to Medicare, Medicaid and other federal healthcare programs from January 1, 2003 to the present, seeks to recover treble damages and civil penalties under the civil False Claims Act, and seeks to recover damages under common law theories of payment by mistake and unjust enrichment. On August 13, 2014, the Company's subsidiary, IPC and the IPC subsidiary defendants filed a joint motion to dismiss the Complaint in Intervention or, in the alternative, to sever claims against the defendants. The federal government filed its response on September 18, 2014, to which the defendants replied on September 25, 2014. The court’s decision, which was filed on February 17, 2015, granted the motion to dismiss in part and denied it in part. The Court’s Opinion and Order dismissed the 29 IPC subsidiary and affiliate defendants without prejudice, but the Court denied the request to dismiss IPC Healthcare, Inc., which remains the sole defendant in the lawsuit. The parties are engaged in negotiations to attempt to resolve the matter, but if an acceptable settlement cannot be reached, the Company intends to continue contesting the case.

On June 14, 2016, the Company entered into a Tolling Agreement, which was extended on November 3, 2016, with the United States of America, through the United States Attorney’s Office for the Eastern District of Tennessee and the United States Department of Health and Human Services, and the State of Tennessee, through the Tennessee Attorney General’s Office, to continue ongoing discussions related to emergency department coding practices for professional services rendered in the State of Tennessee. On June 9, 2014, the Attorney General for the State of Tennessee issued a CID to one of the Company's affiliated entities, Southeastern Emergency Physicians, LLC, about possible false claims for payments associated with professional services furnished to Bureau of TennCare patients. The CID requested that the Company produce records and documents. In conjunction with the inquiry of the Attorney General for the State of Tennessee, the United States Department of Justice, U.S. Attorney’s Office for the Eastern District of Tennessee, on May 26, 2015, sent an informal request for information and documentation to Southeastern Emergency Physicians, LLC, HCFS Health Care Financial Services and TeamHealth. The request sought information relating to the Company's emergency department coding practices for professional services rendered in the State of Tennessee and the production of training and compliance materials. The Company has been timely responding to requests for information and documentation and is continuing to cooperate with the Tennessee Attorney General and the U.S. Attorney’s Office. The Company is currently unable to determine the potential impact, if any, that will result from this matter.

On October 25, 2016, the Company received a CID from the United States Department of Justice pursuant to the Federal False Claims Act concerning the submission of claims to federal healthcare programs for certain professional services furnished by the Company's affiliated provider groups at certain healthcare facilities, including healthcare facilities located in Colorado

23

and Texas. The CID requests, among other things, information related to professional services furnished to critical care patients and professional service split/shared visits involving both physicians and mid-level practitioners (such as physician assistants and nurse practitioners). The CID requests responses to written interrogatories and the production of documents and other information relating to Company coding and billing policies. The Company is cooperating with the Department of Justice. The Company is currently unable to determine the potential impact, if any, that will result from this matter.

Florida Medicaid Reimbursement Suspension

The Company's subsidiary, IPC, received notice on August 7, 2015 that the Florida Agency for Health Care Administration (AHCA) temporarily suspended Medicaid fee-for-service and Medicaid managed care payments to IPC’s Florida affiliate, InPatient Consultants of Florida, Inc. d/b/a IPC of Florida, because IPC of Florida is “under investigation by a state or federal agency.” Since receiving this notice, and based on its failure to contain the required specificity under the applicable federal regulation, IPC has sought additional information from AHCA regarding the basis of the payment suspension, including through repeated discussions with the responsible AHCA officials; by submitting a request for documents through the Florida Public Records Law (PRL) on August 27, 2015; and by filing a petition for formal administrative review on September 4, 2015.

Following these actions, IPC received a revised letter on September 9, 2015 in which AHCA clarified that the investigation causing the payment suspension concerns IPC of Florida’s alleged “up-coding” and “billing for the highest level of inpatient hospital care, which may not be medically necessary.” Since receipt of this revised notice, which still failed to contain the required specificity, IPC has continued to engage with AHCA to obtain information that would enable IPC to rebut the basis for the payment suspension. These efforts have included submitting a second PRL request on September 18, 2015 and submitting a letter to AHCA providing information to support a determination by AHCA that it has “good cause” to discontinue the payment suspension, consistent with the applicable federal regulation. On October 23, 2015, IPC received an order dismissing IPC’s petition for formal administrative review on the grounds that there is no final agency action and because the suspension is a contract action not appropriate for an administrative hearing. The Company is continuing its discussions with AHCA officials in an effort to resolve this matter.

It is not possible to predict when any of the above matters may be resolved, the time or resources that the Company will need to devote to the matters, or what impact, if any, the outcome of any of the matters might have on the Company's business, consolidated financial position, results of operations, or cash flows.

Note 11. Equity-based Compensation

Equity Incentive Plans

In May 2013, the Company's shareholders approved the Team Health Holdings, Inc. Amended and Restated 2009 Stock Incentive Plan (the Stock Plan) that amended the 2009 Stock Incentive Plan.

In connection with the acquisition of IPC, the IPC replacement awards were issued based on a conversion ratio of the IPC common share value to Team Health weighted average share price immediately prior to the closing. The Company assumed and restated the Amended and Restated Team Health Holdings, Inc. 1997 Equity Participation Plan, the Amended and Restated 2002 Equity Participation Plan of Team Health Holdings, Inc., the Amended and Restated Team Health Holdings, Inc. 2007 Equity Participation Plan, and the Amended and Restated Team Health Holdings, Inc. 2012 Equity Participation Plan (collectively the IPC Plans) for the sole purpose of completing the exchange of equity awards. There will be no further issuances under these plans.

Purpose. The purpose of the Stock Plan is to aid in recruiting and retaining key employees, directors, consultants, and other service providers of outstanding ability and to motivate those employees, directors, consultants, and other service providers to exert their best efforts on behalf of the Company and its affiliates by providing incentives through the granting of options, stock appreciation rights and other stock-based awards.

Shares Subject to the Plan. The Stock Plan provides that the total number of shares of common stock that may be issued is 15,100,000, of which approximately 593,000 are available to grant as of September 30, 2016. Shares of the Company’s common stock covered by awards that terminate or lapse without the payment of consideration may be granted again under the Stock Plan.

24

The following table summarizes the status of options under the Stock Plan as of September 30, 2016:

	Shares (in thousands)		Weighted Average Exercise Price		Aggregate Intrinsic Value (in thousands)		Weighted Average Remaining Life in Years
Outstanding at beginning of year	4,780		$	28.07	$	86,342	5.3
Granted	1,134		35.30
Exercised	(881	)	20.59		16,930
Expired or forfeited	(203	)	44.96
Outstanding at end of period	4,830		$	30.51	$	34,285	5.4
Exercisable at end of period	3,098		$	24.31	$	34,280	4.4

Intrinsic value is the amount by which the stock price as of September 30, 2016 exceeds the exercise price of the options. The Company granted approximately 1,134,000 options, of which approximately 442,000 were performance share options, during the nine months ended September 30, 2016. The market based performance stock options vest if the market conditions are met and the grantee remains employed over the requisite service period. As of September 30, 2016, the Company had approximately $20.3 million of unrecognized compensation expense, net of estimated forfeitures related to unvested options, which will be recognized over the remaining requisite service period.

The fair value of options granted in 2016 was based on the grant date fair value as calculated by the Black-Scholes option pricing formula, while the performance share options fair value was based on the grant date fair value as calculated by the Monte Carlo option pricing formula. The expected life is the mid-point between the vesting date and the end of the contractual term, except for the performance options, which have an expected life based on the mid-point between the option expiration date and the date at which the market condition is first fulfilled. The Company uses this simplified method, as described in ASC 718, due to changes in option grant contractual terms causing insufficient historical exercise data. The Company will continue to evaluate the use of the simplified method as historical exercise data becomes more sufficient. The following assumptions were used:

	Time vested options			Performance share options
Expected life	5 years			4.6 years
Volatility	34.9		%	40.2		%
Risk free interest rate	1.3		%	1.4		%
Option value	$	12.14		$	10.39
Assumed dividend rate	—		%	—		%

Restricted awards are grants of restricted stock, restricted stock units and performance stock units that are not vested (Restricted Awards). The Company granted approximately 642,000 shares of Restricted Awards in 2016. The Company had $30.9 million of expense remaining to be recognized over the requisite service period for Restricted Awards at September 30, 2016. The Restricted Awards generally vest annually over a three to four-year period from the initial grant date for the grants made to the independent board members and management. The performance stock units vest at the end of three years from the initial grant date. The actual number of performance stock units to be awarded will be based on the achievement of certain predetermined financial and operational performance targets during the initial two year period starting in the year of the grant. The related expense will be tracked and adjusted as appropriate to reflect the actual shares issued.

25

Market Share Unit Awards

In September 2016, the Company granted approximately 127,000 market share units (MSU). The vesting of these awards is contingent upon the Company's twenty day average closing price immediately preceding the MSU vesting date. The awards vest in three annual tranches and have a maximum potential to vest at 200% based on stock performance and a minimum potential of 75%. The related stock-based compensation expense is determined based on the estimated fair value of the underlying shares on the date of grant and is recognized using the accelerated method over the vesting term. The estimated fair value was calculated using a Monte Carlo simulation model. The fair value of the awards granted in September was $39.26. The awards are included in the restricted stock unit table above. The Company had $4.9 million of expense remaining to be recognized over the requisite service period for the MSUs at September 30, 2016. The market share units vest over a three year period from the initial grant date.

A summary of changes in total outstanding unvested restricted and market share unit awards for the nine months ended September 30, 2016 is as follows (in thousands):

	Restricted Stock		Restricted Units		Performance Units		Market Share Units	Total
Outstanding at beginning of year	100		766		—		—	866
Granted	—		498		144		127	769
Vested	(53	)	(276	)	—		—	(329	)
Forfeited and expired	(5	)	(94	)	(33	)	—	(132	)
Outstanding at September 30, 2016	42		894		111		127	1,174

Stock Purchase Plans

In May 2010, the Company’s Board of Directors (the Board) adopted the 2010 Employee Stock Purchase Plan (ESPP) and the 2010 Nonqualified Stock Purchase Plan (NQSPP).

The ESPP provides for the issuance of up to 600,000 shares to the Company’s employees. All eligible employees are granted identical rights to purchase common stock in each Board authorized offering under the ESPP. Rights granted pursuant to any offering under the ESPP terminate immediately upon cessation of an employee’s employment for any reason. In general, an employee may reduce his or her contribution or withdraw from participation in an offering at any time during the purchase period for such offering. Employees receive a 5% discount on shares purchased under the ESPP. Rights granted under the plan are not transferable and may be exercised only by the person to whom such rights are granted. Offerings occur every six months in April and October. As of September 30, 2016, contributions under the ESPP totaled $3.3 million. In October 2016, approximately 101,000 shares of the Company’s common stock were issued to plan participants.

The NQSPP provides for the issuance of up to 800,000 shares to our independent contractors. All eligible contractors are granted identical rights to purchase common stock in each Board authorized offering under the NQSPP. Rights granted pursuant to any offering under the NQSPP terminate immediately upon cessation of a contractor’s relationship with the Company for any reason. In general, a contractor may reduce his or her contribution or withdraw from participation in an offering at any time during the purchase period for such offering. Contractors receive a 5% discount on shares purchased under the NQSPP. Rights granted under the NQSPP are not transferable and may be exercised only by the person to whom such rights are granted. Offerings occur every six months in April and October. As of September 30, 2016, contributions under the NQSPP totaled $0.9 million. In October 2016, approximately 29,000 shares of the Company’s common stock were issued to plan participants.

26

Equity Based Compensation Expense

Equity based compensation expense, including $3.9 million of expense, primarily associated with changes in executive leadership, recorded in transaction, integration and reorganization costs during the nine months ended September 30, 2016, and the resulting tax benefits were as follows (in thousands):

	Nine Months Ended September 30,
	2015		2016
Stock options	$	7,212	$	6,277
Restricted awards	5,923		18,060
Market share units	—		51
Stock purchase plan	62		82
Total equity based compensation expense	$	13,197	$	24,470
Tax benefit of equity based compensation expense	$	5,081	$	9,360

Note 12. Earnings Per Share

The Company computes basic earnings per share using the weighted average number of shares outstanding. The Company computes diluted earnings per share using the weighted average number of shares outstanding plus the dilutive effect of outstanding stock options, restricted awards, and stock purchase plans. The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2016		2015		2016
Net earnings attributable to Team Health Holdings, Inc. (numerator for basic and diluted earnings per share)	$	35,442	$	10,481	$	92,431	$	29,934
Denominator:
Weighted average shares outstanding	72,361		74,166		71,900		73,823
Effect of dilutive securities:
Stock options	1,086		871		1,176		988
Restricted awards	237		199		272		340
Market share units	—		61		—		67
Stock purchase plans	3		7		3		7
Shares used for diluted earnings per share	73,687		75,304		73,351		75,225
Basic net earnings per share of Team Health Holdings, Inc.	$	0.49	$	0.14	$	1.29	$	0.41
Diluted net earnings per share of Team Health Holdings, Inc.	$	0.48	$	0.14	$	1.26	$	0.40
Securities excluded from diluted earnings per share of Team Health Holdings, Inc. because they were antidilutive:
Stock options	519		1,685		258		1,622
Restricted awards	—		173		—		215

Note 13. Noncontrolling Interests in Consolidated Entity

As of September 30, 2016, the Company is party to one joint venture arrangement. The joint venture provides administrative management and billing services to certain existing and planned urgent care clinics the Company and joint venture partners operate. The consolidated financial statements include all assets, liabilities, revenues and expenses of the less than 100% owned entity that the Company controls. Accordingly, the Company has recorded noncontrolling interests in the earnings and equity of this entity. In connection with this arrangement, the Company received joint venture contributions of $2.0 million during the nine months ended September 30, 2016.

27

Note 14. Transaction, Integration and Reorganization Costs

For the nine months ended September 30, 2016, the Company recognized certain transaction, integration, and reorganization costs in the amount of $48.3 million. For 2016, these expenses include IPC severance and integration costs of $19.3 million, $11.7 million of professional, advisory, and legal costs associated with the activities of (i) the Board's special advisory committee (which was responsible for reviewing and evaluating possible strategic alternatives available to the Company) and (ii) the JANA agreement, $8.8 million of charges associated with the executive leadership transition during the third quarter of 2016, $6.9 million of severance and lease impairment costs associated with a reorganization of the Company's legacy operations, and $1.6 million of legacy transaction costs. For the nine months ended September 30,2015, the Company recognized $7.2 million of costs related to advisory, legal, accounting and other fees incurred related to acquisition activity, of which $2.6 million was associated with the IPC transaction.

Note 15. Accumulated Other Comprehensive Earnings

The changes in accumulated other comprehensive earnings related to available-for-sale securities were as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2016			2015			2016
Balance at beginning of period	$	1,095		$	2,414		$	1,695		$	1,503
Other comprehensive earnings (loss):
Net unrealized gain (loss)	451			(367		)	(436		)	1,422
Tax (expense) benefit	(124		)	133			213			(359		)
Total other comprehensive earnings (loss) before reclassifications, net of tax	327			(234		)	(223		)	1,063
Net amount reclassified to earnings(1)	(97		)	(8		)	(147		)	(394		)
Tax benefit (expense)(2)	—			—			—			—
Total amount reclassified from accumulated other comprehensive earnings, net of tax(3)	(97		)	(8		)	(147		)	(394		)
Total other comprehensive earnings (loss)	230			(242		)	(370		)	669
Balance at end of period	$	1,325		$	2,172		$	1,325		$	2,172

(1) This amount was included in Other (income) expense, net on the accompanying Consolidated Statement of Comprehensive Earnings.

(2) These amounts were included in Provision for income taxes on the accompanying Consolidated Statement of Comprehensive Earnings.

(3) A positive amount indicates a corresponding charge to earnings and a negative amount indicates a corresponding benefit to earnings.

28

Note 16. Segment Reporting

During the fourth quarter of 2015, the Company completed certain changes to its management reporting structure to better align its businesses with the Company objectives and operating strategies. These changes resulted in changes among the Company's previously reported operating and reportable segments. The third quarter 2015 segment results have been reclassified to conform to the current year reporting of these businesses. The Company determined, in accordance with segment reporting guidance, that it provides services through eight operating segments which are aggregated into four reportable segments: Hospital Based Services, IPC Healthcare, Specialty Services, and Other Services. The Hospital Based Services segment, which is an aggregation of emergency medicine, anesthesia, and the Company's legacy acute care services, provides comprehensive healthcare service programs to users of healthcare services on a fee for service as well as a cost plus or contract basis. The IPC Healthcare segment consists of the business acquired in connection with the IPC transaction and provides comprehensive acute hospital medicine and post-acute provider service programs to users of healthcare services. The Specialty Services segment, which is an aggregation of military and government healthcare staffing, clinical services, and nurse call center operations, provides comprehensive healthcare service programs to users of healthcare services in an outpatient setting or in a non-hospital based environment. The Other Services segment is an aggregation of locums staffing, scribes, and billing, collection and consulting services that provides a range of other comprehensive healthcare services. The operating segments included in the Specialty Services or Other Services reportable segments, while similar in the types of services provided by those operating segments included in the Hospital Based Services segment, do not meet the aggregation criteria prescribed by the segment reporting guidance nor do they meet the quantitative thresholds that would require a separate presentation.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies included in our Annual Report on Form 10-K for fiscal year 2015 filed with the SEC. Segment amounts disclosed are prior to any elimination entries made in consolidation, except in the case of net revenues, where intercompany charges have been eliminated. Certain corporate expenses are not allocated to the segments. These unallocated expenses are corporate expenses, net interest expense, depreciation and amortization, transaction costs and income taxes. The Company evaluates segment performance based on profit and loss before the aforementioned expenses.

The following table presents financial information for each reportable segment. Depreciation, amortization, management fee and other expenses separately identified in the consolidated statements of operations are included as a reduction to the respective segments’ operating earnings for each period below (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2016			2015			2016
Net Revenues:
Hospital Based Services	$	831,261		$	894,792		$	2,412,049		$	2,632,504
IPC Healthcare	—			177,125			—			555,506
Specialty Services	42,165			42,806			129,851			134,314
Other Services	25,731			26,742			75,648			77,304
General Corporate	24			29			72			83
	$	899,181		$	1,141,494		$	2,617,620		$	3,399,711
Operating Earnings:
Hospital Based Services	$	92,087		$	78,733		$	236,150		$	209,589
IPC Healthcare	—			5,181			—			25,449
Specialty Services	4,083			8,362			14,941			19,287
Other Services	5,715			6,754			19,158			19,827
General Corporate	(38,044		)	(49,733		)	(98,586		)	(131,118		)
	$	63,841		$	49,297		$	171,663		$	143,034
Reconciliation of Operating Earnings to Net Earnings:
Operating earnings	$	63,841		$	49,297		$	171,663		$	143,034
Interest expense, net	5,572			28,525			14,132			90,255
Provision for income taxes	22,837			10,216			65,178			22,579
Net earnings	$	35,432		$	10,556		$	92,353		$	30,200

29

Note 17. Subsequent Event

On October 31, 2016, the Company announced that it entered into an Agreement and Plan of Merger (the Merger Agreement) to be acquired by funds affiliated with The Blackstone Group L.P. and certain co-investors.   The Company entered into a Merger Agreement with Tennessee Parent, Inc., a Delaware corporation (Parent) and Tennessee Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (Merger Sub), pursuant to which Merger Sub will be merged with and into the Company (the Merger) with the Company surviving the Merger as a wholly owned subsidiary of Parent. The Company's Board of Directors unanimously approved the Merger Agreement and resolved to recommend that the Company's stockholders vote to adopt the Merger Agreement. Until the tenth business day following the end of the go-shop period, the Company may continue to engage with any third party that made an acquisition proposal prior to the end of the go-shop period that the Board of Directors has determined in good faith, after consultation with outside counsel and its financial advisors, is or could reasonably be expected to result in a superior proposal as defined in the Merger Agreement (each, an Excluded Party).

At the effective time of the Merger (the Effective Time), each share of the Company’s common stock, par value $0.01 per share, issued and outstanding immediately prior to the Effective Time (other than shares of the Company’s common stock held by Parent, Merger Sub or any other direct or indirect wholly-owned subsidiary of Parent, shares owned by the Company (including shares held in treasury) or any of its direct or indirect wholly-owned subsidiaries, and shares owned by stockholders who have properly made and not withdrawn or lost a demand for appraisal rights under Delaware law) will be converted into the right to receive $43.50 in cash, without interest and subject to applicable withholding taxes (the Merger Consideration).

Pursuant to the Merger Agreement, (i) each outstanding Company stock option will immediately vest and be canceled and converted into the right to receive an amount in cash equal to the product of (x) the total number of shares of Company common stock subject to each Company stock option multiplied by (y) the excess, if any, of the Merger Consideration over the per share exercise price under such Company stock option and (ii) each outstanding Company restricted stock unit or similar stock right (other than Company performance share units and market stock units, each a “Company stock unit”) will be canceled and converted into the right to receive an amount in cash equal to the product of (x) the number of shares of Company common stock subject to such Company stock unit multiplied by (y) the Merger Consideration. Each outstanding Company performance share unit will be canceled at the Effective Time, and the holder of such Company performance share unit will be entitled to receive an amount in cash equal to the product of (x) the number of shares of Company common stock subject to such Company performance share unit (assuming performance resulted in a payout at the target level award) multiplied by (y) the Merger Consideration. Performance options will vest to the extent the relevant performance vesting thresholds are achieved based on the per share Merger Consideration and, with respect to market share units, a holder of market share units will be entitled to receive an amount in cash equal to the product of (x) the MSU End Price (as set forth in his applicable award agreement) and (y) the relevant performance multiplier (as set forth in his applicable award agreement) that is determined by reference to the per share Merger Consideration. The cash payments in respect of the canceled equity awards will generally be paid as soon as reasonably practicable after the Effective Time, subject to potential delayed payment in the case of any equity awards subject to existing deferral elections.

The Merger Agreement contains certain termination rights for the Company and Parent, including the right of the Company to terminate the Merger Agreement to accept a superior proposal, subject to specified limitations, and provides that, upon termination of the Merger Agreement by the Company or Parent upon specified conditions, the Company will be required to pay Parent a termination fee of $50.4 million under specified conditions where the Company terminates the Merger Agreement in connection with its entry into a superior proposal with an Excluded Party and of $100.8 million under other specified conditions. The Merger Agreement also provides that Parent will be required to pay the Company a reverse termination fee of $201.7 million upon the termination of the Merger Agreement by the Company under specified conditions. There can be no assurance that approval of the Company's stockholders will be obtained or that the Merger Agreement will not be otherwise terminated under the circumstances triggering these obligations. If triggered, payment of these fees and costs will negatively impact the Company's results of operations, financial condition and cash flows.

The closing of the Merger is subject to a condition that the Merger Agreement be adopted by the affirmative vote of the holders of a majority of all of the outstanding shares of the Company’s common stock entitled to vote thereon at such meeting. Consummation of the Merger is also subject to (i) the absence of any law, injunction or other order that prohibits the consummation of the Merger, (ii) the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and (iii) other customary closing conditions. The transaction is expected to close in the first quarter of 2017. If completed, the Merger will result in the Company becoming a wholly owned subsidiary of Parent and the Company's shares will no longer be listed on any public market.

Additional information about the Merger and the Merger Agreement, including circumstances under which the Merger Agreement can be terminated and the ramifications of such termination, as well as other terms and conditions, is set forth in the Company's Current Report on Form 8-K filed with the SEC on October 31, 2016.

30

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

We believe we are one of the largest suppliers of outsourced healthcare professional staffing and administrative services to hospitals and other healthcare providers in the United States, based upon revenues and patient visits. Our regional operating models also include comprehensive programs for inpatient care, anesthesiology, inpatient specialty care, pediatrics and other healthcare services, principally within hospital departments and other healthcare treatment facilities. We have historically focused, however, primarily on providing outsourced services to hospital emergency departments (EDs), which accounts for the majority of our net revenues.

Merger Agreement

On October 31, 2016, we announced that we entered into an Agreement and Plan of Merger (the Merger Agreement) to be acquired by funds affiliated with The Blackstone Group L.P. and certain co-investors.   We entered into a Merger Agreement with Tennessee Parent, Inc., a Delaware corporation (Parent) and Tennessee Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (Merger Sub), pursuant to which Merger Sub will be merged with and into the Company (the Merger) with the Company surviving the Merger as a wholly owned subsidiary of Parent. Our Board of Directors unanimously approved the Merger Agreement and resolved to recommend that our stockholders vote to adopt the Merger Agreement. Until the tenth business day following the end of the go-shop period, we may continue to engage with any third party that made an acquisition proposal prior to the end of the go-shop period that the Board of Directors has determined in good faith, after consultation with outside counsel and its financial advisors, is or could reasonably be expected to result in a superior proposal as defined in the Merger Agreement (each, an Excluded Party).

At the effective time of the Merger (the Effective Time), each share of the Company’s common stock, par value $0.01 per share, issued and outstanding immediately prior to the Effective Time (other than shares of the Company’s common stock held by Parent, Merger Sub or any other direct or indirect wholly-owned subsidiary of Parent, shares owned by the Company (including shares held in treasury) or any of its direct or indirect wholly-owned subsidiaries, and shares owned by stockholders who have properly made and not withdrawn or lost a demand for appraisal rights under Delaware law) will be converted into the right to receive $43.50 in cash, without interest and subject to applicable withholding taxes (the Merger Consideration).

Pursuant to the Merger Agreement, (i) each outstanding Company stock option will immediately vest and be canceled and converted into the right to receive an amount in cash equal to the product of (x) the total number of shares of Company common stock subject to each Company stock option multiplied by (y) the excess, if any, of the Merger Consideration over the per share exercise price under such Company stock option and (ii) each outstanding Company restricted stock unit or similar stock right (other than Company performance share units and market stock units, each a “Company stock unit”) will be canceled and converted into the right to receive an amount in cash equal to the product of (x) the number of shares of Company common stock subject to such Company stock unit multiplied by (y) the Merger Consideration. Each outstanding Company performance share unit will be canceled at the Effective Time, and the holder of such Company performance share unit will be entitled to receive an amount in cash equal to the product of (x) the number of shares of Company common stock subject to such Company performance share unit (assuming performance resulted in a payout at the target level award) multiplied by (y) the Merger Consideration. Performance options will vest to the extent the relevant performance vesting thresholds are achieved based on the per share Merger Consideration and, with respect to market share units, a holder of market share units will be entitled to receive an amount in cash equal to the product of (x) the MSU End Price (as set forth in his applicable award agreement) and (y) the relevant performance multiplier (as set forth in his applicable award agreement) that is determined by reference to the per share Merger Consideration. The cash payments in respect of the canceled equity awards will generally be paid as soon as reasonably practicable after the Effective Time, subject to potential delayed payment in the case of any equity awards subject to existing deferral elections.

The Merger Agreement contains certain termination rights for the Company and Parent, including the right of the Company to terminate the Merger Agreement to accept a superior proposal, subject to specified limitations, and provides that, upon termination of the Merger Agreement by the Company or Parent upon specified conditions, the Company will be required to pay Parent a termination fee of $50.4 million under specified conditions where the Company terminates the Merger Agreement in connection with its entry into a superior proposal with an Excluded Party and of $100.8 million under other specified conditions. The Merger Agreement also provides that Parent will be required to pay the Company a reverse termination fee of $201.7 million upon the termination of the Merger Agreement by the Company under specified conditions. There can be no assurance that approval of our stockholders will be obtained or that the Merger Agreement will not be otherwise terminated under the circumstances triggering these obligations. If triggered, payment of these fees and costs will negatively impact the Company's results of operations, financial condition and cash flows.

The closing of the Merger is subject to a condition that the Merger Agreement be adopted by the affirmative vote of the holders of a majority of all of the outstanding shares of the Company’s common stock entitled to vote thereon at such meeting. Consummation of the Merger is also subject to (i) the absence of any law, injunction or other order that prohibits the

31

consummation of the Merger, (ii) the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and (iii) other customary closing conditions. The transaction is expected to close in the first quarter of 2017. If completed, the Merger will result in the Company becoming a wholly owned subsidiary of Parent and our shares will no longer be listed on any public market.

Additional information about the Merger and the Merger Agreement, including circumstances under which the Merger Agreement can be terminated and the ramifications of such termination, as well as other terms and conditions, is set forth in our Current Report on Form 8-K filed with the SEC on October 31, 2016.

Factors and Trends that Affect Our Results of Operations

In reading our financial statements, you should be aware of the following factors and trends we believe are important in understanding our financial performance.

General Economic Conditions

Any lingering effects of the recent economic conditions may adversely impact our ability to collect for the services we provide as higher unemployment and reductions in commercial managed care and governmental healthcare enrollment may increase the number of uninsured and underinsured patients seeking healthcare at one of our staffed EDs or other clinical facilities. We could be negatively affected if the federal government or the states reduce funding of Medicare, Medicaid and other federal and state healthcare programs in response to increasing deficits in their budgets. Also, patient volume trends in our staffed hospital clinical departments could be adversely affected as individuals potentially defer or forgo seeking care in such departments due to the loss or reduction of coverage previously available to such individuals under commercial insurance or governmental healthcare programs.

IPC Healthcare Acquisition

On November 23, 2015, we completed the acquisition of IPC Healthcare, Inc. (IPC), a national acute hospital medicine and post-acute provider organization. At closing, the Company paid approximately $1.60 billion in cash to the former owners of IPC in exchange for all of the outstanding equity interests of IPC.

In connection with this transaction, we obtained assets and assumed liabilities resulting in the recognition of $1.58 billion of goodwill. On an ongoing basis, we evaluate whether facts and circumstances indicate any impairment of the value of this goodwill. As circumstances change, we cannot be certain that the value of this goodwill will be realized by us. If we determine that a significant impairment has occurred, we will be required to write-off the impaired portion of this goodwill, which could have a material adverse effect on our results of operations in the period in which the write-off occurs. See Note 3 for more information related to the IPC acquisition.

IPC reported revenue of $177.1 million and $555.5 million in the third quarter and first nine months of 2016, respectively.

Healthcare Reform

In 2010, the President of the United States and the U.S. Congress enacted significant reforms to the U.S. healthcare system. These reforms, contained primarily in the Patient Protection and Affordable Care Act, Pub.L. 111-148 (PPACA) and its companion act, the Health Care Education and Reconciliation Act, Pub.L. 111-152, (HCERA), (collectively, the Healthcare Reform Laws) have significantly altered the U.S. healthcare system by establishing, among many other things; (i) increased access to health insurance benefits for the uninsured and underinsured populations; (ii) new facilitators and providers of health insurance as well as new health insurance purchasing access points (i.e., exchanges); (iii) incentives for certain employer groups to purchase health insurance for their employees; (iv) opportunities for subsidies to certain qualifying individuals to help defray the cost of premiums and other out-of-pocket costs associated with the purchase of health insurance; and (v) over the longer term, mechanisms to foster alternative payment and reimbursement methodologies focused on outcomes, quality and care coordination.

Since its passage in 2010, the Healthcare Reform Laws have faced several challenges. Notably, in June 2012, the U.S. Supreme Court upheld the constitutionality of the requirement in the PPACA that individuals maintain health insurance or be required by law to pay a penalty (known as the individual mandate). In that ruling, the individual mandate was upheld by the U.S. Supreme Court under Congress's taxing power. Additionally, the U.S. Supreme Court held in the same ruling that states were not obligated to expand their Medicaid programs as stipulated in the PPACA to eligible recipients based solely on income.  Consequently, the ruling held that each state retained the option to expand their Medicaid rolls or not. States that choose not to expand their Medicaid rolls will forego a 100% federal matching fund made available to states (phasing down to 90% in 2020 and thereafter) for the expanded Medicaid population, but those states that do not expand will not lose their existing federal Medicaid matching payments. Currently, 32 states (including the District of Columbia) have implemented or announced their

32

intention to expand their Medicaid programs for individuals with incomes at or less than 138% of the Federal Poverty Limit (FPL), and 19 states have elected not to expand. In addition, in June 2015, the U.S. Supreme Court upheld the provision of tax credits and federal subsidies available to individuals who purchase health insurance through a federally-facilitated exchange, irrespective of whether the exchange is run by the state or the federal government.

The Healthcare Reform Laws triggered numerous other changes to the U.S. healthcare system, some of which have already gone into effect, such as the individual mandate which went into effect on January 1, 2014, while others have been delayed until 2016 and beyond. For instance, the requirement that mid-size employers (defined as groups between 50 and 99 employees) and large size employers (defined as 100 or more employees) provide health insurance to their employees or pay an employee fine, per employee (the employer mandate) was delayed several times and was not fully implemented until 2016. Additionally, in December 2015, Congress, as part of the Consolidated Appropriations Act for 2016: (i) suspended the health insurance industry fee (the health insurance tax) which applies to employer purchased insured plans, not self-insured plans, for one year, 2017; (ii) defunded the Independent Payment Advisory Board (IPAB), which is a 15-member panel of health care experts created by the PPACA and tasked with making annual cost-cutting recommendations for Medicare if Medicare spending exceeds a specified growth rate, for one year, 2016; (iii) eliminated the Medical Device Excise Tax (Medical Device Tax), which imposed a 2.3% tax on manufacturers of certain medical devices, for two years, 2016 and 2017; and (iv) delayed the implementation of the “Cadillac Tax”, which imposed an excise tax of 40% on premiums for individuals and families that exceeded a certain minimum threshold of $10,200 for individuals and $27,500 for families until 2020.

Most recently, in January 2016, and for the first time since the inception of the Healthcare Reform Laws, Congress sent a bill to the President of the United States, repealing, in full, the Healthcare Reform Laws. President Obama vetoed this bill and Congress failed to override the President’s veto, but notwithstanding, further challenges to the Healthcare Reform Laws are expected which could impact further implementation of these laws, or the law itself. Consequently, the outcome of the upcoming 2016 presidential elections will likely be determinative on the long-term future of the Healthcare Reform Laws.

Changes in Payor Mix

Since implementation of the Healthcare Reform Laws, many of the patients presenting to the Company’s affiliated health care professionals have experienced increased access to health benefits either through the expansion of state Medicaid programs or through access to exchange enrollment opportunities. During 2014 and 2015, the Company realized a decline in the percentage of self-pay visits for our consolidated fee for service volume and an increase in the percentage of Medicaid visits which we believe is attributable to healthcare reform. Other provisions, however, such as Medicare payment reforms and reductions that could potentially reduce provider payments, may have an adverse effect on the reimbursement rates we receive for services provided by affiliated healthcare professionals.

Medicare and Medicaid Payments for Physician Services

The Centers for Medicare & Medicaid Services (CMS) reimburses for our services to Medicare beneficiaries based upon the rates in the Medicare Physician Fee Schedule (MPFS), which were updated each year based on the Sustainable Growth Rate (SGR) formula enacted under the Balanced Budget Act of 1997. Many private payors use the MPFS to determine their own reimbursement rates. The application of the SGR formula to the MPFS yielded negative updates every year beginning in 2002, although CMS was able to take administrative steps to avoid a reduction in 2003 and Congress took a series of legislative actions to prevent reductions each year from 2004 through March 31, 2015.

On April 14, 2015, Congress enacted legislation known as the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) that permanently repealed the SGR formula, replacing it with a formula that calls for annual updates of 0.5% for a 5-year period (starting July 1, 2015 through the end of 2019). Starting in 2020 and through the end of 2025, there will be no annual updates to the MPFS payment rates. Physicians will have the opportunity to receive additional payment adjustments through the Merit-Based Incentive Payment System (MIPS) starting in 2019. MIPS is an incentive-based payment program that rewards quality performance related to four assessment categories: quality of care measures, resource use, meaningful use of electronic health records (EHRs), and clinical practice improvement activities. Physicians will receive a positive, neutral or negative payment adjustment based on how their composite performance score for each of the four assessment categories compares to the relevant performance threshold. Negative payment adjustments are capped at 4% in 2019, increasing each year, up to 9% in 2022 and beyond. Positive payment adjustments must be paid out in an amount equal to the negative payment adjustments and can reach up to a maximum of three times the annual cap for negative payment adjustments in a particular year. Additional incentive payments will be available for “exceptional performers”. Alternatively, physicians who receive a significant share of their revenue through participation in alternative payment models (APMs) that involve risk of financial losses, use of EHRs, and a quality measurement component will receive a 5% bonus each year from 2019 through 2024. These physicians are excluded from participation in the MIPS. In 2026 and subsequent years, annual updates will differ based on whether a physician is participating in an APM that meets certain criteria. Physicians participating in qualifying APMs will receive a 0.75% update, and all other physicians will receive a 0.25% update. APMs include models being tested by

33

the Center for Medicare and Medicaid Innovation (other than health care innovation awards), the Medicare Shared Savings Program, under the Health Care Quality Demonstration Program, and other demonstrations required by Federal law. On October 14, 2016, CMS released a final rule detailing how it plans to implement the MIPS program and incentives for participation in APMs. The final rule offers flexibility and additional options for physicians in order to reduce barriers to participation in MIPS and APMs and minimizes the risk of negative payment adjustments in the early years of these programs.

In addition to these changes to the Medicare physician payment system, MACRA also extended funding for the Children's Health Insurance Program (CHIP). The CHIP program, which covers more than eight million children and pregnant women in families that earn income above Medicaid eligibility levels, is currently authorized through 2019. Currently, funding for the CHIP program has been extended for two years, through fiscal year 2017.

2016 Medicare Physician Fee Schedule (2016 MPFS)

In November 2015, CMS released the final rule to update the 2016 MPFS. This was the first final regulatory update to the MPFS since the SGR formula was repealed in April 2015. The 2016 MPFS final rule resulted in a blended adjustment, impacted not just by MACRA, but also by the Protecting Access to Medicare Act of 2014 (PAMA) and the Achieving a Better Life Experience Act of 2014 (ABLE). A reduction in the 2016 Conversion Factor (CF), offset against a slightly reduced adjustment to the respective specialties' Practice Expense Relative Value Units (PE RVUs), resulted in a slight negative adjustment to the 2016 MPFS.

2017 Medicare Physician Fee Schedule (2017 MPFS)

On November 2, 2016, CMS released the final rule to update the 2017 MPFS. The final rule addresses changes to the MPFS payment rates and other Medicare Part B payment policies. For 2017, the Conversion Factor is estimated to increase slightly, due to application of the 0.5% update factor offset by an RVU budget neutrality adjustment, a target recapture amount, and a multiple procedure payment reduction (MPPR) adjustment for advanced imaging services. MPFS payment rates for Anesthesiology and Emergency Medicine are expected to stay the same for 2017.

Out-of-Network Emergency Care: State Statutes Prohibiting Balance Billing and the Greatest of Three

Over the last several years, the practice of balance billing has gained significant attention in the media from consumers and their advocacy groups. Balance billing is the practice whereby physicians and providers who do not hold managed care provider contracts with certain health insurance plans, bill patients who have accessed their services at amounts above the amount the managed care plan elects to pay the non-participating provider for such services. Recently, the term “surprise billing” has taken a prominent position in the print and digital media particularly among consumer advocacy groups. Surprise billing refers to instances where patients present for medical care at in-network, participating hospitals but unknowingly receive care from out-of-network, non-participating hospital-based physicians such as emergency physicians, anesthesiologists, radiologists or pathologists. This can result in the patient or consumer experiencing claims processing discrepancies and potentially higher out-of-pocket costs, including their receipt of balance bills. The reimbursement amount the provider receives from the plan varies dramatically from plan to plan, region to region and even by insurance product line. The variable and often changing amounts paid by health insurance plans for out-of-network services are referred by the plans as "usual, customary & reasonable", “UCR”, or are also referred to as "usual, customary cost", or "UCC" reimbursement amounts.

In response to the needs of its patients, and as a means to avoid the practice of balance and/or surprise billing, we make a concerted effort to contract with as many health insurance plans as possible, as well as actively engage with our hospital partners to ensure, by all means possible, that we are contracted with those health plans our hospitals contract with, notwithstanding the many variables that exist relative to managed care contracting, either with respect to market conditions, rates, plan enrollment, or even hospital relationships. On occasion, we find ourselves out-of-network with a particular health insurance plan either because (i) the plan has expressed unwillingness to contract with us, (ii) the plan chooses not to enter into business arrangements with “wrap” or “repricing network” providers, or (iii) we and the plan have been unable to reach agreement on reimbursement amounts sufficient to allow us to participate with the plan and become a network provider. Although it is generally a rare occurrence, in such cases we may choose to balance bill patients for amounts that the health plan fails to reimburse citing UCR or UCC as the basis for its payment amount.

Recently, several states have passed statutes, or are currently engaged in legislative efforts, to prohibit the practice of balance and/or surprise billing. Over the last year, balance/surprise billing statutes have passed in New York, Connecticut and most recently in Florida. Florida's law expanded an existing balance billing statute to include Preferred Provider Organizations (PPO) as well as Health Maintenance Organization (HMO) insurance products. California, too, has recently passed legislation (although emergency medical services are exempt) which expands an earlier prohibition on balance billing for out-of-network services rendered in participating, in-network facilities. Other states, such as Georgia, Tennessee and New Jersey are also considering balance/surprise billing restrictions as well, or like Texas, are considering regulations implementing mediation or

34

arbitration dispute resolution processes for the resolution of out-of-network reimbursement disputes between payors and providers.

Additionally, many of these same states are also engaging in network adequacy discussions with health plans as a means to address the issue of narrow or limited participating provider networks, generally referred to as “narrow networks.” This, coupled with high deductible health benefit plans, compounds the concerns and the frequency associated with balance/surprise billing. However, by incorporating certain provider network standards into statute and regulation, states are able to ensure health plans build provider networks of sufficient size and scope to meet the geographic and financial needs of their members and patients, which in turn, frequently drives favorable contract discussions between plans and providers sufficient to allow for our in-network participation with plans.

Given the highly limited number of medical claims that are both out-of-network and balance billed to patients by the Company, the effect of balance/surprise billing statutes on the Company are anticipated to be minimal. Notwithstanding, the Company supports state and federal efforts to develop benchmark standards for defining UCR and UCC in conjunction with statutes that prohibit balance/surprise billing. The Company supports state statutes like those in New York and Connecticut which adopted the 80^th percentile of physician charges as the benchmark standard for UCC. The Company supports the adopted standard in the Florida law defining the benchmark standard as the “usual and customary” physician charges in the community, but believes the legislation did not go far enough in that it failed to establish the 80^th percentile of physician charges as the benchmark as was done in New York and Connecticut. Likewise, in California, the Company opposed efforts to establish an out-of-network benchmarking standard tied to an average in-network contract rate standard or a standard based on an arbitrary multiple of Medicare payment rates. The Company believes neither standard is reflective of a transparent marketplace reflective of true market-based standards for establishing a benchmark / minimum benefit standard (MBS) for determining UCR/UCC.

Further, in November, 2015, CMS, DoL and IRS published a final rule related to the patient protections for out-of-network emergency services, with specific reference to the three prong “test” which determined minimum payment to providers for the reimbursement of such out-of-network emergency services (commonly known as the “Greater of Three”). The Company, along with its industry partners, continues to advocate for a defined benchmark standard to supplement the final rule representing the 80^th percentile of physician charges, geographically adjusted and specialty specific as determined by an independently produced, commercially available and publicly accessible source of physician charges, aggregated in the form of a licensed database representing a composite of physician charges in a community.

Bundled Payments for Care Improvement (BPCI) Program

In July 2015, we began participating in an alternative payment model demonstration project with CMS. The BPCI program requires participating providers to manage the care delivered to certain qualified Medicare beneficiaries during an acute hospitalization and for 90 days thereafter with the end goals of improving quality and reducing costs. The program, which is comprised of four broadly defined models of care, requires participants to go “at-risk” by guaranteeing CMS 2% savings on the costs of services under management with the remaining savings paid to the participants as an incentive for participation. The various models of care cover acute care hospital stays, post-acute care, or both. We participate primarily in Model 2: Retrospective Acute Care Hospital Stay plus Post-Acute Care.

In connection with our participation in the BPCI program, we have contracted with a convening organization that brings together multiple health care providers to participate in BPCI. Currently, 36 of our provider groups (TINs) participate in the BPCI program in several different geographic locations. We significantly expanded our participation in BPCI through the acquisition of IPC Healthcare, Inc. (IPC). During the initial reconciliation process in April 2016 related to the first performance quarter of participation, CMS discovered errors in their physician data set that prevented an accurate reconciliation of performance. As a result, CMS announced in July 2016 that it has waived collection of any guaranteed payments related to downside risk for program performance in 2015 but will remit calculated savings to participants to the extent savings are achieved. At this time, there is not sufficiently accurate information available to measure any gains or losses to date from this program. We anticipate accurate data will be available from CMS by year end of 2016. We have not recognized any benefit or expense associated with the risk elements of the BPCI program, although we have incurred a modest amount of administrative expense as we continue to build out our support operations for the program.

35

Critical Accounting Policies and Estimates

The consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States, which requires us to make estimates and assumptions. Management believes the following critical accounting policies, among others, affect its more significant judgments and estimates used in the preparation of the Company’s consolidated financial statements.

There have been no material changes to these critical accounting policies or their application during the nine months ended September 30, 2016.

Revenue Recognition

Net Revenues Before Provision for Uncollectibles. Net revenues before provision for uncollectibles consist of fee for service revenue, contract revenue and other revenue. Net revenues before provision for uncollectibles are recorded in the period services are rendered. Our net revenues before provision for uncollectibles are principally derived from the provision of healthcare staffing services to patients within healthcare facilities. The form of billing and related risk of collection for such services may vary by customer. The following is a summary of the principal forms of our billing arrangements and how net revenues before provision for uncollectibles are recognized for each.

A significant portion (approximately 88% of our net revenues before provision for uncollectibles for the nine months ended September 30, 2016 and 87% for the year ended December 31, 2015) resulted from fee for service patient visits. Fee for service revenue represents revenue earned under contracts in which we bill and collect the professional component of charges for medical services rendered by our contracted and employed physicians. Under the fee for service arrangements, we bill patients for services provided and receive payment from patients or their third-party payors. Fee for service revenue is reported net of contractual allowances and policy discounts. All services provided are expected to result in cash flows and are therefore reflected as net revenues before provision for uncollectibles in the financial statements. Fee for service revenue is recognized in the period that the services are rendered to specific patients and reduced immediately for the estimated impact of contractual allowances in the case of those patients having third-party payor coverage. The recognition of net revenues before provision for uncollectibles (gross charges less contractual allowances) from such visits is dependent on such factors as proper completion of medical charts following a patient visit, the forwarding of such charts to one of our billing centers for medical coding and entering into our billing systems and the verification of each patient’s submission or representation at the time services are rendered as to the payor(s) responsible for payment of such services. Net revenues before provision for uncollectibles is recorded based on the information known at the time of entering such information into our billing systems as well as an estimate of the net revenues before provision for uncollectibles associated with medical charts for a given service period that have not yet been processed into our billing systems. The above factors and estimates are subject to change. For example, patient payor information may change following an initial attempt to bill for services due to a change in payor status. Such changes in payor status have an impact on recorded net revenues before provision for uncollectibles due to differing payors being subject to different contractual allowance amounts. Such changes in net revenues before provision for uncollectibles are recognized in the period that such changes in the payor become known. Similarly, the actual volume of medical charts not processed into our billing systems may be different from the amounts estimated. Such differences in net revenues before provision for uncollectibles are adjusted the following month based on actual chart volumes processed.

Contract revenue represents revenue generated under contracts in which we provide physician and other healthcare staffing and administrative services in return for a contractually negotiated fee. In these contractual arrangements we are the principal in the transaction and therefore recognize contract revenue on a gross basis. Contract revenue consists primarily of billings based on hours of healthcare staffing provided at agreed upon hourly rates. Revenue in such cases is recognized as the hours worked by our staff and contractors. Additionally, contract revenue includes supplemental revenue from hospitals where we may have a fee for service contract arrangement. Contract revenue for the supplemental billing in such cases is recognized based on the terms of each individual contract. Such contract terms generally either provide for a fixed monthly dollar amount or a variable amount based upon measurable monthly activity, such as hours staffed, patient visits or actual patient collections compared to a minimum activity threshold. Such supplemental revenues based on variable arrangements are usually contractually fixed on a monthly, quarterly or annual calculation basis considering the variable factors negotiated in each such arrangement. Such supplemental revenues are recognized as revenue in the period when such amounts are determined to be fixed and therefore contractually obligated as payable by the customer under the terms of the respective agreement.

Other revenue consists primarily of revenue from management and billing services provided to outside parties. Revenue is recognized for such services pursuant to the terms of the contracts with customers. Generally, such contracts consist of fixed monthly amounts with revenue recognized in the month services are rendered or as hourly consulting fees recognized as revenue as hours worked in accordance with such arrangements. Additionally, we derive a portion of our revenues from providing billing services that are contingent upon the collection of third-party physician billings by us on behalf of such

36

customers. Revenues are not considered earned and therefore not recognized as revenue until actual cash collections are achieved in accordance with the contractual arrangements for such services.

Net Revenues. Net revenues reflect management’s estimate of billed amounts to be ultimately collected. Management, in estimating the amounts to be collected resulting from approximately 25 million fee for service patient visits and procedures over the last 12 months, considers such factors as prior contract collection experience, current period changes in payor mix and patient acuity indicators, reimbursement rate trends in governmental and private sector insurance programs, resolution of overprovision account balances, the estimated impact of billing system effectiveness improvement initiatives, and trends in collections from self-pay patients and external collection agencies. In developing our estimate of collections per visit or procedure, we consider the amount of outstanding gross accounts receivable by period of service and by payor class, but do not use an accounts receivable aging schedule to establish estimated collection valuations. Individual estimates of net revenues by contractual location are monitored and refreshed each month as cash receipts are applied to existing accounts receivable balances and other current trends that have an impact upon the estimated collections per visit are observed. Such estimates are substantially formulaic in nature. In the ordinary course of business, we experience changes in our initial estimates of net revenues during the year following commencement of services. Such provisions and any subsequent changes in estimates may result in adjustments to our operating results with a corresponding adjustment to our accounts receivable allowance for uncollectibles on our balance sheet. Differences between amounts ultimately realized and the initial estimates of net revenues have historically not been material. Beginning in the first quarter of 2016, we modified our reporting metric for hospital medicine volume from cases to encounters and have presented prior year information on the same basis. Encounters represent the individual billable services by the provider during the course of a patient's hospital stay while cases represents the total hospital stay. On average, there may be approximately four to five encounters per case for a typical hospital stay. Encounters are the volume metric that has been reported by IPC and this change is consistent with their historical reporting format. The change in the hospital medicine volume metric did not have a material impact on the reported results in either period.

The table and information below summarize our approximate payor mix as a percentage of consolidated fee for service volume and estimated net revenues per payor, excluding IPC, for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2016		2015		2016
Payor:
Medicare	27.3	%	28.0	%	27.2	%	27.9	%
Medicaid	30.3		29.5		30.5		30.0
Commercial and managed care	25.6		25.5		25.9		25.8
Self-pay	15.6		15.7		15.1		15.0
Other	1.2		1.3		1.3		1.3
Total	100.0	%	100.0	%	100.0	%	100.0	%

Estimated net revenues derived from commercial and managed care plans were approximately 40% in both the nine months ended September 30, 2016 and 41% in 2015. Estimated net revenues derived from the Medicare program were approximately 20% of total net revenues in the nine months ended September 30, 2016 and 19% in 2015. Estimated net revenues derived from the Medicaid program were approximately 12% of total net revenues in the nine months ended September 30, 2016 and 11% in 2015. In addition, net revenues derived from within the Military Health System, which is the U.S. military’s dependent healthcare program, and other government agencies were approximately 3% in the nine months ended September 30, 2016 and 3% in 2015.

Accounts Receivable. As described above and below, we determine the estimated value of our accounts receivable based on estimated cash collection run rates of estimated future collections by contract for patient visits under our fee for service revenue. Accordingly, we are unable to report the payor mix composition on a dollar basis of its outstanding net accounts receivable. However, a 1% change in the estimated carrying value of our net fee for service patient accounts receivable before consideration of the allowance for uncollectible accounts at September 30, 2016 could have an after tax effect of approximately $8.2 million on our financial position and results of operations. Our days revenue outstanding at December 31, 2015 and September 30, 2016 were 62.7 days and 66.8 days, respectively, excluding the effect of the IPC accounts receivable. Our days revenue outstanding including IPC at December 31, 2015 and September 30, 2016 were 69.6 days and 67.9 days, respectively. The number of days outstanding will fluctuate over time due to a number of factors, including, the timing of cash collections and valuation adjustments recorded during the period and increases in average revenue per day that are primarily attributed to

37

an increase in gross charges and patient volumes and increased pricing with managed care plans. Our allowance for doubtful accounts totaled $653.1 million as of September 30, 2016.

Approximately 98% of our allowance for doubtful accounts is related to gross fees for fee for service patient visits. Our principal exposure for uncollectible fee for service visits is centered in self-pay patients and in co-payments and deductibles from patients with insurance. While we do not specifically allocate the allowance for doubtful accounts to individual accounts or specific payor classifications, the portion of the allowance, excluding IPC, associated with fee for service charges as of September 30, 2016 was equal to approximately 93% of outstanding self-pay fee for service patient accounts.

The majority of our fee for service patient visits are for the provision of emergency care in hospital settings. Due to federal government regulations governing the provision of such care, we are obligated to provide emergency care regardless of the patient’s ability to pay or whether or not the patient has insurance or other third-party coverage for the costs of the services rendered. While we attempt to obtain all relevant billing information at the time emergency care services are rendered, there are numerous patient encounters where such information is not available at time of discharge. In such cases where detailed billing information relative to insurance or other third-party coverage is not available at discharge, we attempt to obtain such information from the patient or client hospital billing record information subsequent to discharge to facilitate the collections process. Collections at the time of rendering such services (emergency room discharge as an example) are not significant. The primary responsibility for collection of fee for service accounts receivable resides within our internal billing operations. Once a claim has been submitted to a payor or an individual patient, employees within our billing operations are responsible for the follow-up collection efforts. The protocol for follow-up differs by payor classification. For self-pay patients, our billing system will automatically send a series of dunning letters on a prescribed time frame requesting payment or the provision of information reflecting that the balance due is covered by another payor, such as Medicare or a third-party insurance plan. Generally, the dunning cycle on a self-pay account will run from 90 to 120 days. At the end of this period, if no collections or additional information is obtained from the patient, the account is no longer considered an active account and is transferred to a collection agency. Upon transfer to a collection agency, the patient account is written-off as a bad debt. Any subsequent cash receipts on accounts previously written-off are recorded as a recovery. For non-self-pay accounts, billing personnel will follow-up and respond to any communication from payors such as requests for additional information or denials until collection of the account is obtained or other resolution has occurred. At the completion of our collection cycle, selected accounts may be transferred to collection agencies under a contingent collection basis. The projected value of future contingent collection proceeds expected to be collected over a multi-year period are considered in the estimation of our overall accounts receivable valuation. For contract accounts receivable, invoices for services are prepared in our various operating locations and mailed to our customers, generally on a monthly basis. Contract terms under such arrangements generally require payment within 30 days of receipt of the invoice. Outstanding invoices are periodically reviewed and operations personnel with responsibility for the customer relationship will contact the customer to follow-up on any delinquent invoices. Contract accounts receivable will be considered as bad debt and written-off based upon the individual circumstances of the customer situation after all collection efforts have been exhausted, including legal action if warranted, and it is the judgment of management that the account is not expected to be collected.

Methodology for Computing Allowance for Doubtful Accounts. We employ several methodologies for determining our allowance for doubtful accounts depending on the nature of the net revenues before provision for uncollectibles recognized. We initially determine gross revenue for our fee for service patient visits based upon established fee schedule prices. Such gross revenue is reduced for estimated contractual allowances for those patient visits covered by contractual insurance arrangements to result in net revenues before provision for uncollectibles. Net revenues before provision for uncollectibles are then reduced for our estimate of uncollectible amounts. Fee for service net revenue represents our estimated cash to be collected from such patient visits and is net of our estimate of account balances estimated to be uncollectible. The provision for uncollectible fee for service patient visits is based on historical experience resulting from approximately 25 million fee for service patient visits and procedures over the last 12 months. The significant volume of patient visits and the terms of thousands of commercial and managed care contracts and the various reimbursement policies relating to governmental healthcare programs do not make it feasible to evaluate fee for service accounts receivable on a specific account basis. Fee for service accounts receivable collection estimates are reviewed on a quarterly basis for each of our fee for service contracts by period of accounts receivable origination. Such reviews include the use of historical cash collection percentages by contract adjusted for the lapse of time since the date of the patient visit. In addition, when actual collection percentages differ from expected results, on a contract by contract basis, supplemental detailed reviews of the outstanding accounts receivable balances may be performed by our billing operations to determine whether there are facts and circumstances existing that may cause a different conclusion as to the estimate of the collectibility of that contract’s accounts receivable from the estimate resulting from using the historical collection experience. Contract-related net revenue is billed based on the terms of the contract at amounts expected to be collected. Such billings are typically submitted on a monthly basis and aged trial balances prepared. Allowances for estimated uncollectible amounts related to such contract billings are made based upon specific accounts and invoice periodic reviews

38

once it is concluded that such amounts are not likely to be collected. The methodologies employed to compute allowances for doubtful accounts were unchanged between 2015 and 2016.

Insurance Reserves

The nature of our business is such that it is subject to professional liability claims and lawsuits. Historically, to mitigate a portion of this risk, we have maintained insurance for individual professional liability claims with per incident and annual aggregate limits per physician for all incidents. Prior to March 12, 2003, we obtained such insurance coverage from commercial insurance providers. Subsequent to March 12, 2003, we have provided for a significant portion of our professional liability loss exposures through the use of captive insurance subsidiaries and through greater utilization of self-insurance reserves. Since March 12, 2003, the most significant cost element within our professional liability program has consisted of the actuarial estimates of losses by occurrence period. In addition to the estimated actuarial losses, other costs that are considered by management in the estimation of professional liability costs include program costs such as brokerage fees, claims management expenses, program premiums and taxes, and other administrative costs of operating the program, such as the costs to operate the captive insurance subsidiaries. Net costs in any period reflect our estimate of net losses to be incurred in that period as well as any changes to our estimates of the reserves established for net losses of prior periods.

The accounts of the captive insurance subsidiaries are fully consolidated with those of our other operations in the accompanying financial statements.

The estimation of medical professional liability losses is inherently complex. Medical professional liability claims are typically resolved over an extended period of time, often as long as ten years or more. The combination of changing conditions and the extended time required for claim resolution results in a loss estimation process that requires actuarial skill and the application of judgment, and such estimates require periodic revision. A report of actuarial loss estimates is prepared at least semi-annually. Management’s estimate of our professional liability costs resulting from such actuarial studies is significantly influenced by assumptions and assessments regarding expectations of several factors. These factors include, but are not limited to: historical paid and incurred loss development trends; hours of exposure as measured by hours of physician and related professional staff services; trends in the frequency and severity of claims, which can differ significantly by jurisdiction due to the legislative and judicial climate in such jurisdictions; coverage limits of third-party insurance; the effectiveness of our claims management process; and the outcome of litigation. As a result of the variety of factors that must be considered by management, there is a risk that actual incurred losses may develop differently from estimates.

The underlying information that serves as the foundational basis for making our actuarial estimates of professional liability losses is our internal database of incurred professional liability losses. We have captured extensive professional liability loss data going back, in some cases, over 25 years, that is maintained and updated on an ongoing basis by our internal claims management personnel. Our database contains comprehensive incurred loss information for our existing operations as far back as fiscal year 1997 (reflecting the initial timeframe in which we migrated to a consolidated professional liability program concurrent with the consummation of several significant acquisitions), and, in addition, we possess additional loss data that predates 1997 dates of occurrence for certain of our operations. Loss information reflects both paid and reserved losses incurred when we were covered by outside commercial insurance programs as well as paid and reserved losses incurred under our self-insurance program. Because of the comprehensive nature of the loss data and our comfort with the completeness and reliability of the loss data, this is the information that is used in the development of our actuarial loss estimates. We believe this database is one of the largest repositories of physician professional liability loss information available in our industry and provides us and our actuarial consultants with sufficient data to develop reasonable estimates of the ultimate losses under our self-insurance program. In addition to the estimated losses, as part of the actuarial process, we obtain revised payment pattern assumptions that are based upon our historical loss and related claims payment experience. Such payment patterns reflect estimated cash outflows for aggregate incurred losses by period based upon the occurrence date of the loss as well as the report date of the loss. Although variances have been observed in the actuarial estimate of ultimate losses by occurrence period between actuarial studies, the estimated payment patterns have shown much more limited variability. We use these payment patterns to develop our estimate of the discounted reserve amounts. The relative consistency of the payment pattern estimates provides us with a foundation in which to develop a reasonable estimate of the discount value of the professional liability reserves based upon the most current estimate of ultimate losses to be paid and the reasonable likelihood of the related cash flows over the payment period. Our estimated loss reserves were discounted at 1.6% as of December 31, 2015 and 1.1% as of September 30, 2016, which was the current weighted average Treasury rate, over a 10 year period at December 31, 2015 and September 30, 2016, which reflects the risk free interest rate over the expected period of claims payments.

In establishing our initial reserves for a given loss period, management considers the results of the actuarial loss estimates for such periods as well as assumptions regarding loss retention levels and other program costs to be incurred. On a semi-annual basis, we will review our professional liability reserves considering not only the reserves and loss estimates associated with the current period, but also the reserves established in prior periods based upon revised actuarial loss estimates.

39

The actuarial estimation process employed utilizes a frequency severity simulation model to estimate the ultimate cost of claims for each loss period. The results of the simulation model are then validated by a comparison to the results from several different actuarial methods (paid loss development, incurred loss development, incurred Bornhuetter-Ferguson method, paid Bornhuetter-Ferguson method) for reasonableness. Each method contains assumptions regarding the underlying claims process. Actuarial loss estimates at various confidence levels capture the variability in the loss estimates for process risk but assume that the underlying model and assumptions are correct. Adjustments to professional liability loss reserves will be made as needed to reflect revised assumptions and emerging trends and data. Any adjustments to reserves are reflected in the current operations. Due to the size of our reserve for professional liability losses, even a small percentage adjustment to these estimates can have a material effect on the results of operations for the period in which the adjustment is made. Given the number of factors considered in establishing the reserves for professional liability losses, it is neither practical nor meaningful to isolate a particular assumption or parameter of the process and calculate the impact of changing that single item. The actuarial reports provide a variety of loss estimates based upon statistical confidence levels reflecting the inherent uncertainty of the medical professional liability claims environment in which we operate. Initial year loss estimates are generally recorded using the actuarial expected loss estimate, but aggregate professional liability loss reserves may be carried at amounts in excess of the expected loss estimates provided by the actuarial reports due to the expectation that we believe additional adjustments to prior year estimates may occur. In addition, we are subject to the risk of claims in excess of insured limits as well as unlimited aggregate risk of loss in certain loss periods. As our self-insurance program continues to mature and additional stability is noted in the loss development trends in the program, we expect to continue to review and evaluate the carried level of reserves and make adjustments as needed.

During the first quarter of 2016, we reserved $14.3 million to settle two separate professional liability claims originating from prior years excess of coverage limits, which was fully funded as of September 30, 2016. See Note 10 for more information regarding these settlements.

Our most recent semi-annual actuarial study was completed in October 2016. Based on the results of the revised actuarial loss estimates, management determined that no additional change was necessary in our consolidated reserves for professional liability losses related to prior year loss estimates associated with our self-insured programs.

The following reflects the current reserves for professional liability costs as of September 30, 2016 (in millions) as well as the sensitivity of the reserve estimates at a 65%, 75% and 90% confidence level:

As reported	$	273.7
At 65% confidence level	$	276.8
At 75% confidence level	$	283.2
At 90% confidence level	$	297.0

With the exception of specific settlement or claim issues, it is not possible to quantify the amount of the change in our estimate of prior year losses (when required) by individual fiscal period due to the nature of the professional liability loss estimates that are provided to us on an occurrence period basis and the nature of the coverage that is obtained in the commercial insurance market which is generally underwritten on a claims made or report period basis. Even though we are self-insured for a significant portion of our risk, due to customer contracting requirements and state insurance regulations, we still, at times, must place coverage on a claims made or report period basis with commercial insurance carriers. In a limited number of markets, commercial coverage may be obtained on an occurrence basis. When evaluating the appropriate carrying level of our self-insured professional liability reserves, management considers the current estimates of occurrence period loss estimates as well as how such loss estimates and related future claims will interact with previous or current commercial insurance programs when projecting future cash flows. However, the complexity that is associated with multiple occurrence periods interacting with multiple report periods that contain risks and related reserves retained by us, as well as transferred to commercial insurance carriers, makes it impossible to allocate the change in prior year loss estimates to individual occurrence periods. Instead, we evaluate the future expected cash flows for all historical loss periods in the aggregate and compare such estimates to the current carrying value of our professional liability reserves. This process provides the basis for us to conclude that our reserves for professional liability losses are reasonable and properly stated. Management considers the results of actuarial studies when estimating the appropriate level of professional liability reserves and no adjustments to prior year loss estimates were made in periods where updated actuarial loss estimates were not available.

Due to the complexity of the actuarial estimation process, there are many factors, trends and assumptions that must be considered in the development of the actuarial loss estimates, and we are not able to quantify and disclose which specific elements are primarily contributing to changes in the revised loss estimates of historical occurrence periods when such adjustments may be recorded. However, we believe that our internal investments in enhanced risk management and claims

40

management resources and initiatives, such as the employment of additional claims and litigation management personnel and practices, and an expansion of programs such as root cause loss analysis, early claim evaluation, and litigation support for insured providers have contributed to the generally stable trends in loss development estimates noted during the most recent periods.

Impairment of Intangible Assets

In assessing the recoverability of our intangibles, we must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. If these estimates or their related assumptions change in the future, we may be required to record impairment charges for these assets.

Results of Operations

The following discussion provides an analysis of our results of operations and should be read in conjunction with our unaudited consolidated financial statements. Net revenues are an estimate of future cash collections and as such it is a key measurement by which management evaluates performance of individual contracts as well as the Company as a whole. The following table sets forth the components of net earnings as a percentage of net revenues for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2016		2015		2016
Net revenues	100.0	%	100.0	%	100.0	%	100.0	%
Professional service expenses	78.7		79.7		78.7		79.5
Professional liability costs	3.1		3.0		3.1		3.4
General and administrative expenses	7.5		8.9		8.4		8.9
Other (income) expense, net	0.2		(0.6	)	—		(0.2	)
Depreciation	0.7		0.8		0.7		0.7
Amortization	2.3		2.1		2.4		2.1
Interest expense, net	0.6		2.5		0.5		2.7
Loss on refinancing of debt	—		—		—		—
Transaction, integration, and reorganization costs	0.4		1.8		0.3		1.4
Earnings before income taxes	6.5		1.8		6.0		1.6
Provision for income taxes	2.5		0.9		2.5		0.7
Net earnings	3.9	%	0.9	%	3.5	%	0.9	%
Net (loss) earnings attributable to noncontrolling interests	—	%	—	%	—	%	—	%
Net earnings attributable to Team Health Holdings, Inc.	3.9	%	0.9	%	3.5	%	0.9	%

Three Months Ended September 30, 2016 Compared to the Three Months Ended September 30, 2015

Net Revenues Before Provision for Uncollectibles. Net revenues before provision for uncollectibles in the three months ended September 30, 2016increased $400.4 million, or 26.2%, to $1.93 billion from $1.53 billion in the three months ended September 30, 2015. The increase in net revenues before provision for uncollectibles resulted from increases in fee for service revenue of $370.5 million, contract revenue of $29.4 million and other revenue of $0.5 million. In the three months ended September 30, 2016, fee for service revenue was 88.4% of net revenues before provision for uncollectibles compared to 87.4% in the same period of 2015, contract revenue was 11.0% of net revenues before provision before uncollectibles compared to 12.0% in the same period of 2015 and other revenue was 0.6% and 0.7% in 2016 and 2015, respectively. The increase in fee for service revenue before provision for uncollectibles was primarily a result of a 52.5% increase in total fee for service visits between periods.

Provision for Uncollectibles. The provision for uncollectibles in the three months ended September 30, 2016increased $158.1 million, or 25.2%, to $784.3 million from $626.2 million in the three months ended September 30, 2015. The provision for uncollectibles as a percentage of net revenues before provision for uncollectibles declined to 40.7% in the three months ended September 30, 2016 compared with 41.1% in the corresponding quarter of 2015. The provision for uncollectibles is primarily related to revenue generated under fee for service contracts that is not expected to be fully collected. The increase in the provision for uncollectibles was due primarily to annual increases in gross fee schedules and increases in patient volumes and procedures.

41

Net Revenues. Net revenues in the three months ended September 30, 2016increased $242.3 million, or 26.9%, to $1.14 billion from $899.2 million in the three months ended September 30, 2015. IPC contributed 19.7%, non-IPC (legacy) acquisitions contributed 3.2%, same contract revenue contributed 2.9%, and net sales growth contributed 1.2% of the increase in quarter over quarter growth in net revenues.

Total same contract revenue, which consists of contracts under management in both quarters, increased $25.7 million, or 3.1%, to $847.4 million in the three months ended September 30, 2016 compared to $821.6 million in the three months ended September 30, 2015. Fee for service volume increased 2.5%, which contributed 1.9% of same contract revenue growth between quarters. Increases in estimated collections on same contract fee for service visits provided a 1.1% increase in same contract revenue growth. Managed care contracting, increases in average patient acuity, and enhancements in claims adjudication processes contributed to increases in same contract pricing in the current period while changes in payor mix constrained growth in estimated revenue per visit in both periods. Same contract revenue growth between periods was also constrained by a reduction in prior year revenue estimates in the third quarter of 2016 compared to a favorable change in prior year revenue estimates recognized in the third quarter of 2015. Contract and other revenue contributed 0.1% of same contract revenue growth between quarters. IPC reported revenue of $177.1 million in the third quarter of 2016 while legacy acquisitions contributed $29.1 million of growth in net revenues and net new contract revenue increased $10.4 million between quarters.

We typically gain new contracts by replacing competitors at hospitals that currently outsource such services, obtaining new contracts from facilities that do not currently outsource and responding to contracting opportunities within the military healthcare system. Factors influencing new contracting opportunities include the depth and breadth of our service offerings, our reputation and experience, our ability to recruit and retain qualified clinicians, and pricing considerations when a subsidy or contract payment is required. Contracts are typically terminated due to economic considerations, a change in hospital administration or ownership, dissatisfaction with our service offerings or, primarily relating to our military staffing arrangements, at the end of the contract term.

The components of net revenues include revenue from contracts that have been in effect for prior periods (same contract) and from net, new and acquired contracts during the periods, as set forth in the table below:

	Three Months Ended September 30,
	2015		2016
	(in thousands)
Same contract:
Fee for service revenue	$	649,942	$	674,611
Contract and other revenue	171,695		172,751
Total same contract	821,637		847,362
New contracts, net of terminations:
Fee for service revenue	54,556		56,543
Contract and other revenue	19,908		28,293
Total new contracts, net of terminations	74,464		84,836
Acquired contracts:
Fee for service revenue	2,994		188,794
Contract and other revenue	86		20,502
Total acquired contracts	3,080		209,296
Consolidated:
Fee for service revenue	707,492		919,948
Contract and other revenue	191,689		221,546
Total net revenues	$	899,181	$	1,141,494

42

The following table reflects the visits and procedures included within fee for service revenues described in the table above:

	Three Months Ended September 30,
	2015	2016
	(in thousands)
Fee for service visits and procedures:
Same contract	3,838	3,934
New and acquired contracts, net of terminations	401	2,528
Total fee for service visits and procedures	4,239	6,462

Professional Service Expenses. Professional service expenses, which include physician and provider costs, billing and collection expenses, and other professional expenses, totaled $909.7 million in the three months ended September 30, 2016 compared to $707.9 million in the three months ended September 30, 2015, an increase of $201.8 million, or 28.5%. This increase between quarters is primarily related to our acquisitions and net new contracts and a 2.7% increase in same contract professional service expenses primarily associated with increases in provider compensation. Professional service expenses as a percentage of net revenues was 79.7% in the three months ended September 30, 2016 compared to 78.7% in the three months ended September 30, 2015. Higher professional service expenses as a percentage of net revenues on new and acquired contracts contributed to the increase in professional expense margin between periods.

Professional Liability Costs. Professional liability costs were $33.9 million in the three months ended September 30, 2016 compared to $27.5 million in the three months ended September 30, 2015, an increase of $6.4 million or 23.4%. The increase was primarily attributed to an increase in provider hours, including increases from acquisitions and new contracts between periods. Professional liability costs as a percentage of net revenues were 3.0% in the third quarter of 2016 and 3.1% in 2015.

General and Administrative Expenses. General and administrative expenses increased $34.3 million, or 51.1%, to $101.3 million for the three months ended September 30, 2016 from $67.1 million in the three months ended September 30, 2015. General and administrative expenses included contingent purchase compensation expense of $9.8 million for the three months ended September 30, 2016 compared to a credit of $3.5 million for the three months ended September 30, 2015. Excluding the contingent purchase compensation expense, general and administrative expense increased $20.9 million or 29.6%, to $91.5 million for the three months ended September 30, 2016 from $70.6 million in the three months ended September 30, 2015. The increase in general and administrative expenses between periods was due primarily to the impact of the IPC operations. Total general and administrative expenses as a percentage of net revenues were 8.9% in the third quarter of 2016 and 7.5% in the same quarter in 2015. Excluding contingent purchase compensation expense, general and administrative expenses as a percentage of net revenues were 8.0% in the third quarter of 2016 compared to 7.9% in the third quarter of 2015.

Other (Income) Expense, Net. In the three months ended September 30, 2016, we recognized other income of $6.3 million compared to expense of $2.1 million in the same quarter in 2015. The increase of $8.5 million is primarily due to the change in the fair value of assets related to our non-qualified deferred compensation plan and a $4.3 million gain related to a joint venture deconsolidation in 2016. This increase was partially offset by a nonrecurring gain on other asset sales in 2015.

Depreciation. Depreciation expense was $9.0 million in the three months ended September 30, 2016 compared to $6.3 million for the three months ended September 30, 2015. The increase of $2.7 million was primarily due to capital expenditures in 2016 and 2015.

Amortization. Amortization expense was $23.8 million in the three months ended September 30, 2016 compared to $20.6 million for the three months ended September 30, 2015. The increase of $3.1 million was primarily a result of an increase in other intangibles recognized in connection with our acquisitions in 2016 and 2015.

Interest Expense, Net. Net interest expense increased $23.0 million to $28.5 million in the three months ended September 30, 2016 compared to $5.6 million in the corresponding quarter in 2015 primarily related to the addition of the Tranche B Term Loan facility and the issuance of $545.0 million of 7.25% Senior Notes due in 2023 (Notes) and an increase in the amortization of deferred financing costs, partially offset by a reduction in borrowings pursuant to our senior secured revolving credit facility (the revolving credit facility).

Transaction, Integration, and Reorganization Costs. Transaction, integration, and reorganization costs were $20.8 million for the three months ended September 30, 2016 and $3.9 million for the three months ended September 30, 2015. For 2016,

43

these expenses include ongoing IPC severance and integration costs of $6.7 million, $8.8 million of charges associated with the executive leadership change during the third quarter of 2016, $4.5 million of severance and other costs associated with our ongoing restructuring and reduction in force, and $0.8 million of legacy transaction costs during the quarter. For the three months ended September 30, 2015, we recognized $7.2 million of costs related to advisory, legal, accounting and other fees incurred related to acquisition activity, of which $2.6 million was associated with the IPC transaction.

Earnings before Income Taxes. Earnings before income taxes in the three months ended September 30, 2016 was $20.8 million compared to earnings of $58.3 million in the three months ended September 30, 2015.

Provision for Income Taxes. The provision for income taxes was $10.2 million in the three months ended September 30, 2016 compared to a provision of $22.8 million in the three months ended September 30, 2015.

Net Earnings. Net earnings were $10.6 million in the three months ended September 30, 2016 compared to $35.4 million in the three months ended September 30, 2015.

Net Earnings (Loss) Attributable to Noncontrolling Interests. Net earnings (loss) attributable to noncontrolling interests were earnings of $75,000 for the three months ended September 30, 2016 compared to a loss of $10,000 for the three months ended September 30, 2015.

Net Earnings Attributable to Team Health Holdings, Inc. Net earnings attributable to Team Health Holdings, Inc. were $10.5 million and $35.4 million for the three months ended September 30, 2016 and September 30, 2015, respectively.

Nine Months Ended September 30, 2016 Compared to the Nine Months Ended September 30, 2015

Net Revenues Before Provision for Uncollectibles. Net revenues before provision for uncollectibles in the nine months ended September 30, 2016increased $1.19 billion, or 27.1%, to $5.58 billion from $4.39 billion in the nine months ended September 30, 2015. The increase in net revenues before provision for uncollectibles resulted from increases in fee for service revenue of $1.1 billion, contract revenue of $68.9 million and other revenue of $18.4 million. In the nine months ended September 30, 2016, fee for service revenue was 88.1% of net revenues before provision for uncollectibles compared to 86.8% in the same period of 2015, contract revenue was 11.1% of net revenues before provision before uncollectibles compared to 12.5% in the same period of 2015 and other revenue was 0.8% in 2016 and 0.7% in 2015. The increase in fee for service revenue before provision for uncollectibles was primarily a result of a 57.6% increase in total fee for service visits and procedures.

Provision for Uncollectibles. The provision for uncollectibles increased $408.4 million or 23.0%, to $2.18 billion in the nine months ended September 30, 2016 from $1.77 billion in the corresponding period in 2015. The provision for uncollectibles as a percentage of net revenues before provision for uncollectibles declined to 39.1% in the nine months ended September 30, 2016 compared with 40.4% in the corresponding period of 2015. The provision for uncollectibles is primarily related to revenue generated under fee for service contracts that is not expected to be fully collected. The period-over-period increase in the provision for uncollectibles was due primarily to annual increases in gross fee schedules and increases in patient volumes and procedures.

Net Revenues. Net revenues in the nine months ended September 30, 2016increased $782.1 million or 29.9%, to $3.40 billion from $2.62 billion in the nine months ended September 30, 2015. IPC contributed 21.2%, non-IPC (legacy) acquisitions contributed 4.2%, same contract revenue contributed 3.3%, and net sales growth contributed 1.1% of the increase in period-over-period growth in net revenues. Within the acquisitions category, new hospital contracting opportunities that were initially developed by our sales and marketing process contributed 1.4% of overall net revenues growth between periods.

Total same contract revenue, which consists of contracts under management in both periods, increased $86.6 million, or 3.9%, to $2.31 billion in the nine months ended September 30, 2016 compared to $2.22 billion in the nine months ended September 30, 2015. Fee for service volume increases of 3.1% increased same contract revenue growth by 2.4%, while increases in same contract estimated collections on fee for service visits provided a 1.0% increase in same contract revenue growth between periods. Managed care contracting, increases in average patient acuity, and enhancements in claims adjudication processes contributed to increases in same contract pricing while changes in payor mix constrained growth in estimated revenue per visit in the current period. Same contract pricing growth between periods was also constrained by a reduction in prior year revenue estimates in 2016 compared to a favorable change in prior year revenue estimates recognized in 2015. Contract and other revenue contributed 0.5% of same contract revenue growth between periods. IPC contributed revenue growth of $555.5 million while legacy acquisitions contributed $110.5 million of growth in net revenues and net new contract revenue increased $29.5 million between periods.

44

We typically gain new contracts by replacing competitors at hospitals that currently outsource such services, obtaining new contracts from facilities that do not currently outsource and responding to contracting opportunities within the military healthcare system. Factors influencing new contracting opportunities include the depth and breadth of our service offerings, our reputation and experience, our ability to recruit and retain qualified clinicians, and pricing considerations when a subsidy or contract payment is required. Contracts are typically terminated due to economic considerations, a change in hospital administration or ownership, dissatisfaction with our service offerings or, primarily relating to our military staffing arrangements, at the end of the contract term.

The components of net revenues include revenue from contracts that have been in effect for prior periods (same contracts) and from net, new and acquired contracts during the periods, as set forth in the table below:

	Nine Months Ended September 30,
	2015		2016
	(in thousands)
Same contracts:
Fee for service revenue	$	1,734,744	$	1,810,597
Contract and other revenue	487,586		498,347
Total same contracts	2,222,330		2,308,944
New contracts, net of terminations:
Fee for service revenue	225,339		238,837
Contract and other revenue	83,428		99,438
Total new contracts, net of terminations	308,767		338,275
Acquired contracts:
Fee for service revenue	83,392		687,370
Contract and other revenue	3,131		65,122
Total acquired contracts	86,523		752,492
Consolidated:
Fee for service revenue	2,043,475		2,736,804
Contract and other revenue	574,145		662,907
Total net revenues	$	2,617,620	$	3,399,711

The following table reflects the visits and procedures included within fee for service revenues described in the table above:

	Nine Months Ended September 30,
	2015	2016
	(in thousands)
Fee for service visits and procedures:
Same contracts	10,278	10,594
New and acquired contracts, net of terminations	2,173	9,025
Total fee for service visits and procedures	12,451	19,619

Professional Service Expenses. Professional service expenses, which include physician and provider costs, billing and collection expenses, and other professional expenses, totaled $2.70 billion in the nine months ended September 30, 2016 compared to $2.06 billion in the nine months ended September 30, 2015, an increase of $644.6 million, or 31.3%. This increase between periods is primarily related to our acquisitions and net new contract growth and a 4.2% increase in same contract professional service expenses primarily associated with increases in provider compensation. Professional service expenses as a percentage of net revenues increased to 79.5% in the nine months ended September 30, 2016 from 78.7% in the nine months ended September 30, 2015. Higher professional service expenses as a percentage of net revenues on new and acquired contracts contributed to the increase in professional expense margin between periods.

45

Professional Liability Costs. Professional liability costs were $114.4 million in the nine months ended September 30, 2016 compared to $81.4 million in the nine months ended September 30, 2015, an increase of $33.0 million or 40.5%. Professional liability costs for the nine months ended September 30, 2016 included an increase in prior year professional liability loss reserves of $14.3 million. Excluding the prior year reserve adjustment in 2016, professional liability costs increased $18.7 million, or 23.0%, between periods. The increase was primarily attributed to an increase in provider hours including increases from acquisitions and new contracts. Professional liability costs as a percentage of net revenues were 3.4% in the nine months ended September 30, 2016 and 3.1% in the nine months ended September 30, 2015. Excluding the prior year revenue adjustments in 2016, professional liability costs as a percentage of net revenues were 2.9% in the nine months ended September 30, 2016.

General and Administrative Expenses. General and administrative expenses increased $81.7 million or 37.3% to $300.9 million for the nine months ended September 30, 2016 from $219.2 million in the nine months ended September 30, 2015. General and administrative expenses included contingent purchase compensation expense of $28.7 million for the nine months ended September 30, 2016 compared to $12.2 million of expense for the nine months ended September 30, 2015. Excluding the contingent purchase compensation expense, general and administrative expense increased $65.3 million or 31.5%, to $272.3 million for the nine months ended September 30, 2016 from $207.0 million in the nine months ended September 30, 2015. The increase in general and administrative expenses between periods was due primarily to the impact of IPC operations and other acquisitions, offset by a decline in same contract costs of $0.6 million. Total general and administrative expenses as a percentage of net revenues were 8.9% in the nine months ended September 30, 2016 and 8.4% in the nine months ended September 30, 2015. Excluding contingent purchase compensation expense, general and administrative expenses as a percentage of net revenues were 8.0% in the nine months ended September 30, 2016 compared to 7.9% in the nine months ended September 30, 2015.

Other (Income) Expense, Net. In the nine months ended September 30, 2016, we recognized other income of $7.9 million compared to $0.2 million in the same period in 2015. The increase of $7.8 million in income is primarily due to the change in the fair value of assets related to our non-qualified deferred compensation plan, a $4.3 million gain related to a joint venture deconsolidation in 2016, a loss on the sale of certain assets related to our outsourced medical coding practice in 2015, and increased realized gains on investments in 2016, partially offset by the sale of our equity investment in a hospital-based telemedicine consultation provider and certain assets that were held for sale in 2015.

Depreciation. Depreciation expense was $25.1 million in the nine months ended September 30, 2016 compared to $17.4 million for the nine months ended September 30, 2015. The increase of $7.7 million was primarily due to capital expenditures in 2016 and 2015.

Amortization. Amortization expense was $71.4 million in the nine months ended September 30, 2016 compared to $62.1 million for the nine months ended September 30, 2015. The increase of $9.3 million was primarily a result of an increase in other intangibles recognized in connection with our acquisitions in 2016 and 2015.

Net Interest Expense. Net interest expense increased $76.1 million to $90.3 million in the nine months ended September 30, 2016, compared to $14.1 million in the corresponding period in 2015, primarily related to the addition of the Tranche B Term Loan facility and the issuance of $545.0 million of 7.25% Senior Notes due in 2023 (Notes) and an increase in the amortization of deferred financing costs, partially offset by a reduction in borrowings pursuant to our senior secured revolving credit facility (the revolving credit facility).

Transaction, Integration, and Reorganization Costs. Transaction, integration, and reorganization costs were $48.3 million for the nine months ended September 30, 2016 and $7.2 million for the nine months ended September 30, 2015. For 2016, these expenses include IPC severance and integration costs of $19.3 million, $11.7 million of professional, advisory, and legal costs associated with the activities of (i) the Board's special advisory committee (which is responsible for reviewing and evaluating possible strategic alternatives available to the Company) and (ii) the JANA agreement, $8.8 million of charges associated with the executive leadership transition during the third quarter of 2016, $6.9 million of severance and lease impairment costs associated with a reorganization of the Company's legacy operations, and $1.6 million of legacy transaction costs during the quarter. For the nine months ended September 30, 2015, we recognized $7.2 million of costs related to advisory, legal, accounting and other fees incurred related to acquisition activity, of which $2.6 million was associated with the IPC transaction.

Loss on Refinancing of Debt. In connection with the refinancing of our debt facility in June 2016, we recognized a loss of $1.1 million. The loss consists of the write-off of previously recognized deferred financing costs as well as certain fees and expenses associated with the refinancing.

Earnings before Income Taxes. Earnings before income taxes in the nine months ended September 30, 2016 were $52.8 million compared to $157.5 million in the nine months ended September 30, 2015.

46

Provision for Income Taxes. The provision for income taxes was $22.6 million in the nine months ended September 30, 2016 compared to $65.2 million in the nine months ended September 30, 2015.

Net Earnings. Net earnings were $30.2 million in the nine months ended September 30, 2016 compared to $92.4 million in the nine months ended September 30, 2015.

Net Earnings (Loss) Attributable to Noncontrolling Interests. Net earnings (loss) attributable to noncontrolling interests were earnings of $266,000 for the nine months ended September 30, 2016 and a loss of $78,000 in the nine months ended September 30, 2015.

Net Earnings Attributable to Team Health Holdings, Inc. Net earnings attributable to Team Health Holdings, Inc. were $29.9 million and $92.4 million for the nine months ended September 30, 2016 and September 30, 2015, respectively.

Liquidity and Capital Resources

Our principal ongoing uses of cash are to meet working capital requirements, to fund debt obligations and to finance our capital expenditures and acquisitions. We believe that our cash needs, other than for significant acquisitions, will continue to be met through the use of existing available cash, cash flows derived from future operating results and borrowings under our senior secured revolving credit facility.

Cash flow provided by operations for the nine months ended September 30, 2016 was $107.4 million compared to $131.9 million in the same period in 2015. Included in operating cash flow were contingent purchase price payments of $5.7 million and $12.2 million in the nine months ended September 30, 2016 and September 30, 2015, respectively. Operating cash flow was also impacted by $17.0 million of cash transaction and integration costs associated with the IPC transaction in the nine months ended September 30, 2016. Excluding the impact of the contingent purchase payments and the IPC transaction and integration costs, operating cash flow was $130.1 million in 2016 compared to $144.2 million in 2015. Operating cash flow in the first nine months of 2016 reflects an increased level of accounts receivable funding and interest payments offset by a reduced level of income tax payments when compared to the prior year. Cash used in investing activities in the nine months ended September 30, 2016 was $401.0 million compared to $127.4 million in the same period of 2015. The $273.7 million increase in cash used in investing activities was principally due to an increase in cash used for acquisitions between periods. Cash provided by financing activities in the nine months ended September 30, 2016 was $280.4 million compared to cash used of $6.5 million in the nine months ended September 30, 2015. The change in financing activities between periods was primarily related to changes in net revolving credit facility borrowings between periods, an increase in term loan and contingent purchase obligation payments in 2016 and reduced equity proceeds and related tax benefit from exercise of stock options.

We spent $22.2 million in the first nine months of 2016 and $31.1 million in the first nine months of 2015 on capital expenditures. These expenditures were primarily for billing and information technology investments and related development projects along with projects in support of operational initiatives.

As of September 30, 2016, we had cash and cash equivalents of approximately $15.3 million and total outstanding debt of $2.74 billion (excluding the impact of $48.3 million of deferred financing costs). There were no known liquidity restrictions or impairments on our cash and cash equivalents as of September 30, 2016. We had $332.0 million borrowings under our revolving credit facility outstanding as of September 30, 2016 and had $318.0 million of available borrowings under our revolving credit facility (without giving effect to $6.8 million of undrawn letters of credit).

In June 2016, we completed the repricing of our Tranche B Term Loan facility. The repricing amendment reduced the interest rate applicable to the Tranche B Loans by 75 basis points to LIBOR plus 3.00% from LIBOR plus 3.75% (in each case subject to a minimum LIBOR floor of 75 basis points). See Note 8 of the accompanying consolidated financial statements for a discussion of our indebtedness.

Our senior credit facility agreement, as amended, contains both affirmative and negative covenants, including limitations on our ability to incur additional indebtedness, sell material assets, retire, redeem or otherwise reacquire our capital stock, acquire the capital stock or assets of another business and pay dividends, and require us to comply with a maximum total net leverage ratio, tested quarterly. At September 30, 2016, we were in compliance with all covenants under the senior credit facility agreement. The senior credit facility is secured by substantially all of our and our U.S. subsidiaries’ assets.

The indenture governing our Notes contains restrictive covenants that limit among other things, the ability of us and our restricted subsidiaries to incur or guarantee additional debt or issue disqualified stock or certain preferred stock; pay dividends and make other distributions on, or redeem or repurchase, capital stock; make certain investments; incur certain liens; enter into certain transactions with affiliates; merge or consolidate; enter into agreements that restrict the ability of certain restricted subsidiaries to make dividends or other payments to us or each of our existing and future material domestic wholly-owned restricted subsidiaries, referred to, collectively, as “Guarantors;” designate restricted subsidiaries as unrestricted subsidiaries;

47

and transfer or sell certain assets. These covenants are subject to a number of important limitations and exceptions. The indenture also contains customary events of default which would permit the holders of the Notes to declare those Notes to be immediately due and payable if not cured within applicable grace periods, including the failure to make timely payments on the Notes or other material indebtedness, the failure to satisfy covenants and specified events of bankruptcy and insolvency.

Subject to any contractual restrictions, we and our subsidiaries or affiliates may from time to time, in their sole discretion, purchase, repay, redeem or retire any of our outstanding equity or debt securities in privately negotiated or open market transactions, by tender offer or otherwise.

We have historically been an acquirer of other physician staffing businesses and related interests. For the nine months ended September 30, 2016, total net cash used in acquisitions, including contingent payments, was $419.1 million. As of September 30, 2016, we estimate future contingent payment obligations to be approximately $88.3 million for acquisitions made prior to September 30, 2016, which we expect to fund over a period of three years. $65.5 million was recorded as a liability on our balance sheet as of September 30, 2016, while the remaining estimated liability of $22.9 million will be recorded as contingent purchase and other acquisition compensation expense over the remaining performance period. See Note 3 of the accompanying consolidated financial statements for a discussion of our acquisitions and related contingent payment obligations.

We are currently in discussions with certain physician staffing businesses regarding potential acquisition opportunities. If we consummate any of these potential acquisitions, we would expect to fund such acquisitions using our existing cash, through borrowings under our revolving credit facility, or through the issuance of additional debt or equity. See Note 3 of the accompanying consolidated financial statements for a discussion of the Company's acquisition activity and related contingent purchase obligations.

Effective March 12, 2003, we began providing for professional liability risks in part through a captive insurance subsidiary. Prior to such date, we insured such risks principally through the commercial insurance market. The change in the professional liability insurance program initially resulted in increased cash flow due to the retention of cash formerly paid out in the form of insurance premiums to a commercial insurance company coupled with a long period (typically 2-4 years or longer on average) before cash payout of such losses occurs. A portion of such cash retained is retained within our captive insurance subsidiaries and therefore is not immediately available for general corporate purposes. Investments held by the Company and our captive insurance subsidiaries are carried at fair market value. As of September 30, 2016, these investments totaled approximately $99.9 million, including a $3.3 million net unrealized gain. See Note 5 of the accompanying consolidated financial statements for a discussion of the investments held by the Company and our captive insurance subsidiaries.

Effective June 1, 2014, we renewed our fronting carrier program with a commercial insurance carrier through May 31, 2017. For the nine months ended September 30, 2016, we paid cash premiums of approximately $4.9 million to the commercial insurance carrier, which were the first two quarterly payments for the annual premium of $9.8 million. For the nine months ended September 30, 2016, we funded approximately $18.8 million of premiums to our captive insurance subsidiaries.

We present Adjusted EBITDA as a supplemental measure of our performance. We define Adjusted EBITDA as net earnings attributable to Team Health Holdings, Inc. before interest expense, taxes, depreciation and amortization, as further adjusted to exclude the non-cash items and the other adjustments shown in the table below. We present Adjusted EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. We believe that the presentation of Adjusted EBITDA is appropriate to provide additional information to investors about the calculation of and compliance with our debt agreements. Adjusted EBITDA is a material component of these covenants.

Adjusted EBITDA is not a measurement of financial performance or liquidity under generally accepted accounting principles. In evaluating our performance as measured by Adjusted EBITDA, management recognizes and considers the limitations of this measure. Adjusted EBITDA does not reflect certain cash expenses that we are obligated to make, and although depreciation and amortizations are non-cash charges, assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements. In addition, other companies in our industry may calculate Adjusted EBITDA differently than we do or may not calculate it at all, limiting its usefulness as a comparative measure. Because of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for net earnings, operating income, cash flows from operating, investing or financing activities, or any other measure calculated in accordance with generally accepted accounting principles.

48

The following table sets forth a reconciliation of net earnings attributable to Team Health Holdings, Inc. to Adjusted EBITDA:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2016			2015			2016
	(in thousands)
Net earnings attributable to Team Health Holdings, Inc.	$	35,442		$	10,481		$	92,431		$	29,934
Interest expense, net	5,572			28,525			14,132			90,255
Provision for income taxes	22,837			10,216			65,178			22,579
Depreciation	6,290			8,979			17,423			25,081
Amortization	20,633			23,772			62,085			71,425
Other (income) expense, net(a)	2,137			(6,337		)	(182		)	(7,947		)
Contingent purchase and other acquisition compensation expense(b)	(3,530		)	9,818			12,230			28,669
Transaction, integration, and reorganization costs(c)	3,869			20,836			7,170			48,337
Equity based compensation expense(d)	3,985			6,531			13,197			20,531
Loss on refinancing of debt(e)	—			—			—			1,069
Insurance subsidiaries interest income	535			550			1,558			1,630
Professional liability loss reserve adjustments associated with prior years	—			—			—			14,284
Severance and other charges	3,343			147			4,590			688
Adjusted EBITDA	$	101,113		$	113,518		$	289,812		$	346,535

(a) Reflects gain or loss on sale of assets, realized gains on investments, and changes in fair value of investments associated with the Company’s non-qualified retirement plan.

(b) Reflects expense recognized for historical and estimated future contingent payments and other compensation expense associated with acquisitions.

(c) Reflects transaction and integration costs, reorganization expenses, and advisory, legal and other professional service fees from the Board's special advisory committee process and JANA agreement, as well as $8.8 million of costs associated with the executive leadership transition and $3.6 million of equity based compensation expense for the third quarter of 2016 and $8.8 million of costs associated with the executive leadership transition and $3.9 million of equity based compensation expense for the nine months ended September 30, 2016, primarily associated with changes in executive leadership.

(d) Reflects costs related to equity awards granted under the Company's equity based compensation plans excluding $3.9 million of equity based compensation expense for the nine months ended September 30, 2016, primarily associated with changes in executive leadership.

(e) Reflects the write-off of deferred financing costs of $0.9 million from the previous Tranche B Term Loan facility as well as certain fees and expenses associated with the repricing amendment of the Tranche B Term Loan facility.

Inflation

We do not believe that general inflation in the U.S. economy has had a material impact on our financial position or results of operations.

Seasonality

Historically, our revenues and operating results have reflected minimal seasonal variation due to the significance of revenues derived from patient visits to emergency departments, which are generally open on a year-round basis, and also due to our geographic diversification. Revenue from our non-emergency department staffing lines is dependent on a healthcare facility being open during selected time periods. Revenue in such instances will fluctuate depending upon such factors as the number of holidays in the period.

Recently Issued Accounting Standards

See Note 2 of the notes to the consolidated financial statements for a discussion of recently issued accounting standards.

49

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risk related to changes in interest rates. The Company does not use derivative financial instruments for speculative or trading purposes.

The Company’s earnings are affected by changes in short-term interest rates as a result of its borrowings under its term loan facility.

At September 30, 2016, the fair value of the Company’s total debt was approximately $2.77 billion, which had a carrying value of $2.74 billion, of which $2.19 billion was variable debt. If the market interest rates for the Company’s variable rate borrowings had averaged 1% more subsequent to December 31, 2015, the Company’s interest expense would have increased, and earnings before income taxes would have decreased, by approximately $13.3 million for the nine months ended September 30, 2016. This analysis does not consider the effects of the reduced level of overall economic activity that could exist in such an environment. Further, in the event of a change of such magnitude, management could take actions in an attempt to further mitigate its exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no changes in the Company’s financial structure.

Item 4. Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act), that are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's (SEC) rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving desired objectives. As of September 30, 2016, we conducted an evaluation under the supervision and with the participation of our management, including our President and Chief Executive Officer and Executive Vice President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. As a result of the completion of the IPC acquisition on November 23, 2015, we have begun our analysis of the systems of disclosure controls and procedures and internal controls over financial reporting of IPC and to integrate them within our broader framework of controls. The SEC’s rules require us to include acquired entities in our assessment of the effectiveness of internal control over financial reporting no later than the annual management report following the first anniversary of the acquisition. We plan to complete the evaluation and the integration of IPC within the required time frames and report management’s assessment of our internal control over financial reporting in our first annual report in which such assessment is required for this acquisition. Accordingly, as permitted by the SEC, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of its newly-acquired IPC operations, which are included in the consolidated financial statements for the period ending September 30, 2016. IPC represents $1.89 billion and $1.69 billion of total and net assets, respectively, as of September 30, 2016 and $555.5 million and $25.4 million of net revenues and net earnings, respectively, for the nine months then ended. Based on that evaluation, our Chief Executive Officer and Executive Vice President and Chief Financial Officer concluded that as of September 30, 2016, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting: There were no changes in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended September 30, 2016 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

50

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The information required with respect to this item can be found under “Litigation” in note 10 of the notes to the Company's consolidated financial statements contained in this quarterly report on Form 10-Q and is incorporated by reference into this Item 1.

Item 1A. Risk Factors

As previously announced on October 30, 2016, the Company entered into an Agreement and Plan of Merger (the Merger Agreement), by and among the Company, Tennessee Parent, Inc., a Delaware corporation (Parent) and Tennessee Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (Merger Sub), pursuant to which Merger Sub will be merged with and into the Company (the Merger) with the Company surviving the Merger as a wholly owned subsidiary of Parent. There are a number of risks and uncertainties relating to the Merger. Because of these risks, we have supplemented the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 filed with the Securities and Exchange Commission on February 22, 2016, to add the following risk factors:

Risks Related to the Merger

The occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement could have a material adverse affect on us and our stock price.

As described in the following risk factor, we could experience certain consequences related to the termination of the Merger Agreement and failure to consummate the Merger. The Merger Agreement contains certain termination rights for the Company and Parent, including the right of the Company to terminate the Merger Agreement to accept a superior proposal, subject to specified limitations, and provides that, upon termination of the Merger Agreement by the Company or Parent upon specified conditions, the Company will be required to pay Parent a termination fee of $50.4 million under specified conditions where the Company terminates the Merger Agreement in connection with its entry into a superior proposal with an Excluded Party and of $100.8 million under other specified conditions. The Merger Agreement also provides that Parent will be required to pay the Company a reverse termination fee of $201.7 million upon the termination of the Merger Agreement by the Company under specified conditions. There can be no assurance that approval of our stockholders will be obtained or that the Merger Agreement will not be otherwise terminated under the circumstances triggering these obligations. If triggered, payment of these fees and costs will negatively impact our results of operations, financial condition and cash flows and such impact will be over and above the consequences described below related to the failure to consummate the Merger.

The proposed Merger may not be consummated or may not be consummated in the timeframe or manner currently anticipated, which could have a material adverse effect on us and our stock price.

The proposed Merger is subject to various closing conditions such as the approval of our stockholders as discussed above, as well as antitrust approvals in the United States, among other customary closing conditions. It is possible that a government entity may prohibit, delay or refuse to grant approval for the consummation of the Merger. If any condition to the closing of the Merger is not satisfied or, if permissible, waived, the Merger will not be completed. In addition, satisfying the conditions to the closing of the Merger may take longer than we expect. There can be no assurance that any of the conditions to closing will be satisfied or waived or that other events will not intervene to delay or result in the failure to consummate the Merger.

 If the Merger is not completed for any reason, the price of our common stock may decline to the extent that the current market price may reflect an assumption that the Merger will be consummated at the per share merger consideration of $43.50 in cash specified in the Merger Agreement. Investor confidence could also decline. Further, we have expended, and continue to expend, significant management resources in an effort to complete the Merger. We also are, and will become, obligated to pay certain professional fees and related expenses in connection with the negotiation of the Merger Agreement and performance thereunder, whether or not the Merger is completed, and these expenses will impact our results of operations. If the Merger is not completed we will have incurred these costs, including the diversion of management resources, for which we will have received little or no benefit.

  Further, any delay in closing or a failure to close the Merger could exacerbate any negative impact on our business and our relationships with our payors, physicians and other healthcare professionals, other parties with which we maintain business relationships, or employees as described in the risk factors below, as well as negatively impact our ability to implement alternative business plans.

Disruption of management's attention from our ongoing business operations due to the proposed Merger.

51

  We have expended, and continue to expend, significant management resources in an effort to complete the Merger. Management's attention may be diverted away from the day-to-day operations of our business and execution of our existing business plan in our efforts to complete the Merger. This diversion of management resources could disrupt operations and have an adverse effect on our operating results and business.

The announcement of the proposed Merger could disrupt our relationships with our payors, physicians and other healthcare professionals and others, as well as our operating results and business generally.

   Whether or not the Merger is ultimately consummated, as a result of uncertainty related to the proposed transaction, risks relating to the impact of the announcement of the Merger on our business include the following:

• our employees may experience uncertainty about their future roles, which might adversely affect our ability to retain and hire key personnel and other employees; 

• payors, physicians and other healthcare professionals and other parties with which we maintain business relationships may experience uncertainty about our future and seek alternative relationships with third parties, seek to alter their business relationships with us or fail to extend an existing relationship with us; and

• we have expended and will continue to expend significant costs, fees and expenses for professional services and transaction costs in connection with the proposed Merger; these costs will impact our results of operations regardless of whether or not the Merger is consummated.

    Further, the Merger Agreement restricts us from taking certain actions without Parent's consent while the Merger is pending. These restrictions may, among other matters, prevent us from pursuing otherwise attractive business opportunities, making certain investments or acquisitions, selling assets, engaging in capital expenditures in excess of certain agreed limits, incurring certain indebtedness or making certain other changes to our business pending the closing of the Merger. These restrictions could have an adverse effect on our business, financial condition and results of operations.

   In addition to the foregoing, the amount of the per share merger consideration to be paid in cash pursuant to the Merger Agreement is fixed and will not be increased for changes in our business, assets, liabilities, prospects, outlook, financial condition or results of operation or in the event of any change in the market price of, analyst estimates of, or projections relating to, our common stock. Therefore, the market value of our common stock may vary significantly from the value on the date the Merger Agreement was executed or at other later dates.

Risks Related to Our Business

We may write-off intangible assets, such as goodwill, related to the IPC transaction.

As a result of purchase accounting for our IPC acquisition transaction, our balance sheet at September 30, 2016 contained intangible assets designated as either goodwill or other intangibles totaling approximately $1.59 billion in goodwill and approximately $22.6 million in other intangibles. On an ongoing basis, we evaluate whether facts and circumstances indicate any impairment of the value of intangible assets. As circumstances change, we cannot assure you that the value of these intangible assets will be realized by us. If we determine that a significant impairment has occurred, we will be required to write-off the impaired portion of intangible assets, which could have a material adverse effect on our results of operations in the period in which the write-off occurs.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

52

Item 6. Exhibits

3.1	Certificate of Incorporation of Team Health Holdings, Inc. (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K, filed on December 18, 2009: File No. 001-34583)
3.2	Amended and Restated By-laws of Team Health Holdings, Inc. (filed herewith)
10.1	Separation Agreement between Michael D. Snow and AmeriTeam Services, LLC, dated as of September 2, 2016 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K, filed on September 2, 2016: File No. 001-34583)*
10.2	Employment Agreement between Leif M. Murphy, Team Health Holdings, Inc. and AmeriTeam Services, LLC, dated as of September 2, 2016 (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K, filed on September 2, 2016: File No. 001-34538)*
10.3	Nonqualified Stock Option Agreement (Time-Vesting) by and between Team Health Holdings, Inc. and Leif M. Murphy, dated September 19, 2016 (filed herewith)*
10.4	Nonqualified Stock Option Agreement (Performance Vesting) by and between Team Health Holdings, Inc. and Leif M. Murphy, dated September 19, 2016 (filed herewith)*
10.5	Restricted Stock Unit Award Agreement by and between Team Health Holdings, Inc. and Leif M. Murphy, dated September 19, 2016 (filed herewith)*
10.6	Market Share Unit Award Agreement by and between Team Health Holdings, Inc. and Leif M. Murphy, dated September 19, 2016 (filed herewith)*
31.1	Certification by Leif M. Murphy for Team Health Holdings, Inc. dated November 4, 2016 as required by Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)
31.2	Certification by David P. Jones for Team Health Holdings, Inc. dated November 4, 2016 as required by Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)
32.1	Certification by Leif M. Murphy for Team Health Holdings, Inc. dated November 4, 2016 as required by Section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith)
32.2	Certification by David P. Jones for Team Health Holdings, Inc. dated November 4, 2016 as required by Section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith)
101	The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at September 30, 2016 and December 31, 2015, (ii) Consolidated Statement of Comprehensive Earnings for the three and nine months ended September 30, 2016 and 2015, (iii) Consolidated Statement of Cash Flows for the nine months ended September 30, 2016 and 2015, and (iv) Notes to Consolidated Financial Statements.

* Management contracts or compensatory plans or arrangements

53

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TEAM HEALTH HOLDINGS, INC.
November 4, 2016	/S/    LEIF M. MURPHY
	Leif M. Murphy President and Chief Executive Officer
November 4, 2016	/S/    DAVID P. JONES
	David P. Jones Executive Vice President and Chief Financial Officer

54

EX-3.2

AMENDED AND RESTATED

BY-LAWS

OF

TEAM HEALTH HOLDINGS, INC.

ARTICLE I

Offices

SECTION 1.01    Registered Office. Team Health Holdings, Inc. (the “Corporation”) shall maintain its registered office in the State of Delaware at The Corporation Trust Company, 1209 Orange Street, Wilmington, County of New Castle, Delaware 19801 or at such other location as determined by the Board of Directors in accordance with applicable laws. The Corporation may also have offices in such other places in the United States or elsewhere as the Board of Directors may, from time to time, determine or as the business of the Corporation may require.

ARTICLE II

Meetings of Stockholders

SECTION 2.01    Annual Meetings. Annual meetings of stockholders may be held at such place, either within or without the State of Delaware, and at such time and date as the Board of Directors shall determine. The Board of Directors may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as described in Section 2.11 of these By-laws in accordance with Section 211(a)(2) of the General Corporation Law of the State of Delaware (the “DGCL”).

SECTION 2.02    Special Meetings. Subject to the Corporation’s Certificate of Incorporation (as the same may be amended from time to time, the “Certificate of Incorporation”), special meetings of stockholders, unless otherwise prescribed by statute, may be called at any time by the holders of a majority in voting power of all outstanding shares of stock of the Corporation entitled to vote generally in the election of directors; provided, however, at any time when the Blackstone Entities (as defined below) are the beneficial owners, in the aggregate, of less than a majority in voting power of all outstanding shares of stock of the Corporation entitled to vote generally in the election of directors, special meetings of the stockholders of the Corporation for any purpose or purposes may be called at any time only by or at the direction of the Chairman of the Board of Directors, the Board of Directors or a committee of the Board of Directors which has been duly designated by the Board of Directors and whose powers and authority, as provided in a resolution of the Board of Directors, include the power to call special meetings of stockholders.

SECTION 2.03    Notice of Stockholder Business and Nominations.

(A)    Annual Meetings of Stockholders.

(1)    Nominations of persons for election to the Board of Directors and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders only (a) as provided in the Stockholders’ Agreement, dated as of December 15, 2009, by and between the Corporation and Ensemble Parent LLC (“Ensemble Parent”) (as the same may be amended, supplemented, restated or otherwise modified from time to time, the “Stockholders’ Agreement”) (with respect to nominations of persons for election to the Board of Directors only), (b) pursuant to the Corporation’s notice of meeting (or any supplement thereto) delivered pursuant to Section 2.04 of Article II of these By-laws, (c) by or at the direction of the Chairman of the Board of Directors or the Board of Directors or any committee thereof or (d) by any stockholder of the Corporation who is entitled to vote at the meeting, who, subject to paragraph (C)(4) of this Section 2.03, complied with the notice procedures set forth in paragraphs (A)(2) and (A)(3) of this Section 2.03 and who was a stockholder of record at the time such notice is delivered to the Secretary of the Corporation.

(2)    For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (d) of paragraph (A)(1) of this Section 2.03, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation, and, in the case of business other than nominations of persons for election to the Board of Directors, such other business must constitute a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred and twenty (120) days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is changed by more than thirty (30) days from the anniversary date of the previous year’s meeting, notice by the stockholder to be timely must be so delivered not earlier than one hundred and twenty (120) days prior to such annual meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made. For purposes of the first annual meeting held after December 20, 2009, the anniversary date shall be deemed to be April 20, 2009. Public announcement of an adjournment or postponement of an annual meeting shall not commence a new time period (or extend any time period) for the giving of a stockholder’s notice. Notwithstanding anything in this Section 2.03(A)(2) to the contrary, if the number of directors to be elected to the Board of Directors of the Corporation at an annual meeting is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased board of directors at least one hundred (100) calendar days prior to the first anniversary of the prior year’s annual meeting of stockholders, then a stockholder’s notice required by this Section shall be considered timely, but only with respect to nominees for any new positions created by such increase, if it is received by the Secretary of the Corporation not later than the close of business on the tenth (10th) calendar day following the day on which such public announcement is first made by the Corporation.

(3)    Such stockholder’s notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder, including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; (b) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and, in the event that such business includes a proposal to amend the By-laws of the Corporation, the language of the proposed amendment), the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporation’s books and records, and of such beneficial owner, (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner, (iii) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination, (iv) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (x) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation's outstanding capital stock required to approve or adopt the proposal or elect the nominee and/or (y) otherwise to solicit proxies or votes from stockholders in support of such proposal or nomination, and (v) any other information relating to such stockholder and beneficial owner, if any, required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in an election contest pursuant to and in accordance with Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder; (d) a description of any agreement, arrangement or understanding with respect to the nomination or proposal and/or the voting of shares of any class or series of stock of the Corporation between or among the stockholder giving the notice, the beneficial owner, if any, on whose behalf the nomination or proposal is made, any of their respective affiliates or associates and/or any others acting in concert with any of the foregoing (collectively, “proponent persons”); and (e) a description of any agreement, arrangement or understanding (including without limitation any contract to purchase or sell, acquisition or grant of any option, right or warrant to purchase or sell, swap or other instrument) to which any proponent person is a party, the intent or effect of which may be (i) to transfer to or from any proponent person, in whole or in part, any of the economic consequences of ownership of any security of the Corporation, (ii) to increase or decrease the voting power of any proponent person with respect to shares of any class or series of stock of the Corporation and/or (iii) to provide any proponent person, directly or indirectly, with the opportunity to profit or share in any profit derived from, or to otherwise benefit economically from, any increase or decrease in the value of any security of the Corporation. A stockholder providing notice of a proposed nomination for election to the Board of Directors or other business proposed to be brought before a meeting (whether given pursuant to this paragraph (A)(3) or paragraph (B) of this Section 2.03 of the By-laws) shall update and supplement such notice from time to time to the extent necessary so that the information provided or required to be provided in such notice shall be true and correct as of the record date for the meeting and as of the date that is fifteen (15) days prior to the meeting or any adjournment or postponement thereof; such update and supplement shall be delivered in writing to the Secretary of the Corporation at the principal executive offices of the Corporation not later than five (5) days after the record date for the meeting (in the case of any update and supplement required to be made as of the record date), and not later than ten (10) days prior to the date for the meeting or any adjournment or postponement thereof (in the case of any update and supplement required to be made as of fifteen (15) days prior to the meeting or any adjournment or postponement thereof). The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Corporation.

(B)    Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation's notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation's notice of meeting (1) as provided in the Stockholders’ Agreement, (2) by or at the direction of the Board of Directors or any committee thereof or (3) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is entitled to vote at the meeting, who (subject to paragraph (C)(4) of this Section 2.03) complies with the notice procedures set forth in this Section 2.03 and who is a stockholder of record at the time such notice is delivered to the Secretary of the Corporation. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder entitled to vote in such election of directors may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation's notice of meeting if the stockholder's notice as required by paragraph (A)(2) of this Section 2.03 shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 120th day prior to such special meeting and not later than the close of business on the later of the 90th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.

(C)    General. (1) Except as provided in paragraph (C)(4) of this Section 2.03, only such persons who are nominated in accordance with the procedures set forth in this Section 2.03 or the Stockholders’ Agreement shall be eligible for election to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section. Except as otherwise provided by law, the Certificate of Incorporation or these By-laws, the chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in these By-laws and, if any proposed nomination or business is not in compliance with these By-laws, to declare that such defective proposal or nomination shall be disregarded. The chairman of the meeting of stockholders shall, if the facts warrant, determine and declare to the meeting that any nomination or business was not properly brought before the meeting in accordance with the provisions of these By-laws, and if he or she should so determine, the chairman shall so declare to the meeting, and any such nomination or business not properly brought before the meeting shall not be transacted. Notwithstanding the foregoing provisions of this Section 2.03, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 2.03, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.

(2)    Whenever used in these By-laws, “public announcement” shall mean disclosure (a) in a press release released by the Corporation, provided such press release is released by the Corporation following its customary procedures, is reported by the Dow Jones News Service, Associated Press or comparable national news service, or is generally available on internet news sites, or (b) in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder.

(3)    Notwithstanding the foregoing provisions of this Section 2.03, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder with respect to the matters set forth in this Section 2.03; provided, however, that, to the fullest extent permitted by law, any references in these By-laws to the Exchange Act or the rules and regulations promulgated thereunder are not intended to and shall not limit any requirements applicable to nominations or proposals as to any other business to be considered pursuant to these By-laws (including paragraphs (A)(1)(d) and (B) hereof), and compliance with paragraphs (A)(1)(d) and (B) of this Section 2.03 of the By-laws shall be the exclusive means for a stockholder to make nominations or submit other business (other than, as provided in the last sentence of this paragraph (C)(3), matters properly brought under and in compliance with Rule 14a-8 of the Exchange Act as amended from time to time). Nothing in these By-laws shall be deemed to affect any rights (a) of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act, or (b) of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation to elect directors under specified circumstances. The foregoing notice requirements of this Section 2.03 shall be deemed satisfied by a stockholder with respect to business other than a nomination if the stockholder has notified the Corporation of his, her or its intention to present a proposal at an annual meeting in compliance with applicable rules and regulations promulgated under the Exchange Act and such stockholder’s proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting.

(4)    Notwithstanding anything to the contrary contained in this Section 2.03, for as long as the Stockholders’ Agreement remains in effect with respect to Ensemble Parent (or its affiliates and their respective successors and permitted assigns) (each, a “Blackstone Entity”), no Blackstone Entity then subject to the Stockholders’ Agreement shall be subject to the notice procedures set forth in paragraphs (A)(2), (A)(3) or (B) of this Section 2.03 to nominate any person for election to the Board of Directors or to propose any business to be considered by the stockholders at an annual meeting of stockholders.

SECTION 2.04    Notice of Meetings. Whenever stockholders are required or permitted to take any action at a meeting, a timely notice in writing or by electronic transmission, in the manner provided in Section 232 of the DGCL, of the meeting, which shall state the place, if any, date and time of the meeting, the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, the record date for determining the stockholders entitled to vote at the meeting, if such date is different from the record date for determining stockholders entitled to notice of the meeting, and, in the case of a special meeting, the purposes for which the meeting is called, shall be mailed to or transmitted electronically by the Secretary of the Corporation to each stockholder of record entitled to vote thereat as of the record date for determining the stockholders entitled to notice of the meeting. Unless otherwise provided by law, the Certificate of Incorporation or these By-laws, the notice of any meeting shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting.

SECTION 2.05    Quorum. Unless otherwise required by law or the Certificate of Incorporation, the holders of a majority of the voting power of the issued and outstanding shares of stock of the Corporation entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of stockholders. When a quorum is once present to organize a meeting, the quorum is not broken by the subsequent withdrawal of any stockholders.

SECTION 2.06    Voting. At all meetings of the stockholders, each stockholder shall be entitled to vote, in person or by proxy, the shares of voting stock owned by such stockholder of record on the record date for determining the stockholder entitled to vote at the meeting. When a quorum is present or represented at any meeting, the vote of the holders of a majority of the voting power of the shares of stock present in person or represented by proxy and entitled to vote thereon shall decide any question brought before such meeting, unless the question is one upon which, by express provision of applicable law, of the rules or regulations of any stock exchange applicable to the Corporation, of any regulation applicable to the Corporation or its securities, of the Certificate of Incorporation or of these By-laws, a different vote is required, in which case such express provision shall govern and control the decision of such question.

Notwithstanding the foregoing sentence, each director shall be elected by the vote of the majority of the votes cast with respect to that director's election at any meeting for the election of directors at which a quorum is present, provided that if, as of the tenth (10th) day preceding the date the Corporation first mails its notice of meeting for such meeting to the stockholders of the Corporation, the number of nominees exceeds the number of directors to be elected (a "Contested Election"), the directors shall be elected by the vote of a plurality of the votes cast. For purposes of this Article II, Section 2.06, a majority of votes cast shall mean that the number of votes cast "for" a director's election exceeds the number of votes cast "against" that director's election (with "abstentions" and "broker nonvotes" not counted as a vote cast either "for" or "against" that director's election).

In order for any incumbent director to become a nominee of the Board of Directors for further service on the Board of Directors, such person must submit an irrevocable resignation, contingent on (i) that person not receiving a majority of the votes cast in an election that is not a Contested Election, and (ii) acceptance of that resignation by the Board of Directors in accordance with the policies and procedures adopted by the Board of Directors for such purpose. In the event an incumbent director fails to receive a majority of the votes cast in an election that is not a Contested Election, the Nominating/Governance Committee, or such other committee designated by the Board of Directors pursuant to these By-laws, shall make a recommendation to the Board of Directors as to whether to accept or reject the resignation of such incumbent director, or whether other action should be taken. The Board of Directors shall act on the resignation, taking into account such committee's recommendation, and publicly disclose (by a press release and filing an appropriate disclosure with the Securities and Exchange Commission) its decision regarding the resignation and, if such resignation is rejected, the rationale behind the decision within ninety (90) days following certification of the election results. The committee in making its recommendation and the Board of Directors in making its decision each may consider any factors and other information that they consider appropriate and relevant. the Certificate of Incorporation, all elections of directors shall be determined by a plurality of the votes cast in respect of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors.

If the Board of Directors accepts a director's resignation pursuant to this Article II, Section 2.06, or if a nominee for director is not elected and the nominee is not an incumbent director, then the resulting vacancy may be filled pursuant to Article VI, Paragraph B of the Certificate of Incorporation.

SECTION 2.07    Chairman of Meetings. The Chairman of the Board of Directors, if one is elected, or, in his absence or disability, the President of the Corporation, shall preside at all meetings of the stockholders.

SECTION 2.08    Secretary of Meetings. The Secretary of the Corporation shall act as Secretary at all meetings of the stockholders. In the absence or disability of the Secretary, the Chairman of the Board of Directors or the President shall appoint a person to act as Secretary at such meetings.

SECTION 2.09    Consent of Stockholders in Lieu of Meeting. Except as otherwise provided in the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of the stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded; provided, however, at any time when the Blackstone Entities are the beneficial owners, in the aggregate, of less than a majority in voting power of all outstanding shares of stock of the Corporation entitled to vote generally in the election of directors, any action required or permitted to be taken by the holders of the Common Stock of the Corporation must be effected at a duly called annual or special meeting of such holders and may not be effected by any consent in writing by such holders; provided, however, that any action required or permitted to be taken by the holders of Preferred Stock, voting separately as a series or separately as a class with one or more other such series, may be taken without a meeting, without prior notice and without a vote, to the extent expressly permitted by the Preferred Stock Designation. Delivery made to the Corporation’s registered office shall be made by hand or by certified or registered mail, return receipt requested.

Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the date the earliest dated consent is delivered to the Corporation, a written consent or consents signed by a sufficient number of holders to take action are delivered to the Corporation in the manner prescribed in the first paragraph of this Section 2.09. A telegram, cablegram or other electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxyholder, or by a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed and dated for the purposes of this Section 2.09 to the extent permitted by law. Any such consent shall be delivered in accordance with Section 228(d)(1) of the DGCL. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing or electronic transmission and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that written consents signed by a sufficient number of stockholders or members to take the action were delivered to the Corporation as provided by law.

Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all purposes for which the original writing could be used; provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire original writing.

SECTION 2.10    Adjournment. At any meeting of stockholders of the Corporation, if less than a quorum be present, the person presiding at the meeting or stockholders holding a majority in voting power of the shares of stock of the Corporation, present in person or by proxy and entitled to vote thereat, shall have the power to adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present. Any business may be transacted at the adjourned meeting that might have been transacted at the meeting originally noticed. If the adjournment is for more than thirty (30) days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for determination of stockholders entitled to vote is fixed for the adjourned meeting, the Board of Directors shall fix as the record date for determining stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote at the adjourned meeting, and shall give notice of the adjourned meeting to each stockholder of record as of the record date so fixed for notice of such adjourned meeting.

SECTION 2.11    Remote Communication. If authorized by the Board of Directors in its sole discretion, and subject to such guidelines and procedures as the Board of Directors may adopt, stockholders and proxy holders not physically present at a meeting of stockholders may, by means of remote communication:

(a)    participate in a meeting of stockholders; and

(b)    be deemed present in person and vote at a meeting of stockholders whether such meeting is to be held at a designated place or solely by means of remote communication,

provided, that

(i)    the Corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder;

(ii)    the Corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings; and

(iii)    if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the Corporation.

ARTICLE III

Board of Directors

SECTION 3.01    Powers. The business and affairs of the Corporation shall be managed by or under the direction of its Board of Directors.

SECTION 3.02    Number and Term. Subject to the Certificate of Incorporation, the number of directors shall be fixed by resolution of the Board of Directors. The Board of Directors shall be elected by the stockholders at their annual meeting, and the term of each elected director shall be as set forth in the Certificate of Incorporation. Directors need not be stockholders.

SECTION 3.03    Resignations. Any director may resign at any time upon notice given in writing or by electronic transmission. The resignation shall take effect at the time specified therein, and if no time is specified, at the time of its receipt by the President or Secretary of the Corporation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise expressly provided in the resignation.

SECTION 3.04    Removal. Directors of the Corporation may be removed in the manner provided in the Certificate of Incorporation.

SECTION 3.05    Vacancies and Newly Created Directorships. Except as otherwise provided by law or the Certificate of Incorporation and subject to the rights to fill such vacancies granted to Ensemble Parent under the Stockholders’ Agreement, vacancies occurring in any directorship and newly created directorships resulting from any increase in the number of directors shall be filled only by a majority vote of the remaining directors then in office, although less than a quorum, or by a sole remaining director. Any director so chosen shall hold office until the next election of the class for which such director shall have been chosen and until his or her successor shall be elected and qualified, or until his or her earlier death, resignation, retirement, disqualification or removal.

SECTION 3.06    Meetings. Regular meetings of the Board of Directors may be held at such places and times as shall be determined from time to time by the Board of Directors or as may be specified in a notice of meeting. Special meetings of the Board of Directors may be called by the President of the Corporation, and shall be called by the President or the Secretary of the Corporation if directed by the Board of Directors. Notice need not be given of regular meetings of the Board of Directors. At least twenty four (24) hours before each special meeting of the Board of Directors, either written notice, notice by electronic transmission or oral (either in person or by telephone) notice of the time, date and place of the meeting and the purpose or purposes for which the meeting is called shall be given to each director.

SECTION 3.07    Quorum, Voting and Adjournment. One-third of the total number of directors or any committee thereof shall constitute a quorum for the transaction of business. Except as otherwise provided by law, the Certificate of Incorporation or these By-laws, the act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum, a majority of the directors present thereat may adjourn such meeting to another time and place. Notice of such adjourned meeting need not be given if the time and place of such adjourned meeting are announced at the meeting so adjourned.

SECTION 3.08    Committees. The Board of Directors may designate one or more committees, including but not limited to an Executive Committee and an Audit Committee, each such committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee to replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (a) approving or adopting, or recommending to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval or (b) adopting, amending or repealing any by-law of the Corporation. All committees of the Board of Directors shall keep minutes of their meetings and shall report their proceedings to the Board of Directors when requested or required by the Board of Directors.

SECTION 3.09    Action Without a Meeting. Unless otherwise restricted by the Certificate of Incorporation, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board of Directors or any committee thereof, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed in the minutes of proceedings of the Board of Directors. Such filing shall be in paper form if the minutes are maintained in paper form or shall be in electronic form if the minutes are maintained in electronic form.

SECTION 3.10    Remote Meeting. Unless otherwise restricted by the Certificate of Incorporation, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting by means of conference telephone or other communications equipment in which all persons participating in the meeting can hear each other. Participation in a meeting by means of conference telephone or other communications equipment shall constitute presence in person at such meeting.

ARTICLE IV

Officers

SECTION 4.01    Number. The officers of the Corporation shall include a President and a Secretary, both of whom shall be elected by the Board of Directors and who shall hold office for such terms as shall be determined by the Board of Directors and until their successors are elected and qualify or until their earlier resignation or removal. In addition, the Board of Directors may elect a Chairman of the Board of Directors, one or more Vice Presidents, including an Executive Vice President, a Treasurer and one or more Assistant Treasurers and one or more Assistant Secretaries, who shall hold their office for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. The initial officers shall be elected at the first meeting of the Board of Directors and, thereafter, at the annual organizational meeting of the Board of Directors. Any number of offices may be held by the same person.

SECTION 4.02    Other Officers and Agents. The Board of Directors may appoint such other officers and agents as it deems advisable, who shall hold their office for such terms and shall exercise and perform such powers and duties as shall be determined from time to time by the Board of Directors.

SECTION 4.03    Chairman. The Chairman of the Board of Directors shall be a member of the Board of Directors and shall preside at all meetings of the Board of Directors and of the stockholders. In addition, the Chairman of the Board of Directors shall have such powers and perform such other duties as from time to time may be assigned to him by the Board of Directors.

SECTION 4.04    President. The President shall be the Chief Executive Officer of the Corporation. The President shall exercise such duties as customarily pertain to the office of President and Chief Executive Officer and shall have general and active management of the property, business and affairs of the Corporation, subject to the supervision and control of the Board of Directors. In addition, the President shall perform such other duties as prescribed from time to time by the Board of Directors or these By-laws.

In the absence, disability or refusal of the Chairman of the Board of Directors to act, or the vacancy of such office, the President shall preside at all meetings of the stockholders and of the Board of Directors. Except as the Board of Directors shall otherwise authorize, the President shall execute bonds, mortgages and other contracts on behalf of the Corporation, and shall cause the seal to be affixed to any instrument requiring it and, when so affixed, the seal shall be attested by the signature of the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer.

SECTION 4.05    Vice Presidents. Each Vice President, if any are elected, of whom one or more may be designated an Executive Vice President, shall have such powers and shall perform such duties as shall be assigned to him by the President or the Board of Directors.

SECTION 4.06    Treasurer. The Treasurer shall have custody of the corporate funds, securities, evidences of indebtedness and other valuables of the Corporation and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation. He shall deposit all moneys and other valuables in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation, taking proper vouchers therefor. He shall render to the President and the Board of Directors, upon their request, a report of the financial condition of the Corporation. If required by the Board of Directors, the Treasurer shall give the Corporation a bond for the faithful discharge of his duties in such amount and with such surety as the Board of Directors shall prescribe.

In addition, the Treasurer shall have such further powers and perform such other duties incident to the office of Treasurer as from time to time are assigned to him by the Board of Directors.

SECTION 4.07    Secretary. The Secretary shall: (a) cause minutes of all meetings of the stockholders and directors to be recorded and kept; (b) cause all notices required by these By-laws or otherwise to be given properly; (c) see that the minute books, stock books, and other nonfinancial books, records and papers of the Corporation are kept properly; and (d) cause all reports, statements, returns, certificates and other documents to be prepared and filed when and as required. The Secretary shall have such further powers and perform such other duties as prescribed from time to time by the Board of Directors.

SECTION 4.08    Assistant Treasurers and Assistant Secretaries. Each Assistant Treasurer and each Assistant Secretary, if any are elected, shall be vested with all the powers and shall perform all the duties of the Treasurer and Secretary, respectively, in the absence or disability of such officer, unless or until the Board of Directors shall otherwise determine. In addition, Assistant Treasurers and Assistant Secretaries shall have such powers and shall perform such duties as shall be assigned to them by the Board of Directors.

SECTION 4.09    Corporate Funds and Checks. The funds of the Corporation shall be kept in such depositories as shall from time to time be prescribed by the Board of Directors. All checks or other orders for the payment of money shall be signed by the President or the Secretary or such other person or agent as may from time to time be authorized and with such countersignature, if any, as may be required by the Board of Directors.

SECTION 4.10    Contracts and Other Documents. The President and the Secretary, or such other officer or officers as may from time to time be authorized by the Board of Directors or any other committee given specific authority in the premises by the Board of Directors during the intervals between the meetings of the Board of Directors, shall have power to sign and execute on behalf of the Corporation deeds, conveyances and contracts, and any and all other documents requiring execution by the Corporation.

SECTION 4.11    Ownership of Stock of Another Corporation. Unless otherwise directed by the Board of Directors, the President or the Secretary, or such other officer or agent as shall be authorized by the Board of Directors, shall have the power and authority, on behalf of the Corporation, to attend and to vote at any meeting of equityholders of any entity in which the Corporation holds securities or equity interests and may exercise, on behalf of the Corporation, any and all of the rights and powers incident to the ownership of such securities or equity interests at any such meeting, including the authority to execute and deliver proxies and consents on behalf of the Corporation.

SECTION 4.12    Delegation of Duties. In the absence, disability or refusal of any officer to exercise and perform his duties, the Board of Directors may delegate to another officer such powers or duties.

SECTION 4.13    Resignation and Removal. Any officer of the Corporation may be removed from office for or without cause at any time by the Board of Directors. Any officer may resign at any time in the same manner prescribed under Section 3.03 of these By-laws.

SECTION 4.14    Vacancies. The Board of Directors shall have power to fill vacancies occurring in any office.

ARTICLE V

Stock

SECTION 5.01    Certificates of Stock. The shares of stock of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of the Corporation's stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Every holder of stock in the Corporation represented by certificates shall be entitled to have a certificate signed by, or in the name of the Corporation by, the Chairman of the Board of Directors, or the Vice Chairman of the Board of Directors or the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary, certifying the number and class of shares of stock in the Corporation owned by such holder. Any or all of the signatures on the certificate may be a facsimile. The Board of Directors shall have the power to appoint one or more transfer agents and/or registrars for the transfer or registration of certificates of stock of any class, and may require stock certificates to be countersigned or registered by one or more of such transfer agents and/or registrars.

SECTION 5.02    Transfer of Shares. Shares of stock of the Corporation shall be transferable upon its books by the holders thereof, in person or by their duly authorized attorneys or legal representatives, upon surrender to the Corporation by delivery thereof to the person in charge of the stock and transfer books and ledgers. Certificates representing such shares, if any, shall be cancelled and new certificates, if the shares are to be certificated, shall thereupon be issued. A record shall be made of each transfer. Whenever any transfer of shares shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer if, when the certificates are presented, both the transferor and transferee request the Corporation to do so. The Board of Directors shall have power and authority to make such rules and regulations as it may deem necessary or proper concerning the issue, transfer and registration of certificates for shares of stock of the Corporation.

SECTION 5.03    Lost, Stolen, Destroyed or Mutilated Certificates. A new certificate of stock may be issued in the place of any certificate previously issued by the Corporation alleged to have been lost, stolen or destroyed, and the Board of Directors may, in its discretion, require the owner of such lost, stolen or destroyed certificate, or his or her legal representative, to give the Corporation a bond, in such sum as the Board of Directors may direct, in order to indemnify the Corporation against any claims that may be made against it in connection therewith. A new certificate of stock may be issued in the place of any certificate previously issued by the Corporation that has become mutilated without the posting by the owner of any bond upon the surrender by such owner of such mutilated certificate.

SECTION 5.04    List of Stockholders Entitled To Vote. The officer who has charge of the stock ledger shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting (provided, however, if the record date for determining the stockholders entitled to vote is less than ten (10) days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date), arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting at least ten (10) days prior to the meeting (a) on a reasonably accessible electronic network; provided that the information required to gain access to such list is provided with the notice of meeting or (b) during ordinary business hours at the principal place of business of the Corporation. If the meeting is to be held at a place, then a list of stockholders entitled to vote at the meeting shall be produced and kept at the time and place of the meeting during the whole time thereof and may be examined by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Except as otherwise provided by law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders required by this Section 5.04 or to vote in person or by proxy at any meeting of stockholders.

SECTION 5.05    Fixing Date for Determination of Stockholders of Record.

(A)    In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall, unless otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If the Board of Directors so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.

(B)    In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which shall not be more than sixty (60) days prior to such other action. If no such record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

(C)    Unless otherwise restricted by the Certificate of Incorporation, in order that the Corporation may determine the stockholders entitled to express consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date for determining stockholders entitled to express consent to corporate action in writing without a meeting is fixed by the Board of Directors, (i) when no prior action of the Board of Directors is required by law, the record date for such purpose shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation in accordance with applicable law, and (ii) if prior action by the Board of Directors is required by law, the record date for such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.

SECTION 5.06    Registered Stockholders. Prior to the surrender to the Corporation of the certificate or certificates for a share or shares of stock with a request to record the transfer of such share or shares, the Corporation may treat the registered owner as the person entitled to receive dividends, to vote, to receive notifications and otherwise to exercise all the rights and powers of an owner. To the fullest extent permitted by law, the Corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof.

ARTICLE VI

Notice and Waiver of Notice

SECTION 6.01    Notice. If mailed, notice to stockholders shall be deemed given when deposited in the mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the Corporation. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders may be given by electronic transmission in the manner provided in Section 232 of the DGCL.

SECTION 6.02    Waiver of Notice. A written waiver of any notice, signed by a stockholder or director, or waiver by electronic transmission by such person, whether given before or after the time of the event for which notice is to be given, shall be deemed equivalent to the notice required to be given to such person. Neither the business nor the purpose of any meeting need be specified in such a waiver. Attendance at any meeting (in person or by remote communication) shall constitute waiver of notice except attendance for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened.

ARTICLE VII

Indemnification

SECTION 7.01    Indemnification Respecting Third Party Claims.

(A)    Indemnification of Directors and Officers.The Corporation, to the fullest extent and in the manner permitted by the laws of the State of Delaware as in effect from time to time, shall indemnify in accordance with the following provisions of this Article VII any person (a “Covered Person”) who was or is made a party to, is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding (including any appeal thereof), whether civil, criminal, administrative, regulatory or investigative in nature (other than an action by or in the right of the Corporation), by reason of the fact that such Covered Person is or was a director or officer of the Corporation, or, at a time when he or she was a director or officer of the Corporation, is or was serving at the request of, or to represent the interests of, the Corporation as a director, officer, partner, member, trustee, fiduciary, employee or agent (a "Subsidiary Officer") of another corporation, partnership, joint venture, limited liability company, trust, employee benefit plan or other enterprise, including any charitable or not-for-profit public service organization or trade association (an "Affiliated Entity"), against expenses (including attorneys' fees and disbursements), costs, judgments, fines, penalties and amounts paid in settlement actually and reasonably incurred by such Covered Person in connection with such action, suit or proceeding if such Covered Person acted in good faith and in a manner such Covered Person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful; provided, however, that the Corporation shall not be obligated to indemnify against any amount paid in settlement unless the Corporation has consented to such settlement. The termination of any action, suit or proceeding by judgment, order, settlement or conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the Covered Person did not act in good faith and in a manner which such Covered Person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, that such Covered Person had reasonable cause to believe that his or her conduct was unlawful. Notwithstanding anything to the contrary in the foregoing provisions of this paragraph, a Covered Person shall not be entitled, as a matter of right, to indemnification pursuant to this paragraph against costs or expenses incurred in connection with any action, suit or proceeding commenced by such Covered Person against the Corporation or any Affiliated Entity or any person who is or was a director, officer, partner, member, trustee, fiduciary, employee or agent of the Corporation or a Subsidiary Officer of any Affiliated Entity in their capacity as such, but such indemnification may be provided by the Corporation in a specific case as permitted by Section 7.06 of this Article VII; provided that such Covered Person shall, to the fullest extent permitted by law, be entitled to indemnification in connection with any action, suit or proceeding commenced by such Covered Person to enforce his or her rights under this Article VII.

(B)    Indemnification of Employees and Agents. The Corporation may indemnify any employee or agent of the Corporation in the manner and to the same or a lesser extent that it shall indemnify any director or officer under paragraph (A) above in this Section 7.01.

SECTION 7.02    Indemnification Respecting Derivative Claims.

(A)    Indemnification of Directors and Officers. The Corporation, to the fullest extent and in the manner permitted by the laws of the State of Delaware as in effect from time to time, shall indemnify in accordance with the following provisions of this Article VII any Covered Person who was or is made a party to, is threatened to be made a party to or is involved in any threatened, pending or completed action or suit (including any appeal thereof) brought by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such Covered Person is or was a director or officer of the Corporation, or, at a time when he or she was a director or officer of the Corporation, is or was serving at the request of, or to represent the interests of, the Corporation as a Subsidiary Officer of an Affiliated Entity against expenses (including attorneys’ fees and disbursements) and costs actually and reasonably incurred by such Covered Person in connection with such action or suit if such Covered Person acted in good faith and in a manner such Covered Person reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such Covered Person shall have been adjudged to be liable to the Corporation unless, and only to the extent that, the Court of Chancery of the State of Delaware or the court in which such judgment was rendered shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such Covered Person is fairly and reasonably entitled to indemnity for such expenses and costs as the Court of Chancery of the State of Delaware or such other court shall deem proper. Notwithstanding anything to the contrary in the foregoing provisions of this paragraph, a Covered Person shall not be entitled, as a matter of right, to indemnification pursuant to this paragraph against costs and expenses incurred in connection with any action or suit in the right of the Corporation commenced by such Covered Person, but such indemnification may be provided by the Corporation in any specific case as permitted by Section 7.06 of this Article VII; provided that such Covered Person shall, to the fullest extent permitted by law, be entitled to indemnification in connection with any action, suit or proceeding commenced by such Covered Person to enforce his or her rights under this Article VII.

(B)    Indemnification of Employees and Agents. The Corporation may indemnify any employee or agent of the Corporation in the manner and to the same or a lesser extent that it shall indemnify any director or officer under paragraph (A) above in this Section 7.02.

SECTION 7.03    Determination of Entitlement to Indemnification. Any indemnification to be provided under Section 7.01 or 7.02 of this Article VII (unless ordered by a court of competent jurisdiction) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification is proper under the circumstances because such Covered Person has met the applicable standard of conduct set forth in such paragraph. Such determination shall be made in accordance with any applicable procedures authorized by the Board of Directors and in accordance with the DGCL. In the event a request for indemnification is made after final disposition of the proceeding in question by any Covered Person referred to in paragraph (A) of Section 7.01 or 7.02 of this Article VII, the Corporation shall use its best efforts to cause such determination to be made not later than ninety (90) days after such request is made.

SECTION 7.04    Right to Indemnification in Certain Circumstances.

(A)    Indemnification Upon Successful Defense. Notwithstanding the other provisions of this Article VII, to the extent that a director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in any of paragraphs (A) or (B) of Section 7.01 or 7.02 of this Article VII, or in defense of any claim, issue or matter therein, or in any action, suit or proceeding brought by the director or officer to enforce rights to indemnification or advancement of expenses and costs granted pursuant to this Article VII, such Covered Person shall, to the fullest extent permitted by law, be indemnified against expenses (including attorneys’ fees and disbursements) and costs actually and reasonably incurred by such Covered Person in connection therewith.

(B)    Indemnification for Service As a Witness. To the extent any Covered Person who is or was a director or officer of the Corporation has served or prepared to serve as a witness in any action, suit or proceeding (whether civil, criminal, administrative, regulatory or investigative in nature), including any investigation by any legislative body or any regulatory or self-regulatory body by which the Corporation’s business is regulated, by reason of his or her service as a director or officer of the Corporation or his or her service as a Subsidiary Officer of an Affiliated Entity at a time when he or she was a director or officer of the Corporation (assuming such Covered Person is or was serving at the request of, or to represent the interests of, the Corporation as a Subsidiary Officer of such Affiliated Entity), but excluding service as a witness in an action or suit commenced by such person (unless such expenses were incurred with the approval of the Board of Directors, a committee thereof or the Chairman, a Vice Chairman or the Chief Executive Officer of the Corporation), the Corporation shall, to the fullest extent permitted by law, indemnify such Covered Person against out-of-pocket costs and expenses (including attorneys’ fees and disbursements) actually and reasonably incurred by such Covered Person in connection therewith and shall use its best efforts to provide such indemnity within forty-five (45) days after receipt by the Corporation from such Covered Person of a statement requesting such indemnification, averring such service and reasonably evidencing such expenses and costs; it being understood, however, that the Corporation shall have no obligation under this Article VII to compensate such Covered Person for such Covered Person’s time or efforts so expended. The Corporation may indemnify any employee or agent of the Corporation to the same or a lesser extent as it may indemnify any director or officer of the Corporation pursuant to the foregoing sentence of this paragraph.

SECTION 7.05    Advances of Expenses.     

(A)    Advances to Directors and Officers. To the fullest extent not prohibited by applicable law, expenses and costs incurred by any Covered Person referred to in paragraph (A) of Section 7.01 or 7.02 of this Article VII in defending a civil, criminal, administrative, regulatory or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking in writing by or on behalf of such Covered Person to repay such amount if it shall ultimately be determined that such Covered Person is not entitled to be indemnified in respect of such costs and expenses by the Corporation as authorized by this Article VII.

(B)    Advances to Employees and Agents. To the fullest extent not prohibited by applicable law, expenses and costs incurred by any person referred to in paragraph (B) of Section 7.01 or 7.02 of this Article VII in defending a civil, criminal, administrative, regulatory or investigative action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors, a committee thereof or an officer of the Corporation authorized to so act by the Board of Directors upon receipt of an undertaking in writing by or on behalf of such person to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation in respect of such costs and expenses as authorized by this Article VII.

SECTION 7.06    Indemnification Not Exclusive.

(A)    The provision of indemnification to or the advancement of expenses and costs to any Covered Person under this Article VII, or the entitlement of any Covered Person to indemnification or advancement of expenses and costs under this Article VII, shall not limit or restrict in any way the power of the Corporation to indemnify or advance expenses and costs to such Covered Person in any other way permitted by law or be deemed exclusive of, or invalidate, any right to which any Covered Person seeking indemnification or advancement of expenses and costs may be entitled under any law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such Covered Person’s capacity as an officer, director, employee or agent of the Corporation and as to action in any other capacity.

(B)    Given that certain jointly indemnifiable claims (as defined below) may arise due to the service of the Covered Person as a director of the Corporation at the request of the indemnitee-related entities (as defined below), the Corporation shall be fully and primarily responsible for the payment to the Covered Person in respect of indemnification or advancement of expenses in connection with any such jointly indemnifiable claims, pursuant to and in accordance with the terms of this Article VII, irrespective of any right of recovery the Covered Person may have from the indemnitee-related entities. Under no circumstance shall the Corporation be entitled to any right of subrogation or contribution by the indemnitee-related entities and no right of advancement or recovery the Covered Person may have from the indemnitee-related entities shall reduce or otherwise alter the rights of the Covered Person or the obligations of the Corporation hereunder. In the event that any of the indemnitee-related entities shall make any payment to the Covered Person in respect of indemnification or advancement of expenses with respect to any jointly indemnifiable claim, the indemnitee-related entity making such payment shall be subrogated to the extent of such payment to all of the rights of recovery of the Covered Person against the Corporation, and the Covered Person shall execute all papers reasonably required and shall do all things that may be reasonably necessary to secure such rights, including the execution of such documents as may be necessary to enable the indemnitee-related entities effectively to bring suit to enforce such rights. Each of the indemnitee-related entities shall be third-party beneficiaries with respect to this Section 7.06(B) of Article VII, entitled to enforce this Section 7.06(B) of Article VII.

For purposes of this Section 7.06(B) of Article VII, the following terms shall have the following meanings:

(1) The term “indemnitee-related entities” means any corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise (other than the Corporation or any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise for which the Covered Person has agreed, on behalf of the Corporation or at the Corporation’s request, to serve as a director, officer, employee or agent and which service is covered by the indemnity described herein) from whom a Covered Person may be entitled to indemnification or advancement of expenses with respect to which, in whole or in part, the Corporation may also have an indemnification or advancement obligation.

(2) The term “jointly indemnifiable claims” shall be broadly construed and shall include, without limitation, any action, suit or proceeding for which the Covered Person shall be entitled to indemnification or advancement of expenses from both the indemnitee-related entities and the Corporation pursuant to Delaware law, any agreement or certificate of incorporation, by-laws, partnership agreement, operating agreement, certificate of formation, certificate of limited partnership or comparable organizational documents of the Corporation or the indemnitee-related entities, as applicable.

SECTION 7.07    Corporate Obligations; Reliance.

(A)    The rights granted pursuant to the provisions of this Article VII shall vest at the time a person becomes a director or officer of the Corporation and shall be deemed to create a binding contractual obligation on the part of the Corporation to the persons who from time to time are elected as officers or directors of the Corporation, and such persons in acting in their capacities as officers or directors of the Corporation or Subsidiary Officers of any Affiliated Entity shall be entitled to rely on such provisions of this Article VII without giving notice thereof to the Corporation.

(B)    Without the consent of any affected Covered Person, the Corporation shall not, in connection with the settlement or resolution of any claim alleged against it in any action, suit or proceeding, seek or consent to entry of an order that releases, bars or otherwise affects the rights of indemnification and advancement of expenses provided in this Article VII.

SECTION 7.08     Amendment or Repeal. Any repeal or modification of the provisions of this Article VII shall not adversely affect any right or protection hereunder of any Covered Person in respect of any proceeding (regardless of when such proceeding is first threatened, commenced or completed) arising out of, or related to, any act or omissions occurring prior to the time of such repeal or modification.

SECTION 7.09    Accrual of Claims; Successors. The indemnification provided or permitted under the foregoing provisions of this Article VII shall or may, as the case may be, apply in respect of any expense, cost, judgment, fine, penalty or amount paid in settlement, whether or not the claim or cause of action in respect thereof accrued or arose before or after the effective date of such provisions of this Article VII. The right of any Covered Person who is or was a director, officer, employee or agent of the Corporation to indemnification or advancement of expenses as provided under the foregoing provisions of this Article VII shall continue after he or she shall have ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, distributees, executors, administrators and other legal representatives of such Covered Person.

SECTION 7.10    Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of, or to represent the interests of, the Corporation as a Subsidiary Officer of any Affiliated Entity, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article VII or applicable law.

SECTION 7.11    Definitions of Certain Terms. For purposes of this Article VII, (a) references to “the Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed into the Corporation in a consolidation or merger if such corporation would have been permitted (if its corporate existence had continued) under applicable law to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request, or to represent the interests of, such constituent corporation as a Subsidiary Officer of any Affiliated Entity shall stand in the same position under the provisions of this Article VII with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued; (b) references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; (c) references to “serving at the request of the Corporation” shall include any service as a director, officer, partner, member, trustee, fiduciary, employee or agent of the Corporation or as a Subsidiary Officer of any Affiliated Entity which service imposes duties on, or involves services by, such director, officer, partner, member, trustee, fiduciary, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and (d) a Covered Person who acted in good faith and in a manner such Covered Person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interest of the Corporation” as referred to in this Article VII.

ARTICLE VIII

Miscellaneous

SECTION 8.01    Electronic Transmission. For purposes of these By-laws, “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

SECTION 8.02    Corporate Seal. The Board of Directors may provide a suitable seal, containing the name of the Corporation, which seal shall be in the charge of the Secretary. If and when so directed by the Board of Directors or a committee thereof, duplicates of the seal may be kept and used by the Treasurer or by an Assistant Secretary or Assistant Treasurer.

SECTION 8.03    Fiscal Year. The fiscal year of the Corporation shall end on December 31 of each year, or such other twelve consecutive months as the Board of Directors may designate.

SECTION 8.04    Section Headings. Section headings in these By-laws are for convenience of reference only and shall not be given any substantive effect in limiting or otherwise construing any provision herein.

SECTION 8.05    Inconsistent Provisions. In the event that any provision of these By-laws is or becomes inconsistent with any provision of the Certificate of Incorporation, the DGCL or any other applicable law, such provision of these By-laws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect.

SECTION 8.06 Forum Selection. Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the General Corporation Law of the State of Delaware or the Certificate of Incorporation or these By-laws (as either may be amended from time to time) or a claim as to which Title 8 of the Delaware Code confers jurisdiction upon the Court of Chancery, or (iv) any action asserting a claim governed by the internal affairs doctrine. If no Court of the State of Delaware has jurisdiction over such action or proceeding, the sole and exclusive forum for such action or proceeding shall be the United States District Court for the District of Delaware. If any action the subject matter of which is within the scope of the preceding sentence is filed in a court other than a court located within the State of Delaware (a “Foreign Action”) directly or derivatively by any debtholder or equityholder, such debtholder or equityholder shall be deemed to have consented to (i) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce the preceding sentence, and (ii) having service of process made upon such debtholder or equityholder in any such action by service upon such debtholder’s or equityholder’s counsel in the Foreign Action as agent for such debtholder or equityholder. Any person or entity purchasing or otherwise acquiring or holding any debt or equity interests of the Corporation shall be deemed to have notice of and consented to the provisions of this Section 8.06.

ARTICLE IX

Amendments

SECTION 9.01    Amendments. Subject to the Certificate of Incorporation, these By-laws may be amended, added to, rescinded or repealed at any meeting of the Board of Directors or of the stockholders; provided, however, that, notwithstanding any other provisions of these By-laws or any provision of law which might otherwise permit a lesser vote of the stockholders, at any time when the Blackstone Entities are the beneficial owners, in the aggregate, of less than a majority in voting power of all outstanding shares of stock of the Corporation entitled to vote generally in the election of directors, the affirmative vote of the holders of at least 75% in voting power of all outstanding shares of stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required in order for the stockholders to alter, amend or repeal Sections 2.02, 2.03, 3.02, 3.03, 3.04, or 3.05, Article VII or this proviso of Section 9.01 of the By-laws or to adopt provisions inconsistent therewith.

EX-10.3

[EXECUTION VERSION]

NONQUALIFIED STOCK OPTION AGREEMENT

(TIME-VESTING)

THIS AGREEMENT (the “Agreement”) is made between Team Health Holdings, Inc., a Delaware corporation (hereinafter called the “Company”), and Leif M. Murphy (hereinafter called the “Participant”):

RECITALS:

WHEREAS, the Company has adopted the Team Health Holdings, Inc. Amended and Restated 2009 Stock Incentive Plan (the “Plan”), which Plan is incorporated herein by reference and made a part of this Agreement. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan; and

WHEREAS, the Committee and the Board of Directors have determined that it would be in the best interests of the Company and its shareholders to grant the option provided for herein to the Participant pursuant to the Plan and the terms set forth herein.

NOWTHEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows:

1.Grant of the Option. The Company hereby grants to the Participant, effective as of September 19, 2016 (the “Date of Grant”), the right and option (the “Option”) to purchase, on the terms and conditions hereinafter set forth, all or any part of an aggregate of 381,346Shares, subject to adjustment as set forth in the Plan. The purchase price of the Shares subject to the Option shall be the Fair Market Value on the Date of Grant (the “Option Price”), which was $32.61 per share. The Option is intended to be a non-qualified stock option, and is not intended to be treated as an option that complies with Section 422 of the Internal Revenue Code of 1986, as amended.

2.Vesting.

(a)Ordinary Vesting; Treatment Upon Certain Terminations of Employment. Subject to the Participant’s continued Employment with the Company, the Option shall vest and become exercisable with respect to thirty three and one-third percent (33.3%) of the Shares initially covered by the Option on each of the first, second, and third anniversaries of the Date of Grant (such anniversaries, the “Vesting Dates”). Notwithstanding the foregoing, in the event the Participant’s Employment is terminated (i) by the Company without Cause, (ii) due to the Participant’s resignation for Good Reason (either of (i) or (ii), a “Qualifying Termination”), in each case, prior to a Change in Control, or (iii) due to death or Disability at any time prior to any of the Vesting Dates, then the Option shall be deemed to vest on the termination date such that, after taking in account any previously vested portion of the Option, the Participant will have vested in an amount equal to the greater of (x) forty-two percent (42%) of the total number of Shares initially covered by the Option, and (y) the pro-rata portion of the total number of Shares initially covered by the Option calculated based on the portion of the three (3) year vesting period commencing on the Date of Grant and ending on the date of termination, measured on a daily basis.

At any time, the portion of the Option which has become vested and exercisable as described above (or pursuant to Section 2(c) below) is hereinafter referred to as the “Vested Portion”.

(b)Change in Control. Notwithstanding any provisions of this Agreement or the Plan to the contrary, in the event of a Qualifying Termination that takes place following a Change in Control, the Option shall, to the extent not then vested and not previously forfeited, immediately become fully vested and exercisable. Additionally, in connection with any Change in Control, the provisions set forth in Section 3.6(f) of the employment agreement by and among the Participant, AmeriTeam Services, LLC and the Company, dated as of September 2, 2016, as may be amended from time to time (the “Employment Agreement”) are hereby incorporated by reference and shall apply to the Option.

(c)Other Terminations of Employment. If the Participant’s Employment with the Company is terminated for any reason (other than those set forth in Sections 2(a) and (b)), the Option shall, to the extent not then vested, be canceled by the Company without consideration, and the Vested Portion of the Option shall remain exercisable for the period set forth in Section 3(a). Notwithstanding the foregoing, if the Participant materially breaches any of the restrictive covenants or other material terms set forth in the Employment Agreement, the entire Option (including, without limitation, the Vested Portion of the Option) shall be cancelled by the Company without consideration and no portion of the Option shall remain exercisable.

3.Exercise of Option.

(a)Period of Exercise. Subject to the provisions of the Plan and this Agreement, the Participant may exercise all or any part of the Vested Portion of the Option at any time prior to the earliest to occur of:

(i) the eighth (8^th) anniversary of the Date of Grant;

(ii) one (1) year following the date of the Participant’s termination of Employment due to death or Disability;

(iii) ninety (90) days following the date of the Participant’s termination of Employment by the Company without Cause or by the Participant for any reason; and

(iv) the date of the Participant’s termination of Employment by the Company for Cause; and

(v) the first date on which the Participant materially breaches any of the restrictive covenants or other material terms of the Employment Agreement.

For purposes of this Agreement, “Cause,” “Good Reason,” and “Disability” shall have the respective meanings ascribed to them in the Employment Agreement.

(b)Method of Exercise.

(i) Subject to Section 3(a), the Vested Portion of the Option may be exercised by either delivering to the Company at its principal office written notice of intent to so exercise or by providing such notice to the Company’s designated contact person for the Plan; provided that, the Option may be exercised with respect to whole Shares only. Such notice shall specify the number of Shares for which the Option is being exercised and shall be accompanied by payment in full of the Option Price. The payment of the Option Price may be made at the election of the Participant (i) in cash or its equivalent (e.g., by check), (ii) to the extent permitted by the Committee, in Shares having a Fair Market Value equal

2

to the aggregate Option Price for the Shares being purchased and satisfying such other requirements as may be imposed by the Committee; provided, that such Shares have been held by the Participant for no less than six months (or such other period as established from time to time by the Committee in order to avoid adverse accounting treatment applying generally accepted accounting principles), (iii) partly in cash and, to the extent permitted by the Committee, partly in such Shares, (iv) if there is a public market for the Shares at such time, through the delivery of irrevocable instructions to a broker, who has been either approved or, if applicable, designated by the Committee, to sell Shares obtained upon the exercise of the Option and to deliver promptly to the Company an amount out of the proceeds of such Sale equal to the aggregate option price for the Shares being purchased, or (v) through a “net settlement” as described in Section 6(c) of the Plan. No Participant shall have any rights to dividends or other rights of a stockholder with respect to Shares subject to an Option until the Participant has given written notice of exercise of the Option, paid in full for such Shares and, if applicable, has satisfied any other conditions imposed by the Committee pursuant to the Plan.

(ii) Notwithstanding any other provision of the Plan or this Agreement to the contrary, the Option may not be exercised prior to the completion of any registration or qualification of the Option or the Shares under applicable state and federal securities or other laws, or under any ruling or regulation of any governmental body or national securities exchange that the Committee shall in its sole discretion determine to be necessary or advisable.

(iii) Upon the Company’s determination that the Option has been validly exercised as to any of the Shares, the Company shall issue certificates in the Participant’s name for such Shares. However, the Company shall not be liable to the Participant for damages relating to any delays in issuing the certificates to him, any loss of the certificates, or any mistakes or errors in the issuance of the certificates or in the certificates themselves. Notwithstanding the foregoing, the Company may elect to recognize the Participant’s ownership through uncertificated book entry.

(iv) In the event of the Participant’s death, the Vested Portion of the Option shall remain exercisable by the Participant’s executor or administrator, or the person or persons to whom the Participant’s rights under this Agreement shall pass by will or by the laws of descent and distribution as the case may be, to the extent set forth in Section 3(a). Any heir or legatee of the Participant shall take rights herein granted subject to the terms and conditions hereof.

4.No Right to Continued Employment. The granting of the Option evidenced hereby and this Agreement shall impose no obligation on the Company or any Affiliate to continue the Employment of the Participant and shall not lessen or affect the Company’s or its Affiliate’s right to terminate the Employment of such Participant.

5.Legend on Certificates. To the extent applicable, the certificates representing the Shares purchased by exercise of the Option shall be subject to the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares are listed, and any applicable Federal or state laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

6.Transferability. The Option shall be subject to transfer restrictions as set forth in Section 15 of the Plan.

3

7.Withholding. The Participant may be required to pay to the Company or any Affiliate and the Company shall have the right and is hereby authorized to withhold, any applicable withholding taxes in respect of the Option, its exercise or any payment or transfer under or with respect to the Option and to take such other action as may be necessary in the opinion of the Committee to satisfy all obligations for the payment of such withholding taxes.

8.Securities Laws. Upon the acquisition of any Shares pursuant to the exercise of the Option, the Participant will make or enter into such written representations, warranties and agreements as the Committee may reasonably request in order to comply with applicable securities laws or with this Agreement.

9.Notices. Any notice necessary under this Agreement shall be addressed to the Company in care of its Secretary at the principal executive office of the Company and to the Participant at the address appearing in the personnel records of the Company for the Participant or to either party at such other address as either party hereto may hereafter designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.

10.Choice of Law. This Agreement shall be governed by and construed in accordance with the laws of the state of Delaware without regard to conflicts of laws.

11.Option Subject to Plan. By entering into this Agreement the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. The Option is subject to the Plan. The terms and provisions of the Plan, as they may be amended from time to time, are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

12.Signature in Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

4

IN WITNESS WHEREOF, the parties have caused this Agreement to be effective as of the day and year first above written.

Team Health Holdings Inc.

/s/ Steven E. Clifton

Name: Steven E. Clifton
Title: Executive Vice President and

General Counsel

Participant

/s/ Leif M. Murphy
Leif M. Murphy

[Signature Page – Murphy Time Option Sign-On Award Agreement]

5

EX-10.4

[EXECUTION VERSION]

NONQUALIFIED STOCK OPTION AGREEMENT

(PERFORMANCE-VESTING)

THIS AGREEMENT (the “Agreement”) is made between Team Health Holdings, Inc., a Delaware corporation (hereinafter called the “Company”), and Leif M. Murphy (hereinafter called the “Participant”):

RECITALS:

WHEREAS, the Company has adopted the Team Health Holdings, Inc. Amended and Restated 2009 Stock Incentive Plan (the “Plan”), which Plan is incorporated herein by reference and made a part of this Agreement. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan; and

WHEREAS, the Committee and the Board of Directors have determined that it would be in the best interests of the Company and its shareholders to grant the option provided for herein to the Participant pursuant to the Plan and the terms set forth herein.

NOWTHEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows:

1.Grant of the Option. The Company hereby grants to the Participant, effective as of September 19, 2016 (the “Date of Grant”), the right and option (the “Option”) to purchase, on the terms and conditions hereinafter set forth, all or any part of an aggregate of441,955Shares, subject to adjustment as set forth in the Plan. The purchase price of the Shares subject to the Option shall be the Fair Market Value on the Date of Grant (the “Option Price”), which was $32.61 per share. The Option is intended to be a non-qualified stock option, and is not intended to be treated as an option that complies with Section 422 of the Internal Revenue Code of 1986, as amended.

2.Vesting.

(a)Ordinary Vesting. Subject to the Participant’s continued Employment with the Company, the Option shall vest and become exercisable with respect to thirty three and one-third percent (33.3%) of the Shares initially covered by the Option on each of the first three dates, if any (each such date, a “Vesting Date”), to occur upon which the average closing trading price of a Share over a period of 10 consecutive trading days equals or exceeds each of (i) 115%, (ii) 130%, and (iii) 145% of the Fair Market Value of a Share on the Date of Grant, respectively ((i), (ii), and (iii), collectively, the “Vesting Hurdles”) during the three-year period beginning on the first anniversary, and ending on the fourth anniversary of the “Commencement Date” (as defined in the employment agreement by and among the Participant, AmeriTeam Services, LLC and the Company, dated as of September 2, 2016, as may be amended from time to time (the “Employment Agreement”)) (such three-year period, the “Performance Period”). Any portion of the Option that has not vested on or prior to the final day of the Performance Period shall be forfeited for no consideration.

(b)Change in Control. Notwithstanding any other provisions of this Agreement or the Plan to the contrary, upon the occurrence of a Change in Control, the achievement of any

then-unachieved Vesting Hurdles will be measured as of the date of such Change in Control based upon the “CIC Stock Price” (as defined in the Employment Agreement), and any portion or portions of the Option with respect to which the applicable Vesting Hurdles have been achieved based upon such CIC Stock Price will become fully vested and exercisable either (i) on the first anniversary of the Commencement Date, in the case of a Change in Control that occurs prior to the commencement of the Performance Period, or (ii) immediately, in the case of a Change in Control that occurs on or after the commencement of the Performance Period. Furthermore, notwithstanding the foregoing or any other provisions of this Agreement or the Plan to the contrary, in the event that the “10% IRR Hurdle” (as defined in the Employment Agreement) is achieved as of the date of a Change in Control, 100% of the Option shall immediately become vested and fully exercisable as to the date of such Change in Control. Any portion of the Option for which the corresponding Vesting Hurdles or the 10% IRR Hurdle has not been achieved on or prior to a Change in Control will be immediately forfeited as of the date of such Change in Control. Additionally, in connection with any Change in Control, the provisions set forth in Section 3.6(f) of the Employment Agreement are hereby incorporated by reference and shall apply to the Option.

(c)Treatment Upon Certain Terminations of Employment. In the event that the Participant’s Employment with the Company is terminated (i) due to the Participant’s death or Disability at any time, (ii) by the Company without Cause or due to the Participant’s resignation for Good Reason, in each case, prior to a Change in Control, or (iii) by the Company without Cause or due to the Participant’s termination for Good Reason at any time following a Change in Control, the Option shall be treated as follows:

(1) Due to death or Disability at any time; or (2) by the Company without Cause or the Participant for Good Reason prior to a Change in Control

By the Company without Cause or the Participant for Good Reason following a Change in Control

If such termination date occurs prior to the commencement of the Performance Period, (i) 100% of any tranches of the Option for which the Vesting Hurdles have been achieved prior to the termination date (any such tranches, the “Early Achievement Tranches”) shall become vested and (ii) if the 10% IRR Hurdle has been met as of the termination date, 100% of all tranches of the Option shall become vested.

If such termination date occurs prior to the commencement of the Performance Period, 100% of any Early Achievement Tranches of the Option shall become vested.

(d)Other Terminations of Employment. If the Participant’s Employment with the Company is terminated for any reason (other than those set forth in Section 2(a)), the Option shall, to the extent not then vested, be canceled by the Company without consideration, and the Vested Portion of the Option shall remain exercisable for the period set forth in Section 3(a). Notwithstanding the foregoing, if the Participant materially breaches any of the restrictive covenants or other material terms set forth in the Employment Agreement, the entire Option (including, without limitation, the Vested Portion of the Option) shall be cancelled by the Company without consideration and no portion of the Option shall remain exercisable.

At any time, the portion of the Option which has become vested and exercisable as described in this Agreement is hereinafter referred to as the “Vested Portion”.

3.Exercise of Option.

2

(a)Period of Exercise. Subject to the provisions of the Plan and this Agreement, the Participant may exercise all or any part of the Vested Portion of the Option at any time prior to the earliest to occur of:

(i) the eighth (8^th) anniversary of the Date of Grant;

(ii) one (1) year following the date of the Participant’s termination of Employment due to death or Disability;

(iii) ninety (90) days following the date of the Participant’s termination of Employment by the Company without Cause or by the Participant for any reason; and

(iv) the date of the Participant’s termination of Employment by the Company for Cause; and

(v) the first date on which the Participant materially breaches any of the restrictive covenants or other material terms set forth in the Employment Agreement.

For purposes of this Agreement, “Cause,” “Good Reason,” and “Disability” shall have the respective meanings ascribed to them in the Employment Agreement.

(b)Method of Exercise.

(i) Subject to Section 3(a), the Vested Portion of the Option may be exercised by either delivering to the Company at its principal office written notice of intent to so exercise or by providing such notice to the Company’s designated contact person for the Plan; provided that, the Option may be exercised with respect to whole Shares only. Such notice shall specify the number of Shares for which the Option is being exercised and shall be accompanied by payment in full of the Option Price. The payment of the Option Price may be made at the election of the Participant (i) in cash or its equivalent (e.g., by check), (ii) to the extent permitted by the Committee, in Shares having a Fair Market Value equal to the aggregate Option Price for the Shares being purchased and satisfying such other requirements as may be imposed by the Committee; provided, that such Shares have been held by the Participant for no less than six months (or such other period as established from time to time by the Committee in order to avoid adverse accounting treatment applying generally accepted accounting principles), (iii) partly in cash and, to the extent permitted by the Committee, partly in such Shares, (iv) if there is a public market for the Shares at such time, through the delivery of irrevocable instructions to a broker, who has been either approved or, if applicable, designated by the Committee, to sell Shares obtained upon the exercise of the Option and to deliver promptly to the Company an amount out of the proceeds of such Sale equal to the aggregate option price for the Shares being purchased, or (v) through a “net settlement” as described in Section 6(c) of the Plan. No Participant shall have any rights to dividends or other rights of a stockholder with respect to Shares subject to an Option until the Participant has given written notice of exercise of the Option, paid in full for such Shares and, if applicable, has satisfied any other conditions imposed by the Committee pursuant to the Plan.

(ii) Notwithstanding any other provision of the Plan or this Agreement to the contrary, the Option may not be exercised prior to the completion of any registration or qualification of the Option or the Shares under applicable state and federal securities or other laws, or under any ruling or regulation of any governmental body or national securities

3

exchange that the Committee shall in its sole discretion determine to be necessary or advisable.

(iii) Upon the Company’s determination that the Option has been validly exercised as to any of the Shares, the Company shall issue certificates in the Participant’s name for such Shares. However, the Company shall not be liable to the Participant for damages relating to any delays in issuing the certificates to him, any loss of the certificates, or any mistakes or errors in the issuance of the certificates or in the certificates themselves. Notwithstanding the foregoing, the Company may elect to recognize the Participant’s ownership through uncertificated book entry.

(iv) In the event of the Participant’s death, the Vested Portion of the Option shall remain exercisable by the Participant’s executor or administrator, or the person or persons to whom the Participant’s rights under this Agreement shall pass by will or by the laws of descent and distribution as the case may be, to the extent set forth in Section 3(a). Any heir or legatee of the Participant shall take rights herein granted subject to the terms and conditions hereof.

4.No Right to Continued Employment. The granting of the Option evidenced hereby and this Agreement shall impose no obligation on the Company or any Affiliate to continue the Employment of the Participant and shall not lessen or affect the Company’s or its Affiliate’s right to terminate the Employment of such Participant.

5.Legend on Certificates. To the extent applicable, the certificates representing the Shares purchased by exercise of the Option shall be subject to the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares are listed, and any applicable Federal or state laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

6.Transferability. The Option shall be subject to transfer restrictions as set forth in Section 15 of the Plan.

7.Withholding. The Participant may be required to pay to the Company or any Affiliate and the Company shall have the right and is hereby authorized to withhold, any applicable withholding taxes in respect of the Option, its exercise or any payment or transfer under or with respect to the Option and to take such other action as may be necessary in the opinion of the Committee to satisfy all obligations for the payment of such withholding taxes.

8.Securities Laws. Upon the acquisition of any Shares pursuant to the exercise of the Option, the Participant will make or enter into such written representations, warranties and agreements as the Committee may reasonably request in order to comply with applicable securities laws or with this Agreement.

9.Notices. Any notice necessary under this Agreement shall be addressed to the Company in care of its Secretary at the principal executive office of the Company and to the Participant at the address appearing in the personnel records of the Company for the Participant or to either party at such other address as either party hereto may hereafter designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.

10.Choice of Law. This Agreement shall be governed by and construed in accordance with the laws of the state of Delaware without regard to conflicts of laws.

4

11.Option Subject to Plan. By entering into this Agreement the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. The Option is subject to the Plan. The terms and provisions of the Plan, as they may be amended from time to time, are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

12.Signature in Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

5

IN WITNESS WHEREOF, the parties have caused this Agreement to be effective as of the day and year first above written.

Team Health Holdings, Inc.

/s/ Steven E. Clifton

Name: Steven E. Clifton
Title: Executive Vice President and

General Counsel

Participant

/s/ Leif M. Murphy
Leif M. Murphy

[Signature Page – Murphy Performance Option Sign-On Award Agreement]

6

EX-10.5

[EXECUTION VERSION]

RESTRICTED STOCK UNIT AWARD AGREEMENT

THIS AGREEMENT (the “Agreement”), is made effective as of the 19^th day of September, 2016, (hereinafter called the “Date of Grant”), between Team Health Holdings, Inc., a Delaware corporation (hereinafter called the “Company”), and Leif M. Murphy (hereinafter called the “Participant”):

R E C I T A L S:

WHEREAS, the Company has adopted the Team Health Holdings, Inc. Amended and Restated 2009 Stock Incentive Plan (the “Plan”), which Plan is incorporated herein by reference and made a part of this Agreement. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan; and

WHEREAS, the Committee has determined that it would be in the best interests of the Company and its shareholders to grant the restricted stock unit award provided for herein (the “RSU Award”) to the Participant pursuant to the Plan and the terms set forth herein.

NOWTHEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows:

1.Grant of the RSUs. Subject to the terms and conditions of the Plan and the additional terms and conditions set forth in this Agreement, the Company hereby grants to the Participant an RSU Award consisting of a contractual right to receive 91,996Shares (hereinafter called the “RSUs”). The RSUs shall vest and become nonforfeitable and provide for delivery of the Shares underlying such RSUs in accordance with Sections 2 and 3 hereof.

2.Vesting

(a)Ordinary Vesting; Treatment Upon Certain Terminations of Employment. Subject to the Participant’s continued employment with the Company (“Employment”), the RSUs shall vest and become non-forfeitable with respect to fifty percent (50%) of the RSUs on each of the following dates (the “Scheduled Vesting Dates”): (i) the 2^nd anniversary of the Date of Grant, and (ii) the 3^rd anniversary of the Date of Grant. Notwithstanding the foregoing, in the event the Participant’s Employment is terminated (x) by the Company without Cause, (y) due to the Participant’s resignation for Good Reason (either of (x) or (y), a “Qualifying Termination”), in each case, prior to a Change in Control, or (z) due to death or Disability at any time prior to either or both of the Scheduled Vesting Dates, then the RSUs shall be deemed to vest on the termination date such that, after taking into account any previously vested portion of the RSU Award, the Participant will have vested in an amount equal to the greater of (A) forty-two percent (42%) of the total number of Shares initially covered by the RSU Award, and (B) the pro-rata portion of the total number of Shares initially covered by the RSU Award calculated based on the portion of the three (3) year vesting period commencing on the Date of Grant and ending on the date of termination, measured on a daily basis.

For purposes of this Agreement, “Cause,” “Good Reason,” and “Disability” shall have the respective meanings ascribed to them in the employment agreement by and among the Participant, AmeriTeam Services, LLC, and the Company, dated as of September 2, 2016, as may be amended from time to time (the “Employment Agreement”).

(b)Change in Control. Notwithstanding any provisions of this Agreement or the Plan to the contrary, in the event of a Qualifying Termination that takes place following a Change in Control (a “Change in Control Termination”), the RSUs shall, to the extent not then vested and not previously forfeited, immediately become fully vested. Additionally, in connection with any Change in Control, the provisions set forth in Section 3.6(f) of the Employment Agreement are hereby incorporated by reference and shall apply to the RSUs.

(c)Other Terminations of Employment. If the Participant’s Employment with the Company terminates for any reason other than for the reasons stated in Sections 2(a) or (b) above, all RSUs, to the extent not previously vested, shall be forfeited by the Participant without consideration.

3.Delivery of Shares Underlying the RSUs. Upon or as soon as practicable following the vesting of RSUs on a Scheduled Vesting Date, a Qualifying Termination or upon a Change in Control Termination, as applicable under Section 2 above, the Company shall deliver to the Participant a number of Shares corresponding to such vested number of RSUs in satisfaction of the Company’s obligations to the Participant in respect of such RSUs. Certificates evidencing the Shares delivered upon settlement of the RSUs as described in the preceding sentence shall be issued by the Company and shall be registered in the Participant’s name on the stock transfer books of the Company promptly after the relevant Share delivery date; and no certificates shall be issued for fractional Shares. Notwithstanding the foregoing, the Company may elect to recognize the Participant’s ownership of Shares through uncertificated book entry. The Participant shall not be entitled to receive any Shares or other payments with respect to forfeited RSUs.

4.No Rights as a Stockholder Prior to Settlement; Dividend Equivalent Rights. The Participant shall have no voting or other shareholder rights with respect to the Shares underlying the RSUs unless and until such Shares are delivered to the Participant in accordance with Sections 2 and 3 hereof. Notwithstanding the forgoing, the Participant shall be entitled to receive dividend equivalent payments with respect to outstanding RSUs as described in this Section 4. In the event that the Company pays any cash or in-kind dividends (including dividends paid in Shares) on Shares while the RSUs are outstanding, the Company shall credit to a notional account the cash and in-kind payments that would have been payable on the Shares underlying the RSUs if such Shares would have been outstanding at the time of dividend payment, and then the Company shall pay to the Participant such cash or in‑kind amounts when, and if, such corresponding Shares underlying the RSUs are delivered to the Participant pursuant to Section 3. In the event that the RSUs are forfeited pursuant to Section 2, any corresponding dividend equivalent payment rights shall also be forfeited.

5.No Right to Continued Employment. The granting of the RSUs evidenced by this Agreement shall impose no obligation on the Company or any Affiliate to continue the Employment of the Participant and shall not lessen or affect the Company’s or its Affiliate’s right to terminate the Employment of such Participant

6.Transferability. The RSUs shall be subject to transfer restrictions as set forth in Section 15 of the Plan.

7.Withholding. The Participant may be required to pay to the Company or any Affiliate and the Company shall have the right and is hereby authorized to withhold, any applicable withholding taxes in respect of the RSUs, their grant or vesting or any payment or transfer with

2

respect to the RSUs, to include withholding of vested shares, and to take such additional action as may be necessary in the opinion of the Committee to satisfy all obligations for the payment of such withholding taxes.

8.Securities Laws. Upon the vesting and settlement of any RSUs, the Participant will make or enter into such written representations, warranties and agreements as the Committee may reasonably request in order to comply with applicable securities laws or with this Agreement.

9.Notices. Any notice necessary under this Agreement shall be addressed to the Company in care of its Secretary at the principal executive office of the Company and to the Participant at the address appearing in the personnel records of the Company for such Participant or to either party at such other address as either party hereto may hereafter designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.

10.Choice of Law. This Agreement shall be governed by and construed in accordance with the laws of the state of Delaware without regard to conflicts of laws.

11.RSU Award Subject to Plan. By entering into this Agreement the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. The RSU Award and the RSUs granted hereunder are subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

12.Signature in Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

[Signatures on next page.]

3

IN WITNESS WHEREOF, the parties have caused this Agreement to be effective as of the day and year first above written.

Team Health Holdings, Inc.

/s/ Steven E. Clifton

Name: Steven E. Clifton
Title: Executive Vice President and

General Counsel

Participant

/s/ Leif M. Murphy
Leif M. Murphy

[Signature Page – Murphy RSU Sign-On Award Agreement]

4

EX-10.6

[EXECUTION VERSION]

MARKET SHARE UNIT AWARD AGREEMENT

THIS AGREEMENT (the “Agreement”), is made effective as of the 19^th day of September, 2016, (hereinafter called the “Date of Grant”), between Team Health Holdings, Inc., a Delaware corporation (hereinafter called the “Company”), and Leif M. Murphy (hereinafter called the “Participant”):

R E C I T A L S:

WHEREAS, the Company has adopted the Team Health Holdings, Inc. Amended and Restated 2009 Stock Incentive Plan (the “Plan”), which Plan is incorporated herein by reference and made a part of this Agreement. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan; and

WHEREAS, the Committee has determined that it would be in the best interests of the Company and its shareholders to grant the market share unit award provided for herein (the “MSU Award”) to the Participant pursuant to the Plan and the terms set forth herein.

NOWTHEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows:

1.Grant of the MSU Award. Subject to the terms and conditions of the Plan and the additional terms and conditions set forth in this Agreement, the Company hereby grants to the Participant an MSU Award consisting of a contractual right to receive a targeted amount of 127,345Shares (such targeted number of Shares, the “Target MSUs”) multiplied by a multiplier (the “MSU Multiplier”), ranging from 75% of the Target MSUs (if the “MSU End Price” is less than or equal to 75% of the “MSU Start Price” (each, as defined below)) to 200% of the Target MSUs (if the MSU End Price is greater than or equal to 200% of the MSU Start Price), with such MSU Multiplier being adjusted on a linear basis if the MSU End Price is between 75% and 200% of the MSU Start Price (the Target MSUs multiplied by the applicable MSU Multiplier, the “Earned MSUs”); provided, however, that the MSU Multiplier shall be limited, as necessary, to a maximum amount such that the aggregate Fair Market Value of the Shares subject to such Earned MSUs as determined on the “Vesting Date” (as defined below) shall not exceed 400% of the aggregate Fair Market Value of the Target MSUs on the Date of Grant.

The MSU Award shall vest and become nonforfeitable and provide for delivery of the Shares underlying such MSU Award in accordance with Sections 2 and 3 hereof.

2.Vesting

(a)Ordinary Vesting. Subject to the Participant’s continued employment with the Company (“Employment”), the MSU Award shall vest and become non-forfeitable on the third anniversary of the “Commencement Date” (as defined in the employment agreement by and among the Participant, AmeriTeam Services, LLC, and the Company, dated as of September 2, 2016, as may be amended from time to time (the “Employment Agreement”)) (such date, the “Vesting Date”).

(b)Change in Control. Notwithstanding any other provisions of this Agreement or the Plan to the contrary, upon the occurrence of a Change in Control prior to the Vesting Date,

the MSU End Price and the corresponding MSU Multiplier shall each be fixed by reference to the “CIC Stock Price” as defined in the Employment Agreement), with the MSU Award continuing to vest pursuant to the terms laid out in the first sentence of Section 2(a), above; provided, however, in the event of a Qualifying Termination that takes place following a Change in Control, the Vesting Date shall be deemed to occur as of the date of such termination. Additionally, in connection with any Change in Control, the provisions set forth in Section 3.6(f) of the Employment Agreement are hereby incorporated by reference and shall apply to the MSU Award.

(c)Treatment Upon Certain Terminations of Employment. In the event that the Participant’s Employment with the Company is terminated (i) due to the Participant’s death or Disability at any time, (ii) by the Company without Cause or due to the Participant’s resignation for Good Reason, in each case, prior to a Change in Control, or (iii) by the Company without Cause or due to the Participant’s termination for Good Reason at any time following a Change in Control, the MSU Award shall be treated as follows:

(1) Due to death or Disability at any time; or (2) by the Company without Cause or the Participant for Good Reason prior to a Change in Control

By the Company without Cause or the Participant for Good Reason following a Change in Control

The Vesting Date shall be deemed to have occurred on such termination date and the portion of the MSU Award that otherwise would have vested and become Earned MSUs pursuant to Section 2(a), above, shall be multiplied by a percentage equal to the greater of (i) forty-two percent (42%) and (ii) a pro-rata portion of the MSU Award calculated based on the portion (measured on a daily basis) of the three (3) year vesting period completed through the termination date.

The Vesting Date shall be deemed to have occurred on such termination date.

(d)Other Terminations of Employment. If the Participant’s Employment with the Company terminates for any reason other than as set forth in Sections 2(a), (b), or (c), above, the MSU Award, to the extent not previously vested, shall be forfeited by the Participant without consideration.

For purposes of this Agreement, “Cause,” “Good Reason,” and “Disability” shall have the respective meanings ascribed to them in the Employment Agreement.

For the purposes of this Agreement, “MSU Start Price” shall mean the Fair Market Value of a Share on the Date of Grant, and “MSU End Price” shall mean the average closing trading price of a Share over the twenty (20) consecutive day trading period immediately preceding the Vesting Date.

3.Delivery of Shares Underlying the Earned MSUs. Upon or as soon as practicable following the vesting of the Earned MSUs on the Vesting Date, or a termination of Employment as described in Section 2(c), above, as applicable under Section 2 above, the Company shall deliver to the Participant a number of Shares corresponding to such vested number of Earned MSUs in satisfaction of the Company’s obligations to the Participant in respect of such Earned MSUs. Certificates evidencing the Shares delivered upon settlement of the Earned MSUs as described in the preceding sentence shall be issued by the Company and shall be registered in the Participant’s name on the stock transfer books of the Company promptly after the relevant Share delivery date; and no certificates shall be issued for fractional Shares. Notwithstanding the foregoing, the Company may elect to recognize the Participant’s ownership of Shares through

2

uncertificated book entry. The Participant shall not be entitled to receive any Shares or other payments with respect to forfeited portions of the MSU Award.

4.No Rights as a Stockholder Prior to Settlement; Dividend Equivalent Rights. The Participant shall have no voting or other shareholder rights with respect to the Shares underlying the MSU Award unless and until such Shares are delivered to the Participant in accordance with Sections 2 and 3 hereof. Notwithstanding the forgoing, the Participant shall be entitled to receive dividend equivalent payments with respect to the outstanding MSU Award as described in this Section 4. In the event that the Company pays any cash or in-kind dividends (including dividends paid in Shares) on Shares while the MSU Award is outstanding, the Company shall credit to a notional account the cash and in-kind payments that would have been payable on the Shares underlying the MSU Award if such Shares would have been outstanding at the time of dividend payment, and then the Company shall pay to the Participant such cash or in‑kind amounts when, and if, such corresponding Shares underlying the MSU Award are delivered to the Participant pursuant to Section 3. In the event that the MSU Award is forfeited pursuant to Section 2, any corresponding dividend equivalent payment rights shall also be forfeited.

5.No Right to Continued Employment. The granting of the MSU Award evidenced by this Agreement shall impose no obligation on the Company or any Affiliate to continue the Employment of the Participant and shall not lessen or affect the Company’s or its Affiliate’s right to terminate the Employment of such Participant

6.Transferability. The MSU Award shall be subject to transfer restrictions as set forth in Section 15 of the Plan.

7.Withholding. The Participant may be required to pay to the Company or any Affiliate and the Company shall have the right and is hereby authorized to withhold, any applicable withholding taxes in respect of the MSU Award, its grant or vesting or any payment or transfer with respect to the MSU Award, to include withholding of vested shares, and to take such additional action as may be necessary in the opinion of the Committee to satisfy all obligations for the payment of such withholding taxes.

8.Securities Laws. Upon the vesting and settlement of any Earned MSUs, the Participant will make or enter into such written representations, warranties and agreements as the Committee may reasonably request in order to comply with applicable securities laws or with this Agreement.

9.Notices. Any notice necessary under this Agreement shall be addressed to the Company in care of its Secretary at the principal executive office of the Company and to the Participant at the address appearing in the personnel records of the Company for such Participant or to either party at such other address as either party hereto may hereafter designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.

10.Choice of Law. This Agreement shall be governed by and construed in accordance with the laws of the state of Delaware without regard to conflicts of laws.

11.MSU Award Subject to Plan. By entering into this Agreement the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. The MSU Award and the Earned MSUs granted hereunder are subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference.

3

In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

12.Signature in Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

[Signatures on next page.]

4

IN WITNESS WHEREOF, the parties have caused this Agreement to be effective as of the day and year first above written.

Team Health Holdings, Inc.

/s/ Steven E. Clifton

Name: Steven E. Clifton
Title: Executive Vice President and

General Counsel

Participant

/s/ Leif M. Murphy
Leif M. Murphy

[Signature Page – Murphy MSU Sign-On Award Agreement]

5

EX-31.1

Exhibit 31.1

Certifications

I, Leif M. Murphy, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2016 of Team Health Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

By:	/S/    LEIF M. MURPHY
	Leif M. Murphy President and Chief Executive Officer

Date: November 4, 2016

EX-31.2

Exhibit 31.2

Certifications

I, David P. Jones, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2016 of Team Health Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

By:	/S/    DAVID P. JONES
	David P. Jones Executive Vice President and Chief Financial Officer

Date: November 4, 2016

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Team Health Holdings, Inc. (the “Company”) on Form 10-Q (“Form 10-Q”) for the quarter ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof, I, Leif M. Murphy, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

/S/    LEIF M. MURPHY        

Leif M. Murphy

President and Chief Executive Officer

Date: November 4, 2016

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Team Health Holdings, Inc. (the “Company”) on Form 10-Q (“Form 10-Q”) for the quarter ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof, I, David P. Jones, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

/S/    DAVID P. JONES        

David P. Jones

Executive Vice President and Chief Financial Officer

Date: November 4, 2016

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 31, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	TEAM HEALTH HOLDINGS INC.
Entity Central Index Key	0001082754
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		74,464,838

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 15,315	$ 28,563
Short-term Investments	1,581	1,985
Accounts receivable, less allowance for uncollectibles of $500,645 and $653,070 in 2015 and 2016, respectively	821,963	730,459
Prepaid expenses and other current assets	65,138	73,807
Receivables under insured programs	38,913	36,004
Income tax receivable	3,287	28,791
Total current assets	946,197	899,609
Insurance subsidiaries' and other investments	99,939	111,940
Property and equipment, net	84,141	87,907
Other intangibles, net	320,477	335,637
Goodwill	2,485,591	2,427,802
Deferred income taxes	48,625	50,250
Receivables under insured programs	102,272	90,747
Other	383,333	56,950
Total Assets	4,470,575	4,060,842
Current liabilities:
Accounts payable	57,060	66,358
Accrued compensation and physician payable	323,709	337,455
Other accrued liabilities	305,931	257,651
Current maturities of long-term debt	390,120	68,900
Total current liabilities	1,076,820	730,364
Long-term debt, less current maturities	2,298,985	2,337,363
Other non-current liabilities	376,619	346,427
Shareholders’ equity:
Common stock, ($0.01 par value; 100,000 shares authorized, 73,092 and 74,285 shares issued and outstanding at December 31, 2015 and September 30, 2016, respectively)	743	731
Additional paid-in capital	876,908	836,458
Accumulated deficit	(166,211)	(196,144)
Accumulated other comprehensive earnings	2,172	1,503
Team Health Holdings, Inc. shareholders’ equity	713,612	642,548
Noncontrolling interests	4,539	4,140
Total shareholders' equity including noncontrolling interests	718,151	646,688
Total liabilities and shareholders' equity	$ 4,470,575	$ 4,060,842

XML

Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Allowance for uncollectibles	$ 653,070	$ 500,645
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares outstanding	74,285,000	73,092,000
Common stock, shares issued	74,285,000	73,092,000

XML

Consolidated Statements of Comprehensive Earnings (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Net revenue before provision for uncollectibles	$ 1,925,775	$ 1,525,409	$ 5,581,210	$ 4,390,682
Provision for uncollectibles	784,281	626,228	2,181,499	1,773,062
Net revenue	1,141,494	899,181	3,399,711	2,617,620
Cost of services rendered (exclusive of depreciation and amortization shown separately below)
Professional service expenses	909,712	707,871	2,703,436	2,058,876
Professional liability costs	33,912	27,474	114,351	81,371
General and administrative expenses (includes contingent purchase and other acquisition compensation expense)	101,323	67,066	300,925	219,214
Other (income) expense, net	(6,337)	2,137	(7,947)	(182)
Depreciation	8,979	6,290	25,081	17,423
Amortization	23,772	20,633	71,425	62,085
Interest expense, net	28,525	5,572	90,255	14,132
Transaction, integration, and reorganization costs	20,836	3,869	48,337	7,170
Loss on refinancing of debt			1,069	0
Earnings before income taxes	20,772	58,269	52,779	157,531
Provision for income taxes	10,216	22,837	22,579	65,178
Net earnings	10,556	35,432	30,200	92,353
Net (loss) earnings attributable to noncontrolling interests	75	(10)	266	(78)
Net earnings attributable to Team Health Holdings, Inc.	$ 10,481	$ 35,442	$ 29,934	$ 92,431
Net earnings per share of Team Health Holdings, Inc.
Basic	$ 0.14	$ 0.49	$ 0.41	$ 1.29
Diluted	$ 0.14	$ 0.48	$ 0.40	$ 1.26
Weighted average shares outstanding
Basic (shares)	74,166	72,361	73,823	71,900
Diluted (shares)	75,304	73,687	75,225	73,351
Net change in fair value of investments, net of tax	$ (242)	$ 230	$ 669	$ (370)
Comprehensive earnings	10,314	35,662	30,869	91,983
Comprehensive (loss) earnings attributable to noncontrolling interests	75	(10)	266	(78)
Comprehensive earnings attributable to Team Health Holdings, Inc.	$ 10,239	$ 35,672	$ 30,603	$ 92,061

XML

Consolidated Statements of Comprehensive Earnings (Parenthetical) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Contingent purchase and other acquisition compensation expense recognized	$ 9,818	$ (3,530)	$ 28,669	$ 12,230
Net change in fair value of investments, tax	$ (133)	$ 124	$ 359	$ (213)

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Operating Activities
Net earnings	$ 30,200	$ 92,353
Adjustments to reconcile net earnings:
Depreciation	25,081	17,423
Amortization	71,425	62,085
Amortization of deferred financing costs	6,674	2,142
Equity based compensation expense	24,470	13,197
Provision for uncollectibles	2,181,499	1,773,062
Deferred income taxes	(2,400)	(34,140)
Non-cash loss on refinancing of debt	905	0
(Gain) loss on sale of investments and other assets	34	(1,879)
Net gain on joint venture deconsolidation	(4,346)	0
Equity in joint venture income	(4,446)	(2,856)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	(2,281,334)	(1,846,532)
Prepaids and other assets	(2,720)	(9,774)
Income tax accounts	20,947	29,585
Accounts payable	(9,684)	8,624
Accrued compensation and physician payable	(5,430)	2,439
Contingent purchase liabilities	22,943	(13)
Other accrued liabilities	3,635	(3,034)
Professional liability reserves	29,972	29,261
Net cash provided by operating activities	107,425	131,943
Investing Activities
Purchases of property and equipment	(22,189)	(31,123)
Net proceeds from disposition of assets	50	1,189
Cash paid for acquisitions, net of cash acquired	(395,085)	(116,314)
Payments for the purchase of investments	(458)	0
Proceeds from the sale of investments	2,532	7,332
Purchases of investments at insurance subsidiaries	(50,961)	(67,887)
Proceeds from investments at insurance subsidiaries	62,318	79,422
Net proceeds from joint venture deconsolidation	2,754	0
Net cash used in investing activities	(401,039)	(127,381)
Financing Activities
Payments on long-term debt	(32,348)	(11,250)
Proceeds from note payable	288	0
Payments on revolving credit facility	(697,700)	(989,500)
Proceeds from revolving credit facility	1,007,700	950,500
Payments of financing costs	(1,587)	0
Payments related to contingent purchase obligations	(18,397)	0
Contributions from noncontrolling interests	1,989	1,683
Proceeds from the issuance of common stock under stock purchase plans	4,952	3,445
Proceeds from exercise of stock options	17,938	23,185
Tax benefit from exercise of stock options	1,263	15,475
Payments related to settlement of equity based awards	(3,732)	0
Net cash (used in) provided by financing activities	280,366	(6,462)
Net decrease in cash and cash equivalents	(13,248)	(1,900)
Cash and cash equivalents, beginning of period	28,563	20,094
Cash and cash equivalents, end of period	15,315	18,194
Interest paid	78,746	13,619
Taxes paid, net of refunds	$ 3,752	$ 52,120

XML

Organization and Basis of Presentation

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Basis of Presentation

Organization and Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of Team Health Holdings, Inc. (the Company) its subsidiaries and its affiliates, including its affiliated medical groups, and have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial reporting, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring items) necessary for a fair presentation of results for the interim periods presented. The results of operations for any interim period are not necessarily indicative of results for the full year. The consolidated balance sheet of the Company at December 31, 2015 has been derived from the audited financial statements at that date, but does not include all of the information and disclosures required by U.S. GAAP for complete financial statements. These financial statements and the notes thereto should be read in conjunction with the December 31, 2015 audited consolidated financial statements and the notes thereto included in our annual report on Form 10-K for fiscal year 2015 filed with the Securities and Exchange Commission (the SEC).

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements and notes. Actual results could differ from those estimates. Certain amounts for the prior year have been reclassified to conform to the current year’s presentation.

XML

Recently Adopted and Recently Issued Accounting Guidance

9 Months Ended

Sep. 30, 2016

Accounting Changes and Error Corrections [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles

Recently Adopted and Recently Issued Accounting Guidance

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (FASB) in the form of accounting standards updates (ASUs) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company's consolidated financial position or results of operations.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” which establishes a comprehensive revenue recognition standard for virtually all industries under U.S. GAAP. The standard is effective for public entities for annual reporting periods beginning after December 15, 2017, including interim periods therein, with early adoption permitted for annual reporting periods beginning after December 15, 2016, including interim periods therein. The Company is in the process of evaluating the impact that adoption of this new accounting standard may have on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which will change how companies account for and present lease arrangements. The guidance requires companies to recognize leased assets and liabilities for both capital and operating leases. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, and interim periods therein, and early adoption is permitted. Companies are required to adopt the guidance on a modified retrospective method. The Company is in the process of evaluating the impact that adoption of this new accounting standard may have on the Company's consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting,” which requires companies to recognize the income tax effects of awards in the income statement when the awards vest or are settled (i.e., additional paid-in-capital pools will be eliminated). In addition, the new guidance changes the limit that companies are allowed to withhold for employees without triggering liability classification and allows companies to make a policy election to either recognize forfeitures as they occur or estimate them. The new guidance is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods, and early adoption is permitted. The required transition methods for each aspect of the new guidance varies between prospective, retrospective and modified retrospective. The Company has not yet determined which method of adoption it will select and is in the process of evaluating the impact that adoption of this new accounting standard may have on the Company's consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments,” which clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. ASU 2016-15 is effective for annual reporting periods beginning after December 15, 2017, and interim periods therein, and early adoption is permitted. Companies are required to adopt the guidance on a retrospective method, unless impracticable, at which point prospective application is appropriate. The Company is in the process of evaluating the impact that adoption of this new accounting standard may have on the Company's consolidated financial statements.

The Company has implemented all new accounting pronouncements that are in effect and that could materially impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued, but are not yet effective, that might have a material impact on the consolidated financial statements of the Company unless otherwise noted in prior updates or above.

XML

Acquisitions and Contingent Purchase Obligations

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

Acquisitions and Contingent Purchase Obligations

Acquisitions and Contingent Purchase Obligations

Acquisitions

During the nine months ended September 30, 2016, the Company completed nine acquisitions of emergency medicine, anesthesia services and hospital medicine businesses with operations in California, Connecticut, Florida, Michigan, Ohio and Rhode Island for total consideration of $83.2 million, which expanded the Company's presence in those respective markets. The results of operations of the acquired businesses have been included in the Company’s consolidated financial statements beginning on the respective acquisition dates. The Consolidated Statements of Comprehensive Earnings for the nine months ended September 30, 2016 includes net revenues of $17.7 million related to acquisitions completed during this period. Pro forma results of operations have not been presented because the effect of these acquisitions is not material to the Company’s consolidated results of operations individually or in the aggregate.

The purchase price for these acquisitions was allocated, based on management’s estimates, in accordance with ASC Topic 805, “Business Combinations” (ASC 805). The Company’s purchase price allocation for business combinations completed during recent periods is preliminary and may be subject to revision as additional information about the fair value of acquired working capital becomes available. Additional information, which existed as of the acquisition date but at that time was unknown to the Company, may become known to the Company during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date. The purchase price for these acquisitions completed during the nine months ended September 30, 2016 was allocated as shown in the table below (in thousands):

	September 30, 2016
Accounts receivable	$	3,024
Prepaid expenses and other assets	70
Other intangibles (consisting of physician and hospital agreements)	34,564
Goodwill (of which $29.1 million is tax deductible)	51,955
Accounts payable	(1,165		)
Accrued compensation and physician payable	(1,493		)
Other accrued liabilities	(718		)
Contingent purchase liability	(1,050		)
Net deferred income taxes	(2,025		)
Total purchase price	$	83,162

IPC Healthcare, Inc. (IPC) Acquisition

On November 23, 2015, the Company completed the acquisition of IPC in a cash transaction. At closing, the Company paid approximately $1.60 billion in cash to the former owners of IPC in exchange for all of the outstanding equity interests of IPC.

The accounting for the acquisition of IPC will be completed within the timeframe prescribed by the provisions of ASC 805. The Company continues to obtain information relative to the fair values of assets acquired and liabilities assumed. Acquired assets and assumed liabilities include, but are not limited to, accounts receivable, other intangible assets, current and noncurrent taxes payable, deferred taxes, contingent purchase liabilities, and other accrued liabilities. The valuations are based on appraisal reports or other appropriate valuation techniques to determine the fair value of the assets acquired or liabilities assumed.

During 2016, factors became known that resulted in changes to the purchase price allocation of assets and liabilities existing at the date of the IPC transaction. The estimated fair values of assets acquired and liabilities assumed, specifically accounts receivable, current and noncurrent taxes payable, deferred taxes, contingent purchase liability and other intangible assets, may be subject to change as additional information is received. The purchase price allocation adjustments for this acquisition are summarized as follows (in thousands):

	As of			Adjustments to			As of
	December 31, 2015			Purchase Price Allocation			September 30, 2016
Short term investments	$	1,985		$	—		$	1,985
Accounts receivable	127,265			(11,355		)	115,910
Prepaid expenses and other assets	6,347			(316		)	6,031
Receivables under insured programs	36,255			—			36,255
Property and equipment	10,541			216			10,757
Income tax receivable	12,528			—			12,528
Net deferred income taxes	64,301			(1,936		)	62,365
Other intangibles (consisting of marketing-related and technology-based intangibles and physician and hospital agreements)	4,975			21,700			26,675
Goodwill (of which the tax deductible amount was $368,283)	1,574,757			5,594			1,580,351
Accounts payable	(15,627		)	313			(15,314		)
Accrued compensation and physician payable	(43,856		)	—			(43,856		)
Other accrued liabilities	(63,809		)	(13,260		)	(77,069		)
Contingent purchase liability	(30,639		)	(2,768		)	(33,407		)
Assumed notes payable	(148,249		)	—			(148,249		)
Other non-current liabilities	(61,894		)	1,812			(60,082		)
Total consideration paid, net of acquired cash and cash equivalents of $28,059	$	1,474,880		$	—		$	1,474,880

Subsequent Acquisitions

Effective October 1, 2016, the first day of the fourth quarter of fiscal year 2016, the Company acquired the operations of an emergency medicine business located in Florida for a purchase price of approximately $311.9 million, which the Company funded on September 30, 2016. As of September 30, 2016, the cash paid for this acquisition was classified within other assets in the Consolidated Balance Sheets. In addition to the cash paid, there are potential future contingent purchase obligations of $26.7 million related to this acquisition. The Company's operating results for the reported periods were not impacted by this acquisition as it was completed subsequent to September 30, 2016.

During October 2016, the company completed the acquisition of the operations of an emergency medicine business located in Illinois that provides care to approximately 48,000 patients each year. The Company is still in the process of completing the purchase price allocation for this acquisition.

Contingent Purchase Obligations

In accordance with ASC 805, the Company records its contingent consideration as a component of the opening balance sheet unless there is a continuing employment provision. Contingent consideration with a continuing employment provision is recognized ratably over the defined performance period as compensation expense which is included as a component of general and administrative expense (and parenthetically disclosed with other acquisition-related compensation expense) in the results of the Company’s operations. The payment of contingent purchase obligations is included as a component of financing, unless there is a continuing employment provision, in which case it is included as a component of operating cash flows.

As of September 30, 2016, the Company estimates it may have to pay $88.3 million (excluding $26.7 million related to the acquisition funded on September 30, 2016, but effective October 1, 2016) in future contingent payments for acquisitions made prior to September 30, 2016, based upon the current projected performance of the acquired operations of which $65.5 million is recorded as a liability in other liabilities and other non-current liabilities on the Company’s Consolidated Balance Sheet. The remaining estimated liability of $22.9 million will be recorded as contingent purchase compensation expense over the remaining performance periods. The current estimate of future contingent payments could increase or decrease depending upon the actual performance of the acquisition over the respective performance periods. These payments will be made should the acquired operations achieve the financial targets or certain contract terms as agreed to in the respective acquisition agreements, including the requirements for continuing employment. When measured on a recurring basis, this liability is considered Level 3 in the fair value hierarchy due to the use of unobservable inputs to measure fair value.

The contingent purchase and other acquisition compensation expense recognized for the nine months ended September 30,2015 and 2016 was $12.2 million and $28.7 million, respectively.

The changes to the Company’s accumulated contingent purchase liability for the nine months ended September 30, 2016 are as follows (in thousands):

Contingent purchase liability at December 31, 2015	$	57,080
Payments	(24,047		)
Contingent purchase and other acquisition compensation expense recognized	28,669
Adjustments to contingent purchase liability recognized at acquisition date	3,756
Contingent purchase liability at September 30, 2016	$	65,458

Estimated unrecognized contingent purchase compensation expense as of September 30, 2016 is as follows (in thousands):

For the remainder of the year ended December 31, 2016	$	6,025
For the year ended December 31, 2017	11,069
For the year ended December 31, 2018	3,635
For the year ended December 31, 2019	1,515
For the year ended December 31, 2020	625
	$	22,869

XML

Fair Value Measurements

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The Company applies the provisions of FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” (ASC Topic 820), in determining the fair value of its financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements.

ASC Topic 820 prioritizes the inputs used in measuring fair value into the following hierarchy:

Level 1	Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2	Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable;
Level 3	Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.

The following table provides information on those assets and liabilities the Company currently measures at fair value on a recurring basis as of December 31, 2015 and September 30, 2016 (in thousands):

	Carrying Amount in Consolidated Balance Sheet December 31, 2015		Fair Value December 31, 2015		Fair Value Level 1		Fair Value Level 2		Fair Value Level 3
Insurance subsidiaries' and other investments:
Money market funds	$	18,238	$	18,238	$	18,238	$	—	$	—
Municipal bonds	87,121		87,121		—		87,121		—
Mutual funds	64		64		—		64		—
Private investments	2,818		2,818		—		—		2,818
Corporate bonds	3,699		3,699		—		3,699		—
Total investments of insurance subsidiaries	$	111,940	$	111,940	$	18,238	$	90,884	$	2,818
Supplemental employee retirement plan investments:
Mutual funds	$	45,868	$	45,868	$	—	$	45,868	$	—

	Carrying Amount in Consolidated Balance Sheet September 30, 2016		Fair Value September 30, 2016		Fair Value Level 1		Fair Value Level 2		Fair Value Level 3
Insurance subsidiaries' and other investments:
Money market funds	$	7,539	$	7,539	$	7,539	$	—	$	—
Municipal bonds	83,016		83,016		—		83,016		—
Mutual funds	48		48		—		48		—
Private investments	1,947		1,947		—		—		1,947
Corporate bonds	7,389		7,389		—		7,389		—
Total investments of insurance subsidiaries	$	99,939	$	99,939	$	7,539	$	90,453	$	1,947
Supplemental employee retirement plan investments:
Mutual funds	$	55,655	$	55,655	$	—	$	55,655	$	—

The Company’s insurance subsidiaries' and other investments are valued using market prices on active markets (Level 1) and less active markets (Level 2), in addition to using alternative information when market data is not available (Level 3). Level 1 investment valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 investment valuations are obtained from readily available pricing sources for comparable investments or identical investments in less active markets. The fair values of the Company’s supplemental employee retirement investments are based on quoted prices. Level 3 investment valuations require significant management judgment and are based on transaction price, company performance, and market conditions. For the nine months ended September 30, 2016 there were no transfers between Levels 1, 2 or 3. See Note 5 for more information regarding the Company’s investments.

The Company classified its municipal bonds, mutual funds, and corporate bonds within Level 2 because these securities were valued based on quoted prices in markets that are less active, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency.

The Company classified its private investments within Level 3 because active market pricing is not readily available and, as such, the Company uses net asset values as an estimate of fair value as a practical expedient. The valuation of non-public private equity investments requires significant management judgment due to the absence of observable quoted market prices, inherent lack of liquidity, and the long-term nature of such assets. These investments are valued initially based upon transaction price. In determining valuation adjustments resulting from the investment review process, emphasis is placed on current company performance and market conditions.

In addition to the preceding disclosures prescribed by the provisions of FASB ASC Topic 820, ASC Topic 825 “Financial Instruments” requires the disclosure of the estimated fair value of financial instruments. The Company’s short term financial instruments include cash and cash equivalents, short term investments, accounts receivable, and accounts payable. The carrying value of the short term financial instruments approximates the fair value due to their short term nature. These financial instruments have no stated maturities or the financial instruments have short term maturities that approximate market.

The fair value of the Company's debt is estimated using quoted market prices when available. When quoted market prices are not available, fair value is estimated based on current market interest rates for debt with similar maturities (Level 2). At September 30, 2016, the estimated fair value of the Company’s outstanding debt was $2.77 billion compared to a carrying value of $2.74 billion.

XML

Investments

9 Months Ended

Sep. 30, 2016

Investments [Abstract]

Investments

Investments

Investments are primarily comprised of securities held by the Company and its captive insurance subsidiaries in connection with its participant directed supplemental employee retirement plan. Investments held by the Company and its captive insurance subsidiaries are classified as available-for-sale securities. The unrealized gains or losses of investments held by the Company and its captive insurance subsidiaries are included in accumulated other comprehensive earnings as a separate component of shareholders’ equity, unless the decline in value is deemed to be other-than-temporary and the Company does not have the intent and ability to hold such securities until their full cost can be recovered, in which case such securities are written down to fair value and the loss is charged to current period earnings.

The investments held by the Company in connection with its participant directed supplemental employee retirement plan are classified as trading securities; therefore, changes in fair value associated with these investments are recognized as a component of earnings.

At December 31, 2015 and September 30, 2016, amortized cost basis and aggregate fair value of the Company’s available-for-sale securities by investment type were as follows (in thousands):

	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2015
Money market funds	$	18,238	$	—	$	—		$	18,238
Municipal bonds	84,983		2,411		(273		)	87,121
Mutual funds	64		—		—			64
Private investments	2,712		106		—			2,818
Corporate bonds	3,718		6		(25		)	3,699
	$	109,715	$	2,523	$	(298	)	$	111,940
September 30, 2016
Money market funds	$	7,539	$	—	$	—		$	7,539
Municipal bonds	80,187		3,001		(172		)	83,016
Mutual funds	48		—		—			48
Private Investments	1,711		236		—			1,947
Corporate bonds	7,204		185		—			7,389
	$	96,689	$	3,422	$	(172	)	$	99,939

At December 31, 2015 and September 30, 2016, the amortized cost basis and aggregate fair value of the Company’s available-for-sale securities by contractual maturities were as follows (in thousands):

	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2015
Due in less than one year	$	24,099	$	35	$	(54	)	$	24,080
Due after one year through five years	57,537		1,647		(79		)	59,105
Due after five years through ten years	23,389		674		(56		)	24,007
Due after ten years	1,914		61		(109		)	1,866
Total	$	106,939	$	2,417	$	(298	)	$	109,058
September 30, 2016
Due in less than one year	$	16,987	$	89	$	—		$	17,076
Due after one year through five years	60,055		2,082		(90		)	62,047
Due after five years through ten years	17,888		1,015		(82		)	18,821
Total	$	94,930	$	3,186	$	(172	)	$	97,944

A summary of the Company’s temporarily impaired available-for-sale investment securities as of December 31, 2015 and September 30, 2016 follows (in thousands):

	Impaired Less Than 12 Months					Impaired Over 12 Months					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
December 31, 2015
Municipal bonds	$	13,189	$	(103	)	$	2,575	$	(170	)	$	15,764	$	(273	)
Corporate bonds	3,120		(25		)	—		—			3,120		(25		)
Total investment	$	16,309	$	(128	)	$	2,575	$	(170	)	$	18,884	$	(298	)
September 30, 2016
Municipal bonds	$	3,389	$	(72	)	$	2,433	$	(100	)	$	5,822	$	(172	)
Total investment	$	3,389	$	(72	)	$	2,433	$	(100	)	$	5,822	$	(172	)

The unrealized losses resulted from changes in market interest rates, not from changes in the probability of contractual cash flows. Because the Company has the ability and intent to hold the investments until a recovery of carrying value and full collection of the amounts due according to the contractual terms of the investments is expected, the Company does not consider these investments to be other-than-temporarily impaired at September 30, 2016.

During the nine months ended September 30, 2016, the Company recorded a gain of approximately $0.4 million on the sale of specifically identified investments.

As of December 31, 2015 and September 30, 2016, the investments related to the participant directed supplemental employee retirement plan totaled $45.9 million and $55.7 million, respectively, and are included in other assets in the accompanying consolidated balance sheets. The net trading gains on those investments for the nine months ended September 30, 2015 and September 30, 2016 that were still held by the Company as of September 30, 2015 and September 30, 2016 were as follows (in thousands):

	2015			2016
Net (losses) gains recognized during the nine months ended September 30, 2015 and 2016, respectively on trading securities	$	(1,467	)	$	1,259
Less: Net gains (losses) recognized during the period on trading securities sold during the nine months ended September 30, 2015 and 2016, respectively	(35		)	(120		)
Unrealized (losses) gains recognized on trading securities still held at September 30, 2015 and 2016, respectively	$	(1,432	)	$	1,379

The Company has an investment in a variable interest entity that operates urgent care clinics. The Company was previously the primary beneficiary of the entity and consolidated the entity’s operations, but the Company sold a portion of its ownership to the other joint venture partner in the third quarter of 2016 for $3.3 million, which resulted in a gain of $4.3 million. As a result, the Company determined that it is no longer the primary beneficiary of the entity as it does not have the power to direct the activities that most significantly impact the economic performance of the entity nor the responsibility to absorb a majority of the expected losses. The entity is not consolidated and the investment is accounted for under the equity method, which is classified in other assets in the accompanying consolidated balance sheets and measured at fair value. The determination of whether the Company is the primary beneficiary was performed at the time of our initial investment and performed again when the entity was deconsolidated from the Company’s financial statements. As of September 30, 2016, the fair value of this investment was $0.9 million.

XML

Net Revenue

9 Months Ended

Sep. 30, 2016

Revenue, Net [Abstract]

Net Revenue

Net Revenues

Net revenues consists of fee for service revenue, contract revenue and other revenue. The Company’s net revenues are principally derived from the provision of healthcare staffing services to patients within healthcare facilities and is recorded in the period the services are rendered. Under the fee for service arrangements, the Company bills patients for services provided and receives payment from patients or their third-party payors. Fee for service revenue reflects gross fee for service charges less contractual allowances and policy discounts, where applicable. Contractual adjustments represent the Company’s estimate of discounts and other adjustments to be recognized from gross fee for service charges under contractual payment arrangements, primarily with commercial, managed care and governmental payment plans such as Medicare and Medicaid when the Company’s providers participate in such plans. Contractual adjustments are not reflected in self-pay fee for service revenue. Contract revenue represents revenue generated under contracts in which the Company provides physician and other healthcare staffing and administrative services in return for a contractually negotiated fee. Contract revenue consists primarily of billings based on hours of healthcare staffing provided at agreed-to hourly rates, monthly contractual rates, or certain operational or financial metrics. Revenue in such cases is recognized as the hours are worked by the Company’s affiliated staff and contractors or as metrics are realized. Other revenue consists primarily of revenue from management and billing services provided to outside parties. Revenue is recognized for such services pursuant to the terms of the contracts with customers. The Company also records a provision for uncollectible accounts based primarily on historical collection experience to record accounts receivables at the estimated amounts expected to be collected.

Net revenues consisted of the following (in thousands):

	Three Months Ended September 30,										Nine Months Ended September 30,
	2015					2016					2015					2016
Medicare	$	183,120		20.4	%	$	344,660		30.2	%	$	530,047		20.2	%	$	1,032,522		30.4	%
Medicaid	166,015			18.5		206,896			18.1		476,151			18.2		606,707			17.8
Commercial and managed care	462,652			51.5		551,960			48.4		1,322,652			50.5		1,612,048			47.4
Self-pay	496,910			55.3		568,418			49.8		1,405,252			53.7		1,582,967			46.6
Other	21,576			2.4		26,301			2.3		61,777			2.4		73,263			2.2
Unbilled	2,369			0.3		4,948			0.4		15,979			0.6		7,532			0.2
Net fee for service revenue before provision for uncollectibles	1,332,642			148.2		1,703,183			149.2		3,811,858			145.6		4,915,039			144.6
Contract revenue before provision for uncollectibles	182,631			20.3		211,986			18.6		549,998			21.0		618,931			18.2
Other	10,136			1.1		10,606			0.9		28,826			1.1		47,240			1.4
Net revenues before provision for uncollectibles	1,525,409			169.6		1,925,775			168.7		4,390,682			167.7		5,581,210			164.2
Provision for uncollectibles	(626,228		)	(69.6	)	(784,281		)	(68.7	)	(1,773,062		)	(67.7	)	(2,181,499		)	(64.2	)
Net revenues	$	899,181		100.0	%	$	1,141,494		100.0	%	$	2,617,620		100.0	%	$	3,399,711		100.0	%

The Company employs several methodologies for determining its allowance for uncollectibles depending on the nature of the net revenues before provision for uncollectibles recognized. The Company initially determines gross revenue for its fee for service patient visits based upon established fee schedule prices. Such gross revenue is reduced for estimated contractual allowances for those patient visits covered by contractual insurance arrangements to result in estimated net revenues before provision for uncollectibles. Net revenues before provision for uncollectibles is then reduced for management’s estimate of uncollectible amounts. Fee for service net revenues represents estimated cash to be collected from such patient visits and is net of management’s estimate of account balances estimated to be uncollectible. The provision for uncollectible fee for service patient visits is based on historical experience resulting from approximately 25 million fee for service patient visits and procedures over the last twelve months. The significant volume of patient visits and the terms of thousands of commercial and managed care contracts and the various reimbursement policies relating to governmental healthcare programs do not make it feasible to evaluate fee for service accounts receivable on a specific account basis. Fee for service accounts receivable collection estimates are reviewed on a quarterly basis for each fee for service contract by period of accounts receivable origination. Such reviews include the use of historical cash collection percentages by contract adjusted for the lapse of time since the date of the patient visit. In addition, when actual collection percentages differ from expected results, on a contract by contract basis, supplemental detailed reviews of the outstanding accounts receivable balances may be performed by the Company’s billing operations to determine whether there are facts and circumstances existing that may cause a different conclusion as to the estimate of the collectibility of that contract’s accounts receivable from the estimate resulting from using the historical collection experience. Contract-related net revenues are billed based on the terms of the contract at amounts expected to be collected. Such billings are typically submitted on a monthly basis and aged trial balances are prepared. Allowances for estimated uncollectible amounts related to such contract billings are made based upon periodic reviews of specific accounts and invoices once it is concluded that such amounts are not likely to be collected. Approximately 98% of the Company’s allowance for doubtful accounts is related to receivables for fee for service patient visits. The principal exposure for uncollectible fee for service visits is centered in self-pay patients and, to a lesser extent, for co-payments and deductibles from patients with insurance. While the Company does not specifically allocate the allowance for doubtful accounts to individual accounts or specific payor classifications, the portion of the allowance, excluding IPC, associated with fee for service charges as of September 30, 2016 was equal to approximately 93% of outstanding self-pay fee for service patient accounts. The methodologies employed to compute allowances for doubtful accounts were unchanged between 2015 and 2016.

XML

Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill during the year ended December 31, 2015 and the nine months ended September 30, 2016 were as follows (in thousands):

Goodwill	$	869,038
Accumulated impairment loss	(144,579		)
Additions through acquisitions	1,703,343
Balance, December 31, 2015	$	2,427,802
Goodwill	$	2,572,381
Accumulated impairment loss	(144,579		)
Increases from prior year acquisition purchase price allocation adjustments	5,834
Additions through current year acquisitions	51,955
Balance, September 30, 2016	$	2,485,591

The following is a summary of intangible assets and related amortization as of December 31, 2015 and September 30, 2016 (in thousands):

	Gross Carrying Amount		Accumulated Amortization
As of December 31, 2015:
Contracts	$	494,569	$	(170,873	)
Other	21,716		(9,775		)
Total	$	516,285	$	(180,648	)
As of September 30, 2016:
Contracts	$	517,686	$	(214,821	)
Other	31,161		(13,549		)
Total	$	548,847	$	(228,370	)
Aggregate amortization expense:
For the nine months ended September 30, 2016			$	71,425
Estimated amortization expense:
For the remainder of the year ended December 31, 2016			$	23,777
For the year ended December 31, 2017			91,249
For the year ended December 31, 2018			75,555
For the year ended December 31, 2019			66,521
For the year ended December 31, 2020			46,679
For the years ended December 31, 2021 and thereafter			16,696
Total			$	320,477

Intangible assets are amortized over their estimated life, which is approximately one to six years. As of September 30, 2016, the weighted average remaining amortization period for intangible assets was 3.4 years.

XML

Long-Term Debt

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

Long-term debt as of September 30, 2016 consisted of the following (in thousands):

Tranche A Term Loan Facility	$	555,000
Tranche B Term Loan Facility	1,305,440
7.25% Senior Notes due 2023	545,000
Revolving Credit Facility	332,000
Total outstanding debt	2,737,440
Debt issuance costs	(48,335		)
	2,689,105
Less current portion	(390,120		)
	$	2,298,985

The Company's senior secured credit facilities (Credit Facility) consist of a $600.0 million tranche A term loan facility (Tranche A Term Loan Facility), a $1.31 billion tranche B term loan facility (Tranche B Term Loan Facility) and a $650.0 million revolving credit facility (Revolving Credit Facility). The Tranche A Term Loan and Revolving Credit Facility have a maturity date of October 2, 2019. The Tranche B Term Loan Facility has a maturity date of November 23, 2022. The maturity dates under the Credit Facility are subject to extension with lender consent according to the terms of the senior credit agreement (the Senior Credit Agreement).

The interest rate on any outstanding Revolving Credit Facility borrowings and Tranche A Term Loan Facility borrowings, and the commitment fee applicable to undrawn revolving commitments, is priced off a grid based upon the Company’s first lien net leverage ratio and is currently LIBOR + 2.00% in the case of revolving credit borrowings under the Revolving Credit Facility and Tranche A Term Loan Facility and 0.35% in the case of unused revolving commitments. The weighted average interest rate for the nine months ended September 30, 2016 was 2.70% for amounts outstanding under the Tranche A Term Loan Facility.

On June 2, 2016, the Company amended its Senior Credit Agreement (the Amendment) to reduce the interest rate applicable to any outstanding Tranche B Term Loans from LIBOR plus 3.75% to LIBOR plus 3.00%. The Company effected this reduction in pricing through a refinancing of the existing Tranche B Term Loan Facility. The Amendment also requires the Company to pay a 1.0% prepayment penalty on any amount prepaid if the Tranche B Term Loan Facility is repriced in order to effect a reduction in pricing prior to December 2, 2016. Other significant terms and conditions of the Senior Credit Agreement, including the maturity date of November 23, 2022 and the LIBOR floor of 0.75%, did not change under the amendment.

The Company had $332.0 million borrowings outstanding under the Revolving Credit Facility as of September 30, 2016, and the Company had $6.8 million of standby letters of credit outstanding against the Revolving Credit Facility commitment.

The Credit Facility agreement contains both affirmative and negative covenants, including limitations on the Company’s ability to incur additional indebtedness, sell material assets, retire, redeem or otherwise reacquire its capital stock, acquire the capital stock or assets of another business and pay dividends, and requires the Company to comply with a maximum total leverage ratio, tested quarterly. At September 30, 2016, the Company was in compliance with all of its covenants under the senior credit facility agreement. The Credit Facility is secured by substantially all of the Company’s U. S. subsidiaries’ assets.

Senior Notes and Indenture

On November 23, 2015, Team Health, Inc., a wholly-owned subsidiary of the Company (the Issuer), completed the private placement of $545.0 million aggregate principal amount of 7.25% Senior Notes due 2023 (the Notes). The Notes are senior unsecured obligations and are fully and unconditionally guaranteed on a senior unsecured basis by the Company and, subject to certain exceptions, each of its existing and future material domestic wholly-owned restricted subsidiaries, referred to, collectively, as “Guarantors.”

The Notes bear interest at 7.25% per annum and mature on December 15, 2023. Interest is payable semi-annually on June 15 and December 15 of each year, beginning on June 15, 2016, to holders of record at the close of business on June 1 or December 1, as the case may be, immediately preceding each such interest payment date.

Prior to December 15, 2018, the Issuer may redeem some or all of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus accrued and unpaid interest to, but excluding, the redemption date, if any, plus the “make-whole” premium set forth in the indenture. On and after December 15, 2018, the Company may redeem the Notes, in whole or in part, at the redemption prices set forth in the indenture, plus accrued and unpaid interest to, but excluding, the redemption date. In addition, prior to December 15, 2018, the Company may also redeem up to 40% of the aggregate principal amount of the Notes at a redemption price equal to 107.25% of the aggregate principal amount thereof, in each case, using an amount not to exceed the net cash proceeds from certain equity offerings, plus accrued and unpaid interest to, but excluding, the redemption date.

The indenture governing the Notes due 2023 contains restrictive covenants that limit among other things, the ability of us and our restricted subsidiaries to incur or guarantee additional debt or issue disqualified stock or certain preferred stock; pay dividends and make other distributions on, or redeem or repurchase, capital stock; make certain investments; incur certain liens; enter into certain transactions with affiliates; merge or consolidate; enter into agreements that restrict the ability of certain restricted subsidiaries to make dividends or other payments to us or each of our existing and future material domestic wholly-owned restricted subsidiaries, referred to, collectively, as “Guarantors”; designate restricted subsidiaries as unrestricted subsidiaries; and transfer or sell certain assets. These covenants are subject to a number of important limitations and exceptions. The Indenture also contains customary events of default which would permit the holders of the Notes to declare those Notes to be immediately due and payable if not cured within applicable grace periods, including the failure to make timely payments on the Notes or other material indebtedness, the failure to satisfy covenants and specified events of bankruptcy and insolvency.

Aggregate annual maturities of long-term debt as of September 30, 2016 are as follows (in thousands):

2016	$	390,120
2017	73,120
2018	58,120
2019	418,120
2020 and thereafter	1,797,960

XML

Professional Liability Insurance

9 Months Ended

Sep. 30, 2016

Malpractice Insurance [Abstract]

Professional Liability Insurance

Professional Liability Insurance

The Company’s professional liability loss reserves included in other accrued liabilities and other non-current liabilities in the accompanying consolidated balance sheets consisted of the following (in thousands):

	December 31, 2015		September 30, 2016
Estimated losses under self-insured programs	$	245,070	$	273,655
Estimated losses under commercial insurance programs	126,751		141,185
	371,821		414,840
Less estimated payable within one year	105,028		102,478
	$	266,793	$	312,362

The changes to the Company’s estimated losses under self-insured programs as of September 30, 2016 were as follows (in thousands):

Balance, December 31, 2015	$	245,070
Reserves related to current period	62,802
Changes related to prior year reserves	14,284
Assumed liabilities	(1,812		)
Payments for current period reserves	(880		)
Payments for prior period reserves	(45,809		)
Balance, September 30, 2016	$	273,655

The Company provides for its estimated professional liability losses through a combination of self-insurance and commercial insurance programs. Losses under commercial insurance programs in excess of the limit of coverage remain as a self-insured obligation of the Company. A portion of the professional liability loss risks that have been provided for through self-insurance (claims-made basis) are transferred to and funded into captive insurance companies. The accounts of the captive insurance companies are fully consolidated with those of the other operations of the Company in the accompanying consolidated financial statements.

The self-insurance components of our risk management program include reserves for future claims incurred but not reported (IBNR). As of December 31, 2015, of the $245.1 million of estimated losses under self-insured programs, approximately $157.4 million represented an estimate of IBNR claims and expenses and additional loss development, with the remaining $87.7 million representing specific case reserves. Of the specific case reserves as of December 31, 2015, $3.0 million represented case reserves that had settled but not yet funded, and $84.7 million reflected unsettled case reserves.

As of September 30, 2016, of the $273.7 million of estimated losses under self-insurance programs, approximately $160.7 million represented an estimate of IBNR claims and expenses and additional loss development, with the remaining $113.0 million representing specific case reserves. Of the specific case reserves as of September 30, 2016, $3.4 million represented case reserves that had been settled but not yet funded, and $109.6 million reflected unsettled case reserves.

The Company’s provisions for losses under its self-insurance components are estimated using the results of periodic actuarial studies. Such actuarial studies include numerous underlying estimates and assumptions, including assumptions as to future claim losses, the severity and frequency of such projected losses, loss development factors and others. The Company’s provisions for losses under its self-insured components are subject to subsequent adjustment should future actuarial projected results for such periods indicate projected losses greater or less than previously projected.

During the first quarter of 2016, the Company reserved $14.3 million to settle two separate professional liability claims originating from prior years in excess of coverage limits, which was fully funded as of September 30, 2016. See Note 10 for more information regarding these settlements.

The Company’s most recent actuarial valuation was completed in October 2016. Based on the results of the actuarial study completed in October 2016, management determined no additional change was necessary in the consolidated reserves for professional liability losses during the third quarter of 2016 related to prior year loss estimates. The discount rate on professional liability reserves (including IPC as noted below) was 1.1% at September 30, 2016 compared to 1.6% at December 31, 2015.

IPC Professional Liability Reserves

IPC is fully insured on a claims-made basis up to policy limits through a third party malpractice insurance policy, which ends December 31 of each year. The Company has established reserves for this segment for claims incurred and reported and IBNR during the policy period. These reserves of $25.8 million as of September 30, 2016 and the timing of payment of such amounts are estimated based upon actuarial loss projections, which are updated semi-annually, and discounted using the current weighted average Treasury rate over a 10 year period.

XML

Contingencies

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Contingencies

Contingencies

Litigation

The Company is currently a party to various legal proceedings arising in the ordinary course of business. The legal proceedings the Company is involved in from time to time include lawsuits, claims, audits and investigations with government and non-government parties, including those arising out of services provided, personal injury claims, professional liability claims, the Company's billing, collection and marketing practices, employment disputes and contractual claims, and seek monetary and other relief, including statutory damages and penalties.. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on the Company's net earnings in the period in which the ruling occurs. The estimate of the potential impact from such legal proceedings on the Company's financial position or overall results of operations could change in the future.

On August 14, 2015, a purported stockholder of IPC filed a putative class action complaint in the Court of Chancery of the State of Delaware (the Court of Chancery), captioned Smukler v. IPC Healthcare, Inc., et al., C.A. No. 11392-CB.  On August 18, 2015, a second purported stockholder of IPC filed a putative class action in the Court of Chancery, captioned Crescente v. Singer, et al., C.A. No. 11405-CB.  On September 11, 2015, the Court of Chancery entered an order (the Consolidation Order) consolidating the two actions under the caption In re IPC Healthcare, Inc., Consolidated C.A. No. 11392-CB (the Consolidated Action), and a consolidated class action complaint (the Consolidated Complaint) was filed on September 18, 2015.  The Consolidated Complaint named as defendants the members of IPC’s board of directors, the Company, and Intrepid Merger Sub, Inc. (Merger Sub).  The Consolidated Complaint alleged that the IPC directors breached their fiduciary duties, and that the Company and Merger Sub aided and abetted those breaches, by failing to disclose certain material information in the IPC Preliminary Schedule 14A relating to the proposed acquisition of IPC by the Company (the Transaction).  The Consolidated Complaint sought, among other relief, a preliminary injunction and recovery of the costs of the Consolidated Action, including reasonable attorneys’ fees and expenses.

On November 6, 2015, plaintiffs’ counsel and defendants’ counsel executed a memorandum of understanding, or MOU, memorializing the terms of an agreement in principle pursuant to which IPC agreed to make certain supplemental disclosures relating to the Transaction in a Form 8-K, and plaintiffs agreed to dismissal of the Consolidated Action with prejudice and the release of certain claims.  On November 6, 2015, IPC filed a Form 8-K with the supplemental disclosures with the SEC.

On April 11, 2016, following a series of rulings by the Court of Chancery in other actions challenging mergers, plaintiffs and defendants agreed to replace the MOU with an agreement that plaintiffs would voluntarily dismiss the Consolidated Action on the basis that it was mooted by the supplemental disclosures contained in the Form 8-K.  On April 12, 2016, the Court of Chancery entered a Stipulation and Order Concerning Plaintiffs’ Voluntary Dismissal of the Action and Plaintiffs’ Counsel’s Anticipated Application for an Award of Attorneys’ Fees and Expenses (the Dismissal Order).  The Dismissal Order dismissed the Consolidated Action as moot and dismissed the claims asserted in the Consolidated Complaint with prejudice as to the named plaintiffs and without prejudice as to other members of the purported class.  The Court of Chancery retained jurisdiction over the Consolidated Action solely for the purpose of adjudicating the anticipated application by plaintiffs’ counsel for an award of fees and expenses. 

On May 19, 2016, plaintiffs filed their application for an award of fees and expenses, in the total amount of $350,000. The Company filed its opposition to such application on June 30, 2016, and, on July 14, 2016, plaintiffs filed their reply papers. Subsequent to the filing of plaintiffs' reply papers, plaintiffs’ counsel and defendants’ counsel engaged in arm’s-length discussions regarding the payment of attorneys’ fees and reimbursement of expenses to plaintiffs' counsel. The Company has agreed to pay plaintiffs' counsel attorneys' fees in the amount of $100,000, inclusive of expenses.

On October 31, 2016, the Court of Chancery approved a Stipulation and Order Concerning Dismissal of the Consolidated Action and Approving Notice of Payment of Attorneys’ Fees and Expenses, entered into by the parties, which provided for the payment of $100,000 in attorneys’ fees and expenses to plaintiffs’ counsel, the final dismissal and closing of the Consolidated Action, and the provision of notice to stockholders of the payment to plaintiffs’ counsel.  The Court of Chancery has not been asked to review, and will pass no judgment on, the payment or amount of the agreed-upon fee to plaintiffs’ counsel or its reasonableness.

On November 13, 2015, the U.S. District Court for the Eastern District of Wisconsin ordered the unsealing and service of a qui tam complaint, filed on March 27, 2014, and captioned United States of America, ex rel. John Mamalakis, M.D., the States of California, Colorado, Delaware, Florida, Georgia, Hawaii, Iowa, Maryland, Michigan, Nevada, New Jersey, North Carolina, Oklahoma, Tennessee, Texas, Wisconsin and the District of Columbia v. Anesthetix Management, LLC, d/b/a Anesthetix of TeamHealth, Team Health Holdings, Inc., Sonya Pease, M.D., John Ippolito, M.D., Edward Lee, M.D., Howard Stroup, M.D., Sammy Dean, M.D., and Jacqueline Peters, M.D. (Defendants) (Case No. 2:14cv00349-CNC). On June 11, 2014, the United States gave notice of its intention, and the intention of all of the other states and the District of Columbia, not to intervene in the lawsuit. On March 10, 2016, Team Health Holdings, Inc. was served with the complaint. The complaint alleges that the defendants submitted false claims to federal and state health insurance programs for “medical direction” of anesthesia services (rather than “medical supervision”) that were provided at Wheaton Franciscan Hospital-All Saints Hospital (All Saints) in Racine, Wisconsin, as well as numerous other non-identified hospitals and clinics from 2010 to the present. Plaintiff also claims retaliatory termination, alleging that he was terminated from his employment for voicing his concerns about the anesthesia services. Plaintiff seeks recovery of all Medicare and Medicaid reimbursement that the defendants received as a result of the allegedly false claims and treble damages under the False Claims Act, as well as a civil penalty for each such false Medicare and Medicaid claim. On April 15, 2016, plaintiff amended his complaint, removing all of the individual defendants as well as the claims filed on behalf of Delaware, Georgia, Hawaii, Iowa, Maryland, Nevada, North Carolina, Oklahoma, Tennessee and Texas. On May 2, 2016, Defendants filed a motion to dismiss the entirety of the complaint pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6), or in the alternative, to compel arbitration of the retaliatory discharge claim. On July 1, 2016, Relator filed his opposition to the motion. Defendants filed their reply in support of the motion on July 18, 2016. The Motion remains under advisement and the Company expects the Court to decide it soon. The Company intends to vigorously defend against the allegations in this matter. The Company does not believe that the final outcome of this matter will be material.

In August 2011, a medical malpractice suit was filed against three of the Company’s affiliates and one of its physicians along with other co-defendants, including a hospital, in the Superior Court of New Jersey, Camden County, alleging a failure to diagnose sepsis in 2010. In July 2012, a medical malpractice suit was filed in the Court of Common Pleas, Luzerne, Pennsylvania against one Company affiliate and one of its physicians and a co-defendant hospital, alleging a failure to diagnose a stroke in 2010. In March 2016, both cases resulted in settlements in excess of insurance coverage limits where the Company was required to fund a total of $14.3 million, which represents the Company's contribution to the overall settlements that includes the other defendants. As of September 30, 2016, these settlements have been fully funded.

Healthcare Regulatory Matters

Laws and regulations governing the Medicare and Medicaid programs are complex and subject to interpretation. Compliance with such laws and regulations can be subject to future governmental review and interpretation as well as significant regulatory action. From time to time, governmental regulatory agencies will conduct inquiries and audits of the Company’s practices. It is the Company’s current practice and future intent to cooperate with such inquiries.

In addition to laws and regulations governing the Medicare and Medicaid programs, there are a number of federal and state laws and regulations governing such matters as the corporate practice of medicine and fee splitting arrangements, anti-kickback statutes, physician self-referral laws, false or fraudulent claims filing and patient privacy requirements. The failure to comply with any of such laws or regulations could have an adverse impact on the Company's operations and financial results.

Government Claim

On June 7, 2010, the Company's subsidiary, IPC, received a civil investigative demand (CID) issued by the Department of Justice (DOJ), U.S. Attorney’s Office for the Northern District of Illinois. The CID requested information concerning claims that IPC had submitted to Medicare and Medicaid. The CID covered the period from January 1, 2003, through June 4, 2010, and requested production of a range of documents relating to IPC’s Medicare and Medicaid participation, physician arrangements, operations, billings and compliance programs. IPC produced responsive documents and was in contact with representatives of the DOJ who informed IPC that the inquiry related to a qui tam whistleblower action filed under court seal in the U.S. District Court for the Northern District of Illinois (Chicago). The case is captioned United States ex rel. Oughatiyan v. IPC The Hospitalist Company, Inc. (Civ. No. 09-C-5418). IPC also was informed that several state attorneys general were examining its Medicaid claims in coordination with the DOJ.

On December 5, 2013, the U.S. District Court partially lifted the seal on the civil False Claims Act case related to this investigation. The unsealed portions of the Court docket at that time included the whistleblower’s Complaint which contains allegations of improper billing to Medicare and Medicaid, a Notice of Election to Intervene filed by the federal government and a Notice of Election to Decline Intervention filed by the State of Illinois and 12 other states that participated in the investigation. On June 16, 2014, the federal government filed its Complaint in Intervention against IPC and several of its subsidiaries in the U.S. District Court. The Complaint in Intervention contains allegations of improper billing to Medicare, Medicaid and other federal healthcare programs from January 1, 2003 to the present, seeks to recover treble damages and civil penalties under the civil False Claims Act, and seeks to recover damages under common law theories of payment by mistake and unjust enrichment. On August 13, 2014, the Company's subsidiary, IPC and the IPC subsidiary defendants filed a joint motion to dismiss the Complaint in Intervention or, in the alternative, to sever claims against the defendants. The federal government filed its response on September 18, 2014, to which the defendants replied on September 25, 2014. The court’s decision, which was filed on February 17, 2015, granted the motion to dismiss in part and denied it in part. The Court’s Opinion and Order dismissed the 29 IPC subsidiary and affiliate defendants without prejudice, but the Court denied the request to dismiss IPC Healthcare, Inc., which remains the sole defendant in the lawsuit. The parties are engaged in negotiations to attempt to resolve the matter, but if an acceptable settlement cannot be reached, the Company intends to continue contesting the case.

On June 14, 2016, the Company entered into a Tolling Agreement, which was extended on November 3, 2016, with the United States of America, through the United States Attorney’s Office for the Eastern District of Tennessee and the United States Department of Health and Human Services, and the State of Tennessee, through the Tennessee Attorney General’s Office, to continue ongoing discussions related to emergency department coding practices for professional services rendered in the State of Tennessee. On June 9, 2014, the Attorney General for the State of Tennessee issued a CID to one of the Company's affiliated entities, Southeastern Emergency Physicians, LLC, about possible false claims for payments associated with professional services furnished to Bureau of TennCare patients. The CID requested that the Company produce records and documents. In conjunction with the inquiry of the Attorney General for the State of Tennessee, the United States Department of Justice, U.S. Attorney’s Office for the Eastern District of Tennessee, on May 26, 2015, sent an informal request for information and documentation to Southeastern Emergency Physicians, LLC, HCFS Health Care Financial Services and TeamHealth. The request sought information relating to the Company's emergency department coding practices for professional services rendered in the State of Tennessee and the production of training and compliance materials. The Company has been timely responding to requests for information and documentation and is continuing to cooperate with the Tennessee Attorney General and the U.S. Attorney’s Office. The Company is currently unable to determine the potential impact, if any, that will result from this matter.

On October 25, 2016, the Company received a CID from the United States Department of Justice pursuant to the Federal False Claims Act concerning the submission of claims to federal healthcare programs for certain professional services furnished by the Company's affiliated provider groups at certain healthcare facilities, including healthcare facilities located in Colorado and Texas. The CID requests, among other things, information related to professional services furnished to critical care patients and professional service split/shared visits involving both physicians and mid-level practitioners (such as physician assistants and nurse practitioners). The CID requests responses to written interrogatories and the production of documents and other information relating to Company coding and billing policies. The Company is cooperating with the Department of Justice. The Company is currently unable to determine the potential impact, if any, that will result from this matter.

Florida Medicaid Reimbursement Suspension

The Company's subsidiary, IPC, received notice on August 7, 2015 that the Florida Agency for Health Care Administration (AHCA) temporarily suspended Medicaid fee-for-service and Medicaid managed care payments to IPC’s Florida affiliate, InPatient Consultants of Florida, Inc. d/b/a IPC of Florida, because IPC of Florida is “under investigation by a state or federal agency.” Since receiving this notice, and based on its failure to contain the required specificity under the applicable federal regulation, IPC has sought additional information from AHCA regarding the basis of the payment suspension, including through repeated discussions with the responsible AHCA officials; by submitting a request for documents through the Florida Public Records Law (PRL) on August 27, 2015; and by filing a petition for formal administrative review on September 4, 2015.

Following these actions, IPC received a revised letter on September 9, 2015 in which AHCA clarified that the investigation causing the payment suspension concerns IPC of Florida’s alleged “up-coding” and “billing for the highest level of inpatient hospital care, which may not be medically necessary.” Since receipt of this revised notice, which still failed to contain the required specificity, IPC has continued to engage with AHCA to obtain information that would enable IPC to rebut the basis for the payment suspension. These efforts have included submitting a second PRL request on September 18, 2015 and submitting a letter to AHCA providing information to support a determination by AHCA that it has “good cause” to discontinue the payment suspension, consistent with the applicable federal regulation. On October 23, 2015, IPC received an order dismissing IPC’s petition for formal administrative review on the grounds that there is no final agency action and because the suspension is a contract action not appropriate for an administrative hearing. The Company is continuing its discussions with AHCA officials in an effort to resolve this matter.

It is not possible to predict when any of the above matters may be resolved, the time or resources that the Company will need to devote to the matters, or what impact, if any, the outcome of any of the matters might have on the Company's business, consolidated financial position, results of operations, or cash flows.

XML

Equity-based Compensation

9 Months Ended

Sep. 30, 2016

Share-based Compensation [Abstract]

Share-based Compensation

Equity-based Compensation

Equity Incentive Plans

In May 2013, the Company's shareholders approved the Team Health Holdings, Inc. Amended and Restated 2009 Stock Incentive Plan (the Stock Plan) that amended the 2009 Stock Incentive Plan.

In connection with the acquisition of IPC, the IPC replacement awards were issued based on a conversion ratio of the IPC common share value to Team Health weighted average share price immediately prior to the closing. The Company assumed and restated the Amended and Restated Team Health Holdings, Inc. 1997 Equity Participation Plan, the Amended and Restated 2002 Equity Participation Plan of Team Health Holdings, Inc., the Amended and Restated Team Health Holdings, Inc. 2007 Equity Participation Plan, and the Amended and Restated Team Health Holdings, Inc. 2012 Equity Participation Plan (collectively the IPC Plans) for the sole purpose of completing the exchange of equity awards. There will be no further issuances under these plans.

Purpose. The purpose of the Stock Plan is to aid in recruiting and retaining key employees, directors, consultants, and other service providers of outstanding ability and to motivate those employees, directors, consultants, and other service providers to exert their best efforts on behalf of the Company and its affiliates by providing incentives through the granting of options, stock appreciation rights and other stock-based awards.

Shares Subject to the Plan. The Stock Plan provides that the total number of shares of common stock that may be issued is 15,100,000, of which approximately 593,000 are available to grant as of September 30, 2016. Shares of the Company’s common stock covered by awards that terminate or lapse without the payment of consideration may be granted again under the Stock Plan.

The following table summarizes the status of options under the Stock Plan as of September 30, 2016:

	Shares (in thousands)		Weighted Average Exercise Price		Aggregate Intrinsic Value (in thousands)		Weighted Average Remaining Life in Years
Outstanding at beginning of year	4,780		$	28.07	$	86,342	5.3
Granted	1,134		35.30
Exercised	(881	)	20.59		16,930
Expired or forfeited	(203	)	44.96
Outstanding at end of period	4,830		$	30.51	$	34,285	5.4
Exercisable at end of period	3,098		$	24.31	$	34,280	4.4

Intrinsic value is the amount by which the stock price as of September 30, 2016 exceeds the exercise price of the options. The Company granted approximately 1,134,000 options, of which approximately 442,000 were performance share options, during the nine months ended September 30, 2016. The market based performance stock options vest if the market conditions are met and the grantee remains employed over the requisite service period. As of September 30, 2016, the Company had approximately $20.3 million of unrecognized compensation expense, net of estimated forfeitures related to unvested options, which will be recognized over the remaining requisite service period.

The fair value of options granted in 2016 was based on the grant date fair value as calculated by the Black-Scholes option pricing formula, while the performance share options fair value was based on the grant date fair value as calculated by the Monte Carlo option pricing formula. The expected life is the mid-point between the vesting date and the end of the contractual term, except for the performance options, which have an expected life based on the mid-point between the option expiration date and the date at which the market condition is first fulfilled. The Company uses this simplified method, as described in ASC 718, due to changes in option grant contractual terms causing insufficient historical exercise data. The Company will continue to evaluate the use of the simplified method as historical exercise data becomes more sufficient. The following assumptions were used:

	Time vested options			Performance share options
Expected life	5 years			4.6 years
Volatility	34.9		%	40.2		%
Risk free interest rate	1.3		%	1.4		%
Option value	$	12.14		$	10.39
Assumed dividend rate	—		%	—		%

Restricted awards are grants of restricted stock, restricted stock units and performance stock units that are not vested (Restricted Awards). The Company granted approximately 642,000 shares of Restricted Awards in 2016. The Company had $30.9 million of expense remaining to be recognized over the requisite service period for Restricted Awards at September 30, 2016. The Restricted Awards generally vest annually over a three to four-year period from the initial grant date for the grants made to the independent board members and management. The performance stock units vest at the end of three years from the initial grant date. The actual number of performance stock units to be awarded will be based on the achievement of certain predetermined financial and operational performance targets during the initial two year period starting in the year of the grant. The related expense will be tracked and adjusted as appropriate to reflect the actual shares issued.

Market Share Unit Awards

In September 2016, the Company granted approximately 127,000 market share units (MSU). The vesting of these awards is contingent upon the Company's twenty day average closing price immediately preceding the MSU vesting date. The awards vest in three annual tranches and have a maximum potential to vest at 200% based on stock performance and a minimum potential of 75%. The related stock-based compensation expense is determined based on the estimated fair value of the underlying shares on the date of grant and is recognized using the accelerated method over the vesting term. The estimated fair value was calculated using a Monte Carlo simulation model. The fair value of the awards granted in September was $39.26. The awards are included in the restricted stock unit table above. The Company had $4.9 million of expense remaining to be recognized over the requisite service period for the MSUs at September 30, 2016. The market share units vest over a three year period from the initial grant date.

A summary of changes in total outstanding unvested restricted and market share unit awards for the nine months ended September 30, 2016 is as follows (in thousands):

	Restricted Stock		Restricted Units		Performance Units		Market Share Units	Total
Outstanding at beginning of year	100		766		—		—	866
Granted	—		498		144		127	769
Vested	(53	)	(276	)	—		—	(329	)
Forfeited and expired	(5	)	(94	)	(33	)	—	(132	)
Outstanding at September 30, 2016	42		894		111		127	1,174

Stock Purchase Plans

In May 2010, the Company’s Board of Directors (the Board) adopted the 2010 Employee Stock Purchase Plan (ESPP) and the 2010 Nonqualified Stock Purchase Plan (NQSPP).

The ESPP provides for the issuance of up to 600,000 shares to the Company’s employees. All eligible employees are granted identical rights to purchase common stock in each Board authorized offering under the ESPP. Rights granted pursuant to any offering under the ESPP terminate immediately upon cessation of an employee’s employment for any reason. In general, an employee may reduce his or her contribution or withdraw from participation in an offering at any time during the purchase period for such offering. Employees receive a 5% discount on shares purchased under the ESPP. Rights granted under the plan are not transferable and may be exercised only by the person to whom such rights are granted. Offerings occur every six months in April and October. As of September 30, 2016, contributions under the ESPP totaled $3.3 million. In October 2016, approximately 101,000 shares of the Company’s common stock were issued to plan participants.

The NQSPP provides for the issuance of up to 800,000 shares to our independent contractors. All eligible contractors are granted identical rights to purchase common stock in each Board authorized offering under the NQSPP. Rights granted pursuant to any offering under the NQSPP terminate immediately upon cessation of a contractor’s relationship with the Company for any reason. In general, a contractor may reduce his or her contribution or withdraw from participation in an offering at any time during the purchase period for such offering. Contractors receive a 5% discount on shares purchased under the NQSPP. Rights granted under the NQSPP are not transferable and may be exercised only by the person to whom such rights are granted. Offerings occur every six months in April and October. As of September 30, 2016, contributions under the NQSPP totaled $0.9 million. In October 2016, approximately 29,000 shares of the Company’s common stock were issued to plan participants.

Equity Based Compensation Expense

Equity based compensation expense, including $3.9 million of expense, primarily associated with changes in executive leadership, recorded in transaction, integration and reorganization costs during the nine months ended September 30, 2016, and the resulting tax benefits were as follows (in thousands):

	Nine Months Ended September 30,
	2015		2016
Stock options	$	7,212	$	6,277
Restricted awards	5,923		18,060
Market share units	—		51
Stock purchase plan	62		82
Total equity based compensation expense	$	13,197	$	24,470
Tax benefit of equity based compensation expense	$	5,081	$	9,360

XML

Earnings Per Share

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

The Company computes basic earnings per share using the weighted average number of shares outstanding. The Company computes diluted earnings per share using the weighted average number of shares outstanding plus the dilutive effect of outstanding stock options, restricted awards, and stock purchase plans. The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2016		2015		2016
Net earnings attributable to Team Health Holdings, Inc. (numerator for basic and diluted earnings per share)	$	35,442	$	10,481	$	92,431	$	29,934
Denominator:
Weighted average shares outstanding	72,361		74,166		71,900		73,823
Effect of dilutive securities:
Stock options	1,086		871		1,176		988
Restricted awards	237		199		272		340
Market share units	—		61		—		67
Stock purchase plans	3		7		3		7
Shares used for diluted earnings per share	73,687		75,304		73,351		75,225
Basic net earnings per share of Team Health Holdings, Inc.	$	0.49	$	0.14	$	1.29	$	0.41
Diluted net earnings per share of Team Health Holdings, Inc.	$	0.48	$	0.14	$	1.26	$	0.40
Securities excluded from diluted earnings per share of Team Health Holdings, Inc. because they were antidilutive:
Stock options	519		1,685		258		1,622
Restricted awards	—		173		—		215

XML

Noncontrolling Interests in Consolidated Entity

9 Months Ended

Sep. 30, 2016

Noncontrolling Interest [Abstract]

Noncontrolling Interest Disclosure

Noncontrolling Interests in Consolidated Entity

As of September 30, 2016, the Company is party to one joint venture arrangement. The joint venture provides administrative management and billing services to certain existing and planned urgent care clinics the Company and joint venture partners operate. The consolidated financial statements include all assets, liabilities, revenues and expenses of the less than 100% owned entity that the Company controls. Accordingly, the Company has recorded noncontrolling interests in the earnings and equity of this entity. In connection with this arrangement, the Company received joint venture contributions of $2.0 million during the nine months ended September 30, 2016.

XML

Transaction, Integration and Reorganization Costs

9 Months Ended

Sep. 30, 2016

Transaction, integration, and reorganization costs [Abstract]

Transaction, integration and reorganization costs

Transaction, Integration and Reorganization Costs

For the nine months ended September 30, 2016, the Company recognized certain transaction, integration, and reorganization costs in the amount of $48.3 million. For 2016, these expenses include IPC severance and integration costs of $19.3 million, $11.7 million of professional, advisory, and legal costs associated with the activities of (i) the Board's special advisory committee (which was responsible for reviewing and evaluating possible strategic alternatives available to the Company) and (ii) the JANA agreement, $8.8 million of charges associated with the executive leadership transition during the third quarter of 2016, $6.9 million of severance and lease impairment costs associated with a reorganization of the Company's legacy operations, and $1.6 million of legacy transaction costs. For the nine months ended September 30,2015, the Company recognized $7.2 million of costs related to advisory, legal, accounting and other fees incurred related to acquisition activity, of which $2.6 million was associated with the IPC transaction.

XML

Accumulated Other Comprehensive Income

9 Months Ended

Sep. 30, 2016

Statement of Comprehensive Income [Abstract]

Accumulated Other Comprehensive Earnings (Loss)

Accumulated Other Comprehensive Earnings

The changes in accumulated other comprehensive earnings related to available-for-sale securities were as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2016			2015			2016
Balance at beginning of period	$	1,095		$	2,414		$	1,695		$	1,503
Other comprehensive earnings (loss):
Net unrealized gain (loss)	451			(367		)	(436		)	1,422
Tax (expense) benefit	(124		)	133			213			(359		)
Total other comprehensive earnings (loss) before reclassifications, net of tax	327			(234		)	(223		)	1,063
Net amount reclassified to earnings(1)	(97		)	(8		)	(147		)	(394		)
Tax benefit (expense)(2)	—			—			—			—
Total amount reclassified from accumulated other comprehensive earnings, net of tax(3)	(97		)	(8		)	(147		)	(394		)
Total other comprehensive earnings (loss)	230			(242		)	(370		)	669
Balance at end of period	$	1,325		$	2,172		$	1,325		$	2,172

(1) This amount was included in Other (income) expense, net on the accompanying Consolidated Statement of Comprehensive Earnings.

(2) These amounts were included in Provision for income taxes on the accompanying Consolidated Statement of Comprehensive Earnings.

(3) A positive amount indicates a corresponding charge to earnings and a negative amount indicates a corresponding benefit to earnings.

XML

Segment Reporting

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

During the fourth quarter of 2015, the Company completed certain changes to its management reporting structure to better align its businesses with the Company objectives and operating strategies. These changes resulted in changes among the Company's previously reported operating and reportable segments. The third quarter 2015 segment results have been reclassified to conform to the current year reporting of these businesses. The Company determined, in accordance with segment reporting guidance, that it provides services through eight operating segments which are aggregated into four reportable segments: Hospital Based Services, IPC Healthcare, Specialty Services, and Other Services. The Hospital Based Services segment, which is an aggregation of emergency medicine, anesthesia, and the Company's legacy acute care services, provides comprehensive healthcare service programs to users of healthcare services on a fee for service as well as a cost plus or contract basis. The IPC Healthcare segment consists of the business acquired in connection with the IPC transaction and provides comprehensive acute hospital medicine and post-acute provider service programs to users of healthcare services. The Specialty Services segment, which is an aggregation of military and government healthcare staffing, clinical services, and nurse call center operations, provides comprehensive healthcare service programs to users of healthcare services in an outpatient setting or in a non-hospital based environment. The Other Services segment is an aggregation of locums staffing, scribes, and billing, collection and consulting services that provides a range of other comprehensive healthcare services. The operating segments included in the Specialty Services or Other Services reportable segments, while similar in the types of services provided by those operating segments included in the Hospital Based Services segment, do not meet the aggregation criteria prescribed by the segment reporting guidance nor do they meet the quantitative thresholds that would require a separate presentation.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies included in our Annual Report on Form 10-K for fiscal year 2015 filed with the SEC. Segment amounts disclosed are prior to any elimination entries made in consolidation, except in the case of net revenues, where intercompany charges have been eliminated. Certain corporate expenses are not allocated to the segments. These unallocated expenses are corporate expenses, net interest expense, depreciation and amortization, transaction costs and income taxes. The Company evaluates segment performance based on profit and loss before the aforementioned expenses.

The following table presents financial information for each reportable segment. Depreciation, amortization, management fee and other expenses separately identified in the consolidated statements of operations are included as a reduction to the respective segments’ operating earnings for each period below (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2016			2015			2016
Net Revenues:
Hospital Based Services	$	831,261		$	894,792		$	2,412,049		$	2,632,504
IPC Healthcare	—			177,125			—			555,506
Specialty Services	42,165			42,806			129,851			134,314
Other Services	25,731			26,742			75,648			77,304
General Corporate	24			29			72			83
	$	899,181		$	1,141,494		$	2,617,620		$	3,399,711
Operating Earnings:
Hospital Based Services	$	92,087		$	78,733		$	236,150		$	209,589
IPC Healthcare	—			5,181			—			25,449
Specialty Services	4,083			8,362			14,941			19,287
Other Services	5,715			6,754			19,158			19,827
General Corporate	(38,044		)	(49,733		)	(98,586		)	(131,118		)
	$	63,841		$	49,297		$	171,663		$	143,034
Reconciliation of Operating Earnings to Net Earnings:
Operating earnings	$	63,841		$	49,297		$	171,663		$	143,034
Interest expense, net	5,572			28,525			14,132			90,255
Provision for income taxes	22,837			10,216			65,178			22,579
Net earnings	$	35,432		$	10,556		$	92,353		$	30,200

XML

Subsequent Event

9 Months Ended

Sep. 30, 2016

Subsequent Events [Abstract]

Subsequent Events [Text Block]

Subsequent Event

On October 31, 2016, the Company announced that it entered into an Agreement and Plan of Merger (the Merger Agreement) to be acquired by funds affiliated with The Blackstone Group L.P. and certain co-investors.   The Company entered into a Merger Agreement with Tennessee Parent, Inc., a Delaware corporation (Parent) and Tennessee Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (Merger Sub), pursuant to which Merger Sub will be merged with and into the Company (the Merger) with the Company surviving the Merger as a wholly owned subsidiary of Parent. The Company's Board of Directors unanimously approved the Merger Agreement and resolved to recommend that the Company's stockholders vote to adopt the Merger Agreement. Until the tenth business day following the end of the go-shop period, the Company may continue to engage with any third party that made an acquisition proposal prior to the end of the go-shop period that the Board of Directors has determined in good faith, after consultation with outside counsel and its financial advisors, is or could reasonably be expected to result in a superior proposal as defined in the Merger Agreement (each, an Excluded Party).

At the effective time of the Merger (the Effective Time), each share of the Company’s common stock, par value $0.01 per share, issued and outstanding immediately prior to the Effective Time (other than shares of the Company’s common stock held by Parent, Merger Sub or any other direct or indirect wholly-owned subsidiary of Parent, shares owned by the Company (including shares held in treasury) or any of its direct or indirect wholly-owned subsidiaries, and shares owned by stockholders who have properly made and not withdrawn or lost a demand for appraisal rights under Delaware law) will be converted into the right to receive $43.50 in cash, without interest and subject to applicable withholding taxes (the Merger Consideration).

Pursuant to the Merger Agreement, (i) each outstanding Company stock option will immediately vest and be canceled and converted into the right to receive an amount in cash equal to the product of (x) the total number of shares of Company common stock subject to each Company stock option multiplied by (y) the excess, if any, of the Merger Consideration over the per share exercise price under such Company stock option and (ii) each outstanding Company restricted stock unit or similar stock right (other than Company performance share units and market stock units, each a “Company stock unit”) will be canceled and converted into the right to receive an amount in cash equal to the product of (x) the number of shares of Company common stock subject to such Company stock unit multiplied by (y) the Merger Consideration. Each outstanding Company performance share unit will be canceled at the Effective Time, and the holder of such Company performance share unit will be entitled to receive an amount in cash equal to the product of (x) the number of shares of Company common stock subject to such Company performance share unit (assuming performance resulted in a payout at the target level award) multiplied by (y) the Merger Consideration. Performance options will vest to the extent the relevant performance vesting thresholds are achieved based on the per share Merger Consideration and, with respect to market share units, a holder of market share units will be entitled to receive an amount in cash equal to the product of (x) the MSU End Price (as set forth in his applicable award agreement) and (y) the relevant performance multiplier (as set forth in his applicable award agreement) that is determined by reference to the per share Merger Consideration. The cash payments in respect of the canceled equity awards will generally be paid as soon as reasonably practicable after the Effective Time, subject to potential delayed payment in the case of any equity awards subject to existing deferral elections.

The Merger Agreement contains certain termination rights for the Company and Parent, including the right of the Company to terminate the Merger Agreement to accept a superior proposal, subject to specified limitations, and provides that, upon termination of the Merger Agreement by the Company or Parent upon specified conditions, the Company will be required to pay Parent a termination fee of $50.4 million under specified conditions where the Company terminates the Merger Agreement in connection with its entry into a superior proposal with an Excluded Party and of $100.8 million under other specified conditions. The Merger Agreement also provides that Parent will be required to pay the Company a reverse termination fee of $201.7 million upon the termination of the Merger Agreement by the Company under specified conditions. There can be no assurance that approval of the Company's stockholders will be obtained or that the Merger Agreement will not be otherwise terminated under the circumstances triggering these obligations. If triggered, payment of these fees and costs will negatively impact the Company's results of operations, financial condition and cash flows.

The closing of the Merger is subject to a condition that the Merger Agreement be adopted by the affirmative vote of the holders of a majority of all of the outstanding shares of the Company’s common stock entitled to vote thereon at such meeting. Consummation of the Merger is also subject to (i) the absence of any law, injunction or other order that prohibits the consummation of the Merger, (ii) the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and (iii) other customary closing conditions. The transaction is expected to close in the first quarter of 2017. If completed, the Merger will result in the Company becoming a wholly owned subsidiary of Parent and the Company's shares will no longer be listed on any public market.

Additional information about the Merger and the Merger Agreement, including circumstances under which the Merger Agreement can be terminated and the ramifications of such termination, as well as other terms and conditions, is set forth in the Company's Current Report on Form 8-K filed with the SEC on October 31, 2016.

XML

(Policies)

9 Months Ended

Sep. 30, 2016

Accounting Changes and Error Corrections [Abstract]

New Accounting Pronouncements, Policy

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (FASB) in the form of accounting standards updates (ASUs) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company's consolidated financial position or results of operations.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” which establishes a comprehensive revenue recognition standard for virtually all industries under U.S. GAAP. The standard is effective for public entities for annual reporting periods beginning after December 15, 2017, including interim periods therein, with early adoption permitted for annual reporting periods beginning after December 15, 2016, including interim periods therein. The Company is in the process of evaluating the impact that adoption of this new accounting standard may have on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which will change how companies account for and present lease arrangements. The guidance requires companies to recognize leased assets and liabilities for both capital and operating leases. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, and interim periods therein, and early adoption is permitted. Companies are required to adopt the guidance on a modified retrospective method. The Company is in the process of evaluating the impact that adoption of this new accounting standard may have on the Company's consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting,” which requires companies to recognize the income tax effects of awards in the income statement when the awards vest or are settled (i.e., additional paid-in-capital pools will be eliminated). In addition, the new guidance changes the limit that companies are allowed to withhold for employees without triggering liability classification and allows companies to make a policy election to either recognize forfeitures as they occur or estimate them. The new guidance is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods, and early adoption is permitted. The required transition methods for each aspect of the new guidance varies between prospective, retrospective and modified retrospective. The Company has not yet determined which method of adoption it will select and is in the process of evaluating the impact that adoption of this new accounting standard may have on the Company's consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments,” which clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. ASU 2016-15 is effective for annual reporting periods beginning after December 15, 2017, and interim periods therein, and early adoption is permitted. Companies are required to adopt the guidance on a retrospective method, unless impracticable, at which point prospective application is appropriate. The Company is in the process of evaluating the impact that adoption of this new accounting standard may have on the Company's consolidated financial statements.

The Company has implemented all new accounting pronouncements that are in effect and that could materially impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued, but are not yet effective, that might have a material impact on the consolidated financial statements of the Company unless otherwise noted in prior updates or above.

Business Combinations Policy

In accordance with ASC 805, the Company records its contingent consideration as a component of the opening balance sheet unless there is a continuing employment provision. Contingent consideration with a continuing employment provision is recognized ratably over the defined performance period as compensation expense which is included as a component of general and administrative expense (and parenthetically disclosed with other acquisition-related compensation expense) in the results of the Company’s operations. The payment of contingent purchase obligations is included as a component of financing, unless there is a continuing employment provision, in which case it is included as a component of operating cash flows.

Fair Value of Financial Instruments, Policy

The Company’s insurance subsidiaries' and other investments are valued using market prices on active markets (Level 1) and less active markets (Level 2), in addition to using alternative information when market data is not available (Level 3). Level 1 investment valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 investment valuations are obtained from readily available pricing sources for comparable investments or identical investments in less active markets. The fair values of the Company’s supplemental employee retirement investments are based on quoted prices. Level 3 investment valuations require significant management judgment and are based on transaction price, company performance, and market conditions.

The Company applies the provisions of FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” (ASC Topic 820), in determining the fair value of its financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements.

ASC Topic 820 prioritizes the inputs used in measuring fair value into the following hierarchy:

Level 1	Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2	Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable;
Level 3	Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.

Revenue Recognition, Policy

Net revenues consists of fee for service revenue, contract revenue and other revenue. The Company’s net revenues are principally derived from the provision of healthcare staffing services to patients within healthcare facilities and is recorded in the period the services are rendered. Under the fee for service arrangements, the Company bills patients for services provided and receives payment from patients or their third-party payors. Fee for service revenue reflects gross fee for service charges less contractual allowances and policy discounts, where applicable. Contractual adjustments represent the Company’s estimate of discounts and other adjustments to be recognized from gross fee for service charges under contractual payment arrangements, primarily with commercial, managed care and governmental payment plans such as Medicare and Medicaid when the Company’s providers participate in such plans. Contractual adjustments are not reflected in self-pay fee for service revenue. Contract revenue represents revenue generated under contracts in which the Company provides physician and other healthcare staffing and administrative services in return for a contractually negotiated fee. Contract revenue consists primarily of billings based on hours of healthcare staffing provided at agreed-to hourly rates, monthly contractual rates, or certain operational or financial metrics. Revenue in such cases is recognized as the hours are worked by the Company’s affiliated staff and contractors or as metrics are realized. Other revenue consists primarily of revenue from management and billing services provided to outside parties. Revenue is recognized for such services pursuant to the terms of the contracts with customers. The Company also records a provision for uncollectible accounts based primarily on historical collection experience to record accounts receivables at the estimated amounts expected to be collected.

Trade and Other Accounts Receivable, Policy

The Company employs several methodologies for determining its allowance for uncollectibles depending on the nature of the net revenues before provision for uncollectibles recognized. The Company initially determines gross revenue for its fee for service patient visits based upon established fee schedule prices. Such gross revenue is reduced for estimated contractual allowances for those patient visits covered by contractual insurance arrangements to result in estimated net revenues before provision for uncollectibles. Net revenues before provision for uncollectibles is then reduced for management’s estimate of uncollectible amounts. Fee for service net revenues represents estimated cash to be collected from such patient visits and is net of management’s estimate of account balances estimated to be uncollectible. The provision for uncollectible fee for service patient visits is based on historical experience resulting from approximately 25 million fee for service patient visits and procedures over the last twelve months. The significant volume of patient visits and the terms of thousands of commercial and managed care contracts and the various reimbursement policies relating to governmental healthcare programs do not make it feasible to evaluate fee for service accounts receivable on a specific account basis. Fee for service accounts receivable collection estimates are reviewed on a quarterly basis for each fee for service contract by period of accounts receivable origination. Such reviews include the use of historical cash collection percentages by contract adjusted for the lapse of time since the date of the patient visit. In addition, when actual collection percentages differ from expected results, on a contract by contract basis, supplemental detailed reviews of the outstanding accounts receivable balances may be performed by the Company’s billing operations to determine whether there are facts and circumstances existing that may cause a different conclusion as to the estimate of the collectibility of that contract’s accounts receivable from the estimate resulting from using the historical collection experience. Contract-related net revenues are billed based on the terms of the contract at amounts expected to be collected. Such billings are typically submitted on a monthly basis and aged trial balances are prepared. Allowances for estimated uncollectible amounts related to such contract billings are made based upon periodic reviews of specific accounts and invoices once it is concluded that such amounts are not likely to be collected. Approximately 98% of the Company’s allowance for doubtful accounts is related to receivables for fee for service patient visits. The principal exposure for uncollectible fee for service visits is centered in self-pay patients and, to a lesser extent, for co-payments and deductibles from patients with insurance. While the Company does not specifically allocate the allowance for doubtful accounts to individual accounts or specific payor classifications, the portion of the allowance, excluding IPC, associated with fee for service charges as of September 30, 2016 was equal to approximately 93% of outstanding self-pay fee for service patient accounts. The methodologies employed to compute allowances for doubtful accounts were unchanged between 2015 and 2016.

Segment Reporting, Policy

The accounting policies of the segments are the same as those described in the summary of significant accounting policies included in our Annual Report on Form 10-K for fiscal year 2015 filed with the SEC. Segment amounts disclosed are prior to any elimination entries made in consolidation, except in the case of net revenues, where intercompany charges have been eliminated. Certain corporate expenses are not allocated to the segments. These unallocated expenses are corporate expenses, net interest expense, depreciation and amortization, transaction costs and income taxes. The Company evaluates segment performance based on profit and loss before the aforementioned expenses.

XML

Acquisitions and Contingent Purchase Obligations (Tables)

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

Purchase price allocation

The purchase price for these acquisitions was allocated, based on management’s estimates, in accordance with ASC Topic 805, “Business Combinations” (ASC 805). The Company’s purchase price allocation for business combinations completed during recent periods is preliminary and may be subject to revision as additional information about the fair value of acquired working capital becomes available. Additional information, which existed as of the acquisition date but at that time was unknown to the Company, may become known to the Company during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date. The purchase price for these acquisitions completed during the nine months ended September 30, 2016 was allocated as shown in the table below (in thousands):

	September 30, 2016
Accounts receivable	$	3,024
Prepaid expenses and other assets	70
Other intangibles (consisting of physician and hospital agreements)	34,564
Goodwill (of which $29.1 million is tax deductible)	51,955
Accounts payable	(1,165		)
Accrued compensation and physician payable	(1,493		)
Other accrued liabilities	(718		)
Contingent purchase liability	(1,050		)
Net deferred income taxes	(2,025		)
Total purchase price	$	83,162

IPC Healthcare, Inc. (IPC) Acquisition

On November 23, 2015, the Company completed the acquisition of IPC in a cash transaction. At closing, the Company paid approximately $1.60 billion in cash to the former owners of IPC in exchange for all of the outstanding equity interests of IPC.

The accounting for the acquisition of IPC will be completed within the timeframe prescribed by the provisions of ASC 805. The Company continues to obtain information relative to the fair values of assets acquired and liabilities assumed. Acquired assets and assumed liabilities include, but are not limited to, accounts receivable, other intangible assets, current and noncurrent taxes payable, deferred taxes, contingent purchase liabilities, and other accrued liabilities. The valuations are based on appraisal reports or other appropriate valuation techniques to determine the fair value of the assets acquired or liabilities assumed.

During 2016, factors became known that resulted in changes to the purchase price allocation of assets and liabilities existing at the date of the IPC transaction. The estimated fair values of assets acquired and liabilities assumed, specifically accounts receivable, current and noncurrent taxes payable, deferred taxes, contingent purchase liability and other intangible assets, may be subject to change as additional information is received. The purchase price allocation adjustments for this acquisition are summarized as follows (in thousands):

	As of			Adjustments to			As of
	December 31, 2015			Purchase Price Allocation			September 30, 2016
Short term investments	$	1,985		$	—		$	1,985
Accounts receivable	127,265			(11,355		)	115,910
Prepaid expenses and other assets	6,347			(316		)	6,031
Receivables under insured programs	36,255			—			36,255
Property and equipment	10,541			216			10,757
Income tax receivable	12,528			—			12,528
Net deferred income taxes	64,301			(1,936		)	62,365
Other intangibles (consisting of marketing-related and technology-based intangibles and physician and hospital agreements)	4,975			21,700			26,675
Goodwill (of which the tax deductible amount was $368,283)	1,574,757			5,594			1,580,351
Accounts payable	(15,627		)	313			(15,314		)
Accrued compensation and physician payable	(43,856		)	—			(43,856		)
Other accrued liabilities	(63,809		)	(13,260		)	(77,069		)
Contingent purchase liability	(30,639		)	(2,768		)	(33,407		)
Assumed notes payable	(148,249		)	—			(148,249		)
Other non-current liabilities	(61,894		)	1,812			(60,082		)
Total consideration paid, net of acquired cash and cash equivalents of $28,059	$	1,474,880		$	—		$	1,474,880

Accumulated contingent purchase expense liability

The changes to the Company’s accumulated contingent purchase liability for the nine months ended September 30, 2016 are as follows (in thousands):

Contingent purchase liability at December 31, 2015	$	57,080
Payments	(24,047		)
Contingent purchase and other acquisition compensation expense recognized	28,669
Adjustments to contingent purchase liability recognized at acquisition date	3,756
Contingent purchase liability at September 30, 2016	$	65,458

Estimated unrecognized contingent purchase compensation expense

Estimated unrecognized contingent purchase compensation expense as of September 30, 2016 is as follows (in thousands):

For the remainder of the year ended December 31, 2016	$	6,025
For the year ended December 31, 2017	11,069
For the year ended December 31, 2018	3,635
For the year ended December 31, 2019	1,515
For the year ended December 31, 2020	625
	$	22,869

XML

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Summary of assets and liabilities measured at fair value on a recurring basis

The following table provides information on those assets and liabilities the Company currently measures at fair value on a recurring basis as of December 31, 2015 and September 30, 2016 (in thousands):

	Carrying Amount in Consolidated Balance Sheet December 31, 2015		Fair Value December 31, 2015		Fair Value Level 1		Fair Value Level 2		Fair Value Level 3
Insurance subsidiaries' and other investments:
Money market funds	$	18,238	$	18,238	$	18,238	$	—	$	—
Municipal bonds	87,121		87,121		—		87,121		—
Mutual funds	64		64		—		64		—
Private investments	2,818		2,818		—		—		2,818
Corporate bonds	3,699		3,699		—		3,699		—
Total investments of insurance subsidiaries	$	111,940	$	111,940	$	18,238	$	90,884	$	2,818
Supplemental employee retirement plan investments:
Mutual funds	$	45,868	$	45,868	$	—	$	45,868	$	—

	Carrying Amount in Consolidated Balance Sheet September 30, 2016		Fair Value September 30, 2016		Fair Value Level 1		Fair Value Level 2		Fair Value Level 3
Insurance subsidiaries' and other investments:
Money market funds	$	7,539	$	7,539	$	7,539	$	—	$	—
Municipal bonds	83,016		83,016		—		83,016		—
Mutual funds	48		48		—		48		—
Private investments	1,947		1,947		—		—		1,947
Corporate bonds	7,389		7,389		—		7,389		—
Total investments of insurance subsidiaries	$	99,939	$	99,939	$	7,539	$	90,453	$	1,947
Supplemental employee retirement plan investments:
Mutual funds	$	55,655	$	55,655	$	—	$	55,655	$	—

XML

Investments (Tables)

9 Months Ended

Sep. 30, 2016

Investments [Abstract]

Summary of amortized cost basis and aggregate fair value of available-for-sale securities by investment type

At December 31, 2015 and September 30, 2016, amortized cost basis and aggregate fair value of the Company’s available-for-sale securities by investment type were as follows (in thousands):

	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2015
Money market funds	$	18,238	$	—	$	—		$	18,238
Municipal bonds	84,983		2,411		(273		)	87,121
Mutual funds	64		—		—			64
Private investments	2,712		106		—			2,818
Corporate bonds	3,718		6		(25		)	3,699
	$	109,715	$	2,523	$	(298	)	$	111,940
September 30, 2016
Money market funds	$	7,539	$	—	$	—		$	7,539
Municipal bonds	80,187		3,001		(172		)	83,016
Mutual funds	48		—		—			48
Private Investments	1,711		236		—			1,947
Corporate bonds	7,204		185		—			7,389
	$	96,689	$	3,422	$	(172	)	$	99,939

Summary of amortized cost basis and aggregate fair value of available-for-sale securities by contractual maturities

At December 31, 2015 and September 30, 2016, the amortized cost basis and aggregate fair value of the Company’s available-for-sale securities by contractual maturities were as follows (in thousands):

	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2015
Due in less than one year	$	24,099	$	35	$	(54	)	$	24,080
Due after one year through five years	57,537		1,647		(79		)	59,105
Due after five years through ten years	23,389		674		(56		)	24,007
Due after ten years	1,914		61		(109		)	1,866
Total	$	106,939	$	2,417	$	(298	)	$	109,058
September 30, 2016
Due in less than one year	$	16,987	$	89	$	—		$	17,076
Due after one year through five years	60,055		2,082		(90		)	62,047
Due after five years through ten years	17,888		1,015		(82		)	18,821
Total	$	94,930	$	3,186	$	(172	)	$	97,944

Summary of temporarily impaired available-for-sale investment securities

A summary of the Company’s temporarily impaired available-for-sale investment securities as of December 31, 2015 and September 30, 2016 follows (in thousands):

	Impaired Less Than 12 Months					Impaired Over 12 Months					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
December 31, 2015
Municipal bonds	$	13,189	$	(103	)	$	2,575	$	(170	)	$	15,764	$	(273	)
Corporate bonds	3,120		(25		)	—		—			3,120		(25		)
Total investment	$	16,309	$	(128	)	$	2,575	$	(170	)	$	18,884	$	(298	)
September 30, 2016
Municipal bonds	$	3,389	$	(72	)	$	2,433	$	(100	)	$	5,822	$	(172	)
Total investment	$	3,389	$	(72	)	$	2,433	$	(100	)	$	5,822	$	(172	)

Summary of trading gains and losses on investments related to participant directed supplemental employee retirement plan

As of December 31, 2015 and September 30, 2016, the investments related to the participant directed supplemental employee retirement plan totaled $45.9 million and $55.7 million, respectively, and are included in other assets in the accompanying consolidated balance sheets. The net trading gains on those investments for the nine months ended September 30, 2015 and September 30, 2016 that were still held by the Company as of September 30, 2015 and September 30, 2016 were as follows (in thousands):

	2015			2016
Net (losses) gains recognized during the nine months ended September 30, 2015 and 2016, respectively on trading securities	$	(1,467	)	$	1,259
Less: Net gains (losses) recognized during the period on trading securities sold during the nine months ended September 30, 2015 and 2016, respectively	(35		)	(120		)
Unrealized (losses) gains recognized on trading securities still held at September 30, 2015 and 2016, respectively	$	(1,432	)	$	1,379

XML

Net Revenue (Tables)

9 Months Ended

Sep. 30, 2016

Revenue, Net [Abstract]

Schedule of net revenue

Net revenues consisted of the following (in thousands):

	Three Months Ended September 30,										Nine Months Ended September 30,
	2015					2016					2015					2016
Medicare	$	183,120		20.4	%	$	344,660		30.2	%	$	530,047		20.2	%	$	1,032,522		30.4	%
Medicaid	166,015			18.5		206,896			18.1		476,151			18.2		606,707			17.8
Commercial and managed care	462,652			51.5		551,960			48.4		1,322,652			50.5		1,612,048			47.4
Self-pay	496,910			55.3		568,418			49.8		1,405,252			53.7		1,582,967			46.6
Other	21,576			2.4		26,301			2.3		61,777			2.4		73,263			2.2
Unbilled	2,369			0.3		4,948			0.4		15,979			0.6		7,532			0.2
Net fee for service revenue before provision for uncollectibles	1,332,642			148.2		1,703,183			149.2		3,811,858			145.6		4,915,039			144.6
Contract revenue before provision for uncollectibles	182,631			20.3		211,986			18.6		549,998			21.0		618,931			18.2
Other	10,136			1.1		10,606			0.9		28,826			1.1		47,240			1.4
Net revenues before provision for uncollectibles	1,525,409			169.6		1,925,775			168.7		4,390,682			167.7		5,581,210			164.2
Provision for uncollectibles	(626,228		)	(69.6	)	(784,281		)	(68.7	)	(1,773,062		)	(67.7	)	(2,181,499		)	(64.2	)
Net revenues	$	899,181		100.0	%	$	1,141,494		100.0	%	$	2,617,620		100.0	%	$	3,399,711		100.0	%

XML

Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule Of Changes In Goodwill

The changes in the carrying amount of goodwill during the year ended December 31, 2015 and the nine months ended September 30, 2016 were as follows (in thousands):

Goodwill	$	869,038
Accumulated impairment loss	(144,579		)
Additions through acquisitions	1,703,343
Balance, December 31, 2015	$	2,427,802
Goodwill	$	2,572,381
Accumulated impairment loss	(144,579		)
Increases from prior year acquisition purchase price allocation adjustments	5,834
Additions through current year acquisitions	51,955
Balance, September 30, 2016	$	2,485,591

Summary of intangible assets and related amortization

The following is a summary of intangible assets and related amortization as of December 31, 2015 and September 30, 2016 (in thousands):

	Gross Carrying Amount		Accumulated Amortization
As of December 31, 2015:
Contracts	$	494,569	$	(170,873	)
Other	21,716		(9,775		)
Total	$	516,285	$	(180,648	)
As of September 30, 2016:
Contracts	$	517,686	$	(214,821	)
Other	31,161		(13,549		)
Total	$	548,847	$	(228,370	)
Aggregate amortization expense:
For the nine months ended September 30, 2016			$	71,425
Estimated amortization expense:
For the remainder of the year ended December 31, 2016			$	23,777
For the year ended December 31, 2017			91,249
For the year ended December 31, 2018			75,555
For the year ended December 31, 2019			66,521
For the year ended December 31, 2020			46,679
For the years ended December 31, 2021 and thereafter			16,696
Total			$	320,477

XML

Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Schedule of long-term debt

Long-term debt as of September 30, 2016 consisted of the following (in thousands):

Tranche A Term Loan Facility	$	555,000
Tranche B Term Loan Facility	1,305,440
7.25% Senior Notes due 2023	545,000
Revolving Credit Facility	332,000
Total outstanding debt	2,737,440
Debt issuance costs	(48,335		)
	2,689,105
Less current portion	(390,120		)
	$	2,298,985

Schedule of aggregate annual maturities of long-term debt

Aggregate annual maturities of long-term debt as of September 30, 2016 are as follows (in thousands):

2016	$	390,120
2017	73,120
2018	58,120
2019	418,120
2020 and thereafter	1,797,960

XML

Professional Liability Insurance (Tables)

9 Months Ended

Sep. 30, 2016

Malpractice Insurance [Abstract]

Summary of professional liability loss reserves

The Company’s professional liability loss reserves included in other accrued liabilities and other non-current liabilities in the accompanying consolidated balance sheets consisted of the following (in thousands):

	December 31, 2015		September 30, 2016
Estimated losses under self-insured programs	$	245,070	$	273,655
Estimated losses under commercial insurance programs	126,751		141,185
	371,821		414,840
Less estimated payable within one year	105,028		102,478
	$	266,793	$	312,362

Summary of estimated losses under self-insured programs

The changes to the Company’s estimated losses under self-insured programs as of September 30, 2016 were as follows (in thousands):

Balance, December 31, 2015	$	245,070
Reserves related to current period	62,802
Changes related to prior year reserves	14,284
Assumed liabilities	(1,812		)
Payments for current period reserves	(880		)
Payments for prior period reserves	(45,809		)
Balance, September 30, 2016	$	273,655

XML

Equity-based Compensation (Tables)

9 Months Ended

Sep. 30, 2016

Share-based Compensation [Abstract]

Stock options status under Stock Plan

The following table summarizes the status of options under the Stock Plan as of September 30, 2016:

	Shares (in thousands)		Weighted Average Exercise Price		Aggregate Intrinsic Value (in thousands)		Weighted Average Remaining Life in Years
Outstanding at beginning of year	4,780		$	28.07	$	86,342	5.3
Granted	1,134		35.30
Exercised	(881	)	20.59		16,930
Expired or forfeited	(203	)	44.96
Outstanding at end of period	4,830		$	30.51	$	34,285	5.4
Exercisable at end of period	3,098		$	24.31	$	34,280	4.4

Stock option valuation assumptions

The fair value of options granted in 2016 was based on the grant date fair value as calculated by the Black-Scholes option pricing formula, while the performance share options fair value was based on the grant date fair value as calculated by the Monte Carlo option pricing formula. The expected life is the mid-point between the vesting date and the end of the contractual term, except for the performance options, which have an expected life based on the mid-point between the option expiration date and the date at which the market condition is first fulfilled. The Company uses this simplified method, as described in ASC 718, due to changes in option grant contractual terms causing insufficient historical exercise data. The Company will continue to evaluate the use of the simplified method as historical exercise data becomes more sufficient. The following assumptions were used:

	Time vested options			Performance share options
Expected life	5 years			4.6 years
Volatility	34.9		%	40.2		%
Risk free interest rate	1.3		%	1.4		%
Option value	$	12.14		$	10.39
Assumed dividend rate	—		%	—		%

Summary of changes in unvested shares of restricted awards

A summary of changes in total outstanding unvested restricted and market share unit awards for the nine months ended September 30, 2016 is as follows (in thousands):

	Restricted Stock		Restricted Units		Performance Units		Market Share Units	Total
Outstanding at beginning of year	100		766		—		—	866
Granted	—		498		144		127	769
Vested	(53	)	(276	)	—		—	(329	)
Forfeited and expired	(5	)	(94	)	(33	)	—	(132	)
Outstanding at September 30, 2016	42		894		111		127	1,174

Share-based compensation

Equity based compensation expense, including $3.9 million of expense, primarily associated with changes in executive leadership, recorded in transaction, integration and reorganization costs during the nine months ended September 30, 2016, and the resulting tax benefits were as follows (in thousands):

	Nine Months Ended September 30,
	2015		2016
Stock options	$	7,212	$	6,277
Restricted awards	5,923		18,060
Market share units	—		51
Stock purchase plan	62		82
Total equity based compensation expense	$	13,197	$	24,470
Tax benefit of equity based compensation expense	$	5,081	$	9,360

XML

Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Basic and diluted earnings per share

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2016		2015		2016
Net earnings attributable to Team Health Holdings, Inc. (numerator for basic and diluted earnings per share)	$	35,442	$	10,481	$	92,431	$	29,934
Denominator:
Weighted average shares outstanding	72,361		74,166		71,900		73,823
Effect of dilutive securities:
Stock options	1,086		871		1,176		988
Restricted awards	237		199		272		340
Market share units	—		61		—		67
Stock purchase plans	3		7		3		7
Shares used for diluted earnings per share	73,687		75,304		73,351		75,225
Basic net earnings per share of Team Health Holdings, Inc.	$	0.49	$	0.14	$	1.29	$	0.41
Diluted net earnings per share of Team Health Holdings, Inc.	$	0.48	$	0.14	$	1.26	$	0.40
Securities excluded from diluted earnings per share of Team Health Holdings, Inc. because they were antidilutive:
Stock options	519		1,685		258		1,622
Restricted awards	—		173		—		215

XML

Accumulated Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2016

Statement of Comprehensive Income [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive earnings related to available-for-sale securities were as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2016			2015			2016
Balance at beginning of period	$	1,095		$	2,414		$	1,695		$	1,503
Other comprehensive earnings (loss):
Net unrealized gain (loss)	451			(367		)	(436		)	1,422
Tax (expense) benefit	(124		)	133			213			(359		)
Total other comprehensive earnings (loss) before reclassifications, net of tax	327			(234		)	(223		)	1,063
Net amount reclassified to earnings(1)	(97		)	(8		)	(147		)	(394		)
Tax benefit (expense)(2)	—			—			—			—
Total amount reclassified from accumulated other comprehensive earnings, net of tax(3)	(97		)	(8		)	(147		)	(394		)
Total other comprehensive earnings (loss)	230			(242		)	(370		)	669
Balance at end of period	$	1,325		$	2,172		$	1,325		$	2,172

(1) This amount was included in Other (income) expense, net on the accompanying Consolidated Statement of Comprehensive Earnings.

(2) These amounts were included in Provision for income taxes on the accompanying Consolidated Statement of Comprehensive Earnings.

(3) A positive amount indicates a corresponding charge to earnings and a negative amount indicates a corresponding benefit to earnings.

XML

Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Summary of financial information of reportable segment

The following table presents financial information for each reportable segment. Depreciation, amortization, management fee and other expenses separately identified in the consolidated statements of operations are included as a reduction to the respective segments’ operating earnings for each period below (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2016			2015			2016
Net Revenues:
Hospital Based Services	$	831,261		$	894,792		$	2,412,049		$	2,632,504
IPC Healthcare	—			177,125			—			555,506
Specialty Services	42,165			42,806			129,851			134,314
Other Services	25,731			26,742			75,648			77,304
General Corporate	24			29			72			83
	$	899,181		$	1,141,494		$	2,617,620		$	3,399,711
Operating Earnings:
Hospital Based Services	$	92,087		$	78,733		$	236,150		$	209,589
IPC Healthcare	—			5,181			—			25,449
Specialty Services	4,083			8,362			14,941			19,287
Other Services	5,715			6,754			19,158			19,827
General Corporate	(38,044		)	(49,733		)	(98,586		)	(131,118		)
	$	63,841		$	49,297		$	171,663		$	143,034
Reconciliation of Operating Earnings to Net Earnings:
Operating earnings	$	63,841		$	49,297		$	171,663		$	143,034
Interest expense, net	5,572			28,525			14,132			90,255
Provision for income taxes	22,837			10,216			65,178			22,579
Net earnings	$	35,432		$	10,556		$	92,353		$	30,200

XML

Acquisitions and Contingent Purchase Obligations - Purchase Price Allocation (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Business Acquisition [Line Items]
Goodwill	$ 2,485,591	$ 2,427,802
Accrued contingent purchase liability	(65,458)	(57,080)
Current Year Acquisitions
Business Acquisition [Line Items]
Accounts receivable	3,024
Prepaid expenses and other assets	70
Net deferred income taxes	(2,025)
Other intangibles	34,564
Goodwill	51,955
Accounts payable	(1,165)
Accrued compensation and physician payable	(1,493)
Other accrued liabilities	(718)
Accrued contingent purchase liability	(1,050)
Total purchase price	83,162
Tax deductible goodwill	29,100
IPC Acquisition
Business Acquisition [Line Items]
Short term investments	1,985	1,985
Accounts receivable	115,910	127,265
Adjustments to the purchase price allocation, Accounts Receivable	(11,355)
Prepaid expenses and other assets	6,031	6,347
Adjustments to the purchase price allocation, Prepaids and Other Assets	(316)
Receivables under insured programs	36,255	36,255
Property and equipment	10,757	10,541
Adjustments to the purchase price allocation, Property, Plant, and Equipment	216
Income tax receivable	12,528	12,528
Business Combination Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Assets	62,365	64,301
Adjustments to the purchase price allocation - deferred tax	(1,936)
Other intangibles	26,675	4,975
Adjustments to the purchase price allocation, Other Intangibles	21,700
Goodwill	1,580,351	1,574,757
Adjustments to the purchase price allocation, Goodwill	5,594
Accounts payable	(15,314)	(15,627)
Adjustments to the purchase price allocation, Accounts Payable	313
Accrued compensation and physician payable	(43,856)	(43,856)
Other accrued liabilities	(77,069)	(63,809)
Adjustments to the purchase price allocation, Other Accrued Liabilities	(13,260)
Accrued contingent purchase liability	(33,407)	(30,639)
Adjustments to the purchase price allocation, Contingent Purchase Liability	(2,768)
Assumed notes payable	(148,249)	(148,249)
Other non-current liabilities	(60,082)	(61,894)
Adjustments to the purchase price allocation, Other Non-Current Liabilities	1,812
Total purchase price	1,474,880	$ 1,474,880
Tax deductible goodwill	368,283
Acquired Cash and Equivalents	$ 28,059

XML

Acquisitions and Contingent Purchase Obligations - Contingent Purchase Liability (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Business Combination, Separately Recognized Transactions [Line Items]
Contingent purchase liability at December 31, 2015			$ 57,080
Payments			(24,047)
Contingent purchase and other acquisition compensation expense recognized	$ 9,818	$ (3,530)	28,669	$ 12,230
Adjustments to contingent purchase liability recognized at acquisition date			3,756
Contingent purchase liability at September 30, 2016	$ 65,458		$ 65,458

XML

Acquisitions and Contingent Purchase Obligations - Estimated Contingent Purchase Expense (Details) $ in Thousands	Sep. 30, 2016 USD ($)
Business Combination, Separately Recognized Transactions [Line Items]
Estimated unrecognized contingent purchase compensation expense	$ 22,869
For the remainder of the year ended December 31, 2016
Business Combination, Separately Recognized Transactions [Line Items]
Estimated unrecognized contingent purchase compensation expense	6,025
For the year ended December 31, 2017
Business Combination, Separately Recognized Transactions [Line Items]
Estimated unrecognized contingent purchase compensation expense	11,069
For the year ended December 31, 2018
Business Combination, Separately Recognized Transactions [Line Items]
Estimated unrecognized contingent purchase compensation expense	3,635
For the year ended December 31, 2019
Business Combination, Separately Recognized Transactions [Line Items]
Estimated unrecognized contingent purchase compensation expense	1,515
For the year ended December 31, 2020
Business Combination, Separately Recognized Transactions [Line Items]
Estimated unrecognized contingent purchase compensation expense	$ 625

XML

Acquisitions and Contingent Purchase Obligations (Details Textual) visit in Thousands, $ in Thousands			1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 01, 2016 USD ($)	Nov. 23, 2015 USD ($)	Oct. 31, 2016 visit	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($) Business	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($) visit	Dec. 31, 2015 USD ($)
Business Acquisition [Line Items]
Number of businesses acquired | Business						9
Total cash paid for acquisitions						$ 395,085	$ 116,314
Net revenue				$ 1,141,494	$ 899,181	3,399,711	2,617,620
Contingent Consideration Estimate				88,300		88,300		$ 88,300
Fee for service patient visits | visit								25,000
Accrued contingent purchase liability				65,458		65,458		$ 65,458	$ 57,080
Remaining estimated liability to be recorded as contingent purchase compensation expense				22,869		22,869		22,869
Contingent purchase and other acquisition compensation expense recognized				9,818	$ (3,530)	28,669	12,230
Current Year Acquisitions
Business Acquisition [Line Items]
Total cash paid for acquisitions						83,162
Net revenue						17,700
Accrued contingent purchase liability				1,050		1,050		1,050
IPC Acquisition
Business Acquisition [Line Items]
Payments to acquire businesses, gross		$ 1,600,000
Accrued contingent purchase liability				$ 33,407		33,407		$ 33,407	$ 30,639
Subsequent Event
Business Acquisition [Line Items]
Total cash paid for acquisitions	$ 311,900
Contingent Consideration Estimate	$ 26,700
Fee for service patient visits | visit			48
General and Administrative Expense
Business Acquisition [Line Items]
Contingent purchase and other acquisition compensation expense recognized						$ 28,669	$ 12,230

XML

Fair Value Measurements (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	$ 55,655	$ 45,868
Fair Value Level 2 [Member] | Mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	55,655	45,868
Reported Value Measurement [Member] | Mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	55,655	45,868
Insurance subsidiaries [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	99,939	111,940
Insurance subsidiaries [Member] | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	7,539	18,238
Insurance subsidiaries [Member] | Municipal bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	83,016	87,121
Insurance subsidiaries [Member] | Mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	48	64
Insurance subsidiaries [Member] | Private investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	1,947	2,818
Insurance subsidiaries [Member] | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	7,389	3,699
Insurance subsidiaries [Member] | Fair Value Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	7,539	18,238
Insurance subsidiaries [Member] | Fair Value Level 1 [Member] | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	7,539	18,238
Insurance subsidiaries [Member] | Fair Value Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	90,453	90,884
Insurance subsidiaries [Member] | Fair Value Level 2 [Member] | Municipal bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	83,016	87,121
Insurance subsidiaries [Member] | Fair Value Level 2 [Member] | Mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	48	64
Insurance subsidiaries [Member] | Fair Value Level 2 [Member] | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	7,389	3,699
Insurance subsidiaries [Member] | Fair Value Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	1,947	2,818
Insurance subsidiaries [Member] | Fair Value Level 3 [Member] | Private investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	1,947	2,818
Insurance subsidiaries [Member] | Reported Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	99,939	111,940
Insurance subsidiaries [Member] | Reported Value Measurement [Member] | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	7,539	18,238
Insurance subsidiaries [Member] | Reported Value Measurement [Member] | Municipal bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	83,016	87,121
Insurance subsidiaries [Member] | Reported Value Measurement [Member] | Mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	48	64
Insurance subsidiaries [Member] | Reported Value Measurement [Member] | Private investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	1,947	2,818
Insurance subsidiaries [Member] | Reported Value Measurement [Member] | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments the Company currently measures at fair value on a recurring basis	$ 7,389	$ 3,699

XML

Fair Value Measurements (Details Textual) $ in Thousands	Sep. 30, 2016 USD ($)
Summary of amortized cost basis and aggregate fair value of available-for-sale securities by investment type
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount	$ 0
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount	0
Fair Value, Liabilities, Level 2 to Level 1 Transfers, Amount	0
Fair Value, Liabilities, Level 1 to Level 2 Transfers, Amount	0
Fair value of outstanding debt	2,770,000
Carrying value of debt	$ 2,737,440

XML

Investments - Amortized Cost Basis and Aggregate Fair Value by Investment Type (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Available-for-sale Securities, Fair Value to Amortized Cost Basis [Abstract]
Cost Basis	$ 96,689	$ 109,715
Gross Unrealized Gains	3,422	2,523
Gross Unrealized Losses	(172)	(298)
Fair Value	99,939	111,940
Money market funds
Available-for-sale Securities, Fair Value to Amortized Cost Basis [Abstract]
Cost Basis	7,539	18,238
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	7,539	18,238
Municipal bonds
Available-for-sale Securities, Fair Value to Amortized Cost Basis [Abstract]
Cost Basis	80,187	84,983
Gross Unrealized Gains	3,001	2,411
Gross Unrealized Losses	(172)	(273)
Fair Value	83,016	87,121
Mutual funds
Available-for-sale Securities, Fair Value to Amortized Cost Basis [Abstract]
Cost Basis	48	64
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	48	64
Private investments
Available-for-sale Securities, Fair Value to Amortized Cost Basis [Abstract]
Cost Basis	1,711	2,712
Gross Unrealized Gains	236	106
Gross Unrealized Losses	0	0
Fair Value	1,947	2,818
Corporate bonds
Available-for-sale Securities, Fair Value to Amortized Cost Basis [Abstract]
Cost Basis	7,204	3,718
Gross Unrealized Gains	185	6
Gross Unrealized Losses	0	(25)
Fair Value	$ 7,389	$ 3,699

XML

Investments - Amortized Cost Basis and Aggregate Fair Value by Contractual Maturities (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Summary of amortized cost basis and aggregate fair value of available-for-sale securities by contractual maturities
Due in less than one year, Cost Basis	$ 16,987	$ 24,099
Due after one year through five years, Cost Basis	60,055	57,537
Due after five years through ten years, Cost Basis	17,888	23,389
Due after ten years, Cost Basis		1,914
Total Cost Basis	94,930	106,939
Due in less than one year, Fair Value	17,076	24,080
Due after one year through five years, Fair Value	62,047	59,105
Due after five years through ten years, Fair Value	18,821	24,007
Due after ten years, Fair Value		1,866
Total Fair Value	97,944	109,058
Gross Unrealized Gain	3,186	2,417
Gross Unrealized Loss	(172)	(298)
Due in less than one year
Summary of amortized cost basis and aggregate fair value of available-for-sale securities by contractual maturities
Gross Unrealized Gain	89	35
Gross Unrealized Loss	0	(54)
Due after one year through five years
Summary of amortized cost basis and aggregate fair value of available-for-sale securities by contractual maturities
Gross Unrealized Gain	2,082	1,647
Gross Unrealized Loss	(90)	(79)
Due after five years through ten years
Summary of amortized cost basis and aggregate fair value of available-for-sale securities by contractual maturities
Gross Unrealized Gain	1,015	674
Gross Unrealized Loss	$ (82)	(56)
Due after ten years
Summary of amortized cost basis and aggregate fair value of available-for-sale securities by contractual maturities
Gross Unrealized Gain		61
Gross Unrealized Loss		$ (109)

XML

Investments - Temporarily Impaired Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Summary of temporarily impaired available-for-sale investment securities
Impaired Less Than 12 Months, Fair Value	$ 3,389	$ 16,309
Impaired Less Than 12 Months, Unrealized Losses	(72)	(128)
Impaired Over 12 Months, Fair Value	2,433	2,575
Impaired Over 12 Months, Unrealized Losses	(100)	(170)
Total, Fair Value	5,822	18,884
Total, Unrealized Losses	(172)	(298)
Municipal bonds
Summary of temporarily impaired available-for-sale investment securities
Impaired Less Than 12 Months, Fair Value	3,389	13,189
Impaired Less Than 12 Months, Unrealized Losses	(72)	(103)
Impaired Over 12 Months, Fair Value	2,433	2,575
Impaired Over 12 Months, Unrealized Losses	(100)	(170)
Total, Fair Value	5,822	15,764
Total, Unrealized Losses	(172)	(273)
Corporate bonds
Summary of temporarily impaired available-for-sale investment securities
Impaired Less Than 12 Months, Fair Value		3,120
Impaired Less Than 12 Months, Unrealized Losses		(25)
Impaired Over 12 Months, Fair Value		0
Impaired Over 12 Months, Unrealized Losses		0
Total, Fair Value		3,120
Total, Unrealized Losses	$ 0	$ (25)

XML

Investments - Trading Gains and Losses on Participant Directed Investments (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Investments [Abstract]
Net (losses) gains recognized during the nine months ended September 30, 2015 and 2016, respectively on trading securities	$ 1,259	$ (1,467)
Less: Net gains (losses) recognized during the period on trading securities sold during the nine months ended September 30, 2015 and 2016, respectively	(120)	(35)
Unrealized (losses) gains recognized on trading securities still held at September 30, 2015 and 2016, respectively	$ 1,379	$ (1,432)

XML

Investments (Details Textual) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Investments, Debt and Equity Securities [Abstract]
Recorded gain on the sale of available for sale investments		$ 394
Supplemental employee retirement plan	$ 55,655	55,655		$ 45,868
Proceeds from Divestiture of Interest in Subsidiaries and Affiliates	3,300
Gain (Loss) on Disposition of Other Assets	4,300	4,346	$ 0
Equity Method Investments, Fair Value Disclosure	$ 900	$ 900

XML

Net Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Schedule of net revenue
Net fee for service revenue before provision for uncollectibles	$ 1,703,183	$ 1,332,642	$ 4,915,039	$ 3,811,858
Percentage of net fee-for-service revenue before provision for uncollectibles	149.20%	148.20%	144.60%	145.60%
Contract revenue before provision for uncollectibles	$ 211,986	$ 182,631	$ 618,931	$ 549,998
Percentage of contract before provision for uncollectibles	18.60%	20.30%	18.20%	21.00%
Other	$ 10,606	$ 10,136	$ 47,240	$ 28,826
Percentage, other	0.90%	1.10%	1.40%	1.10%
Net revenues before provision for uncollectibles	$ 1,925,775	$ 1,525,409	$ 5,581,210	$ 4,390,682
Percentage of net revenue before provision for uncollectibles	168.70%	169.60%	164.20%	167.70%
Provision for uncollectibles	$ (784,281)	$ (626,228)	$ (2,181,499)	$ (1,773,062)
Percentage of provision for uncollectibles	(68.70%)	(69.60%)	(64.20%)	(67.70%)
Net revenue	$ 1,141,494	$ 899,181	$ 3,399,711	$ 2,617,620
Percentage of net revenue	100.00%	100.00%	100.00%	100.00%
Medicare [Member]
Schedule of net revenue
Net fee for service revenue before provision for uncollectibles	$ 344,660	$ 183,120	$ 1,032,522	$ 530,047
Percentage of net fee-for-service revenue before provision for uncollectibles	30.20%	20.40%	30.40%	20.20%
Medicaid [Member]
Schedule of net revenue
Net fee for service revenue before provision for uncollectibles	$ 206,896	$ 166,015	$ 606,707	$ 476,151
Percentage of net fee-for-service revenue before provision for uncollectibles	18.10%	18.50%	17.80%	18.20%
Commercial and managed care [Member]
Schedule of net revenue
Net fee for service revenue before provision for uncollectibles	$ 551,960	$ 462,652	$ 1,612,048	$ 1,322,652
Percentage of net fee-for-service revenue before provision for uncollectibles	48.40%	51.50%	47.40%	50.50%
Self-pay [Member]
Schedule of net revenue
Net fee for service revenue before provision for uncollectibles	$ 568,418	$ 496,910	$ 1,582,967	$ 1,405,252
Percentage of net fee-for-service revenue before provision for uncollectibles	49.80%	55.30%	46.60%	53.70%
Other [Member]
Schedule of net revenue
Net fee for service revenue before provision for uncollectibles	$ 26,301	$ 21,576	$ 73,263	$ 61,777
Percentage of net fee-for-service revenue before provision for uncollectibles	2.30%	2.40%	2.20%	2.40%
Unbilled Revenue [Member]
Schedule of net revenue
Net fee for service revenue before provision for uncollectibles	$ 4,948	$ 2,369	$ 7,532	$ 15,979
Percentage of net fee-for-service revenue before provision for uncollectibles	0.40%	0.30%	0.20%	0.60%

XML

Net Revenue (Details Textual) visit in Millions	12 Months Ended
	Sep. 30, 2016 visit
Revenue, Net [Abstract]
Fee for service patient visits	25
Doubtful accounts related to gross fees for fee-for-service patient visits	98.00%
Outstanding self-pay fee-for-service patient accounts	93.00%

XML

Goodwill and Other Intangible Assets - Changes in Goodwill (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Goodwill [Line Items]
Goodwill, gross	$ 2,572,381	$ 869,038
Accumulated impairment loss	(144,579)	(144,579)
Additions through acquisitions		1,703,343
Beginning Balance	2,427,802
Ending Balance	2,485,591	$ 2,427,802
Prior Year Acquisitions [Member]
Goodwill [Line Items]
Increases from prior year acquisition purchase price allocation adjustments	5,834
Current Year Acquisitions
Goodwill [Line Items]
Additions through acquisitions	51,955
Ending Balance	$ 51,955

XML

Goodwill and Other Intangible Assets - Intangible Assets and Related Amortization (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Summary of intangible assets and related amortization
Gross Carrying Amount	$ 548,847		$ 548,847		$ 516,285
Accumulated Amortization	(228,370)		(228,370)		(180,648)
Aggregate amortization expense:
For the nine months ended September 30, 2016	23,772	$ 20,633	71,425	$ 62,085
Estimated amortization expense:
For the remainder of the year ended December 31, 2016	23,777		23,777
For the year ended December 31, 2017	91,249		91,249
For the year ended December 31, 2018	75,555		75,555
For the year ended December 31, 2019	66,521		66,521
For the year ended December 31, 2020	46,679		46,679
For the years ended December 31, 2021 and thereafter	16,696		16,696
Intangible Assets, Net (Excluding Goodwill)	320,477		320,477		335,637
Contracts
Summary of intangible assets and related amortization
Gross Carrying Amount	517,686		517,686		494,569
Accumulated Amortization	(214,821)		(214,821)		(170,873)
Other
Summary of intangible assets and related amortization
Gross Carrying Amount	31,161		31,161		21,716
Accumulated Amortization	$ (13,549)		$ (13,549)		$ (9,775)

XML

Goodwill and Other Intangible Assets (Details Textual)	9 Months Ended
	Sep. 30, 2016
Finite Lived Intangible Assets [Line Items]
Remaining amortization period	3 years 5 months 4 days
Maximum
Finite Lived Intangible Assets [Line Items]
Estimated useful life of contract intangibles	6 years
Minimum
Finite Lived Intangible Assets [Line Items]
Estimated useful life of contract intangibles	1 year

XML

Long-Term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Schedule of long-term debt
Long-term debt	$ 2,689,105
Total outstanding debt	2,737,440
Debt issuance costs, net	(48,335)
Current maturities of long-term debt	(390,120)	$ (68,900)
Long term debt, less current maturities	2,298,985	$ 2,337,363
Revolving Credit Facility [Member] | Line of Credit [Member]
Schedule of long-term debt
Long-term debt	332,000
Term A Loan Facility [Member] | Notes Payable to Banks [Member]
Schedule of long-term debt
Long-term debt	555,000
Term B Loan Facility [Member] | Notes Payable to Banks [Member]
Schedule of long-term debt
Long-term debt	1,305,440
7.25% Senior Notes [Member] | Senior Notes [Member]
Schedule of long-term debt
Long-term debt	$ 545,000

XML

Long-Term Debt - Aggregate Annual Maturities of Long-Term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Maturities of Long-term Debt [Abstract]
Rolling year one	$ 390,120	$ 68,900
Rolling year two	73,120
Rolling year three	58,120
Rolling year four	418,120
Rolling year five	$ 1,797,960

XML

Long-Term Debt (Details Textual) - USD ($) $ in Thousands	3 Months Ended	5 Months Ended	9 Months Ended
	Sep. 30, 2016	Jun. 02, 2016	Sep. 30, 2016
Debt Instrument [Line Items]
Long-term debt	$ 2,689,105		$ 2,689,105
Standby letters of credit [Member]
Debt Instrument [Line Items]
Letters of credit outstanding	6,800		6,800
Notes Payable to Banks [Member] | Term A Loan Facility [Member]
Debt Instrument [Line Items]
Face amount of debt instrument	600,000		$ 600,000
Maturity date			Oct. 02, 2019
Percentage points added to LIBOR			2.00%
Weighted average interest rate			2.70%
Long-term debt	555,000		$ 555,000
Notes Payable to Banks [Member] | Term B Loan Facility [Member]
Debt Instrument [Line Items]
Face amount of debt instrument	$ 1,310,000		$ 1,310,000
Maturity date			Nov. 23, 2022
Percentage points added to LIBOR	3.00%	3.75%
Prepayment Fee Percentage	1.00%		1.00%
Long-term debt	$ 1,305,440		$ 1,305,440
Senior Notes [Member] | 7.25% Senior Notes [Member]
Debt Instrument [Line Items]
Face amount of debt instrument	545,000		$ 545,000
Maturity date			Dec. 15, 2023
Long-term debt	$ 545,000		$ 545,000
Stated interest rate	7.25%		7.25%
Redemption price			100.00%
Percentage of principal amount redeemed			40.00%
Partial redemption price			107.25%
Line of Credit [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Borrowing capacity	$ 650,000		$ 650,000
Revolver maturity date			Oct. 02, 2019
Percentage points added to LIBOR			2.00%
Unused capacity interest rate			0.35%
Long-term debt	$ 332,000		$ 332,000
Minimum | Notes Payable to Banks [Member] | Term B Loan Facility [Member]
Debt Instrument [Line Items]
Percentage points added to LIBOR			0.75%

XML

Professional Liability Insurance - Professional Liability Loss Reserve (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Malpractice Insurance [Abstract]
Estimated losses under self-insured programs	$ 273,655	$ 245,070
Estimated losses under commercial insurance programs	141,185	126,751
Professional liability loss reserves	414,840	371,821
Less estimated payable within one year	102,478	105,028
Professional liability loss reserves, Noncurrent	$ 312,362	$ 266,793

XML

Professional Liability Insurance - Estimated Losses Under Self-Insured Programs (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Malpractice Insurance [Abstract]
Balance, December 31, 2015	$ 245,070
Reserves related to current period	62,802
Changes related to prior year reserves	14,284
Assumed liabilities	(1,812)
Payments for current period reserves	(880)
Payments for prior period reserves	(45,809)
Balance, September 30, 2016	$ 273,655

XML

Professional Liability Insurance (Details Textual) $ in Thousands	1 Months Ended	9 Months Ended	12 Months Ended
	Oct. 31, 2016 USD ($)	Sep. 30, 2016 USD ($) Claim	Dec. 31, 2015 USD ($)
Malpractice Insurance [Line Items]
Estimated losses under self-insured programs		$ 273,655	$ 245,070
Reserve for settlement of prior year claims		$ 14,284
Number of claims settled | Claim		2
Professional liability reserves, discount rate		1.10%	1.60%
Professional liability loss reserves		$ 414,840	$ 371,821
Estimated IBNR
Malpractice Insurance [Line Items]
Estimated losses under self-insured programs		160,700	157,400
Specific Case Reserves
Malpractice Insurance [Line Items]
Estimated losses under self-insured programs		113,000	87,700
Settled But Not Yet Funded Specific Case Reserves
Malpractice Insurance [Line Items]
Estimated losses under self-insured programs		3,400	3,000
Unsettled Specific Case Reserves
Malpractice Insurance [Line Items]
Estimated losses under self-insured programs		109,600	$ 84,700
Subsequent Event
Malpractice Insurance [Line Items]
Prior year claims and claims adjustment expense	$ 0
IPC Acquisition
Malpractice Insurance [Line Items]
Professional liability loss reserves		$ 25,800
Discount Factor Period		10 years

XML

Contingencies (Details Textual) - 9 months ended Sep. 30, 2016	healthcare_professionals	USD ($)	Business	state
Loss Contingencies [Line Items]
Loss Contingency, Damages Sought, Value		$ 350,000
Litigation Settlement, Expense		100,000
Reserve for settlement of prior year claims		$ 14,284,000
August 2011 [Member]
Loss Contingencies [Line Items]
Number of defendants	1		3
July 2012 [Member]
Loss Contingencies [Line Items]
Number of defendants	1		1
Civ. No. 09-C-5418 [Member]
Loss Contingencies [Line Items]
Number of defendants | Business			29
Number of plaintiffs | state				12
CID [Member]
Loss Contingencies [Line Items]
Number of defendants | Business			1

XML

Equity-based Compensation - Stock Option Status Under Stock Plan (Details) - Stock options - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands			9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2016
Shares (in thousands)
Outstanding at beginning of year			4,780
Granted			1,134
Exercised			(881)
Expired or forfeited			(203)
Outstanding at end of period	4,830	4,780	4,830
Exercisable at end of period	3,098		3,098
Weighted Average Exercise Price
Outstanding at beginning of year			$ 28.07
Granted			35.30
Exercised			20.59
Expired or forfeited			44.96
Outstanding at end of period	$ 30.51	$ 28.07	30.51
Exercisable at end of period	$ 24.31		$ 24.31
Aggregate Intrinsic Value (in thousands) and Weighted Average Remaining Life in Years
Aggregate intrinsic value outstanding at beginning of year			$ 86,342
Aggregate intrinsic value exercised			16,930
Aggregate intrinsic value outstanding at end of period	$ 34,285	$ 86,342	34,285
Aggregate intrinsic value exercisable at end of period	$ 34,280		$ 34,280
Weighted average remaining life at balance sheet date	5 years 4 months 24 days	5 years 3 months 18 days
Weighted average remaining life exercisable at end of period	4 years 4 months 24 days

XML

Equity-based Compensation - Valuation Assumptions (Details) - 2009 Stock Plan	9 Months Ended
	Sep. 30, 2016 $ / shares
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected Term	5 years
Expected volatility rate	34.90%
Risk free interest rate	1.30%
Weighted average grant date fair value	$ 12.14
Expected Dividend Rate	0.00%
Performance Share Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected Term	4 years 7 months 14 days
Expected volatility rate	40.20%
Risk free interest rate	1.40%
Weighted average grant date fair value	$ 10.39
Expected Dividend Rate	0.00%

XML

Equity-based Compensation - Changes in Unvested Shares of Restricted Awards (Details) shares in Thousands	9 Months Ended
	Sep. 30, 2016 shares
Summary of changes in unvested restricted stock awards
Outstanding at beginning of year	866
Granted	769
Vested	(329)
Forfeited and expired	(132)
Outstanding at September 30, 2016	1,174
Restricted Units
Summary of changes in unvested restricted stock awards
Outstanding at beginning of year	766
Granted	498
Vested	(276)
Forfeited and expired	(94)
Outstanding at September 30, 2016	894
2009 Stock Plan | Restricted Stock
Summary of changes in unvested restricted stock awards
Outstanding at beginning of year	100
Granted	0
Vested	(53)
Forfeited and expired	(5)
Outstanding at September 30, 2016	42
2009 Stock Plan | Performance Units
Summary of changes in unvested restricted stock awards
Outstanding at beginning of year	0
Granted	144
Vested	0
Forfeited and expired	(33)
Outstanding at September 30, 2016	111
2009 Stock Plan | Market Share Unit
Summary of changes in unvested restricted stock awards
Outstanding at beginning of year	0
Granted	127
Vested	0
Forfeited and expired	0
Outstanding at September 30, 2016	127
2009 Stock Plan | Restricted Awards
Summary of changes in unvested restricted stock awards
Granted	642

XML

Equity-based Compensation - Equity Based Compensation Expense (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity based compensation expense	$ 24,470	$ 13,197
Tax benefit of equity based compensation expense	9,360	5,081
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity based compensation expense	6,277	7,212
Restricted Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity based compensation expense	18,060	5,923
Market Share Unit
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity based compensation expense	51	0
Stock Purchase Plans
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity based compensation expense	82	$ 62
Transaction Integration and Reorganization Costs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity based compensation expense	$ 3,900

XML

Equity-based Compensation (Details Textual) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended	9 Months Ended
	Oct. 31, 2016	Sep. 30, 2016
Share-Based Compensation (Textual) [Abstract]
Equity awards granted		769,000
Stock options
Share-Based Compensation (Textual) [Abstract]
Options granted in period		1,134,000
Unrecognized compensation expense, options		$ 20.3
Performance Share Options
Share-Based Compensation (Textual) [Abstract]
Options granted in period		442,000
Restricted awards
Share-Based Compensation (Textual) [Abstract]
Compensation Not yet Recognized, Share-based Awards Other than Options		$ 30.9
2009 Stock Plan
Share-Based Compensation (Textual) [Abstract]
Total number of shares of common stock that may be issued		15,100,000
Number of shares available for grant		593,000
2009 Stock Plan | Restricted awards
Share-Based Compensation (Textual) [Abstract]
Equity awards granted		642,000
2009 Stock Plan | Performance Units
Share-Based Compensation (Textual) [Abstract]
Equity awards granted		144,000
Award vesting period		2 years
Award requisite service period		3 years
2009 Stock Plan | Market Share Unit
Share-Based Compensation (Textual) [Abstract]
Equity awards granted		127,000
Compensation Not yet Recognized, Share-based Awards Other than Options		$ 4.9
Award vesting period		3 years
Measurement Period For Market Share Unit Vesting		20 days
Equity Instruments Other than Options, Intrinsic value per share of Grants in Period		$ 39.26
2010 Employee Stock Purchase Plan | Employee Stock
Share-Based Compensation (Textual) [Abstract]
Total number of shares of common stock that may be issued		600,000
Discount on shares purchased		5.00%
Contributions to the stock purchase plan		$ 3.3
2010 Nonqualified Stock Purchase Plan | Nonqualified Stock Purchase Plan
Share-Based Compensation (Textual) [Abstract]
Total number of shares of common stock that may be issued		800,000
Discount on shares purchased		5.00%
Contributions to the stock purchase plan		$ 0.9
Minimum | Restricted awards
Share-Based Compensation (Textual) [Abstract]
Award vesting period		3 years
Maximum | Restricted awards
Share-Based Compensation (Textual) [Abstract]
Award vesting period		4 years
Subsequent Event | 2010 Employee Stock Purchase Plan | Employee Stock
Share-Based Compensation (Textual) [Abstract]
Shares issued during period under Employee Stock Purchase Plan	101,000
Subsequent Event | 2010 Nonqualified Stock Purchase Plan | Nonqualified Stock Purchase Plan
Share-Based Compensation (Textual) [Abstract]
Shares issued during period under Non-qualified Stock Purchase Plans	29,000
Tranche one | Minimum | 2009 Stock Plan | Market Share Unit
Share-Based Compensation (Textual) [Abstract]
Award Vesting Rights, Percentage		75.00%
Tranche one | Maximum | 2009 Stock Plan | Market Share Unit
Share-Based Compensation (Textual) [Abstract]
Award Vesting Rights, Percentage		200.00%
Tranche two | Minimum | 2009 Stock Plan | Market Share Unit
Share-Based Compensation (Textual) [Abstract]
Award Vesting Rights, Percentage		75.00%
Tranche two | Maximum | 2009 Stock Plan | Market Share Unit
Share-Based Compensation (Textual) [Abstract]
Award Vesting Rights, Percentage		200.00%
Tranche three | Minimum | 2009 Stock Plan | Market Share Unit
Share-Based Compensation (Textual) [Abstract]
Award Vesting Rights, Percentage		75.00%
Tranche three | Maximum | 2009 Stock Plan | Market Share Unit
Share-Based Compensation (Textual) [Abstract]
Award Vesting Rights, Percentage		200.00%

XML

Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Basic and diluted earnings per share
Net earnings attributable to Team Health Holdings, Inc. (numerator for basic and diluted earnings per share)	$ 10,481	$ 35,442	$ 29,934	$ 92,431
Denominator:
Weighted average shares outstanding	74,166	72,361	73,823	71,900
Stock options	871	1,086	988	1,176
Restricted awards	199	237	340	272
Incremental Common Shares Attributable to Dilutive Effect of Contingently Issuable Units with Market Condition	61	0	67	0
Stock purchase plans	7	3	7	3
Shares used for diluted earnings per share	75,304	73,687	75,225	73,351
Basic net earnings per share of Team Health Holdings, Inc.	$ 0.14	$ 0.49	$ 0.41	$ 1.29
Diluted net earnings per share of Team Health Holdings, Inc.	$ 0.14	$ 0.48	$ 0.40	$ 1.26
Stock options
Denominator:
Securities excluded from diluted earnings per share of Team Health Holdings, Inc. because they were antidilutive:	1,685	519	1,622	258
Restricted awards
Denominator:
Securities excluded from diluted earnings per share of Team Health Holdings, Inc. because they were antidilutive:	173	0	215	0

XML

Noncontrolling Interests in Consolidated Entity (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($) Business	Sep. 30, 2015 USD ($)
Noncontrolling Interest [Abstract]
Number of Joint Venture Arrangements | Business	1
Contributions from noncontrolling interests | $	$ 1,989	$ 1,683

XML

Transaction, Integration and Reorganization Costs (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Business Acquisition [Line Items]
Transaction, integration, and reorganization costs	$ 20,836	$ 3,869	$ 48,337	$ 7,170
Professional, advisory and legal costs			11,700
IPC Acquisition
Business Acquisition [Line Items]
Recognized transaction costs			19,300	$ 2,600
Non-IPC
Business Acquisition [Line Items]
Recognized transaction costs			1,600
Executive leadership transition costs
Business Acquisition [Line Items]
Severance and lease impairment costs			8,800
Severance and lease costs
Business Acquisition [Line Items]
Severance and lease impairment costs			$ 6,900

XML

Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended		12 Months Ended
		Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at beginning of period		$ 2,414	$ 1,095	$ 1,503	$ 1,695	$ 1,695
Total other comprehensive earnings (loss)		(242)	230	669	(370)	(370)
Balance at end of period		2,172	1,325	2,172	1,325	$ 1,503
Accumulated Net Investment Gain (Loss) Including Portion Attributable to Noncontrolling Interest
Accumulated Other Comprehensive Income (Loss) [Line Items]
Net unrealized gain (loss)		(367)	451	1,422	(436)
Tax (expense) benefit		133	(124)	(359)	213
Total other comprehensive earnings (loss) before reclassifications, net of tax		(234)	327	1,063	(223)
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Net Investment Gain (Loss) Including Portion Attributable to Noncontrolling Interest
Accumulated Other Comprehensive Income (Loss) [Line Items]
Net amount reclassified to earnings(1)	[1]	(8)	(97)	(394)	(147)
Tax benefit (expense)(2)	[2]	0	0	0	0
Total amount reclassified from accumulated other comprehensive earnings, net of tax(3)	[3]	$ (8)	$ (97)	$ (394)	$ (147)

[1] This amount was included in Other (income) expense, net on the accompanying Consolidated Statement of Comprehensive Earnings.

[2] These amounts were included in Provision for income taxes on the accompanying Consolidated Statement of Comprehensive Earnings.

[3] A positive amount indicates a corresponding charge to earnings and a negative amount indicates a corresponding benefit to earnings.

XML

Segment Reporting (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Summary of financial information of reportable segment
Net Revenues:	$ 1,141,494	$ 899,181	$ 3,399,711	$ 2,617,620
Operating Earnings:	49,297	63,841	143,034	171,663
Interest expense, net	28,525	5,572	90,255	14,132
Provision for income taxes	10,216	22,837	22,579	65,178
Net earnings	10,556	35,432	30,200	92,353
Operating Segments [Member] | Hospital Based Services [Member]
Summary of financial information of reportable segment
Net Revenues:	894,792	831,261	2,632,504	2,412,049
Operating Earnings:	78,733	92,087	209,589	236,150
Operating Segments [Member] | IPC Healthcare
Summary of financial information of reportable segment
Net Revenues:	177,125	0	555,506	0
Operating Earnings:	5,181	0	25,449	0
Operating Segments [Member] | Specialty Services
Summary of financial information of reportable segment
Net Revenues:	42,806	42,165	134,314	129,851
Operating Earnings:	8,362	4,083	19,287	14,941
Operating Segments [Member] | Other Services
Summary of financial information of reportable segment
Net Revenues:	26,742	25,731	77,304	75,648
Operating Earnings:	6,754	5,715	19,827	19,158
Corporate, Non-Segment [Member] | Corporate Segment [Member]
Summary of financial information of reportable segment
Net Revenues:	29	24	83	72
Operating Earnings:	$ (49,733)	$ (38,044)	$ (131,118)	$ (98,586)

XML

Segment Reporting (Details Textual)	9 Months Ended
	Sep. 30, 2016 Segments
Segment Reporting Information, Additional Information [Abstract]
Number of Operating Segments	8
Number of Reportable Segments	4

XML

Subsequent Event (Details) - Subsequent Event $ / shares in Units, $ in Millions	Oct. 31, 2016 USD ($) $ / shares
Subsequent Event [Line Items]
Potential Superior Proposal Termination Payment	$ 50.4
Potential Termination Fee, Other Circumstance	100.8
Gain Contingency, Unrecorded Amount	$ 201.7
Blackstone [Member] | TeamHealth [Member]
Subsequent Event [Line Items]
Potential Merger, Share Price | $ / shares	$ 43.50