British Columbia (State or other jurisdiction of incorporation or organization) | 98-1188172 (I.R.S. Employer Identification No.) |
11700 Katy Freeway, Suite 300, Houston, Texas (Address of principal executive offices) | 77079 (Zip Code) |
Large accelerated filer [ ] | Accelerated filer [ X ] |
Non-accelerated filer [ ] | Smaller reporting company [ ] |
September 30, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Current Assets: | |||||||
Cash | $ | 19,614 | $ | 15,666 | |||
Trade accounts receivable, net of allowance of $2,144 at September 30, 2016 and $5,165 at December 31, 2015 | 86,170 | 92,569 | |||||
Medical supplies | 4,321 | 4,493 | |||||
Prepaid expenses and other current assets | 3,727 | 2,789 | |||||
Total current assets | 113,832 | 115,517 | |||||
Property and equipment, net | 34,638 | 35,303 | |||||
Intangible assets, net | 18,268 | 19,619 | |||||
Goodwill | 44,833 | 44,833 | |||||
Deferred tax asset | 27,470 | 25,035 | |||||
Other long-term assets | 1,942 | 1,720 | |||||
Total Assets | $ | 240,983 | $ | 242,027 | |||
Liabilities and Shareholders' Equity | |||||||
Current Liabilities: | |||||||
Trade accounts payable | $ | 19,702 | $ | 23,381 | |||
Accrued expenses | 20,661 | 16,648 | |||||
Current portion of capital leases | 3,484 | 5,193 | |||||
Current portion of long-term debt | 1,006 | 1,243 | |||||
Current portion of warrant and stock option derivative liabilities | 380 | 332 | |||||
Other current liabilities | 6,802 | 5,025 | |||||
Total current liabilities | 52,035 | 51,822 | |||||
Lines of credit | 8,135 | 3,000 | |||||
Long-term capital leases, net of current portion | 12,711 | 13,654 | |||||
Long-term debt, net of current portion | 22,826 | 21,469 | |||||
Warrant and stock option derivative liabilities, net of current portion | 1,537 | 2,619 | |||||
Other long-term liabilities | 3,523 | 3,386 | |||||
Total liabilities | 100,767 | 95,950 | |||||
Commitments and Contingencies | |||||||
Contingently redeemable noncontrolling interest | 10,567 | 12,225 | |||||
Shareholders' Equity: | |||||||
Common shares, no par value, unlimited shares authorized, 76,855,014 and 73,675,979 shares issued and outstanding, respectively | — | — | |||||
Additional paid in capital | 218,724 | 211,827 | |||||
Accumulated deficit | (88,410 | ) | (85,491 | ) | |||
Total shareholders’ equity attributable to Nobilis Health Corp. | 130,314 | 126,336 | |||||
Noncontrolling interests | (665 | ) | 7,516 | ||||
Total shareholders' equity | 129,649 | 133,852 | |||||
Total Liabilities and Shareholders' Equity | $ | 240,983 | $ | 242,027 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues: | |||||||||||||||
Patient and net professional fees | $ | 65,666 | $ | 46,237 | $ | 167,199 | $ | 126,661 | |||||||
Contracted marketing revenues | 2,604 | 4,410 | 10,754 | 8,059 | |||||||||||
Factoring revenues | 2,413 | 1,836 | 5,874 | 4,481 | |||||||||||
Total revenues | 70,683 | 52,483 | 183,827 | 139,201 | |||||||||||
Operating expenses: | |||||||||||||||
Salaries and benefits | 13,209 | 10,255 | 38,377 | 26,927 | |||||||||||
Drugs and supplies | 15,473 | 8,405 | 39,670 | 22,265 | |||||||||||
General and administrative | 33,195 | 21,025 | 85,678 | 54,625 | |||||||||||
Bad debt expense | — | 929 | — | 1,129 | |||||||||||
Depreciation and amortization | 1,952 | 1,522 | 6,462 | 3,114 | |||||||||||
Facility operating expenses | 63,829 | 42,136 | 170,187 | 108,060 | |||||||||||
Corporate expenses: | |||||||||||||||
Salaries and benefits | 1,765 | 1,540 | 5,077 | 3,532 | |||||||||||
General and administrative | 4,576 | 5,192 | 14,984 | 17,707 | |||||||||||
Legal expenses | 1,535 | 521 | 4,110 | 1,733 | |||||||||||
Depreciation | 79 | 43 | 209 | 99 | |||||||||||
Total corporate costs | 7,955 | 7,296 | 24,380 | 23,071 | |||||||||||
(Loss) income from operations | (1,101 | ) | 3,051 | (10,740 | ) | 8,070 | |||||||||
Other expense (income) : | |||||||||||||||
Change in fair value of warrant and stock option derivative liabilities | 133 | (6,381 | ) | (1,566 | ) | (4,677 | ) | ||||||||
Interest expense | 744 | 322 | 2,115 | 1,106 | |||||||||||
Bargain purchase gain | — | (4,358 | ) | — | (4,358 | ) | |||||||||
Other income, net | (198 | ) | (106 | ) | (3,011 | ) | (1,518 | ) | |||||||
Total other expense (income) | 679 | (10,523 | ) | (2,462 | ) | (9,447 | ) | ||||||||
(Loss) income before income taxes and noncontrolling interests | (1,780 | ) | 13,574 | (8,278 | ) | 17,517 | |||||||||
Income tax expense (benefit) | 483 | 256 | (1,766 | ) | 862 | ||||||||||
Net (loss) income | (2,263 | ) | 13,318 | (6,512 | ) | 16,655 | |||||||||
Net income (loss) attributable to noncontrolling interests | 496 | 2,375 | (3,594 | ) | 10,617 | ||||||||||
Net (loss) income attributable to Nobilis Health Corp. | $ | (2,759 | ) | $ | 10,943 | $ | (2,918 | ) | $ | 6,038 | |||||
Net (loss) income per basic common share | $ | (0.04 | ) | $ | 0.15 | $ | (0.04 | ) | $ | 0.09 | |||||
Net (loss) income per fully diluted common share | $ | (0.04 | ) | $ | 0.14 | $ | (0.04 | ) | $ | 0.08 | |||||
Weighted average shares outstanding (basic) | 76,774,967 | 70,935,587 | 76,114,538 | 65,310,610 | |||||||||||
Weighted average shares outstanding (fully diluted) | 76,774,967 | 77,656,264 | 76,114,538 | 75,067,623 |
Nine Months Ended September 30, | |||||||
2016 | 2015 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net (loss) income | $ | (6,512 | ) | $ | 16,655 | ||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 6,671 | 3,213 | |||||
Provision for bad debts | — | 1,129 | |||||
Share-based compensation | 5,226 | 12,469 | |||||
Change in fair value of warrant and stock option derivative liabilities | (1,566 | ) | (4,677 | ) | |||
Recoupment of indemnified expenses | — | (1,700 | ) | ||||
Deferred income taxes | (2,435 | ) | — | ||||
Gain on bargain purchase of a business | — | (4,358 | ) | ||||
Gain on sale of property and equipment | (265 | ) | — | ||||
Earnings from equity method investment | (1,000 | ) | — | ||||
Amortization of deferred financing fees | 112 | 66 | |||||
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed: | |||||||
Trade accounts receivable | 6,399 | (11,962 | ) | ||||
Medical supplies | 172 | (612 | ) | ||||
Prepaid expenses and other current assets | (938 | ) | (2,095 | ) | |||
Other long-term assets | 152 | (37 | ) | ||||
Trade accounts payable and accrued liabilities | 334 | (4,372 | ) | ||||
Other current liabilities | 1,777 | (900 | ) | ||||
Other long-term liabilities | 137 | 19 | |||||
Distributions from equity method investments | 1,079 | — | |||||
Net cash provided by operating activities | 9,343 | 2,838 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchase of property and equipment | (4,388 | ) | (2,533 | ) | |||
Investment in associate | — | (206 | ) | ||||
Purchase of equity method investment | (609 | ) | — | ||||
Note receivable, net | 150 | (197 | ) | ||||
Acquisition of Victory | — | (1,436 | ) | ||||
Acquisition of Peak | — | (849 | ) | ||||
Acquisition of Peak, net of cash acquired | — | (1,299 | ) | ||||
Deconsolidation of imaging centers and urgent care clinic | — | (166 | ) | ||||
Net cash used for investing activities | (4,847 | ) | (6,686 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Distributions to noncontrolling interests | (6,245 | ) | (9,015 | ) | |||
Proceeds from exercise of stock options | 2,074 | 521 | |||||
Proceeds from exercise of stock warrants | 130 | 4,343 | |||||
Proceeds from private placement | — | 28,395 | |||||
Payments on capital lease obligations | (2,652 | ) | (719 | ) | |||
Proceeds (payments) from line of credit | 5,135 | (5,420 | ) | ||||
Proceeds from debt | 6,440 | 20,000 | |||||
Payments on debt | (5,026 | ) | (20,124 | ) | |||
Deferred financing fees | (404 | ) | (662 | ) | |||
Net cash (used for) provided by financing activities | (548 | ) | 17,319 | ||||
NET INCREASE IN CASH | 3,948 | 13,525 | |||||
CASH — Beginning of period | 15,666 | 7,568 | |||||
CASH — End of period | $ | 19,614 | $ | 21,093 |
Nine Months Ended September 30, | |||||||
2016 | 2015 | ||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||
Cash paid for interest | $ | 2,052 | $ | 1,129 | |||
Cash paid for taxes | $ | 2,279 | $ | 633 | |||
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||||||
Non-cash acquisition of property and equipment | $ | — | $ | 15,345 | |||
Non-cash acquisition of goodwill and intangibles | $ | — | $ | 13,532 | |||
Non-cash deconsolidation of property and equipment | $ | — | $ | 2,828 | |||
Non-cash deconsolidation of goodwill | $ | — | $ | 701 | |||
Athas settlement in lieu of contingent shares | $ | — | $ | 5,685 |
November 1, 2015 | |||
Net assets acquired: | |||
Trade accounts receivable | $ | 82 | |
Prepaid expenses and other current assets | 36 | ||
Inventory | 69 | ||
Property and equipment | 13,266 | ||
Other long-term assets | 113 | ||
Goodwill | 6,932 | ||
Tradename | 160 | ||
Hospital license | 12 | ||
Net assets acquired | $ | 20,670 | |
Net liabilities assumed: | |||
Trade accounts payable | $ | 2,668 | |
Accrued liabilities | 419 | ||
Current portion of capital leases | 658 | ||
Long-term portion of capital leases | 12,213 | ||
Total liabilities assumed | $ | 15,958 | |
Consideration: | |||
Cash, net of cash acquired | $ | 3,180 | |
Noncontrolling Interest | 1,532 | ||
Total consideration | $ | 4,712 |
September 30, 2015 | |||
Revenue | $ | 139,774 | |
Income from operations | $ | 8,225 | |
Net income attributable to noncontrolling interests | $ | 10,360 | |
Net income attributable to common stockholders | $ | 6,282 | |
Net income per basic common share | $ | 0.10 |
September 30, 2016 | December 31, 2015 | ||||||
Trade accounts receivable | $ | 84,573 | $ | 95,114 | |||
Allowance for doubtful accounts | (2,144 | ) | (5,165 | ) | |||
Receivables transferred | (357 | ) | (298 | ) | |||
Receivables purchased | 4,098 | 2,918 | |||||
Trade accounts receivable, net | $ | 86,170 | $ | 92,569 |
• | Accounts receivable and other receivables |
• | Investments in associates |
• | Accounts payable, accrued liabilities and other current liabilities |
• | Other liabilities and notes payable |
• | Capital leases |
• | Lines of credit |
• | Debt |
• | Warrants |
• | Non-employee stock options |
• | Credit risk |
• | Fair value risk |
• | Foreign exchange risk |
• | Other market price risk |
• | Liquidity risk |
• | Interest rate risk |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
Payors | 2016 | 2015 | 2016 | 2015 | ||||||||
Private insurance and other private pay | 96.3 | % | 94.4 | % | 96.2 | % | 94.7 | % | ||||
Workers compensation | 3.4 | % | 5.1 | % | 3.4 | % | 4.8 | % | ||||
Medicare | 0.3 | % | 0.5 | % | 0.4 | % | 0.5 | % | ||||
Total | 100 | % | 100 | % | 100 | % | 100 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
Payors | 2016 | 2015 | 2016 | 2015 | ||||||||
Private insurance and other private pay | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||
Workers compensation | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||
Medicare | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||
Total | 100 | % | 100 | % | 100 | % | 100 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
Payors | 2016 | 2015 | 2016 | 2015 | ||||||||
Private insurance and other private pay | 96.8 | % | 95.1 | % | 96.7 | % | 95.2 | % | ||||
Workers compensation | 3.0 | % | 4.5 | % | 3.0 | % | 4.3 | % | ||||
Medicare | 0.2 | % | 0.4 | % | 0.3 | % | 0.5 | % | ||||
Total | 100 | % | 100 | % | 100 | % | 100 | % |
September 30, 2016 | December 31, 2015 | ||||||
Accrued expenses: | |||||||
Accrued salaries and related benefits | $ | 3,941 | $ | 5,309 | |||
Other | 16,720 | 11,339 | |||||
Total accrued expenses | $ | 20,661 | $ | 16,648 | |||
Other current liabilities: | |||||||
Estimated amounts due to third party payors | $ | 6,348 | $ | 3,795 | |||
Other | 454 | 1,230 | |||||
Total other current liabilities | $ | 6,802 | $ | 5,025 |
September 30, 2016 | December 31, 2015 | ||||||
Gross debt | $ | 24,687 | $ | 23,275 | |||
Less: unamortized loan fees | 855 | 563 | |||||
Debt, net of unamortized loan fees | 23,832 | 22,712 | |||||
Less: current portion of term loan, net of unamortized loan fees | 1,006 | 1,243 | |||||
Long-term debt, net of unamortized loan fees | $ | 22,826 | $ | 21,469 |
Fair Value Measurements Using | |||||||||||||||
Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||
December 31, 2015: | |||||||||||||||
Warrant and stock option derivative liabilities | $ | — | $ | — | $ | 2,951 | $ | 2,951 | |||||||
Total | $ | — | $ | — | $ | 2,951 | $ | 2,951 | |||||||
September 30, 2016: | |||||||||||||||
Warrant and stock option derivative liabilities | $ | — | $ | — | $ | 1,917 | $ | 1,917 | |||||||
Total | $ | — | $ | — | $ | 1,917 | $ | 1,917 |
Shares Underlying Options | Weighted- Average Exercise Price | Weighted-Average Remaining Life (years) | |||||||
Outstanding at January 1, 2015 | 3,118,218 | $ | 1.45 | 9.80 | |||||
Granted | 2,601,782 | $ | 5.50 | 9.78 | |||||
Exercised | (447,787 | ) | $ | 1.26 | — | ||||
Forfeited | (372,213 | ) | $ | 1.11 | — | ||||
Outstanding at September 30, 2015 | 4,900,000 | $ | 3.65 | 9.47 | |||||
Exercisable at | |||||||||
Exercisable at September 30, 2015 | 1,408,461 | $ | 2.54 | 9.47 | |||||
Exercisable at | |||||||||
Outstanding at January 1, 2016 | 5,465,000 | $ | 2.97 | 9.20 | |||||
Granted | 2,457,075 | $ | 2.14 | 9.40 | |||||
Exercised | (1,083,750 | ) | $ | 1.91 | — | ||||
Forfeited | (966,800 | ) | $ | 3.01 | — | ||||
Outstanding at September 30, 2016 | 5,871,525 | $ | 2.77 | 8.90 | |||||
Outstanding at | |||||||||
Exercisable at September 30, 2016 | 2,234,025 | $ | 2.32 | 8.50 |
Nine Months Ended September 30, | |||||
2016 | 2015 | ||||
Expected price volatility | 114% - 117% | 113% - 122% | |||
Risk free interest rate | 1.03% - 1.53% | 1.34% - 1.87% | |||
Expected annual dividend yield | 0 | % | 0 | % | |
Expected option term (years) | 5 - 6 | 5 - 6 | |||
Expected forfeiture rate | 0.5% - 11.6% | 1.3% - 8.8% | |||
Grant date fair value per share | $1.73 - $2.41 | $2.97 - $6.31 | |||
Grant date exercise price per share | $1.99 - $2.82 | $2.53 - $6.10 |
Nine Months Ended September 30, | |||||
2016 | 2015 | ||||
Risk free interest rate | 0.26% - 0.59% | 0.11% - 0.64% | |||
Expected life in years | 0.25 - 1.15 | 0.25 - 2.0 | |||
Expected volatility | 76% - 112% | 71% - 89% | |||
Expected dividend yield | 0 | % | 0 | % |
2016 | 2015 | ||||||
Balance at beginning of year | $ | 2,109 | $ | 6,657 | |||
Issuance of warrants and options | — | 12,797 | |||||
Transferred to equity upon exercise | — | (8,882 | ) | ||||
Change in fair value recorded in earnings | (1,729 | ) | (4,742 | ) | |||
Balance as of September 30, 2016 and 2015 | $ | 380 | $ | 5,830 |
Exercise price in Cdn$ | Number of warrants and options | Remaining contractual life (years) | ||||||
2015 Warrants | $ | 11.50 | 3,923,834 | 0.90 | ||||
2015 Options | $ | 9.00 | 392,383 | 0.90 | ||||
Outstanding and Exercisable as of September 30, 2016 | 4,316,217 |
Nine Months Ended September 30, | |||||
2016 | 2015 | ||||
Risk free interest rate | 1.01% - 1.14% | 1.37% - 1.56% | |||
Expected life in years | 4 - 5 | 5 - 6 | |||
Expected volatility | 103% - 114% | 113% - 115% | |||
Expected dividend yield | 0 | % | 0 | % |
2016 | 2015 | |||||||
Balance at beginning of year | $ | 841 | $ | — | ||||
Vested during the period | 533 | 1,531 | ||||||
Change in fair value recorded in earnings | 163 | 65 | ||||||
Balance as of September 30, 2016 and 2015 | $ | 1,537 | $ | 1,596 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Basic: | |||||||||||||||
Net (loss) income attributable to Nobilis Health Corp. | $ | (2,759 | ) | $ | 10,943 | $ | (2,918 | ) | $ | 6,038 | |||||
Weighted average common shares outstanding | 76,774,967 | 70,935,587 | 76,114,538 | 65,310,610 | |||||||||||
Net (loss) income per common share | $ | (0.04 | ) | $ | 0.15 | $ | (0.04 | ) | $ | 0.09 | |||||
Diluted: | |||||||||||||||
Net (loss) income attributable to Nobilis Health Corp. | $ | (2,759 | ) | $ | 10,943 | $ | (2,918 | ) | $ | 6,038 | |||||
Weighted average common shares outstanding | 76,774,967 | 70,935,587 | 76,114,538 | 65,310,610 | |||||||||||
Dilutive effect of stock options, warrants, RSUs | — | 6,720,676 | — | 6,720,676 | |||||||||||
Athas share consideration | — | — | — | 3,036,337 | |||||||||||
Weighted average common shares outstanding assuming dilution | 76,774,967 | 77,656,263 | 76,114,538 | 75,067,623 | |||||||||||
Net (loss) income per fully diluted share | $ | (0.04 | ) | $ | 0.14 | $ | (0.04 | ) | $ | 0.08 |
NHC - ASC Dallas | First Nobilis | Total | |||||||||
Balance at January 1, 2015 | $ | 6,654 | $ | 6,213 | $ | 12,867 | |||||
Distributions | (3,892 | ) | (7,617 | ) | (11,509 | ) | |||||
Net income attributable to noncontrolling interests | 631 | 10,236 | 10,867 | ||||||||
Total contingently redeemable noncontrolling interests at December 31, 2015 | $ | 3,393 | $ | 8,832 | $ | 12,225 | |||||
Balance at January 1, 2016 | $ | 3,393 | $ | 8,832 | $ | 12,225 | |||||
Distributions | (2,929 | ) | (600 | ) | (3,529 | ) | |||||
Net (loss) income attributable to noncontrolling interests | (210 | ) | 2,081 | 1,871 | |||||||
Total contingently redeemable noncontrolling interests at September 30, 2016 | $ | 254 | $ | 10,313 | $ | 10,567 |
September 30, 2016 | December 31, 2015 | ||||||
Total cash and short term investments | $ | 1,071 | $ | 191 | |||
Total accounts receivable | 8,638 | 8,660 | |||||
Total other current assets | 1,768 | 1,582 | |||||
Total property and equipment | 17,547 | 5,227 | |||||
Total other assets | 165 | 144 | |||||
Total assets | $ | 29,189 | $ | 15,804 | |||
Total accounts payable | $ | 3,847 | $ | 2,286 | |||
Total other liabilities | 5,924 | 7,059 | |||||
Total accrued liabilities | 4,242 | 2,664 | |||||
Long term - capital lease | 11,543 | 780 | |||||
Noncontrolling interest | (8,547 | ) | (1,488 | ) | |||
Total liabilities | $ | 17,009 | $ | 11,301 |
• | Canada is excluded from the worldwide annual effective tax rate calculation because Canada has losses but does not expect to realize them, which reduces the third quarter effective tax rate by approximately 3.8% for the nine months ended September 30, 2016. |
• | All of the Partnership’s earnings are included in the Company’s net income; however, the Company is not required to record income tax expense or benefit with respect to the portion of the Partnership’s earnings allocated to its noncontrolling public limited partners, which reduces the third quarter effective tax rate by approximately 4.5% for the nine months ended September 30, 2016. |
• | The Company adjusted the prior year tax provision. The adjustment to the existing deferred tax assets and liabilities decreases the third quarter effective tax rate by approximately 1.6% for the nine months ended September 30, 2016. |
• | The third quarter effective tax rate includes a discrete item for the stock compensation shortfall, which reduces the effective tax rate by approximately 3.8% for the nine months ended September 30, 2016. |
• | The net tax for the three and nine months ended September 30, 2016 was $0.5 million expense and $1.7 million benefit, respectively, resulting in an effective tax rate of approximately -29.3% and 21.1% respectively. The net tax includes $0.3 million and $0.8 million of state tax expense, respectively. The Company did not recognize any federal or foreign tax expense or benefit for the three and nine months ended September 30, 2015 as the Company had a full valuation allowance against deferred tax assets at that time. The state tax expense for the three and nine months ended September 30, 2015 was $0.3 million and $0.9 million, respectively. |
Three months ended September 30, 2016 | |||||||||||||||
Medical Services | Marketing | Corporate | Total | ||||||||||||
Revenues | $ | 65,419 | $ | 5,264 | $ | — | $ | 70,683 | |||||||
Operating expenses | 60,871 | 2,958 | — | 63,829 | |||||||||||
Corporate costs | — | — | 7,955 | 7,955 | |||||||||||
Income (loss) from operations | 4,548 | 2,306 | (7,955 | ) | (1,101 | ) | |||||||||
Change in fair value of warrant and option liabilities | — | — | 133 | 133 | |||||||||||
Interest expense | 329 | 1 | 414 | 744 | |||||||||||
Other (income) expense | (199 | ) | (57 | ) | 58 | (198 | ) | ||||||||
Income (loss) before income taxes | $ | 4,418 | $ | 2,362 | $ | (8,560 | ) | $ | (1,780 | ) | |||||
Other data: | |||||||||||||||
Depreciation and amortization expense | $ | 1,564 | $ | 388 | $ | 79 | $ | 2,031 | |||||||
Income tax expense | $ | 205 | $ | 78 | $ | 200 | $ | 483 | |||||||
Capital expenditures | $ | 1,289 | $ | — | $ | 72 | $ | 1,361 |
Three months ended September 30, 2015 | |||||||||||||||
Medical Services | Marketing | Corporate | Total | ||||||||||||
Revenues | $ | 46,150 | $ | 6,333 | $ | — | $ | 52,483 | |||||||
Operating expenses | 36,466 | 5,670 | — | 42,136 | |||||||||||
Corporate costs | — | — | 7,296 | 7,296 | |||||||||||
Income (loss) from operations | 9,684 | 663 | (7,296 | ) | 3,051 | ||||||||||
Change in fair value of warrant and option liabilities | — | — | (6,381 | ) | (6,381 | ) | |||||||||
Interest expense (income) | 169 | (15 | ) | 168 | 322 | ||||||||||
Bargain purchase | (4,358 | ) | — | — | (4,358 | ) | |||||||||
Other expense (income) | 1,583 | (205 | ) | (1,484 | ) | (106 | ) | ||||||||
Income before income taxes | $ | 12,290 | $ | 883 | $ | 401 | $ | 13,574 | |||||||
Other data: | |||||||||||||||
Depreciation and amortization expense | $ | 1,178 | $ | 344 | $ | 43 | $ | 1,565 | |||||||
Income tax expense | $ | 176 | $ | 80 | $ | — | $ | 256 | |||||||
Capital expenditures | $ | 1,041 | $ | — | $ | — | $ | 1,041 | |||||||
Non-cash acquisition of property | $ | 10,485 | $ | — | $ | — | $ | 10,485 | |||||||
Non-cash acquisition of intangibles and goodwill | $ | 1,534 | $ | — | $ | — | $ | 1,534 |
Nine months ended September 30, 2016 | |||||||||||||||
Medical Services | Marketing | Corporate | Total | ||||||||||||
Revenues | $ | 166,922 | $ | 16,905 | $ | — | $ | 183,827 | |||||||
Operating expenses | 158,471 | 11,716 | — | 170,187 | |||||||||||
Corporate costs | — | — | 24,380 | 24,380 | |||||||||||
Income (loss) from operations | 8,451 | 5,189 | (24,380 | ) | (10,740 | ) | |||||||||
Change in fair value of warrant and option liabilities | — | — | (1,566 | ) | (1,566 | ) | |||||||||
Interest expense | 1,074 | 4 | 1,037 | 2,115 | |||||||||||
Other income | (1,682 | ) | (305 | ) | (1,024 | ) | (3,011 | ) | |||||||
Income (loss) before income taxes | $ | 9,059 | $ | 5,490 | $ | (22,827 | ) | $ | (8,278 | ) | |||||
Other data: | |||||||||||||||
Depreciation and amortization expense | $ | 5,026 | $ | 1,436 | $ | 209 | $ | 6,671 | |||||||
Income tax expense (benefit) | $ | 662 | $ | 149 | $ | (2,577 | ) | $ | (1,766 | ) | |||||
Capital expenditures | $ | 4,000 | $ | — | $ | 388 | $ | 4,388 | |||||||
Intangible assets | $ | 5,246 | $ | 13,022 | $ | — | $ | 18,268 | |||||||
Goodwill | $ | 25,822 | $ | 19,011 | $ | — | $ | 44,833 | |||||||
Total assets | $ | 175,279 | $ | 44,413 | $ | 21,291 | $ | 240,983 | |||||||
Total liabilities | $ | 55,602 | $ | 6,928 | $ | 38,237 | $ | 100,767 |
Nine months ended September 30, 2015 | |||||||||||||||
Medical Services | Marketing | Corporate | Total | ||||||||||||
Revenues | $ | 123,638 | $ | 15,563 | $ | — | $ | 139,201 | |||||||
Operating expenses | 94,589 | 13,471 | — | 108,060 | |||||||||||
Corporate costs | — | — | 23,071 | 23,071 | |||||||||||
Income (loss) from operations | 29,049 | 2,092 | (23,071 | ) | 8,070 | ||||||||||
Change in fair value of warrant and option liabilities | — | — | (4,677 | ) | (4,677 | ) | |||||||||
Interest expense | 169 | 65 | 872 | 1,106 | |||||||||||
Bargain purchase | (4,358 | ) | — | — | (4,358 | ) | |||||||||
Other expense (income) | 1,383 | (446 | ) | (2,455 | ) | (1,518 | ) | ||||||||
Income (loss) before income taxes | $ | 31,855 | $ | 2,473 | $ | (16,811 | ) | $ | 17,517 | ||||||
Other data: | |||||||||||||||
Depreciation and amortization expense | $ | 2,079 | $ | 1,035 | $ | 99 | $ | 3,213 | |||||||
Income tax expense | $ | 703 | $ | 159 | $ | — | $ | 862 | |||||||
Capital expenditures | $ | 2,406 | $ | 127 | $ | — | $ | 2,533 | |||||||
Intangible assets | $ | 5,734 | $ | 14,172 | $ | — | $ | 19,906 | |||||||
Goodwill | $ | 14,163 | $ | 19,011 | $ | — | $ | 33,174 | |||||||
Non-cash acquisition of property | $ | 15,345 | $ | — | $ | — | $ | 15,345 | |||||||
Non-cash acquisition of intangibles and goodwill | $ | 13,532 | $ | — | $ | — | $ | 13,532 | |||||||
Total assets | $ | 103,836 | $ | 43,528 | $ | 18,158 | $ | 165,522 | |||||||
Total liabilities | $ | 38,360 | $ | 3,909 | $ | 22,831 | $ | 65,100 |
• | In October 2014 the Company entered into a marketing services agreement with an entity controlled by a physician equity owner. In June 2015, the Company expanded the relationship with this physician equity owner to include consulting, medical supplies, medical directorship and on-call agreements. The Company incurred expenses of $2.5 million and $2.5 million as of September 30, 2016 and 2015, respectively. The Company has incurred expenses of $1.9 million and $0.2 million in fees owed pursuant to the service agreements as of September 30, 2016 and 2015, respectively. |
• | In July 2014, the Company entered into a marketing services agreement with a physician equity owner and an entity owned by that physician equity owner’s brother. The Company incurred expenses of $1.0 million and $0.3 million as of September 30, 2016 and 2015, respectively. |
• | In September 2013, the Company entered into a book deal with a physician equity owner. In March 2015, the Company entered into a marketing agreement with that physician equity owner and a marketing services company owned by the physician equity owner’s father. The Company incurred expenses of $3.9 million and $2.4 million as of September 30, 2016 and 2015, respectively. |
• | our ability to successfully maintain effective internal controls over financial reporting, including the impact of material weaknesses identified by management and our ability to remediate such control deficiencies; |
• | our ability to implement our business strategy, manage the growth in our business, and integrate acquired businesses; |
• | the risk of litigation and investigations, and liability claims for damages and other expenses not covered by insurance; |
• | the risk that payments from third-party payers, including government healthcare programs, may decrease or not increase as costs increase; |
• | adverse developments affecting the medical practices of our physician limited partners; |
• | our ability to maintain favorable relations with our physician limited partners; |
• | our ability to grow revenues by increasing case and procedure volume while maintaining profitability; |
• | failure to timely or accurately bill for services; |
• | our ability to compete for physician partners, patients and strategic relationships; |
• | the risk of changes in patient volume and patient mix; |
• | the risk that laws and regulations that regulate payments for medical services made by government healthcare programs could cause our revenues to decrease; |
• | the risk that contracts are cancelled or not renewed or that we are not able to enter into additional contracts under terms that are acceptable to us; and |
• | the risk of potential decreases in our reimbursement rates. |
• | North American Spine: promotion of minimally invasive spine procedures (pain management musculoskeletal, musculoskeletal and spine); |
• | Migraine Treatment Centers of America: promotion of procedures related to chronic migraine pain (interventional headache procedure); |
• | NueStep: promotion of surgical procedures designed to treat pain in the foot, ankle and leg (podiatry); |
• | Evolve-The Experts in Weight Loss Surgery: promotion of surgical weight loss procedures (bariatrics); |
• | Minimally Invasive Reproductive Surgery Institute (“MIRI”): promotion of women’s health related procedures; and |
• | Onward Orthopedics: promotion of general orthopedics, sports medicine related to orthopedics (orthopedics and pain management interventions); |
• | Clarity Vein and Vascular: promotion of cosmetic and medical vein and vascular treatments. |
• | the surgical center fee for the use of infrastructure, surgical equipment, nursing staff, non-surgical professional services, supplies and other support services, which is earned by the Nobilis Facilities; |
• | the professional fee, which is separately earned, billed and collected by the physician performing the procedure, separate and apart from the fees charged by the Nobilis Facilities; and |
• | the anesthesiology fee, which is separately earned, billed and collected by the anesthesia provider, separate and apart from the fees charged by the Nobilis Facilities and the physicians. |
Three Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Revenues: | |||||||
Patient and net professional fees | $ | 65,666 | $ | 46,237 | |||
Contracted marketing revenues | 2,604 | 4,410 | |||||
Factoring revenues | 2,413 | 1,836 | |||||
Total revenues | 70,683 | 52,483 | |||||
Operating expenses: | |||||||
Salaries and benefits | 13,209 | 10,255 | |||||
Drugs and supplies | 15,473 | 8,405 | |||||
General and administrative | 33,195 | 21,025 | |||||
Bad debt expense | — | 929 | |||||
Depreciation and amortization | 1,952 | 1,522 | |||||
Facility operating expenses | 63,829 | 42,136 | |||||
Corporate expenses: | |||||||
Salaries and benefits | 1,765 | 1,540 | |||||
General and administrative | 4,576 | 5,192 | |||||
Legal expenses | 1,535 | 521 | |||||
Depreciation | 79 | 43 | |||||
Total corporate costs | 7,955 | 7,296 | |||||
(Loss) income from operations | (1,101 | ) | 3,051 | ||||
Other expense (income) : | |||||||
Change in fair value of warrant and stock option derivative liabilities | 133 | (6,381 | ) | ||||
Interest expense | 744 | 322 | |||||
Bargain purchase gain | — | (4,358 | ) | ||||
Other income, net | (198 | ) | (106 | ) | |||
Total other expense (income) | 679 | (10,523 | ) | ||||
(Loss) income before income taxes and noncontrolling interests | (1,780 | ) | 13,574 | ||||
Income tax expense | 483 | 256 | |||||
Net (loss) income | $ | (2,263 | ) | $ | 13,318 |
Three Months Ended September 30, | ||||||||||||||||||
Revenue (in thousands) | Number of Cases (1) | Revenue per Case (2) | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||
Hospitals | $ | 51,886 | $ | 27,954 | 3,057 | 1,270 | $ | 16,973 | $ | 22,011 | ||||||||
ASCs | 11,717 | 17,313 | 1,878 | 2,781 | 6,239 | 6,225 | ||||||||||||
Ancillary services | 1,816 | 883 | — | — | — | — | ||||||||||||
Total | $ | 65,419 | $ | 46,150 | 4,935 | 4,051 | $ | 13,256 | $ | 11,392 |
2016 | 2016 % | 2015 | 2015 % | ||||||||
Specialty | Cases | Cases | Cases | Cases | |||||||
Pain Management | 1,852 | 37.5 | % | 1,177 | 29.1 | % | |||||
Orthopedics | 422 | 8.6 | % | 420 | 10.4 | % | |||||
Spine | 511 | 10.4 | % | 349 | 8.6 | % | |||||
Podiatry | 89 | 1.8 | % | 130 | 3.2 | % | |||||
Gastro-intestinal | 9 | 0.2 | % | 64 | 1.6 | % | |||||
General Surgery | 154 | 3.1 | % | 187 | 4.6 | % | |||||
Plastic & Reconstructive | 466 | 9.4 | % | 357 | 8.8 | % | |||||
Bariatrics | 1,063 | 21.5 | % | 999 | 24.7 | % | |||||
Gynecology | 179 | 3.6 | % | 231 | 5.7 | % | |||||
Urology | — | — | % | 3 | 0.1 | % | |||||
ENT | 190 | 3.9 | % | 134 | 3.3 | % | |||||
TOTAL | 4,935 | 100 | % | 4,051 | 100 | % |
2016 | 2015 | ||||
Contract Network Type | Contract Mix | Contract Mix | |||
OON | 88.5 | % | 84.4 | % | |
INN | 11.5 | % | 15.6 | % | |
TOTAL | 100 | % | 100 | % |
Three Months Ended September 30, | ||||||||||||||||||
Revenues | Revenues | |||||||||||||||||
(in thousands) | Number of Cases (1) | per Case (2) | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||
Marketing | $ | 5,264 | $ | 6,333 | 162 | 367 | $ | 32,494 | $ | 17,256 | ||||||||
Total | $ | 5,264 | $ | 6,333 | 162 | 367 | $ | 32,494 | $ | 17,256 |
2016 | 2016 % | 2015 | 2015 % | ||||||||
Specialty | Cases | Cases | Cases | Cases | |||||||
Pain Management | 87 | 53.7 | % | 195 | 53.1 | % | |||||
Spine | 75 | 46.3 | % | 169 | 46.0 | % | |||||
Gynecology | — | — | % | 3 | 0.9 | % | |||||
TOTAL | 162 | 100 | % | 367 | 100 | % |
Contract Network Type | 2016 Contract Mix | 2015 Contract Mix | |||
OON | 56 | % | 23.9 | % | |
INN | 44 | % | 76.1 | % | |
TOTAL | 100 | % | 100 | % |
Nine Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Revenues: | |||||||
Patient and net professional fees | $ | 167,199 | $ | 126,661 | |||
Contracted marketing revenues | 10,754 | 8,059 | |||||
Factoring revenues | 5,874 | 4,481 | |||||
Total revenues | 183,827 | 139,201 | |||||
Operating expenses: | |||||||
Salaries and benefits | 38,377 | 26,927 | |||||
Drugs and supplies | 39,670 | 22,265 | |||||
General and administrative | 85,678 | 54,625 | |||||
Bad debt expense | — | 1,129 | |||||
Depreciation and amortization | 6,462 | 3,114 | |||||
Facility operating expenses | 170,187 | 108,060 | |||||
Corporate expenses: | |||||||
Salaries and benefits | 5,077 | 3,532 | |||||
General and administrative | 14,984 | 17,707 | |||||
Legal expenses | 4,110 | 1,733 | |||||
Depreciation | 209 | 99 | |||||
Total corporate costs | 24,380 | 23,071 | |||||
(Loss) income from operations | (10,740 | ) | 8,070 | ||||
Other expense (income) : | |||||||
Change in fair value of warrant and stock option derivative liabilities | (1,566 | ) | (4,677 | ) | |||
Interest expense | 2,115 | 1,106 | |||||
Bargain purchase gain | — | (4,358 | ) | ||||
Other income, net | (3,011 | ) | (1,518 | ) | |||
Total other expense (income) | (2,462 | ) | (9,447 | ) | |||
(Loss) income before income taxes and noncontrolling interests | (8,278 | ) | 17,517 | ||||
Income tax (benefit) expense | (1,766 | ) | 862 | ||||
Net (loss) income | (6,512 | ) | 16,655 |
Nine Months Ended September 30, 2016 | ||||||||||||||||||
Revenue (in thousands) | Number of Cases (1) | Revenue per Case (2) | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||
Hospitals | $ | 131,002 | $ | 60,908 | 7,631 | 2,771 | $ | 17,167 | $ | 21,981 | ||||||||
ASCs | 30,464 | 61,558 | 5,630 | 8,788 | 5,411 | 7,005 | ||||||||||||
Ancillary services | 5,456 | 1,173 | — | — | — | — | ||||||||||||
Total | $ | 166,922 | $ | 123,639 | 13,261 | 11,559 | $ | 12,587 | $ | 10,696 |
2016 | 2016 % | 2015 | 2015 % | ||||||||
Specialty | Cases | Cases | Cases | Cases | |||||||
Pain Management | 4,882 | 36.8 | % | 3,999 | 34.6 | % | |||||
Orthopedics | 1,186 | 8.9 | % | 946 | 8.2 | % | |||||
Spine | 1,140 | 8.6 | % | 671 | 5.8 | % | |||||
Podiatry | 260 | 2.0 | % | 374 | 3.2 | % | |||||
Gastro-intestinal | 86 | 0.6 | % | 246 | 2.1 | % | |||||
General Surgery | 481 | 3.6 | % | 502 | 4.3 | % | |||||
Plastic & Reconstructive | 1,262 | 9.5 | % | 1,142 | 9.9 | % | |||||
Bariatrics | 2,872 | 21.7 | % | 2,675 | 23.1 | % | |||||
Gynecology | 569 | 4.3 | % | 571 | 4.9 | % | |||||
Urology | 2 | — | % | 10 | — | % | |||||
ENT | 521 | 3.9 | % | 423 | 3.8 | % | |||||
TOTAL | 13,261 | 100 | % | 11,559 | 100 | % |
Contract Network Type | 2016 Contract Mix | 2015 Contract Mix | |||
OON | 86.4 | % | 87.8 | % | |
INN | 13.6 | % | 12.2 | % | |
TOTAL | 100 | % | 100 | % |
Nine Months Ended September 30, 2016 | ||||||||||||||||||||
Revenue | Revenue | |||||||||||||||||||
(in thousands) | Number of Cases (1) | per Case (2) | ||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||
Marketing | 16,905 | 15,563 | 673 | 990 | 25,119 | 15,720 | ||||||||||||||
Total | $ | 16,905 | $ | 15,563 | $ | 673 | $ | 990 | $ | 25,119 | $ | 15,720 |
2016 | 2016 % | 2015 | 2015 % | ||||||||
Specialty | Cases | Cases | Cases | Cases | |||||||
Pain Management | 287 | 42.6 | % | 590 | 59.6 | % | |||||
Spine | 382 | 56.8 | % | 397 | 40.1 | % | |||||
Gynecology | — | — | % | 3 | 0.3 | % | |||||
Podiatry | 3 | 0.4 | % | — | — | % | |||||
Bariatrics | 1 | 0.1 | % | — | — | % | |||||
TOTAL | 673 | 100 | % | 990 | 100 | % |
Contract Network Type | 2016 Contract Mix | 2015 Contract Mix | |||
OON | 35.1 | % | 26.5 | % | |
INN | 64.9 | % | 73.5 | % | |
TOTAL | 100 | % | 100 | % |
• | On July 9, 2015, we appointed Mr. Kenneth Klein to serve as the Company’s Chief Financial Officer. Our previous CFO assumed other responsibilities with our accounting and finance organization. |
• | On May 9, 2016, we appointed Mr. Marcos Rodriguez to serve as the Company’s Chief Accounting Officer. |
• | We strengthened our accounting and financial reporting group with the addition of several new professionals with knowledge, experience and training in the application of U.S. GAAP to our accounting and finance organization. We also engaged third party accountants during the fourth quarter of 2015 who are providing assistance with significant, infrequently occurring transactions. |
• | We are currently reviewing and implementing remediation steps providing for more detailed supervisory review processes as part of our financial statement close process. |
• | On September 21, 2015, we appointed Dr. Lee McMillian to serve as the Company’s Vice President of Information Technology. This was a newly created position for the Company. |
• | During the fourth quarter of 2015 and the first quarter of 2016, we strengthened our information technology department by adding six information technology professionals with knowledge of security, networking and infrastructure. |
• | We have also invested approximately $320 thousand in hardware and software upgrades. |
• | As of January 2016, we implemented a process to review third party service providers’ Service Organization Controls reports. |
• | In February 2016, we implemented a control to periodically review the access granted in order to ensure that users of our information systems had the appropriate access relative to the user’s job responsibilities. A new user access form was created that captured appropriate authorizations, not only for access to financial systems but for other sensitive systems as well. Furthermore, certain sensitive levels of access have been identified, which require further approvals from Company’s management. |
• | In February 2016, we created controls to ensure that policies and procedures are followed with respect to application change management in certain of the Company’s proprietary software, which involves multiple levels of approval and periodic change management review. |
• | In February 2016, we began restricting and maintaining network access accounts to only employees in the information technology department and implemented compensating controls, including periodic audits of network access. |
• | During the third quarter of 2016, we engaged third party internal control consultants to perform a benchmarking review of our internal control environment and documentation. |
Exhibit | Description |
10.1 | Amended and Restated Purchase Agreement among Northstar Healthcare Acquisitions L.L.C., Nobilis Health Corp., Arizona Center for Minimally Invasive Surgery, LLC, Arizona Vein & Vascular Center, LLC, L. Philipp Wall, M.D., P.C., and L. Philipp Wall dated October 28, 2016 (incorporated by reference to Exhibit 10.1 to Nobilis Health Corp.'s Current Report on Form 8-K filed with the SEC on November 3, 2016) |
10.2 | Convertible Promissory Note in principal amount of $2,250,000 dated October 28, 2016 (incorporated by reference to Exhibit 10.2 to Nobilis Health Corp.'s Current Report on Form 8-K filed with the SEC on November 3, 2016) |
10.3 | Employment Agreement by and between Nobilis Health Corp., Northstar Healthcare Acquisitions, LLC and L. Philipp Wall, MD dated October 28, 2016 (incorporated by reference to Exhibit 10.3 to Nobilis Health Corp.'s Current Report on Form 8-K filed with the SEC on November 3, 2016) |
10.4 | Credit Agreement dated as of October 28, 2016 among Nobilis Health Corp., Northstar Healthcare Holdings, Inc., Northstar Healthcare Acquisitions, L.L.C., the Loan Parties named therein, Compass Bank, LegacyTexas Bank, the other lenders party thereto, and BBVA Compass (incorporated by reference to Exhibit 10.4 to Nobilis Health Corp.'s Current Report on Form 8-K filed with the SEC on November 3, 2016) |
10.5 | Pledge Agreement in favor of Compass Bank dated as of October 28, 2016 (incorporated by reference to Exhibit 10.5 to Nobilis Health Corp.'s Current Report on Form 8-K filed with the SEC on November 3, 2016) |
10.6 | Guaranty and Security Agreement dated as of October 28, 2016 by and among Northstar Healthcare Acquisitions, L.L.C., the other parties thereto and Compass Bank (incorporated by reference to Exhibit 10.6 to Nobilis Health Corp.'s Current Report on Form 8-K filed with the SEC on November 3, 2016) |
31.1* | Certification of Chief Executive Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes- Oxley Act of 2002 |
31.2* | Certification of Chief Financial Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes- Oxley Act of 2002 |
32.1* | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
32.2* | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
* 101.INS | XBRL Instance Document |
* 101.SCH | XBRL Taxonomy Extension Schema Document |
* 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
* 101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
* 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
* 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
Date: November 7, 2016 | ||
By: | /s/ Kenneth Klein | |
Kenneth Klein | ||
Chief Financial Officer | ||
(Principal Financial and Duly Authorized Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q for the period ended September 30, 2016 of Nobilis Health Corp.; |
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 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 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. |
1. | I have reviewed this Quarterly Report on Form 10-Q for the period ended September 30, 2016 of Nobilis Health Corp.; |
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 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 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. |
1. | The Report 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 Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
1. | The Report 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 Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Oct. 28, 2016 |
|
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Trading Symbol | hlth | |
Entity Registrant Name | Nobilis Health Corp. | |
Entity Central Index Key | 0001409916 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 76,877,014 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable, current | $ 2,144 | $ 5,165 |
Common shares issued (in shares) | 76,885,014 | 73,675,979 |
Common shares outstanding (in shares) | 76,885,014 | 73,675,979 |
COMPANY DESCRIPTION |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
COMPANY DESCRIPTION | COMPANY DESCRIPTION Nobilis Health Corp. (“Nobilis” or the “Company”) was incorporated on March 16, 2007 under the name "Northstar Healthcare Inc." pursuant to the provisions of the British Columbia Business Corporations Act. On December 5, 2014, Northstar Healthcare Inc. changed its name to Nobilis Health Corp. The Company owns and manages health care facilities in the States of Texas and Arizona, consisting primarily of ambulatory surgery centers and acute-care surgical hospitals. In 2014, through its acquisition of Athas Health, LLC (“Athas”), the Company expanded its service offering within the health care industry to include providing contracted marketing services and accounts receivable factoring. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying interim consolidated financial statements have not been audited by the Company’s independent registered public accounting firm, except that the Consolidated Balance Sheet at December 31, 2015, is derived from previously audited consolidated financial statements. In the opinion of management, all material adjustments, consisting of normal recurring adjustments, necessary for fair presentation have been included. These interim consolidated financial statements include all accounts of the Company. All significant intercompany transactions and accounts have been eliminated upon consolidation. Certain reclassifications have been made to prior period amounts to conform to current period financial statement classifications. The reclassifications included in these comparative consolidated financial statements are (i) a change in presentation of other comprehensive income and (ii) a reclassification from cost of goods sold to operating expenses. The reclassifications were deemed to be immaterial to the consolidated financial statements both individually and in the aggregate. These consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC) for interim financial information. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements. Therefore, these interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 (“2015 Annual Report”) filed with the SEC on March 15, 2016. The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. There have been no material changes to the Company’s critical accounting policies or estimates from those disclosed in the 2015 Annual Report. Recent Accounting Pronouncements In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). This update changes how entities account for and measure the fair value of certain equity investments and updates the presentation and disclosure of certain financial assets and liabilities. This new ASU is effective for annual and interim periods beginning on or after December 15, 2017, and for interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact that ASU 2016-01 will have on the Company’s consolidated financial position and disclosures. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net) (“ASU 2016-08”). The amendments address how an entity should assess whether it is the principal or the agent in contracts that include three or more parties. The ASU clarifies that an entity should evaluate whether it is the principal or the agent for each specified good or service promised in a contract with a customer. The amendments affect the guidance in ASU 2014-09 which is not yet effective. The effective date and transition requirements for the amendments in this ASU are the same as the effective date and transition of ASU 2014-09, which will be effective for the Company for reporting periods beginning after December 15, 2017. The Company is currently evaluating the new guidance to determine the method of adoption that it will use and the impact it will have on its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU-2016-09"). ASU 2016-09 impacts several aspects of the accounting for share-based payment transactions, including classification of certain items on the Consolidated Statement of Cash Flows and accounting for income taxes. Specifically, the ASU requires that excess tax benefits and tax deficiencies (the difference between the deduction for tax purposes and the compensation cost recognized for financial reporting purposes) be recognized as income tax expense or benefit in the Consolidated Statement of Operations, introducing a new element of volatility to the provision for income taxes. ASU No. 2016-09 is effective on January 1, 2017, with early adoption permitted. The transition method varies for each of the areas in the ASU. The Company is currently evaluating the impact of adopting this new accounting standard on its results of operations and financial position. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, which clarifies the guidance in ASU 2014-09 regarding assessing whether promises to transfer goods or services are distinct, and whether an entity's promise to grant a license provides a customer with a right to use or right to access the entity's intellectual property. The effective date and transition requirements for the amendments in this ASU are the same as the effective date and transition of ASU 2014-09, which will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its consolidated financial statements. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”). This Update provides for amendments to ASU 2014-09, amending the guidance on transition, collectability, noncash consideration and the presentation of sales and other similar taxes. Specifically, ASU 2016-12 clarifies that, for a contract to be considered completed at transition, all (or substantially all) of the revenue must have been recognized under legacy GAAP. In addition, ASU 2016-12 clarifies how an entity should evaluate the collectability threshold and when an entity can recognize nonrefundable consideration received as revenue if an arrangement does not meet the standard’s contract criteria. The effective date and transition requirements for the amendments in this ASU are the same as the effective date and transition of ASU 2014-09, which will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 provides guidance on how certain cash receipts and cash payments are to be presented and classified in the statement of cash flows. For public entities, ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements. |
SUPPLEMENTAL CASH FLOWS |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUPPLEMENTAL CASH FLOWS | SUPPLEMENTAL CASH FLOWS The supplemental cash flows information for the nine months ended September 30, 2016 and 2015 are comprised of the following (in thousands):
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ACQUISITIONS |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS | ACQUISITIONS Scottsdale Liberty Hospital (SLH) In November 2015, the Company acquired a 60% interest in Freedom Pain Hospital (n/k/a SLH) located in Scottsdale, Arizona. The Company acquired management control of the entity which was formed to own and operate the successor hospital. The transaction was treated as a business combination. The following table summarizes the fair values of the identifiable assets acquired and liabilities assumed at the date of acquisition (in thousands):
Unaudited Supplemental Pro Forma Information The following unaudited supplemental pro forma financial information includes the results of operations for SLH, and is presented as if the acquired company had been consolidated as of the beginning of the year immediately preceding the year in which the company was acquired. The unaudited supplemental pro forma financial information has been provided for illustrative purposes only and does not purport to be indicative of the actual results that would have been achieved by combining the companies for the periods presented, or of the results that may be achieved by the combined companies in the future. Further, results may vary significantly from the results reflected in the following unaudited supplemental pro forma financial information because of future events and transactions, as well as other factors. There were no acquisitions during the period ended September 30, 2016, thus the consolidated financial statements for the period include full financial results of all consolidated subsidiaries. The following table shows our pro forma results for the nine months ended September 30, 2015 (in thousands, except per share amounts):
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TRADE ACCOUNTS RECEIVABLE, NET |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
TRADE ACCOUNTS RECEIVABLE, NET | TRADE ACCOUNTS RECEIVABLE, NET A detail of trade accounts receivable, net as of September 30, 2016 and December 31, 2015 is as follows (in thousands):
Bad debt expense was zero for the three and nine months ended September 30, 2016 and was $0.9 million and $1.1 million for the three and nine months ended September 30, 2015 respectively. From time to time, we transfer to third parties certain of our accounts receivable balances on a non-recourse basis in return for advancement on payment to achieve a faster cash collection. As of September 30, 2016 and December 31, 2015, there remained a balance of $0.4 million and $0.3 million, respectively, in transferred receivables pursuant to the terms of the original agreement. For the three months ended September 30, 2016 and 2015, the Company received advanced payments of $0.1 million and $0.3 million, respectively. During the same time period, the Company transferred $0.8 million and $1.4 million of receivables, net of advancement of payment. Concurrently, upon collection of these transferred receivables, payment will be made to the transferee. For the nine months ended September 30, 2016 and 2015, the Company received advanced payments of $0.6 million and $1.4 million, respectively. During the same time period, the Company transferred $4.9 million and $5.2 million of receivables, respectively. Concurrently, upon collection of these transferred receivables, payment will be made to the transferee. Athas, Peak Neuromonitoring (“Peak”), and Nobilis Surgical Assist (“First Assist”) purchase receivables from physicians, at a discount, on a non-recourse basis. The discount and purchase price vary by specialty and are recorded at the date of purchase, which generally occurs 30 to 45 days after the accounts are billed. These purchased receivables are billed and collected by Athas, Peak, and First Assist and they retain 100% of what is collected after paying the discounted purchase price. Following the transfer of the receivable, the transferor has no continued involvement and there are no restrictions on the receivables. Gross revenue from purchased receivables was $4.6 million and $3.2 million for the three months ended September 30, 2016 and 2015, respectively. Gross revenue from purchased receivables was $11.2 million and $8.3 million for the nine months ended September 30, 2016 and 2015, respectively. Revenue, net of the discounted purchase price, was $2.4 million and $1.8 million for the three months ended September 30, 2016 and 2015, respectively. Revenue, net of the discounted purchase price, was $5.9 million and $4.5 million for the nine months ended September 30, 2016 and 2015, respectively. Accounts receivable for purchased receivables was $4.1 million and $2.9 million for the nine months ended September 30, 2016 and year-ended December 31, 2015, respectively. Revenue from receivables purchased is recorded in the factoring revenue line item within the Consolidated Statements of Operations. |
INVESTMENTS IN ASSOCIATES |
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Sep. 30, 2016 | |
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures [Abstract] | |
INVESTMENTS IN ASSOCIATES | INVESTMENTS IN ASSOCIATES During the first quarter of 2015, The Company completed the deconsolidation of two imaging centers and one urgent care clinic in Houston, which consisted of the following entities: Spring Northwest Management, LLC, Spring Northwest Operating, LLC, Willowbrook Imaging, LLC, GRIP Medical Diagnostics, LLC and KIRPA Holdings, LLC. The Company resigned as the manager of these facilities resulting in loss of control and its rights to exercise significant influence. The Company retained investments in these facilities that are accounted for as cost method investments beginning January 1, 2015. The carrying value as of September 30, 2016 and December 31, 2015 was $0.7 million. The investments are classified as other long-term assets in the Consolidated Balance Sheets. In March 2016, the Company acquired a 58% interest in Athelite Holdings LLC ("Athelite"), a holding company with a 70% interest in Dallas Metro Surgery Center LLC ("Dallas Metro"), a company formed to provide management services to a Hospital Outpatient Department (“HOPD”). In April 2016, Athelite interest in Dallas Metro was reduced to 62%. The Athelite investment is accounted for as an equity method investment as the Company did not obtain the necessary level of control for the investment to be accounted for as a business combination. This is due to the fact that the Company does not have the ability to directly appoint a majority of the board members of Dallas Metro or independently make strategic operational decisions. The carrying value as of September 30, 2016 was $0.5 million. The investment is classified as other long-term assets in the Consolidated Balance Sheets. |
FINANCIAL INSTRUMENTS AND CONCENTRATION |
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Investments, All Other Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FINANCIAL INSTRUMENTS AND CONCENTRATION | FINANCIAL INSTRUMENTS AND CONCENTRATION In common with all other businesses, the Company is exposed to risks that arise from its use of financial instruments. This note describes the Company’s objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect to these risks is presented throughout these consolidated financial statements. Principal financial instruments The principal financial instruments used by the Company, from which financial instrument risk arises, are as follows:
The carrying amounts of the Company’s cash, accounts receivable and other receivables, accounts payable, accrued liabilities, other current liabilities and other liabilities as reflected in the consolidated financial statements approximate fair value due to their short term maturity. The estimated fair value of the Company's other long-term debt instruments approximate their carrying amounts as the interest rates approximate the Company's current borrowing rate for similar debt instruments of comparable maturity, or have variable interest rates. Financial instruments - risk management The Company’s financial instrument risks include, but are not limited to the following:
Credit risk Credit risk is the risk of financial loss to the Company if a patient, non-partner surgeon or insurance company fails to meet its contractual obligations. The Company, in the normal course of business, is exposed mainly to credit risk on its accounts receivable from insurance companies, other third-party payors, and physicians. Accounts receivables are net of applicable bad debt reserves, which are established based on specific credit risk associated with insurance companies, payors and other relevant information. Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due and arises from the Company’s management of working capital. The Company’s objective to managing liquidity risk is to ensure that it will have sufficient cash to allow it to meet its liabilities when they become due. To achieve this objective, it seeks to maintain cash balances (or agreed credit facilities) to meet expected requirements. The liquidity risk of the Company and its subsidiaries is managed centrally by the Company’s finance function. The Company believes that there are currently no concerns of its ability to meet its liabilities as they become due for the foreseeable future. The following tables set forth certain information with respect to the Company’s payor concentration. Patient and net professional fee revenues by payor are summarized below for the applicable periods: MEDICAL SEGMENT
MARKETING SEGMENT
CONSOLIDATED SEGMENTS
Three facilities represent approximately 75.1% and 83.0% of the Company’s contracted marketing revenue for the three and nine months ended September 30, 2016, and three facilities represent approximately 83.6% of the Company’s contracted marketing accounts receivable as of September 30, 2016. Market risk Market risk is the risk that the fair value of future cash flows of financial instruments will fluctuate due to changes in interest rates and/or foreign currency exchange rates. Interest rate risk The Company entered into a revolving line of credit that, from time to time, may increase interest rates based on market index. Foreign exchange risk Foreign exchange risk arises because the Company has certain expenses that are incurred in Canadian dollars. The Company is also exposed to currency risk on purchases made from vendors based in Canada. The Company has Canadian denominated cash (“Cdn”) of $0.2 million and a nominal amount of trade payables at September 30, 2016. The Company had Cdn of $0.3 million and a nominal amount of trade payables at December 31, 2015. |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES The following table presents a summary of items comprising accrued expenses and other current liabilities in the accompanying Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015 (in thousands):
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OTHER LONG-TERM LIABILITIES |
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Sep. 30, 2016 | |
Other Liabilities Disclosure [Abstract] | |
OTHER LONG-TERM LIABILITIES | OTHER LONG-TERM LIABILITIES The Company assumed real property leases as part of certain acquisitions which required the Company to pay above market rentals through the remainder of the lease terms. Of the $3.5 million balance in other long-term liabilities at September 30, 2016, approximately $3.2 million of that balance relates to unfavorable leases. The unfavorable lease liability is amortized as a reduction to rent expense over the contractual periods the Company is required to make rental payments under the leases. Estimated amortization of unfavorable leases for the five years and thereafter subsequent to December 31, 2015, is $0.1 million for the remainder of 2016, $0.5 million for 2017 and $0.3 million for 2018, 2019, 2020, and $2.2 million thereafter. |
LINES OF CREDIT |
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Line of Credit Facility [Abstract] | |
LINES OF CREDIT | LINES OF CREDIT On March 31, 2015, the Company secured a $5.0 million revolving line of credit from Healthcare Financial Services, LLC (f/k/a General Electric Capital Corporation), or “HFS” (the “HFS Revolver”) maturing in March 2020, which was subsequently amended and increased to $11.6 million on August 19, 2016. The HFS Revolver bears interest at a rate of 4% plus LIBOR per annum (effective rate of 5.24% at September 30, 2016) and requires quarterly interest payments. Principal amounts borrowed under the HFS Revolver may be repaid and re-borrowed periodically. The HFS Revolver is collateralized in the same manner as the HFS term loan discussed in Note 11 - Debt. As of September 30, 2016 and December 31, 2015, $8.1 million and $3.0 million, respectively, were outstanding under the HFS Revolver. The revolving line of credit is subject to certain restrictive covenants in conjunction with the HFS Term Loan, as defined in Note 11 - Debt. On July 30, 2015, the Company issued a $1.5 million letter of credit to the Landlord of the PSH (“PSH Landlord”) facility in connection with the execution of the hospital facility lease. The PSH Landlord shall have the right to draw upon the letter of credit in an event of default. The letter of credit is secured by the $5.0 million HFS Revolver, which was subsequently amended and increased to $11.6 million on August 19, 2016. On May 18, 2016, the Company secured a $3.0 million revolving line of credit from Legacy Texas Bank (the “Legacy Revolver”). The Legacy Revolver bears interest at a rate of 4% plus LIBOR per annum on drawn funds and requires monthly payments of interest. Monthly payments of principal commenced in September 2016. As of September 30, 2016, the outstanding balance was zero and the Legacy Revolver was extinguished using the increased borrowing capacity acquired through the Seventh Amendment to Credit Agreement ( the "Seventh Amendment") discussed in Note 11 - Debt. |
DEBT |
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DEBT | DEBT On March 31, 2015, the Company secured a $20.0 million term loan from HFS (the “HFS Term Loan”), which was subsequently amended and increased to $25.0 million on August 19, 2016. The HFS Term Loan bears interest at a rate of 4% plus LIBOR per annum (effective rate of 5.24% at September 30, 2016) and requires quarterly payments of principal and interest until it matures in March 2020. The HFS Term Loan provides for a 0.70% LIBOR floor. The HFS Term Loan is collateralized by the accounts receivable and physical equipment of all of the Company’s 100% owned subsidiaries as well as the Company’s ownership interest in all less than wholly owned subsidiaries. The HFS Term Loan primarily served to refinance all previously held debt and lines of credit. Debt issuance costs associated with the new credit facility approximated $1.0 million. The issuance costs are a direct deduction from the carrying value of the HFS Term Loan, amortized using the interest method and reported as interest expense on our statement of operations. As of September 30, 2016, the outstanding balance of the HFS Term Loan was $24.7 million. The Company entered into the Sixth Amendment to Credit Agreement (the "Sixth Amendment"), dated as of August 1, 2016, among Northstar Healthcare Acquisitions, L.L.C. ("NHA"), HFS and the credit parties named therein. The Sixth Amendment among other things, added a cap on Investments in Nobilis Health Anesthesia Network, PLLC of $2.0 million; increased the permitted indebtedness of the Company pursuant to that certain Loan Agreement, dated as of July 30, 2015, between PSH and Legacy Texas Bank from 7.0 to 7.05; modified the maximum leverage ratio as of March 31, 2016, to 3.05 to 1.00; and modified the definition of "Subsidiary" to exclude the following entities: Athelite, Dallas Metro, Marsh Lane Surgical Hospital, LLC, Nobilis Health Network, Inc. ("NHN") and the subsidiaries of NHN. The Company entered into the Seventh Amendment, dated as of August 19, 2016, among HFS, other credit parties named therein and other financial institutions. The Seventh Amendment, among other things, increased total borrowing capacity to $36.6 million from $30.6 million. The increased borrowing capacity provided under the Seventh Amendment consisted of aggregate term and revolving loan commitments from HFS of $25 million and $11.6 million, respectively. The Seventh Amendment includes material financial covenants, ratios and tests. The Company must maintain a Consolidated Leverage Ratio of not more than 2.00 to 1.00 and a Consolidated Fixed Charge Coverage Ratio of at least 3.00 to 1.00. Capital Lease Obligations allowed under the covenants increased from $3.0 million to $6.1 million and the HFS Term Loan's quarterly amortization payment increased under the Seventh Amendment from $250,000 to $312,500 per quarter. The Company entered into the Eighth Amendment to Credit Agreement and Limited Waiver (the "Eighth Amendment"), dated as of October 20, 2016, by and among NHA, other credit parties named therein, HFS and other financial institutions. The purpose of the Amendment was to (i) modify the covenant regarding the Company’s holding company status to permit certain business activities thereunder (ii) define a new permitted lien and an applicable basket with regard to a lien filed by a Company vendor and (iii) amend the management fees covenant to permit payment of certain management fees under the Loan Agreement. As a result, the Company was in compliance with its covenants under the HFS Term Loan as of September 30, 2016. On July 30, 2015, the Company secured a $4.5 million term loan from Legacy Texas Bank (the “Legacy Bank Term Loan”). The term loan bears interest at a rate of 4% plus LIBOR per annum and requires monthly payments of interest. Monthly payments of principal commenced in August 2016. The Legacy Bank Term Loan matures in July 2020 and is subordinated to the Company’s term loan and revolver with HFS. As of September 30, 2016, the outstanding balance was zero and the Legacy Bank Term Loan was extinguished using the increased borrowing capacity acquired through the Seventh Amendment. Loan origination fees are deferred and the net amount is amortized over the contractual life of the related loans. Debt at September 30, 2016 and December 31, 2015 consisted of the following (in thousands):
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FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The Company measures certain financial assets and liabilities at fair value on a recurring basis, including warrant and stock option derivative liabilities. There have been no transfers between fair value measurement levels during the nine months ended September 30, 2016 and 2015. The following table summarizes our assets and liabilities measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):
In certain cases, where there is limited activity or less transparency around inputs to valuation, securities are classified as Level 3 within the valuation hierarchy. Level 3 liabilities that were measured at estimated fair value on a recurring basis consist of warrant and stock option derivative liabilities. The estimated fair values of the warrant and stock option derivative liabilities were measured using the Black-Scholes valuation model (refer to Note 14 - Warrants and options liabilities). Due to the nature of valuation inputs, the valuation of the warrants is considered a Level 3 measurement. |
SHARE BASED COMPENSATION |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE BASED COMPENSATION | SHARE BASED COMPENSATION Restricted Share Units (“RSUs”) The Company had no stock compensation expense relative to RSUs for both the three months ended September 30, 2016 and 2015. The Company recorded stock compensation expense relative to RSUs of nil and $5.4 million for the nine months ended September 30, 2016 and 2015, respectively. There were no grants during the three and nine months ended September 30, 2016 and 2015. During the nine months ended September 30, 2015, two key executives experienced triggering events, as defined in their employee agreements, which accelerated all unrecognized stock compensation expense on their outstanding RSUs. As a result of this acceleration, the Company recognized $4.5 million of stock compensation expense during the nine months ended September 30, 2015. The Company had no outstanding RSUs at September 30, 2016 and 2015. Stock Options The Company granted a total of 350,000 and 2,457,075 stock options during the three and nine months ended September 30, 2016, respectively. Of the options granted during the nine months ended September 30, 2016, 297,075 of those vest immediately and 2,160,000 vest ratably over a three-year period. The Company granted a total of 3,166,782 stock options during the year ended December 31, 2015. Of the options granted during the year ended December 31, 2015, 451,782 of those vest immediately, 450,000 vest ratably over a one-year period, 1,865,000 vest ratably over a three-year period, and 400,000 cliff vest at the end of a five-year period. The following table summarizes stock option activity for the nine months ended September 30, 2016 and 2015:
The above table includes 650,000 options issued to non-employees, all of which are still outstanding at September 30, 2016. Refer to Note 14 - Warrants and options liabilities for discussion regarding the classification of these options within the Consolidated Balance Sheet. The total intrinsic value of stock options exercised was $1.3 million and $2.9 million during the nine months ended September 30, 2016 and 2015, respectively. The total intrinsic value for all in-the-money vested outstanding stock options at September 30, 2016 was $1.8 million. Assuming all stock options outstanding at September 30, 2016 were vested, the total intrinsic value of in-the-money outstanding stock options would have been $4.2 million at September 30, 2016. The Company recorded total stock compensation expense relative to employee stock options of $1.6 million and $1.3 million for the three months ended September 30, 2016 and 2015, respectively, and $5.0 million and $4.3 million for the nine months ended September 30, 2016 and 2015, respectively. The fair values of the employee stock options used in recording compensation expense are computed using the Black-Scholes option pricing model. The table below shows the assumptions used in the model for options awarded during the nine months ended September 30, 2016 and 2015.
For stock options, the Company recognizes share-based compensation net of estimated forfeitures and revises the estimates in the subsequent periods if actual forfeitures differ from the estimates. Forfeiture rates are estimated based on historical experience as well as expected future behavior. |
WARRANTS AND OPTIONS LIABILITIES |
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WARRANTS AND OPTIONS LIABILITIES | WARRANTS AND OPTIONS LIABILITIES Warrants and Options Issued in Private Placements The Company issued warrants and compensatory options in connection with private placements completed in December 2013, September 2014 and May 2015. These warrants and options have exercise prices denominated in Canadian dollars and as such may not be considered indexed to our stock which is valued in U.S. dollars. Hence, these warrants and options are classified as liabilities under the caption “Warrants and Options Derivative Liability” and recorded at estimated fair value at each reporting date, computed using the Black-Scholes valuation method. Changes in the liability from period to period are recorded in the Consolidated Statements of Operations under the caption “Change in fair value of warrant and stock option derivative liabilities”. The estimated fair values of warrants and options accounted for as liabilities were determined on the date of the private placements and at each balance sheet date following using the Black Scholes pricing model with the following inputs:
The changes in fair value of the warrants and options (excluding non-employees) liability during the nine months ended September 30, 2016 and 2015 were as follows (in thousands):
The following warrants and options were outstanding at September 30, 2016:
As of September 30, 2016, there were no warrants or options outstanding from the 2014 issuances. Options Issued to Non-Employees As discussed in Note 13 - Share based compensation, in 2014 the Company issued options to professionals providing services to the organization. These professionals do not meet the definition of an employee under U.S. GAAP. At September 30, 2016, there were 650,000 options outstanding to these non-employees. Under U.S. GAAP, the value of these option awards is determined at the performance completion date. The Company recognizes expense for the estimated total value of the awards during the period from their issuance until performance completion since the professional services are being rendered during this time. The total expense recognized is adjusted to the final value of the award as determined on the performance completion date. The estimated values of the option awards are determined using the Black Scholes pricing model with the following inputs:
For the three month periods ended September 30, 2016 and 2015, the Company recorded expense for non-employee stock options of $0.1 million and $0.2 million, respectively. For the nine months ended September 30, 2016 and 2015, the Company recorded expense for non-employee stock options of $0.2 million and $2.8 million, respectively. The changes in fair value of the liability related to vested yet un-exercised options issued to non-employees during the nine months ended September 30, 2016 and 2015 were as follows (in thousands):
Options issued to non-employees are reclassified from equity to liabilities on the performance completion date. Under U.S. GAAP, such options may not be considered indexed to our stock because they have exercise prices denominated in Canadian dollars. Hence, these will be classified as liabilities under the caption “Warrant and stock option liabilities” and recorded at estimated fair value at each reporting date, computed using the Black-Scholes valuation method. Changes in the liability from period to period will be recorded in the Consolidated Statements of Operations under the caption “Change in fair value of warrant and stock option liabilities”. At September 30, 2016, there were 0.6 million unexercised non-employee options requiring liability classification. |
EARNINGS PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE | EARNINGS PER SHARE Basic net earnings attributable to Nobilis common shareholders, per common share, excludes dilution and is computed by dividing net earnings attributable to Nobilis common shareholders by the weighted-average number of common shares outstanding during the period. Diluted net earnings attributable to Nobilis common shareholders, per common share, is computed by dividing net earnings attributable to Nobilis common shareholders by the weighted-average number of common shares outstanding during the period plus any potential dilutive common share equivalents, including shares issuable upon the vesting stock option awards, warrants and RSUs as determined under the treasury stock method. A detail of the Company’s earnings per share is as follows (in thousands except for share and per share amounts):
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NONCONTROLLING INTERESTS |
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NONCONTROLLING INTERESTS | NONCONTROLLING INTERESTS Noncontrolling interests at September 30, 2016 and December 31, 2015 represent an 8.1% interest in The Palladium for Surgery - Houston, Ltd, 75% interest in the Medical Ambulatory Suites, L.P., 65% interest in Microsurgery Institute, LLC., 2.3% interest in Houston Microsurgery Institute, LLC., 50% in Northstar Healthcare Dallas Management, LLC., 65% in NHC ASC – Dallas, LLC., 49% in First Nobilis, LLC., 40% in First Nobilis Hospital Management, LLC., 45% in Hermann Drive Surgical Hospital, LP., and 40% in Perimeter Road Surgical Hospital, LLC. Agreements with the third party equity owners in NHC - ASC Dallas and First Nobilis give these owners limited rights to require the Company to repurchase their equity interests upon the occurrence of certain events, none of which were probable of occurring as of September 30, 2016 and December 31, 2015. The contingently redeemable noncontrolling interests associated with these entities are classified in the Company’s Consolidated Balance Sheets as “temporary” or mezzanine equity. Changes in contingently redeemable noncontrolling interests are as follows (in thousands):
Certain of our consolidated subsidiaries that are less than wholly owned meet the definition of a Variable Interest Entity (“VIE”), and we hold voting interests in all such entities. We consolidate the activities of VIE’s for which we are the primary beneficiary. In order to determine whether we own a variable interest in a VIE, we perform qualitative analysis of the entity’s design, organizational structure, primary decision makers and relevant agreements. Such variable interests include our voting interests, and may also include other interests and rights, including those gained through management contracts. Since our core business is the management and operation of health care facilities, our subsidiaries that are determined to be VIE’s represent entities that own, manage and operate such facilities. Voting interests in such entities are typically owned by us, by physicians practicing at these facilities (or entities controlled by them) and other parties associated with the operation of the facilities. In forming such entities, we typically seek to retain operational control and, as a result, in some cases, voting rights we hold are not proportionate to the economic share of our ownership in these entities, which causes them to meet the VIE definition. We consolidate such VIE’s if we determine that we are the primary beneficiary because (i) we have the power to direct the activities that most significantly impact the economic performance of the VIE via our rights and obligations associated with the management and operation of the VIE’s health care facilities, and (ii) as a result of our obligation to absorb losses and the right to receive residual returns that could potentially be significant to the VIE, which we have through our equity interests. The following table summarizes the carrying amount of the assets and liabilities of our material VIE’s included in the Company’s Consolidated Balance Sheets (after elimination of intercompany transactions and balances) (in thousands):
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INCOME TAXES |
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INCOME TAXES | INCOME TAXES The Company is a corporation subject to federal income tax at a statutory rate of 35% of pretax earnings. The Company estimates an annual effective income tax rate of 32.5% for U.S. and none for Canada based on projected results for the year and applies this rate to income before taxes to calculate income tax expense. The following items caused the third quarter effective income tax rate to be significantly different from the statutory rate:
On April 22, 2016, the Company received notification from the Internal Revenue Service to examine our December 31, 2014 and 2013 Federal income tax return. Based on management tax analysis, the Company did not have any uncertain tax positions as of September 30, 2016. |
BUSINESS SEGMENT INFORMATION |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS SEGMENT INFORMATION | BUSINESS SEGMENT INFORMATION A summary of the business segment information for the three months ended September 30, 2016 and 2015 is as follows (in thousands):
A summary of the business segment information for the nine months ended September 30, 2016 and 2015 is as follows (in thousands):
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RELATED PARTY TRANSACTIONS |
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Sep. 30, 2016 | |||||||||||||
Related Party Transactions [Abstract] | |||||||||||||
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS The minority interest holder of First Nobilis Hospital, a fully consolidated entity, is also a partial owner of First Street Hospital, L.P. and First Street Surgical Center, L.P., both of which have an ongoing business relationship with the Company. At September 30, 2016, the Company has a net amount due from these related parties of $1.4 million. In addition, the Company leases certain medical equipment and facility space from these related parties. Equipment lease costs of approximately $0.5 million and $0.6 million were incurred during the quarter ended September 30, 2016 and 2015, respectively. Facility lease costs of approximately $0.4 million were incurred during both the three months ended September 30, 2016 and 2015. Equipment lease costs of approximately $1.6 million and $1.7 million were incurred during the nine months ended September 30, 2016 and 2015, respectively. Facility lease costs of approximately $1.3 million were incurred during both the nine months ended September 30, 2016 and 2015, respectively. In March 2016, the Company acquired an interest in Athelite, a holding company which owns an interest in Dallas Metro, a company formed to provide management services to an HOPD. The Athelite investment is accounted for as an equity method investment (refer to Note 6 - Investments in associates). At September 30, 2016, the Company had $3.6 million in accounts receivable from the HOPD and $0.9 million in accounts receivable from Dallas Metro. The Company also rents, on a monthly basis, certain medical equipment to Dallas Metro and subleases operation facility to Benton Transitional. Physician Related Party Transactions Nobilis maintains certain medical directorship, consulting and marketing agreements with various physicians who are also equity owners in Nobilis entities. Material related party arrangements of this nature are described below:
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COMMITMENTS AND CONTINGENCIES |
9 Months Ended |
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Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Litigation In the normal course of our business, we are subject to legal proceedings brought by or against us and our subsidiaries. In the opinion of management, the amount of ultimate liability with respect to these actions will not materially impact the financial position, results of operations or liquidity of the Company. Shareholder Lawsuits After the Company announced it would be restating its 2014 annual financial statements and 2015 first and second quarter interim financial statements, one complaint, Schott v. Nobilis Health Corp. et al, was filed in the United States District Court for the Southern District of Texas against the Company, our former chief executive officer and our current chief financial officer. The complaint sought class action status on behalf of our shareholders and alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 arising out of the restatement. The defendants vigorously defended against these claims and filed motions to dismiss the consolidated complaint for failure to plead particularized facts supporting a strong inference of scienter on the part of the individual defendants.On June 1, 2016 the court heard oral arguments on the Company’s pending motion to dismiss which the court later granted on September 29, 2016. The court ultimately dismissed the case with prejudice on October 24, 2016. In addition, a statement of claim (complaint), Vince Capelli v Nobilis Health Corp. et. al, was filed on January 8, 2016 in the Ontario Superior Court of Justice under court file number CV-16-544173 naming Nobilis Health Corp., certain current and former officers and the Company’s former auditors as defendants. The statement of claim seeks to advance claims on behalf of the plaintiff and on behalf of a class comprised of certain of our shareholders related to, among other things, alleged certain violations of the Ontario Securities Act and seeks damages in the amount of C$80 million plus interest. The defendants intend to vigorously defend against these claims. At this time the Company believes the likelihood of loss, if any, is remote. |
SUBSEQUENT EVENTS |
9 Months Ended |
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Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS The Company entered into the Eighth Amendment on October 20, 2016, by and among NHA, other credit parties named therein, HFS and other financial institutions. The purpose of the Amendment was to (i) modify the covenant regarding the Company’s holding company status to permit certain business activities thereunder (ii) define a new permitted lien and an applicable basket with regard to a lien filed by a Company vendor and (iii) amend the management fees covenant to permit payment of certain management fees under the Loan Agreement. As a result, the Company was in compliance with its covenants under the HFS Term Loan as of September 30, 2016. On October 28, 2016, the Company entered into an $82.5 million credit agreement (the “Compass Bank Loans”) with Compass Bank. The credit agreement includes a $52.5 million term loan and a $30.0 million revolving credit facility. The proceeds will be used to refinance all previously held debt and lines of credit and for the acquisition of Arizona Vein and Vascular Centers. As of September 30, 2016, the outstanding balance of the HFS Term Loan and Revolver was $24.7 million and $8.1 million, respectively. The Compass Bank loans are collateralized by the accounts receivable and physical equipment of all of the Company’s 100% owned subsidiaries as well as the Company’s ownership interest in all less than wholly owned subsidiaries. The Compass Bank Loans require the Company to maintain a consolidated leverage ratio of 2.75 to 1.00 through September 30, 2018, 2.50 to 1.00 for December 31, 2018 to September 30, 2019, 2.25 to 1.00 for December 31, 2019 to September 30, 2020 and 2.00 to 1.00 through December 31, 2020; and a consolidated fixed charge coverage ratio of 2.00 to 1.00. The Compass Bank Loans bear interest from the closing date to the first business day immediately following the date on which Compass Bank receives a compliance certificate from the Company for the fiscal quarter ending March 31, 2017; 2.75% per annum for base rate loans, 3.75% per annum for Eurodollar Rate Loans, 3.75% for line of credit fees, and 0.500% per annum for the commitment fee. Thereafter, the Compass Bank Loans bear interest based on the Company’s consolidated leverage ratio as follows: (i) Less than 1.00 to 1.00; base rate margin 2.00%, LIBOR margin 3.00%, commitment fee rate 0.375%, (ii) Less than 1.75 to 1.00 but greater than or equal to 1.00 to 1.00; base rate margin 2.25%, LIBOR margin 3.25%, commitment fee rate 0.375%, (iii) Less than 2.50 to 1.00 but greater than or equal to 1.75 to 1.00; base rate margin 2.50%, LIBOR margin 3.50%, commitment fee rate 0.450%, (iv) Greater than or equal to 2.50 to 1.00; base rate margin 2.75%, LIBOR margin 3.75%, commitment fee rate 0.500%. The Compass Bank term loan requires quarterly payments of Principal as follows: (i) March 31, 2017 to December 31, 2018 of $0.7 million, (ii) March 31, 2019 to December 31, 2020 of $1.3 million, (iii) March 31, 2021 to September 30, 2021 of $2.0 million, (iv) October 28, 2021, the remaining principal balance of the term. The Compass Bank Loans mature on October 28, 2021. In connection with the funding of the Compass Bank Loans, the Company also completed the acquisition of the operating assets of Arizona Center for Minimally Invasive Surgery, LLC, an Arizona limited liability company (“ACMIS”), L. Philipp Wall, M.D., P.C., an Arizona professional corporation (“PC”), Arizona Vein & Vascular Center, LLC, an Arizona limited liability company and wholly owned subsidiary of PC, (“AVVC” and with ACMIS and PC, each a “Seller” and collectively “Sellers”), and L. Philipp Wall (“Owner”). The Company, Northstar Healthcare Acquisitions, L.L.C. ("Buyer"), Sellers and Owner entered into an amended and restated purchase agreement (the “Amended and Restated Purchase Agreement”) dated as of October 28, 2016. Buyer received substantially all of the operating assets of Sellers in exchange for an aggregate purchase price of approximately $22.0 million, consisting of $17.0 million in cash (subject to a holdback described below), $2.5 million of NHC’s common shares, and $2.50 million the form of a convertible promissory note (“Convertible Promissory Note”) between Buyer and ACMIS. In addition, the Sellers may receive an additional earnout payment based on the growth in trailing twelve month EBITDA of the new vascular division on the twelve-month anniversary of closing (as compared to the trailing twelve month EBITDA for the twelve months prior to closing). The earnout payment shall be equal to fifty percent (50%) of such growth. As part of the Amended and Restated Purchase Agreement, $1.05 million of the cash purchase price was held back and is subject to the Amended and Restated Purchase Agreement’s indemnification provisions. On the twelve-month anniversary of closing, fifty percent (50%) of the amount held back, less any amounts paid as, or claimed as, indemnification, will be paid to the Owner. The remaining amounts held back, less any amounts paid as, or claimed as, indemnification, will be paid to the Owner on the twenty-four-month anniversary of closing. The common shares issued to Owner at closing were issued at a price per share based on the NYSE MKT closing price of NHC’s common shares on the day prior to closing. The common shares are restricted under Rule 144 of the Securities Act of 1933, as amended, and are subject to additional contractual lock-up provisions, which lift in one-quarter increments on the twelve-month, fifteen-month, eighteen-month and twenty-first month anniversaries of closing. On October 31, 2016, the Company increased its ownership interest in SLH from 60% to 75%. Pursuant to a subscription agreement, the Company was the only member to participate in the capital raise and acquired an additional 60 Class C Units. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
9 Months Ended |
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Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying interim consolidated financial statements have not been audited by the Company’s independent registered public accounting firm, except that the Consolidated Balance Sheet at December 31, 2015, is derived from previously audited consolidated financial statements. In the opinion of management, all material adjustments, consisting of normal recurring adjustments, necessary for fair presentation have been included. These interim consolidated financial statements include all accounts of the Company. All significant intercompany transactions and accounts have been eliminated upon consolidation. Certain reclassifications have been made to prior period amounts to conform to current period financial statement classifications. The reclassifications included in these comparative consolidated financial statements are (i) a change in presentation of other comprehensive income and (ii) a reclassification from cost of goods sold to operating expenses. The reclassifications were deemed to be immaterial to the consolidated financial statements both individually and in the aggregate. These consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC) for interim financial information. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements. Therefore, these interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 (“2015 Annual Report”) filed with the SEC on March 15, 2016. The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. There have been no material changes to the Company’s critical accounting policies or estimates from those disclosed in the 2015 Annual Report. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). This update changes how entities account for and measure the fair value of certain equity investments and updates the presentation and disclosure of certain financial assets and liabilities. This new ASU is effective for annual and interim periods beginning on or after December 15, 2017, and for interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact that ASU 2016-01 will have on the Company’s consolidated financial position and disclosures. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net) (“ASU 2016-08”). The amendments address how an entity should assess whether it is the principal or the agent in contracts that include three or more parties. The ASU clarifies that an entity should evaluate whether it is the principal or the agent for each specified good or service promised in a contract with a customer. The amendments affect the guidance in ASU 2014-09 which is not yet effective. The effective date and transition requirements for the amendments in this ASU are the same as the effective date and transition of ASU 2014-09, which will be effective for the Company for reporting periods beginning after December 15, 2017. The Company is currently evaluating the new guidance to determine the method of adoption that it will use and the impact it will have on its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU-2016-09"). ASU 2016-09 impacts several aspects of the accounting for share-based payment transactions, including classification of certain items on the Consolidated Statement of Cash Flows and accounting for income taxes. Specifically, the ASU requires that excess tax benefits and tax deficiencies (the difference between the deduction for tax purposes and the compensation cost recognized for financial reporting purposes) be recognized as income tax expense or benefit in the Consolidated Statement of Operations, introducing a new element of volatility to the provision for income taxes. ASU No. 2016-09 is effective on January 1, 2017, with early adoption permitted. The transition method varies for each of the areas in the ASU. The Company is currently evaluating the impact of adopting this new accounting standard on its results of operations and financial position. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, which clarifies the guidance in ASU 2014-09 regarding assessing whether promises to transfer goods or services are distinct, and whether an entity's promise to grant a license provides a customer with a right to use or right to access the entity's intellectual property. The effective date and transition requirements for the amendments in this ASU are the same as the effective date and transition of ASU 2014-09, which will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its consolidated financial statements. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”). This Update provides for amendments to ASU 2014-09, amending the guidance on transition, collectability, noncash consideration and the presentation of sales and other similar taxes. Specifically, ASU 2016-12 clarifies that, for a contract to be considered completed at transition, all (or substantially all) of the revenue must have been recognized under legacy GAAP. In addition, ASU 2016-12 clarifies how an entity should evaluate the collectability threshold and when an entity can recognize nonrefundable consideration received as revenue if an arrangement does not meet the standard’s contract criteria. The effective date and transition requirements for the amendments in this ASU are the same as the effective date and transition of ASU 2014-09, which will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 provides guidance on how certain cash receipts and cash payments are to be presented and classified in the statement of cash flows. For public entities, ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements. |
SUPPLEMENTAL CASH FLOWS (Tables) |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Flow, Supplemental Disclosures | The supplemental cash flows information for the nine months ended September 30, 2016 and 2015 are comprised of the following (in thousands):
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ACQUISITIONS (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value of Identifiable Assets | The following table summarizes the fair values of the identifiable assets acquired and liabilities assumed at the date of acquisition (in thousands):
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Business Acquisition, Pro Forma Information | The following table shows our pro forma results for the nine months ended September 30, 2015 (in thousands, except per share amounts):
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TRADE ACCOUNTS RECEIVABLE, NET (Tables) |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable | A detail of trade accounts receivable, net as of September 30, 2016 and December 31, 2015 is as follows (in thousands):
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FINANCIAL INSTRUMENTS AND CONCENTRATION (Tables) |
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Schedule of Revenue by Major Customers by Reporting Segments |
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Schedule of Revenue by Major Customers by Reporting Segments |
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Schedule of Revenue by Major Customers by Reporting Segments |
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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) |
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Schedule of Accounts Payable and Accrued Liabilities | The following table presents a summary of items comprising accrued expenses and other current liabilities in the accompanying Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015 (in thousands):
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DEBT (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | Debt at September 30, 2016 and December 31, 2015 consisted of the following (in thousands):
|
FAIR VALUE MEASUREMENTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, by Balance Sheet Grouping | The following table summarizes our assets and liabilities measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):
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SHARE BASED COMPENSATION (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity | The following table summarizes stock option activity for the nine months ended September 30, 2016 and 2015:
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Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The table below shows the assumptions used in the model for options awarded during the nine months ended September 30, 2016 and 2015.
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WARRANTS AND OPTIONS LIABILITIES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants and Rights Note Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Warrants or Rights, Valuation Assumptions | The estimated fair values of warrants and options accounted for as liabilities were determined on the date of the private placements and at each balance sheet date following using the Black Scholes pricing model with the following inputs:
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Schedule of Warrants or Rights, Activity | The changes in fair value of the warrants and options (excluding non-employees) liability during the nine months ended September 30, 2016 and 2015 were as follows (in thousands):
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Schedule of Warrants or Rights | The following warrants and options were outstanding at September 30, 2016:
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Schedule of Option Awards, Valuation Assumptions | The estimated values of the option awards are determined using the Black Scholes pricing model with the following inputs:
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Schedule of Stockholders' Equity Note, Options to Non-employees | The changes in fair value of the liability related to vested yet un-exercised options issued to non-employees during the nine months ended September 30, 2016 and 2015 were as follows (in thousands):
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EARNINGS PER SHARE (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | A detail of the Company’s earnings per share is as follows (in thousands except for share and per share amounts):
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NONCONTROLLING INTERESTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redeemable Noncontrolling Interest | Changes in contingently redeemable noncontrolling interests are as follows (in thousands):
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Schedule of Variable Interest Entities | The following table summarizes the carrying amount of the assets and liabilities of our material VIE’s included in the Company’s Consolidated Balance Sheets (after elimination of intercompany transactions and balances) (in thousands):
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BUSINESS SEGMENT INFORMATION (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | A summary of the business segment information for the three months ended September 30, 2016 and 2015 is as follows (in thousands):
A summary of the business segment information for the nine months ended September 30, 2016 and 2015 is as follows (in thousands):
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SUPPLEMENTAL CASH FLOWS - Supplemental Disclosures (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid for interest | $ 2,052 | |
Cash paid for interest | $ 1,129 | |
Cash paid for taxes | 2,279 | |
Cash paid for taxes | 633 | |
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Non-cash acquisition of property and equipment | 0 | |
Non-cash acquisition of property and equipment | 15,345 | |
Non-cash acquisition of goodwill and intangibles | 0 | |
Non-cash acquisition of goodwill and intangibles | 13,532 | |
Non-cash deconsolidation of property and equipment | 0 | |
Non-cash deconsolidation of property and equipment | 2,828 | |
Non-cash deconsolidation of goodwill | 0 | |
Non-cash deconsolidation of goodwill | 701 | |
Athas settlement in lieu of contingent shares | $ 0 | |
Athas settlement in lieu of contingent shares | $ 5,685 |
ACQUISITIONS (Narrative) (Details) |
1 Months Ended |
---|---|
Nov. 30, 2015 | |
Business Combinations [Abstract] | |
Acquisitions 1 | 60.00% |
ACQUISITIONS - Schedule of Fair Value of Identifiable Assets (Details) $ in Thousands |
1 Months Ended |
---|---|
Nov. 30, 2015
USD ($)
| |
Net assets acquired: | |
Trade accounts receivable | $ 82 |
Prepaid expenses and other current assets | 36 |
Inventory | 69 |
Property and equipment | 13,266 |
Other long-term assets | 113 |
Goodwill | 6,932 |
Tradename | 160 |
Hospital license | 12 |
Net assets acquired | 20,670 |
Net liabilities assumed: | |
Trade accounts payable | 2,668 |
Accrued liabilities | 419 |
Current portion of capital leases | 658 |
Long-term portion of capital leases | 12,213 |
Total liabilities assumed | 15,958 |
Consideration: | |
Cash, net of cash acquired | 3,180 |
Noncontrolling Interest | 1,532 |
Total consideration | $ 4,712 |
ACQUISITIONS - Pro Forma Information (Details) $ / shares in Units, $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2015
USD ($)
$ / shares
| |
Business Combinations [Abstract] | |
Revenue | $ 139,774 |
Income from operations | 8,225 |
Net income attributable to noncontrolling interests | 10,360 |
Net income attributable to common stockholders | $ 6,282 |
Net income per basic common share (in dollars per share) | $ / shares | $ 0.10 |
TRADE ACCOUNTS RECEIVABLE, NET - Schedule of Accounts, Notes, Loans and Financing Receivable (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Receivables [Abstract] | ||
Trade accounts receivable | $ 84,573 | |
Trade accounts receivable | $ 95,114 | |
Allowance for doubtful accounts | (2,144) | |
Allowance for doubtful accounts | (5,165) | |
Receivables transferred | (357) | |
Receivables transferred | (298) | |
Receivables purchased | 4,098 | |
Receivables purchased | 2,918 | |
Trade accounts receivable, net | $ 86,170 | |
Trade accounts receivable, net | $ 92,569 |
INVESTMENTS IN ASSOCIATES (Narrative) (Details) - USD ($) $ in Millions |
1 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Apr. 30, 2016 |
Mar. 31, 2016 |
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures [Abstract] | ||||
Investments In Associates 1 | $ 0.7 | $ 0.7 | ||
Investments In Associates 2 | 58.00% | |||
Investments In Associates 3 | 70.00% | |||
Investments In Associates 4 | 62.00% | |||
Investments In Associates 5 | $ 0.5 |
FINANCIAL INSTRUMENTS AND CONCENTRATION (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | 12 Months Ended |
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Investments, All Other Investments [Abstract] | |||
Financial Instruments And Concentration 1 | 75.10% | ||
Financial Instruments And Concentration 2 | 83.00% | ||
Financial Instruments And Concentration 3 | 83.60% | ||
Financial Instruments And Concentration 4 | $ 0.2 | ||
Financial Instruments And Concentration 5 | $ 0.3 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES - Schedule of Accounts Payable and Accrued Liabilities (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
| |
Accrued expenses: | |
Accrued salaries and related benefits | $ 3,941 |
Accrued salaries and related benefits | 5,309 |
Other | 16,720 |
Other | 11,339 |
Total accrued expenses | 20,661 |
Total accrued expenses | 16,648 |
Other current liabilities: | |
Estimated amounts due to third party payors | 6,348 |
Estimated amounts due to third party payors | 3,795 |
Other | 454 |
Other | 1,230 |
Total other current liabilities | 6,802 |
Total other current liabilities | $ 5,025 |
OTHER LONG-TERM LIABILITIES (Narrative) (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Other long-term liabilities | $ 3,523 | $ 3,386 |
Unfavorable lease | 3,200 | |
Estimated amortization of unfavorable lease, remainder of 2016 | 100 | |
Estimated amortization of unfavorable lease, 2017 | 500 | |
Estimated amortization of unfavorable lease, 2018 | 300 | |
Estimated amortization of unfavorable lease, 2019 | 300 | |
Estimated amortization of unfavorable lease, 2020 | 300 | |
Estimated amortization of unfavorable lease, thereafter | $ 2,200 |
LINES OF CREDIT (Narrative) (Details) - USD ($) |
9 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Aug. 19, 2016 |
May 18, 2016 |
Mar. 31, 2016 |
Jul. 30, 2015 |
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Line of Credit Facility [Abstract] | ||||||
Lines Of Credit 1 | $ 11,600,000.0 | $ 5,000,000.0 | ||||
Lines Of Credit 2 | 4.00% | |||||
Lines Of Credit 3 | 5.24% | |||||
Lines Of Credit 4 | $ 8,100,000 | |||||
Lines Of Credit 5 | $ 3,000,000 | |||||
Lines Of Credit 6 | $ 1,500,000.0 | |||||
Lines Of Credit 7 | $ 5,000,000.0 | |||||
Lines Of Credit 8 | $ 3,000,000.0 | |||||
Lines Of Credit 9 | 4.00% | |||||
Long-term Line of Credit | $ 0 |
DEBT (Narrative) (Details) |
9 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Aug. 19, 2016
USD ($)
|
Aug. 18, 2016
USD ($)
|
Aug. 01, 2016
USD ($)
|
Jul. 31, 2016 |
Mar. 31, 2016 |
Jul. 30, 2015
USD ($)
|
Mar. 31, 2015
USD ($)
|
Sep. 30, 2016
USD ($)
|
|
Line of Credit Facility [Line Items] | ||||||||
Debt 1 | $ 25,000,000.0 | $ 20,000,000.0 | ||||||
Debt 2 | 4.00% | |||||||
Debt 3 | 5.24% | |||||||
Debt 4 | 0.70% | |||||||
Debt 5 | 100.00% | |||||||
Debt 6 | $ 1,000,000 | |||||||
Debt 7 | $ 24,700,000 | |||||||
Debt 8 | $ 2,000,000.0 | |||||||
Debt 9 | 7.0 | |||||||
Debt 10 | 7.05 | |||||||
Debt 11 | 2.00 | 3.05 | ||||||
Fixed charge coverage ratio | 3.00 | |||||||
Debt 14 | $ 4,500,000.0 | |||||||
Debt 15 | 4.00% | |||||||
Credit Agreement | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Maximum borrowing capacity | $ 36,600,000.0 | $ 30,600,000.0 | ||||||
Capital lease obligation limit | 6,100,000.0 | 3,000,000.0 | ||||||
Credit Agreement | Term | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Maximum borrowing capacity | 25,000,000 | |||||||
Quarterly amortization payment | 312,500 | $ 250,000 | ||||||
Credit Agreement | Revolving | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Maximum borrowing capacity | $ 11,600,000.0 |
DEBT - Schedule of Long-term Debt Instruments (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Debt Disclosure [Abstract] | ||
Gross debt | $ 24,687 | |
Gross debt | $ 23,275 | |
Less: unamortized loan fees | 855 | |
Less: unamortized loan fees | 563 | |
Debt, net of unamortized loan fees | 23,832 | |
Debt, net of unamortized loan fees | 22,712 | |
Less: current portion of term loan, net of unamortized loan fees | 1,006 | |
Less: current portion of term loan, net of unamortized loan fees | 1,243 | |
Long-term debt, net of unamortized loan fees | $ 22,826 | |
Long-term debt, net of unamortized loan fees | $ 21,469 |
FAIR VALUE MEASUREMENTS - Schedule of Fair Value, by Balance Sheet Grouping (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Fair Value Disclosures [Abstract] | ||
Warrant and stock option derivative liabilities, Level 1 | $ 0 | |
Warrant and stock option derivative liabilities, Level 2 | 0 | |
Warrant and stock option derivative liabilities, Level 3 | 2,951 | |
Warrant and stock option derivative liabilities | 2,951 | |
Total, Level 1 | 0 | |
Total, Level 2 | 0 | |
Total, Level 3 | 2,951 | |
Total | $ 2,951 | |
Warrant and stock option derivative liabilities, Level 1 | $ 0 | |
Warrant and stock option derivative liabilities, Level 2 | 0 | |
Warrant and stock option derivative liabilities, Level 3 | 1,917 | |
Warrant and stock option derivative liabilities | 1,917 | |
Total, Level 1 | 0 | |
Total, Level 2 | 0 | |
Total, Level 3 | 1,917 | |
Total | $ 1,917 |
WARRANTS AND OPTIONS LIABILITIES - Schedule of Warrants or Rights, Valuation Assumptions (Details) |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Warrants and Rights Note Disclosure [Abstract] | ||
Risk free interest rate Min | 0.26% | |
Risk free interest rate Max | 0.59% | |
Risk free interest rate Min | 0.11% | |
Risk free interest rate Max | 0.64% | |
Expected life Min | 3 months | |
Expected life Max | 1 year 1 month 24 days | |
Expected life Min | 3 months | |
Expected life Max | 2 years | |
Expected volatility Min | 76.00% | |
Expected volatility Max | 112.00% | |
Expected volatility Min | 71.00% | |
Expected volatility Max | 89.00% | |
Expected dividend yield | 0.00% | |
Expected dividend yield | 0.00% |
WARRANTS AND OPTIONS LIABILITIES - Schedule of Warrants or Rights (Details) |
9 Months Ended |
---|---|
Sep. 30, 2016
CAD / shares
shares
| |
Exercise price | |
2015 Warrants (in Canadian dollars per share) | CAD / shares | CAD 11.50 |
2015 Options (in Canadian dollars per share) | CAD / shares | CAD 9.00 |
Number of warrants and options | |
2015 Warrants (in shares) | 3,923,834 |
2015 Options (in shares) | 392,383 |
Outstanding and Exercisable (in shares) | 4,316,217 |
Remaining contractual life | |
2015 Warrants | 10 months 24 days |
2015 Options | 10 months 24 days |
WARRANTS AND OPTIONS LIABILITIES (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Class of Warrant or Right [Line Items] | ||||
Nonemployee options outstanding (in shares) | 600,000 | 600,000 | ||
Warrants And Options Liabilities 1 | 650,000 | |||
Warrants And Options Liabilities 2 | $ 0.1 | $ 0.2 | ||
Warrants And Options Liabilities 3 | $ 0.2 | |||
Warrants And Options Liabilities 4 | $ 2.8 | |||
2014 Warrant And Option Issuances | ||||
Class of Warrant or Right [Line Items] | ||||
Nonemployee options outstanding (in shares) | 0 | 0 |
WARRANTS AND OPTIONS LIABILITIES - Schedule of Option Awards, Valuation Assumptions (Details) |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Warrants and Rights Note Disclosure [Abstract] | ||
Risk free interest rate Min | 1.01% | |
Risk free interest rate Max | 1.14% | |
Risk free interest rate Min | 1.37% | |
Risk free interest rate Max | 1.56% | |
Expected life Min | 4 years | |
Expected life Max | 5 years | |
Expected life Min | 5 years | |
Expected life Max | 6 years | |
Expected volatility Min | 103.00% | |
Expected volatility Max | 114.00% | |
Expected volatility Min | 113.00% | |
Expected volatility Max | 115.00% | |
Expected dividend yield | 0.00% | |
Expected dividend yield | 0.00% |
WARRANTS AND OPTIONS LIABILITIES - Schedule of Option Awards, Liability (Details) - Options To Non-employees - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Warrants and Rights Outstanding [Roll Forward] | ||
Balance at beginning of year | $ 841 | $ 0 |
Vested during the period | 533 | 1,531 |
Change in fair value recorded in earnings | 163 | 65 |
Ending balance | $ 1,537 | $ 1,596 |
NONCONTROLLING INTERESTS (Narrative) (Details) |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Noncontrolling Interest [Abstract] | ||
Noncontrolling Interests 1 | 8.10% | 8.10% |
Noncontrolling Interests 2 | 75.00% | 75.00% |
Noncontrolling Interests 3 | 65.00% | 65.00% |
Noncontrolling Interests 4 | 2.30% | 2.30% |
Noncontrolling Interests 5 | 50.00% | 50.00% |
Noncontrolling Interests 6 | 65.00% | 65.00% |
Noncontrolling Interests 7 | 49.00% | 49.00% |
Noncontrolling Interests 8 | 40.00% | 40.00% |
Noncontrolling Interests 9 | 45.00% | 45.00% |
Noncontrolling Interests 10 | 40.00% | 40.00% |
NONCONTROLLING INTERESTS - Schedule of Variable Interest Entities (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Noncontrolling Interest [Abstract] | ||
Total cash and short term investments | $ 1,071 | |
Total cash and short term investments | $ 191 | |
Total accounts receivable | 8,638 | |
Total accounts receivable | 8,660 | |
Total other current assets | 1,768 | |
Total other current assets | 1,582 | |
Total property and equipment | 17,547 | |
Total property and equipment | 5,227 | |
Total other assets | 165 | |
Total other assets | 144 | |
Total assets | 29,189 | |
Total assets | 15,804 | |
Total accounts payable | 3,847 | |
Total accounts payable | 2,286 | |
Total other liabilities | 5,924 | |
Total other liabilities | 7,059 | |
Total accrued liabilities | 4,242 | |
Total accrued liabilities | 2,664 | |
Long term - capital lease | 11,543 | |
Long term - capital lease | 780 | |
Noncontrolling interest | (8,547) | |
Noncontrolling interest | (1,488) | |
Total liabilities | $ 17,009 | |
Total liabilities | $ 11,301 |
INCOME TAXES (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Income Tax Disclosure [Abstract] | ||||
Income Taxes 1 | 35.00% | |||
Income Taxes 2 | 32.50% | |||
Income Taxes 3 | 3.80% | |||
Income Taxes 4 | 4.50% | |||
Income Taxes 7 | 1.60% | |||
Effective income tax rate reduction for discrete tax items | 3.80% | |||
Income Taxes 9 | $ 0.5 | |||
Income Taxes 10 | $ 1.7 | |||
Income Taxes 11 | 29.30% | |||
Income Taxes 12 | 21.10% | |||
Income Taxes 13 | $ 0.3 | |||
Income Taxes 14 | $ 0.8 | |||
Income Taxes 15 | $ 0.3 | |||
Income Taxes 16 | $ 0.9 |
RELATED PARTY TRANSACTIONS (Narrative) (Details) number in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2015
USD ($)
|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2015
USD ($)
|
|
Related Party Transaction [Line Items] | ||||
Related Party Transactions 1 | $ 1.4 | |||
Related Party Transactions 2 | $ 0.5 | |||
Related Party Transactions 3 | $ 0.6 | |||
Related Party Transactions 4 | $ 0.4 | $ 0.4 | ||
Related Party Transactions 5 | 1.6 | $ 1.7 | ||
Related Party Transactions 6 | 1.3 | 1.3 | ||
Related Party Transactions 8 | 2.5 | |||
Related Party Transactions 9 | $ 2.5 | |||
Related Party Transactions 10 | 1.9 | |||
Related Party Transactions 11 | 0.2 | |||
Related Party Transactions 12 | 1.0 | |||
Related Party Transactions 13 | $ 0.3 | |||
Related Party Transactions 14 | 3.9 | |||
Related Party Transactions 15 | $ 2.4 | |||
Affiliate | HOPD | ||||
Related Party Transaction [Line Items] | ||||
Related Party Transactions 7 | 3.6 | |||
Affiliate | Dallas Metro | ||||
Related Party Transaction [Line Items] | ||||
Related Party Transactions 7 | $ 0.9 |
COMMITMENTS AND CONTINGENCIES (Narrative) (Details) CAD in Millions |
9 Months Ended |
---|---|
Sep. 30, 2016
CAD
| |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments And Contingencies 1 | CAD 80 |
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