10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2016.

Commission file number: 333-170812

21ST CENTURY ONCOLOGY HOLDINGS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization)	26-1747745 (I.R.S. Employer Identification No.)
2270 Colonial Boulevard, Fort Myers, Florida (Address of Principal Executive Offices)	33907 (Zip Code)

(239) 931-7254

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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

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

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

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☐

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

* The registrant is a voluntary filer and is not required to file the reports required by Sections 13 or 15(d) of the Securities Exchange Act of 1934.

As of November 14, 2016, we had outstanding 1,059 shares of Common Stock, par value $0.01 per share, which are 100% owned by 21st Century Oncology Investments, LLC.

21ST CENTURY ONCOLOGY HOLDINGS, INC.

Form 10-Q

INDEX

PART I.  FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets — September 30, 2016 and December 31, 2015	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss — Three and Nine Months Ended September 30, 2016 and 2015	4
	Condensed Consolidated Statements of Cash Flows — Nine Months Ended September 30, 2016 and 2015	5
	Notes to Interim Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	55
Item 4	Controls and Procedures	55
PART II.  OTHER INFORMATION
Item 1.	Legal Proceedings	58
Item 1A.	Risk Factors	58
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 6.	Exhibits	60

2

PART I

FINANCIAL INFORMATION

Item 1.    Financial Statements

21ST CENTURY ONCOLOGY HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

	September 30,		December 31,
	2016		2015
	(unaudited)		As Adjusted (a)
ASSETS
Current assets:
Cash and cash equivalents ($13,175 and $10,175 related to VIEs)	$	49,696	$	65,211
Restricted cash		300		195
Marketable securities		1,756		1,078
Accounts receivable, net ($15,038 and $16,945 related to VIEs)		126,629		122,355
Prepaid expenses ($391 and $487 related to VIEs)		10,494		7,822
Inventories ($504 and $409 related to VIEs)		3,731		3,918
Income tax receivable		5,153		4,966
Other current assets ($287 and $319 related to VIEs)		17,875		15,732
Total current assets		215,634		221,277
Equity investments in joint ventures		15,209		1,214
Property and equipment, net ($18,796 and $20,866 related to VIEs)		214,695		238,585
Real estate subject to finance obligation		14,970		12,631
Goodwill ($52,577 and $52,454 related to VIEs)		491,742		498,680
Intangible assets, net ($5,954 and $5,987 related to VIEs)		59,481		70,115
Embedded derivative and other financial instrument features of Series A convertible redeemable preferred stock		499		17,883
Other long-term assets ($6,460 and $6,291 related to VIEs)		40,487		41,588
Deferred income taxes ($6 and $6 related to VIEs)		2,243		1,888
Total assets	$	1,054,960	$	1,103,861
LIABILITIES AND DEFICIT
Current liabilities:
Accounts payable ($1,633 and $2,691 related to VIEs)	$	57,666	$	59,888
Accrued expenses ($1,543 and $4,637 related to VIEs)		82,879		111,653
Income taxes payable		3,697		2,501
Current portion of long-term debt ($343 and $64 related to VIEs)		1,106,662		1,023,877
Current portion of finance obligation		230		283
Other current liabilities		11,620		14,265
Total current liabilities		1,262,754		1,212,467
Long-term debt, less current portion ($161 and $155 related to VIEs)		17,731		49,233
Finance obligation, less current portion		15,641		13,318
Embedded derivative and other financial instrument features of Series A convertible redeemable preferred stock		24,843		19,911
Other long-term liabilities ($3,353 and $2,974 related to VIEs)		71,298		70,928
Deferred income taxes		4,989		3,887
Total liabilities		1,397,256		1,369,744
Series A convertible redeemable preferred stock, $0.001 par value, $1,000 stated value, 3,500,000 authorized, 410,000 and 385,000 issued and outstanding at September 30, 2016 and December 31, 2015, respectively		472,349		389,514
Noncontrolling interests – redeemable		19,247		19,233
Commitments and contingencies
Equity:
Common stock, $0.01 par value, 1,000,000 shares authorized, 1,059 issued and outstanding at September 30, 2016 and December 31, 2015		—		—
Additional paid-in capital		521,350		579,920
Retained deficit		(1,323,777)		(1,226,298)
Accumulated other comprehensive loss, net of tax		(58,966)		(54,574)
Total 21st Century Oncology Holdings, Inc. shareholder’s deficit		(861,393)		(700,952)
Noncontrolling interests - nonredeemable		27,501		26,322
Total deficit		(833,892)		(674,630)
Total liabilities and deficit	$	1,054,960	$	1,103,861

(a)Derived from audited financial statements. See note 3 for discussion of accounting principles adopted during the period.

See accompanying notes.

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21ST CENTURY ONCOLOGY HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands):	2016		2015		2016		2015
Revenues:
Net patient service revenue	$	226,505	$	243,768	$	715,974	$	755,877
Management fees		14,240		14,180		43,514		45,261
Other revenue		4,934		4,309		14,872		14,965
Total revenues		245,679		262,257		774,360		816,103
Expenses:
Salaries and benefits		136,859		142,640		414,610		436,996
Medical supplies		22,211		22,498		74,215		73,563
Facility rent expenses		17,440		16,983		52,304		50,821
Other operating expenses		16,007		15,951		47,678		46,994
General and administrative expenses		35,344		68,306		101,070		141,341
Depreciation and amortization		21,319		22,439		63,412		66,775
Provision for doubtful accounts		8,610		5,617		17,270		13,683
Interest expense, net		27,151		23,771		77,353		73,836
Other gains and losses		481		(5,696)		(12,699)		(7,363)
Impairment loss		770		—		2,595		—
Early extinguishment of debt		—		—		—		37,390
Fair value measurements		34,976		1,799		22,187		8,404
(Gain) loss on foreign currency transactions		(5)		333		300		537
Total expenses		321,163		314,641		860,295		942,977
Loss before income taxes and equity interest in net income of joint ventures		(75,484)		(52,384)		(85,935)		(126,874)
Income tax expense		3,166		2,851		7,967		7,198
Net loss before equity interest in net income of joint ventures		(78,650)		(55,235)		(93,902)		(134,072)
Equity interest in net income of joint ventures, net of tax		150		(10)		957		202
Net loss		(78,500)		(55,245)		(92,945)		(133,870)
Net income attributable to noncontrolling interests – redeemable and non-redeemable		(1,422)		(2,530)		(4,534)		(6,610)
Net loss attributable to 21st Century Oncology Holdings, Inc. shareholder		(79,922)		(57,775)		(97,479)		(140,480)
Other comprehensive loss, net of tax:
Unrealized loss on foreign currency translation		(1,150)		(2,415)		(5,146)		(6,414)
Other comprehensive loss		(1,150)		(2,415)		(5,146)		(6,414)
Comprehensive loss		(79,650)		(57,660)		(98,091)		(140,284)
Comprehensive income attributable to noncontrolling interests-redeemable and non-redeemable		(1,429)		(2,067)		(3,780)		(5,599)
Comprehensive loss attributable to 21st Century Oncology Holdings, Inc. shareholder	$	(81,079)	$	(59,727)	$	(101,871)	$	(145,883)

See accompanying notes.

4

21ST CENTURY ONCOLOGY HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Nine Months Ended September 30,
(in thousands):	2016		2015
Cash flows from operating activities
Net loss	$	(92,945)	$	(133,870)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		63,412		66,775
Deferred rent expense		200		356
Deferred income taxes		739		(912)
Stock-based compensation		—		6
Provision for doubtful accounts		17,270		13,683
Gain on the sale/disposal of property and equipment		(480)		(203)
Gain on contribution of a radiation facility to a joint venture		(12,629)		—
Gain on the sale of marketable securities		—		(2)
Impairment loss		2,595		—
Early extinguishment of debt		—		37,390
Debt modification costs		5,910		—
Loss on foreign currency transactions		158		298
Fair value adjustment of earn-out liabilities		1		(518)
Fair value adjustment of embedded derivatives and other financial instruments		22,186		8,922
Amortization of debt discount		1,415		1,228
Amortization of loan costs		3,229		3,675
Paid in kind interest on notes payable		1,888		370
Equity interest in net income of joint ventures, net of tax		(957)		(202)
Distribution received from unconsolidated joint ventures		269		106
Pension plan contributions		(927)		(1,756)
Changes in operating assets and liabilities:
Accounts receivable and other current assets		(26,974)		(34,277)
Prepaid expenses and other assets		597		2,192
Inventories		231		(624)
Accounts payable		(2,214)		4,500
Accrued deferred compensation		1,198		1,057
Income taxes payable		843		435
Accrued expenses / other liabilities		(27,849)		64,692
Net cash (used in) provided by operating activities		(42,834)		33,321
Cash flows from investing activities
Purchase of property and equipment		(24,204)		(33,595)
Acquisition of medical practices		(129)		(33,064)
Change in restricted cash associated with medical practice acquisitions		(105)		7,009
Proceeds from the sale of equity interest in a joint venture		6,170		—
Proceeds from the sale of property and equipment		124		1,143
Purchase of marketable securities		(711)		(4,633)
Sale of marketable securities		—		4,013
(Loans to) repayments from employees		(221)		353
Purchase of joint venture interests		(502)		—
Distribution received from joint venture entities		—		496
Purchase of company owned life insurance policies		(1,105)		(1,015)
Change in other assets and other liabilities		545		45
Net cash used in investing activities		(20,138)		(59,248)

Continued

5

21ST CENTURY ONCOLOGY HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(unaudited)

	Nine Months Ended September 30,
(in thousands):	2016		2015
Cash flows from financing activities
Proceeds from issuance of debt		62,748		972,851
Principal repayments of debt		(27,582)		(921,871)
Repayments of finance obligation		(200)		(168)
Proceeds from issuance of Series A convertible redeemable preferred stock		25,000		—
Payments of issue costs related to the issuance of preferred stock		(30)		—
Proceeds from issuance of noncontrolling interest		—		743
Proceeds from noncontrolling interest holders - redeemable and non-redeemable		—		3,230
Purchase of noncontrolling interest - non-redeemable		—		(16,233)
Cash distributions to noncontrolling interest holders – redeemable and non-redeemable		(3,208)		(4,072)
Payments for contingent considerations		(149)		(8,537)
Payment of call premium on long-term debt		—		(24,877)
Payment of debt modification costs		(5,910)		—
Payment of other financing costs		(552)		—
Payments of loan costs		(2,638)		(26,481)
Net cash provided by (used in) financing activities		47,479		(25,415)
Effect of exchange rate changes on cash and cash equivalents		(22)		(15)
Net decrease in cash and cash equivalents		(15,515)		(51,357)
Cash and cash equivalents, beginning of period		65,211		99,082
Cash and cash equivalents, end of period	$	49,696	$	47,725
Supplemental disclosure of non-cash investing and financing activities
Finance obligation related to real estate projects	$	2,517	$	844
Derecognition of finance obligation related to real estate projects	$	—	$	12,215
Capital lease obligations related to the purchase of equipment	$	10,879	$	2,408
Medical equipment and service contract component related to the acquisition of medical equipment through accounts payable	$	—	$	665
Change in earn-out liabilities	$	—	$	13,572
Assumed debt obligations related to the acquisition of medical practices	$	373	$	290
Amounts payable to sellers in the purchase of a medical practice	$	—	$	150
Noncash dividend declared to noncontrolling interest	$	84	$	56
Issuance of notes payable relating to the purchase of SFRO noncontrolling interest	$	—	$	14,560
Issuance of equity units relating to the purchase of SFRO noncontrolling interest	$	—	$	14,500
Accrued dividends on Series A convertible preferred stock, accrued at effective rate	$	48,073	$	40,223
Accretion of redemption value on Series A convertible preferred stock	$	9,792	$	13,262
Change in additional paid-in capital from sale/purchase of interest in subsidiaries	$	—	$	2,315
Contribution of assets to a joint venture entity	$	18,980	$	—
Additional paid in capital adjustment for fair value of noncontrolling interest	$	705	$	—

See accompanying notes.

6

21ST CENTURY ONCOLOGY HOLDINGS, INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

September 30, 2016

1. Organization

21st Century Oncology Holdings, Inc., through its wholly-owned subsidiaries (collectively, the “Company”), is a leading global, physician-led provider of integrated cancer care (“ICC”) services. The Company’s physicians provide comprehensive, academic quality, cost-effective coordinated care for cancer patients in personal and convenient community settings (its “ICC model”). The Company provides its physicians with the advanced medical technology necessary to achieve optimal outcomes. The Company’s provision of care includes a full spectrum of cancer care services enabled by employing and affiliating with physicians in their related specialties. This innovative approach to cancer care allows the Company to collaborate across its physician base, integrate services and payments for related medical needs and disseminate best practices.

As of September 30, 2016, the Company deployed approximately 949 community-based physicians in the fields of radiation oncology, medical oncology, breast, gynecological and general surgery, urology and primary care in the United States. The Company’s physicians provide medical services at 370 locations, including our 180 radiation therapy centers, of which 58 operate in partnership with health systems. The Company’s cancer treatment centers in the United States are operated predominantly under the 21st Century Oncology brand and are strategically clustered in 17 states: Alabama, Arizona, California, Florida, Indiana, Kentucky, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New York, North Carolina, Rhode Island, South Carolina, Washington and West Virginia, as well as countries in Latin America, Central America and the Caribbean. The Company’s 36 international radiation therapy centers, located in Argentina, Mexico, Colombia, Costa Rica, the Dominican Republic, Guatemala and El Salvador operate under the 21st Century Oncology brand or a local brand and, in many cases, are operated with local minority partners, including hospitals.

The Company is also engaged in providing capital equipment and business management services to oncology physician groups (“Groups”) that treat patients at cancer centers (“Centers”). The Company provides management services to five Groups in California and one Group in Indiana. The Company owns the Centers’ assets and provides services to the Groups through exclusive, long-term management services agreements. The Company provides the Groups with oncology business management expertise and new technologies including radiation oncology equipment and related treatment software. Business services that the Company provides to the Groups include non-physician clinical and administrative staff, operations management, purchasing, managed care contract negotiation assistance, reimbursement, billing and collecting, information technology, human resource and payroll, compliance, accounting, and treasury. Under the terms of the management services agreements, the Company is reimbursed for certain operating expenses of each Center and earns a monthly management fee from each Group.  The management fees are primarily based on a predetermined percentage of each Group’s earnings before interest, income taxes, depreciation, and amortization (“EBITDA”) associated with the provision of radiation therapy. The Company’s management fees range from 50% to 60% of each Group’s EBITDA, with one Group in California whose fee ranges from 20% to 30% of cash collections.

2. Leverage and Liquidity

The Company is highly leveraged. As of September 30, 2016, the Company had approximately $1.1 billion of long-term debt outstanding.  The Company has experienced and continues to experience losses from its operations and negative cash flows. The Company reported net losses of approximately $126.8 million, $92.9 million and $133.9 million for the year ended December 31, 2015 and nine month periods ended September 30, 2016 and 2015, respectively. At September 30, 2016, the Company had $49.7 million of cash and was fully drawn under its revolver (“2015 Revolving Credit Facility”).

7

The Company’s high level of debt and negative cash flows could have material adverse effects on its business and financial condition. Specifically, the Company’s high level of debt could have important consequences, including the following:

requiring a substantial portion of the Company’s cash flows to be dedicated to debt service payments instead of other purposes;

making it more difficult for the Company to satisfy its obligations with respect to debt;

limiting the Company’s ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements;

increasing the Company’s vulnerability to general adverse economic and industry conditions;

limiting the Company’s flexibility in planning for and reacting to changes in the industry in which the Company competes;

placing the Company at a disadvantage compared to other, less leveraged competitors; and

increasing the Company’s cost of borrowing.

Further, subject to certain qualifications, the credit agreement governing the Company’s term loan facility (the “2015 Term Facility” and together with the 2015 Revolving Credit Facility, the “2015 Credit Facilities”) and the indenture governing the Company’s notes (the “Senior Notes Indenture”), each as currently in effect, requires the Company to receive, subject to certain important qualifications set forth therein, (1) no later than September 10, 2016, net cash proceeds from the issuance or sale of the Company’s capital stock or from other equity investments in an aggregate amount of at least $25.0 million (the “First Capital Event”), (2) requires the Company to receive, no later than November 30, 2016, additional net cash proceeds from the issuance or sale of the Company’s capital stock or from other equity investments and/or sales of assets (which sale transactions must be deleveraging transactions on a pro forma basis) in an aggregate amount of at least $25.0 million (or a lesser amount such that when combined with the proceeds from the First Capital Event, the total amount is not less than $50.0 million) (the “Second Capital Event”) and (3) no later than March 31, 2017, additional net cash proceeds from the issuance or sale of the Company’s capital stock or from other equity investments and/or sales of assets (which sale transactions must be deleveraging transactions on a pro forma basis) in an aggregate amount of at least the lesser of (A) $75.0 million (or a lesser amount such that when combined with the proceeds from the First Capital Event and the Second Capital Event, the total amount is not less than $125.0 million), and (B) an amount such that, after giving effect to such issuance or sale of capital stock or other equity investments and/or sales of assets, the Company’s cash and cash equivalents plus unused revolving loan commitments equals at least $120.0 million and the Company’s consolidated leverage ratio is not greater than 6.4 to 1.00 (the “Third Capital Event” and together with the First Capital Event and the Second Capital Event, the “Capital Events” and each, a “Capital Event”). At least $50 million of the proceeds from the First Capital Event, Second Capital Event and Third Capital Event must be from the issuance or sale of 21st Century Oncology, Inc.’s (“21C”) capital stock or from other equity investments. The Company is also required to comply with a minimum liquidity covenant in an amount not less than $40.0 million after the completion of the First Capital Event, to be tested monthly prior to the completion of the Third Capital Event and quarterly thereafter. Its failure to satisfy such requirements could result in an event of default under our 2015 Credit Facilities or Senior Notes Indenture, which could result in the debt thereunder being accelerated. While the Company is pursuing a variety of initiatives to satisfy the requirements of the 2015 Credit Facilities and Senior Notes Indenture, it does not have commitments to obtain the required equity or dispose of assets in place, and it may not be able to maintain the required levels of liquidity.  Consequently there is substantial doubt about the Company’s ability to continue as a going concern.

On September 9, 2016, the Company satisfied the First Capital Event.  In addition, the Company satisfied the minimum liquidity covenant as of September 30, 2016 and October 31, 2016. While the Company is pursuing a variety of initiatives to satisfy the other requirements of the 2015 Credit Facilities and Senior Notes Indenture, it does not have commitments to obtain the required equity or dispose of assets in place, and it may not be able to maintain the required levels of liquidity.  Consequently there is substantial doubt about the Company’s ability to continue as a going concern. See Note 17, Subsequent Events, for additional information.

8

In the event the Company is unable to meet the other requirements (as described above), it will need to identify alternative options, such as a debt refinancing, a sale of the Company or other strategic transaction, or a transformative transaction, such as a possible restructuring or reorganization of the Company’s operations. In addition, the perception that the Company may not be able to continue as a going concern may negatively and materially impact its existing and future business relationships, and others may choose not to engage in business with the Company at all due to concerns about its ability to meet its contractual obligations.

3. Basis of presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for annual financial statements.  All adjustments necessary for a fair presentation have been included. All such adjustments are considered to be of a normal and recurring nature. Interim results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated audited financial statements and the notes thereto included in the Company’s Form 10-K for the year ended December 31, 2015.

Out of period adjustments:

During the quarter ended March 31, 2016, the Company determined that foreign currency translation adjustments have not been applied to goodwill relative to an acquisition in Argentina in 2011. The cumulative difference between the unrealized loss on foreign currency translation that should have been recognized and that actually was recognized was not material to the Company’s results of operations or financial position as of or for any of the periods presented. The Company recorded an adjustment to correct the unrealized loss on foreign currency translation and accumulated other comprehensive loss, net of tax, along with the associated goodwill for approximately $0.9 million in the condensed consolidated statement of operations and comprehensive loss for the nine months ended September 30, 2016. There was no impact to the condensed consolidated statement of cash flows for the nine months ended September 30, 2016.

Seasonality:

The Company’s results of operations historically have fluctuated on a quarterly basis and can be expected to continue to fluctuate. Many of the patients of the Company’s Florida treatment centers are part-time residents during the winter months. Hence, these treatment centers have historically experienced higher utilization rates during the winter months than during the remainder of the year. In addition, volume is typically lower in the summer months due to traditional vacation periods. As of September 30, 2016, 60 of the Company’s 144 U.S. domestic radiation treatment centers are located in Florida.

Variable interest entities:

The accompanying interim condensed consolidated financial statements include the accounts of the Company and all subsidiaries and entities controlled by the Company through the Company’s direct or indirect ownership of a majority interest and/or exclusive rights granted to the Company as the management company of such entities or by contract. All significant intercompany accounts and transactions have been eliminated.

The Company has evaluated certain radiation oncology practices in order to determine if they are variable interest entities (“VIEs”). This evaluation resulted in the Company determining that certain of its radiation oncology practices were potential VIEs. For each of these practices, the Company has evaluated (1) the sufficiency of the fair value of the entity’s equity investments at risk to absorb losses, (2) that, as a group, the holders of the equity investments at risk have (a) the direct or indirect ability through voting rights to make decisions about the entity’s significant activities, (b) the obligation to absorb the expected losses of the entity and that their obligations are not protected directly or indirectly, and (c) the right to receive the expected residual return of the entity, and (3) substantially all of the entity’s activities do not involve or are not conducted on behalf of an investor that has disproportionately fewer voting rights in

9

terms of its obligation to absorb the expected losses or its right to receive expected residual returns of the entity, or both. The Accounting Standards Codification (“ASC”), 810 Consolidation (“ASC 810”), requires a company to consolidate VIEs if the company is the primary beneficiary of the activities of those entities. Certain of the Company’s radiation oncology practices are VIEs and the Company has a variable interest in each of these practices through its administrative services agreements. Other of the Company’s radiation oncology practices (primarily consisting of partnerships) are VIEs and the Company has a variable interest in each of these practices because the total equity investment at risk is not sufficient to permit the legal entity to finance its activities without the additional subordinated financial support provided by its members.

In accordance with ASC 810, the Company consolidates certain radiation oncology practices where the Company provides administrative services pursuant to long-term management agreements. The noncontrolling interests in these entities represent the interests of the physician owners of the oncology practices in the equity and results of operations of these consolidated entities. The Company, through its variable interests in these practices, has the power to direct the activities of these practices that most significantly impact the entity’s economic performance, and the Company would absorb a majority of the expected losses of these practices should they occur. Based on these determinations, the Company has consolidated these radiation oncology practices in its condensed consolidated financial statements for all periods presented.

The Company could be obligated, under the terms of the operating agreements governing certain of its joint ventures, upon the occurrence of various fundamental regulatory changes and or upon the occurrence of certain events outside of the Company’s control, to purchase some or all of the noncontrolling interests related to the Company’s consolidated subsidiaries. These repurchase requirements would be triggered by, among other things, regulatory changes prohibiting the existing ownership structure. While the Company is not aware of events that would make the occurrence of such a change probable, regulatory changes are outside the control of the Company. Accordingly, the noncontrolling interests subject to these repurchase provisions have been classified outside of equity on the Company’s consolidated balance sheets.

As of September 30, 2016 and December 31, 2015, the combined total assets included in the Company’s condensed consolidated balance sheet relating to the VIEs were approximately $113.2 million and $113.9 million, respectively.

As of September 30, 2016, the Company was the primary beneficiary of, and therefore consolidated, 28 VIEs, which operate 48 radiation therapy centers. Any significant amounts of assets and liabilities related to the consolidated VIEs are identified parenthetically on the accompanying condensed consolidated balance sheets. The assets are owned by, and the liabilities are obligations of, the VIEs, not the Company. Only the assets of the VIEs can be used to settle the liabilities of the VIEs. The assets are used pursuant to operating agreements established by each VIE. The VIEs are not guarantors of the Company’s debts. In the states of California, Massachusetts, Michigan, Nevada, New York, North Carolina and Washington, the Company’s treatment centers are operated as physician office practices. The Company typically provides technical services to these treatment centers in addition to administrative services. For the nine months ended September 30, 2016 and 2015 approximately 13.2% and 14.0% of the Company’s net patient service revenue, respectively, was generated by professional corporations for which it has administrative management agreements.

As of September 30, 2016, the Company also held equity interests in five VIEs for which the Company is not the primary beneficiary. Those VIEs consist of partnerships that primarily provide radiation oncology services.  The Company is not the primary beneficiary of these VIEs as it does not retain the power and rights in the operations of the entities. The Company’s investments in the unconsolidated VIEs are approximately $15.2 million and $1.2 million at September 30, 2016 and December 31, 2015, respectively, with ownership interests ranging between 33.3% and 50.0% general partner or equivalent interest. Accordingly, substantially all of these equity investment balances are attributed to the Company’s noncontrolling interests in the unconsolidated partnerships. The Company’s maximum risk of loss related to the investments in these VIEs is limited to the equity interest.

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Cost of revenues:

The cost of revenues for the three months ended September 30, 2016 and 2015 are approximately $184.5 million and $193.4 million, respectively. The cost of revenues for the nine months ended September 30, 2016 and 2015 are approximately $573.5 million and $595.2 million, respectively. The cost of revenues includes expenses incurred for the delivery of patient care. These expenses include salaries and benefits of physicians, physicists, dosimetrists, radiation technicians etc., medical supplies, facility rent expenses, other operating expenses, depreciation and amortization.

Recent pronouncements:

In February 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The new guidance intends to reduce the number of consolidation models as well as place more emphasis on risk of loss when determining a controlling financial interest. The Company adopted this ASU prospectively on January 1, 2016. The adoption of this ASU did not have a significant impact on the Company’s consolidated financial position or results of operations.

In April 2015, the FASB issued ASU 2015-03, Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The new guidance requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The Company adopted ASU 2015-03 on January 1, 2016 with retrospective application to its December 31, 2015 condensed consolidated balance sheet. The effect of the adoption of ASU 2015-03 was to reclassify debt issue costs of approximately $19.8 million as of December 31, 2015 as a deduction from the related debt liabilities. Accordingly, other assets and total assets in the 2015 condensed consolidated balance sheet were reduced by that amount, and long-term debt and total liabilities were reduced by the same amount. There was no effect on net income or cash flows.

In April 2015, the FASB issued ASU 2015-05, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The new guidance establishes guidelines for evaluating whether a cloud computing arrangement involves the sale of a software license and the appropriate accounting. The Company adopted this ASU on January 1, 2016 on a prospective basis. The adoption of this ASU did not have a significant impact on the Company’s consolidated financial position or results of operations.

In August 2015, FASB issued ASU 2015-15, Interest — Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. The new guidance allows debt issuance costs related to line-of-credit arrangements to be recognized as an asset and amortized ratably over the line-of-credit term. The Company adopted ASU 2015-15 on January 1, 2016 with retrospective application to its December 31, 2015 condensed consolidated balance sheet. The effect of the adoption of ASU 2015-15 was to reclassify debt issue costs of approximately $4.6 million as of December 31, 2015 as a deduction from the related debt liabilities. Accordingly, other assets and total assets in the 2015 condensed consolidated balance sheet were reduced by that amount, and long-term debt and total liabilities were reduced by the same amount. There was no effect on net income or cash flows.

In March 2016, the FASB issued ASU 2016-09, Compensation — Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 provides new guidance intended to simplify several aspects of accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, including an option to early adopt. The Company does not expect adoption to have a material impact on its financial statements.

During 2016, the FASB issued additional ASUs relating to Revenue from Contracts with Customers (Topic 606). These updates, identified as ASU 2016-08, ASU 2016-10 and ASU 2016-12, identified practical expedients and clarified various aspects of the new revenue recognition standard outlined in ASU 2014-09. The Company has reviewed these updates and does not believe they will materially impact the Company’s future adoption of the standard. The effective date and transition requirements for ASU 2014-09 (and updated in ASU 2015-14) were not changed with these pronouncements.

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In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740) – Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 provides new guidance intended to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, including an option to early adopt. The Company is currently evaluating the potential effects of the adoption to its financial statements.

4. Accumulated other comprehensive loss, net of tax

Comprehensive loss consists of net loss and other comprehensive loss. Other comprehensive loss refers to revenue, expenses, gains, and losses that are recorded as an element of equity but are excluded from net loss. The Company’s accumulated other comprehensive loss is composed of the Company’s foreign currency translation of its operations in South America, Central America and the Caribbean as well as net periodic benefit cost of pension plans. There were no reclassifications from other comprehensive income into earnings for the periods presented.

The components of accumulated other comprehensive loss, net of tax, were as follows:

	21st Century Oncology Holdings, Inc. Shareholder						Noncontrolling Interests
Quarter to date (in thousands):	Foreign Currency Translation Adjustments		Net Periodic Benefit Cost of Pension Plan		Total		Foreign Currency Translation Adjustments		Other Comprehensive Loss
As of June 30, 2016	$	(57,352)	$	(457)	$	(57,809)	$	(7,436)
Other comprehensive loss		(1,157)		—		(1,157)		7	$	(1,150)
As of September 30, 2016	$	(58,509)	$	(457)	$	(58,966)	$	(7,429)	$	(1,150)

	21st Century Oncology Holdings, Inc. Shareholder						Noncontrolling Interests
Year to date (in thousands):	Foreign Currency Translation Adjustments		Net Periodic Benefit Cost of Pension Plan		Total		Foreign Currency Translation Adjustments		Other Comprehensive Loss
As of December 31, 2015	$	(54,117)	$	(457)	$	(54,574)	$	(6,675)
Other comprehensive loss		(4,392)		—		(4,392)		(754)	$	(5,146)
As of September 30, 2016	$	(58,509)	$	(457)	$	(58,966)	$	(7,429)	$	(5,146)

5. Series A preferred stock

On September 26, 2014, the Company entered into a Subscription Agreement (the “ Original Subscription Agreement”) with Canada Pension Plan Investment Board (“CPPIB”). Pursuant to the Original Subscription Agreement, the Company issued to CPPIB an aggregate of 385,000 newly issued shares of its Series A Convertible Preferred Stock, (the “Series A Preferred Stock”), par value $0.001 per share, stated value $1,000 per share, for a purchase price of $325.0 million. 

On September 9, 2016 , the Company entered into a second Subscription Agreement (the “2016 Subscription Agreement”), by and among the Company, CPPIB, 21st Century Oncology Investments, LLC (“21CI”) and 21C. Pursuant to the 2016 Subscription Agreement, the Company issued to CPPIB, an aggregate of 25,000 shares of its Series A Preferred Stock, par value $0.001 per share, for a purchase price of $25.0 million. In connection with the 2016 Subscription Agreement, CPPIB irrevocably and unconditionally waived, released and forgave any and all Default Events (as defined in the 2016 Subscription Agreement) occurring prior to closing of the equity issuance and any and all rights or remedies of CPPIB with respect thereto.

As set forth in the Amended and Restated Certificate of Designations of Series A Convertible Preferred Stock (the “Certificate of Designations”), holders of Series A Preferred Stock are entitled to receive, as and if declared by the board of directors of the Company, dividends at an applicable rate per annum, payable quarterly in arrears on January 1, April 1, July 1 and October 1 of each year. During the first three years after issuance, any dividends, when and if declared, shall be paid by the Company in the form of additional shares of Series A Preferred Stock.  During the first twelve months after issuance, the applicable dividend rate on the Series A Preferred Stock shall be 9.875%, thereafter increasing on a periodic basis. Until September 24, 2017, any dividends when and if declared, shall be paid by the

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Company in the form of additional shares of Series A Preferred Stock. Starting as of July 17, 2016, the maximum applicable dividend rate on the Series A Preferred Stock was 16.00%, provided that, upon the occurrence of certain default events after September 9, 2016, dividends will accrue at a rate of 26.00%. Such dividends accrue daily, whether or not declared by the board of directors of the Company. After September 24, 2017, and only if the Company’s outstanding senior notes are repaid in full, dividends will be paid in cash upon the election of a majority of the holders of Series A Preferred Stock (the “Majority Preferred Holders”) or upon certain other events of default as defined by the Certificate of Designations.

The Series A Preferred Stock is mandatorily convertible into common stock, par value $0.01 per share (the “Common Stock”) of the Company upon the occurrence of a qualifying initial public offering of the Company or a qualifying merger. The Series A Preferred Stock also becomes mandatorily convertible on the tenth anniversary of the original issue date. If, upon conversion, the Series A Preferred Stock converted to Common Stock represents greater than 29% of the Company’s outstanding Common Stock (“Excess Common Stock”), CPPIB has the option to convert amounts in excess of 29% to newly issued preferred stock (the “Excess Preferred Stock”). If settled under a repurchase event (which occurs upon a change of control or a default event, as defined in the related agreements), redemption occurs at the stated value.

Holders of Series A Preferred Stock also have, among other rights, the right to require the Company to repurchase their shares upon the occurrence of certain events of default and certain change of control transactions, at the prices set forth in the Certificate of Designations.  In addition, the Certificate of Designations also provides for certain consent rights of the Majority Preferred Holders in connection with specified corporate events of 21CI or its subsidiaries, including, among other things, with respect to certain equity issuances and certain acquisitions, financing transactions and asset sale transactions.  Upon certain events of default and the obtaining of applicable anti-trust regulatory approvals, holders of Series A Preferred Stock are also entitled to vote together with holders of Common Stock, on an as-converted basis. In addition, the Series A Preferred Stock is senior in preference to the Company’s Common Stock with respect to dividend rights, rights upon liquidation, winding up or dissolution.

Pursuant to the terms of the Subscription Agreement, immediately following the occurrence of a qualifying initial public offering of the Company, a qualifying merger, or on September 26, 2024 at the option of CPPIB or the Company, the Company will execute and deliver to CPPIB a Warrant Agreement (the “Warrant Agreement”) and issue to CPPIB warrants to purchase shares of Common Stock having a then-current value of $30 million, at a purchase price of $0.01 per share.  The warrants expire on the tenth anniversary of the date of issuance.

The Company evaluated the contingent events that could trigger the conversion of the Series A Preferred Stock to Common Stock and issue of warrants and determined that the contingent conversion features qualify as an embedded derivative and, that the contingently exercisable warrants are a freestanding financial instrument, each requiring bifurcation and classification as a liability, measured at fair value.

Modification of Series A Preferred Stock

The Certificate of Designations, as amended and restated in connection with the 2016 Subscription Agreement, (i) reduced the maximum applicable dividend rate on the Series A Preferred Stock to 16% from the previous maximum rate of 26%; (ii) reduced the applicable dividend rate in the event of default; and (iii) reduced the price at which the holders of the Series A Preferred Stock could require the Company to repurchase their shares upon the occurrence of certain events of default and certain change of control transactions.

The Company evaluated whether or not the 2016 Subscription Agreement was an extinguishment and reissuance of the Series A Preferred Shares or a modification using a fair value approach. Under this approach, if there is a 10% or greater change in the fair value of the Series A Preferred Stock as a result of the amendment or exchange, the shares are considered substantially different and the amendment would be accounted for as an extinguishment and reissuance. If the change in fair value is less than 10%, the amendment is considered a modification. The Certificate of Designations, as amended and restated in connection with the 2016 Subscription Agreement decreased the fair value of the Series A Preferred Stock by approximately $11 million, or 2.0%, and thus the Company considered the amendment to be a modification, with no change to the carrying amount required.

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Activity during the quarter ended September 30, 2016

The Company estimated the fair value of the embedded derivatives and warrants using significant unobservable inputs (Level 3), as defined in Note 8. The primary valuation technique used was comparing the present value of discounted cash flows, assuming no triggering events occur with the present value of discounted cash flows assuming a triggering event does occur. The assumptions incorporated management’s estimates of timing and probability of each triggering event, with those cash flows discounted using rates commensurate with the risks of those cash flows. As a result of the Company entering into Amendment No. 2 to the 2015 Credit Agreement, both of which are defined and further discussed in Note 13, and the capital event requirements required pursuant to Amendment No. 2, the Company reevaluated the timing and probability assumptions of each triggering event during the quarter ended September 30, 2016. Based on the current assumptions, the Company determined the fair value of the embedded derivative to be approximately $0.5 million which is reflected as an asset in the embedded derivative and other financial instrument features of Series A convertible redeemable preferred stock caption of the accompanying condensed consolidated balances sheets and the fair value of the warrants to be approximately $24.8 million which is reflected as a liability in the embedded derivative and other financial instrument features of Series A convertible redeemable preferred stock caption of the accompanying condensed consolidated balances sheets, both as of September 30, 2016. 

The Company is accreting the components of the difference between issuance date fair value and redemption value over the period which each component of that discount relates, generally using the effective interest method, which is reflective of the economics of the instrument.

If the Series A Preferred Stock were redeemable as of the balance sheet date, the Series A Preferred Stock would be redeemable at its stated value of $410.0 million plus accrued dividends. Accrued dividends as of September 30, 2016 and December 31, 2015 were $101.8 million and $53.6 million, respectively.

Changes to the Series A Preferred Stock are as follows:

Quarter to date (in thousands):
As of June 30, 2016	$	429,966
Issuance of Series A preferred stock, net of discount and issuance costs		24,970
Accretion of Series A Preferred Stock to redemption value		1,353
Series A Preferred Stock dividends accrued at effective rate		16,060
As of September 30, 2016	$	472,349

Year to date (in thousands):
Balance, December 31, 2015	$	389,514
Issuance of Series A preferred stock, net of discount and issuance costs		24,970
Accretion of Series A Preferred Stock to redemption value		9,792
Series A Preferred Stock dividends accrued at effective rate		48,073
As of September 30, 2016	$	472,349

6. Reconciliation of total equity and noncontrolling interests

The consolidated financial statements include the accounts of the Company and its majority owned subsidiaries in which it has a controlling financial interest.  Noncontrolling interests-nonredeemable principally represent minority shareholders’ proportionate share of the equity of certain consolidated majority owned entities of the Company.

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The following table presents changes in total equity for the respective periods:

(in thousands):	21st Century Oncology Holdings, Inc Shareholder’s Deficit		Noncontrolling interests - nonredeemable		Total Equity		Noncontrolling interests - redeemable
Balance, December 31, 2015	$	(700,952)	$	26,322	$	(674,630)	$	19,233
Net (loss) income		(97,479)		3,883		(93,596)		651
Other comprehensive loss from foreign currency translation		(4,392)		(736)		(5,128)		(18)
Accretion of Series A convertible redeemable preferred stock to redemption value		(9,792)		—		(9,792)		—
Accrued Series A convertible redeemable preferred stock dividends		(48,073)		—		(48,073)		—
Adjustment of noncontrolling interest to redemption value		(705)		—		(705)		705
Distributions		—		(1,968)		(1,968)		(1,324)
Balance, September 30, 2016	$	(861,393)	$	27,501	$	(833,892)	$	19,247
Balance, December 31, 2014	$	(493,439)	$	55,838	$	(437,601)	$	15,273
Net (loss) income		(140,480)		4,641		(135,839)		1,969
Other comprehensive loss from foreign currency translation		(5,403)		(1,010)		(6,413)		(1)
Accretion of Series A convertible redeemable preferred stock to redemption value		(13,262)		—		(13,262)		—
Accrued Series A convertible redeemable preferred stock dividends		(40,223)		—		(40,223)		—
Purchase price fair value of noncontrolling interest		14,500		(44,060)		(29,560)		—
Proceeds from issuance of noncontrolling interest		2,315		8,939		11,254		3,767
Proceeds from noncontrolling interest holders		—		3,170		3,170		686
Stock based compensation		6		—		6		—
Distributions		—		(2,347)		(2,347)		(1,760)
Balance, September 30, 2015	$	(675,986)	$	25,171	$	(650,815)	$	19,934

Redeemable equity securities with redemption features that are not solely within the Company’s control are classified outside of permanent equity as noncontrolling interests - redeemable. Those securities are initially recorded at their estimated fair value on the date of issuance. Securities that are currently redeemable or redeemable after the passage of time are adjusted to their redemption value as changes occur. In the unlikely event that a redeemable equity security will require redemption, any subsequent adjustments to the initially recorded amount will be recognized in the period that a redemption becomes probable. Contingent redemption events vary by joint venture and generally include either the holder’s discretion or circumstances jeopardizing the joint ventures’ ability to provide services, the joint ventures’ participation in Medicare, Medicaid, or other third party reimbursement programs, the tax-exempt status of minority shareholders, and violation of federal statutes, regulations, ordinances, or guidelines. Amounts required to redeem noncontrolling interests are based on either fair value or a multiple of trailing financial performance and are potentially unlimited.

7. Derivative agreements

Series A Preferred Stock embedded derivative and other financial instruments

The Company’s Series A Preferred Stock contains provisions for contingent events that could trigger the conversion of the Series A Preferred Stock to common stock and require the issuance of warrants to CPPIB. The Company determined that the contingent conversion features qualify as an embedded derivative, and, that the contingently exercisable warrants are a freestanding financial instrument, each requiring bifurcation and classification as a liability, measured at fair value. The Company evaluates the fair value of the embedded derivatives and warrants and adjusts changes in fair value through the fair value measurements caption in the consolidated statements of operations and comprehensive loss.

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SFRO seller financing note embedded derivative

On July 2, 2015, the Company purchased the noncontrolling interest of South Florida Radiation Oncology (“SFRO”) as further described in Note 10. The Company structured a portion of the purchase price with seller financing paid in kind (“PIK”) notes (“SFRO PIK Notes”) that, in the event the sellers achieve certain milestones, require payment acceleration of principal amounts as well as premium payments. The Company determined that the contingent conversion features of the SFRO PIK Notes qualify as embedded derivatives, requiring bifurcation and classification as debt, measured at fair value. The Company evaluates the fair value of those embedded derivatives and adjusts changes in fair value through the fair value measurements caption in the condensed consolidated statements of operations and comprehensive loss.

8. Fair value of financial instruments

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis in accordance with ASC 820. Certain assets and liabilities are subject to fair value adjustments only in certain circumstances and measured at fair value on a non-recurring basis.

The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 — Quoted prices for identical assets and liabilities in active markets.

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Unobservable inputs for the asset or liability.

Cash and cash equivalents are reflected in the consolidated financial statements at their carrying value, which approximate their fair value due to their short maturity.

As of September 30, 2016 and December 31, 2015, the Company held certain items that are required to be measured at fair value on a recurring basis, including the embedded derivative features and warrants of its Series A Preferred Stock and SFRO PIK Notes. The primary valuation technique used was comparing the present value of discounted cash flows, assuming no triggering events occur, with the present value of discounted cash flows assuming a triggering event does occur. The assumptions incorporated management’s estimates of timing and probability of each triggering event, with those cash flows discounted using rates commensurate with the risks of those cash flows. Changes in fair value based on variations in assumptions generally cannot be extrapolated because the relationship between the directional change of each input is not usually linear.

Earn-out liabilities are generally contingent upon the acquiree achieving certain EBITDA targets. The Company values earn-out liabilities by estimating the timing and amount of potential payments. The estimated payments are discounted to present value and probability weightings are assigned, if applicable.

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The following tables provide information about long-term debt not carried at fair value in accordance with ASC 820. The fair values were based on prices quoted from third-party financial institutions (Level 2). The fair values are as follows:

	September 30, 2016
(in thousands):	Fair Value		Carrying Value
$610.0 million Term Loan Facility due April 30, 2022	$	563,221	$	585,322
$360.0 million Senior Notes due May 1, 2023	$	302,400	$	353,183
$75.0 million Senior Secured Notes due January 15, 2017	$	488	$	488

	December 31, 2015
(in thousands):	Fair Value		Carrying Value
$610.0 million Term Loan Facility due April 30, 2022	$	509,838	$	589,133
$360.0 million Senior Notes due May 1, 2023	$	262,800	$	352,546
$75.0 million Senior Secured Notes due January 15, 2017	$	443	$	443

The carrying values of the Company’s other long-term debt instruments approximate fair value due to the length of time to maturity and/or the existence of interest rates that approximate prevailing market rates.

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The following items are measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820, as of September 30, 2016 and December 31, 2015:

			Fair Value Measurements at Reporting Date Using
(in thousands):	September 30, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Marketable securities	$	1,756	$	1,756	$	—	$	—
Other current assets
Cash surrender value of company owned life insurance investments	$	191	$	191	$	—	$	—
Assets
Embedded derivative and other financial instrument features of Series A Preferred Stock	$	499	$	—	$	—	$	499
Other long-term assets
Cash surrender value of company owned life insurance investments	$	6,717	$	6,717	$	—	$	—
Other current liabilities
Embedded derivative features of SFRO PIK Notes	$	900	$	—	$	—	$	900
Earn-out liabilities	$	45	$	—	$	—	$	45
Cash surrender value of company owned life insurance obligations	$	191	$	191	$	—	$	—
Liabilities
Embedded derivative and other financial instrument features of Series A Preferred Stock	$	24,843	$	—	$	—	$	24,843
Other long-term liabilities
Cash surrender value of company owned life insurance obligations	$	7,376	$	7,376	$	—	$	—

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			Fair Value Measurements at Reporting Date Using
(in thousands):	December 31, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Marketable securities	$	1,078	$	1,078	$	—	$	—
Other current assets
Cash surrender value of company owned life insurance investments	$	299	$	299	$	—	$	—
Assets
Embedded derivative and other financial instrument features of Series A Preferred Stock	$	17,883	$	—	$	—	$	17,883
Other long-term assets
Cash surrender value of company owned life insurance investments	$	5,203	$	5,203	$	—	$	—
Other current liabilities
Embedded derivative features of SFRO PIK Notes	$	2,230	$	—	$	—	$	2,230
Earn-out liabilities	$	193	$	—	$	—	$	193
Cash surrender value of company owned life insurance obligations	$	299	$	299	$	—	$	—
Liabilities
Embedded derivative and other financial instrument features of Series A Preferred Stock	$	19,911	$	—	$	—	$	19,911
Other long-term liabilities
Cash surrender value of company owned life insurance obligations	$	5,796	$	5,796	$	—	$	—

There have been no transfers between levels of valuation hierarchies for the nine months ended September 30, 2016 and 2015.

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The following tables present changes in Level 3 liabilities measured at fair value on a recurring basis:

	Fair value		Instruments		Change in		Fair value
Quarter to date (in thousands):	June 30, 2016		Issued (Paid)		Fair Value		September 30, 2016
Assets
Embedded derivative and other financial instrument features of Series A convertible redeemable preferred stock	$	33,284	$	—	$	(32,785)	$	499
Other current liabilities
Embedded derivative features of SFRO PIK Notes	$	2,540	$	(1,200)	$	(440)	$	900
Earn-out liabilities	$	45	$	—	$	—	$	45
Liabilities
Embedded derivative and other financial instrument features of Series A convertible redeemable preferred stock	$	22,212	$	—	$	2,631	$	24,843
	Fair value		Instruments		Change in		Fair value
Year to date (in thousands):	December 31, 2015		Issued (Paid)		Fair Value		September 30, 2016
Assets
Embedded derivative and other financial instrument features of Series A convertible redeemable preferred stock	$	17,883	$	—	$	(17,384)	$	499
Other current liabilities
Embedded derivative features of SFRO PIK Notes	$	2,230	$	(1,200)	$	(130)	$	900
Earn-out liabilities	$	193	$	(149)	$	1	$	45
Liabilities
Embedded derivative and other financial instrument features of Series A convertible redeemable preferred stock	$	19,911	$	—	$	4,932	$	24,843

9. Income taxes

The Company’s effective rate was (9.3)% and (5.7)% for the nine months ended September 30, 2016 and 2015, respectively. The change in the effective rate for the first nine months of 2016 compared to the same period of the year prior is primarily the result of the relative mix of earnings and tax rates across jurisdictions, and the application of ASC 740-270 to exclude certain jurisdictions for which the Company is unable to benefit from losses. These items also caused the effective tax rate to differ from the U.S. statutory rate of 35%.

The Company’s future effective tax rates could be affected by changes in the relative mix of taxable income and taxable loss jurisdictions, changes in the valuation of deferred tax assets or liabilities, or changes in tax laws or interpretations thereof.  The Company monitors the assumptions used in estimating the annual effective tax rate and makes adjustments, if required, throughout the year.  If actual results differ from the assumptions used in estimating the Company’s annual effective tax rates, future income tax expense (benefit) could be materially affected.

The Company has not provided U.S. federal and state deferred taxes on the cumulative earnings of non-U.S. affiliates and associated companies that have been reinvested indefinitely. The aggregate undistributed earnings of the Company’s foreign subsidiaries for which no deferred tax liability has been recorded is approximately $1.3 million as of December 31, 2015. It is not practical to determine the U.S. income tax liability that would be payable if such earnings were not reinvested indefinitely.

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The Company is routinely under audit by federal, state, or local authorities in the areas of income taxes and other taxes. These audits may include questioning the timing and amount of deductions and compliance with federal, state, and local tax laws. The Company regularly assesses the likelihood of adverse outcomes from these audits to determine the adequacy of the Company’s provision for income taxes.  To the extent the Company prevails in matters for which accruals have been established or is required to pay amounts in excess of such accruals, the effective tax rate could be materially affected.  In accordance with the statute of limitations for federal tax returns, the Company’s federal tax returns for the years 2012 through 2015 are subject to examination.

10. Acquisitions and other arrangements

Kennewick, Washington

On January 2, 2015, the Company purchased an 80% interest in a legal entity that operates a radiation oncology facility in Kennewick, Washington for approximately $18.9 million comprised of approximately $17.6 million in cash and a contingent earn-out payment valued at $1.3 million. The allocation of the purchase price is to tangible assets of approximately $3.0 million, intangible assets of $2.2 million ($1.2 million in non-compete agreement, amortized over 5 years, and $1.0 million in tradename), noncontrolling interest-redeemable of $3.8 million, assumed capital leases of $0.3 million and goodwill of $17.8 million, which is deductible for tax purposes.

The earn-out is contingent upon achieving certain EBITDA targets measured over three years from the acquisition date and the potential payments range from $0 to approximately $3.4 million. The earn-out was valued using a multiple scenario probability weighted income approach that discounted future earn-out payments under the following scenarios: base case, a minimum earn-out case, no earn-out case, and maximum earn-out case. Each scenario forecasted the future EBITDA of the acquired entity and calculated the anticipated earn-out paid for each year. The earn-out payments were discounted to the present value and probability weightings were applied to each scenario to determine the estimated fair value.

SFRO

On February 10, 2014, the Company purchased a 65% equity interest in SFRO. On July 2, 2015, the Company purchased the remaining 35% of SFRO for $44.1 million, comprised of $15.0 million in cash, $14.6 million payment-in-kind (“PIK”) (“SFRO PIK Notes”), and $14.5 million in 21CI preferred stock, which was immediately converted to common stock. The SFRO PIK Notes accrue interest at 10% per annum, which will be accrued quarterly and added to the outstanding principal amount. The SFRO PIK Notes mature on June 30, 2019 and provide for accelerated principal payments along with premium payments to the sellers upon achievement of certain operational milestones. As of September 30, 2016, one milestone had been achieved.

Other acquisitions and other arrangements

On July 31, 2016, the Company purchased a radiation oncology practice group located in Modesto, California for approximately $0.4 million comprised of a seller financing note payable to the seller over 2 years. The allocation of the purchase price was $0.3 million to a non-compete agreement, amortized over 2 years, and $0.1 million to goodwill.

On January 1, 2016, the Company contributed its Greenville, North Carolina radiation treatment center to a newly formed joint venture (“Newco”). The Company’s Greenville operations were valued at approximately $19.0 million. Simultaneously, a local hospital system contributed its Greenville, North Carolina radiation treatment center operations into Newco and purchased additional ownership interests from the Company for approximately $6.2 million. As a result of the transaction, the Company owns 50% of Newco. The Company determined it does not control Newco and as of January 1, 2016, deconsolidated the operations of its Greenville treatment center, recording a gain on disposal of $12.6 million in other gains and losses in the condensed consolidated statements of operations and comprehensive loss.

The Company valued its Greenville treatment center using a weighted average of the market approach and income approach, which are Level 3 valuation techniques. The market approach considered a range of enterprise values developed with revenue multiples and EBITDA multiples consistent with radiation oncology practice purchases. The income approach considered a number of factors, including the center’s performance projections, capital expenditures, discount rates, strength of competition and income tax rates.

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On December 14, 2015, the Company acquired the assets of a radiation oncology practice it already manages located in Miami, Florida for approximately $6.6 million comprised of approximately $1.1 million in cash and $5.5 million of seller financing note. The allocation of the purchase price is to tangible assets of approximately $3.5 million, non-compete agreement of $0.1 million, goodwill of $5.5 million and the assumption of a $2.5 million capital lease.

On January 6, 2015, the Company acquired the assets of a radiation oncology practice located in Warwick, Rhode Island for approximately $8.0 million in cash. The allocation of the purchase price is to tangible assets of $0.6 million, intangible assets of approximately $0.9 million ($0.2 million in non-compete agreement, amortized over 5 years, and $0.7 million in certificate of need), and goodwill of $6.5 million, which is deductible for tax purposes.

The operations of the foregoing acquisitions have been included, and the operations of the foregoing deconsolidation have been excluded, in the accompanying condensed consolidated statements of operations and comprehensive loss from the respective date of the acquisition or deconsolidation.

11. Goodwill and intangible assets

The changes in the carrying amount of goodwill are as follows:

	Nine Months Ended		Year Ended
(in thousands):	September 30, 2016		December 31, 2015
Balance, beginning of period: U.S. Domestic Segment
Goodwill	$	1,150,614	$	1,120,275
Accumulated impairment losses		(700,799)		(700,799)
Net goodwill, beginning of period		449,815		419,476
Goodwill acquired during the period		123		30,468
Contribution of a radiation facility to an unconsolidated joint venture		(5,146)		—
Adjustments to purchase price allocations		—		(129)
Balance, end of period
Goodwill		1,145,591		1,150,614
Accumulated impairment losses		(700,799)		(700,799)
Net goodwill, end of period: U.S. Domestic Segment	$	444,792	$	449,815
Balance, beginning of period: International Segment
Goodwill	$	48,865	$	57,083
Net goodwill, beginning of period		48,865		57,083
Goodwill acquired during the period		—		233
Adjustments to purchase price allocations		—		88
Foreign currency translation		(1,915)		(8,539)
Balance, end of period
Goodwill		46,950		48,865
Net goodwill, end of period: International Segment	$	46,950	$	48,865

During the quarter ended June 30, 2016, the Company entered into an agreement to terminate an OnCure management services agreement prior to the end of its expiration date. The management services agreement is recorded as an intangible asset on the condensed consolidated balance sheet. The Company assessed the fair value of the management services agreement, determined it was impaired and recorded an impairment loss of $1.8 million, which is recorded in impairment loss in the condensed consolidated statements of operations and comprehensive loss. The management services agreement impairment relates to the Company’s U.S. Domestic Segment. The Company determined the fair value of the management services agreement based on the income approach.

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12. Accrued expenses

Accrued expenses consist of the following:

(in thousands):	September 30, 2016		December 31, 2015
Accrued payroll and payroll related deductions and taxes	$	26,012	$	19,051
Accrued compensation arrangements		22,422		30,010
Accrued interest		17,196		7,359
Accrued Gamma investigative matter		—		34,694
Accrued electronic health record incentive payments and penalties		7,791		10,964
Accrued other		9,458		9,575
Total accrued expenses	$	82,879	$	111,653

13. Long-term debt

At September 30, 2016 and December 31, 2015, all of the Company’s senior credit facility and senior notes have been classified as current liabilities due to the Capital Event requirements included in such agreements. See note 2, Leverage and Liquidity, for more information. In addition, certain of the Company’s capital leases and a seller financing promissory note have been classified as current liabilities due to the non-compliance of certain default provisions within the respective agreements.

The Company’s long-term debt consists of the following (in thousands):

	September 30,		December 31,
	2016		2015
$125.0 million Senior Secured Credit Facility – (2015 Revolving Credit Facility) (net of $4,039 and $4,567 of deferred financing costs at September 30, 2016 and December 31, 2015, respectively)	$	117,961	$	55,433
$610.0 million Senior Secured Credit Facility – (Term Loan Facility) (net of unamortized debt discount of $4,825 and $5,498 and deferred financing costs of $12,228 and $12,319 at September 30, 2016 and December 31, 2015, respectively)		585,322		589,133
$360.0 million Senior Notes (net of $7,492 and $7,454 of deferred financing costs at September 30, 2016 and December 31, 2015, respectively)		353,183		352,546
$75.0 million Senior Secured Notes		488		443
Capital leases payable with various monthly payments plus interest at rates ranging from 3.75% to 19.0%, due at various maturity dates through December 2020		40,947		49,854
SFRO PIK Notes (net of unamortized debt discount of $301 and $384 and embedded derivative of $2,217 and $2,876 at September 30, 2016 and December 31, 2015, respectively)		15,652		12,497
Various other notes payable and seller financing promissory notes  with various monthly payments plus interest at rates ranging from 7.1% to 19.5%, due at various maturity dates through May 2021		10,840		13,204
		1,124,393		1,073,110
Less current portion		(1,106,662)		(1,023,877)
	$	17,731	$	49,233

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Senior Secured Credit Facility

On April 30, 2015, 21C entered into the Credit Agreement (the “2015 Credit Agreement”) among 21C, as borrower, the Company, Morgan Stanley Senior Funding, Inc., as administrative agent (in such capacity, the “2015 Administrative Agent”), collateral agent, issuing bank and as swingline lender, the other agents party thereto and the lenders party thereto.

The credit facilities provided under the 2015 Credit Agreement consist of a revolving credit facility providing for up to $125 million of revolving extensions of credit outstanding at any time (including revolving loans, swingline loans and letters of credit) (the “2015 Revolving Credit Facility”) and an initial term loan facility providing for $610 million of term loan (the “Term Loan Facility”). 21C may (i) increase the aggregate amount of revolving loans by an amount not to exceed $25 million in the aggregate and (ii) subject to consummation of the Third Capital Event and a consolidated secured leverage ratio test, increase the aggregate amount of the term loans or the revolving loans by an unlimited amount or issue pari passu or junior secured loans or notes or unsecured loans or notes in an unlimited amount. The 2015 Revolving Credit Facility matures April 30, 2020 and the 2015 Term Loan Facility matures April 30, 2022.

Borrowings pursuant to the 2015 Credit Agreement are secured on a first priority basis by a perfected security interest in substantially all of the Company’s assets.

Loans under the 2015 Revolving Credit Facility are subject to the following interest rates:

(a)  for loans which are Eurodollar loans, including London Interbank Offered Rate (“LIBOR”), loans for any interest period, at a rate per annum equal to a percentage equal to (i) the rate per annum as administered by ICE Benchmark Administration, determined on the basis of the rate for deposits in dollars for a period equal to such interest period commencing on the first day of such interest period as of 11:00 A.M., London time, two business days prior to the beginning of such interest period divided by (ii) 1.0 minus the then stated maximum rate of all reserve requirements applicable to any member bank of the Federal Reserve System in respect of euro currency funding or liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D), plus (iii) an applicable margin of between 5.625% and 6.125%, based upon a total leverage pricing grid; and

(b)  for loans which are base rate loans, (i) the greatest of (A) the 2015 Administrative Agent’s prime lending rate on such day, which was 3.50% as of September 30, 2016, (B) the federal funds effective rate at such time plus ½ of 1%, and (C) the Eurodollar Rate for a Eurodollar Loan with a one-month interest period commencing on such day plus 1.00%, plus (ii) an applicable margin of between 4.625% and 5.125%, based upon a total leverage pricing grid.

21C will pay certain recurring fees with respect to the 2015 Revolving Credit Facility, including (i) fees on the unused commitments of the lenders under the 2015 Revolving Credit Facility, (ii) letter of credit fees on the aggregate face amounts of outstanding letters of credit and (iii) administration fees.

Loans under the 2015 Term Credit Facility are subject to the following interest rates:

(a)  for loans which are Eurodollar loans, including LIBOR loans, for any interest period, at a rate per annum equal to a percentage equal to (i) the rate per annum as administered by ICE Benchmark Administration, determined on the basis of the rate for deposits in dollars for a period equal to such interest period commencing on the first day of such interest period as of 11:00 A.M., London time, two business days prior to the beginning of such interest period divided by (ii) 1.0 minus the then stated maximum rate of all reserve requirements applicable to any member bank of the Federal Reserve System in respect of euro currency funding or liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D), provided that such percentage shall be deemed to be not less than 1.00%, plus (iii) an applicable margin of 6.125%; and

(b)  for loans which are base rate loans, (i) the greatest of (A) the 2015 Administrative Agent’s prime lending rate on such day, (B) the federal funds effective rate at such time plus ½ of 1%, and (C) the Eurodollar Rate for a Eurodollar Loan with a one-month interest period commencing on such day plus 1.00%, provided that such percentage shall be deemed to be not less than 2.00%, plus (ii) an applicable margin of 5.125%.

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The 2015 Credit Agreement contains customary representations and warranties, subject to limitations and exceptions, and customary covenants restricting the ability (subject to various exceptions) of 21C and certain of its subsidiaries to: incur additional indebtedness (including guarantee obligations); incur liens; engage in mergers or other fundamental changes; sell certain property or assets; pay dividends or other distributions; consummate acquisitions; make investments, loans and advances; prepay certain indebtedness, including the Senior Notes; change the nature of the business; engage in certain transactions with affiliates; and restrictions on the ability of 21C’s subsidiaries to make distributions, advances and asset transfers.  In addition, under the 2015 Credit Facilities, 21C is required to (i) maintain minimum liquidity of at least $40.0 million (tested monthly) and (ii) comply with a consolidated leverage ratio (tested quarterly) of 7.50 to 1.00 until March 30, 2018, stepping down to 6.25 to 1.00 thereafter. The consolidated leverage ratio is as follows as of September 30, 2016:

	Requirement at September 30, 2016	Level at September 30, 2016
Maximum permitted consolidated leverage ratio	<7.50 to 1.00	7.14 to 1.00

The 2015 Credit Facilities contain customary events of default, including with respect to nonpayment of principal, interest, fees or other amounts; material inaccuracy of a representation or warranty when made; failure to perform or observe covenants; cross default to other material indebtedness; bankruptcy and insolvency events; inability to pay debts; monetary judgment defaults; actual or asserted invalidity or impairment of any definitive loan documentation and a change of control.

The obligations of 21C under the 2015 Credit Facilities are guaranteed by the Company and each direct and indirect, domestic subsidiary of 21C, subject to customary exceptions.

On May 12, 2016, the Company received notice from the 2015 Administrative Agent that it was in default under the 2015 Credit Agreement because, among other things, 21C had not timely delivered 2015 audited financial statements to the Administrative Agent.

On June 10, 2016, the Company entered into an amendment and waiver (“Amendment No. 1”) to the 2015 Credit Agreement. Amendment No. 1 waived through July 31, 2016 any default or event of default under the 2015 Credit Agreement for failure to timely provide audited annual financial statements and related reports and certificates for the year ended December 31, 2015 and quarterly financial statements and related reports and certificates for the quarter ended March 31, 2016 (the “Specified Deliverables”). The Company paid approximately $1.8 million in loan costs related to Amendment No. 1 and incurred additional legal fees of approximately $0.2 million. Amendment No. 1 further provided that the interest rate applicable to the loans under the Credit Agreement increase in each case by 0.125% per annum as of July 1, 2016.

On August 15, 2016, the Company entered into an amendment and waiver (“Amendment No. 2”) to the 2015 Credit Agreement.

Amendment No. 2 provides for a limited waiver:

(1) through September 10, 2016, in respect of (a) any default or event of default under the 2015 Credit Agreement resulting from failure to provide audited annual financial statements and related reports and certificates for the year ended December 31, 2015 (the “Delayed 10-K”) without a “going concern” or like qualification as and when required pursuant to the 2015 Credit Agreement and (b) any cross-default that may arise under the 2015 Credit Agreement as a result of a default or event of default under the Senior Notes Indenture, which occurs as a result of the Company’s failure to timely furnish to the Trustee and holders of the Senior Notes (each as defined below) or file with the SEC the financial information required in the Delayed 10-K; and

(2)  through September 30, 2016, in respect of (a) any default or event of default under the 2015 Credit Agreement resulting from failure to timely provide quarterly financial statements and related reports and certificates for the quarters ended March 31, 2016 (the “Delayed 10Q”) and June 30, 2016 and (b) any cross-default that may arise under the 2015 Credit Agreement as a result of a default or event of default under the Senior Notes Indenture which occurs as a result of the Company’s failure to timely furnish to the Trustee and holders of the Senior Notes or file with the SEC the financial information required in the Delayed 10-Q and the quarterly report on Form 10-Q for the quarter ended June 30, 2016 (together, the “Quarterly SEC Reports”).

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The Company filed the Delayed 10-K with the SEC on August 23, 2016 and the Delayed 10-Q and the quarterly financial statements and related reports and certificates for the quarter ended June 30, 2016 on September 20, 2016.

In addition, Amendment No. 2 requires 21C to receive:

(1) no later than September 10, 2016, net cash proceeds from the issuance or sale of 21C’s capital stock or from other equity investments in an aggregate amount of at least $25.0 million;

(2) no later than November 30, 2016, additional net cash proceeds from the issuance or sale of 21C’s capital stock or from other equity investments and/or sales of assets (which sale transactions must be deleveraging transactions on a pro forma basis) in an aggregate amount of at least $25.0 million (or a lesser amount such that when combined with the proceeds from the First Capital Event, the total amount is not less than $50.0 million); and

(3) no later than March 31, 2017, additional net cash proceeds from the issuance or sale of 21C’s capital stock or from other equity investments and/or sales of assets (which sale transactions must be deleveraging transactions on a pro forma basis) in an aggregate amount of at least the lesser of (A) $75.0 million (or a lesser amount such that when combined with the proceeds from the First Capital Event and the Second Capital Event, the total amount is not less than $125.0 million), and (B) an amount such that, after giving effect to such issuance or sale of capital stock or other equity investments and/or sales of assets, 21C’s cash and cash equivalents plus unused revolving loan commitments equals at least $120.0 million and 21C’s consolidated leverage ratio is not greater than 6.4 to 1.00.

Notwithstanding any qualification provided for in the above described Capital Events, Amendment No. 2 requires that 21C receive, on or prior to March 31, 2017, at least $50.0 million of net cash proceeds from the issuance or sale of 21C’s capital stock or from other equity investments. On September 9, 2016, the Company satisfied the First Capital Event.

Amendment No. 2 provides for a new minimum liquidity covenant pursuant to which 21C must maintain at least $40.0 million of liquidity after the completion of the First Capital Event, which will be tested monthly prior to the completion of the Third Capital Event and quarterly thereafter.

Amendment No. 2 also amends certain existing covenants (and definitions related thereto) in the 2015 Credit Agreement and provides for additional restrictions regarding the ability of 21C and certain of its subsidiaries to incur additional debt, make restricted payments and make investments. These covenants are subject to a number of important limitations and exceptions.

Senior Notes Offering

On April 30, 2015, 21C completed an offering of $360.0 million aggregate principal amount of 11.00% senior notes due 2023 at an issue price of 100.00% (the “Senior Notes”). The Senior Notes are senior unsecured obligations of 21C and are guaranteed on an unsecured senior basis by the Company and each of 21C’s existing and future direct and indirect domestic subsidiaries that is a guarantor (the “Guarantors”) under the 2015 Credit Facilities.

The Senior Notes were issued in a private offering that is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), to qualified institutional buyers in accordance with Rule 144A and to persons outside of the United States pursuant to Regulation S under the Securities Act.

21C used the net proceeds from the offering, together with cash on hand and borrowings under the 2015 Credit Facilities, to repay its $90.0 million Term Facility, to redeem its 97/8% Senior Subordinated Notes due 2017 and its 87/8% Senior Secured Second Lien Notes due 2017, to repurchase the 113/4% Senior Secured Notes due 2017 issued by OnCure, to pay related fees and expenses and for general corporate purposes. The Company incurred approximately $26.5 million in transaction fees and expenses, including legal, accounting and other fees associated with the offering.

The Senior Notes were issued pursuant to an indenture, dated April 30, 2015 (the “Senior Notes Indenture”), among 21C, the Guarantors and Wilmington Trust, National Association, governing the Notes.

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Interest is payable on the Senior Notes on each May 1 and November 1, commencing November 1, 2015. 21C may redeem some or all of the Senior Notes at any time prior to May 1, 2018 at a price equal to 100% of the principal amount of the Senior Notes redeemed plus accrued and unpaid interest to the redemption date, if any, and an applicable make-whole premium. On or after May 1, 2018, 21C may redeem some or all of the Senior Notes at redemption prices set forth in the Senior Notes Indenture. In addition, at any time prior to May 1, 2018, 21C may redeem up to 35% of the aggregate principal amount of the Senior Notes, at a specified redemption price with the net cash proceeds of certain equity offerings.

The Senior Notes Indenture contains covenants that, among other things, restrict the ability of 21C and certain of its subsidiaries to: incur additional debt or issue preferred shares; pay dividends on or make distributions in respect of their equity interest or make other restricted payments; sell certain assets; create liens on certain assets to secure debt; consolidate, merge, sell or otherwise dispose of all or substantially all of their assets; enter into certain transactions with affiliates; and designate subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of important limitations and exceptions. In addition, in certain circumstances, if 21C sells assets or experiences certain changes of control, it must offer to purchase the Senior Notes.

The Company incurred a loss of approximately $37.4 million from the early extinguishment of debt as a result of the notes offering in April, 2015.  The Company paid approximately $24.9 million in premium payments for the early retirement of its $350.0 million senior secured second lien notes and $380.1 million senior subordinated notes, along with the tender offer premium payments on the $75.0 million senior secured notes. As a result of the notes offering, the Company wrote-off approximately $3.1 million in original issue discount and $9.4 million in deferred financing costs.

On May 17, 2016, the Company received notice from Wilmington Trust, National Association, as trustee (the “Trustee”) of the Senior Notes. The notice stated that 21C was in default under the Indenture governing the Senior Notes because 21C failed to timely furnish to the Trustee and noteholders the financial information required in an annual report on Form 10-K for the year ended December 31, 2015.

On July 25, 2016, the Company entered into the second supplemental indenture to the Senior Notes Indenture (the “Second Supplemental Indenture”), providing for a limited waiver through July 31, 2016 of certain defaults or events of default under the Senior Notes Indenture for failure to timely furnish to the trustee and holders of the Senior Notes or file with the SEC the financial information required in an annual report on Form 10-K for the year ended December 31, 2015 or in a quarterly report on Form 10-Q for the period ended March 31, 2016. As consideration for the foregoing, the Company paid to all holders of the Senior Notes an amount representing additional interest on the Senior Notes equal to $2.30 per $1,000 principal amount of the Senior Notes. The Company also paid certain fees and expenses of the advisors to certain holders of the Senior Notes incurred in connection with the Second Supplemental Indenture.

On August 16, 2016, the Company received the requisite consents from the holders of a majority of the aggregate principal amount of the Senior Notes outstanding to enter into a third supplemental indenture (the “Third Supplemental Indenture”) to the Senior Notes Indenture.

The Third Supplemental Indenture provides for a limited waiver:

(1) through September 10, 2016, in respect of certain defaults or events of default under the Senior Notes Indenture resulting from failure to timely furnish to the Trustee and holders of the Senior Notes or file with the SEC the Delayed 10-K; and

(2) through September 30, 2016, in respect of certain defaults or events of default under the Senior Notes Indenture resulting from failure to timely furnish to the Trustee and holders of the Senior Notes or file with the SEC the Quarterly SEC Reports.

The Company filed the Delayed 10-K with the SEC on August 23, 2016 and the Delayed 10-Q and the quarterly financial statements and related reports and certificates for the quarter ended June 30, 2016 on September 20, 2016.

The Third Supplemental Indenture requires the Company to complete each Capital Event as described above and in the same time frame described above. As discussed above, the Company satisfied the First Capital Event on September 9, 2016.

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The Third Supplemental Indenture provides for a new minimum liquidity covenant pursuant to which the Company must maintain at least $40.0 million of liquidity after the completion of the First Capital Event, which will be tested monthly prior to the completion of the Third Capital Event and quarterly thereafter.

The Third Supplemental Indenture also amends certain existing covenants (and definitions related thereto) in the Senior Notes Indenture and provides for additional restrictions regarding the ability of 21C and certain of its subsidiaries to incur additional debt and pay dividends on or make distributions in respect of their equity interests or make other restricted payments. These covenants are subject to a number of important limitations and exceptions.

Pursuant to the Third Supplemental Indenture, in addition to any cash interest provided for in the Senior Notes Indenture, during the period starting on August 1, 2016 through August 31, 2016, holders of the Senior Notes will be entitled to PIK interest at a rate of 0.75% per annum, which rate will increase by an additional 0.75% per annum on the first day of each subsequent month, commencing on September 1, 2016. PIK interest will be paid monthly on the first day of each month, starting on September 1, 2016. PIK interest will stop accruing on the date of completion of the Third Capital Event, and the last PIK interest payment will be made on the first day of the month following such date.

The Company paid approximately $0.8 million in loan costs related to the Second Supplemental Indenture and incurred additional legal fees of approximately $5.7 million related to Amendment No. 2 and the Second and Third Suplemental indenture.

The Third Supplemental Indenture also provides that the holders of a majority of the aggregate principal amount of the Senior Notes outstanding shall have the right to designate one non-voting board observer to attend meetings of the Board of Directors of each of the Company and 21C until the date of completion of the Third Capital Event. See note 17, Subsequent Events, for additional information.

14. Commitments and contingencies

Legal Proceedings

The Company operates in a highly regulated and litigious industry. As a result, the Company is involved in disputes, litigation, and regulatory matters incidental to its operations, including governmental investigations, personal injury lawsuits, employment claims, and other matters arising out of the normal conduct of business. Other than as set forth below, the Company does not believe that an adverse decision in any of these matters would have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Data Breach

On November 13, 2015, the Company was advised by the Federal Bureau of Investigation (the “FBI”) that patient information was illegally obtained by an unauthorized third party who may have gained access to a Company database. The Company immediately hired a leading forensic firm to support its investigation, assess its system and bolster its security. Based on its investigation, the Company determined that the intruder may have accessed the database on October 3, 2015. The Company notified approximately 2.2 million current and former patients that certain information may have been copied and transferred.

Following the data breach, the Company received notice that class action complaints had been filed against the Company and certain of its affiliates in Florida and California. The complaints allege, among other things, that the Company failed to take the necessary security precautions to protect patient information and prevent the data breach. Several of the Florida complaints have been consolidated. The Company expects additional claims to be consolidated to the extent permitted by the courts. Because of the early stages of these matters and the uncertainties of litigation, the Company cannot predict the ultimate resolution of these matters or estimate the amounts of, or ranges of, potential loss, if any, with respect to these proceedings.

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In addition, the Company has received a request for information regarding the data breach and the Company’s response from the Office for Civil Rights as well as additional inquiries from State Attorneys General. The Company has responded to each of those inquiries and provided the information requested. The Company could face fines or penalties as a result of these inquiries. However, due to the early stages of these matters, The Company cannot predict the ultimate resolution or estimate the amounts of, or ranges of, potential loss, if any.

The Company has insurance coverage and contingency plans for certain potential liabilities relating to the data breach. Nevertheless, the coverage may be insufficient to satisfy all claims and liabilities related thereto and the Company will be responsible for deductibles and any other expenses that may be incurred in excess of insurance coverage.

Lease Commitments

As a result of non-compliance with certain covenants of the Company’s capital leases and a seller financing promissory note as discussed in Note 13, the Company is in default on a master real estate lease agreement. The master real estate lease agreement encompasses 18 radiation treatment centers and the Company’s corporate headquarters. The results of this default could include the Lessor retaking possession of the centers, terminating the master real estate lease and collecting damages including acceleration of rent and all other obligations.

Exit and Disposal Costs

During the quarter ended September 30, 2016, the Company ceased use of its leased corporate aircraft. As a result, it recorded a liability of $0.5 million as of September 30, 2016 representing its net lease obligation and a corresponding loss. The loss is recorded in the other gains and losses caption in the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2016. The liability is recorded in the other current liabilities caption and the other long-term liabilities caption in the condensed consolidated balance sheets as of September 30, 2016.  The liability will be amortized as the underlying lease payments are paid through March 2018.  No amortization was recorded during the three or nine months ended September 30, 2016.

During the quarter ended September 30, 2016, the Company ceased use of real estate property it leases pursuant to an operating lease. The Company assessed the cease use event in accordance with ASC 420, Exit and Disposal Costs, and determined no net liability should be recorded. On November 10, 2016, the Company entered into a sublease for the property, which qualifies as a type 1 subsequent event and is required to be recorded as of September 30, 2016. The Company recorded a liability of $0.5 million as of September 30, 2016 representing its net lease obligation and a corresponding loss. The loss is recorded in the other gains and losses caption in the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2016. The liability is recorded in the other current liabilities caption and the the other long-term liabilities caption in the condensed consolidated balance sheets as of September 30, 2016.  The liability will be amortized as the underlying lease payments are paid through March 2018. No amortization was recorded during the three or nine months ended September 30, 2016.

During the quarter ended September 30, 2016, the Company identified and terminated certain employees. As a result, it recorded a severance charge of $4.2 million as of September 30, 2016 recorded in the general and administrative expenses caption in the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2016. The liability is recorded in the other current liabilities caption in the condensed consolidated balance sheets as of September 30, 2016.

During the quarter ended September 30, 2016, the Company entered into an agreement to sell one of its owned facilities located in Boca Raton, Florida.  The sale closed in October 2016 and generated $0.9 million in net cash proceeds.  As a result, the Company recorded an impairment loss as of September 30, 2016 of $0.8 million for the excess of the facility’s net book value over the net cash proceeds.

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15. Other gains and losses

Other gains and losses consists of the following:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands):	2016		2015		2016		2015
Gain on the contribution of a radiation facility to a joint venture	$	—	$	—	$	(12,629)	$	—
(Gain) loss on the sale/disposal of property and equipment		(446)		100		(480)		(203)
Gain on BP settlement		—		(5,796)		(517)		(5,796)
Exit and disposal costs		534		—		534		—
Loss on sublease		490		—		490		—
Gain on insurance recoveries		(97)		—		(97)		(1,364)
Total other gains and losses	$	481	$	(5,696)	$	(12,699)	$	(7,363)

Gain on the contribution of a radiaton facility to a joint venture

On January 1, 2016, the Company deconsolidated the operations of its Greenville treatment center, recording a gain on disposal of $12.6 million.

Gain on BP settlement

During 2016 and 2015, the Company received settlement funds from the Deepwater Horizon Settlement Program for damages suffered as a result of the Deepwater Horizon Oil Spill that occurred in 2010.

Exit and disposal costs

During the quarter ended September 30, 2016, the Company ceased use of its leased corporate aircraft. As a result, it recorded a liability representing its net lease obligation and a corresponding loss.

Loss on sublease

During the quarter ended September 30, 2016, the Company ceased use of real estate property it leases pursuant to an operating lease. The Company assessed the cease use event in accordance with ASC 420, Exit and Disposal Costs, and determined no net liability should be recorded. On November 10, 2016, the Company entered into a sublease for the property, which qualifies as a type 1 subsequent event and is required to be recorded as of September 30, 2016. The Company recorded a loss on sublease representing the Company’s net lease obligation as of September 30, 2016. 

Gain on insurance recoveries

During 2015, the Company received insurance recoveries from damages suffered as a result of a fire in one of its North Carolina radiation treatment centers that occurred during 2011. During 2016, the Company received insurance recoveries from damages suffered as a result of water damage in one of its Michigan radiation treatment centers.

16. Segment and geographic information

The Company operates in one line of business, operating physician group practices, and its operations are structured into two geographically organized groups: the U.S. Domestic operating segment and the International operating segment, which are also the reporting segments. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Transactions between reporting segments are properly eliminated. The Company assesses performance of and makes decisions on how to allocate resources to its operating segments based on multiple factors including current and projected facility gross profit and market opportunities. Facility gross profit is defined as total revenues less cost of revenues.

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Financial information by geographic segment is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands):	2016		2015		2016		2015
Total revenues:
U.S. Domestic	$	217,391	$	231,166	$	694,786	$	728,999
International		28,288		31,091		79,574		87,104
Total	$	245,679	$	262,257	$	774,360	$	816,103
Facility gross profit:
U.S. Domestic	$	51,077	$	56,352	$	172,566	$	188,450
International		15,076		18,000		42,737		48,606
Total	$	66,153	$	74,352	$	215,303	$	237,056
Depreciation and amortization:
U.S. Domestic	$	19,910	$	20,978	$	59,543	$	62,411
International		1,409		1,461		3,869		4,364
Total	$	21,319	$	22,439	$	63,412	$	66,775
Capital expenditures: *
U.S. Domestic					$	32,306	$	33,094
International						2,777		3,574
Total					$	35,083	$	36,668

*     includes capital lease obligations and accounts payable related to capital expenditures

(in thousands):	September 30, 2016		December 31, 2015
Total assets:
U.S. Domestic	$	932,192	$	982,575
International		122,768		121,286
Total	$	1,054,960	$	1,103,861
Property and equipment:
U.S. Domestic	$	190,897	$	213,442
International		23,798		25,143
Total	$	214,695	$	238,585
Acquisition-related goodwill and intangible assets:
U.S. Domestic	$	496,585	$	511,182
International		54,638		57,613
Total	$	551,223	$	568,795

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The reconciliation of the Company’s reportable segment profit and loss is as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands):	2016		2015		2016		2015
Facility gross profit	$	66,153	$	74,352	$	215,303	$	237,056
Less:
General and administrative expenses		35,344		68,306		101,070		141,340
General and administrative salaries		30,817		28,693		82,361		84,257
General and administrative depreciation and amortization		3,493		3,913		10,801		11,846
Provision for doubtful accounts		8,610		5,617		17,270		13,683
Interest expense, net		27,151		23,771		77,353		73,836
Other gains and losses		481		(5,696)		(12,699)		(7,363)
Impairment loss		770		-		2,595		-
Early extinguishment of debt		-		-		-		37,390
Fair value measurements		34,976		1,799		22,187		8,404
Loss on foreign currency transactions		(5)		333		300		537
Loss before income taxes and equity interest in net income of joint ventures	$	(75,484)	$	(52,384)	$	(85,935)	$	(126,874)

17. Subsequent events

On November 1, 2016, the Company announced that 21C failed to make a semi-annual interest payment as required by the Senior Notes Indenture governing its Senior Notes. The failure to make such interest payment, if not cured within 30 days, will result in an event of default under the Senior Notes Indenture.

Should an event of default occur under the Senior Notes Indenture, a cross-default would occur under the Company’s 2015 Credit Facilities. Following an event of default under the Senior Notes Indenture or 2015 Credit Facilities, the holders of the Senior Notes or lenders under the 2015 Credit Facilities, as applicable, could accelerate 21C’s indebtedness outstanding under the Senior Notes Indenture or 2015 Credit Facilities, as applicable. In addition, other obligations of the Company could be accelerated, including the Series A Preferred Stock, other debt and capital leases and certain operating leases.

The Company intends to utilize the available 30-day cure period under the Senior Notes Indenture to work with its lenders, bondholders and stakeholders to address the potential default, however, there can be no assurance the Company will be able to cure the default within the 30-day cure period.

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

The following discussion and analysis should be read in conjunction with the unaudited interim condensed consolidated financial statements and related notes included elsewhere in this quarterly report on Form 10-Q for the quarter ended September 30, 2016 (“Form 10-Q”).  This section of this Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties, such as statements about our plans, objectives, expectations and intentions. These statements may be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “should” or “will” or the negative thereof or other variations thereon or comparable terminology. We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed in this Form 10-Q in the section titled “Risk Factors” and in the sections titled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 (the “Form 10-K”) may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which apply on and as of the date of this Form 10-Q. References in this Form 10-Q to “we,” “us” and “our” are references to 21st Century Oncology Holdings, Inc. and its subsidiaries, consolidated professional corporations and associations and unconsolidated affiliates, unless the context requires otherwise. References in this Form 10-Q to “our treatment centers” refer to owned, managed and hospital based treatment centers.

Overview

We are the leading global, physician-led provider of integrated cancer care (“ICC”) services. Our physicians provide comprehensive, academic quality, cost-effective coordinated care for cancer patients in personal and convenient community settings. We believe we offer a powerful value proposition to patients, hospital systems, payers and risk-taking physician groups by delivering high quality care and good clinical outcomes at lower overall costs through outpatient settings, clinical excellence, physician coordination and scaled efficiency.

We use a number of metrics to assist management in evaluating financial condition and operating performance, and the most important follow:

U.S. Domestic:

the total radiation oncology treatment plans;

the total radiation oncology treatments per day;

the net patient service revenue per radiation oncology treatment;

the pro-forma adjusted earnings before interest, taxes, depreciation and amortization;

the ratio of funded debt to pro-forma adjusted earnings before interest, taxes, depreciation and amortization (leverage ratio); and

facility gross profit.

International:

total number of open cases;

revenue per radiation oncology case.

Revenue Drivers

Our revenue growth is primarily driven by expanding our number of centers, optimizing the utilization of advanced technologies at our existing centers, benefiting from demographic and population trends in most of our local markets and by providing value added services to other healthcare and provider organizations. New centers are added or acquired based on capacity, demographics and competitive considerations.

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The average net patient service revenue per radiation oncology treatment is sensitive to the mix of services used in treating a patient’s tumor. The reimbursement rates set by Medicare and commercial payers tend to be higher for more advanced treatment technologies, reflecting their higher complexity. A key part of our business strategy is to make advanced technologies available once supporting economics exist. For example, we have been utilizing image guided radiation therapy (“IGRT”) and Gamma Function, a proprietary capability to enable measurement of the actual amount of radiation delivered during a treatment and to provide immediate feedback for adaption of future treatments.

Operating Costs

The principal costs of operating a treatment center are the salaries and benefits of the physicians and technical staff (“compensation expense”) as well as equipment and facility costs. Compensation expense is generally variable in nature and limited by the number of patients physicians can appropriately treat each day. Equipment and facility costs are generally fixed in nature. Profitability of a treatment center is sensitive to treatment volumes and will fluctuate based upon utilization of the equipment and facility.

Sources of Revenue By Payer

We receive payments for services to patients from the government Medicare and Medicaid programs, commercial insurers, managed care organizations and our patients directly. Generally, our revenue is determined by a number of factors, including the payer mix, the number and nature of procedures performed and the rate of payment for the procedures. The following table sets forth the percentage of our U.S. domestic net patient service revenue we earned based upon the patients’ primary insurance by category of payer in our last fiscal year and the nine months ended September 30, 2016 and 2015.

	Nine Months Ended
	September 30,				Year Ended
U.S. Domestic:	2016		2015		December 31, 2015
Payer
Medicare	37.8	%	39.1	%	38.8	%
Commercial	60.3		58.4		58.7
Medicaid	1.0		1.6		1.5
Self-pay	0.9		0.9		1.0
Total U.S. domestic net patient service revenue	100.0	%	100.0	%	100.0	%

Medicare and Medicaid

Since cancer disproportionately affects elderly people, Medicare, as well as the related co-payments, is a major funding source for the services we provide and government reimbursement developments can have a material effect on operating performance. These developments include the reimbursement amount for each Current Procedural Terminology (“CPT”) service that we provide and the specific CPT services covered by Medicare. The Centers for Medicare and Medicaid Services (“CMS”), the government agency responsible for administering the Medicare program, administers an annual process for considering changes in reimbursement rates and covered services. We have played, and will continue to play, a role in that process both directly and through the radiation oncology professional societies.

On December 28, 2015, the President signed S. 2425, the Patient Access and Medicare Protection Act. Among other things, this legislation will freeze the code definitions and relative value units for radiation treatment delivery and imaging codes in 2017 and 2018 according to code definition and relative value units in existence for these codes in 2016.  The legislation also requires the Secretary of Health and Human Services to report to Congress no later than 18 months after the enactment of S. 2425 on the development of an episodic alternative payment model for payment under the Medicare program under title XVIII of the Social Security Act for radiation therapy services furnished in the freestanding setting.

The final CY 2017 Physician Fee Schedule is expected to reduce our radiation oncology payments by approximately 0.1%.  It is expected that the CY 2018 rule will continue to reaffirm these freeze provisions.

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The Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”) will have a significant impact on how all providers will be paid beginning in 2019.  Starting in 2019, providers will be paid either through a new “Merit-Based Incentive Payment System” (“MIPS”) program or as part of an “Advanced Alternative Payment Model” (“AAPM”).  Providers paid through the MIPS will be subject to bonuses or penalties of between plus or minus 4% in 2019 to plus or minus 9% in 2022 and beyond based on quality performance.  Providers in an AAPM are exempt from the MIPS program and eligible for 5% incentive payments from 2019 through 2024. If a radiation therapy AAPM is not approved for freestanding radiation therapy providers as an option in 2019, it is expected that legislation will be sought to extend the payment freeze.

Commercial

Commercial sources include private health insurance as well as related payments for co-insurance and co-payments. We enter into contracts with private health insurance and other health benefit groups by granting discounts to such organizations in return for the patient volume they provide.

Most of our commercial revenue is from managed care delivery systems and is attributable to contracts where a set fee is negotiated relative to services provided by our treatment centers. We do not have any contracts that individually represent over 10% of our total U.S. net patient service revenue. For the nine months ended September 30, 2016, approximately 4% of our U.S. net patient service revenue is attributable to contracts where we bear utilization risk. Although the terms and conditions of our managed care contracts vary considerably, they are typically for a one-year term and provide for automatic renewals.

Self-Pay

Self-pay consists of payments for treatments by patients not otherwise covered by third-party payers, such as government or commercial sources. Because the incidence of cancer is much higher in those over the age of 65, most of our patients have access to Medicare or other insurance and therefore the self-pay portion of our business is minor. However, we are seeing a general increase in the patient responsibility portion of our claims and revenue.

We grant a discount on gross charges to self-pay patients not covered under other third party payer arrangements. The discount amounts are excluded from patient service revenue. To the extent that we realize additional losses resulting from nonpayment of the discounted charges, such additional losses are included in the provision for doubtful accounts.

Other Material Factors

Other material factors that we believe will impact our future financial performance include:

our future cash flows;

our substantial indebtedness;

patient volume and census;

continued advances in technology and the related capital requirements;

continued affiliation with physician specialties other than radiation oncology;

our ability to develop and conduct business with hospitals and other large healthcare organizations in a manner that adequately and attractively compensates us for our services;

our ability to achieve identified cost savings and operational efficiencies;

increased costs associated with development and optimization of our internal infrastructure; and

healthcare reform.

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Results of Operations

The following table presents summaries of our results of operations for the three months ended September 30, 2016 and 2015.

(in thousands):	Three Months Ended September 30, 2016				Three Months Ended September 30, 2015
Revenues:
Net patient service revenue	$	226,505	92.2	%	$	243,768	93.0	%
Management fees		14,240	5.8			14,180	5.4
Other revenue		4,934	2.0			4,309	1.6
Total revenues		245,679	100.0			262,257	100.0
Expenses:
Salaries and benefits		136,859	55.7			142,640	54.4
Medical supplies		22,211	9.0			22,498	8.6
Facility rent expenses		17,440	7.1			16,983	6.5
Other operating expenses		16,007	6.5			15,951	6.1
General and administrative expenses		35,344	14.4			68,306	26.0
Depreciation and amortization		21,319	8.7			22,439	8.6
Provision for doubtful accounts		8,610	3.5			5,617	2.1
Interest expense, net		27,151	11.1			23,771	9.1
Other gains and losses		481	0.2			(5,696)	(2.2)
Impairment loss		770	0.3			—	—
Fair value measurements		34,976	14.2			1,799	0.7
(Gain) loss on foreign currency transactions		(5)	—			333	0.1
Total expenses		321,163	130.7			314,641	120.0
Loss before income taxes and equity interest in net income of joint ventures		(75,484)	(30.7)			(52,384)	(20.0)
Income tax expense		3,166	1.3			2,851	1.1
Net loss before equity interest in net income of joint ventures		(78,650)	(32.0)			(55,235)	(21.1)
Equity interest in net income of joint ventures, net of tax		150	0.1			(10)	—
Net loss		(78,500)	(31.9)			(55,245)	(21.1)
Net income attributable to noncontrolling interests – redeemable and non-redeemable		(1,422)	(0.6)			(2,530)	(1.0)
Net loss attributable to 21st Century Oncology Holdings, Inc. shareholder	$	(79,922)	(32.5)	%	$	(57,775)	(22.1)	%

Comparison of the Three Months Ended September 30, 2016 and 2015

Revenues

Net patient service revenue. For the three months ended September 30, 2016 and 2015, net patient service revenue comprised 92.2% and 93.0%, respectively, of our total revenues.  In our net patient service revenue for the three months ended September 30, 2016 and 2015, revenue from the professional-only component of radiation therapy where we do not bill globally (inclusive of professional and technical components) and revenue from the practices of medical specialties other than radiation oncology, comprised approximately 30.1% and 30.9%, respectively, of our total revenues.

Management fees. Certain of the Company’s physician groups receive payments for their services and treatments rendered to patients.  Management fees are recorded at the amount earned by the Company under the management services agreements. Services rendered by the respective physician groups are billed by the Company, as the exclusive billing agent of the physician groups, to patients, third-party payers, and others. The Company’s management fees are dependent on the EBITDA (or in one case, revenue) of each radiation therapy center. For the three months ended September 30, 2016 and 2015, management fees comprised 5.8% and 5.4%, respectively, of our total revenues.

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Other revenue. For the three months ended September 30, 2016 and 2015, other revenue comprised approximately 2.0% and 1.6%, respectively, of our total revenues. Other revenue is primarily derived from management services provided to hospital radiation therapy departments, technical services provided to hospital radiation therapy departments, billing services provided to non-affiliated physicians, and income for equipment leased by joint venture entities.

Total revenues. Total revenues decreased by $16.6 million, or 6.3%, from $262.3 million for the three months ended September 30, 2015 to $245.7 million for the three months ended September 30, 2016. Net patient service revenue in our total domestic freestanding line of business declined $7.3 million, or 4.8%, as compared to the same period in the prior year. This decline was driven by a 1.3% decline in total radiation oncology treatments per day and a 3.6% decline in net patient service revenue per radiation oncology treatment for the third quarter of 2016 as compared to the same period in the prior year.

Net patient service revenue in our ICC line of business declined $7.2 million, or 9.0%, as compared to the same period in the prior year.  The conversion of our Jacksonville medical oncology group to a professional services agreement (PSA) with the University of Florida, whereby the Company will invoice for chemotherapy administration only, eliminating the drug portion, drove $4.6 million of the decline in ICC revenue. 

International net patient service revenue declined $3.4 million, or 10.7%, as compared to the same period in the prior year due to the devaluation in the Argentine Peso. Excluding the impact of currency fluctuations, international revenue growth was approximately 37.8%, or $8.9 million, quarter over quarter. 

Total revenue variance in the preceding paragraphs includes growth in new practices and treatment centers in new and existing local markets during 2015 and 2016 through the development and expansion of surgery practices in Florida and the acquisition and development of physician radiation practices in California, Colombia, Kentucky and South Carolina. The following table summarizes the acquisition and development of physician radiation practices for the comparable periods:

Date	Sites	Location	Market	Type
April 2015	1	Corbin, Kentucky	Corbin — Kentucky	Hospital Based
August 2015	1	Medellin, Colombia	International (Colombia)	Acquisition
November 2015	1	Lompoc, California	Central California	De Novo
January 2016	1	Conway, South Carolina	Myrtle Beach — South Carolina	De Novo

Expenses

Salaries and benefits. Salaries and benefits decreased by $5.7 million, or 4.1%, from $142.6 million for the three months ended September 30, 2015 to $136.9 million for the three months ended September 30, 2016. Salaries and benefits as a percentage of total revenues increased from 54.4% for the three months ended September 30, 2015 to 55.7% for the three months ended September 30, 2016.  Additional staffing of personnel and physicians due to our growth in new practices and treatment centers during 2015 and 2016 contributed $0.2 million to our salaries and benefits. In addition, salaries and benefits increased $4.2 million from accrued severance payments associated with a reduction in our workforce. For existing practices and centers within our local markets, salaries and benefits decreased $9.3 million. Of the $9.3 million decrease, $3.6 million was due to the reduction of certain of our 2016 bonus programs, and the balance of the decrease was due to reductions in staff and compensation arrangements with physicians. Salaries and benefits were also impacted by the deconsolidation of a radiation practice and termination of certain arrangements with hospital partners of approximately $0.8 million.

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Medical supplies. Medical supplies decreased by $0.3 million, or 1.3%, from $22.5 million for the three months ended September 30, 2015 to $22.2 million for the three months ended September 30, 2016. Medical supplies as a percentage of total revenues increased from 8.6% for the three months ended September 30, 2015 to 9.0% for the three months ended September 30, 2016. Medical supplies consist of patient positioning devices, radioactive seed supplies, supplies used for other brachytherapy services, pharmaceuticals used in the delivery of radiation therapy treatments and chemotherapy-related drugs and other medical supplies. A decrease of approximately $0.3 million in our remaining practices, predominately related to the conversion of the Jacksonville medical oncology group to a professional services agreement, and the deconsolidation of a radiation practice and termination of certain arrangements with hospital partners of approximately $0.1 million offset by approximately $0.1 million increase related to our growth in new practices and treatment centers during 2015 and 2016.

Facility rent expenses. Facility rent expenses increased by $0.4 million, or 2.7%, from $17.0 million for the three months ended September 30, 2015 to $17.4 million for the three months ended September 30, 2016. Facility rent expenses as a percentage of total revenues increased from 6.5% for the three months ended September 30, 2015 to 7.1% for the three months ended September 30, 2016. Approximately $0.1 million of the increase was related to our growth in new practices and treatment centers during 2015 and 2016 and an increase of approximately $0.5 million in our remaining practices, offset by the deconsolidation of a radiation practice and termination of certain arrangements with hospital partners of approximately $0.2 million.

Other operating expenses. Other operating expenses were unchanged at $16.0 million for the three months ended September 30, 2016 and 2015. Other operating expense as a percentage of total revenues increased from 6.1% for the three months ended September 30, 2015 to 6.5% for the three months ended September 30, 2016.  Other operating expenses consist of repairs and maintenance of equipment, equipment rental and contract labor. Approximately $0.1 million was related to our growth in new practices and treatment centers during 2015 and 2016, and an increase of approximately $0.2 million in our remaining practices and centers in existing local markets, offset by $0.2 million decrease relating to equipment rental expense relating to medical equipment refinancing, and the deconsolidation of a radiation practice and termination of certain arrangements with hospital partners of approximately $0.1 million.

General and administrative expenses. General and administrative expenses decreased by $33.0 million, or 48.3%, from $68.3 million for the three months ended September 30, 2015 to $35.3 million for the three months ended September 30, 2016. General and administrative expenses principally consist of professional service fees, consulting, office supplies and expenses, insurance, marketing and travel costs. General and administrative expenses as a percentage of total revenues decreased from 26.0% for the three months ended September 30, 2015 to 14.4% for the three months ended September 30, 2016.  The net decrease of $33.0 million in general and administrative expenses was due to a decrease of approximately $2.4 million in our existing practices and treatments centers in our local markets. The decrease in general and administrative expenses included decreases in litigation costs of approximately $38.6 million and a decrease of approximately $1.0 million in diligence costs relating to acquisitions and potential acquisitions of physician practices. In addition, professional services fees increased by $9.0 million due to additional costs incurred during the period associated with the restatement of our prior period financial statements and amendments and waivers to our 2015 Credit Agreement and Senior Notes.

Depreciation and amortization. Depreciation and amortization expense decreased by $1.1 million, or 5.0%, from $22.4 million for the three months ended September 30, 2015 to $21.3 million for the three months ended September 30, 2016. Depreciation and amortization expense as a percentage of total revenues increased from 8.6% for the three months ended September 30, 2015 to 8.7% for the three months ended September 30, 2016. Approximately $0.2 million was related to growth in new practices and treatment centers during 2015 and 2016 and a decrease in certain local markets of our depreciation and amortization by approximately $0.6 million and a decrease of approximately $0.5 million in amortization of certain non-compete agreements and the deconsolidation of a radiation practice and termination of certain arrangements with hospital partners of approximately $0.2 million.

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Provision for doubtful accounts. The provision for doubtful accounts increased by $3.0 million, or 53.3%, from $5.6 million for the three months ended September 30, 2015 to $8.6 million for the three months ended September 30, 2016.  The provision for doubtful accounts as a percentage of total revenues increased from 2.1% for the three months ended September 30, 2015 to 3.5% for the three months ended September 30, 2016. The increase as a percentage of revenue is partially due to third party payers assigning higher co-pays and shifting of payer responsibility to the patient, which results in increased bad debt expense. In addition, the provision for doubtful accounts has increased by approximately $3.3 million due to an increase in aged accounts receivable in SFRO’s legacy billing system as we transitioned to our practice management system platform.

Interest expense, net. Interest expense, increased by $3.4 million, or 14.2%, from $23.8 million for the three months ended September 30, 2015 to $27.2 million for the three months ended September 30, 2016. The increase of $3.4 million in interest expense was due to an increase of approximately $2.5 million in interest due to our average debt increase from $1.0 billion to $1.2 billion and an increase in interest expense of approximately $0.9 million due to an increase in our weighted average interest rate from 9.1% to 9.4%.

Other gains and losses.  During the three months ended September 30, 2016, we recorded a gain of $0.4 million on the disposal of property and equipment and $0.1 million in insurance recoveries, offset by a loss of $0.5 million related to the the decommissioning of our leased corporate aircraft and a loss of $0.5 million as a result of our ceased usage of, and entering into a sublease for, real estate property leased by us pursuant to an operating lease.

During the three months ended September 30, 2015, we received approximately $5.8 million from the Deepwater Horizon Settlement Program for damages suffered as a result of the Deepwater Horizon Oil Spill that occurred in 2010, partially offset by losses on the disposal of property and equipment of $0.1 million.

Impairment loss. During the three months ended September 30, 2016, we entered into an agreement to sell one of our owned facilities located in Boca Raton, Florida.  As a result of the sale, which generated $0.9 million in net cash proceeds in October 2016, we recorded an impairment loss of $0.8 million.

Fair value measurements. We funded a portion of the purchase price related to the OnCure and Kennewick, Washington acquisitions with contingent consideration. The contingent consideration is generally dependent on the acquiree achieving certain EBITDA thresholds. We estimated and recorded an earn-out liability for each of the acquisitions as of their respective acquisition dates. We estimate the fair value of the earn-out liabilities at each reporting date. Changes to the estimated earn-out liabilities are recorded in the fair value measurements caption in the consolidated statements of operations and comprehensive loss. For the three months ended September 30, 2016 and 2015, we recorded immaterial changes in the fair value of earn-out liabilities.

Pursuant to the terms of a Subscription Agreement, immediately following the occurrence of a qualifying initial public offering or a qualifying merger, we will execute and deliver to Canada Pension Plan Investment Board (“CPPIB”) a Warrant Agreement (the “Warrant Agreement”) and issue to CPPIB warrants to purchase shares of our common stock having a then-current value of $30 million, at a purchase price of $0.01 per share. The warrants expire on the tenth anniversary of the date of issuance. The contingent events that could trigger the conversion of the Series A Preferred Stock to common stock and issuance of warrants qualify as an embedded derivative and are freestanding financial instruments, each requiring bifurcation and measured at fair value. As a result of us entering into Amendment No. 2 to the 2015 Credit Agreement, both of which are defined and further discussed in Note 13, and the capital event requirements required pursuant to Amendment No. 2, the Company reevaluated the timing and probability assumptions of each triggering event during the quarter ended September 30, 2016. Based on the current assumptions, for the three months ended September 30, 2016 and 2015, we recorded a $35.4 million loss and a $1.4 million loss, respectively, related to changes in the fair value of the CPPIB related embedded derivatives and warrants.

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On July 2, 2015, we purchased the noncontrolling interest of SFRO. We structured a portion of the purchase with seller financing notes (“SFRO PIK Notes”) that contain clauses requiring payment acceleration of principal amounts as well as premium payments if the sellers achieve specific operational milestones. We determined that the contingent conversion features of the SFRO PIK Notes qualify as embedded derivatives, requiring bifurcation and classification as debt, measured at fair value. We estimate the fair value of embedded derivatives at each reporting date and record the change in fair value of the embedded derivatives to expense in the fair value measurements caption in the consolidated statements of operations and comprehensive loss. For the three months ended September 30, 2016 and 2015, we recorded a $0.4 million gain and a $0.4 million loss, respectively, related to changes in the fair value of the SFRO PIK Notes embedded derivatives.

Income taxes.  Our effective tax rate was (4.2)% for the three months ended September 30, 2016 and (5.4)% for the three months ended September 30, 2015. The change in the effective tax rate for the three months ended September 30, 2016 compared to the same period of the year prior is primarily the result of the relative mix of earnings and tax rates across jurisdictions, and the application of ASC 740-270 to exclude certain jurisdictions for which we are unable to benefit from losses.

Net loss. Net loss increased by $23.3 million, from $55.2 million in net loss for the three months ended September 30, 2015 to $78.5 million in net loss for the three months ended September 30, 2016. Net loss represents (21.1)% of total revenues for the three months ended September 30, 2015 and net loss represents (31.9)% of total revenues for the three months ended September 30, 2016.

The following table presents summaries of our results of operations for the nine months ended September 30, 2016 and 2015.

	Nine Months Ended				Nine Months Ended
(in thousands):	September 30, 2016				September 30, 2015
Revenues:
Net patient service revenue	$	715,974	92.5	%	$	755,877	92.7	%
Management fees		43,514	5.6			45,261	5.5
Other revenue		14,872	1.9			14,965	1.8
Total revenues		774,360	100.0			816,103	100.0
Expenses:
Salaries and benefits		414,610	53.5			436,996	53.5
Medical supplies		74,215	9.6			73,563	9.0
Facility rent expenses		52,304	6.8			50,821	6.2
Other operating expenses		47,678	6.2			46,994	5.8
General and administrative expenses		101,070	13.1			141,341	17.3
Depreciation and amortization		63,412	8.2			66,775	8.2
Provision for doubtful accounts		17,270	2.2			13,683	1.7
Interest expense, net		77,353	10.0			73,836	9.0
Other gains and losses		(12,699)	(1.6)			(7,363)	(0.9)
Impairment loss		2,595	0.3			—	—
Early extinguishment of debt		—	—			37,390	4.6
Fair value measurements		22,187	2.9			8,404	1.0
(Gain) loss on foreign currency transactions		300	—			537	0.1
Total expenses		860,295	111.2			942,977	115.5
Loss before income taxes and equity interest in net income of joint ventures		(85,935)	(11.2)			(126,874)	(15.5)
Income tax expense		7,967	1.0			7,198	0.9
Net loss before equity interest in net income of joint ventures		(93,902)	(12.2)			(134,072)	(16.4)
Equity interest in net income of joint ventures, net of tax		957	0.1			202	—
Net loss		(92,945)	(12.1)			(133,870)	(16.4)
Net income attributable to noncontrolling interests – redeemable and non-redeemable		(4,534)	(0.6)			(6,610)	(0.8)
Net loss attributable to 21st Century Oncology Holdings, Inc. shareholder	$	(97,479)	(12.7)	%	$	(140,480)	(17.2)	%

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Comparison of the Nine Months Ended September 30, 2016 and 2015

Revenues

Net patient service revenue. For the nine months ended September 30, 2016 and 2015, net patient service revenue comprised 92.5% and 92.7%, respectively, of our total revenues.  In our net patient service revenue for the nine months ended September 30, 2016 and 2015, revenue from the professional-only component of radiation therapy where we do not bill globally (inclusive of professional and technical components) and revenue from the practices of medical specialties other than radiation oncology, comprised approximately 31.8% and 32.1%, respectively, of our total revenues.

Management fees. Certain of the Company’s physician groups receive payments for their services and treatments rendered to patients.  Management fees are recorded at the amount earned by the Company under the management services agreements. Services rendered by the respective physician groups are billed by the Company, as the exclusive billing agent of the physician groups, to patients, third-party payers, and others. The Company’s management fees are dependent on the EBITDA (or in one case, revenue) of each radiation therapy center. For the nine months ended September 30, 2016 and 2015, management fees comprised 5.6% and 5.5%, respectively, of our total revenues.

Other revenue. For the nine months ended September 30, 2016 and 2015, other revenue comprised approximately 1.9% and 1.8% of our total revenues, respectively. Other revenue is primarily derived from management services provided to hospital radiation therapy departments, technical services provided to hospital radiation therapy departments, billing services provided to non-affiliated physicians, and income for equipment leased by joint venture entities.

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Total revenues. Total revenues decreased by $41.7 million, or 5.1%, from $816.1 million for the nine months ended September 30, 2015 to $774.4 million for the nine months ended September 30, 2016. Net patient service revenue in our domestic freestanding line of business declined $19.8 million, or 4.2%, as compared to the same period in the prior year. This decline was driven by a 3.0% decline in total radiation oncology treatments per day and a 1.8% decline in net patient service revenue per radiation oncology treatment for the first nine months of 2016 as compared to the same period in the prior year.

Net patient service revenue in our ICC line of business declined $15.1 million, or 5.9%, as compared to the same period in the prior year.  The conversion of our Jacksonville medical oncology group to a professional services agreement (PSA) with the University of Florida, whereby the Company will invoice for chemotherapy administration only, eliminating the drug portion, drove $12.1 million of the decline in ICC revenue. 

International net patient service revenue declined $8.1 million, or 9.2%, as compared to the same period in the prior year due to the devaluation in the Argentine Peso.  Excluding the impact of currency fluctuations, international revenue growth was approximately 36.1%, or $24.3 million, year over year.

Total revenue variance in the preceding paragraphs includes growth in new practices and treatment centers in new and existing local markets during 2015 and 2016 through the development and expansion of surgery practices in Florida and the acquisition and development of physician radiation practices in California, Colombia, Florida, Kentucky, North Carolina, Rhode Island, South Carolina and Washington. The following table summarizes the acquisition and development of physician radiation practices for the comparable periods:

Date	Sites	Location	Market	Type
January 2015	1	Kennewick, Washington	Washington	Acquisition
January 2015	1	Warwick, Rhode Island	Rhode Island	Acquisition
January 2015	1	West Palm Beach, Florida	Palm Beach County — Florida	Acquisition
January 2015	1	Weaverville, North Carolina	Western North Carolina	De Novo
April 2015	1	Corbin, Kentucky	Corbin — Kentucky	Hospital Based
August 2015	1	Medellin, Colombia	International	Acquisition
November 2015	1	Lompoc, California	California	De Novo
December 2015	1	Kendall, Florida	Miami/Dade County — Florida	Acquisition
January 2016	1	Conway, South Carolina	Myrtle Beach — South Carolina	De Novo

Expenses

Salaries and benefits. Salaries and benefits decreased by $22.4 million, or 5.1%, from $437.0 million for the nine months ended September 30, 2015 to $414.6 million for the nine months ended September 30, 2016. Salaries and benefits as a percentage of total revenues were unchanged at 53.5% for the nine months ended September 30, 2016 and 2015. Additional staffing of personnel and physicians due to our growth in new practices and treatment centers during 2015 and 2016 contributed $1.7 million to our salaries and benefits. In addition, salaries and benefits increased $4.3 million from accrued severance payments associated with a reduction in our workforce.  For existing practices and centers within our local markets, salaries and benefits decreased $25.6 million. Of the $25.6 million decrease, $6.3 millionwas due to the reduction of certain of our 2016 bonus programs, and the balance of the decrease was due to reductions in staff and compensation arrangements with physicians. Salaries and benefits were also impacted by the deconsolidation of a radiation practice and termination of certain arrangements with hospital partners of approximately $2.8 million.

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Medical supplies. Medical supplies increased by $0.6 million, or 0.9%, from $73.6 million for the nine months ended September 30, 2015 to $74.2 million for the nine months ended September 30, 2016. Medical supplies as a percentage of total revenues increased from 9.0% for the nine months ended September 30, 2015 to 9.6% for the nine months ended September 30, 2016. Medical supplies consist of patient positioning devices, radioactive seed supplies, supplies used for other brachytherapy services, pharmaceuticals used in the delivery of radiation therapy treatments and chemotherapy-related drugs and other medical supplies. Approximately $0.2 million of the increase was related to our growth in new practices and treatment centers during 2015 and 2016. In our practices and centers in existing local markets, medical supplies increased by approximately $0.9 million as a result of expanded medical oncology services which provide for increase in certain chemotherapy drugs within certain of our Florida east coast practices, which was offset by a $0.5 million decrease related to the deconsolidation of a radiation practice and termination of certain arrangements with hospital partners.

Facility rent expenses. Facility rent expenses increased by $1.5 million, or 2.9%, from $50.8 million for the nine months ended September 30, 2015 to $52.3 million for the nine months ended September 30, 2016. Facility rent expenses as a percentage of total revenues increased from 6.2% for the nine months ended September 30, 2015 to 6.8% for the nine months ended September 30, 2016. Approximately $0.5 million of the increase was related to our growth in new practices and treatment centers during 2015 and 2016 and an increase of approximately $1.6 million in our remaining practices, offset by the deconsolidation of a radiation practice and termination of certain arrangements with hospital partners of approximately $0.6 million.

Other operating expenses. Other operating expenses increased by $0.7 million, or 1.5%, from $47.0 million for the nine months ended September 30, 2015 to $47.7 million for the nine months ended September 30, 2016. Other operating expense as a percentage of total revenues increased from 5.8% for the nine months ended September 30, 2015 to 6.2% for the nine months ended September 30, 2016.  Other operating expenses consist of repairs and maintenance of equipment, equipment rental and contract labor. Approximately $0.6 million of the increase was related to our growth in new practices and treatment centers during 2015 and 2016 and an increase of approximately $1.2 million in our remaining practices and centers in existing local markets, offset by approximately $0.7 million decrease relating to equipment rental expense relating to medical equipment refinancing, and the deconsolidation of a radiation practice and termination of certain arrangements with hospital partners of approximately $0.4 million.

General and administrative expenses. General and administrative expenses decreased by $40.2 million, or 28.5%, from $141.3 million for the nine months ended September 30, 2015 to $101.1 million for the nine months ended September 30, 2016. General and administrative expenses principally consist of professional service fees, consulting, office supplies and expenses, insurance, marketing and travel costs. General and administrative expenses as a percentage of total revenues decreased from 17.3% for the nine months ended September 30, 2015 to 13.1% for the nine months ended September 30, 2016.  The net decrease of $40.2 million in general and administrative expenses was due to increases of approximately $0.3 million relating to our growth in new practices and treatment centers during 2015 and 2016. The decrease in general and administrative expenses included decreases in litigation costs of approximately $55.8 million and a decrease of approximately $2.7 million in diligence costs relating to acquisitions and potential acquisitions of physician practices. Increases in general and administrative expenses of approximately $0.8 million in our remaining practices and treatments centers in our existing local markets. In addition, professional services fees increased by $17.2 million due to additional costs incurred during the period associated with the restatement of our prior period financial statements and amendments and waivers to our 2015 Credit Agreement and Senior Notes.

Depreciation and amortization. Depreciation and amortization expense decreased by $3.4 million, or 5.0%, from $66.8 million for the nine months ended September 30, 2015 to $63.4 million for the nine months ended September 30, 2016. Depreciation and amortization expense as a percentage of total revenues remained constant at 8.2% for the nine months ended September 30, 2016 and 2015. Depreciation and amortization expense increased by approximately $0.8 million related to growth in new practices and treatment centers during 2015 and 2016 offset by a decrease in certain local markets by approximately $2.3 million and decreases of approximately $1.1 million in amortization of certain non-compete agreements and the deconsolidation of a radiation practice and termination of certain arrangements with hospital partners of approximately $0.8 million.

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Provision for doubtful accounts. The provision for doubtful accounts increased by $3.6 million, or 26.2%, from $13.7 million for the nine months ended September 30, 2015 to $17.3 million for the nine months ended September 30, 2016.  The provision for doubtful accounts as a percentage of total revenues increased from 1.7% for the nine months ended September 30, 2015 to 2.2% for the nine months ended September 30, 2016. The increase is partially due to third party payers assigning higher co-pays and shifting of payer responsibility to the patient, which results in increased bad debt expense. In addition, the provision for doubtful accounts has increased by approximately $3.3 million due to an increase in aged accounts receivable in SFRO’s legacy billing system as we transitioned to our practice management system platform.

Interest expense, net. Interest expense, net increased by $3.6 million, or 4.8%, from $73.8 million for the nine months ended September 30, 2015 to $77.4 million for the nine months ended September 30, 2016. The increase of $3.6 million in interest expense was due to an increase of approximately $7.5 million in interest due to our average debt increase from $1.0 billion to $1.1 billion offset by a decrease in interest expense of approximately $4.0 million due to a decrease in our weighted average interest rate from 9.4% to 8.9%.

Other gains and losses. On January 1, 2016, we contributed our Greenville, North Carolina treatment center operations into a newly formed joint venture. Simultaneously, a local hospital system contributed its Greenville, North Carolina treatment center operations into the joint venture and purchased additional ownership interests from us for approximately $6.2 million. As a result of the transaction, we own 50% of the joint venture. In addition, we determined we do not control the joint venture and, as of January 1, 2016, we deconsolidated the operations of our Greenville, North Carolina treatment center. We recorded a gain on disposal of our Greenville location of $12.6 million.

During the nine months ended September 30, 2016, we also recorded a gain of $0.5 million on the disposal of property and equipment, $0.1 million in insurance recoveries, and received approximately $0.5 million from the Deepwater Horizon Settlement Program for damages suffered as a result of the Deepwater Horizon Oil Spill that occurred in 2010. These gains were partially offset by a loss of $0.5 million related to the the decommissioning of our leased corporate aircraft and a loss of $0.5 million as a result of our ceased usage of, and entering into a sublease for, real estate property leased by us pursuant to an operating lease.

During the nine months ended September 30, 2015, we recorded a gain of $0.2 million on the disposal of property and equipment, a gain of $5.8 million from the Deepwater Horizon Settlement Program for damanges suffered as a result of the Deepwater Horizon Oil Spill that occurred in 2010 and $1.4 million of insurance recoveries from damages suffered from a fire in one of our North Carolina radiation treatment centers that occurred during 2011. 

Impairment loss. During the nine months ended September 30, 2016, we entered into an agreement to terminate an OnCure management services agreement prior to the end of its expiration date. We reviewed the management services agreement for impairment and recorded an impairment loss of approximately $1.8 million.

During the nine months ended September 30, 2016, we entered into an agreement to sell one of our owned facilities located in Boca Raton, Florida.  As a result of the sale, which generated $0.9 million in net cash proceeds in October 2016, we recorded an impairment loss of $0.8 million.

Early extinguishment of debt. During the nine months ended September 30, 2015, we incurred an expense of approximately $37.4 million from the early extinguishment of debt as a result of the $1.0 billion in debt refinancing in April 2015. We paid approximately $24.9 million in premium payments for the early retirement of our $350.0 million senior secured second lien notes and our $380.1 million senior subordinated notes, along with the tender offer premium payments on our $75.0 million senior secured notes. As a result of the debt refinancing, we wrote-off approximately $3.1 million in original issue discount and $9.4 million in deferred financing costs.

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Fair value measurements. We funded a portion of the purchase price related to the OnCure and Kennewick, Washington acquisitions with contingent consideration. The contingent consideration is generally dependent on the acquiree achieving certain EBITDA thresholds. We estimated and recorded an earn-out liability for each of the acquisitions as of their respective acquisition dates. We estimate the fair value of the earn-out liabilities at each reporting date. Changes to the estimated earn-out liabilities are recorded to expense in the fair value measurements caption in the consolidated statements of operations and comprehensive loss. For the nine months ended September 30, 2016 and 2015, we recorded a $0.0 million loss and a $0.5 million gain, respectively, related to changes in the fair value of earn-out liabilities.

Pursuant to the terms of a Subscription Agreement, immediately following the occurrence of a qualifying initial public offering or a qualifying merger, we will execute and deliver to CPPIB the Warrant Agreement and issue to CPPIB warrants to purchase shares of our common stock having a then-current value of $30 million, at a purchase price of $0.01 per share. The warrants expire on the tenth anniversary of the date of issuance. The contingent events that could trigger the conversion of the Series A Preferred Stock to common stock and issuance of warrants qualify as an embedded derivative and are freestanding financial instruments, each requiring bifurcation and measured at fair value. As a result of us entering into Amendment No. 2 to the 2015 Credit Agreement and the capital event requirements pursuant to Amendment No. 2, the Company reevaluated the timing and probability assumptions of each triggering event during the quarter ended September 30, 2016. Based on the current assumptions, for the nine months ended September 30, 2016 and 2015, we recorded a loss of $22.3 million and $8.5 million, respectively, related to changes in the fair value of the CPPIB related embedded derivatives and warrants.

On July 2, 2015, we purchased the noncontrolling interest of SFRO. We structured a portion of the purchase with seller financing notes  that contain clauses requiring payment acceleration of principal amounts as well as premium payments if the sellers achieve specific operational milestones. We determined that the contingent conversion features of the SFRO PIK Notes qualify as embedded derivatives, requiring bifurcation and classification as debt, measured at fair value. We estimate the fair value of embedded derivatives at each reporting date and record the change in fair value of the embedded derivatives to expense in the fair value measurements caption in the consolidated statements of operations and comprehensive loss. For the nine months ended September 30, 2016 and 2015 we recorded a $0.1 million gain and a $0.4 million loss, respectively, related to changes in the fair value of the SFRO PIK Notes embedded derivatives.

Income taxes.  Our effective tax rate was (9.3)% for the nine months ended September 30, 2016 and (5.7)% for the nine months ended September 30, 2015. The change in the effective tax rate for the nine months ended September 30, 2016 compared to the same period of the year prior is primarily the result of the relative mix of earnings and tax rates across jurisdictions, and the application of ASC 740-270 to exclude certain jurisdictions for which we are unable to benefit from losses.

Net loss. Net loss decreased by $41.0 million, from $133.9 million in net loss for the nine months ended September 30, 2015 to $92.9 million in net loss for the nine months ended September 30, 2016. Net loss represents (16.4)% of total revenues for the nine months ended September 30, 2015 and represents (12.1)% of total revenues for the nine months ended September 30, 2016.

Liquidity and Capital Resources

Our principal capital requirements are for working capital, acquisitions, expansion and de novo treatment center development. Working capital is funded through cash from operations, supplemented, as needed and when available, by our revolving credit facility. We finance our operations, capital expenditures and acquisitions through a combination of borrowings and cash generated from operations.

We are currently highly leveraged and our sources of liquidity are limited. As of September 30, 2016, we had $1.1 billion of debt outstanding. We have experienced and continue to experience losses from operations and negative cash flows. We reported net losses of approximately $126.8 million, $92.9 million and $133.9 million for the year ended December 31, 2015 and for the nine months ended September 30, 2016 and 2015, respectively. At September 30, 2016, we had $49.7 million of unrestricted cash and were fully drawn under our revolver.

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Our high level of debt could have adverse effects on our business and financial condition. Specifically, our high level of debt could have important consequences, including the following:

requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes;

making it more difficult for us to satisfy our obligations with respect to debt;

limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements;

increasing our vulnerability to general adverse economic and industry conditions;

limiting our flexibility in planning for and reacting to changes in the industry in which we compete;

placing us at a disadvantage compared to other, less leveraged competitors; and

increasing our cost of borrowing.

Further, subject to certain qualifications, the 2015 Credit Agreement and the Senior Notes Indenture, each as currently in effect, require us to receive, subject to certain important qualifications set forth therein, (1) no later than September 10, 2016, net cash proceeds from the issuance or sale of 21C’s capital stock or from other equity investments in an aggregate amount of at least $25.0 million (the “First Capital Event”), (2) no later than November 30, 2016, additional net cash proceeds from the issuance or sale of 21C’s capital stock or from other equity investments and/or sales of assets (which sale transactions must be deleveraging transactions on a pro forma basis) in an aggregate amount of at least $25.0 million (or a lesser amount such that when combined with the proceeds from the First Capital Event, the total amount is not less than $50.0 million) (the “Second Capital Event”) and (3) no later than March 31, 2017, additional net cash proceeds from the issuance or sale of 21C’s capital stock or from other equity investments and/or sales of assets (which sale transactions must be deleveraging transactions on a pro forma basis) in an aggregate amount of at least the lesser of (A) $75.0 million (or a lesser amount such that when combined with the proceeds from the First Capital Event and the Second Capital Event, the total amount is not less than $125.0 million), and (B) an amount such that, after giving effect to such issuance or sale of capital stock or other equity investments and/or sales of assets, 21C’s cash and cash equivalents plus unused revolving loan commitments equals at least $120.0 million and 21C’s consolidated leverage ratio is not greater than 6.4 to 1.00 (the “Third Capital Event” and together with the First Capital Event and the Second Capital Event, the “Capital Events” and each, a “Capital Event”). At least $50 million of the proceeds from the First Capital Event, Second Capital Event and Third Capital Event must be from the issuance or sale of our capital stock or from other equity investments. We are also required to comply with a minimum liquidity covenant in an amount not less than $40.0 million after the completion of the First Capital Event, to be tested monthly prior to the completion of the Third Capital Event and quarterly thereafter. Our failure to satisfy such requirements could result in an event of default under the 2015 Credit Agreement or Senior Notes Indenture, which could result in the debt thereunder being accelerated. While the Company is pursuing a variety of initiatives to satisfy the requirements of the 2015 Credit Agreement and Senior Notes Indenture, we do not have firm commitments to obtain the required equity or dispose of assets in place, and we may not be able to maintain the required levels of liquidity.  Consequently there is substantial doubt about the Company’s ability to continue as a going concern.

On September 9, 2016, we satisfied the First Capital Event. In addition, we satisfied the minimum liquidity covenant as of September 30, 2016 and October 31, 2016. While the Company is pursuing a variety of initiatives to satisfy the other requirements of the 2015 Credit Agreement and Senior Notes Indenture, we do not have firm commitments to obtain the required equity or dispose of assets in place, and we may not be able to maintain the required levels of liquidity.  Consequently there is substantial doubt about the Company’s ability to continue as a going concern.

In the event we are unable to meet the other requirements, we will need to identify alternative options, such as a debt refinancing, a sale of the Company or other strategic transaction, or a transformative transaction, such as a possible restructuring or reorganization of the Company’s operations. In addition, the perception that we may not be able to continue as a going concern may negatively and materially impact our existing and future business relationships, and others may choose not to deal with us at all due to concerns about our ability to meet our contractual obligations.

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On November 1, 2016, we failed to make a semi-annual interest payment as required by the Senior Notes Indenture governing our Senior Notes. The failure to make such interest payment, if not cured within 30 days, will result in an event of default under the Senior Notes Indenture.

Should an event of default occur under the Senior Notes Indenture, a cross-default would occur under our 2015 Credit Facilities. Following an event of default under the Senior Notes Indenture or 2015 Credit Facilities, the holders of the Senior Notes or lenders under the 2015 Credit Facilities, as applicable, could accelerate our indebtedness outstanding under the Senior Notes Indenture or 2015 Credit Facilities, as applicable. In addition, other obligations could be accelerated, including the Series A Preferred Stock, other debt and capital leases and certain operating leases.

We intend to utilize the available 30-day cure period under the Senior Notes Indenture to work with our lenders, bondholders and stakeholders to address the potential default, however, there can be no assurance we will be able to cure the default within the 30-day cure period.

Within the last year, we have remitted significant amounts of cash to CMS as a result of the fluorescence in situ hybridization (“FISH”) and GAMMA settlements totaling $19.8 million and $34.7 million respectively, the Meaningful Use attestation issue totaling $8.8 million and other compliance related matters.  In addition, significant cash outlays have been associated with these same matters, including legal, compliance and accounting fees. 

The restatement of our financial statements from 2010 through 2015 resulted in significant amounts of cash outlays including $10.4 million in restatement fees and services and amendment and waiver fees totaling $7.8 million through September 30, 2016.

Moreover, industry trends have affected us negatively.  These trends include reimbursement reductions by CMS and shifts in treatment protocols that have reduced treatment volumes. Looking forward these industry trends appear to be more stable.  CMS has confirmed a rate freeze until 2018 and the impact of the change in treatment protocol appears to have been absorbed in the business.  In addition to the improved stability in revenue, we have undertaken and continue to implement significant cost saving initiatives. 

Cash Flows From Operating Activities

Net cash used in operating activities for the nine month period ended September 30, 2016 was $42.8 million and net cash provided by operating activities was $33.3 million for the nine month period ended September 30, 2015.

Net cash provided by operating activities decreased by $76.2 million from $33.3 million provided by operating activities for the nine month period ended September 30, 2015 to $42.8 million used in operating activities for the nine month period ended September 30, 2016 predominately related to payments for certain compliance matters of approximately $41.2 million, which includes $34.7 million payment for the GAMMA Settlement, $0.8 million for legal fees associated with the GAMMA and FISH settlements and refund payments of approximately $8.8 million in connection with electronic health records incentive payments received  under the Health Information Technology for Economic and Clinical Health Act as a result of meaningful use attestations submitted on behalf of certain Company employed physicians.  In addition, we spent approximately $10.4 million through September 30, 2016 related to the costs associated with the restatement of previously issued financial statements and $7.8 million related to debt amendments and waivers.  The change in accounts receivable from cash from operations is a result of a number of factors, including delays with provider enrollment and participation status with insurance plans for SFRO providers,  increases in patient accounts receivable relating to deductibles, coinsurance, and copays and disputes with certain insurance companies related to denial of claims.

Cash Flows From Investing Activities

Net cash used in investing activities for the nine month periods ended September 30, 2016 and 2015 was $20.1 million and $59.2 million, respectively.

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Net cash used in investing activities decreased by $39.1 million, from $59.2 million for the nine month period ended September 30, 2015 to $20.1 million for the nine month period ended September 30, 2016. On January 1, 2016, we contributed our Greenville, North Carolina treatment center operations into a newly formed joint venture (“Newco”). Simultaneously, a local hospital system contributed its Greenville, North Carolina treatment center operations into Newco and purchased additional ownership interests from us for approximately $6.2 million. As a result of the transaction, we own 50% of Newco. In addition, we purchased approximately $24.2 million in property and equipment during the nine months ended September 30, 2016.

During the nine month period ended September 30, 2015, net cash used in investing activities was impacted by approximately $33.1 million related to the acquisition of medical practices. On January 2, 2015, we purchased an 80% equity interest in a legal entity that operates a radiation oncology facility in Kennewick, Washington for approximately $19.2 million, subject to working capital and other customary adjustments. The transaction was funded with $17.7 million in cash, assumed capital lease obligation of $0.3 million, and a $1.3 million contingent earn-out payment. On January 6, 2015, we purchased the assets of a radiation oncology practice located in Warrick, Rhode Island for approximately $8.0 million in cash. On January 6, 2015, we purchased the assets of a radiation oncology practice we already managed located in Hollywood, Florida for approximately $0.5 million in cash. During 2015, we paid approximately $7.0 million associated with settlement of reserve funds pursuant to the OnCure, SFRO, and other acquisitions. In addition, we purchased approximately $33.6 million in property and equipment for the nine months ended September 30, 2015.

Cash Flows From Financing Activities

Net cash provided by financing activities for the nine month period ended September 30, 2016 was $47.5 million and net cash used in financing activities for the nine months period ended September 30, 2015 was $25.4 million.

During the quarter ended March 31, 2016, we drew an additional $60.0 million in our revolving credit facility to increase our liquidity position. Through September 2016, we paid approximately $2.6 million in loan costs and $5.9 million in debt modification costs related to our amendments and waivers to the 2015 Credit Agreement and Senior Notes Indenture. 

On September 9, 2016, we issued to CPPIB, in a private placement, an aggregate of 25,000 newly issued shares of our Series A Convertible Redeemable Preferred Stock for a purchase price of $25.0 million.

On January 6, 2015, one of our joint ventures acquired the assets of a radiation oncology practice located in Warwick, Rhode Island for approximately $8.0 million. Two of our hospital partners in the joint venture contributed approximately $3.2 million in 2015 for the purchase transaction. On January 6, 2015, we purchased an additional 9% interest in a joint venture radiation oncology practice for approximately $1.2 million in cash.

On February 1, 2015, the Company formed a joint venture comprising the operations of three radiation therapy centers located in New Jersey and sold a 30% interest of the joint venture to the Lourdes Health systems for approximately $0.7 million.

For the nine months ended September 30, 2015, we paid approximately $25.6 million in loan costs from our refinancing of our long-term debt with the issuance on new subordinated notes due 2023 and a new senior credit facility and incurred costs of approximately $0.9 million. With the refinancing of our long term debt, we paid approximately $24.9 million related to breakage, premium call payments and tender offer payments on our $380.1 million senior subordinated notes, $350.0 million senior secured second lien notes and our $75.0 million senior secured notes.

We paid approximately $8.5 million predominately related to the OnCure notes and paid the earn-out liability and finalized the reserve liability relating to the bankruptcy exit of OnCure Holdings, LLC, along with payments of earn-out liabilities related to two previous acquisitions in North Carolina.

We had partnership distributions from non-controlling interests of approximately $3.2 million and $4.1 million for the nine months ended September 30, 2016 and 2015, respectively.

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Senior Secured Credit Facility

On April 30, 2015, 21C entered into the Credit Agreement (the “2015 Credit Agreement”) among 21C, as borrower, the Company, Morgan Stanley Senior Funding, Inc., as administrative agent (in such capacity, the “2015 Administrative Agent”), collateral agent, issuing bank and as swingline lender, the other agents party thereto and the lenders party thereto.

The credit facilities provided under the 2015 Credit Agreement consist of a revolving credit facility providing for up to $125 million of revolving extensions of credit outstanding at any time (including revolving loans, swingline loans and letters of credit) (the “2015 Revolving Credit Facility”) and an initial term loan facility providing for $610 million of term loan commitments (the “2015 Term Facility” and together with the 2015 Revolving Credit Facility, the “2015 Credit Facilities”). 21C may (i) increase the aggregate amount of revolving loans by an amount not to exceed $25 million in the aggregate and (ii) subject to consummation of the Third Capital Event and a consolidated secured leverage ratio test, increase the aggregate amount of the term loans or the revolving loans by an unlimited amount or issue pari passu or junior secured loans or notes or unsecured loans or notes in an unlimited amount. The 2015 Revolving Credit Facility matures April 30, 2020 and the 2015 Term Facility matures April 30, 2022.

Borrowings pursuant to the 2015 Credit Agreement are secured on a first priority basis by a perfected security interest in substantially all of the Company’s assets.

Loans under the 2015 Revolving Credit Facility are subject to the following interest rates:

(a) for loans which are Eurodollar loans, including London Interbank Offered Rate (“LIBOR”) loans, for any interest period, at a rate per annum equal to a percentage equal to (i) the rate per annum as administered by ICE Benchmark Administration, determined on the basis of the rate for deposits in dollars for a period equal to such interest period commencing on the first day of such interest period as of 11:00 A.M., London time, two business days prior to the beginning of such interest period divided by (ii) 1.0 minus the then stated maximum rate of all reserve requirements applicable to any member bank of the Federal Reserve System in respect of euro currency funding or liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D), plus (iii) an applicable margin of between 5.625% and 6.125%, based upon a total leverage pricing grid; and

(b) for loans which are base rate loans, (i) the greatest of (A) the 2015 Administrative Agent’s prime lending rate on such day, which was 3.50% as of September 30, 2016, (B) the federal funds effective rate at such time plus ½ of 1%, and (C) the Eurodollar Rate for a Eurodollar Loan with a one-month interest period commencing on such day plus 1.00%, plus (ii) an applicable margin of between 4.625% and 5.125%, based upon a total leverage pricing grid.

21C will pay certain recurring fees with respect to the 2015 Revolving Credit Facility, including (i) fees on the unused commitments of the lenders under the 2015 Revolving Credit Facility, (ii) letter of credit fees on the aggregate face amounts of outstanding letters of credit and (iii) administration fees.

Loans under the 2015 Term Credit Facility are subject to the following interest rates:

(a) for loans which are Eurodollar loans, including LIBOR loans, for any interest period, at a rate per annum equal to a percentage equal to (i) the rate per annum as administered by ICE Benchmark Administration, determined on the basis of the rate for deposits in dollars for a period equal to such interest period commencing on the first day of such interest period as of 11:00 A.M., London time, two business days prior to the beginning of such interest period divided by (ii) 1.0 minus the then stated maximum rate of all reserve requirements applicable to any member bank of the Federal Reserve System in respect of euro currency funding or liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D), provided that such percentage shall be deemed to be not less than 1.00%, plus (iii) an applicable margin of 6.125%; and

(b) for loans which are base rate loans, (i) the greatest of (A) the 2015 Administrative Agent’s prime lending rate on such day, (B) the federal funds effective rate at such time plus ½ of 1%, and (C) the Eurodollar Rate for a Eurodollar Loan with a one-month interest period commencing on such day plus 1.00%, provided that such percentage shall be deemed to be not less than 2.00%, plus (ii) an applicable margin of 5.125%.

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The 2015 Credit Agreement contains customary representations and warranties, subject to limitations and exceptions, and customary covenants restricting the ability (subject to various exceptions) of 21C and certain of its subsidiaries to: incur additional indebtedness (including guarantee obligations); incur liens; engage in mergers or other fundamental changes; sell certain property or assets; pay dividends of other distributions; consummate acquisitions; make investments, loans and advances; prepay certain indebtedness, including the Senior Notes; change the nature of the business; engage in certain transactions with affiliates; and incur restrictions on the ability of 21C’s subsidiaries to make distributions, advances and asset transfers.  In addition, under the 2015 Credit Facilities, we are required to (i) maintain minimum liquidity of at least $40.0 million (tested monthly) and (ii) comply with a consolidated leverage ratio (tested quarterly) of 7.50 to 1.00 until March 30, 2018, stepping down to 6.25 to 1.00 thereafter. The consolidated leverage ratio is as follows as of September 30, 2016:

	Requirement at September 30, 2016	Level at September 30, 2016
Maximum permitted consolidated leverage ratio	< 7.50 to 1.00	7.14 to 1.00

The 2015 Credit Facilities contain customary events of default, including with respect to nonpayment of principal, interest, fees or other amounts; material inaccuracy of a representation or warranty when made; failure to perform or observe covenants; cross default to other material indebtedness; bankruptcy and insolvency events; inability to pay debts; monetary judgment defaults; actual or asserted invalidity or impairment of any definitive loan documentation and a change of control.

The obligations of 21C under the 2015 Credit Facilities are guaranteed by us and each direct and indirect, domestic subsidiary of 21C, subject to customary exceptions.

The 2015 Revolving Credit Facility also requires that we comply with various other covenants, including, but not limited to, restrictions on new indebtedness, asset sales, capital expenditures, acquisitions and dividends.

On June 10, 2016, we entered into an amendment and waiver (“Amendment No. 1”) to the 2015 Credit Agreement, which waived through July 31, 2016 any default or event of default under the 2015 Credit Agreement for failure to timely provide audited annual financial statements and related reports and certificates for the year ended December 31, 2015 and quarterly financial statements and related reports and certificates for the quarter ended March 31, 2016 (the “Specified Deliverables”).

Additionally, Amendment No. 1 waived any cross-default that may have arisen under the 2015 Credit Agreement prior to or on July 31, 2016 as a result of a default or event of default under the indenture governing the Senior Notes, which occurred as a result of the Company’s failure to timely deliver to the trustee under the indenture governing the Senior Notes its annual report on Form 10-K for the year ended December 31, 2015 and its quarterly report on Form 10-Q for the quarter ended March 31, 2016. Amendment No. 1 further provides that the interest rate applicable to the loans under the Credit Agreement increases in each case by 0.125% per annum as of July 1, 2016.

On August 15, 2016, we entered into an amendment and waiver (“Amendment No. 2”) to the 2015 Credit Agreement.

Amendment No. 2 provides for a limited waiver:

(1) through September 10, 2016, in respect of (a) any default or event of default under the 2015 Credit Agreement resulting from failure to provide audited annual financial statements and related reports and certificates for the year ended December 31, 2015 without a “going concern” or like qualification as and when required pursuant to the 2015 Credit Agreement and (b) any cross-default that may arise under the 2015 Credit Agreement as a result of a default or event of default under the Senior Notes Indenture, which occurs as a result of the Company’s failure to timely furnish to the Trustee and holders of the Senior Notes (each as defined below) or file with the SEC the financial information required in the Delayed 10-K; and

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(2) through September 30, 2016, in respect of (a) any default or event of default under the 2015 Credit Agreement resulting from failure to timely provide quarterly financial statements and related reports and certificates for the quarters ended March 31, 2016 and June 30, 2016 and (b) any cross-default that may arise under the 2015 Credit Agreement as a result of a default or event of default under the Senior Notes Indenture which occurs as a result of the Company’s failure to timely furnish to the Trustee and holders of the Senior Notes or file with the SEC the financial information required in the Delayed 10-Q and the quarterly report on Form 10-Q for the quarter ended June 30, 2016 (together, the “Quarterly SEC Reports”).

We filed the Delayed 10-K with the SEC on August 23, 2016 and the Delayed 10-Q on September 20, 2016.

In addition, Amendment No. 2 requires 21C to receive:

(1) no later than September 10, 2016, net cash proceeds from the issuance or sale of 21C’s capital stock or from other equity investments in an aggregate amount of at least $25.0 million;

(2) no later than November 30, 2016, additional net cash proceeds from the issuance or sale of 21C’s capital stock or from other equity investments and/or sales of assets (which sale transactions must be deleveraging transactions on a pro forma basis) in an aggregate amount of at least $25.0 million (or a lesser amount such that when combined with the proceeds from the First Capital Event, the total amount is not less than $50.0 million); and

(3) no later than March 31, 2017, additional net cash proceeds from the issuance or sale of 21C’s capital stock or from other equity investments and/or sales of assets (which sale transactions must be deleveraging transactions on a pro forma basis) in an aggregate amount of at least the lesser of (A) $75.0 million (or a lesser amount such that when combined with the proceeds from the First Capital Event and the Second Capital Event, the total amount is not less than $125.0 million), and (B) an amount such that, after giving effect to such issuance or sale of capital stock or other equity investments and/or sales of assets, 21C’s cash and cash equivalents plus unused revolving loan commitments equals at least $120.0 million and 21C’s consolidated leverage ratio is not greater than 6.4 to 1.00.

Notwithstanding any qualification provided for in the above described Capital Events, Amendment No. 2 requires that 21C receive, on or prior to March 31, 2017, at least $50.0 million of net cash proceeds from the issuance or sale of 21C’s capital stock or from other equity investments. On September 9, 2016, we satisfied the First Capital Event.

Amendment No. 2 provides for a new minimum liquidity covenant pursuant to which 21C must maintain at least $40.0 million of liquidity after the completion of the First Capital Event, which will be tested monthly prior to the completion of the Third Capital Event and quarterly thereafter.

Amendment No. 2 also amends certain existing covenants (and definitions related thereto) in the 2015 Credit Agreement and provides for additional restrictions regarding the ability of 21C and certain of its subsidiaries to incur additional debt, make restricted payments and make investments. These covenants are subject to a number of important limitations and exceptions.

Senior Notes

On April 30, 2015, 21C completed an offering of $360.0 million aggregate principal amount of 11.00% senior notes due 2023 (the “Senior Notes”) at an issue price of 100.00%.  The Senior Notes are senior unsecured obligations of 21C and are guaranteed on an unsecured senior basis by the Company and each of 21C’s existing and future direct and indirect domestic subsidiaries that is a guarantor (the “Guarantors”) under the 2015 Credit Facilities.

The Senior Notes were issued in a private offering that is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), to qualified institutional buyers in accordance with Rule 144A and to persons outside of the United States pursuant to Regulation S under the Securities Act.

21C used the net proceeds from the offering, together with cash on hand and borrowings under the 2015 Credit Facilities, to repay our $90.0 million Term Facility, to redeem our 97/8% Senior Subordinated Notes due 2017 and our 87/8% Senior Secured Second Lien Notes due 2017, to repurchase a portion of the 113/4% Senior Secured Notes due 2017 issued by OnCure, to pay related fees and expenses and for general corporate purposes. We incurred approximately $26.5 million in transaction fees and expenses, including legal, accounting, and other fees associated with the offering.

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The Senior Notes were issued pursuant to the indenture, dated April 30, 2015 (the “Senior Notes Indenture”), among 21C, the Guarantors and Wilmington Trust, National Association, as trustee, governing the Senior Notes. As of September 30, 2016, 21C had $360.0 million aggregate principal amount of Senior Notes outstanding.

Interest is payable on the Senior Notes on each May 1 and November 1, commencing November 1, 2015. 21C may redeem some or all of the Senior Notes at any time prior to May 1, 2018 at a price equal to 100% of the principal amount of the Senior Notes redeemed plus accrued and unpaid interest to the redemption date, if any, and an applicable make-whole premium. On or after May 1, 2018, 21C may redeem some or all of the Senior Notes at redemption prices set forth in the Indenture. In addition, at any time prior to May 1, 2018, 21C may redeem up to 35% of the aggregate principal amount of the Senior Notes, at a specified redemption price with the net cash proceeds of certain equity offerings.

The Senior Notes Indenture contains covenants that, among other things, restrict the ability of 21C and certain of its subsidiaries to: incur additional debt or issue preferred shares; pay dividends on or make distributions in respect of their equity interest or make other restricted payments; sell certain assets; create liens on certain assets to secure debt; consolidate, merge, sell or otherwise dispose of all or substantially all of their assets; enter into certain transactions with affiliates; and designate subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of important limitations and exceptions. In addition, in certain circumstances, if 21C sells assets or experiences certain changes of control, it must offer to purchase the Senior Notes.

On July 25, 2016, we entered into the second supplemental indenture to the Senior Notes Indenture (the “Second Supplemental Indenture”), providing for a limited waiver through July 31, 2016 of certain defaults or events of default under the Senior Notes Indenture for failure to timely furnish to the trustee and holders of the Senior Notes or file with the SEC the financial information required in an annual report on Form 10-K for the year ended December 31, 2015 or in a quarterly report on Form 10-Q for the period ended March 31, 2016. As consideration for the foregoing, 21C paid to all holders of the Senior Notes an amount representing additional interest on the Senior Notes equal to $2.30 per $1,000 principal amount of the Senior Notes. 21C also paid certain fees and expenses of the advisors to certain holders of the Senior Notes incurred in connection with the Second Supplemental Indenture.

On August 16, 2016, 21C received the requisite consents from the holders of a majority of the aggregate principal amount of the Senior Notes outstanding to enter into a third supplemental indenture (the “Third Supplemental Indenture”) to the Senior Notes Indenture.

The Third Supplemental Indenture provides for a limited waiver:

(1) through September 10, 2016, in respect of certain defaults or events of default under the Senior Notes Indenture resulting from failure to timely furnish to the Trustee and holders of the Senior Notes or file with the SEC the Delayed 10-K; and

(2) through September 30, 2016, in respect of certain defaults or events of default under the Senior Notes Indenture resulting from failure to timely furnish to the Trustee and holders of the Senior Notes or file with the SEC the Quarterly SEC Reports.

The Company filed the Delayed 10-K with the SEC on August 23, 2016 and the Delayed 10-Q on September 20, 2016.

The Third Supplemental Indenture requires 21C to complete each Capital Event as described above and in the same time frame described above. As discussed above, the Company satisfied the First Capital Event on September 9, 2016.

The Third Supplemental Indenture provides for a new minimum liquidity covenant pursuant to which 21C must maintain at least $40.0 million of liquidity after the completion of the First Capital Event, which will be tested monthly prior to the completion of the Third Capital Event and quarterly thereafter.

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The Third Supplemental Indenture also amends certain existing covenants (and definitions related thereto) in the Senior Notes Indenture and provides for additional restrictions regarding the ability of 21C and certain of its subsidiaries to incur additional debt and pay dividends on or make distributions in respect of their equity interests or make other restricted payments. These covenants are subject to a number of important limitations and exceptions.

Pursuant to the Third Supplemental Indenture, in addition to any cash interest provided for in the Senior Notes Indenture, during the period starting on August 1, 2016 through August 31, 2016, holders of the Senior Notes will be entitled to PIK interest at a rate of 0.75% per annum, which rate will increase by an additional 0.75% per annum on the first day of each subsequent month, commencing on September 1, 2016. PIK interest will be paid monthly on the first day of each month, starting on September 1, 2016. PIK interest will stop accruing on the date of completion of the Third Capital Event, and the last PIK interest payment will be made on the first day of the month following such date.

The Third Supplemental Indenture also provides that the holders of a majority of the aggregate principal amount of the Senior Notes outstanding shall have the right to designate one non-voting board observer to attend meetings of the Board of Directors of each of the Company and 21C until the date of completion of the Third Capital Event.

Billing and Collections

Our billing system in the U.S., excluding recently acquired businesses, utilizes a fee schedule for billing patients, third-party payers and government sponsored programs such that fees billed to each responsible party are automatically adjusted to the allowable payment amount at time of billing.

Insurance information is requested from all patients either at the time the first appointment is scheduled or at the time of service. A copy of the insurance card is scanned into our system at the time of service so that it is readily available to staff during the collection process. Patient demographic information is collected for both our clinical and billing systems. It is our policy to collect co-payments from the patient at the time of service.

Charges are posted to the billing system by coders in our central billing office and our medical offices. After charges are posted, edits are performed, any necessary corrections are made, billing forms are generated and sent electronically to our clearinghouse whenever electronic submission is possible. Any billing forms not able to be processed through the clearinghouse are printed and mailed from our print mail service. Statements are automatically generated from our billing system and mailed to either the payer or patient on a regular basis for any amounts still outstanding from the respective responsible party. Daily, weekly and monthly accounts receivable analysis reports are utilized by staff and management to prioritize accounts for collection purposes, as well as to identify trends and issues. Our write-off process requires manual review and our process for collecting accounts receivable is dependent on the type of payer as set forth below.

In our international operations, our commercial and billing department obtains an authorization by the payer for the type of radiation therapy services to be provided and the agreed upon amount for the completion of the course of treatment. Upon completion of the course of treatment, the billing department invoices the payer for the authorized and agreed upon amount.  If the course of treatment has not be completed due to cancellations, death of patient, or other reason, the commercial department contacts the payer to agree to a reduced amount per what was initially authorized.

Medicare, Medicaid and Commercial Payer Balances

Our central billing office staff expedites the payment process from insurance companies and other payers via electronic inquiries, phone calls and automated letters to ensure timely payment. Our billing system generates standard aging reports by date of billing in increments of 30 day intervals. The collection team utilizes these reports to assess and determine the payers requiring additional focus and collection efforts. Our accounts receivable exposure on Medicare, Medicaid and commercial payer balances is largely limited to denials and other unusual adjustments and consequently our bad debt expense on balances relating to these types of payers over the years has been insignificant.

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In the event of denial of payment, we follow the payers’ standard appeals process, both to secure payment and to lobby the payers, as appropriate, to modify their medical policies to expand coverage for the newer and more advanced treatment services that we provide which, in many cases, is the payers’ reason for denial of payment. If all reasonable collection efforts with these payers have been exhausted by our central billing office staff, the account receivable is written-off.

Self-Pay Balances

We administer self-pay account balances through our central billing office and our policy is to first attempt to collect these balances. If initial attempts are unsuccessful, we often send outstanding self-pay patient claims to collection agencies at designated points in the collection process. In some cases, monthly payment arrangements are made with patients for the account balance remaining after insurance payments have been applied. These accounts are reviewed monthly to ensure payments continue to be made in a timely manner. Once it has been determined by our staff that the patient is not responding to our collection attempts, a final notice is mailed. This generally occurs more than 120 days after the date of the original bill. If there is no response to our final notice, after 30 days the account is assigned to a collection agency and, as appropriate, recorded as a bad debt and written off.

Acquisitions and Developments

The following table summarizes our change in radiation therapy centers in which we operate for the nine months ended September 30, 2016:

	2016
Radiation therapy centers at beginning of period	181
Internally developed / reopened	1
Acquired	1
Closed	(3)
Radiation therapy centers at period end	180

When we acquire a radiation therapy center, the purchase price is allocated to the assets acquired and liabilities assumed based upon their respective fair values.

On January 1, 2016, we contributed our Greenville, North Carolina radiation treatment center to a newly formed joint venture (“Newco”). Simultaneously, a local hospital system contributed its Greenville, North Carolina radiation treatment center to Newco and purchased additional ownership interests from us for approximately $6.2 million. As a result of the transaction, we own 50% of Newco and are providing management services to both radiation treatment centers. In addition, we determined we do not control Newco, and as of January 1, 2016, we deconsolidated the operations of our Greenville radiation treatment center.

On January 19, 2016 we commenced operations at a de novo radiation therapy center located in Conway, South Carolina.

During the nine months ended September 30, 2016, we ceased operations at three facilities located in Arizona, Maryland and Massachusetts.

As of September 30, 2016, we have two de novo radiation treatment centers under construction in South Carolina and the Dominican Republic.

Critical Accounting Policies

Management considers an accounting policy to be critical if the accounting policy requires management to make particularly difficult, subjective or complex judgments about matters that are inherently uncertain. A summary of our critical accounting policies is included in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies” of our Form 10-K. There have been no material changes to the critical accounting policies disclosed in our Form 10-K.

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Off-Balance Sheet Arrangements

As of September 30, 2016, our off-balance sheet obligation consisted of $3.5 million in letters of credit. We do not currently have any off-balance sheet arrangements with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not engage in trading activities involving non-exchange traded contracts. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For quantitative and qualitative disclosures about market risk affecting us, see “Quantitative and Qualitative Disclosure about Market Risk” in Item 7A of Part II of our Annual Report on Form 10-K for the year ended December 31, 2015. As of September 30, 2016, our exposure to market risk has not changed materially since December 31, 2015.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, have evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. This evaluation identified material weaknesses in our internal control over financial reporting as noted below in Management’s Report on Internal Control over Financial Reporting. Based on the evaluation of these material weaknesses, our principal executive officer and principal financial officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with U.S. generally accepted accounting principles (“GAAP”) and includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

In December 2015, we identified material weaknesses as we did not:

· have a sufficient complement of personnel with an appropriate level of knowledge, experience, and oversight commensurate with our financial reporting requirements to ensure proper selection and application of GAAP;

· design and maintain adequate procedures or effective review and approval controls over the accurate recording of revenues and related accounts receivables in MDLLC, our Latin America operations;

  ·

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· design and maintain adequate procedures or effective review and approval controls over the accurate reporting, including the use of appropriate technical accounting expertise, when recording complex or non-routine transactions such as those involving self-insured medical malpractice programs, purchase accounting, embedded derivatives, accounting and reporting for the SFRO acquisition (including classification of noncontrolling interests), CPPIB transactions and related embedded derivatives, foreign currency translations and functional currency determinations for foreign operations;

· design and maintain adequate procedures or effective controls related to our regulatory compliance monitoring procedures and oversight over compliance and regulatory affairs matters; specifically, the scope of our compliance work programs and procedures did not address all relevant risks to the organization, including procedures to test for the medical necessity;

· design and maintain adequate procedures or effective controls to test that the meaningful use criteria was successfully met and maintained in order for the Company to recognize EHR incentive income under the gain contingency model as prescribed by ASC 450;

· design and maintain procedures or effective controls to ensure effective communication and coordination within the Company on compliance related matters;

· design and maintain adequate oversight over the accounting department of foreign operations including internal controls required to mitigate risks of material misstatement.

· design and maintain procedures or effective controls to ensure adequate oversight over the information technology (“IT”) organization to maintain effective information technology general controls (access and program change controls) which are required to support automated controls and IT functionality; and

· integrate and maintain (i) appropriate segregation of duties over cash, (ii) adequate access controls with regard to financial applications, and (iii) adequate controls over the processing of expenditures, including payroll expense. Each of these items is specific to the integration of SFRO.

Management is committed to the planning and implementation of remediation efforts to address the material weaknesses as well as other identified areas of risk. These remediation efforts, summarized below, which are either implemented or in process, are intended to both address the identified material weaknesses and to enhance our overall financial control environment.

More specifically to date we have:

· adopted new accounting policies including improved documentation and communication for revenue recognition, medical malpractice liability and other complex accounting areas;

· engaged an external team of experienced senior finance and accounting consultants to: (i)  review, analyze and enhance our consolidated financial statement close and reporting processes, (ii) perform testing and evaluation of the Company’s internal controls, and (iii) assist the Company in designing and implementing additional financial reporting controls and financial reporting control enhancements;

· appointed experienced professionals to key leadership positions;

· completed the implementation of a more robust contract governance structure to assure appropriate administration, compliance and accounting treatment for new or amended contract terms;

· revised and improved a formal delegation of authority from the Board of Directors;

· engaged compliance specialists to conduct an evaluation of our compliance program and a compliance risk assessment to identify opportunities to improve the existing compliance program. The evaluation encompassed a comprehensive review of the infrastructure and operations of the enterprise-wide compliance program, including an evaluation of the compliance program activities at physician practices in our various geographic regions;

· updated our code of conduct and established a process whereby all of our employees will be required to annually acknowledge their commitment to adhering to its provisions;

· outsourced our compliance hotline to a third-party to enhance the anonymous and confidential process for reporting any suspected violations of federal or state law and regulations, the Company’s policies and procedures, or the Company’s code of conduct;

· reviewed, updated, developed and implemented written policies and procedures regarding the operation of the Company’s compliance program;

· reviewed, updated, developed and implemented written policies and procedures regarding proper billing, coding and claims submission;

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· reviewed, developed, updated and implemented a comprehensive compliance training program for employees, contractors involved in patient care, coding or billing, and the Board of Directors;

· established a program to enhance internal coding audits and the processes and procedures for responding to the results of those audits;

· established a Compliance and Quality Committee charged with oversight of compliance and regulatory functions;

· implemented an annual certification process requiring management employees to attest that their areas of responsibility are in compliance with applicable laws, regulations and internal policies and procedures; and established a Regulatory Affairs Department charged with responsibility for our meaningful use process, including oversight and testing of compliance with criteria prior to submitting attestations;

· integrated the SFRO revenue cycle and practice management system platform into our revenue cycle systems;

· addressed SFRO integration items related to appropriate segregation of duties over cash, financial application access controls, and expenditure processing;

· implemented controls and procedures to improve processes and communications around non-routine or complex transactions; and

· strengthened our disclosure committee with formalized processes to enhance the transparency of our external financial reporting.

Management believes that progress has been made against remaining remediation efforts and successful completion is an important priority. Remaining remediation activities include:

· restructuring key revenue, cost, billing system and related reimbursement accounting policies and processes in Latin America;

· restructuring certain accounting functions and organizational structures to enhance accurate reporting and ensure appropriate accountability;

· hiring additional accounting, finance, internal audit, compliance and information technology personnel with appropriate backgrounds and skill sets;

· establishing additional programs to provide appropriate accounting and controls training to financial, operational and corporate executives on an ongoing basis;

· expanding and enhancing our financial reporting systems to facilitate more robust analysis of operating performance, budgeting and forecasting;

· enhancing communication and monitoring processes and the appropriate documentation of such to ensure the Audit Committee’s effectiveness in executing its oversight responsibilities;

· enhancing operational guidelines and oversight over general IT controls to ensure the proper development and implementation of applications, integrity of programs and data, and computer operations; and

· continuing improvements to our compliance monitoring and reporting programs.

Management believes the measures described above, when fully implemented and operational, will remediate the control deficiencies we have identified and strengthen our internal control over financial reporting. We are committed to improving our internal control processes and intend to continue to review and improve our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal control over financial reporting, we may decide to implement other initiatives to address control deficiencies or determine to modify, or in appropriate circumstances, not complete, certain of the remediation measures described above.

Inherent Limitations on Effectiveness of Controls

The Company’s management team, including the CEO and CFO, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and fraud. A control system, no matter how well-designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is based in part on certain assumptions

57

about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. As noted herein, management has identified material weaknesses in our internal control over financial reporting.

Except as noted in the preceding paragraphs, there has been no change in our internal control over financial reporting that occurred during the period that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

There have been no material changes to any legal proceedings previously disclosed in our most recently filed 10-K and 10-Q. Refer to Note 14 Commitments and Contingencies, to our condensed consolidated financial statements for a description of currently pending legal proceedings.

Item 1A. Risk Factors.

Our substantial debt could adversely affect our financial condition.

        We have $1.1 billion of total debt outstanding as of September 30, 2016. Our high level of debt could have adverse effects on our business and financial condition. Specifically, our high level of debt could have important consequences, including the following:

•requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes; 

•making it more difficult for us to satisfy our obligations with respect to our debt; 

•limiting our ability to obtain additional financing to fund future working capital, capital expenditures,     acquisitions or other general corporate requirements; 

•increasing our vulnerability to general adverse economic and industry conditions; 

•limiting our flexibility in planning for and reacting to changes in the industry in which we compete; 

•placing us at a disadvantage compared to other, less leveraged competitors; and 

•increasing our cost of borrowing.

        Our ability to make scheduled payments on and to refinance our indebtedness depends on and is subject to our financial and operating performance, which in turn is affected by general and regional economic, financial, competitive, business and other factors beyond our control, including the availability of financing in the international banking and capital markets. On November 1, 2016, we failed to make a semi-annual interest payment as required by the Senior Notes Indenture governing our Senior Notes. The failure to make such interest payment, if not cured within 30 days, will result in an event of default under the Senior Notes Indenture.

We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to service our debt, to refinance our debt or to fund our other liquidity needs. If we are unable to meet our debt obligations or to fund our other liquidity needs, we will need to identify alternative options, such as a debt refinancing, a sale of the Company or other strategic transaction, or a transformative transaction, such as a possible restructuring or reorganization of the Company's operations.

58

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

On September 9, 2016, we issued issued to Canada Pension Plan Investment Board, an aggregate of 25,000 shares of our Series A Convertible Preferred Stock, par value $0.001 per share, for a purchase price of $25.0 million. The private placement was conducted in reliance upon the exemption from registration under Regulation S of the Securities Act of 1933, as amended.

59

Item 6. Exhibits.

Exhibit Number	Description
3.1	Amended and Restated Certificate of Designations of Series A Convertible Preferred Stock of 21st Century Oncology Holdings, Inc. (incorporated by reference to Exhibit 3.1 to 21st Century Oncology Holdings, Inc.’s Current Report on Form 8-K filed on September 9, 2016).
4.1	Second Supplemental Indenture, dated as of July 25, 2016, among 21st Century Oncology, Inc., the guarantors party thereto and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.1 to 21st Century Oncology Holdings, Inc.’s Current Report on Form 8-K filed on July 28, 2016).
4.2	Third Supplemental Indenture, dated as of August 16, 2016, among 21st Century Oncology, Inc., the guarantors party thereto and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.1 to 21st Century Oncology Holdings, Inc.’s Current Report on Form 8-K filed on August 16, 2016).
10.1	Amendment No. 2 and Waiver, dated as of August 15, 2016, to the Credit Agreement, dated as of April 30, 2015, among 21st Century Oncology, Inc., 21st Century Oncology Holdings, Inc., the lenders party thereto from time to time, Morgan Stanley Senior Funding, Inc., as Administrative Agent, and the other agents and arrangers named therein (incorporated by reference to Exhibit 10.1 to 21st Century Oncology Holdings, Inc.’s Current Report on Form 8-K filed on August 16, 2016).
10.2	Executive Employment Agreement, dated as of September 8, 2016, by and among 21st Century Oncology Holdings, Inc. and William R. Spalding (incorporated by reference to Exhibit 10.1 to 21st Century Oncology Holdings, Inc.’s Current Report on Form 8-K filed on September 9, 2016).
10.3	Letter Agreement, dated as of September 8, 2016, by and among 21st Century Oncology Holdings, Inc., 21st Century Oncology Investments, LLC and Dr. Daniel Dosoretz (incorporated by reference to Exhibit 10.2 to 21st Century Oncology Holdings, Inc.’s Current Report on Form 8-K filed on September 9, 2016).
10.4	Subscription Agreement, dated as of September 9, 2016, by and among 21st Century Oncology Investments, LLC, 21st Century Oncology Holdings, Inc., 21st Century Oncology, Inc., and Canada Pension Plan Investment Board (incorporated by reference to Exhibit 10.3 to 21st Century Oncology Holdings, Inc.’s Current Report on Form 8-K filed on September 9, 2016).*
10.5	Third Amended and Restated Securityholders Agreement, dated as of September 9, 2016, by and among 21st Century Oncology Investments, LLC, 21st Century Oncology Holdings, Inc. and the other parties thereto (incorporated by reference to Exhibit 10.4 to 21st Century Oncology Holdings, Inc.’s Current Report on Form 8-K filed on September 9, 2016).
10.6	Eighth Amended and Restated Limited Liability Company Agreement of 21st Century Oncology Investments, dated as of September 9, 2016 (incorporated by reference to Exhibit 10.5 to 21st Century Oncology Holdings, Inc.’s Current Report on Form 8-K filed on September 9, 2016).*
10.7	Amendment No. 1 and Waiver to Amended and Restated Management Agreement, dated September 9, 2016, among 21st Century Oncology, Inc., 21st Century Oncology Investments, LLC and Vestar Capital Partners, LLC.¥
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  ¥
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  ¥
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1	Supplemental Financial Information.  ¥

60

101  The following financial information from 21st Century Oncology Holdings, Inc. Quarterly Report on Form 10-Q for the period September 30, 2016, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheet at September 30, 2016 and December 31, 2015; (ii) the Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2016 and 2015; (iii) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015; and (iv) Notes to Interim Condensed Consolidated Financial Statements.  ¥

*         Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules upon request by the Securities and Exchange Commission. 

¥         Filed herewith.

61

SIGNATURE

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

		21ST CENTURY ONCOLOGY HOLDINGS, INC.
Date:    November 14, 2016
	By:	/s/ LEANNE M. STEWART
		LeAnne M. Stewart
		Chief Financial Officer
		(Principal Financial Officer)

62

EX-10.7

Exhibit 10.7

AMENDMENT NO. 1 AND WAIVER

TO

AMENDED AND RESTATED MANAGEMENT AGREEMENT

This Amendment No. 1 and Waiver to the Amended and Restated Management Agreement  (this “Amendment”) is made as of September 9, 2016, among 21st Century Oncology, Inc. (f/k/a Radiation Therapy Services, Inc.), a Florida corporation (the “Company”), 21st Century Oncology Holdings, Inc. (f/k/a Radiation Therapy Services Holdings, Inc.), a Delaware corporation (“Holdings”), 21st Century Oncology Investments, LLC (f/k/a Radiation Therapy Investments, LLC), a Delaware limited liability company (“Investors”), and Vestar Capital Partners, LLC (f/k/a Vestar Capital Partners), a New York limited liability company (“Vestar”). 

WHEREAS, pursuant to Section 9(a) of the Amended and Restated Management Agreement, dated as of September 26, 2014 (the “Management Agreement”), the Company, Holdings, Investors and Vestar may amend and/or waive any provision of the Management Agreement; and

WHEREAS, Canada Pension Plan Investment Board (“CPPIB”) is, on the date hereof, entering into a Subscription Agreement (the “Subscription Agreement”) with the Company, Holdings and Investors, which provides for an investment by CPPIB in Holdings and in connection therewith the Company, Holdings, Investors and Vestar desire to amend the Management Agreement. 

NOW, THEREFORE, in consideration for the mutual promises made herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

1. Capitalized Terms. Capitalized terms used, but not otherwise defined herein, shall have the meaning given to them in the Management Agreement.

2. Amendments to the Management Agreement.

(a) Section 2 of the Management Agreement is hereby amended and restated in its entirety to read as follows:

“Services.  Vestar hereby agrees that it shall render to each of Investors, Holdings and the Company (and their subsidiaries) by and through Vestar’s officers, employees, agents, representatives and affiliates as Vestar in its sole discretion shall designate from time to time, financial advisory or other similar services to Investors, Holdings and the Company (and their subsidiaries) in connection with acquisitions, divestitures, refinancings, restructurings and similar transactions by Investors, Holdings and the Company (and their subsidiaries).  It is expressly agreed that the services to be performed hereunder shall not include full or part-time employment by any of the Company and its subsidiaries of any employee or partner of Vestar or any of its affiliates.”

(b) Section 3(a) of the Management Agreement is hereby amended and restated in its entirety by deleting the current provision in its entirety and replacing such provision to read as follows:

“[Reserved.]”

(c) Section 3(b) of the Management Agreement is hereby amended and restated in its entirety to read as follows:

“Subject to Section 7, Investors, Holdings and the Company and their respective successors hereby jointly and severally agree to pay or cause to be paid to Vestar either (i) $6,000,000 for any financial advisory or similar services provided by it and/or its affiliates in connection with a Sale of the Company (as defined in that certain Securityholders Agreement, dated as of the date hereof, by and among Investors and certain of the securityholders of Investors from time to time party thereto, as the same may be amended, modified or restated from time to time (the “Securityholders Agreement”)) or (ii) $6,000,000 in connection with a Qualified IPO or other initial Public Offering (as defined in the Securityholders Agreement) (the fees set forth in this Section 3(b), the “Advisory Fee”).”

(d) Section 4 of the Management Agreement is hereby amended and restated in its entirety to read as follows:

“In addition to the Advisory Fee, Investors, Holdings and the Company hereby jointly and severally agree, at the direction of Vestar, to pay directly or reimburse Vestar for its reasonable Out of Pocket Expenses incurred after the date hereof in connection with the services provided to Investors, Holdings and the Company (and their subsidiaries) pursuant to Section 2 hereof.  For the purposes of this Agreement, the term “Out of Pocket Expenses” shall mean the amounts paid by or on behalf of Vestar in connection with board service by the Vestar Managers (as defined in the Third Amended and Restated Securityholders Agreement, dated as of the date hereof, by and among the Company, Holdings, Investors, Vestar and the other parties thereto) including reasonable costs of transportation, per diem, telephone calls, word processing expenses or any similar expense not associated with Vestar’s ordinary operations and, in the event approved by the board of directors of Holdings (including approval by the members of the board of directors of Holdings who are designees of the Majority Preferred Stockholders (as defined in the Securityholders Agreement)), any out-of-pocket costs and expenses incurred by or on behalf of Vestar in connection with the services contemplated by Section 2.  All reimbursements for Out-of-Pocket Expenses shall be made promptly upon or as soon as practicable after presentation by Vestar of the statement in connection therewith.”

(e) The last sentence of Section 6 of the Management Agreement is hereby amended and restated in its entirety to read as follows:

“The provisions of Sections 4, 5, 8 and 9 and the joint and several obligation of Investors, Holdings and the Company to pay the Advisory Fee shall survive the termination of this Agreement.”

(f) Section 7 of the Management Agreement is hereby amended and restated in its entirety to read as follows:

“Default Event.  Notwithstanding anything herein to the contrary, upon (A) the occurrence and during the continuance of a Default Event (as defined in the Certificate of Designations) occurring after September 9, 2016, or (B) upon and following the exercise of a Repurchase Option (as defined in the Certificate of Designations) as a result of a Default Event (as defined in the Certificate of Designations) occurring after September 9, 2016 then, in either case, (i) Section 3(b) shall have no force or effect and no payment shall

be owed to Vestar thereunder, (ii) other than with respect to any accrued and unpaid Fees (as defined in the Agreement prior to giving effect to Amendment No. 1 and Waiver to the Amended and Restated Management Agreement) incurred on or prior to December 31, 2015 (the “Accrued Fees”), any and all other payment rights of Vestar hereunder (including rights of reimbursement and indemnification) shall be subordinated to the senior and priority right of payment of the holders of the Convertible Preferred Stock to the extent of the Stated Value thereof and (iii) Section 2 shall have no force or effect and Vestar shall have no obligation to provide services pursuant to this Agreement. Vestar agrees that if it receives any such payment hereunder on or after a Default Event occurring after September 9, 2016 and prior to the full payment of the Stated Value to such holders, it shall hold such received amount in trust for such holders and shall promptly remit same as directed by the Majority Holders.”

(g) Section 9(a) of the Management Agreement is hereby amended and restated in its entirety to read as follows:

“No amendment of any provision of this Agreement, or consent to any departure by either party from any such provision, shall in any event be effective unless the same shall be in writing and signed by the parties to this Agreement.  No waiver of any provision of this Agreement shall in any event be effective unless the same shall be in writing and signed by the party against whom the waiver is to be effective. Any amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.”

(h) The Management Agreement is hereby amended such that any reference to “Advisory Fees” shall be deemed to refer to “Advisory Fee”. 

3. Waiver of Fees. The Company, Holdings, Investors and Vestar hereby irrevocably and unconditionally waive, release and forgive Vestar’s right to receive any accrued but unpaid Fees incurred on or after January 1, 2016 (it being understood and agreed that the foregoing waiver shall in no way affect Vestar’s right to receive any Accrued Fees, which Accrued Fees shall remain owing in accordance with the terms of the Management Agreement (without giving effect to this Amendment or any Default Event occurring on or prior to September 9, 2016), provided that such Accrued Fees shall not become immediately due and payable until the earlier of (a) the occurrence of the Third Capital Event (as defined in that certain Credit Agreement, dated as of April 30, 2015 (as amended, supplemented or otherwise modified from time to time), by and between the Company, Holdings, the lenders party thereto and the administrative agent and other agents and arrangers named therein), (b) a Sale of the Company or Public Offering (each, as defined in the Securityholders Agreement) and (c) April 1, 2017.

4. Effect of Amendment. Except as expressly amended hereby, the Management Agreement shall remain unaltered and in full force and effect and the respective terms, conditions or covenants thereof are hereby in all respects confirmed.  Whenever the Management Agreement is referred to in any agreement, document or other instrument, such reference will be to the Management Agreement as amended by this Amendment. 

5. Miscellaneous. Section 9 of the Management Agreement is incorporated herein by reference, mutatis mutandis.

[The remainder of this page intentionally left blank.]

IN WITNESS WHEREOF, the undersigned have caused this Amendment to be signed as of the date first written above.

VESTAR CAPITAL PARTNERS, LLC
By:	/s/ Steven Della Rocca
Name:	Steven Della Rocca
Title:	Managing Director and General Counsel
21st CENTURY ONCOLOGY, INC.
By:	/s/ LeAnne M. Stewart
Name:	LeAnne M. Stewart
Title:	Chief Financial Officer
21st CENTURY ONCOLOGY HOLDINGS, INC.
By:	/s/ LeAnne M. Stewart
Name:	LeAnne M. Stewart
Title:	Chief Financial Officer
21st CENTURY ONCOLOGY INVESTMENTS, LLC
By:	/s/ James L. Elrod, Jr.
Name:	James L. Elrod, Jr.
Title:	President

[Signature Page to Amendment No. 1 and Waiver to A&R Management Agreement]

EX-31.1

Exhibit 31.1

CERTIFICATION

I, William R. Spalding, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of 21st Century Oncology Holdings, Inc.;

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

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

4. The registrant’s other certifying officers 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 we have:

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

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

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

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

5. The registrant’s other certifying officers 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 function):

(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.

Dated: November 14, 2016	By:	/s/ WILLIAM R. SPALDING
	William R. Spalding
	President and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, LeAnne M. Stewart, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of 21st Century Oncology Holdings, Inc.;

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

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

4. The registrant’s other certifying officers 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 we have:

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

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

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

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

5. The registrant’s other certifying officers 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 function):

(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.

Dated: November 14, 2016	By:	/s/ LEANNE M. STEWART
	LeAnne M. Stewart
	Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of 21st Century Oncology Holdings, Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2016 (the “Report”), I, William R. Spalding, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(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.

A signed original of this written certification required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ WILLIAM R. SPALDING

William R. Spalding

President and Chief Executive Officer

(Principal Executive Officer)

November 14, 2016

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of 21st Century Oncology Holdings, Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2016 (the “Report”), I, LeAnne M. Stewart, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(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.

A signed original of this written certification required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ LEANNE M. STEWART

LeAnne M. Stewart

Chief Financial Officer

(Principal Financial Officer)

November 14, 2016

EX-99.1

Exhibit 99.1

Supplemental Financial Information

21st Century Oncology, Inc. (21C), a subsidiary of the Company, has payment obligations under the senior secured credit facility, and Senior Notes that are guaranteed by the Company. The Company owns 100% of 21C and certain domestic subsidiaries of 21C, all of which are, directly or indirectly, 100% owned by 21C (the “Subsidiary Guarantors” and, collectively with the Company, the “Guarantors”). Such guarantees are full, unconditional and joint and several. The consolidated joint ventures, foreign subsidiaries and professional corporations of the Company are non‑guarantors. The following supplemental financial information sets forth, on an unconsolidated basis, selected balance sheet accounts, revenues and adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) information.

21ST CENTURY ONCOLOGY HOLDINGS, INC.

Supplemental Financial Information

September 30, 2016

	Parent
Selected Balance Sheets Accounts	Issuer &
As of September 30, 2016	Guarantor	Non Guarantor	Eliminations	Consolidated
Assets
Cash	26,032	23,664	—	49,696
Current assets (excluding cash)	118,329	47,609	—	165,938
Long-term assets	831,543	157,207	(149,424)	839,326
Total Assets	975,904	228,480	(149,424)	1,054,960
Liabilities
Current portion of debt	1,104,149	2,513	—	1,106,662
Current liabilities (excluding debt)	135,441	20,651	—	156,092
Long-term debt, less current portion	13,508	4,223	—	17,731
Long-term liabilities (excluding debt)	107,681	48,476	(39,386)	116,771
Total Liabilities	1,360,779	75,863	(39,386)	1,397,256
	Parent
Selected Income Statement Accounts	Issuer &
For the Nine Months Ended September 30, 2016	Guarantor	Non Guarantor	Eliminations	Consolidated
Total Revenues	615,924	208,480	(50,044)	774,360
EBITDA	36,243	24,669	(9,659)	51,253
EBITDA Adjustments:
Intercompany equity investments	(9,659)	—	9,659	—
Net income attributable to noncontrolling interest	—	4,534	—	4,534
Noncontrolling interest cash distributions	—	(3,208)	—	(3,208)
Gain on the contribution of a radiation facility to a joint venture	(12,629)	—	—	(12,629)
Gain on BP settlement	(517)	—	—	(517)
Impairment loss	2,595	—	—	2,595
Fair value adjustment of earn-out liabilities	1	—	—	1
Fair value adjustment of embedded derivatives and other financial instruments	22,186	—	—	22,186
Other expenses	9,851	110	—	9,961
Non-cash expenses	2,249	184	—	2,433
Sale-lease back adjustments	(940)	—	—	(940)
Acquisition-related costs	1,140	40	—	1,180
Litigation matters	1,888	—	—	1,888
Expenses associated with debt/waiver amendments and restatement of previously issued financial statements	17,230	—	—	17,230
Sub-total	69,638	26,329	—	95,967
Allocated share of Non-Guarantor EBITDA to Guarantor	18,035	(18,035)	—	—
Pro-Forma Adjusted EBITDA	87,673	8,294	—	95,967

21ST CENTURY ONCOLOGY HOLDINGS, INC.

Supplemental Financial Information

September 30, 2015

	Parent
Selected Balance Sheets Accounts	Issuer &
As of December 31, 2015	Guarantor	Non Guarantor	Eliminations	Consolidated
Assets
Cash	48,336	16,875	—	65,211
Current assets (excluding cash)	121,775	44,283	(9,992)	156,066
Long-term assets	895,264	170,023	(182,703)	882,584
Total Assets	1,065,375	231,181	(192,695)	1,103,861
Liabilities
Current portion of debt	1,020,343	3,534	—	1,023,877
Current liabilities (excluding debt)	169,946	28,556	(9,912)	188,590
Long-term debt, less current portion	43,728	5,505	—	49,233
Long-term liabilities (excluding debt)	138,867	44,104	(74,927)	108,044
Total Liabilities	1,372,884	81,699	(84,839)	1,369,744
	Parent
Selected Income Statement Accounts	Issuer &
For the Nine Months Ended September 30, 2015	Guarantor	Non Guarantor	Eliminations	Consolidated
Total Revenues	518,638	361,237	(63,772)	816,103
EBITDA	(16,471)	37,538	(13,738)	7,329
EBITDA Adjustments:
Intercompany equity investments	(13,738)	—	13,738	—
Net income attributable to noncontrolling interest	—	6,610	—	6,610
Noncontrolling interest cash distributions	—	(4,072)	—	(4,072)
Early extinguishment of debt	37,390	—		37,390
Gain on BP settlement	(5,796)	—		(5,796)
Fair value adjustment of earn-out liabilities	(1,632)	1,114	—	(518)
Fair value adjustment of embedded derivatives and other financial instruments	8,922	—	—	8,922
Other expenses	5,966	179	—	6,145
Non-cash expenses	2,929	364	—	3,293
Sale-lease back adjustments	(760)	—	—	(760)
Acquisition-related costs	3,325	182	—	3,507
Litigation matters	57,775	—	—	57,775
Pro-Forma full period effect of acquisition EBITDA	467	—	—	467
Sub-total	78,377	41,915	—	120,292
Allocated share of Non-Guarantor EBITDA to Guarantor	28,779	(28,779)	—	—
Pro-Forma Adjusted EBITDA	107,156	13,136	—	120,292

21ST CENTURY ONCOLOGY HOLDINGS, INC.

Supplemental Financial Information

September 30, 2016

	Parent
Selected Income Statement Accounts	Issuer &
For the Three Months Ended September 30, 2016	Guarantor	Non Guarantor	Eliminations	Consolidated
Total Revenues	195,250	70,867	(20,438)	245,679
EBITDA	(34,011)	8,511	(2,786)	(28,286)
EBITDA Adjustments:
Intercompany equity investments	(2,786)	—	2,786	—
Net income attributable to noncontrolling interest	—	1,422	—	1,422
Noncontrolling interest cash distributions	—	(1,801)	—	(1,801)
Gain on BP settlement	—	—	—	—
Impairment loss	770	—	—	770
Fair value adjustment of embedded derivatives and other financial instruments	34,976	—	—	34,976
Other expenses	6,192	34	—	6,226
Non-cash expenses	753	47	—	800
Sale-lease back adjustments	(359)	—	—	(359)
Acquisition-related costs	181	9	—	190
Litigation matters	636	—	—	636
Expenses associated with debt/waiver amendments and restatement of previously issued financial statements	9,049	—	—	9,049
Sub-total	15,401	8,222	—	23,623
Allocated share of Non-Guarantor EBITDA to Guarantor	5,632	(5,632)	—	—
Pro-Forma Adjusted EBITDA	21,033	2,590	—	23,623

21ST CENTURY ONCOLOGY HOLDINGS, INC.

Supplemental Financial Information

September 30, 2015

	Parent
Selected Income Statement Accounts	Issuer &
For the Three Months Ended September 30, 2015	Guarantor	Non Guarantor	Eliminations	Consolidated
Total Revenues	162,832	121,143	(21,718)	262,257
EBITDA	(21,650)	13,744	(808)	(8,714)
EBITDA Adjustments:
Intercompany equity investments	(808)	—	808	—
Net income attributable to noncontrolling interest	—	2,530	—	2,530
Noncontrolling interest cash distributions	—	(2,050)	—	(2,050)
Gain on BP settlement	(5,796)	—	—	(5,796)
Fair value adjustment of earn-out liabilities	12	—	—	12
Fair value adjustment of embedded derivatives and other financial instruments	1,787	—	—	1,787
Other expenses	2,145	55	—	2,200
Non-cash expenses	818	126	—	944
Sale-lease back adjustments	4	—	—	4
Acquisition-related costs	1,095	33	—	1,128
Litigation matters	39,256	—	—	39,256
Pro-Forma full period effect of acquisition EBITDA	117	—	—	117
Sub-total	16,980	14,438	—	31,418
Allocated share of Non-Guarantor EBITDA to Guarantor	9,913	(9,913)	—	—
Pro-Forma Adjusted EBITDA	26,893	4,525	—	31,418

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 14, 2016
Document And Entity Information [Abstract]
Entity Registrant Name	21st Century Oncology Holdings, Inc.
Entity Central Index Key	0001503518
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Entity Common Stock, Shares Outstanding		1,059

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	[1]
Current assets:
Cash and cash equivalents ($13,175 and $10,175 related to VIEs)	$ 49,696	$ 65,211
Restricted cash	300	195
Marketable securities	1,756	1,078
Accounts receivable, net ($15,038 and $16,945 related to VIEs)	126,629	122,355
Prepaid expenses ($391 and $487 related to VIEs)	10,494	7,822
Inventories ($504 and $409 related to VIEs)	3,731	3,918
Income taxes receivable	5,153	4,966
Other current assets ($287 and $319 related to VIEs)	17,875	15,732
Total current assets	215,634	221,277
Equity investments in joint ventures	15,209	1,214
Property and equipment, net ($18,796 and $20,866 related to VIEs)	214,695	238,585
Real estate subject to finance obligation	14,970	12,631
Goodwill ($52,577 and $52,454 related to VIEs)	491,742	498,680
Intangible assets, net ($5,954 and $5,987 related to VIEs)	59,481	70,115
Embedded derivative and other financial instrument features of Series A convertible redeemable preferred stock	499	17,883
Other long-term assets ($6,460 and $6,291 related to VIEs)	40,487	41,588
Deferred income taxes ($6 and $6 related to VIEs)	2,243	1,888
Total assets	1,054,960	1,103,861
Current liabilities:
Accounts payable ($1,633 and $2,691 related to VIEs)	57,666	59,888
Accrued expenses ($1,543 and $4,637 related to VIEs)	82,879	111,653
Income taxes payable	3,697	2,501
Current portion of long-term debt ($343 and $64 related to VIEs)	1,106,662	1,023,877
Current portion of finance obligation	230	283
Other current liabilities	11,620	14,265
Total current liabilities	1,262,754	1,212,467
Long-term debt, less current portion ($161 and $155 related to VIEs	17,731	49,233
Finance obligation, less current portion	15,641	13,318
Embedded derivative and other financial instrument features of Series A convertible redeemable preferred stock	24,843	19,911
Other long-term liabilities ($3,353 and $2,974 related to VIEs)	71,298	70,928
Deferred income taxes	4,989	3,887
Total liabilities	1,397,256	1,369,744
Series A convertible redeemable preferred stock, $0.001 par value, $1,000 stated value, 3,500,000 authorized, 410,000 and 385,000 issued and outstanding at September 30, 2016 and December 31, 2015, respectively	472,349	389,514
Noncontrolling interests - redeemable	19,247	19,233
Commitments and contingencies
Equity:
Common stock, $0.01 par value, 1,000,000 shares authorized, 1,059 issued and outstanding at September 30, 2016 and December 31, 2015
Additional paid-in capital	521,350	579,920
Retained deficit	(1,323,777)	(1,226,298)
Accumulated other comprehensive loss, net of tax	(58,966)	(54,574)
Total 21st Century Oncology Holdings, Inc. shareholder's deficit	(861,393)	(700,952)
Noncontrolling interests - nonredeemable	27,501	26,322
Total deficit	(833,892)	(674,630)
Total liabilities and deficit	$ 1,054,960	$ 1,103,861

[1] Derived from audited financial statements. See note 3 for discussion of accounting principles adopted during the period.

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Cash and cash equivalents	$ 49,696	$ 65,211	[1]
Accounts receivable, net	126,629	122,355	[1]
Prepaid expenses	10,494	7,822	[1]
Inventories	3,731	3,918	[1]
Other current assets	17,875	15,732	[1]
Property and equipment, net	214,695	238,585	[1]
Goodwill	491,742	498,680	[1]
Intangible assets, net	59,481	70,115	[1]
Other long-term assets	40,487	41,588	[1]
Deferred income taxes	2,243	1,888	[1]
Accounts payable	57,666	59,888	[1]
Accrued expenses	82,879	111,653	[1]
Income taxes payable	3,697	2,501	[1]
Current portion of long-term debt	1,106,662	1,023,877	[1]
Long-term debt, less current portion	17,731	49,233	[1]
Other long-term liabilities	$ 71,298	$ 70,928	[1]
Preferred stock par value	$ 0.001	$ 0.001
Preferred stock, Stated value (in dollars per share)	$ 1,000	$ 1,000
Preferred stock, shares authorized (in shares)	3,500,000	3,500,000
Preferred stock, shares issued (in shares)	410,000	410,000
Preferred stock, shares outstanding (in shares)	385,000	385,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	1,000,000	1,000,000
Common stock, shares issued (in shares)	1,059	1,059
Common stock, shares outstanding (in shares)	1,059	1,059
Consolidated VIEs [Member]
Cash and cash equivalents	$ 13,175	$ 10,175
Accounts receivable, net	15,038	16,945
Prepaid expenses	391	487
Inventories	504	409
Other current assets	287	319
Property and equipment, net	18,796	20,866
Goodwill	52,577	52,454
Intangible assets, net	5,954	5,987
Other long-term assets	6,460	6,291
Deferred income taxes	6	6
Accounts payable	1,633	2,691
Accrued expenses	1,543	4,637
Current portion of long-term debt	343	64
Long-term debt, less current portion	161	155
Other long-term liabilities	$ 3,353	$ 2,974

[1] Derived from audited financial statements. See note 3 for discussion of accounting principles adopted during the period.

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Consolidated Statements Of Operations And Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenues:
Net patient service revenue	$ 226,505	$ 243,768	$ 715,974	$ 755,877
Management fees	14,240	14,180	43,514	45,261
Other revenue	4,934	4,309	14,872	14,965
Total revenues	245,679	262,257	774,360	816,103
Expenses:
Salaries and benefits	136,859	142,640	414,610	436,996
Medical supplies	22,211	22,498	74,215	73,563
Facility rent expenses	17,440	16,983	52,304	50,821
Other operating expenses	16,007	15,951	47,678	46,994
General and administrative expenses	35,344	68,306	101,070	141,341
Depreciation and amortization	21,319	22,439	63,412	66,775
Provision for doubtful accounts	8,610	5,617	17,270	13,683
Interest expense, net	27,151	23,771	77,353	73,836
Other gains and losses	481	(5,696)	(12,699)	(7,363)
Impairment loss	770		2,595
Early extinguishment of debt				37,390
Fair value measurements	34,976	1,799	22,187	8,404
(Gain) loss on foreign currency transactions	(5)	333	300	537
Total expenses	321,163	314,641	860,295	942,977
Loss before income taxes and equity interest in net income of joint ventures	(75,484)	(52,384)	(85,935)	(126,874)
Income tax expense	3,166	2,851	7,967	7,198
Net loss before equity interest in net income of joint ventures	(78,650)	(55,235)	(93,902)	(134,072)
Equity interest in net income of joint ventures, net of tax	150	(10)	957	202
Net loss	(78,500)	(55,245)	(92,945)	(133,870)
Net income attributable to noncontrolling interests - redeemable and non-redeemable	(1,422)	(2,530)	(4,534)	(6,610)
Net loss attributable to 21st Century Oncology Holdings, Inc. shareholder	(79,922)	(57,775)	(97,479)	(140,480)
Other comprehensive loss, net of tax:
Unrealized loss on foreign currency translation	(1,150)	(2,415)	(5,146)	(6,414)
Other comprehensive loss	(1,150)	(2,415)	(5,146)	(6,414)
Comprehensive loss	(79,650)	(57,660)	(98,091)	(140,284)
Comprehensive income attributable to noncontrolling interests-redeemable and non-redeemable:	(1,429)	(2,067)	(3,780)	(5,599)
Comprehensive loss attributable to 21st Century Oncology Holdings, Inc. shareholder	$ (81,079)	$ (59,727)	$ (101,871)	$ (145,883)

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Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	3 Months Ended			9 Months Ended			12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2015	Sep. 30, 2016		Sep. 30, 2015	Dec. 31, 2015
Cash flows from operating activities
Net loss	$ (78,500)	$ (55,245)		$ (92,945)		$ (133,870)	$ (126,800)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization				63,412		66,775
Deferred rent expense				200		356
Deferred income taxes				739		(912)
Stock-based compensation						6
Provision for doubtful accounts	8,610	5,617		17,270		13,683
Gain on the sale/disposal of property and equipment	(446)		$ 100	(480)		(203)
Gain on the contribution of a radiation facility to a joint venture				(12,629)
Gain on the sale of marketable securities						(2)
Impairment loss	770			2,595
Early extinguishment of debt						37,390
Debt modification costs				(5,910)
Loss on foreign currency transactions				158		298
Fair value adjustment of earn-out liability				1		(518)
Fair value adjustment of embedded derivatives and other financial instruments				22,186		8,922
Amortization of debt discount				1,415		1,228
Amortization of loan costs				3,229		3,675
Paid in kind interest on notes payable				1,888		370
Equity interest in net income of joint ventures, net of tax	(150)	10		(957)		(202)
Distribution received from unconsolidated joint ventures				269		106
Pension plan contributions				(927)		(1,756)
Changes in operating assets and liabilities:
Accounts receivable and other current assets				(26,974)		(34,277)
Prepaid expenses and other assets				597		2,192
Inventories				231		(624)
Accounts payable				(2,214)		4,500
Accrued deferred compensation				1,198		1,057
Income taxes payable				843		435
Accrued expenses / other liabilities				(27,849)		64,692
Net cash (used in) provided by operating activities				(42,834)		33,321
Cash flows from investing activities
Purchases of property and equipment				(24,204)		(33,595)
Acquisition of medical practices				(129)		(33,064)
Change in restricted cash associated with medical practice acquisitions				(105)		7,009
Proceeds from the sale of equity interest in a joint venture				6,170
Proceeds from the sale of property and equipment				124		1,143
Purchase of marketable securities				(711)		(4,633)
Sale of marketable securities						4,013
(Loans to) repayments from employees				221		(353)
Purchase of joint venture interests				(502)
Distribution received from joint venture entities						496
Purchase of company owned life insurance policies				(1,105)		(1,015)
Change in other assets and other liabilities				545		45
Net cash used in investing activities				(20,138)		(59,248)
Cash flows from financing activities
Proceeds from issuance of debt				62,748		972,851
Principal repayments of debt				(27,582)		(921,871)
Repayments of finance obligation				(200)		(168)
Proceeds from issuance of Series A convertible redeemable preferred stock				25,000
Payments of issue costs related to the issuance of preferred stock				(30)
Proceeds from issuance of noncontrolling interest						743
Proceeds from noncontrolling interest holders - redeemable and non-redeemable						3,230
Purchase of noncontrolling interest - non-redeemable						(16,233)
Cash distributions to noncontrolling interest holders - redeemable and non-redeemable				(3,208)		(4,072)
Payments for continent consideration				(149)		(8,537)
Payment of call premium on long-term debt						(24,877)
Payment of debt modification costs				(5,910)
payment of other financing costs				(552)
Payments of loan costs				(2,638)		(26,481)
Net cash provided by (used in) financing activities				47,479		(25,415)
Effect of exchange rate changes on cash and cash equivalents				(22)		(15)
Net decrease in cash and cash equivalents				(15,515)		(51,357)
Cash and cash equivalents, beginning of period				65,211	[1]	99,082	99,082
Cash and cash equivalents, end of period	49,696	47,725		49,696		47,725	$ 65,211	[1]
Supplemental disclosure of non-cash investing and financing activities
Finance obligation related to real estate projects				2,517		844
Derecognition of finance obligation related to real estate projects						12,215
Capital lease obligations related to the purchase of equipment				10,879		2,408
Medical equipment and service contract component related to the acquisition of medical equipment through accounts payable						665
Change in earn-out liabilities						13,572
Assumed debt obligations related to the acquisition of medical practices				373		290
Amounts payable to sellers in the purchase of a medical practice						150
Noncash dividend declared to noncontrolling interest				84		56
Issuance of notes payable relating to the purchase of SFRO noncontrolling interest						14,560
Issuance of equity units relating to the purchase of SFRO noncontrolling interest						14,500
Accrued dividends on Series A convertible preferred stock, accrued at effective rate	48,073	$ 40,223		48,073		40,223
Accretion of redemption value on Series A convertible preferred stock	$ 1,353			9,792		13,262
Change in additional paid-in capital from sale/purchase of interest in subsidiaries						$ 2,315
Contribution of assets to a joint venture entity				18,980
Additional paid in capital adjustment for fair value of noncontrolling interest				$ 705

[1] Derived from audited financial statements. See note 3 for discussion of accounting principles adopted during the period.

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Organization

9 Months Ended

Sep. 30, 2016

Organization [Abstract]

Organization

1. Organization

21st Century Oncology Holdings, Inc., through its wholly-owned subsidiaries (collectively, the “Company”), is a leading global, physician-led provider of integrated cancer care (“ICC”) services. The Company’s physicians provide comprehensive, academic quality, cost-effective coordinated care for cancer patients in personal and convenient community settings (its “ICC model”). The Company provides its physicians with the advanced medical technology necessary to achieve optimal outcomes. The Company’s provision of care includes a full spectrum of cancer care services enabled by employing and affiliating with physicians in their related specialties. This innovative approach to cancer care allows the Company to collaborate across its physician base, integrate services and payments for related medical needs and disseminate best practices.

As of September 30, 2016, the Company deployed approximately 949 community-based physicians in the fields of radiation oncology, medical oncology, breast, gynecological and general surgery, urology and primary care in the United States. The Company’s physicians provide medical services at 370 locations, including our 180 radiation therapy centers, of which 58 operate in partnership with health systems. The Company’s cancer treatment centers in the United States are operated predominantly under the 21st Century Oncology brand and are strategically clustered in 17 states: Alabama, Arizona, California, Florida, Indiana, Kentucky, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New York, North Carolina, Rhode Island, South Carolina, Washington and West Virginia, as well as countries in Latin America, Central America and the Caribbean. The Company’s 36 international radiation therapy centers, located in Argentina, Mexico, Colombia, Costa Rica, the Dominican Republic, Guatemala and El Salvador operate under the 21st Century Oncology brand or a local brand and, in many cases, are operated with local minority partners, including hospitals.

The Company is also engaged in providing capital equipment and business management services to oncology physician groups (“Groups”) that treat patients at cancer centers (“Centers”). The Company provides management services to five Groups in California and one Group in Indiana. The Company owns the Centers’ assets and provides services to the Groups through exclusive, long-term management services agreements. The Company provides the Groups with oncology business management expertise and new technologies including radiation oncology equipment and related treatment software. Business services that the Company provides to the Groups include non-physician clinical and administrative staff, operations management, purchasing, managed care contract negotiation assistance, reimbursement, billing and collecting, information technology, human resource and payroll, compliance, accounting, and treasury. Under the terms of the management services agreements, the Company is reimbursed for certain operating expenses of each Center and earns a monthly management fee from each Group.  The management fees are primarily based on a predetermined percentage of each Group’s earnings before interest, income taxes, depreciation, and amortization (“EBITDA”) associated with the provision of radiation therapy. The Company’s management fees range from 50% to 60% of each Group’s EBITDA, with one Group in California whose fee ranges from 20% to 30% of cash collections.

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Leverage And Liquidity

9 Months Ended

Sep. 30, 2016

Leverage And Liquidity [Abstract]

Leverage And Liquidity

2. Leverage and Liquidity

The Company is highly leveraged. As of September 30, 2016, the Company had approximately $1.1 billion of long-term debt outstanding.  The Company has experienced and continues to experience losses from its operations and negative cash flows. The Company reported net losses of approximately $126.8 million, $92.9 million and $133.9 million for the year ended December 31, 2015 and nine month periods ended September 30, 2016 and 2015, respectively. At September 30, 2016, the Company had $49.7 million of cash and was fully drawn under its revolver (“2015 Revolving Credit Facility”).

The Company’s high level of debt and negative cash flows could have material adverse effects on its business and financial condition. Specifically, the Company’s high level of debt could have important consequences, including the following:

requiring a substantial portion of the Company’s cash flows to be dedicated to debt service payments instead of other purposes;

making it more difficult for the Company to satisfy its obligations with respect to debt;

limiting the Company’s ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements;

increasing the Company’s vulnerability to general adverse economic and industry conditions;

limiting the Company’s flexibility in planning for and reacting to changes in the industry in which the Company competes;

placing the Company at a disadvantage compared to other, less leveraged competitors; and

increasing the Company’s cost of borrowing.

Further, subject to certain qualifications, the credit agreement governing the Company’s term loan facility (the “2015 Term Facility” and together with the 2015 Revolving Credit Facility, the “2015 Credit Facilities”) and the indenture governing the Company’s notes (the “Senior Notes Indenture”), each as currently in effect, requires the Company to receive, subject to certain important qualifications set forth therein, (1) no later than September 10, 2016, net cash proceeds from the issuance or sale of the Company’s capital stock or from other equity investments in an aggregate amount of at least $25.0 million (the “First Capital Event”), (2) requires the Company to receive, no later than November 30, 2016, additional net cash proceeds from the issuance or sale of the Company’s capital stock or from other equity investments and/or sales of assets (which sale transactions must be deleveraging transactions on a pro forma basis) in an aggregate amount of at least $25.0 million (or a lesser amount such that when combined with the proceeds from the First Capital Event, the total amount is not less than $50.0 million) (the “Second Capital Event”) and (3) no later than March 31, 2017, additional net cash proceeds from the issuance or sale of the Company’s capital stock or from other equity investments and/or sales of assets (which sale transactions must be deleveraging transactions on a pro forma basis) in an aggregate amount of at least the lesser of (A) $75.0 million (or a lesser amount such that when combined with the proceeds from the First Capital Event and the Second Capital Event, the total amount is not less than $125.0 million), and (B) an amount such that, after giving effect to such issuance or sale of capital stock or other equity investments and/or sales of assets, the Company’s cash and cash equivalents plus unused revolving loan commitments equals at least $120.0 million and the Company’s consolidated leverage ratio is not greater than 6.4 to 1.00 (the “Third Capital Event” and together with the First Capital Event and the Second Capital Event, the “Capital Events” and each, a “Capital Event”). At least $50 million of the proceeds from the First Capital Event, Second Capital Event and Third Capital Event must be from the issuance or sale of 21st Century Oncology, Inc.’s (“21C”) capital stock or from other equity investments. The Company is also required to comply with a minimum liquidity covenant in an amount not less than $40.0 million after the completion of the First Capital Event, to be tested monthly prior to the completion of the Third Capital Event and quarterly thereafter. Its failure to satisfy such requirements could result in an event of default under our 2015 Credit Facilities or Senior Notes Indenture, which could result in the debt thereunder being accelerated. While the Company is pursuing a variety of initiatives to satisfy the requirements of the 2015 Credit Facilities and Senior Notes Indenture, it does not have commitments to obtain the required equity or dispose of assets in place, and it may not be able to maintain the required levels of liquidity.  Consequently there is substantial doubt about the Company’s ability to continue as a going concern.

On September 9, 2016, the Company satisfied the First Capital Event.  In addition, the Company satisfied the minimum liquidity covenant as of September 30, 2016 and October 31, 2016. While the Company is pursuing a variety of initiatives to satisfy the other requirements of the 2015 Credit Facilities and Senior Notes Indenture, it does not have commitments to obtain the required equity or dispose of assets in place, and it may not be able to maintain the required levels of liquidity.  Consequently there is substantial doubt about the Company’s ability to continue as a going concern. See Note 17, Subsequent Events, for additional information.

In the event the Company is unable to meet the other requirements (as described above), it will need to identify alternative options, such as a debt refinancing, a sale of the Company or other strategic transaction, or a transformative transaction, such as a possible restructuring or reorganization of the Company’s operations. In addition, the perception that the Company may not be able to continue as a going concern may negatively and materially impact its existing and future business relationships, and others may choose not to engage in business with the Company at all due to concerns about its ability to meet its contractual obligations.

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Basis Of Presentation

9 Months Ended

Sep. 30, 2016

Basis Of Presentation [Abstract]

Basis Of Presentation

3. Basis of presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for annual financial statements.  All adjustments necessary for a fair presentation have been included. All such adjustments are considered to be of a normal and recurring nature. Interim results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated audited financial statements and the notes thereto included in the Company’s Form 10-K for the year ended December 31, 2015.

Out of period adjustments:

During the quarter ended March 31, 2016, the Company determined that foreign currency translation adjustments have not been applied to goodwill relative to an acquisition in Argentina in 2011. The cumulative difference between the unrealized loss on foreign currency translation that should have been recognized and that actually was recognized was not material to the Company’s results of operations or financial position as of or for any of the periods presented. The Company recorded an adjustment to correct the unrealized loss on foreign currency translation and accumulated other comprehensive loss, net of tax, along with the associated goodwill for approximately $0.9 million in the condensed consolidated statement of operations and comprehensive loss for the nine months ended September 30, 2016. There was no impact to the condensed consolidated statement of cash flows for the nine months ended September 30, 2016.

Seasonality:

The Company’s results of operations historically have fluctuated on a quarterly basis and can be expected to continue to fluctuate. Many of the patients of the Company’s Florida treatment centers are part-time residents during the winter months. Hence, these treatment centers have historically experienced higher utilization rates during the winter months than during the remainder of the year. In addition, volume is typically lower in the summer months due to traditional vacation periods. As of September 30, 2016,  60 of the Company’s 144 U.S. domestic radiation treatment centers are located in Florida.

Variable interest entities:

The accompanying interim condensed consolidated financial statements include the accounts of the Company and all subsidiaries and entities controlled by the Company through the Company’s direct or indirect ownership of a majority interest and/or exclusive rights granted to the Company as the management company of such entities or by contract. All significant intercompany accounts and transactions have been eliminated.

The Company has evaluated certain radiation oncology practices in order to determine if they are variable interest entities (“VIEs”). This evaluation resulted in the Company determining that certain of its radiation oncology practices were potential VIEs. For each of these practices, the Company has evaluated (1) the sufficiency of the fair value of the entity’s equity investments at risk to absorb losses, (2) that, as a group, the holders of the equity investments at risk have (a) the direct or indirect ability through voting rights to make decisions about the entity’s significant activities, (b) the obligation to absorb the expected losses of the entity and that their obligations are not protected directly or indirectly, and (c) the right to receive the expected residual return of the entity, and (3) substantially all of the entity’s activities do not involve or are not conducted on behalf of an investor that has disproportionately fewer voting rights in terms of its obligation to absorb the expected losses or its right to receive expected residual returns of the entity, or both. The Accounting Standards Codification (“ASC”), 810 Consolidation (“ASC 810”), requires a company to consolidate VIEs if the company is the primary beneficiary of the activities of those entities. Certain of the Company’s radiation oncology practices are VIEs and the Company has a variable interest in each of these practices through its administrative services agreements. Other of the Company’s radiation oncology practices (primarily consisting of partnerships) are VIEs and the Company has a variable interest in each of these practices because the total equity investment at risk is not sufficient to permit the legal entity to finance its activities without the additional subordinated financial support provided by its members.

In accordance with ASC 810, the Company consolidates certain radiation oncology practices where the Company provides administrative services pursuant to long-term management agreements. The noncontrolling interests in these entities represent the interests of the physician owners of the oncology practices in the equity and results of operations of these consolidated entities. The Company, through its variable interests in these practices, has the power to direct the activities of these practices that most significantly impact the entity’s economic performance, and the Company would absorb a majority of the expected losses of these practices should they occur. Based on these determinations, the Company has consolidated these radiation oncology practices in its condensed consolidated financial statements for all periods presented.

The Company could be obligated, under the terms of the operating agreements governing certain of its joint ventures, upon the occurrence of various fundamental regulatory changes and or upon the occurrence of certain events outside of the Company’s control, to purchase some or all of the noncontrolling interests related to the Company’s consolidated subsidiaries. These repurchase requirements would be triggered by, among other things, regulatory changes prohibiting the existing ownership structure. While the Company is not aware of events that would make the occurrence of such a change probable, regulatory changes are outside the control of the Company. Accordingly, the noncontrolling interests subject to these repurchase provisions have been classified outside of equity on the Company’s consolidated balance sheets.

As of September 30, 2016 and December 31, 2015, the combined total assets included in the Company’s condensed consolidated balance sheet relating to the VIEs were approximately $113.2 million and $113.9 million, respectively.

As of September 30, 2016, the Company was the primary beneficiary of, and therefore consolidated, 28 VIEs, which operate 48 radiation therapy centers. Any significant amounts of assets and liabilities related to the consolidated VIEs are identified parenthetically on the accompanying condensed consolidated balance sheets. The assets are owned by, and the liabilities are obligations of, the VIEs, not the Company. Only the assets of the VIEs can be used to settle the liabilities of the VIEs. The assets are used pursuant to operating agreements established by each VIE. The VIEs are not guarantors of the Company’s debts. In the states of California, Massachusetts, Michigan, Nevada, New York, North Carolina and Washington, the Company’s treatment centers are operated as physician office practices. The Company typically provides technical services to these treatment centers in addition to administrative services. For the nine months ended September 30, 2016 and 2015 approximately 13.2% and 14.0% of the Company’s net patient service revenue, respectively, was generated by professional corporations for which it has administrative management agreements.

As of September 30, 2016, the Company also held equity interests in five VIEs for which the Company is not the primary beneficiary. Those VIEs consist of partnerships that primarily provide radiation oncology services.  The Company is not the primary beneficiary of these VIEs as it does not retain the power and rights in the operations of the entities. The Company’s investments in the unconsolidated VIEs are approximately $15.2 million and $1.2 million at September 30, 2016 and December 31, 2015, respectively, with ownership interests ranging between 33.3% and 50.0% general partner or equivalent interest. Accordingly, substantially all of these equity investment balances are attributed to the Company’s noncontrolling interests in the unconsolidated partnerships. The Company’s maximum risk of loss related to the investments in these VIEs is limited to the equity interest.

Cost of revenues:

The cost of revenues for the three months ended September 30, 2016 and 2015 are approximately $184.5 million and $193.4 million, respectively. The cost of revenues for the nine months ended September 30, 2016 and 2015 are approximately $573.5 million and $595.2 million, respectively. The cost of revenues includes expenses incurred for the delivery of patient care. These expenses include salaries and benefits of physicians, physicists, dosimetrists, radiation technicians etc., medical supplies, facility rent expenses, other operating expenses, depreciation and amortization.

Recent pronouncements:

In February 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The new guidance intends to reduce the number of consolidation models as well as place more emphasis on risk of loss when determining a controlling financial interest. The Company adopted this ASU prospectively on January 1, 2016. The adoption of this ASU did not have a significant impact on the Company’s consolidated financial position or results of operations.

In April 2015, the FASB issued ASU 2015-03, Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The new guidance requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The Company adopted ASU 2015-03 on January 1, 2016 with retrospective application to its December 31, 2015 condensed consolidated balance sheet. The effect of the adoption of ASU 2015-03 was to reclassify debt issue costs of approximately $19.8 million as of December 31, 2015 as a deduction from the related debt liabilities. Accordingly, other assets and total assets in the 2015 condensed consolidated balance sheet were reduced by that amount, and long-term debt and total liabilities were reduced by the same amount. There was no effect on net income or cash flows.

In April 2015, the FASB issued ASU 2015-05, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The new guidance establishes guidelines for evaluating whether a cloud computing arrangement involves the sale of a software license and the appropriate accounting. The Company adopted this ASU on January 1, 2016 on a prospective basis. The adoption of this ASU did not have a significant impact on the Company’s consolidated financial position or results of operations.

In August 2015, FASB issued ASU 2015-15, Interest — Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. The new guidance allows debt issuance costs related to line-of-credit arrangements to be recognized as an asset and amortized ratably over the line-of-credit term. The Company adopted ASU 2015-15 on January 1, 2016 with retrospective application to its December 31, 2015 condensed consolidated balance sheet. The effect of the adoption of ASU 2015-15 was to reclassify debt issue costs of approximately $4.6 million as of December 31, 2015 as a deduction from the related debt liabilities. Accordingly, other assets and total assets in the 2015 condensed consolidated balance sheet were reduced by that amount, and long-term debt and total liabilities were reduced by the same amount. There was no effect on net income or cash flows.

In March 2016, the FASB issued ASU 2016-09, Compensation — Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 provides new guidance intended to simplify several aspects of accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, including an option to early adopt. The Company does not expect adoption to have a material impact on its financial statements.

During 2016, the FASB issued additional ASUs relating to Revenue from Contracts with Customers (Topic 606). These updates, identified as ASU 2016-08, ASU 2016-10 and ASU 2016-12, identified practical expedients and clarified various aspects of the new revenue recognition standard outlined in ASU 2014-09. The Company has reviewed these updates and does not believe they will materially impact the Company’s future adoption of the standard. The effective date and transition requirements for ASU 2014-09 (and updated in ASU 2015-14) were not changed with these pronouncements.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740) – Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 provides new guidance intended to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, including an option to early adopt. The Company is currently evaluating the potential effects of the adoption to its financial statements.

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Accumulated Other Comprehensive Loss, Net Of Tax

9 Months Ended

Sep. 30, 2016

Accumulated Other Comprehensive Loss, Net Of Tax [Abstract]

Accumulated Other Comprehensive Loss, Net Of Tax

4. Accumulated other comprehensive loss, net of tax

Comprehensive loss consists of net loss and other comprehensive loss. Other comprehensive loss refers to revenue, expenses, gains, and losses that are recorded as an element of equity but are excluded from net loss. The Company’s accumulated other comprehensive loss is composed of the Company’s foreign currency translation of its operations in South America, Central America and the Caribbean as well as net periodic benefit cost of pension plans. There were no reclassifications from other comprehensive income into earnings for the periods presented.

The components of accumulated other comprehensive loss, net of tax, were as follows:

	21st Century Oncology Holdings, Inc. Shareholder						Noncontrolling Interests
Quarter to date (in thousands):	Foreign Currency Translation Adjustments		Net Periodic Benefit Cost of Pension Plan		Total		Foreign Currency Translation Adjustments		Other Comprehensive Loss
As of June 30, 2016	$	(57,352)	$	(457)	$	(57,809)	$	(7,436)
Other comprehensive loss		(1,157)		—		(1,157)		7	$	(1,150)
As of September 30, 2016	$	(58,509)	$	(457)	$	(58,966)	$	(7,429)	$	(1,150)

	21st Century Oncology Holdings, Inc. Shareholder						Noncontrolling Interests
Year to date (in thousands):	Foreign Currency Translation Adjustments		Net Periodic Benefit Cost of Pension Plan		Total		Foreign Currency Translation Adjustments		Other Comprehensive Loss
As of December 31, 2015	$	(54,117)	$	(457)	$	(54,574)	$	(6,675)
Other comprehensive loss		(4,392)		—		(4,392)		(754)	$	(5,146)
As of September 30, 2016	$	(58,509)	$	(457)	$	(58,966)	$	(7,429)	$	(5,146)

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Series A Preferred Stock

9 Months Ended

Sep. 30, 2016

Series A Preferred Stock [Abstract]

Series A Preferred Stock

5. Series A preferred stock

On September 26, 2014, the Company entered into a Subscription Agreement (the “ Original Subscription Agreement”) with Canada Pension Plan Investment Board (“CPPIB”). Pursuant to the Original Subscription Agreement, the Company issued to CPPIB an aggregate of 385,000 newly issued shares of its Series A Convertible Preferred Stock, (the “Series A Preferred Stock”), par value $0.001 per share, stated value $1,000 per share, for a purchase price of $325.0 million. 

On September 9, 2016 , the Company entered into a second Subscription Agreement (the “2016 Subscription Agreement”), by and among the Company, CPPIB, 21st Century Oncology Investments, LLC (“21CI”) and 21C. Pursuant to the 2016 Subscription Agreement, the Company issued to CPPIB, an aggregate of 25,000 shares of its Series A Preferred Stock, par value $0.001 per share, for a purchase price of $25.0 million. In connection with the 2016 Subscription Agreement, CPPIB irrevocably and unconditionally waived, released and forgave any and all Default Events (as defined in the 2016 Subscription Agreement) occurring prior to closing of the equity issuance and any and all rights or remedies of CPPIB with respect thereto.

As set forth in the Amended and Restated Certificate of Designations of Series A Convertible Preferred Stock (the “Certificate of Designations”), holders of Series A Preferred Stock are entitled to receive, as and if declared by the board of directors of the Company, dividends at an applicable rate per annum, payable quarterly in arrears on January 1, April 1, July 1 and October 1 of each year. During the first three years after issuance, any dividends, when and if declared, shall be paid by the Company in the form of additional shares of Series A Preferred Stock.  During the first twelve months after issuance, the applicable dividend rate on the Series A Preferred Stock shall be 9.875%, thereafter increasing on a periodic basis. Until September 24, 2017, any dividends when and if declared, shall be paid by the Company in the form of additional shares of Series A Preferred Stock. Starting as of July 17, 2016, the maximum applicable dividend rate on the Series A Preferred Stock was 16.00%, provided that, upon the occurrence of certain default events after September 9, 2016, dividends will accrue at a rate of 26.00%. Such dividends accrue daily, whether or not declared by the board of directors of the Company. After September 24, 2017, and only if the Company’s outstanding senior notes are repaid in full, dividends will be paid in cash upon the election of a majority of the holders of Series A Preferred Stock (the “Majority Preferred Holders”) or upon certain other events of default as defined by the Certificate of Designations.

The Series A Preferred Stock is mandatorily convertible into common stock, par value $0.01 per share (the “Common Stock”) of the Company upon the occurrence of a qualifying initial public offering of the Company or a qualifying merger. The Series A Preferred Stock also becomes mandatorily convertible on the tenth anniversary of the original issue date. If, upon conversion, the Series A Preferred Stock converted to Common Stock represents greater than 29% of the Company’s outstanding Common Stock (“Excess Common Stock”), CPPIB has the option to convert amounts in excess of 29% to newly issued preferred stock (the “Excess Preferred Stock”). If settled under a repurchase event (which occurs upon a change of control or a default event, as defined in the related agreements), redemption occurs at the stated value.

Holders of Series A Preferred Stock also have, among other rights, the right to require the Company to repurchase their shares upon the occurrence of certain events of default and certain change of control transactions, at the prices set forth in the Certificate of Designations.  In addition, the Certificate of Designations also provides for certain consent rights of the Majority Preferred Holders in connection with specified corporate events of 21CI or its subsidiaries, including, among other things, with respect to certain equity issuances and certain acquisitions, financing transactions and asset sale transactions.  Upon certain events of default and the obtaining of applicable anti-trust regulatory approvals, holders of Series A Preferred Stock are also entitled to vote together with holders of Common Stock, on an as-converted basis. In addition, the Series A Preferred Stock is senior in preference to the Company’s Common Stock with respect to dividend rights, rights upon liquidation, winding up or dissolution.

Pursuant to the terms of the Subscription Agreement, immediately following the occurrence of a qualifying initial public offering of the Company, a qualifying merger, or on September 26, 2024 at the option of CPPIB or the Company, the Company will execute and deliver to CPPIB a Warrant Agreement (the “Warrant Agreement”) and issue to CPPIB warrants to purchase shares of Common Stock having a then-current value of $30 million, at a purchase price of $0.01 per share.  The warrants expire on the tenth anniversary of the date of issuance.

The Company evaluated the contingent events that could trigger the conversion of the Series A Preferred Stock to Common Stock and issue of warrants and determined that the contingent conversion features qualify as an embedded derivative and, that the contingently exercisable warrants are a freestanding financial instrument, each requiring bifurcation and classification as a liability, measured at fair value.

Modification of Series A Preferred Stock

The Certificate of Designations, as amended and restated in connection with the 2016 Subscription Agreement, (i) reduced the maximum applicable dividend rate on the Series A Preferred Stock to 16% from the previous maximum rate of 26%; (ii) reduced the applicable dividend rate in the event of default; and (iii) reduced the price at which the holders of the Series A Preferred Stock could require the Company to repurchase their shares upon the occurrence of certain events of default and certain change of control transactions.

The Company evaluated whether or not the 2016 Subscription Agreement was an extinguishment and reissuance of the Series A Preferred Shares or a modification using a fair value approach. Under this approach, if there is a 10% or greater change in the fair value of the Series A Preferred Stock as a result of the amendment or exchange, the shares are considered substantially different and the amendment would be accounted for as an extinguishment and reissuance. If the change in fair value is less than 10%, the amendment is considered a modification. The Certificate of Designations, as amended and restated in connection with the 2016 Subscription Agreement decreased the fair value of the Series A Preferred Stock by approximately $11 million, or 2.0%, and thus the Company considered the amendment to be a modification, with no change to the carrying amount required.

Activity during the quarter ended September 30, 2016

The Company estimated the fair value of the embedded derivatives and warrants using significant unobservable inputs (Level 3), as defined in Note 8. The primary valuation technique used was comparing the present value of discounted cash flows, assuming no triggering events occur with the present value of discounted cash flows assuming a triggering event does occur. The assumptions incorporated management’s estimates of timing and probability of each triggering event, with those cash flows discounted using rates commensurate with the risks of those cash flows. As a result of the Company entering into Amendment No. 2 to the 2015 Credit Agreement, both of which are defined and further discussed in Note 13, and the capital event requirements required pursuant to Amendment No. 2, the Company reevaluated the timing and probability assumptions of each triggering event during the quarter ended September 30, 2016. Based on the current assumptions, the Company determined the fair value of the embedded derivative to be approximately $0.5 million which is reflected as an asset in the embedded derivative and other financial instrument features of Series A convertible redeemable preferred stock caption of the accompanying condensed consolidated balances sheets and the fair value of the warrants to be approximately $24.8 million which is reflected as a liability in the embedded derivative and other financial instrument features of Series A convertible redeemable preferred stock caption of the accompanying condensed consolidated balances sheets, both as of September 30, 2016. 

The Company is accreting the components of the difference between issuance date fair value and redemption value over the period which each component of that discount relates, generally using the effective interest method, which is reflective of the economics of the instrument.

If the Series A Preferred Stock were redeemable as of the balance sheet date, the Series A Preferred Stock would be redeemable at its stated value of $410.0 million plus accrued dividends. Accrued dividends as of September 30, 2016 and December 31, 2015 were $101.8 million and $53.6 million, respectively.

Changes to the Series A Preferred Stock are as follows:

Quarter to date (in thousands):
As of June 30, 2016	$	429,966
Issuance of Series A preferred stock, net of discount and issuance costs		24,970
Accretion of Series A Preferred Stock to redemption value		1,353
Series A Preferred Stock dividends accrued at effective rate		16,060
As of September 30, 2016	$	472,349

Year to date (in thousands):
Balance, December 31, 2015	$	389,514
Issuance of Series A preferred stock, net of discount and issuance costs		24,970
Accretion of Series A Preferred Stock to redemption value		9,792
Series A Preferred Stock dividends accrued at effective rate		48,073
As of September 30, 2016	$	472,349

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Reconciliation Of Total Equity And Noncontrolling Interests

9 Months Ended

Sep. 30, 2016

Reconciliation Of Total Equity And Noncontrolling Interests [Abstract]

Reconciliation Of Total Equity And Noncontrolling Interests

6. Reconciliation of total equity and noncontrolling interests

The consolidated financial statements include the accounts of the Company and its majority owned subsidiaries in which it has a controlling financial interest.  Noncontrolling interests-nonredeemable principally represent minority shareholders’ proportionate share of the equity of certain consolidated majority owned entities of the Company.

The following table presents changes in total equity for the respective periods:

(in thousands):	21st Century Oncology Holdings, Inc Shareholder’s Deficit		Noncontrolling interests - nonredeemable		Total Equity		Noncontrolling interests - redeemable
Balance, December 31, 2015	$	(700,952)	$	26,322	$	(674,630)	$	19,233
Net (loss) income		(97,479)		3,883		(93,596)		651
Other comprehensive loss from foreign currency translation		(4,392)		(736)		(5,128)		(18)
Accretion of Series A convertible redeemable preferred stock to redemption value		(9,792)		—		(9,792)		—
Accrued Series A convertible redeemable preferred stock dividends		(48,073)		—		(48,073)		—
Adjustment of noncontrolling interest to redemption value		(705)		—		(705)		705
Distributions		—		(1,968)		(1,968)		(1,324)
Balance, September 30, 2016	$	(861,393)	$	27,501	$	(833,892)	$	19,247
Balance, December 31, 2014	$	(493,439)	$	55,838	$	(437,601)	$	15,273
Net (loss) income		(140,480)		4,641		(135,839)		1,969
Other comprehensive loss from foreign currency translation		(5,403)		(1,010)		(6,413)		(1)
Accretion of Series A convertible redeemable preferred stock to redemption value		(13,262)		—		(13,262)		—
Accrued Series A convertible redeemable preferred stock dividends		(40,223)		—		(40,223)		—
Purchase price fair value of noncontrolling interest		14,500		(44,060)		(29,560)		—
Proceeds from issuance of noncontrolling interest		2,315		8,939		11,254		3,767
Proceeds from noncontrolling interest holders		—		3,170		3,170		686
Stock based compensation		6		—		6		—
Distributions		—		(2,347)		(2,347)		(1,760)
Balance, September 30, 2015	$	(675,986)	$	25,171	$	(650,815)	$	19,934

Redeemable equity securities with redemption features that are not solely within the Company’s control are classified outside of permanent equity as noncontrolling interests - redeemable. Those securities are initially recorded at their estimated fair value on the date of issuance. Securities that are currently redeemable or redeemable after the passage of time are adjusted to their redemption value as changes occur. In the unlikely event that a redeemable equity security will require redemption, any subsequent adjustments to the initially recorded amount will be recognized in the period that a redemption becomes probable. Contingent redemption events vary by joint venture and generally include either the holder’s discretion or circumstances jeopardizing the joint ventures’ ability to provide services, the joint ventures’ participation in Medicare, Medicaid, or other third party reimbursement programs, the tax-exempt status of minority shareholders, and violation of federal statutes, regulations, ordinances, or guidelines. Amounts required to redeem noncontrolling interests are based on either fair value or a multiple of trailing financial performance and are potentially unlimited.

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Derivative Agreements

9 Months Ended

Sep. 30, 2016

Derivative Agreements [Abstract]

Derivative Agreements

7. Derivative agreements

Series A Preferred Stock embedded derivative and other financial instruments

The Company’s Series A Preferred Stock contains provisions for contingent events that could trigger the conversion of the Series A Preferred Stock to common stock and require the issuance of warrants to CPPIB. The Company determined that the contingent conversion features qualify as an embedded derivative, and, that the contingently exercisable warrants are a freestanding financial instrument, each requiring bifurcation and classification as a liability, measured at fair value. The Company evaluates the fair value of the embedded derivatives and warrants and adjusts changes in fair value through the fair value measurements caption in the consolidated statements of operations and comprehensive loss.

SFRO seller financing note embedded derivative

On July 2, 2015, the Company purchased the noncontrolling interest of South Florida Radiation Oncology (“SFRO”) as further described in Note 10. The Company structured a portion of the purchase price with seller financing paid in kind (“PIK”) notes (“SFRO PIK Notes”) that, in the event the sellers achieve certain milestones, require payment acceleration of principal amounts as well as premium payments. The Company determined that the contingent conversion features of the SFRO PIK Notes qualify as embedded derivatives, requiring bifurcation and classification as debt, measured at fair value. The Company evaluates the fair value of those embedded derivatives and adjusts changes in fair value through the fair value measurements caption in the condensed consolidated statements of operations and comprehensive loss.

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Fair Value Of Financial Instruments

9 Months Ended

Sep. 30, 2016

Fair Value Of Financial Instruments [Abstract]

Fair Value Of Financial Instruments

8. Fair value of financial instruments

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis in accordance with ASC 820. Certain assets and liabilities are subject to fair value adjustments only in certain circumstances and measured at fair value on a non-recurring basis.

The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 — Quoted prices for identical assets and liabilities in active markets.

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Unobservable inputs for the asset or liability.

Cash and cash equivalents are reflected in the consolidated financial statements at their carrying value, which approximate their fair value due to their short maturity.

As of September 30, 2016 and December 31, 2015, the Company held certain items that are required to be measured at fair value on a recurring basis, including the embedded derivative features and warrants of its Series A Preferred Stock and SFRO PIK Notes. The primary valuation technique used was comparing the present value of discounted cash flows, assuming no triggering events occur, with the present value of discounted cash flows assuming a triggering event does occur. The assumptions incorporated management’s estimates of timing and probability of each triggering event, with those cash flows discounted using rates commensurate with the risks of those cash flows. Changes in fair value based on variations in assumptions generally cannot be extrapolated because the relationship between the directional change of each input is not usually linear.

Earn-out liabilities are generally contingent upon the acquiree achieving certain EBITDA targets. The Company values earn-out liabilities by estimating the timing and amount of potential payments. The estimated payments are discounted to present value and probability weightings are assigned, if applicable.

The following tables provide information about long-term debt not carried at fair value in accordance with ASC 820. The fair values were based on prices quoted from third-party financial institutions (Level 2). The fair values are as follows:

	September 30, 2016
(in thousands):	Fair Value		Carrying Value
$610.0 million Term Loan Facility due April 30, 2022	$	563,221	$	585,322
$360.0 million Senior Notes due May 1, 2023	$	302,400	$	353,183
$75.0 million Senior Secured Notes due January 15, 2017	$	488	$	488

	December 31, 2015
(in thousands):	Fair Value		Carrying Value
$610.0 million Term Loan Facility due April 30, 2022	$	509,838	$	589,133
$360.0 million Senior Notes due May 1, 2023	$	262,800	$	352,546
$75.0 million Senior Secured Notes due January 15, 2017	$	443	$	443

The carrying values of the Company’s other long-term debt instruments approximate fair value due to the length of time to maturity and/or the existence of interest rates that approximate prevailing market rates.

The following items are measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820, as of September 30, 2016 and December 31, 2015:

			Fair Value Measurements at Reporting Date Using
(in thousands):	September 30, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Marketable securities	$	1,756	$	1,756	$	—	$	—
Other current assets
Cash surrender value of company owned life insurance investments	$	191	$	191	$	—	$	—
Assets
Embedded derivative and other financial instrument features of Series A Preferred Stock	$	499	$	—	$	—	$	499
Other long-term assets
Cash surrender value of company owned life insurance investments	$	6,717	$	6,717	$	—	$	—
Other current liabilities
Embedded derivative features of SFRO PIK Notes	$	900	$	—	$	—	$	900
Earn-out liabilities	$	45	$	—	$	—	$	45
Cash surrender value of company owned life insurance obligations	$	191	$	191	$	—	$	—
Liabilities
Embedded derivative and other financial instrument features of Series A Preferred Stock	$	24,843	$	—	$	—	$	24,843
Other long-term liabilities
Cash surrender value of company owned life insurance obligations	$	7,376	$	7,376	$	—	$	—

			Fair Value Measurements at Reporting Date Using
(in thousands):	December 31, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Marketable securities	$	1,078	$	1,078	$	—	$	—
Other current assets
Cash surrender value of company owned life insurance investments	$	299	$	299	$	—	$	—
Assets
Embedded derivative and other financial instrument features of Series A Preferred Stock	$	17,883	$	—	$	—	$	17,883
Other long-term assets
Cash surrender value of company owned life insurance investments	$	5,203	$	5,203	$	—	$	—
Other current liabilities
Embedded derivative features of SFRO PIK Notes	$	2,230	$	—	$	—	$	2,230
Earn-out liabilities	$	193	$	—	$	—	$	193
Cash surrender value of company owned life insurance obligations	$	299	$	299	$	—	$	—
Liabilities
Embedded derivative and other financial instrument features of Series A Preferred Stock	$	19,911	$	—	$	—	$	19,911
Other long-term liabilities
Cash surrender value of company owned life insurance obligations	$	5,796	$	5,796	$	—	$	—

There have been no transfers between levels of valuation hierarchies for the nine months ended September 30, 2016 and 2015.

The following tables present changes in Level 3 liabilities measured at fair value on a recurring basis:

	Fair value		Instruments		Change in		Fair value
Quarter to date (in thousands):	June 30, 2016		Issued (Paid)		Fair Value		September 30, 2016
Assets
Embedded derivative and other financial instrument features of Series A convertible redeemable preferred stock	$	33,284	$	—	$	(32,785)	$	499
Other current liabilities
Embedded derivative features of SFRO PIK Notes	$	2,540	$	(1,200)	$	(440)	$	900
Earn-out liabilities	$	45	$	—	$	—	$	45
Liabilities
Embedded derivative and other financial instrument features of Series A convertible redeemable preferred stock	$	22,212	$	—	$	2,631	$	24,843
	Fair value		Instruments		Change in		Fair value
Year to date (in thousands):	December 31, 2015		Issued (Paid)		Fair Value		September 30, 2016
Assets
Embedded derivative and other financial instrument features of Series A convertible redeemable preferred stock	$	17,883	$	—	$	(17,384)	$	499
Other current liabilities
Embedded derivative features of SFRO PIK Notes	$	2,230	$	(1,200)	$	(130)	$	900
Earn-out liabilities	$	193	$	(149)	$	1	$	45
Liabilities
Embedded derivative and other financial instrument features of Series A convertible redeemable preferred stock	$	19,911	$	—	$	4,932	$	24,843

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Income Taxes

9 Months Ended

Sep. 30, 2016

Income Taxes [Abstract]

Income Taxes

9. Income taxes

The Company’s effective rate was (9.3)% and (5.7)% for the nine months ended September 30, 2016 and 2015, respectively. The change in the effective rate for the first nine months of 2016 compared to the same period of the year prior is primarily the result of the relative mix of earnings and tax rates across jurisdictions, and the application of ASC 740-270 to exclude certain jurisdictions for which the Company is unable to benefit from losses. These items also caused the effective tax rate to differ from the U.S. statutory rate of 35%.

The Company’s future effective tax rates could be affected by changes in the relative mix of taxable income and taxable loss jurisdictions, changes in the valuation of deferred tax assets or liabilities, or changes in tax laws or interpretations thereof.  The Company monitors the assumptions used in estimating the annual effective tax rate and makes adjustments, if required, throughout the year.  If actual results differ from the assumptions used in estimating the Company’s annual effective tax rates, future income tax expense (benefit) could be materially affected.

The Company has not provided U.S. federal and state deferred taxes on the cumulative earnings of non-U.S. affiliates and associated companies that have been reinvested indefinitely. The aggregate undistributed earnings of the Company’s foreign subsidiaries for which no deferred tax liability has been recorded is approximately $1.3 million as of December 31, 2015. It is not practical to determine the U.S. income tax liability that would be payable if such earnings were not reinvested indefinitely.

The Company is routinely under audit by federal, state, or local authorities in the areas of income taxes and other taxes. These audits may include questioning the timing and amount of deductions and compliance with federal, state, and local tax laws. The Company regularly assesses the likelihood of adverse outcomes from these audits to determine the adequacy of the Company’s provision for income taxes.  To the extent the Company prevails in matters for which accruals have been established or is required to pay amounts in excess of such accruals, the effective tax rate could be materially affected.  In accordance with the statute of limitations for federal tax returns, the Company’s federal tax returns for the years 2012 through 2015 are subject to examination.

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Acquisitions And Other Arrangements

9 Months Ended

Sep. 30, 2016

Acquisitions And Other Arrangements [Abstract]

Acquisitions And Other Arrangements

10. Acquisitions and other arrangements

Kennewick, Washington

On January 2, 2015, the Company purchased an 80% interest in a legal entity that operates a radiation oncology facility in Kennewick, Washington for approximately $18.9 million comprised of approximately $17.6 million in cash and a contingent earn-out payment valued at $1.3 million. The allocation of the purchase price is to tangible assets of approximately $3.0 million, intangible assets of $2.2 million ($1.2 million in non-compete agreement, amortized over 5 years, and $1.0 million in tradename), noncontrolling interest-redeemable of $3.8 million, assumed capital leases of $0.3 million and goodwill of $17.8 million, which is deductible for tax purposes.

The earn-out is contingent upon achieving certain EBITDA targets measured over three years from the acquisition date and the potential payments range from $0 to approximately $3.4 million. The earn-out was valued using a multiple scenario probability weighted income approach that discounted future earn-out payments under the following scenarios: base case, a minimum earn-out case, no earn-out case, and maximum earn-out case. Each scenario forecasted the future EBITDA of the acquired entity and calculated the anticipated earn-out paid for each year. The earn-out payments were discounted to the present value and probability weightings were applied to each scenario to determine the estimated fair value.

SFRO

On February 10, 2014, the Company purchased a 65% equity interest in SFRO. On July 2, 2015, the Company purchased the remaining 35% of SFRO for $44.1 million, comprised of $15.0 million in cash, $14.6 million payment-in-kind (“PIK”) (“SFRO PIK Notes”), and $14.5 million in 21CI preferred stock, which was immediately converted to common stock. The SFRO PIK Notes accrue interest at 10% per annum, which will be accrued quarterly and added to the outstanding principal amount. The SFRO PIK Notes mature on June 30, 2019 and provide for accelerated principal payments along with premium payments to the sellers upon achievement of certain operational milestones. As of September 30, 2016, one milestone had been achieved.

Other acquisitions and other arrangements

On July 31, 2016, the Company purchased a radiation oncology practice group located in Modesto, California for approximately $0.4 million comprised of a seller financing note payable to the seller over 2 years. The allocation of the purchase price was $0.3 million to a non-compete agreement, amortized over 2 years, and $0.1 million to goodwill.

On January 1, 2016, the Company contributed its Greenville, North Carolina radiation treatment center to a newly formed joint venture (“Newco”). The Company’s Greenville operations were valued at approximately $19.0 million. Simultaneously, a local hospital system contributed its Greenville, North Carolina radiation treatment center operations into Newco and purchased additional ownership interests from the Company for approximately $6.2 million. As a result of the transaction, the Company owns 50% of Newco. The Company determined it does not control Newco and as of January 1, 2016, deconsolidated the operations of its Greenville treatment center, recording a gain on disposal of $12.6 million in other gains and losses in the condensed consolidated statements of operations and comprehensive loss.

The Company valued its Greenville treatment center using a weighted average of the market approach and income approach, which are Level 3 valuation techniques. The market approach considered a range of enterprise values developed with revenue multiples and EBITDA multiples consistent with radiation oncology practice purchases. The income approach considered a number of factors, including the center’s performance projections, capital expenditures, discount rates, strength of competition and income tax rates.

On December 14, 2015, the Company acquired the assets of a radiation oncology practice it already manages located in Miami, Florida for approximately $6.6 million comprised of approximately $1.1 million in cash and $5.5 million of seller financing note. The allocation of the purchase price is to tangible assets of approximately $3.5 million, non-compete agreement of $0.1 million, goodwill of $5.5 million and the assumption of a $2.5 million capital lease.

On January 6, 2015, the Company acquired the assets of a radiation oncology practice located in Warwick, Rhode Island for approximately $8.0 million in cash. The allocation of the purchase price is to tangible assets of $0.6 million, intangible assets of approximately $0.9 million ($0.2 million in non-compete agreement, amortized over 5 years, and $0.7 million in certificate of need), and goodwill of $6.5 million, which is deductible for tax purposes.

The operations of the foregoing acquisitions have been included, and the operations of the foregoing deconsolidation have been excluded, in the accompanying condensed consolidated statements of operations and comprehensive loss from the respective date of the acquisition or deconsolidation.

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Goodwill And Intangible Assets

9 Months Ended

Sep. 30, 2016

Goodwill And Intangible Assets [Abstract]

Goodwill And Intangible Assets

11. Goodwill and intangible assets

The changes in the carrying amount of goodwill are as follows:

	Nine Months Ended		Year Ended
(in thousands):	September 30, 2016		December 31, 2015
Balance, beginning of period: U.S. Domestic Segment
Goodwill	$	1,150,614	$	1,120,275
Accumulated impairment losses		(700,799)		(700,799)
Net goodwill, beginning of period		449,815		419,476
Goodwill acquired during the period		123		30,468
Contribution of a radiation facility to an unconsolidated joint venture		(5,146)		—
Adjustments to purchase price allocations		—		(129)
Balance, end of period
Goodwill		1,145,591		1,150,614
Accumulated impairment losses		(700,799)		(700,799)
Net goodwill, end of period: U.S. Domestic Segment	$	444,792	$	449,815
Balance, beginning of period: International Segment
Goodwill	$	48,865	$	57,083
Net goodwill, beginning of period		48,865		57,083
Goodwill acquired during the period		—		233
Adjustments to purchase price allocations		—		88
Foreign currency translation		(1,915)		(8,539)
Balance, end of period
Goodwill		46,950		48,865
Net goodwill, end of period: International Segment	$	46,950	$	48,865

During the quarter ended June 30, 2016, the Company entered into an agreement to terminate an OnCure management services agreement prior to the end of its expiration date. The management services agreement is recorded as an intangible asset on the condensed consolidated balance sheet. The Company assessed the fair value of the management services agreement, determined it was impaired and recorded an impairment loss of $1.8 million, which is recorded in impairment loss in the condensed consolidated statements of operations and comprehensive loss. The management services agreement impairment relates to the Company’s U.S. Domestic Segment. The Company determined the fair value of the management services agreement based on the income approach.

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Accrued Expenses

9 Months Ended

Sep. 30, 2016

Accrued Expenses [Abstract]

Accrued Expenses

12. Accrued expenses

Accrued expenses consist of the following:

(in thousands):	September 30, 2016		December 31, 2015
Accrued payroll and payroll related deductions and taxes	$	26,012	$	19,051
Accrued compensation arrangements		22,422		30,010
Accrued interest		17,196		7,359
Accrued Gamma investigative matter		—		34,694
Accrued electronic health record incentive payments and penalties		7,791		10,964
Accrued other		9,458		9,575
Total accrued expenses	$	82,879	$	111,653

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Long-Term Debt

9 Months Ended

Sep. 30, 2016

Long-Term Debt [Abstract]

Long-Term Debt

13. Long-term debt

At September 30, 2016 and December 31, 2015, all of the Company’s senior credit facility and senior notes have been classified as current liabilities due to the Capital Event requirements included in such agreements. See note 2, Leverage and Liquidity, for more information. In addition, certain of the Company’s capital leases and a seller financing promissory note have been classified as current liabilities due to the non-compliance of certain default provisions within the respective agreements.

The Company’s long-term debt consists of the following (in thousands):

	September 30,		December 31,
	2016		2015
$125.0 million Senior Secured Credit Facility – (2015 Revolving Credit Facility) (net of $4,039 and $4,567 of deferred financing costs at September 30, 2016 and December 31, 2015, respectively)	$	117,961	$	55,433
$610.0 million Senior Secured Credit Facility – (Term Loan Facility) (net of unamortized debt discount of $4,825 and $5,498 and deferred financing costs of $12,228 and $12,319 at September 30, 2016 and December 31, 2015, respectively)		585,322		589,133
$360.0 million Senior Notes (net of $7,492 and $7,454 of deferred financing costs at September 30, 2016 and December 31, 2015, respectively)		353,183		352,546
$75.0 million Senior Secured Notes		488		443
Capital leases payable with various monthly payments plus interest at rates ranging from 3.75% to 19.0%, due at various maturity dates through December 2020		40,947		49,854
SFRO PIK Notes (net of unamortized debt discount of $301 and $384 and embedded derivative of $2,217 and $2,876 at September 30, 2016 and December 31, 2015, respectively)		15,652		12,497
Various other notes payable and seller financing promissory notes  with various monthly payments plus interest at rates ranging from 7.1% to 19.5%, due at various maturity dates through May 2021		10,840		13,204
		1,124,393		1,073,110
Less current portion		(1,106,662)		(1,023,877)
	$	17,731	$	49,233

Senior Secured Credit Facility

On April 30, 2015, 21C entered into the Credit Agreement (the “2015 Credit Agreement”) among 21C, as borrower, the Company, Morgan Stanley Senior Funding, Inc., as administrative agent (in such capacity, the “2015 Administrative Agent”), collateral agent, issuing bank and as swingline lender, the other agents party thereto and the lenders party thereto.

The credit facilities provided under the 2015 Credit Agreement consist of a revolving credit facility providing for up to $125 million of revolving extensions of credit outstanding at any time (including revolving loans, swingline loans and letters of credit) (the “2015 Revolving Credit Facility”) and an initial term loan facility providing for $610 million of term loan (the “Term Loan Facility”). 21C may (i) increase the aggregate amount of revolving loans by an amount not to exceed $25 million in the aggregate and (ii) subject to consummation of the Third Capital Event and a consolidated secured leverage ratio test, increase the aggregate amount of the term loans or the revolving loans by an unlimited amount or issue pari passu or junior secured loans or notes or unsecured loans or notes in an unlimited amount. The 2015 Revolving Credit Facility matures April 30, 2020 and the 2015 Term Loan Facility matures April 30, 2022.

Borrowings pursuant to the 2015 Credit Agreement are secured on a first priority basis by a perfected security interest in substantially all of the Company’s assets.

Loans under the 2015 Revolving Credit Facility are subject to the following interest rates:

(a)  for loans which are Eurodollar loans, including London Interbank Offered Rate (“LIBOR”), loans for any interest period, at a rate per annum equal to a percentage equal to (i) the rate per annum as administered by ICE Benchmark Administration, determined on the basis of the rate for deposits in dollars for a period equal to such interest period commencing on the first day of such interest period as of 11:00 A.M., London time, two business days prior to the beginning of such interest period divided by (ii) 1.0 minus the then stated maximum rate of all reserve requirements applicable to any member bank of the Federal Reserve System in respect of euro currency funding or liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D), plus (iii) an applicable margin of between 5.625% and 6.125%, based upon a total leverage pricing grid; and

(b)  for loans which are base rate loans, (i) the greatest of (A) the 2015 Administrative Agent’s prime lending rate on such day, which was 3.50% as of September 30, 2016, (B) the federal funds effective rate at such time plus ½ of 1%, and (C) the Eurodollar Rate for a Eurodollar Loan with a one-month interest period commencing on such day plus 1.00%, plus (ii) an applicable margin of between 4.625% and 5.125%, based upon a total leverage pricing grid.

21C will pay certain recurring fees with respect to the 2015 Revolving Credit Facility, including (i) fees on the unused commitments of the lenders under the 2015 Revolving Credit Facility, (ii) letter of credit fees on the aggregate face amounts of outstanding letters of credit and (iii) administration fees.

Loans under the 2015 Term Credit Facility are subject to the following interest rates:

(a)  for loans which are Eurodollar loans, including LIBOR loans, for any interest period, at a rate per annum equal to a percentage equal to (i) the rate per annum as administered by ICE Benchmark Administration, determined on the basis of the rate for deposits in dollars for a period equal to such interest period commencing on the first day of such interest period as of 11:00 A.M., London time, two business days prior to the beginning of such interest period divided by (ii) 1.0 minus the then stated maximum rate of all reserve requirements applicable to any member bank of the Federal Reserve System in respect of euro currency funding or liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D), provided that such percentage shall be deemed to be not less than 1.00%, plus (iii) an applicable margin of 6.125%; and

(b)  for loans which are base rate loans, (i) the greatest of (A) the 2015 Administrative Agent’s prime lending rate on such day, (B) the federal funds effective rate at such time plus ½ of 1%, and (C) the Eurodollar Rate for a Eurodollar Loan with a one-month interest period commencing on such day plus 1.00%, provided that such percentage shall be deemed to be not less than 2.00%, plus (ii) an applicable margin of 5.125%.

The 2015 Credit Agreement contains customary representations and warranties, subject to limitations and exceptions, and customary covenants restricting the ability (subject to various exceptions) of 21C and certain of its subsidiaries to: incur additional indebtedness (including guarantee obligations); incur liens; engage in mergers or other fundamental changes; sell certain property or assets; pay dividends or other distributions; consummate acquisitions; make investments, loans and advances; prepay certain indebtedness, including the Senior Notes; change the nature of the business; engage in certain transactions with affiliates; and restrictions on the ability of 21C’s subsidiaries to make distributions, advances and asset transfers.  In addition, under the 2015 Credit Facilities, 21C is required to (i) maintain minimum liquidity of at least $40.0 million (tested monthly) and (ii) comply with a consolidated leverage ratio (tested quarterly) of 7.50 to 1.00 until March 30, 2018, stepping down to 6.25 to 1.00 thereafter. The consolidated leverage ratio is as follows as of September 30, 2016:

	Requirement at September 30, 2016	Level at September 30, 2016
Maximum permitted consolidated leverage ratio	<7.50 to 1.00	7.14 to 1.00

The 2015 Credit Facilities contain customary events of default, including with respect to nonpayment of principal, interest, fees or other amounts; material inaccuracy of a representation or warranty when made; failure to perform or observe covenants; cross default to other material indebtedness; bankruptcy and insolvency events; inability to pay debts; monetary judgment defaults; actual or asserted invalidity or impairment of any definitive loan documentation and a change of control.

The obligations of 21C under the 2015 Credit Facilities are guaranteed by the Company and each direct and indirect, domestic subsidiary of 21C, subject to customary exceptions.

On May 12, 2016, the Company received notice from the 2015 Administrative Agent that it was in default under the 2015 Credit Agreement because, among other things, 21C had not timely delivered 2015 audited financial statements to the Administrative Agent.

On June 10, 2016, the Company entered into an amendment and waiver (“Amendment No. 1”) to the 2015 Credit Agreement. Amendment No. 1 waived through July 31, 2016 any default or event of default under the 2015 Credit Agreement for failure to timely provide audited annual financial statements and related reports and certificates for the year ended December 31, 2015 and quarterly financial statements and related reports and certificates for the quarter ended March 31, 2016 (the “Specified Deliverables”). The Company paid approximately $1.8 million in loan costs related to Amendment No. 1 and incurred additional legal fees of approximately $0.2 million. Amendment No. 1 further provided that the interest rate applicable to the loans under the Credit Agreement increase in each case by 0.125% per annum as of July 1, 2016.

On August 15, 2016, the Company entered into an amendment and waiver (“Amendment No. 2”) to the 2015 Credit Agreement.

Amendment No. 2 provides for a limited waiver:

(1) through September 10, 2016, in respect of (a) any default or event of default under the 2015 Credit Agreement resulting from failure to provide audited annual financial statements and related reports and certificates for the year ended December 31, 2015 (the “Delayed 10-K”) without a “going concern” or like qualification as and when required pursuant to the 2015 Credit Agreement and (b) any cross-default that may arise under the 2015 Credit Agreement as a result of a default or event of default under the Senior Notes Indenture, which occurs as a result of the Company’s failure to timely furnish to the Trustee and holders of the Senior Notes (each as defined below) or file with the SEC the financial information required in the Delayed 10-K; and

(2)  through September 30, 2016, in respect of (a) any default or event of default under the 2015 Credit Agreement resulting from failure to timely provide quarterly financial statements and related reports and certificates for the quarters ended March 31, 2016 (the “Delayed 10Q”) and June 30, 2016 and (b) any cross-default that may arise under the 2015 Credit Agreement as a result of a default or event of default under the Senior Notes Indenture which occurs as a result of the Company’s failure to timely furnish to the Trustee and holders of the Senior Notes or file with the SEC the financial information required in the Delayed 10-Q and the quarterly report on Form 10-Q for the quarter ended June 30, 2016 (together, the “Quarterly SEC Reports”).

The Company filed the Delayed 10-K with the SEC on August 23, 2016 and the Delayed 10-Q and the quarterly financial statements and related reports and certificates for the quarter ended June 30, 2016 on September 20, 2016.

In addition, Amendment No. 2 requires 21C to receive:

(1) no later than September 10, 2016, net cash proceeds from the issuance or sale of 21C’s capital stock or from other equity investments in an aggregate amount of at least $25.0 million;

(2) no later than November 30, 2016, additional net cash proceeds from the issuance or sale of 21C’s capital stock or from other equity investments and/or sales of assets (which sale transactions must be deleveraging transactions on a pro forma basis) in an aggregate amount of at least $25.0 million (or a lesser amount such that when combined with the proceeds from the First Capital Event, the total amount is not less than $50.0 million); and

(3) no later than March 31, 2017, additional net cash proceeds from the issuance or sale of 21C’s capital stock or from other equity investments and/or sales of assets (which sale transactions must be deleveraging transactions on a pro forma basis) in an aggregate amount of at least the lesser of (A) $75.0 million (or a lesser amount such that when combined with the proceeds from the First Capital Event and the Second Capital Event, the total amount is not less than $125.0 million), and (B) an amount such that, after giving effect to such issuance or sale of capital stock or other equity investments and/or sales of assets, 21C’s cash and cash equivalents plus unused revolving loan commitments equals at least $120.0 million and 21C’s consolidated leverage ratio is not greater than 6.4 to 1.00.

Notwithstanding any qualification provided for in the above described Capital Events, Amendment No. 2 requires that 21C receive, on or prior to March 31, 2017, at least $50.0 million of net cash proceeds from the issuance or sale of 21C’s capital stock or from other equity investments. On September 9, 2016, the Company satisfied the First Capital Event.

Amendment No. 2 provides for a new minimum liquidity covenant pursuant to which 21C must maintain at least $40.0 million of liquidity after the completion of the First Capital Event, which will be tested monthly prior to the completion of the Third Capital Event and quarterly thereafter.

Amendment No. 2 also amends certain existing covenants (and definitions related thereto) in the 2015 Credit Agreement and provides for additional restrictions regarding the ability of 21C and certain of its subsidiaries to incur additional debt, make restricted payments and make investments. These covenants are subject to a number of important limitations and exceptions.

Senior Notes Offering

On April 30, 2015, 21C completed an offering of $360.0 million aggregate principal amount of 11.00% senior notes due 2023 at an issue price of 100.00% (the “Senior Notes”). The Senior Notes are senior unsecured obligations of 21C and are guaranteed on an unsecured senior basis by the Company and each of 21C’s existing and future direct and indirect domestic subsidiaries that is a guarantor (the “Guarantors”) under the 2015 Credit Facilities.

The Senior Notes were issued in a private offering that is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), to qualified institutional buyers in accordance with Rule 144A and to persons outside of the United States pursuant to Regulation S under the Securities Act.

21C used the net proceeds from the offering, together with cash on hand and borrowings under the 2015 Credit Facilities, to repay its $90.0 million Term Facility, to redeem its 97/8% Senior Subordinated Notes due 2017 and its 87/8% Senior Secured Second Lien Notes due 2017, to repurchase the 113/4% Senior Secured Notes due 2017 issued by OnCure, to pay related fees and expenses and for general corporate purposes. The Company incurred approximately $26.5 million in transaction fees and expenses, including legal, accounting and other fees associated with the offering.

The Senior Notes were issued pursuant to an indenture, dated April 30, 2015 (the “Senior Notes Indenture”), among 21C, the Guarantors and Wilmington Trust, National Association, governing the Notes.

Interest is payable on the Senior Notes on each May 1 and November 1, commencing November 1, 2015. 21C may redeem some or all of the Senior Notes at any time prior to May 1, 2018 at a price equal to 100% of the principal amount of the Senior Notes redeemed plus accrued and unpaid interest to the redemption date, if any, and an applicable make-whole premium. On or after May 1, 2018, 21C may redeem some or all of the Senior Notes at redemption prices set forth in the Senior Notes Indenture. In addition, at any time prior to May 1, 2018, 21C may redeem up to 35% of the aggregate principal amount of the Senior Notes, at a specified redemption price with the net cash proceeds of certain equity offerings.

The Senior Notes Indenture contains covenants that, among other things, restrict the ability of 21C and certain of its subsidiaries to: incur additional debt or issue preferred shares; pay dividends on or make distributions in respect of their equity interest or make other restricted payments; sell certain assets; create liens on certain assets to secure debt; consolidate, merge, sell or otherwise dispose of all or substantially all of their assets; enter into certain transactions with affiliates; and designate subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of important limitations and exceptions. In addition, in certain circumstances, if 21C sells assets or experiences certain changes of control, it must offer to purchase the Senior Notes.

The Company incurred a loss of approximately $37.4 million from the early extinguishment of debt as a result of the notes offering in April, 2015.  The Company paid approximately $24.9 million in premium payments for the early retirement of its $350.0 million senior secured second lien notes and $380.1 million senior subordinated notes, along with the tender offer premium payments on the $75.0 million senior secured notes. As a result of the notes offering, the Company wrote-off approximately $3.1 million in original issue discount and $9.4 million in deferred financing costs.

On May 17, 2016, the Company received notice from Wilmington Trust, National Association, as trustee (the “Trustee”) of the Senior Notes. The notice stated that 21C was in default under the Indenture governing the Senior Notes because 21C failed to timely furnish to the Trustee and noteholders the financial information required in an annual report on Form 10-K for the year ended December 31, 2015.

On July 25, 2016, the Company entered into the second supplemental indenture to the Senior Notes Indenture (the “Second Supplemental Indenture”), providing for a limited waiver through July 31, 2016 of certain defaults or events of default under the Senior Notes Indenture for failure to timely furnish to the trustee and holders of the Senior Notes or file with the SEC the financial information required in an annual report on Form 10-K for the year ended December 31, 2015 or in a quarterly report on Form 10-Q for the period ended March 31, 2016. As consideration for the foregoing, the Company paid to all holders of the Senior Notes an amount representing additional interest on the Senior Notes equal to $2.30 per $1,000 principal amount of the Senior Notes. The Company also paid certain fees and expenses of the advisors to certain holders of the Senior Notes incurred in connection with the Second Supplemental Indenture.

On August 16, 2016, the Company received the requisite consents from the holders of a majority of the aggregate principal amount of the Senior Notes outstanding to enter into a third supplemental indenture (the “Third Supplemental Indenture”) to the Senior Notes Indenture.

The Third Supplemental Indenture provides for a limited waiver:

(1) through September 10, 2016, in respect of certain defaults or events of default under the Senior Notes Indenture resulting from failure to timely furnish to the Trustee and holders of the Senior Notes or file with the SEC the Delayed 10-K; and

(2) through September 30, 2016, in respect of certain defaults or events of default under the Senior Notes Indenture resulting from failure to timely furnish to the Trustee and holders of the Senior Notes or file with the SEC the Quarterly SEC Reports.

The Company filed the Delayed 10-K with the SEC on August 23, 2016 and the Delayed 10-Q and the quarterly financial statements and related reports and certificates for the quarter ended June 30, 2016 on September 20, 2016.

The Third Supplemental Indenture requires the Company to complete each Capital Event as described above and in the same time frame described above. As discussed above, the Company satisfied the First Capital Event on September 9, 2016.

The Third Supplemental Indenture provides for a new minimum liquidity covenant pursuant to which the Company must maintain at least $40.0 million of liquidity after the completion of the First Capital Event, which will be tested monthly prior to the completion of the Third Capital Event and quarterly thereafter.

The Third Supplemental Indenture also amends certain existing covenants (and definitions related thereto) in the Senior Notes Indenture and provides for additional restrictions regarding the ability of 21C and certain of its subsidiaries to incur additional debt and pay dividends on or make distributions in respect of their equity interests or make other restricted payments. These covenants are subject to a number of important limitations and exceptions.

Pursuant to the Third Supplemental Indenture, in addition to any cash interest provided for in the Senior Notes Indenture, during the period starting on August 1, 2016 through August 31, 2016, holders of the Senior Notes will be entitled to PIK interest at a rate of 0.75% per annum, which rate will increase by an additional 0.75% per annum on the first day of each subsequent month, commencing on September 1, 2016. PIK interest will be paid monthly on the first day of each month, starting on September 1, 2016. PIK interest will stop accruing on the date of completion of the Third Capital Event, and the last PIK interest payment will be made on the first day of the month following such date.

The Company paid approximately $0.8 million in loan costs related to the Second Supplemental Indenture and incurred additional legal fees of approximately $5.7 million related to Amendment No. 2 and the Second and Third Suplemental indenture.

The Third Supplemental Indenture also provides that the holders of a majority of the aggregate principal amount of the Senior Notes outstanding shall have the right to designate one non-voting board observer to attend meetings of the Board of Directors of each of the Company and 21C until the date of completion of the Third Capital Event. See note 17, Subsequent Events, for additional information.

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Commitments And Contingencies

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies [Abstract]

Commitments and Contingencies

14. Commitments and contingencies

Legal Proceedings

The Company operates in a highly regulated and litigious industry. As a result, the Company is involved in disputes, litigation, and regulatory matters incidental to its operations, including governmental investigations, personal injury lawsuits, employment claims, and other matters arising out of the normal conduct of business. Other than as set forth below, the Company does not believe that an adverse decision in any of these matters would have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Data Breach

On November 13, 2015, the Company was advised by the Federal Bureau of Investigation (the “FBI”) that patient information was illegally obtained by an unauthorized third party who may have gained access to a Company database. The Company immediately hired a leading forensic firm to support its investigation, assess its system and bolster its security. Based on its investigation, the Company determined that the intruder may have accessed the database on October 3, 2015. The Company notified approximately 2.2 million current and former patients that certain information may have been copied and transferred.

Following the data breach, the Company received notice that class action complaints had been filed against the Company and certain of its affiliates in Florida and California. The complaints allege, among other things, that the Company failed to take the necessary security precautions to protect patient information and prevent the data breach. Several of the Florida complaints have been consolidated. The Company expects additional claims to be consolidated to the extent permitted by the courts. Because of the early stages of these matters and the uncertainties of litigation, the Company cannot predict the ultimate resolution of these matters or estimate the amounts of, or ranges of, potential loss, if any, with respect to these proceedings.

In addition, the Company has received a request for information regarding the data breach and the Company’s response from the Office for Civil Rights as well as additional inquiries from State Attorneys General. The Company has responded to each of those inquiries and provided the information requested. The Company could face fines or penalties as a result of these inquiries. However, due to the early stages of these matters, The Company cannot predict the ultimate resolution or estimate the amounts of, or ranges of, potential loss, if any.

The Company has insurance coverage and contingency plans for certain potential liabilities relating to the data breach. Nevertheless, the coverage may be insufficient to satisfy all claims and liabilities related thereto and the Company will be responsible for deductibles and any other expenses that may be incurred in excess of insurance coverage.

Lease Commitments

As a result of non-compliance with certain covenants of the Company’s capital leases and a seller financing promissory note as discussed in Note 13, the Company is in default on a master real estate lease agreement. The master real estate lease agreement encompasses 18 radiation treatment centers and the Company’s corporate headquarters. The results of this default could include the Lessor retaking possession of the centers, terminating the master real estate lease and collecting damages including acceleration of rent and all other obligations.

Exit and Disposal Costs

During the quarter ended September 30, 2016, the Company ceased use of its leased corporate aircraft. As a result, it recorded a liability of $0.5 million as of September 30, 2016 representing its net lease obligation and a corresponding loss. The loss is recorded in the other gains and losses caption in the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2016. The liability is recorded in the other current liabilities caption and the other long-term liabilities caption in the condensed consolidated balance sheets as of September 30, 2016.  The liability will be amortized as the underlying lease payments are paid through March 2018.  No amortization was recorded during the three or nine months ended September 30, 2016.

During the quarter ended September 30, 2016, the Company ceased use of real estate property it leases pursuant to an operating lease. The Company assessed the cease use event in accordance with ASC 420, Exit and Disposal Costs, and determined no net liability should be recorded. On November 10, 2016, the Company entered into a sublease for the property, which qualifies as a type 1 subsequent event and is required to be recorded as of September 30, 2016. The Company recorded a liability of $0.5 million as of September 30, 2016 representing its net lease obligation and a corresponding loss. The loss is recorded in the other gains and losses caption in the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2016. The liability is recorded in the other current liabilities caption and the the other long-term liabilities caption in the condensed consolidated balance sheets as of September 30, 2016.  The liability will be amortized as the underlying lease payments are paid through March 2018. No amortization was recorded during the three or nine months ended September 30, 2016.

During the quarter ended September 30, 2016, the Company identified and terminated certain employees. As a result, it recorded a severance charge of $4.2 million as of September 30, 2016 recorded in the general and administrative expenses caption in the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2016. The liability is recorded in the other current liabilities caption in the condensed consolidated balance sheets as of September 30, 2016.

During the quarter ended September 30, 2016, the Company entered into an agreement to sell one of its owned facilities located in Boca Raton, Florida.  The sale closed in October 2016 and generated $0.9 million in net cash proceeds.  As a result, the Company recorded an impairment loss as of September 30, 2016 of $0.8 million for the excess of the facility’s net book value over the net cash proceeds.

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Other Gains And Losses

9 Months Ended

Sep. 30, 2016

Other Gains And Losses [Abstract]

Other Gains And Losses

15. Other gains and losses

Other gains and losses consists of the following:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands):	2016		2015		2016		2015
Gain on the contribution of a radiation facility to a joint venture	$	—	$	—	$	(12,629)	$	—
(Gain) loss on the sale/disposal of property and equipment		(446)		100		(480)		(203)
Gain on BP settlement		—		(5,796)		(517)		(5,796)
Exit and disposal costs		534		—		534		—
Loss on sublease		490		—		490		—
Gain on insurance recoveries		(97)		—		(97)		(1,364)
Total other gains and losses	$	481	$	(5,696)	$	(12,699)	$	(7,363)

Gain on the contribution of a radiaton facility to a joint venture

On January 1, 2016, the Company deconsolidated the operations of its Greenville treatment center, recording a gain on disposal of $12.6 million.

Gain on BP settlement

During 2016 and 2015, the Company received settlement funds from the Deepwater Horizon Settlement Program for damages suffered as a result of the Deepwater Horizon Oil Spill that occurred in 2010.

Exit and disposal costs

During the quarter ended September 30, 2016, the Company ceased use of its leased corporate aircraft. As a result, it recorded a liability representing its net lease obligation and a corresponding loss.

Loss on sublease

During the quarter ended September 30, 2016, the Company ceased use of real estate property it leases pursuant to an operating lease. The Company assessed the cease use event in accordance with ASC 420, Exit and Disposal Costs, and determined no net liability should be recorded. On November 10, 2016, the Company entered into a sublease for the property, which qualifies as a type 1 subsequent event and is required to be recorded as of September 30, 2016. The Company recorded a loss on sublease representing the Company’s net lease obligation as of September 30, 2016. 

Gain on insurance recoveries

During 2015, the Company received insurance recoveries from damages suffered as a result of a fire in one of its North Carolina radiation treatment centers that occurred during 2011. During 2016, the Company received insurance recoveries from damages suffered as a result of water damage in one of its Michigan radiation treatment centers.

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Segment And Geographic Information

9 Months Ended

Sep. 30, 2016

Segment And Geographic Information [Abstract]

Segment And Geographic Information

16. Segment and geographic information

The Company operates in one line of business, operating physician group practices, and its operations are structured into two geographically organized groups: the U.S. Domestic operating segment and the International operating segment, which are also the reporting segments. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Transactions between reporting segments are properly eliminated. The Company assesses performance of and makes decisions on how to allocate resources to its operating segments based on multiple factors including current and projected facility gross profit and market opportunities. Facility gross profit is defined as total revenues less cost of revenues.

Financial information by geographic segment is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands):	2016		2015		2016		2015
Total revenues:
U.S. Domestic	$	217,391	$	231,166	$	694,786	$	728,999
International		28,288		31,091		79,574		87,104
Total	$	245,679	$	262,257	$	774,360	$	816,103
Facility gross profit:
U.S. Domestic	$	51,077	$	56,352	$	172,566	$	188,450
International		15,076		18,000		42,737		48,606
Total	$	66,153	$	74,352	$	215,303	$	237,056
Depreciation and amortization:
U.S. Domestic	$	19,910	$	20,978	$	59,543	$	62,411
International		1,409		1,461		3,869		4,364
Total	$	21,319	$	22,439	$	63,412	$	66,775
Capital expenditures: *
U.S. Domestic					$	32,306	$	33,094
International						2,777		3,574
Total					$	35,083	$	36,668

*     includes capital lease obligations and accounts payable related to capital expenditures

(in thousands):	September 30, 2016		December 31, 2015
Total assets:
U.S. Domestic	$	932,192	$	982,575
International		122,768		121,286
Total	$	1,054,960	$	1,103,861
Property and equipment:
U.S. Domestic	$	190,897	$	213,442
International		23,798		25,143
Total	$	214,695	$	238,585
Acquisition-related goodwill and intangible assets:
U.S. Domestic	$	496,585	$	511,182
International		54,638		57,613
Total	$	551,223	$	568,795

The reconciliation of the Company’s reportable segment profit and loss is as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands):	2016		2015		2016		2015
Facility gross profit	$	66,153	$	74,352	$	215,303	$	237,056
Less:
General and administrative expenses		35,344		68,306		101,070		141,340
General and administrative salaries		30,817		28,693		82,361		84,257
General and administrative depreciation and amortization		3,493		3,913		10,801		11,846
Provision for doubtful accounts		8,610		5,617		17,270		13,683
Interest expense, net		27,151		23,771		77,353		73,836
Other gains and losses		481		(5,696)		(12,699)		(7,363)
Impairment loss		770		-		2,595		-
Early extinguishment of debt		-		-		-		37,390
Fair value measurements		34,976		1,799		22,187		8,404
Loss on foreign currency transactions		(5)		333		300		537
Loss before income taxes and equity interest in net income of joint ventures	$	(75,484)	$	(52,384)	$	(85,935)	$	(126,874)

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Subsequent Events

9 Months Ended

Sep. 30, 2016

Subsequent Events [Abstract]

Subsequent Events

17. Subsequent events

On November 1, 2016, the Company announced that 21C failed to make a semi-annual interest payment as required by the Senior Notes Indenture governing its Senior Notes. The failure to make such interest payment, if not cured within 30 days, will result in an event of default under the Senior Notes Indenture.

Should an event of default occur under the Senior Notes Indenture, a cross-default would occur under the Company’s 2015 Credit Facilities. Following an event of default under the Senior Notes Indenture or 2015 Credit Facilities, the holders of the Senior Notes or lenders under the 2015 Credit Facilities, as applicable, could accelerate 21C’s indebtedness outstanding under the Senior Notes Indenture or 2015 Credit Facilities, as applicable. In addition, other obligations of the Company could be accelerated, including the Series A Preferred Stock, other debt and capital leases and certain operating leases.

The Company intends to utilize the available 30-day cure period under the Senior Notes Indenture to work with its lenders, bondholders and stakeholders to address the potential default, however, there can be no assurance the Company will be able to cure the default within the 30-day cure period.

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Basis Of Presentation (Policy)

9 Months Ended

Sep. 30, 2016

Basis Of Presentation [Abstract]

Out of Period Adjustments

Out of period adjustments:

During the quarter ended March 31, 2016, the Company determined that foreign currency translation adjustments have not been applied to goodwill relative to an acquisition in Argentina in 2011. The cumulative difference between the unrealized loss on foreign currency translation that should have been recognized and that actually was recognized was not material to the Company’s results of operations or financial position as of or for any of the periods presented. The Company recorded an adjustment to correct the unrealized loss on foreign currency translation and accumulated other comprehensive loss, net of tax, along with the associated goodwill for approximately $0.9 million in the condensed consolidated statement of operations and comprehensive loss for the nine months ended September 30, 2016. There was no impact to the condensed consolidated statement of cash flows for the nine months ended September 30, 2016.

Seasonality

Seasonality:

The Company’s results of operations historically have fluctuated on a quarterly basis and can be expected to continue to fluctuate. Many of the patients of the Company’s Florida treatment centers are part-time residents during the winter months. Hence, these treatment centers have historically experienced higher utilization rates during the winter months than during the remainder of the year. In addition, volume is typically lower in the summer months due to traditional vacation periods. As of September 30, 2016,  60 of the Company’s 144 U.S. domestic radiation treatment centers are located in Florida.

Variable Interest Entities

Variable interest entities:

The accompanying interim condensed consolidated financial statements include the accounts of the Company and all subsidiaries and entities controlled by the Company through the Company’s direct or indirect ownership of a majority interest and/or exclusive rights granted to the Company as the management company of such entities or by contract. All significant intercompany accounts and transactions have been eliminated.

The Company has evaluated certain radiation oncology practices in order to determine if they are variable interest entities (“VIEs”). This evaluation resulted in the Company determining that certain of its radiation oncology practices were potential VIEs. For each of these practices, the Company has evaluated (1) the sufficiency of the fair value of the entity’s equity investments at risk to absorb losses, (2) that, as a group, the holders of the equity investments at risk have (a) the direct or indirect ability through voting rights to make decisions about the entity’s significant activities, (b) the obligation to absorb the expected losses of the entity and that their obligations are not protected directly or indirectly, and (c) the right to receive the expected residual return of the entity, and (3) substantially all of the entity’s activities do not involve or are not conducted on behalf of an investor that has disproportionately fewer voting rights in terms of its obligation to absorb the expected losses or its right to receive expected residual returns of the entity, or both. The Accounting Standards Codification (“ASC”), 810 Consolidation (“ASC 810”), requires a company to consolidate VIEs if the company is the primary beneficiary of the activities of those entities. Certain of the Company’s radiation oncology practices are VIEs and the Company has a variable interest in each of these practices through its administrative services agreements. Other of the Company’s radiation oncology practices (primarily consisting of partnerships) are VIEs and the Company has a variable interest in each of these practices because the total equity investment at risk is not sufficient to permit the legal entity to finance its activities without the additional subordinated financial support provided by its members.

In accordance with ASC 810, the Company consolidates certain radiation oncology practices where the Company provides administrative services pursuant to long-term management agreements. The noncontrolling interests in these entities represent the interests of the physician owners of the oncology practices in the equity and results of operations of these consolidated entities. The Company, through its variable interests in these practices, has the power to direct the activities of these practices that most significantly impact the entity’s economic performance, and the Company would absorb a majority of the expected losses of these practices should they occur. Based on these determinations, the Company has consolidated these radiation oncology practices in its condensed consolidated financial statements for all periods presented.

The Company could be obligated, under the terms of the operating agreements governing certain of its joint ventures, upon the occurrence of various fundamental regulatory changes and or upon the occurrence of certain events outside of the Company’s control, to purchase some or all of the noncontrolling interests related to the Company’s consolidated subsidiaries. These repurchase requirements would be triggered by, among other things, regulatory changes prohibiting the existing ownership structure. While the Company is not aware of events that would make the occurrence of such a change probable, regulatory changes are outside the control of the Company. Accordingly, the noncontrolling interests subject to these repurchase provisions have been classified outside of equity on the Company’s consolidated balance sheets.

As of September 30, 2016 and December 31, 2015, the combined total assets included in the Company’s condensed consolidated balance sheet relating to the VIEs were approximately $113.2 million and $113.9 million, respectively.

As of September 30, 2016, the Company was the primary beneficiary of, and therefore consolidated, 28 VIEs, which operate 48 radiation therapy centers. Any significant amounts of assets and liabilities related to the consolidated VIEs are identified parenthetically on the accompanying condensed consolidated balance sheets. The assets are owned by, and the liabilities are obligations of, the VIEs, not the Company. Only the assets of the VIEs can be used to settle the liabilities of the VIEs. The assets are used pursuant to operating agreements established by each VIE. The VIEs are not guarantors of the Company’s debts. In the states of California, Massachusetts, Michigan, Nevada, New York, North Carolina and Washington, the Company’s treatment centers are operated as physician office practices. The Company typically provides technical services to these treatment centers in addition to administrative services. For the nine months ended September 30, 2016 and 2015 approximately 13.2% and 14.0% of the Company’s net patient service revenue, respectively, was generated by professional corporations for which it has administrative management agreements.

As of September 30, 2016, the Company also held equity interests in five VIEs for which the Company is not the primary beneficiary. Those VIEs consist of partnerships that primarily provide radiation oncology services.  The Company is not the primary beneficiary of these VIEs as it does not retain the power and rights in the operations of the entities. The Company’s investments in the unconsolidated VIEs are approximately $15.2 million and $1.2 million at September 30, 2016 and December 31, 2015, respectively, with ownership interests ranging between 33.3% and 50.0% general partner or equivalent interest. Accordingly, substantially all of these equity investment balances are attributed to the Company’s noncontrolling interests in the unconsolidated partnerships. The Company’s maximum risk of loss related to the investments in these VIEs is limited to the equity interest.

Cost of Revenues

Cost of revenues:

The cost of revenues for the three months ended September 30, 2016 and 2015 are approximately $184.5 million and $193.4 million, respectively. The cost of revenues for the nine months ended September 30, 2016 and 2015 are approximately $573.5 million and $595.2 million, respectively. The cost of revenues includes expenses incurred for the delivery of patient care. These expenses include salaries and benefits of physicians, physicists, dosimetrists, radiation technicians etc., medical supplies, facility rent expenses, other operating expenses, depreciation and amortization.

Recent Pronouncements

Recent pronouncements:

In February 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The new guidance intends to reduce the number of consolidation models as well as place more emphasis on risk of loss when determining a controlling financial interest. The Company adopted this ASU prospectively on January 1, 2016. The adoption of this ASU did not have a significant impact on the Company’s consolidated financial position or results of operations.

In April 2015, the FASB issued ASU 2015-03, Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The new guidance requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The Company adopted ASU 2015-03 on January 1, 2016 with retrospective application to its December 31, 2015 condensed consolidated balance sheet. The effect of the adoption of ASU 2015-03 was to reclassify debt issue costs of approximately $19.8 million as of December 31, 2015 as a deduction from the related debt liabilities. Accordingly, other assets and total assets in the 2015 condensed consolidated balance sheet were reduced by that amount, and long-term debt and total liabilities were reduced by the same amount. There was no effect on net income or cash flows.

In April 2015, the FASB issued ASU 2015-05, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The new guidance establishes guidelines for evaluating whether a cloud computing arrangement involves the sale of a software license and the appropriate accounting. The Company adopted this ASU on January 1, 2016 on a prospective basis. The adoption of this ASU did not have a significant impact on the Company’s consolidated financial position or results of operations.

In August 2015, FASB issued ASU 2015-15, Interest — Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. The new guidance allows debt issuance costs related to line-of-credit arrangements to be recognized as an asset and amortized ratably over the line-of-credit term. The Company adopted ASU 2015-15 on January 1, 2016 with retrospective application to its December 31, 2015 condensed consolidated balance sheet. The effect of the adoption of ASU 2015-15 was to reclassify debt issue costs of approximately $4.6 million as of December 31, 2015 as a deduction from the related debt liabilities. Accordingly, other assets and total assets in the 2015 condensed consolidated balance sheet were reduced by that amount, and long-term debt and total liabilities were reduced by the same amount. There was no effect on net income or cash flows.

In March 2016, the FASB issued ASU 2016-09, Compensation — Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 provides new guidance intended to simplify several aspects of accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, including an option to early adopt. The Company does not expect adoption to have a material impact on its financial statements.

During 2016, the FASB issued additional ASUs relating to Revenue from Contracts with Customers (Topic 606). These updates, identified as ASU 2016-08, ASU 2016-10 and ASU 2016-12, identified practical expedients and clarified various aspects of the new revenue recognition standard outlined in ASU 2014-09. The Company has reviewed these updates and does not believe they will materially impact the Company’s future adoption of the standard. The effective date and transition requirements for ASU 2014-09 (and updated in ASU 2015-14) were not changed with these pronouncements.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740) – Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 provides new guidance intended to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, including an option to early adopt. The Company is currently evaluating the potential effects of the adoption to its financial statements.

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Accumulated Other Comprehensive Loss, Net Of Tax (Tables)

9 Months Ended

Sep. 30, 2016

Accumulated Other Comprehensive Loss, Net Of Tax [Abstract]

Schedule Of Components Of Accumulated Other Comprehensive Loss, Net Of Tax

	21st Century Oncology Holdings, Inc. Shareholder						Noncontrolling Interests
Quarter to date (in thousands):	Foreign Currency Translation Adjustments		Net Periodic Benefit Cost of Pension Plan		Total		Foreign Currency Translation Adjustments		Other Comprehensive Loss
As of June 30, 2016	$	(57,352)	$	(457)	$	(57,809)	$	(7,436)
Other comprehensive loss		(1,157)		—		(1,157)		7	$	(1,150)
As of September 30, 2016	$	(58,509)	$	(457)	$	(58,966)	$	(7,429)	$	(1,150)

	21st Century Oncology Holdings, Inc. Shareholder						Noncontrolling Interests
Year to date (in thousands):	Foreign Currency Translation Adjustments		Net Periodic Benefit Cost of Pension Plan		Total		Foreign Currency Translation Adjustments		Other Comprehensive Loss
As of December 31, 2015	$	(54,117)	$	(457)	$	(54,574)	$	(6,675)
Other comprehensive loss		(4,392)		—		(4,392)		(754)	$	(5,146)
As of September 30, 2016	$	(58,509)	$	(457)	$	(58,966)	$	(7,429)	$	(5,146)

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Series A Preferred Stock (Tables)

9 Months Ended

Sep. 30, 2016

Series A Preferred Stock [Abstract]

Schedule of Changes to Series A Preferred Stock

Quarter to date (in thousands):
As of June 30, 2016	$	429,966
Issuance of Series A preferred stock, net of discount and issuance costs		24,970
Accretion of Series A Preferred Stock to redemption value		1,353
Series A Preferred Stock dividends accrued at effective rate		16,060
As of September 30, 2016	$	472,349

Year to date (in thousands):
Balance, December 31, 2015	$	389,514
Issuance of Series A preferred stock, net of discount and issuance costs		24,970
Accretion of Series A Preferred Stock to redemption value		9,792
Series A Preferred Stock dividends accrued at effective rate		48,073
As of September 30, 2016	$	472,349

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Reconciliation Of Total Equity And Noncontrolling Interests (Tables)

9 Months Ended

Sep. 30, 2016

Reconciliation Of Total Equity And Noncontrolling Interests [Abstract]

Schedule Of Changes In Total Equity

(in thousands):	21st Century Oncology Holdings, Inc Shareholder’s Deficit		Noncontrolling interests - nonredeemable		Total Equity		Noncontrolling interests - redeemable
Balance, December 31, 2015	$	(700,952)	$	26,322	$	(674,630)	$	19,233
Net (loss) income		(97,479)		3,883		(93,596)		651
Other comprehensive loss from foreign currency translation		(4,392)		(736)		(5,128)		(18)
Accretion of Series A convertible redeemable preferred stock to redemption value		(9,792)		—		(9,792)		—
Accrued Series A convertible redeemable preferred stock dividends		(48,073)		—		(48,073)		—
Adjustment of noncontrolling interest to redemption value		(705)		—		(705)		705
Distributions		—		(1,968)		(1,968)		(1,324)
Balance, September 30, 2016	$	(861,393)	$	27,501	$	(833,892)	$	19,247
Balance, December 31, 2014	$	(493,439)	$	55,838	$	(437,601)	$	15,273
Net (loss) income		(140,480)		4,641		(135,839)		1,969
Other comprehensive loss from foreign currency translation		(5,403)		(1,010)		(6,413)		(1)
Accretion of Series A convertible redeemable preferred stock to redemption value		(13,262)		—		(13,262)		—
Accrued Series A convertible redeemable preferred stock dividends		(40,223)		—		(40,223)		—
Purchase price fair value of noncontrolling interest		14,500		(44,060)		(29,560)		—
Proceeds from issuance of noncontrolling interest		2,315		8,939		11,254		3,767
Proceeds from noncontrolling interest holders		—		3,170		3,170		686
Stock based compensation		6		—		6		—
Distributions		—		(2,347)		(2,347)		(1,760)
Balance, September 30, 2015	$	(675,986)	$	25,171	$	(650,815)	$	19,934

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Fair Value Of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Of Financial Instruments [Abstract]

Schedule Of Fair Value Debt Instruments Based On Level 2

	September 30, 2016
(in thousands):	Fair Value		Carrying Value
$610.0 million Term Loan Facility due April 30, 2022	$	563,221	$	585,322
$360.0 million Senior Notes due May 1, 2023	$	302,400	$	353,183
$75.0 million Senior Secured Notes due January 15, 2017	$	488	$	488

	December 31, 2015
(in thousands):	Fair Value		Carrying Value
$610.0 million Term Loan Facility due April 30, 2022	$	509,838	$	589,133
$360.0 million Senior Notes due May 1, 2023	$	262,800	$	352,546
$75.0 million Senior Secured Notes due January 15, 2017	$	443	$	443

Schedule Of Items Measured At Fair Value On Recurring Basis

			Fair Value Measurements at Reporting Date Using
(in thousands):	September 30, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Marketable securities	$	1,756	$	1,756	$	—	$	—
Other current assets
Cash surrender value of company owned life insurance investments	$	191	$	191	$	—	$	—
Assets
Embedded derivative and other financial instrument features of Series A Preferred Stock	$	499	$	—	$	—	$	499
Other long-term assets
Cash surrender value of company owned life insurance investments	$	6,717	$	6,717	$	—	$	—
Other current liabilities
Embedded derivative features of SFRO PIK Notes	$	900	$	—	$	—	$	900
Earn-out liabilities	$	45	$	—	$	—	$	45
Cash surrender value of company owned life insurance obligations	$	191	$	191	$	—	$	—
Liabilities
Embedded derivative and other financial instrument features of Series A Preferred Stock	$	24,843	$	—	$	—	$	24,843
Other long-term liabilities
Cash surrender value of company owned life insurance obligations	$	7,376	$	7,376	$	—	$	—

			Fair Value Measurements at Reporting Date Using
(in thousands):	December 31, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Marketable securities	$	1,078	$	1,078	$	—	$	—
Other current assets
Cash surrender value of company owned life insurance investments	$	299	$	299	$	—	$	—
Assets
Embedded derivative and other financial instrument features of Series A Preferred Stock	$	17,883	$	—	$	—	$	17,883
Other long-term assets
Cash surrender value of company owned life insurance investments	$	5,203	$	5,203	$	—	$	—
Other current liabilities
Embedded derivative features of SFRO PIK Notes	$	2,230	$	—	$	—	$	2,230
Earn-out liabilities	$	193	$	—	$	—	$	193
Cash surrender value of company owned life insurance obligations	$	299	$	299	$	—	$	—
Liabilities
Embedded derivative and other financial instrument features of Series A Preferred Stock	$	19,911	$	—	$	—	$	19,911
Other long-term liabilities
Cash surrender value of company owned life insurance obligations	$	5,796	$	5,796	$	—	$	—

Schedule Of Changes In Level 3 Liabilities

	Fair value		Instruments		Change in		Fair value
Quarter to date (in thousands):	June 30, 2016		Issued (Paid)		Fair Value		September 30, 2016
Assets
Embedded derivative and other financial instrument features of Series A convertible redeemable preferred stock	$	33,284	$	—	$	(32,785)	$	499
Other current liabilities
Embedded derivative features of SFRO PIK Notes	$	2,540	$	(1,200)	$	(440)	$	900
Earn-out liabilities	$	45	$	—	$	—	$	45
Liabilities
Embedded derivative and other financial instrument features of Series A convertible redeemable preferred stock	$	22,212	$	—	$	2,631	$	24,843
	Fair value		Instruments		Change in		Fair value
Year to date (in thousands):	December 31, 2015		Issued (Paid)		Fair Value		September 30, 2016
Assets
Embedded derivative and other financial instrument features of Series A convertible redeemable preferred stock	$	17,883	$	—	$	(17,384)	$	499
Other current liabilities
Embedded derivative features of SFRO PIK Notes	$	2,230	$	(1,200)	$	(130)	$	900
Earn-out liabilities	$	193	$	(149)	$	1	$	45
Liabilities
Embedded derivative and other financial instrument features of Series A convertible redeemable preferred stock	$	19,911	$	—	$	4,932	$	24,843

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Goodwill And Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2016

Goodwill And Intangible Assets [Abstract]

Schedule Of Changes in The Carrying Amount Of Goodwill

	Nine Months Ended		Year Ended
(in thousands):	September 30, 2016		December 31, 2015
Balance, beginning of period: U.S. Domestic Segment
Goodwill	$	1,150,614	$	1,120,275
Accumulated impairment losses		(700,799)		(700,799)
Net goodwill, beginning of period		449,815		419,476
Goodwill acquired during the period		123		30,468
Contribution of a radiation facility to an unconsolidated joint venture		(5,146)		—
Adjustments to purchase price allocations		—		(129)
Balance, end of period
Goodwill		1,145,591		1,150,614
Accumulated impairment losses		(700,799)		(700,799)
Net goodwill, end of period: U.S. Domestic Segment	$	444,792	$	449,815
Balance, beginning of period: International Segment
Goodwill	$	48,865	$	57,083
Net goodwill, beginning of period		48,865		57,083
Goodwill acquired during the period		—		233
Adjustments to purchase price allocations		—		88
Foreign currency translation		(1,915)		(8,539)
Balance, end of period
Goodwill		46,950		48,865
Net goodwill, end of period: International Segment	$	46,950	$	48,865

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Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 2016

Accrued Expenses [Abstract]

Schedule Of Accrued Expenses

(in thousands):	September 30, 2016		December 31, 2015
Accrued payroll and payroll related deductions and taxes	$	26,012	$	19,051
Accrued compensation arrangements		22,422		30,010
Accrued interest		17,196		7,359
Accrued Gamma investigative matter		—		34,694
Accrued electronic health record incentive payments and penalties		7,791		10,964
Accrued other		9,458		9,575
Total accrued expenses	$	82,879	$	111,653

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Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2016

Long-Term Debt [Abstract]

Schedule Of Company's Long-Term Debt

The Company’s long-term debt consists of the following (in thousands):

	September 30,		December 31,
	2016		2015
$125.0 million Senior Secured Credit Facility – (2015 Revolving Credit Facility) (net of $4,039 and $4,567 of deferred financing costs at September 30, 2016 and December 31, 2015, respectively)	$	117,961	$	55,433
$610.0 million Senior Secured Credit Facility – (Term Loan Facility) (net of unamortized debt discount of $4,825 and $5,498 and deferred financing costs of $12,228 and $12,319 at September 30, 2016 and December 31, 2015, respectively)		585,322		589,133
$360.0 million Senior Notes (net of $7,492 and $7,454 of deferred financing costs at September 30, 2016 and December 31, 2015, respectively)		353,183		352,546
$75.0 million Senior Secured Notes		488		443
Capital leases payable with various monthly payments plus interest at rates ranging from 3.75% to 19.0%, due at various maturity dates through December 2020		40,947		49,854
SFRO PIK Notes (net of unamortized debt discount of $301 and $384 and embedded derivative of $2,217 and $2,876 at September 30, 2016 and December 31, 2015, respectively)		15,652		12,497
Various other notes payable and seller financing promissory notes  with various monthly payments plus interest at rates ranging from 7.1% to 19.5%, due at various maturity dates through May 2021		10,840		13,204
		1,124,393		1,073,110
Less current portion		(1,106,662)		(1,023,877)
	$	17,731	$	49,233

Schedule Of Financial Covenants Compliance Under The Revolving Credit Facility

	Requirement at September 30, 2016	Level at September 30, 2016
Maximum permitted consolidated leverage ratio	<7.50 to 1.00	7.14 to 1.00

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Other Gains And Losses (Tables)

9 Months Ended

Sep. 30, 2015

Other Gains And Losses [Abstract]

Schedule Of Other Gains And Losses

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands):	2016		2015		2016		2015
Gain on the contribution of a radiation facility to a joint venture	$	—	$	—	$	(12,629)	$	—
(Gain) loss on the sale/disposal of property and equipment		(446)		100		(480)		(203)
Gain on BP settlement		—		(5,796)		(517)		(5,796)
Exit and disposal costs		534		—		534		—
Loss on sublease		490		—		490		—
Gain on insurance recoveries		(97)		—		(97)		(1,364)
Total other gains and losses	$	481	$	(5,696)	$	(12,699)	$	(7,363)

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Segment And Geographic Information (Tables)

9 Months Ended

Sep. 30, 2016

Segment And Geographic Information [Abstract]

Schedule Of Financial Information By Geographic Segment

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands):	2016		2015		2016		2015
Total revenues:
U.S. Domestic	$	217,391	$	231,166	$	694,786	$	728,999
International		28,288		31,091		79,574		87,104
Total	$	245,679	$	262,257	$	774,360	$	816,103
Facility gross profit:
U.S. Domestic	$	51,077	$	56,352	$	172,566	$	188,450
International		15,076		18,000		42,737		48,606
Total	$	66,153	$	74,352	$	215,303	$	237,056
Depreciation and amortization:
U.S. Domestic	$	19,910	$	20,978	$	59,543	$	62,411
International		1,409		1,461		3,869		4,364
Total	$	21,319	$	22,439	$	63,412	$	66,775
Capital expenditures: *
U.S. Domestic					$	32,306	$	33,094
International						2,777		3,574
Total					$	35,083	$	36,668

*     includes capital lease obligations and accounts payable related to capital expenditures

(in thousands):	September 30, 2016		December 31, 2015
Total assets:
U.S. Domestic	$	932,192	$	982,575
International		122,768		121,286
Total	$	1,054,960	$	1,103,861
Property and equipment:
U.S. Domestic	$	190,897	$	213,442
International		23,798		25,143
Total	$	214,695	$	238,585
Acquisition-related goodwill and intangible assets:
U.S. Domestic	$	496,585	$	511,182
International		54,638		57,613
Total	$	551,223	$	568,795

Schedule Of Reconciliation Of The Company's Reportable Segment Profit And Loss

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands):	2016		2015		2016		2015
Facility gross profit	$	66,153	$	74,352	$	215,303	$	237,056
Less:
General and administrative expenses		35,344		68,306		101,070		141,340
General and administrative salaries		30,817		28,693		82,361		84,257
General and administrative depreciation and amortization		3,493		3,913		10,801		11,846
Provision for doubtful accounts		8,610		5,617		17,270		13,683
Interest expense, net		27,151		23,771		77,353		73,836
Other gains and losses		481		(5,696)		(12,699)		(7,363)
Impairment loss		770		-		2,595		-
Early extinguishment of debt		-		-		-		37,390
Fair value measurements		34,976		1,799		22,187		8,404
Loss on foreign currency transactions		(5)		333		300		537
Loss before income taxes and equity interest in net income of joint ventures	$	(75,484)	$	(52,384)	$	(85,935)	$	(126,874)

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Organization (Details)	9 Months Ended
	Sep. 30, 2016 state site store item
Organization [Line Items]
Community-based physicians | item	949
Medical service locations | site	370
Radiation therapy service locations | store	180
Therapy service locations in partnership with health systems | site	58
Number of states | state	17
International treatment centers | store	36
Low End Of The Range [Member]
Organization [Line Items]
Management fees from EBITDA	50.00%
Low End Of The Range [Member] | California [Member]
Organization [Line Items]
Management fees from collections	20.00%
High End Of The Range [Member]
Organization [Line Items]
Management fees from EBITDA	60.00%
High End Of The Range [Member] | California [Member]
Organization [Line Items]
Management fees from collections	30.00%

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Leverage And Liquidity (Details) - USD ($) $ in Thousands				3 Months Ended		9 Months Ended		12 Months Ended
	Mar. 31, 2017	Nov. 30, 2016	Sep. 10, 2016	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015		Dec. 31, 2014
Liquidity [Line Items]
Long term debt				$ 17,731	$ 1,100,000	$ 17,731	$ 1,100,000	$ 49,233	[1]
Net loss				78,500	55,245	92,945	133,870	126,800
Unrestricted cash				$ 49,696	$ 47,725	$ 49,696	$ 47,725	$ 65,211	[1]	$ 99,082
Senior Secured Revolving Credit Facility [Member] | Low End Of The Range [Member]
Liquidity [Line Items]
Cash proceeds from equity investments			$ 25,000
Scenario, Forecast [Member] | Senior Secured Revolving Credit Facility [Member] | Low End Of The Range [Member]
Liquidity [Line Items]
Cash proceeds from equity investments	$ 50,000
Cash proceeds from equity investments, first capital event		$ 25,000
Cash proceeds from equity investments, first and second capital event	125,000
Cash proceeds from equity investments, second capital event	75,000	$ 50,000
Cash proceeds from equity investments, third capital event	120,000
Unrestricted cash	$ 40,000
Scenario, Forecast [Member] | Senior Secured Revolving Credit Facility [Member] | High End Of The Range [Member]
Liquidity [Line Items]
Consolidated leverage ratio	6.40%

[1] Derived from audited financial statements. See note 3 for discussion of accounting principles adopted during the period.

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Basis Of Presentation (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016 USD ($) store item	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($) store item	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Variable Interest Entities [Line Items]
Assets related to VIEs	$ 1,054,960		$ 1,054,960		$ 1,103,861	[1]
Equity investments in joint ventures	15,209		15,209		1,214	[1]
Prior Period Adjustment [Abstract]
Unrealized loss on foreign currency translation	$ (1,150)	$ (2,415)	$ (5,146)	$ (6,414)
Seasonality
Radiation therapy service locations | store	180		180
Cost of Revenue [Abstract]
Cost of revenues	$ 184,500	$ 193,400	$ 573,500	$ 595,200
Florida [Member]
Seasonality
Radiation therapy service locations | item	60		60
U. S. Domestic [Member]
Variable Interest Entities [Line Items]
Assets related to VIEs	$ 932,192		$ 932,192		982,575
Seasonality
Radiation therapy service locations | item	144		144
Restatement Adjustment [Member]
Prior Period Adjustment [Abstract]
Unrealized loss on foreign currency translation			$ (900)
Restatement Adjustment [Member] | Accounting Standards Update 2015-02 [Member]
Recent pronouncements
Debt issue costs					(19,800)
Restatement Adjustment [Member] | Accounting Standards Update 2015-15 [Member]
Recent pronouncements
Debt issue costs					(4,600)
Consolidated VIEs [Member]
Variable Interest Entities [Line Items]
Assets related to VIEs	$ 113,200		$ 113,200		113,900
Number of variable interest entities | item	28		28
Number of operating centers of variable interest entities | item	48		48
Net patient service revenue			13.20%	14.00%
Unconsolidated VIEs [Member]
Variable Interest Entities [Line Items]
Number of variable interest entities | item	5		5
Equity investments in joint ventures	$ 15,200		$ 15,200		$ 1,200
Unconsolidated VIEs [Member] | Low End Of The Range [Member]
Variable Interest Entities [Line Items]
Ownership interest			33.30%
Unconsolidated VIEs [Member] | High End Of The Range [Member]
Variable Interest Entities [Line Items]
Ownership interest			50.00%

[1] Derived from audited financial statements. See note 3 for discussion of accounting principles adopted during the period.

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Accumulated Other Comprehensive Loss, Net Of Tax (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Comprehensive Income (Loss) [Line Items]
Beginning balance	[1]			$ (54,574)
Foreign Currency Translation Adjustments		$ (1,150)	$ (2,415)	(5,146)	$ (6,414)
Other comprehensive loss		(1,150)	$ (2,415)	(5,146)	$ (6,414)
Ending Balance		(58,966)		(58,966)
21st Century Oncology Holdings, Inc. Shareholder's Equity [Member]
Comprehensive Income (Loss) [Line Items]
Beginning balance		(57,809)		(54,574)
Other comprehensive loss		(1,157)		(4,392)
Ending Balance		(58,966)		(58,966)
Foreign Currency Translation Adjustments [Member]
Comprehensive Income (Loss) [Line Items]
Beginning balance		(57,352)		(54,117)
Other comprehensive loss		(1,157)		(4,392)
Ending Balance		(58,509)		(58,509)
Net Periodic Benefit Cost Of Pension Plan [Member]
Comprehensive Income (Loss) [Line Items]
Beginning balance		(457)		(457)
Ending Balance		(457)		(457)
Noncontrolling Interests, Foreign Currency Translation Adjustments [Member]
Comprehensive Income (Loss) [Line Items]
Beginning balance		(7,436)		(6,675)
Other comprehensive loss		7		(754)
Ending Balance		(7,429)		(7,429)
Other Comprehensive Loss [Member]
Comprehensive Income (Loss) [Line Items]
Foreign Currency Translation Adjustments		(1,150)		(5,146)
Other comprehensive loss		$ (1,150)		$ (5,146)

[1] Derived from audited financial statements. See note 3 for discussion of accounting principles adopted during the period.

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Series A Preferred Stock (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands				9 Months Ended
	Sep. 09, 2016	Jul. 17, 2016	Sep. 26, 2014	Sep. 30, 2016	Dec. 31, 2015		Sep. 30, 2015
Preferred Stock [Line Items]
Preferred stock issued				410,000	410,000
Preferred stock par value				$ 0.001	$ 0.001
Preferred stock stated value				$ 1,000	1,000
Proceeds from issuance of Series A convertible redeemable preferred stock				$ 25,000
Preferred Stock Dividend, Term				3 years
Preferred stock dividend rate				9.875%
Common stock par value				$ 0.01	$ 0.01
Warrants				$ 30,000
Warrants purchase price				$ 0.01
Fair value of Series A Preferred stock				$ 11,000
Percentage of change in fair value of preferred stock				2.00%
Derivative asset				$ 499	$ 17,883	[1]
Embedded derivative liability				24,843	19,911	[1]
Accrued Series A preferred stock dividends				48,073			$ 40,223
Private placement
Preferred Stock [Line Items]
Preferred stock issued	25,000		385,000
Preferred stock par value	$ 0.001		$ 0.001
Preferred stock stated value			$ 1,000
Proceeds from issuance of Series A convertible redeemable preferred stock	$ 25,000		$ 325,000
Series A Preferred Stock [Member]
Preferred Stock [Line Items]
Aggregate amount of redemption requirement				410,000
Accrued Series A preferred stock dividends				$ 101,800	$ 53,600
Certificate Of Designations Default [Member]
Preferred Stock [Line Items]
Preferred stock dividend rate	26.00%
High End Of The Range [Member]
Preferred Stock [Line Items]
Preferred stock dividend rate		16.00%
Percentage of common stock				29.00%
Threshold percentage to account as an extinguishment and reissuance using fair value approach				10.00%
Low End Of The Range [Member]
Preferred Stock [Line Items]
Threshold percentage to account as modification using fair value approach				10.00%

[1] Derived from audited financial statements. See note 3 for discussion of accounting principles adopted during the period.

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Series A Preferred Stock (Schedule Of Changes To Series A Preferred Stock) (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016		Sep. 30, 2015
Series A Preferred Stock [Abstract]
Beginning Balance	$ 429,966	$ 389,514	[1]
Issuance of Series A preferred stock, net of discount and issuance costs	24,970	24,970		$ 3,767
Accretion of Series A preferred stock to redemption value	1,353	9,792		$ 13,262
Series A preferred stock dividends accrued at effective rate	16,060	48,073
Ending Balance	$ 472,349	$ 472,349

[1] Derived from audited financial statements. See note 3 for discussion of accounting principles adopted during the period.

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Reconciliation Of Total Equity And Noncontrolling Interests (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016		Sep. 30, 2015
Schedule of Capitalization, Equity [Line Items]
Balance, beginning of period	[1]			$ (674,630)
Net (loss) income		$ (79,922)	$ (57,775)	(97,479)		$ (140,480)
Accretion of Series A convertible redeemable preferred stock to redemption value		1,353		9,792		13,262
Accrued Series A convertible redeemable preferred stock dividend		(16,060)		(48,073)
Adjustment of noncontrolling interest to redemption value				705
Proceeds from issuance of noncontrolling interest						743
Proceeds from noncontrolling interest holders - redeemable and non-redeemable						3,230
Balance, end of period		(833,892)		(833,892)
Noncontrolling interests - redeemable
Balance, beginning of period				19,233	[1]	15,273
Net (loss) income				651		1,969
Other comprehensive loss from foreign currency translation				(18)		(1)
Proceeds from issuance of noncontrolling interest		24,970		24,970		3,767
Proceeds from noncontrolling interest holders						686
Distributions				(1,324)		(1,760)
Balance, end of period		19,247	19,934	19,247		19,934
21st Century Oncology Holdings, Inc. Shareholder's Equity [Member]
Schedule of Capitalization, Equity [Line Items]
Balance, beginning of period				(700,952)		(493,439)
Net (loss) income				(97,479)		(140,480)
Other comprehensive loss from foreign currency translation				(4,392)		(5,403)
Accretion of Series A convertible redeemable preferred stock to redemption value				(9,792)		(13,262)
Accrued Series A convertible redeemable preferred stock dividend				(48,073)		(40,223)
Adjustment of noncontrolling interest to redemption value				(705)
Purchase price fair value of noncontrolling interest						14,500
Proceeds from issuance of noncontrolling interest						2,315
Stock-based compensation						6
Balance, end of period		(861,393)	(675,986)	(861,393)		(675,986)
Noncontrolling Interests - Nonredeemable [Member]
Schedule of Capitalization, Equity [Line Items]
Balance, beginning of period				26,322		55,838
Net (loss) income				3,883		4,641
Other comprehensive loss from foreign currency translation				(736)		(1,010)
Purchase price fair value of noncontrolling interest						(44,060)
Proceeds from issuance of noncontrolling interest						8,939
Proceeds from noncontrolling interest holders - redeemable and non-redeemable						3,170
Distributions				(1,968)		(2,347)
Balance, end of period		27,501	25,171	27,501		25,171
Equity [Member]
Schedule of Capitalization, Equity [Line Items]
Balance, beginning of period				(674,630)		(437,601)
Net (loss) income				(93,596)		(135,839)
Other comprehensive loss from foreign currency translation				(5,128)		(6,413)
Accretion of Series A convertible redeemable preferred stock to redemption value				(9,792)		(13,262)
Accrued Series A convertible redeemable preferred stock dividend				(48,073)		(40,223)
Adjustment of noncontrolling interest to redemption value				(705)
Purchase price fair value of noncontrolling interest						(29,560)
Proceeds from issuance of noncontrolling interest						11,254
Proceeds from noncontrolling interest holders - redeemable and non-redeemable						3,170
Stock-based compensation						6
Distributions				(1,968)		(2,347)
Balance, end of period		$ (833,892)	$ (650,815)	$ (833,892)		$ (650,815)

[1] Derived from audited financial statements. See note 3 for discussion of accounting principles adopted during the period.

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Fair value Of Financial Instruments (Schedule Of Fair Value Debt Instruments Based On Level 2) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	Apr. 30, 2015
Senior Secured Term Credit Facility Maturities Through April 30, 2022 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Face amount	$ 610,000	$ 610,000
Fair Value	563,221	509,838
Carrying Value	585,322	589,133
11.00% Senior Secured Notes May 1, 2023 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Face amount	360,000	360,000	$ 360,000
Fair Value	302,400	262,800
Carrying Value	353,183	352,546
11 3/4% Senior Secured Due January 15, 2017 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Face amount	75,000	75,000
Fair Value	488	443
Carrying Value	$ 488	$ 443

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Fair value Of Financial Instruments (Schedule Of Items Measured At Fair Value On Recurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair Value Measurements
Marketable securities	$ 1,756	$ 1,078	[1]
Other Current Assets [Member] | Cash Surrender Value [Member]
Fair Value Measurements
Cash surrender value of company owned life insurance investments	191	299
Assets [Member] | Embedded Derivative And Other Financial Instrument Features Of Series A Preferred Stock [Member]
Fair Value Measurements
Embedded derivative assets	499	17,883
Other Long-Term Assets [Member] | Cash Surrender Value [Member]
Fair Value Measurements
Cash surrender value of company owned life insurance investments	6,717	5,203
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value Measurements
Marketable securities	1,756	1,078
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Other Current Assets [Member] | Cash Surrender Value [Member]
Fair Value Measurements
Cash surrender value of company owned life insurance investments	191	299
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Other Long-Term Assets [Member] | Cash Surrender Value [Member]
Fair Value Measurements
Cash surrender value of company owned life insurance investments	6,717	5,203
Significant Unobservable Inputs (Level 3) [Member] | Assets [Member] | Embedded Derivative And Other Financial Instrument Features Of Series A Preferred Stock [Member]
Fair Value Measurements
Embedded derivative assets	499	17,883
Embedded Derivative Features Of SFRO PIK Notes [Member] | Other Current Liabilities [Member]
Fair Value Measurements
Embedded derivative liabilities	900	2,230
Embedded Derivative Features Of SFRO PIK Notes [Member] | Significant Unobservable Inputs (Level 3) [Member] | Other Current Liabilities [Member]
Fair Value Measurements
Embedded derivative liabilities	900	2,230
Embedded Derivative And Other Financial Instrument Features Of Series A Preferred Stock [Member] | Liability [Member]
Fair Value Measurements
Embedded derivative liabilities	24,843	19,911
Embedded Derivative And Other Financial Instrument Features Of Series A Preferred Stock [Member] | Significant Unobservable Inputs (Level 3) [Member] | Liability [Member]
Fair Value Measurements
Embedded derivative liabilities	24,843	19,911
Earn-Out Liabilities [Member] | Other Current Liabilities [Member]
Fair Value Measurements
Earn-out liabilities	45	193
Earn-Out Liabilities [Member] | Significant Unobservable Inputs (Level 3) [Member] | Other Current Liabilities [Member]
Fair Value Measurements
Earn-out liabilities	45	193
Cash Surrender Value [Member] | Other Current Liabilities [Member]
Fair Value Measurements
Cash surrender value of company owned life insurance obligations	191	299
Cash Surrender Value [Member] | Other Long-Term Liabilities [Member]
Fair Value Measurements
Cash surrender value of company owned life insurance obligations	7,376	5,796
Cash Surrender Value [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Other Current Liabilities [Member]
Fair Value Measurements
Cash surrender value of company owned life insurance obligations	191	299
Cash Surrender Value [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Other Long-Term Liabilities [Member]
Fair Value Measurements
Cash surrender value of company owned life insurance obligations	$ 7,376	$ 5,796

[1] Derived from audited financial statements. See note 3 for discussion of accounting principles adopted during the period.

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Fair Value Of Financial Instruments (Schedule Of Changes In Level 3 Liabilities) (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016
Other Current Liabilities [Member] | Embedded Derivative Features Of SFRO PIK Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value, balance	$ 2,540	$ 2,230
Instruments Issued/Paid	(1,200)	(1,200)
Change in Fair Value	(440)	(130)
Fair value, balance	900	900
Other Current Liabilities [Member] | Earn-Out Liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value, balance	45	193
Instruments Issued/Paid		(149)
Change in Fair Value		1
Fair value, balance	45	45
Liability [Member] | Embedded Derivative And Other Financial Instrument Features Of Series A Preferred Stock [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value, balance	22,212	19,911
Change in Fair Value	2,631	4,932
Fair value, balance	24,843	24,843
Embedded Derivative And Other Financial Instrument Features Of Series A Preferred Stock [Member] | Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value, balance	33,284	17,883
Change in Fair Value	(32,785)	(17,384)
Fair value, balance	$ 499	$ 499

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Income Taxes (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Income Taxes [Abstract]
Effective income tax rate	(9.30%)	(5.70%)
US Statutory rate	35.00%
Deferred tax liability			$ 0
Undistributed earnings			$ 1,300

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Acquisitions And Other Arrangements (Narrative) (Details) - USD ($) $ in Thousands							9 Months Ended
	Jul. 31, 2016	Jan. 01, 2016	Dec. 14, 2015	Jul. 02, 2015	Jan. 06, 2015	Jan. 02, 2015	Sep. 30, 2016	Dec. 31, 2015	[1]	Feb. 10, 2014
Acquisitions [Line Items]
Goodwill							$ 491,742	$ 498,680
Proceeds from the sale of equity interest in a joint venture							6,170
Gain on disposal							$ 12,629
North Carolina [Member] | Newco [Member]
Acquisitions [Line Items]
Ownership interest purchased		50.00%
Proceeds from the sale of equity interest in a joint venture		$ 6,200
North Carolina [Member] | Disposal Group, Not Discontinued Operations [Member] | Newco [Member]
Acquisitions [Line Items]
Consideration from joint venture		19,000
Gain on disposal		$ 12,600
Radiation Oncology Practice [Member] | Florida [Member]
Acquisitions [Line Items]
Total purchase price			$ 6,600
Purchase price, cash payment			1,100
Purchase price allocated to tangible assets			3,500
Purchase price allocated to capital leases			2,500
Goodwill			5,500
Assumed debt obligations related to the acquisition of medical practices			5,500
Radiation Oncology Practice [Member] | Rhode Island [Member]
Acquisitions [Line Items]
Purchase price, cash payment					$ 8,000
Purchase price allocated to tangible assets					600
Purchase price allocated to intangible assets					900
Goodwill					6,500
Radiation Oncology Practice [Member] | California [Member]
Acquisitions [Line Items]
Total purchase price	$ 400
Goodwill	$ 100
Seller financing notes payable, term	2 years
Radiation Oncology Practice [Member] | Non-Compete Agreement [Member] | Florida [Member]
Acquisitions [Line Items]
Purchase price allocated to intangible assets			$ 100
Radiation Oncology Practice [Member] | Non-Compete Agreement [Member] | Rhode Island [Member]
Acquisitions [Line Items]
Purchase price allocated to intangible assets					$ 200
Amortization period of acquired intangible assets					5 years
Radiation Oncology Practice [Member] | Non-Compete Agreement [Member] | California [Member]
Acquisitions [Line Items]
Purchase price allocated to intangible assets	$ 300
Amortization period of acquired intangible assets	2 years
Radiation Oncology Practice [Member] | Certificates Of Need [Member] | Rhode Island [Member]
Acquisitions [Line Items]
Purchase price allocated to intangible assets					$ 700
South Florida Radiation Oncology
Acquisitions [Line Items]
Total purchase price				$ 44,100
Purchase price, cash payment				$ 15,000
Ownership interest purchased				35.00%						65.00%
Company's issuance of equity				$ 14,500
South Florida Radiation Oncology | Seller Financed Note [Member]
Acquisitions [Line Items]
Interest rate				10.00%
Face amount				$ 14,600
Radiation Oncology Facility [Member] | Washington [Member]
Acquisitions [Line Items]
Total purchase price						$ 18,900
Purchase price, cash payment						17,600
Purchase price allocated to tangible assets						3,000
Purchase price allocated to intangible assets						2,200
Purchase price allocated to capital leases						300
Goodwill						$ 17,800
Ownership interest purchased						80.00%
Purchase price allocated to redeemable noncontrolling interests						$ 3,800
Adjustment to the earn-out payment						$ 1,300
Contingent earn-out, term						3 years
Radiation Oncology Facility [Member] | Non-Compete Agreement [Member] | Washington [Member]
Acquisitions [Line Items]
Purchase price allocated to intangible assets						$ 1,200
Amortization period						5 years
Radiation Oncology Facility [Member] | Trade Names [Member] | Washington [Member]
Acquisitions [Line Items]
Purchase price allocated to intangible assets						$ 1,000
Low End Of The Range [Member] | Radiation Oncology Facility [Member] | Washington [Member]
Acquisitions [Line Items]
Fair value of contingent earn-out						0
High End Of The Range [Member] | Radiation Oncology Facility [Member] | Washington [Member]
Acquisitions [Line Items]
Fair value of contingent earn-out						$ 3,400

[1] Derived from audited financial statements. See note 3 for discussion of accounting principles adopted during the period.

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Goodwill And Intangible Assets (Details) - USD ($) $ in Thousands		3 Months Ended	9 Months Ended	12 Months Ended
		Sep. 30, 2016	Sep. 30, 2016	Dec. 31, 2015
Net goodwill, beginning of period	[1]		$ 498,680
Net goodwill, end of period		$ 491,742	491,742	$ 498,680	[1]
Impairment loss		770	2,595
U. S. Domestic [Member]
Goodwill, beginning of period			1,150,614	1,120,275
Accumulated impairment losses, beginning of period			(700,799)	(700,799)
Net goodwill, beginning of period			449,815	419,476
Goodwill acquired during the period			123	30,468
Contribution of a radiation facility to an unconsolidated joint venture			(5,146)
Adjustments to purchase price allocations				(129)
Goodwill, end of period		1,145,591	1,145,591	1,150,614
Accumulated impairment losses, end of period		(700,799)	(700,799)	(700,799)
Net goodwill, end of period		444,792	444,792	449,815
International [Member]
Goodwill, beginning of period			48,865	57,083
Net goodwill, beginning of period			48,865	57,083
Goodwill acquired during the period				233
Adjustments to purchase price allocations				88
Foreign currency translation			(1,915)	(8,539)
Goodwill, end of period		46,950	46,950	48,865
Net goodwill, end of period		$ 46,950	$ 46,950	$ 48,865

[1] Derived from audited financial statements. See note 3 for discussion of accounting principles adopted during the period.

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Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Accrued Expenses [Abstract]
Accrued payroll and payroll related deductions and taxes	$ 26,012	$ 19,051
Accrued compensation arrangements	22,422	30,010
Accrued interest	17,196	7,359
Accrued Gamma investigative matter		34,694
Accrued electronic health record incentive payments and penalties	7,791	10,964
Accrued other	9,458	9,575
Total accrued expenses	$ 82,879	$ 111,653	[1]

[1] Derived from audited financial statements. See note 3 for discussion of accounting principles adopted during the period.

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Long-Term Debt (Narrative) (Details) - USD ($)									6 Months Ended	9 Months Ended
	Mar. 31, 2017	Nov. 30, 2016	Sep. 10, 2016	Sep. 01, 2016	Jul. 25, 2016	Jul. 01, 2016	Jun. 10, 2016	Apr. 30, 2015	Jun. 30, 2016	Sep. 30, 2016	Sep. 30, 2015	Aug. 31, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Payment of call premium											$ 24,877,000
Initial purchasers' discount								$ 3,100,000
Proceeds from issuance of debt										$ 62,748,000	972,851,000
Repayment of long-term debt										27,582,000	921,871,000
Loss on early extinguishment of debt											(37,390,000)
Deferred financing costs								9,400,000
Loan costs										2,638,000	$ 26,481,000
11.00% Senior Secured Notes May 1, 2023 [Member]
Debt Instrument [Line Items]
Face amount								$ 360,000,000		$ 360,000,000			$ 360,000,000
Interest rate								11.00%
Issuance price, percentage								100.00%
Expenses incurred associated with offering								$ 26,500,000
Percentage of principal amount at which the entity may redeem some or all of notes										100.00%
Percentage of aggregate principal amount at which the entity may redeem notes with the net cash proceeds of certain equity offerings										35.00%
Transaction fees and expenses, including legal, accounting and other fees and expenses								26,500,000
Senior Secured Term Credit Facility Maturities Through October 15, 2016 [Member]
Debt Instrument [Line Items]
Repayment of long-term debt								$ 90,000,000
9 7/8% Senior Subordinated Notes Due April 15, 2017 [Member]
Debt Instrument [Line Items]
Face amount										$ 380,100,000
Interest rate										9.875%
Loss on early extinguishment of debt										$ 37,400,000
Repayment of debt									$ 24,900,000
8 7/8% Senior Secured Second Lien Notes due January 15, 2017 [Member]
Debt Instrument [Line Items]
Face amount										$ 350,000,000
Interest rate										8.875%
11 3/4% Senior Secured Due January 15, 2017 [Member]
Debt Instrument [Line Items]
Face amount										$ 75,000,000			75,000,000
Interest rate										11.75%
2015 Credit Agreement [Member]
Debt Instrument [Line Items]
Increase in interest rate						0.125%
Legal fees							$ 200,000
Loan costs							$ 1,800,000
2015 Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Maximum borrowing capacity										$ 125,000,000
Maturity date										Apr. 30, 2020
2015 Term Facility [Member]
Debt Instrument [Line Items]
Maximum borrowing capacity										$ 610,000,000
Maturity date										Apr. 30, 2022
Senior Secured Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Face amount										$ 125,000,000			$ 125,000,000
RTS [Member] | 2015 Credit Agreement [Member]
Debt Instrument [Line Items]
Possible increase of revolving loans by subsidiary										$ 25,000,000
RTS [Member] | 2015 Credit Facilities [Member]
Debt Instrument [Line Items]
First lien leverage ratio										7.50%
RTS [Member] | 2015 Credit Facilities [Member] | After March 30, 2018 [Member]
Debt Instrument [Line Items]
First lien leverage ratio										6.25%
Low End Of The Range [Member] | Senior Secured Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Cash proceeds from equity investments			$ 25,000,000
Low End Of The Range [Member] | Senior Secured Revolving Credit Facility [Member] | Scenario, Forecast [Member]
Debt Instrument [Line Items]
Cash proceeds from equity investments	$ 50,000,000
Cash proceeds from equity investments, first capital event		$ 25,000,000
Cash proceeds from equity investments, first and second capital event	125,000,000
Cash proceeds from equity investments, second capital event	75,000,000	$ 50,000,000
Cash proceeds from equity investments, third capital event	120,000,000
Unrestricted cash	$ 40,000,000
High End Of The Range [Member]
Debt Instrument [Line Items]
First lien leverage ratio										7.14%
High End Of The Range [Member] | Requirement [Member]
Debt Instrument [Line Items]
First lien leverage ratio										7.50%
High End Of The Range [Member] | Senior Secured Revolving Credit Facility [Member] | Scenario, Forecast [Member]
Debt Instrument [Line Items]
Consolidated leverage ratio	6.40%
Eurodollar [Member] | 2015 Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Variable interest rate										1.00%
Interest period										1 month
Eurodollar [Member] | 2015 Term Facility [Member]
Debt Instrument [Line Items]
Interest rate										6.125%
Interest period										1 month
Eurodollar [Member] | Low End Of The Range [Member] | 2015 Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Interest rate										5.625%
Eurodollar [Member] | Low End Of The Range [Member] | 2015 Term Facility [Member]
Debt Instrument [Line Items]
Variable interest rate										1.00%
Eurodollar [Member] | High End Of The Range [Member] | 2015 Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Interest rate										6.125%
Prime Rate [Member] | 2015 Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Variable interest rate										3.50%
Base Rate [Member] | Low End Of The Range [Member] | 2015 Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Interest rate										4.625%
Base Rate [Member] | Low End Of The Range [Member] | 2015 Term Facility [Member]
Debt Instrument [Line Items]
Interest rate										2.00%
Base Rate [Member] | High End Of The Range [Member] | 2015 Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Interest rate										5.125%
Base Rate [Member] | High End Of The Range [Member] | 2015 Term Facility [Member]
Debt Instrument [Line Items]
Interest rate										5.125%
Overnight Federal Funds Rate [Member] | 2015 Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Variable interest rate										0.50%
Overnight Federal Funds Rate [Member] | 2015 Term Facility [Member]
Debt Instrument [Line Items]
Variable interest rate										0.50%
Senior Notes [Member]
Debt Instrument [Line Items]
Interest rate												0.75%
Increase in interest rate				0.75%
Additional interest paid per $1,000 of principal senior notes outstanding					$ 2.30
Legal fees										$ 5,700,000
Loan costs										800,000
Senior Notes [Member] | Low End Of The Range [Member]
Debt Instrument [Line Items]
Unrestricted cash			$ 40,000,000							$ 40,000,000

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Long-Term Debt (Schedule Of Company's Long-Term Debt) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015		Sep. 30, 2015	Apr. 30, 2015
Long-Term Debt [Line Items]
Debt and Capital Lease Obligations, Total	$ 1,124,393	$ 1,073,110
Less current portion	(1,106,662)	(1,023,877)	[1]
Long-term debt, less current portion	17,731	49,233	[1]	$ 1,100,000
Capital Leases Payable [Member]
Long-Term Debt [Line Items]
Debt and Capital Lease Obligations, Total	$ 40,947	49,854
Interest rate, minimum	3.75%
Interest rate, maximum	19.00%
Senior Secured Term Credit Facility Maturities Through April 30, 2022 [Member]
Long-Term Debt [Line Items]
Debt and Capital Lease Obligations, Total	$ 585,322	589,133
Face amount	610,000	610,000
Deferred financing costs	12,228	12,319
Debt discount	4,825	5,498
Senior Secured Revolving Credit Facility [Member]
Long-Term Debt [Line Items]
Debt and Capital Lease Obligations, Total	117,961	55,433
Face amount	125,000	125,000
Deferred financing costs	4,039	4,567
11.00% Senior Secured Notes May 1, 2023 [Member]
Long-Term Debt [Line Items]
Debt and Capital Lease Obligations, Total	353,183	352,546
Face amount	360,000	360,000			$ 360,000
Deferred financing costs	7,492	7,454
11 3/4% Senior Secured Due January 15, 2017 [Member]
Long-Term Debt [Line Items]
Debt and Capital Lease Obligations, Total	488	443
Face amount	75,000	75,000
Other Notes Payable Due Through May 2021 [Member]
Long-Term Debt [Line Items]
Debt and Capital Lease Obligations, Total	$ 10,840	13,204
Interest rate, minimum	7.10%
Interest rate, maximum	19.50%
Seller Financing Promissory Notes [Member]
Long-Term Debt [Line Items]
Debt and Capital Lease Obligations, Total	$ 15,652	12,497
Embedded derivative	2,217	2,876
Debt discount	$ 301	$ 384

[1] Derived from audited financial statements. See note 3 for discussion of accounting principles adopted during the period.

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Long-Term Debt (Schedule Of Financial Covenants Compliance Under The Revolving Credit Facility) (Details) - High End Of The Range [Member]	9 Months Ended
	Sep. 30, 2016
Line of Credit Facility [Line Items]
Maximum permitted first lien leverage ratio	7.14%
Requirement [Member]
Line of Credit Facility [Line Items]
Maximum permitted first lien leverage ratio	7.50%

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Commitments and Contingencies (Details) $ in Millions		1 Months Ended	3 Months Ended	9 Months Ended
	Oct. 03, 2015 item	Oct. 31, 2016 USD ($)	Sep. 30, 2016 USD ($) site store item	Sep. 30, 2016 USD ($) site store item
Lease Commitments
Radiation therapy service locations | store			180	180
Exit and Disposal Costs
Severance charge			$ 4.2
Medical service locations | site			370	370
Facility Located in Boca Raton, Florida [Member]
Exit and Disposal Costs
Medical service locations | item			1	1
Cash proceeds from sale of business		$ 0.9
Impairment loss				$ 0.8
Master Real Estate Lease Agreement [Member]
Lease Commitments
Radiation therapy service locations | item			18	18
Leased Corporate Aircraft [Member]
Exit and Disposal Costs
Net leasing obligation			$ 0.5	$ 0.5
Amortization			0.0	0.0
Real Estate Property Sublease [Member]
Exit and Disposal Costs
Net leasing obligation			0.5	0.5
Amortization			$ 0.0	$ 0.0
Data Breach [Member]
Legal Proceedings
Number of current and former patients | item	2,200,000

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Other Gains And Losses (Schedule Of Other Gains And Losses) (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Other Gains And Losses [Abstract]
Gain on the contribution of a radiation facility to a joint venture				$ (12,629)
Gain on the sale/disposal of property and equipment	$ (446)		$ 100	(480)	$ (203)
Gain on BP settlement			(5,796)	(517)	(5,796)
Exit and disposal costs	534			534
Loss on sublease	490			490
Gain on insurance recoveries	(97)			(97)	(1,364)
Total other gains and losses	$ 481	$ (5,696)	$ (5,696)	$ (12,699)	$ (7,363)

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Segment And Geographic Information (Narrative) (Details)	9 Months Ended
	Sep. 30, 2016 segment
Segment And Geographic Information [Abstract]
Number of operating lines of business	1
Number of reporting segments	2

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Segment And Geographic Information (Schedule Of Financial Information By Geographic Segment) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Segment and geographic information [Line Items]
Total revenues	$ 245,679	$ 262,257	$ 774,360	$ 816,103
Facility gross profit	66,153	74,352	215,303	237,056
Depreciation and amortization	21,319	22,439	63,412	66,775
Capital expenditures			35,083	36,668
Total assets	1,054,960		1,054,960		$ 1,103,861	[1]
Property and equipment	214,695		214,695		238,585	[1]
Acquisition-related goodwill and intangible assets			551,223		568,795
U. S. Domestic [Member]
Segment and geographic information [Line Items]
Total revenues	217,391	231,166	694,786	728,999
Facility gross profit	51,077	56,352	172,566	188,450
Depreciation and amortization	19,910	20,978	59,543	62,411
Capital expenditures			32,306	33,094
Total assets	932,192		932,192		982,575
Property and equipment	190,897		190,897		213,442
Acquisition-related goodwill and intangible assets			496,585		511,182
International [Member]
Segment and geographic information [Line Items]
Total revenues	28,288	31,091	79,574	87,104
Facility gross profit	15,076	18,000	42,737	48,606
Depreciation and amortization	1,409	$ 1,461	3,869	4,364
Capital expenditures			2,777	$ 3,574
Total assets	122,768		122,768		121,286
Property and equipment	$ 23,798		23,798		25,143
Acquisition-related goodwill and intangible assets			$ 54,638		$ 57,613

[1] Derived from audited financial statements. See note 3 for discussion of accounting principles adopted during the period.

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Segment And Geographic Information (Schedule Of Reconciliation Of The Company's Reportable Segment Profit And Loss) (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Reconciliation Of The Company's Reportable Segment Profit And Loss
Facility gross profit	$ 66,153	$ 74,352		$ 215,303	$ 237,056
General and administrative expenses	35,344	68,306		101,070	141,341
General and administrative salaries	136,859	142,640		414,610	436,996
General and administrative depreciation and amortization	21,319	22,439		63,412	66,775
Provision for doubtful accounts	8,610	5,617		17,270	13,683
Interest expense, net	27,151	23,771		77,353	73,836
Other gains and losses	481	(5,696)	$ (5,696)	(12,699)	(7,363)
Impairment loss	770			2,595
Early extinguishment of debt					37,390
Fair value measurements	34,976	1,799		22,187	8,404
Loss on foreign currency transactions	(5)	333		300	537
Loss before income taxes and equity interest in net income of joint ventures	(75,484)	(52,384)		(85,935)	(126,874)
Reportable Segment [Member]
Reconciliation Of The Company's Reportable Segment Profit And Loss
Facility gross profit	66,153	74,352		215,303	237,056
General and administrative expenses	35,344	68,306		101,070	141,340
General and administrative salaries	30,817	28,693		82,361	84,257
General and administrative depreciation and amortization	3,493	3,913		10,801	11,846
Provision for doubtful accounts	8,610	5,617		17,270	13,683
Interest expense, net	27,151	23,771		77,353	73,836
Other gains and losses	481	(5,696)		(12,699)	(7,363)
Impairment loss	770			2,595
Early extinguishment of debt					37,390
Fair value measurements	34,976	1,799		22,187	8,404
Loss on foreign currency transactions	(5)	333		300	537
Loss before income taxes and equity interest in net income of joint ventures	$ (75,484)	$ (52,384)		$ (85,935)	$ (126,874)

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Subsequent Events (Details)	Nov. 01, 2016
Subsequent Event [Member] | Senior Notes [Member]
Subsequent Event [Line Items]
Cure period within which interest payment to be made	30 days