Delaware | 001-37955 | 62-1493316 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
1A Burton Hills Boulevard | ||
Nashville, Tennessee | 37215 | |
(Address of Principal Executive Offices) | (Zip Code) |
Yes [X] | No [ ] |
Yes [X] | No [ ] |
Large accelerated filer [X] | Accelerated filer [ ] |
Non-accelerated filer [ ] | Smaller reporting company [ ] |
(Do not check if a smaller reporting company) | Emerging growth company [ ] |
Yes [ ] | No [X] |
i |
Envision Healthcare Corporation Consolidated Balance Sheets (unaudited) (Dollars in millions, shares in thousands) | |||||||
March 31, | December 31, | ||||||
2017 | 2016 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 225.3 | $ | 316.9 | |||
Insurance collateral | 86.3 | 87.0 | |||||
Accounts receivable, net of allowance of $1,427.8 and $584.0, respectively | 1,328.1 | 1,297.8 | |||||
Supplies inventory | 22.9 | 23.4 | |||||
Prepaid and other current assets | 136.1 | 135.1 | |||||
Current assets held for sale | 3,026.5 | 551.1 | |||||
Total current assets | 4,825.2 | 2,411.3 | |||||
Property and equipment, net | 299.3 | 300.8 | |||||
Investments in unconsolidated affiliates | 131.4 | 114.7 | |||||
Goodwill | 7,665.7 | 7,584.0 | |||||
Intangible assets, net | 3,636.1 | 3,675.5 | |||||
Other assets | 133.7 | 134.2 | |||||
Noncurrent assets held for sale | — | 2,488.4 | |||||
Total assets | $ | 16,691.4 | $ | 16,708.9 | |||
Liabilities and Equity | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 46.8 | $ | 46.6 | |||
Accounts payable | 54.9 | 69.9 | |||||
Accrued salaries and benefits | 416.6 | 483.8 | |||||
Accrued interest | 34.5 | 51.4 | |||||
Other accrued liabilities | 255.8 | 253.2 | |||||
Current liabilities held for sale | 737.9 | 249.4 | |||||
Total current liabilities | 1,546.5 | 1,154.3 | |||||
Long-term debt, net of deferred financing costs of $106.9 and $111.0, respectively | 5,785.9 | 5,790.2 | |||||
Deferred income taxes | 1,821.8 | 1,343.7 | |||||
Insurance reserves | 288.2 | 278.9 | |||||
Other long-term liabilities | 118.0 | 102.4 | |||||
Noncurrent liabilities held for sale | — | 468.6 | |||||
Commitments and contingencies | |||||||
Noncontrolling interests – redeemable | 182.6 | 182.9 | |||||
Equity: | |||||||
Preferred stock, $0.01 par value, 100,000 shares authorized, 1,725 shares issued and outstanding | 0.1 | 0.1 | |||||
Common stock, $0.01 par value, 1,000,000 shares authorized, 117,520 and 117,478 shares issued and outstanding, respectively | 1.2 | 1.2 | |||||
Additional paid-in capital | 5,982.8 | 5,976.3 | |||||
Retained earnings | 306.2 | 753.7 | |||||
Accumulated other comprehensive income (loss) | 0.7 | (0.2 | ) | ||||
Total Envision Healthcare Corporation equity | 6,291.0 | 6,731.1 | |||||
Noncontrolling interests – non-redeemable | 657.4 | 656.8 | |||||
Total equity | 6,948.4 | 7,387.9 | |||||
Total liabilities and equity | $ | 16,691.4 | $ | 16,708.9 |
1 |
Item 1. Financial Statements - (continued) |
Envision Healthcare Corporation Consolidated Statements of Operations (unaudited) (Dollars in millions, except earnings per share) | |||||||
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Revenues | $ | 2,855.8 | $ | 818.3 | |||
Provision for uncollectibles | (977.2 | ) | (93.6 | ) | |||
Net revenue | 1,878.6 | 724.7 | |||||
Operating expenses: | |||||||
Salaries and benefits | 1,348.1 | 411.5 | |||||
Supply cost | 54.0 | 47.0 | |||||
Insurance expense | 48.8 | 17.7 | |||||
Other operating expenses | 183.9 | 88.4 | |||||
Transaction and integration costs | 21.5 | 1.4 | |||||
Impairment charges | 0.3 | — | |||||
Depreciation and amortization | 71.3 | 29.0 | |||||
Total operating expenses | 1,727.9 | 595.0 | |||||
Net gain on disposals and deconsolidations | 0.3 | — | |||||
Equity in earnings of unconsolidated affiliates | 4.9 | 6.6 | |||||
Operating income | 155.9 | 136.3 | |||||
Interest expense, net | 52.4 | 30.8 | |||||
Other income, net | 1.1 | — | |||||
Earnings from continuing operations before income taxes | 104.6 | 105.5 | |||||
Income tax expense | 17.5 | 20.8 | |||||
Net earnings from continuing operations | 87.1 | 84.7 | |||||
Discontinued operations: | |||||||
Earnings from discontinued operations | 10.0 | — | |||||
Income tax expense from discontinued operations | (488.2 | ) | — | ||||
Net loss from discontinued operations | (478.2 | ) | — | ||||
Net earnings (loss) | (391.1 | ) | 84.7 | ||||
Less net earnings attributable to noncontrolling interests | 54.1 | 53.8 | |||||
Net earnings (loss) attributable to Envision Healthcare Corporation stockholders | (445.2 | ) | 30.9 | ||||
Preferred stock dividends | (2.3 | ) | (2.3 | ) | |||
Net earnings (loss) attributable to Envision Healthcare Corporation common stockholders | $ | (447.5 | ) | $ | 28.6 | ||
Amounts attributable to Envision Healthcare Corporation common stockholders: | |||||||
Earnings from continuing operations, net of income tax | $ | 30.7 | $ | 28.6 | |||
Loss from discontinued operations, net of income tax | (478.2 | ) | — | ||||
Net earnings (loss) attributable to Envision Healthcare Corporation common stockholders | $ | (447.5 | ) | $ | 28.6 | ||
Basic earnings (loss) per share attributable to common stockholders: | |||||||
Net earnings from continuing operations | $ | 0.26 | $ | 0.53 | |||
Net earnings (loss) from discontinued operations | (4.10 | ) | — | ||||
Net earnings (loss) | $ | (3.84 | ) | $ | 0.53 | ||
Diluted earnings (loss) per share attributable to common stockholders: | |||||||
Net earnings from continuing operations | $ | 0.26 | $ | 0.53 | |||
Net earnings (loss) from discontinued operations | (4.10 | ) | — | ||||
Net earnings (loss) | $ | (3.84 | ) | $ | 0.53 | ||
Weighted average number of shares and share equivalents outstanding: | |||||||
Basic | 116,563 | 53,665 | |||||
Diluted | 119,475 | 54,001 |
2 |
Item 1. Financial Statements - (continued) |
Envision Healthcare Corporation Consolidated Statements of Comprehensive Income (unaudited) (In millions) | |||||||
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Net earnings (loss) | $ | (391.1 | ) | $ | 84.7 | ||
Other comprehensive income, net of income tax: | |||||||
Unrealized holding gain during the period, net of income tax | 0.9 | — | |||||
Comprehensive income (loss), net of income tax | (390.2 | ) | 84.7 | ||||
Less comprehensive income attributable to noncontrolling interests | 54.1 | 53.8 | |||||
Comprehensive income (loss) attributable to Envision Healthcare Corporation stockholders | $ | (444.3 | ) | $ | 30.9 |
3 |
Item 1. Financial Statements - (continued) |
Envision Healthcare Corporation Consolidated Statements of Changes in Equity (unaudited) (Dollars in millions, shares in thousands) | |||||||||||||||||||||||||||||||||||||
Envision Healthcare Corporation Stockholders | Noncontrolling | ||||||||||||||||||||||||||||||||||||
Accumulated | Noncontrolling | Interests – | |||||||||||||||||||||||||||||||||||
Additional | Other | Interests – | Total | Redeemable | |||||||||||||||||||||||||||||||||
Common Stock | Preferred Stock | Paid-in | Retained | Comprehensive | Non- | Equity | (Temporary | ||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Earnings | Income (Loss) | Redeemable | (Permanent) | Equity) | ||||||||||||||||||||||||||||
Balance at December 31, 2016 | 117,478 | $ | 1.2 | 1,725 | $ | 0.1 | $ | 5,976.3 | $ | 753.7 | $ | (0.2 | ) | $ | 656.8 | $ | 7,387.9 | $ | 182.9 | ||||||||||||||||||
Net earnings (loss) | — | — | — | — | — | (445.2 | ) | — | 18.8 | (426.4 | ) | 35.3 | |||||||||||||||||||||||||
Issuance of restricted stock | 21 | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Stock options exercised | 149 | — | — | — | 1.1 | — | — | — | 1.1 | — | |||||||||||||||||||||||||||
Stock repurchased | (128 | ) | — | — | — | (8.7 | ) | — | — | — | (8.7 | ) | — | ||||||||||||||||||||||||
Share-based compensation | — | — | — | — | 16.1 | — | — | — | 16.1 | — | |||||||||||||||||||||||||||
Dividends paid on preferred stock | — | — | — | — | — | (2.3 | ) | — | — | (2.3 | ) | — | |||||||||||||||||||||||||
Acquisitions and other transactions impacting noncontrolling interests | — | — | — | — | 0.6 | — | — | 13.0 | 13.6 | — | |||||||||||||||||||||||||||
Distributions to noncontrolling interests, net of capital contributions | — | — | — | — | — | — | — | (23.6 | ) | (23.6 | ) | (36.0 | ) | ||||||||||||||||||||||||
Disposals and other transactions impacting noncontrolling interests | — | — | — | — | (2.6 | ) | — | — | (7.6 | ) | (10.2 | ) | 0.4 | ||||||||||||||||||||||||
Unrealized holding gain on investments, net of income tax | — | — | — | — | — | — | 0.9 | — | 0.9 | ||||||||||||||||||||||||||||
Balance at March 31, 2017 | 117,520 | $ | 1.2 | 1,725 | $ | 0.1 | $ | 5,982.8 | $ | 306.2 | $ | 0.7 | $ | 657.4 | $ | 6,948.4 | $ | 182.6 | |||||||||||||||||||
Balance at January 1, 2016 | 54,294 | $ | 1,345.4 | 1,725 | $ | 166.6 | $ | — | $ | 781.4 | $ | — | $ | 471.3 | $ | 2,764.7 | $ | 175.7 | |||||||||||||||||||
Net earnings | — | — | — | — | — | 30.9 | — | 17.5 | 48.4 | 36.4 | |||||||||||||||||||||||||||
Issuance of restricted stock | 567 | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Cancellation of restricted stock | (7 | ) | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Stock options exercised | 13 | 0.3 | — | — | — | — | — | — | 0.3 | — | |||||||||||||||||||||||||||
Stock repurchased | (78 | ) | (5.7 | ) | — | — | — | — | — | — | (5.7 | ) | — | ||||||||||||||||||||||||
Share-based compensation | — | 7.2 | — | — | — | — | — | — | 7.2 | — | |||||||||||||||||||||||||||
Tax benefit related to exercise of share-based awards | — | 3.6 | — | — | — | — | — | — | 3.6 | — | |||||||||||||||||||||||||||
Dividends paid on preferred stock | — | — | — | — | — | (2.3 | ) | — | — | (2.3 | ) | — | |||||||||||||||||||||||||
Acquisitions and other transactions impacting noncontrolling interests | — | 0.5 | — | — | — | — | — | (1.3 | ) | (0.8 | ) | — | |||||||||||||||||||||||||
Distributions to noncontrolling interests, net of capital contributions | — | — | — | — | — | — | — | (18.7 | ) | (18.7 | ) | (37.9 | ) | ||||||||||||||||||||||||
Disposals and other transactions impacting noncontrolling interests | — | (1.4 | ) | — | — | — | — | — | 1.5 | 0.1 | 0.5 | ||||||||||||||||||||||||||
Balance at March 31, 2016 | 54,789 | $ | 1,349.9 | 1,725 | $ | 166.6 | $ | — | $ | 810.0 | $ | — | $ | 470.3 | $ | 2,796.8 | $ | 174.7 |
4 |
Item 1. Financial Statements - (continued) |
Envision Healthcare Corporation Consolidated Statements of Cash Flows (unaudited) (In millions) | |||||||
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities: | |||||||
Net earnings (loss) | $ | (391.1 | ) | $ | 84.7 | ||
Adjustments to reconcile net earnings (loss) to net cash flows provided by operating activities: | |||||||
Depreciation and amortization | 105.5 | 29.0 | |||||
Amortization of deferred loan costs | 4.2 | 2.1 | |||||
Provision for uncollectibles | 1,196.2 | 99.4 | |||||
Net gain on disposals and deconsolidations | (0.3 | ) | — | ||||
Share-based compensation | 16.1 | 7.2 | |||||
Deferred income taxes | 504.2 | 6.6 | |||||
Equity in earnings of unconsolidated affiliates | (5.1 | ) | (6.6 | ) | |||
Impairment charges | 0.3 | — | |||||
Other, net | — | (3.6 | ) | ||||
Increases (decreases) in cash and cash equivalents, net of acquisitions and dispositions: | |||||||
Accounts receivable | (1,243.2 | ) | (114.5 | ) | |||
Supplies inventory | (0.7 | ) | (0.2 | ) | |||
Prepaid and other current assets | 1.9 | (8.4 | ) | ||||
Accounts payable | (8.9 | ) | (6.1 | ) | |||
Accrued expenses and other liabilities | (84.7 | ) | (11.1 | ) | |||
Other, net | 3.7 | 3.2 | |||||
Net cash flows provided by operating activities | 98.1 | 81.7 | |||||
Cash flows from investing activities: | |||||||
Acquisitions and related expenses, net of cash acquired | (73.1 | ) | (3.0 | ) | |||
Acquisition of property and equipment | (40.7 | ) | (15.7 | ) | |||
Purchases of marketable securities | (3.4 | ) | — | ||||
Maturities of marketable securities | 0.5 | 2.2 | |||||
Other, net | 7.1 | (1.5 | ) | ||||
Net cash flows used in investing activities | (109.6 | ) | (18.0 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from long-term borrowings | 3.7 | 16.2 | |||||
Repayment on long-term borrowings | (11.9 | ) | (40.3 | ) | |||
Distributions to noncontrolling interests | (60.5 | ) | (56.8 | ) | |||
Proceeds from issuance of common stock upon exercise of stock options | 1.1 | 0.3 | |||||
Repurchase of common stock | (8.8 | ) | (5.6 | ) | |||
Other, net | (0.7 | ) | 1.6 | ||||
Net cash flows used in financing activities | (77.1 | ) | (84.6 | ) | |||
Net decrease in cash and cash equivalents | (88.6 | ) | (20.9 | ) | |||
Cash and cash equivalents, beginning of period | 331.6 | 106.7 | |||||
Less cash and cash equivalents of held for sale assets, end of period | 17.7 | — | |||||
Cash and cash equivalents, end of period | $ | 225.3 | $ | 85.8 |
5 |
Item 1. Financial Statements - (continued) |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Supplemental cash flow information: | |||||||
Interest payments | $ | 65.3 | $ | 41.3 | |||
Income tax paid, net of refunds | $ | 5.3 | $ | 8.9 |
6 |
Item 1. Financial Statements - (continued) |
• | ASU 2016-08 “Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” |
• | ASU 2016-10 “Identifying Performance Obligations and Licensing” |
• | ASU 2016-12 “Narrow-Scope Improvements and Practical Expedients” |
• | ASU 2016-20 “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers” |
7 |
Item 1. Financial Statements - (continued) |
8 |
Item 1. Financial Statements - (continued) |
9 |
Item 1. Financial Statements - (continued) |
Three Months Ended March 31, | |||||||||||||
2017 | 2016(1) | ||||||||||||
Medicare | $ | 463.3 | 25 | % | $ | 150.9 | 21 | % | |||||
Medicaid | 155.7 | 8 | 33.9 | 5 | |||||||||
Commercial and managed care | 1,205.9 | 64 | 532.1 | 73 | |||||||||
Self-pay | 813.3 | 43 | 65.7 | 9 | |||||||||
Net fee for service revenue | 2,638.2 | 140 | 782.6 | 108 | |||||||||
Contract and other revenue | 217.6 | 12 | 35.7 | 5 | |||||||||
Provision for uncollectibles | (977.2 | ) | (52 | ) | (93.6 | ) | (13 | ) | |||||
Net revenue | $ | 1,878.6 | 100 | % | $ | 724.7 | 100 | % |
(1) | On December 1, 2016, the Company completed the Merger. Accordingly, historical amounts from EHH for periods prior to that date are not included. |
10 |
Item 1. Financial Statements - (continued) |
11 |
Item 1. Financial Statements - (continued) |
12 |
Item 1. Financial Statements - (continued) |
2016 | |||
EHH | |||
Cash and cash equivalents | $ | 165.8 | |
Insurance collateral | 59.9 | ||
Accounts receivable | 1,269.6 | ||
Supplies inventory | 38.7 | ||
Prepaid and other current assets | 115.8 | ||
Property and equipment | 375.8 | ||
Goodwill | 4,520.8 | ||
Intangible assets | 3,120.8 | ||
Other long-term assets | 95.0 | ||
Accounts payable | (63.6 | ) | |
Accrued salaries and benefits | (338.0 | ) | |
Accrued interest | (17.3 | ) | |
Other accrued liabilities | (319.3 | ) | |
Deferred income taxes | (1,041.5 | ) | |
Long term insurance reserves | (291.2 | ) | |
Other long-term liabilities | (62.8 | ) | |
Long-term debt | (3,063.1 | ) | |
Total fair value | 4,565.4 | ||
Less: Fair value attributable to noncontrolling interests | 122.0 | ||
Acquisition date fair value of total consideration transferred | $ | 4,443.4 |
Three Months Ended March 31, 2017 (1) | |||
Accounts receivable | $ | 4.7 | |
Prepaid and other current assets | 0.1 | ||
Property and equipment | 0.1 | ||
Goodwill | 73.1 | ||
Intangible assets | 10.8 | ||
Accounts payable | (0.1 | ) | |
Other accrued liabilities | (0.3 | ) | |
Deferred income taxes | (1.5 | ) | |
Total fair value | 86.9 | ||
Less: Fair value attributable to noncontrolling interests | 13.8 | ||
Acquisition date fair value of total consideration transferred | $ | 73.1 |
(1) | Represents the preliminary allocation of fair value of acquired assets and liabilities associated with these acquisitions at March 31, 2017. |
13 |
Item 1. Financial Statements - (continued) |
Three Months Ended March 31, 2017 | |||
Net revenue | $ | 15.2 | |
Net earnings | $ | 0.8 | |
Less: Net earnings attributable to noncontrolling interests | 0.3 | ||
Net earnings attributable to Envision Healthcare Corporation stockholders | $ | 0.5 |
14 |
Item 1. Financial Statements - (continued) |
March 31, | December 31, | ||||||
2017 | 2016 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 17.7 | $ | 14.7 | |||
Insurance collateral (1) | 1.0 | — | |||||
Accounts receivable, net | 475.8 | 457.2 | |||||
Supplies inventory | 38.5 | 37.8 | |||||
Prepaid and other current assets | 38.1 | 41.4 | |||||
Property and equipment, net | 281.1 | 294.4 | |||||
Investments in unconsolidated affiliates | 2.2 | 2.2 | |||||
Goodwill | 1,223.5 | 1,235.0 | |||||
Intangible assets, net | 923.0 | 929.4 | |||||
Other assets | 25.6 | 27.4 | |||||
Total assets held for sale | $ | 3,026.5 | $ | 3,039.5 | |||
Liabilities | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 0.5 | $ | 0.4 | |||
Accounts payable | 32.7 | 31.4 | |||||
Accrued salaries and benefits | 68.2 | 77.4 | |||||
Accrued interest | — | — | |||||
Other accrued liabilities | 130.4 | 140.2 | |||||
Long-term debt | 1.2 | 1.4 | |||||
Deferred income taxes | 365.2 | 337.0 | |||||
Insurance reserves | 103.6 | 91.6 | |||||
Other long-term liabilities | 36.1 | 38.6 | |||||
Total liabilities held for sale | $ | 737.9 | $ | 718.0 |
(1) | Insurance collateral for claims related to the medical transportation business is held within a captive insurance company. Such balances are available to settle the insurance claims of the medical transportation business but are not recorded into assets held for sale as the captive insurance company is a subsidiary of the Company, not the medical transportation business. |
15 |
Item 1. Financial Statements - (continued) |
Three Months Ended March 31, 2017 | |||
Net revenues | $ | 593.5 | |
Operating expenses: | |||
Salaries and benefits | 337.9 | ||
Supply cost | 13.9 | ||
Insurance expense | 18.7 | ||
Other operating expenses | 152.3 | ||
Transaction and integration costs | 4.3 | ||
Depreciation and amortization | 34.2 | ||
Total operating expenses | 561.3 | ||
Equity in earnings of unconsolidated affiliates | 0.2 | ||
Operating income | 32.4 | ||
Interest expense, net | 22.4 | ||
Earnings before income taxes | $ | 10.0 | |
Results of discontinued operations: | |||
Earnings from discontinued operations | $ | 10.0 | |
Income tax expense of discontinued operations | (488.2 | ) | |
Net loss from discontinued operations | $ | (478.2 | ) |
16 |
Item 1. Financial Statements - (continued) |
March 31, 2017 | |||||||||||||||
Description: | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Assets: | |||||||||||||||
U.S. Treasuries | $ | 0.4 | $ | 1.1 | $ | — | $ | 1.5 | |||||||
Corporate bonds/Fixed income | 23.7 | 7.2 | — | 30.9 | |||||||||||
Corporate equity | 14.8 | 0.1 | — | 14.9 | |||||||||||
Liabilities: | |||||||||||||||
Contingent consideration | — | — | 1.0 | 1.0 |
December 31, 2016 | |||||||||||||||
Description: | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Assets: | |||||||||||||||
U.S. Treasuries | $ | 0.4 | $ | 0.6 | $ | — | $ | 1.0 | |||||||
Corporate bonds/Fixed income | 22.8 | 5.5 | — | 28.3 | |||||||||||
Corporate equity | 14.2 | — | — | 14.2 | |||||||||||
Liabilities: | |||||||||||||||
Contingent consideration | — | — | 1.0 | 1.0 |
March 31, 2017 | December 31, 2016 | ||||||
Available-for-sale securities: | |||||||
U.S. Treasuries | $ | 1.5 | $ | 1.0 | |||
Corporate bonds/Fixed income | 30.9 | 28.3 | |||||
Corporate equity | 14.9 | 14.2 | |||||
Total available-for-sale securities | 47.3 | 43.5 | |||||
Cash deposits and other | 39.0 | 43.5 | |||||
Insurance collateral | $ | 86.3 | $ | 87.0 |
17 |
Item 1. Financial Statements - (continued) |
March 31, 2017 | |||||||||||||||
Gross | Gross | ||||||||||||||
Cost | Unrealized | Unrealized | Fair | ||||||||||||
Basis | Gains | Losses | Value | ||||||||||||
Description: | |||||||||||||||
U.S. Treasuries | $ | 1.5 | $ | — | $ | — | $ | 1.5 | |||||||
Corporate bonds/Fixed income | 30.8 | 0.1 | — | 30.9 | |||||||||||
Corporate equity | 14.3 | 0.7 | (0.1 | ) | 14.9 | ||||||||||
Total available-for-sale securities | $ | 46.6 | $ | 0.8 | $ | (0.1 | ) | $ | 47.3 |
December 31, 2016 | |||||||||||||||
Gross | Gross | ||||||||||||||
Cost | Unrealized | Unrealized | Fair | ||||||||||||
Basis | Gains | Losses | Value | ||||||||||||
Description: | |||||||||||||||
U.S. Treasuries | $ | 1.0 | $ | — | $ | — | $ | 1.0 | |||||||
Corporate bonds/Fixed income | 28.3 | — | — | 28.3 | |||||||||||
Corporate equity | 14.4 | 0.1 | (0.3 | ) | 14.2 | ||||||||||
Total available-for-sale securities | $ | 43.7 | $ | 0.1 | $ | (0.3 | ) | $ | 43.5 |
18 |
Item 1. Financial Statements - (continued) |
19 |
Item 1. Financial Statements - (continued) |
Physician Services | Ambulatory Services | Total | |||||||||
Balance at December 31, 2016 | $ | 5,509.7 | $ | 2,074.3 | $ | 7,584.0 | |||||
Goodwill acquired, including post acquisition adjustments | 63.0 | 30.9 | 93.9 | ||||||||
Goodwill disposed, including impact of deconsolidation transactions | — | (12.2 | ) | (12.2 | ) | ||||||
Balance at March 31, 2017 | $ | 5,572.7 | $ | 2,093.0 | $ | 7,665.7 |
Amortizable Intangible Assets | Estimated Useful Life | Weighted Average Amortization Period | ||
Customer relationships | 17 to 20 years | 18.8 | ||
Capitalized software | 3 to 5 years | 4.4 | ||
Trade names | 1 year | 0.7 | ||
Agreements, contracts and other | 3 to 15 years | 3.8 |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Gross | Gross | ||||||||||||||||||||||
Carrying | Accumulated | Carrying | Accumulated | ||||||||||||||||||||
Amount | Amortization | Net | Amount | Amortization | Net | ||||||||||||||||||
Amortizable intangible assets: | |||||||||||||||||||||||
Customer relationships | $ | 3,247.9 | $ | (195.5 | ) | $ | 3,052.4 | $ | 3,235.0 | $ | (154.6 | ) | $ | 3,080.4 | |||||||||
Capitalized software | 140.9 | (50.1 | ) | 90.8 | 136.5 | (41.8 | ) | 94.7 | |||||||||||||||
Trade names | 25.0 | (8.3 | ) | 16.7 | 25.0 | (2.1 | ) | 22.9 | |||||||||||||||
Agreements, contracts and other | 13.4 | (5.2 | ) | 8.2 | 13.2 | (4.7 | ) | 8.5 | |||||||||||||||
Total amortizable intangible assets | 3,427.2 | (259.1 | ) | 3,168.1 | 3,409.7 | (203.2 | ) | 3,206.5 | |||||||||||||||
Non-amortizable intangible assets: | |||||||||||||||||||||||
Trade name | 460.0 | — | 460.0 | 460.0 | — | 460.0 | |||||||||||||||||
Restrictive covenant arrangements | 8.0 | — | 8.0 | 9.0 | — | 9.0 | |||||||||||||||||
Total non-amortizable intangible assets | 468.0 | — | 468.0 | 469.0 | — | 469.0 | |||||||||||||||||
Total intangible assets | $ | 3,895.2 | $ | (259.1 | ) | $ | 3,636.1 | $ | 3,878.7 | $ | (203.2 | ) | $ | 3,675.5 |
20 |
Item 1. Financial Statements - (continued) |
March 31, | December 31, | ||||||
2017 | 2016 | ||||||
Insurance reserves | $ | 76.6 | $ | 78.2 | |||
Refunds payable | 33.3 | 33.6 | |||||
Deferred revenue | 12.1 | 9.4 | |||||
Other | 133.8 | 132 | |||||
Total other accrued liabilities | $ | 255.8 | $ | 253.2 |
March 31, | December 31, | ||||||
2017 | 2016 | ||||||
ABL Facility | $ | — | $ | — | |||
Term Loan B - 2023 | 3,486.3 | 3,495.0 | |||||
Senior Unsecured Notes due 2022 (5.625%) | 1,100.0 | 1,100.0 | |||||
Senior Unsecured Notes due 2022 (5.125%) | 750.0 | 750.0 | |||||
Senior Unsecured Notes due 2024 (6.25%) | 550.0 | 550.0 | |||||
Other debt due through 2025 | 22.0 | 20.9 | |||||
Capitalized lease arrangements due through 2031 | 31.3 | 31.9 | |||||
5,939.6 | 5,947.8 | ||||||
Less current portion | 46.8 | 46.6 | |||||
Less net deferred financing costs | 106.9 | 111.0 | |||||
Long-term debt | $ | 5,785.9 | $ | 5,790.2 |
21 |
Item 1. Financial Statements - (continued) |
March 31, 2017 | December 31, 2016 | ||||||
Third-party insurance reserves | $ | 90.6 | $ | 92.8 | |||
Estimated losses under self-insured programs | 174.7 | 170.0 | |||||
Incurred but not reported losses | 99.5 | 94.3 | |||||
Total accrued insurance reserves | 364.8 | 357.1 | |||||
Less estimated losses payable within one year | 76.6 | 78.2 | |||||
Total | $ | 288.2 | $ | 278.9 |
Balance at December 31, 2016 | $ | 357.1 | |
Provision related to current period reserves | 18.3 | ||
Payments for prior period reserves | (15.2 | ) | |
Change in third-party insurance reserves | (3.0 | ) | |
Other, net including post-acquisition adjustments | 7.6 | ||
Balance at March 31, 2017 | $ | 364.8 |
22 |
Item 1. Financial Statements - (continued) |
23 |
Item 1. Financial Statements - (continued) |
Weighted | ||||||
Number | Average | |||||
of Shares | Grant Price | |||||
Non-vested awards at December 31, 2016 | 1,240,526 | $ | 63.09 | |||
Shares granted | 571,084 | 66.08 | ||||
Shares vested | (372,945 | ) | 53.66 | |||
Shares forfeited | (2,204 | ) | 67.36 | |||
Non-vested awards at March 31, 2017 | 1,436,461 | 66.72 |
Weighted | ||||||||
Weighted | Average | |||||||
Average | Remaining | |||||||
Number | Exercise | Contractual | ||||||
of Shares | Price | Term (in years) | ||||||
Outstanding at December 31, 2016 | 3,511,114 | $ | 20.81 | 5.1 | ||||
Options exercised with total intrinsic value of $8.0 million | (148,773 | ) | 12.85 | |||||
Options canceled | (12,049 | ) | 47.12 | |||||
Outstanding at March 31, 2017 with an aggregate intrinsic value of $139.1 million | 3,350,292 | $ | 21.07 | 4.9 | ||||
Vested and Exercisable at March 31, 2017 with an aggregate intrinsic value of $138.9 million | 3,013,689 | $ | 15.97 | 4.4 |
Volatility | 31.9% | |
Risk free rate | 0.82% - 1.90% | |
Expected term of options in years | 1.0 - 5.0 | |
Expected dividend yield | 0% |
24 |
Item 1. Financial Statements - (continued) |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Share-based compensation expense from continuing operations | $ | 14.6 | $ | 7.2 | |||
Fair value of shares vested | 28.4 | 17.0 | |||||
Cash received from option exercises | 1.1 | 0.3 | |||||
Tax benefit from exercises of share based awards | 2.9 | 3.6 |
Three Months Ended March 31, | ||||||||||
Earnings | Shares | Per Share | ||||||||
(Numerator) | (Denominator) | Amount | ||||||||
2017: | ||||||||||
Net earnings from continuing operations attributable to Envision Healthcare Corporation common stockholders (basic) | $ | 30.7 | 116,563 | $ | 0.26 | |||||
Effect of dilutive securities, options and non-vested shares | — | 2,912 | ||||||||
Net earnings from continuing operations attributable to Envision Healthcare Corporation common stockholders (diluted) | $ | 30.7 | 119,475 | $ | 0.26 | |||||
Net earnings (loss) from discontinued operations attributable to Envision Healthcare Corporation common stockholders (basic and diluted) | $ | (478.2 | ) | 116,563 | $ | (4.10 | ) | |||
2016: | ||||||||||
Net earnings from continuing operations attributable to Envision Healthcare Corporation common stockholders (basic) | $ | 28.6 | 53,665 | $ | 0.53 | |||||
Effect of dilutive securities, options and non-vested shares | — | 336 | ||||||||
Net earnings attributable to Envision Healthcare Corporation common stockholders (diluted) | $ | 28.6 | 54,001 | $ | 0.53 |
25 |
Item 1. Financial Statements - (continued) |
26 |
Item 1. Financial Statements - (continued) |
27 |
Item 1. Financial Statements - (continued) |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Net Revenue: | |||||||
Physician Services(1) | $ | 1,562.7 | $ | 417.6 | |||
Ambulatory Services | 315.9 | 307.1 | |||||
Total | $ | 1,878.6 | $ | 724.7 | |||
Adjusted EBITDA: | |||||||
Physician Services(1) (2) | $ | 150.1 | $ | 66.5 | |||
Ambulatory Services(2) | 60.2 | 53.6 | |||||
Total | $ | 210.3 | $ | 120.1 | |||
Adjusted EBITDA: | $ | 210.3 | $ | 120.1 | |||
Net earnings attributable to noncontrolling interests | 54.1 | 53.8 | |||||
Interest expense, net | (52.4 | ) | (30.8 | ) | |||
Depreciation and amortization | (71.3 | ) | (29.0 | ) | |||
Share-based compensation | (14.6 | ) | (7.2 | ) | |||
Transaction and integration costs | (21.5 | ) | (1.4 | ) | |||
Impairment charges | (0.3 | ) | — | ||||
Net gain on disposals and deconsolidations | 0.3 | — | |||||
Earnings before income taxes | $ | 104.6 | $ | 105.5 | |||
Acquisition and Capital Expenditures: | |||||||
Physician Services (1) | $ | 66.0 | $ | 10.3 | |||
Ambulatory Services | 27.8 | 8.4 | |||||
Total | $ | 93.8 | $ | 18.7 |
(1) | On December 1, 2016, the Company completed the Merger. Accordingly, historical amounts from EHH for periods prior to that date are not included. |
(2) | For the three months ended March 31, 2017 and on a before tax basis, approximately $14.5 million of general corporate expenses, including allocations for corporate salaries and stock based compensation, general and administrative costs and depreciation, were removed from the medical transportation business and reallocated to the Company's remaining segments. This removal of corporate expenses resulted in a reduction of Adjusted EBITDA in the physician services and ambulatory services segments of $6.9 million and $2.0 million, respectively. |
28 |
Item 1. Financial Statements - (continued) |
Condensed Consolidating Balance Sheet - March 31, 2017 (In millions) | |||||||||||||||||||
Parent Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Total Consolidated | |||||||||||||||
Assets | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 52.1 | $ | 15.0 | $ | 158.2 | $ | — | $ | 225.3 | |||||||||
Insurance collateral | — | — | 86.3 | — | 86.3 | ||||||||||||||
Accounts receivable, net | — | 271.6 | 1,056.5 | — | 1,328.1 | ||||||||||||||
Supplies inventory | — | — | 22.9 | — | 22.9 | ||||||||||||||
Prepaid and other current assets | 17.1 | 57.3 | 64.8 | (3.1 | ) | 136.1 | |||||||||||||
Current assets held for sale | — | 3,026.5 | — | — | 3,026.5 | ||||||||||||||
Total current assets | 69.2 | 3,370.4 | 1,388.7 | (3.1 | ) | 4,825.2 | |||||||||||||
Property and equipment, net | 11.7 | 94.7 | 192.9 | — | 299.3 | ||||||||||||||
Investments in and advances to affiliates | 11,356.3 | 1,070.1 | — | (12,295.0 | ) | 131.4 | |||||||||||||
Intercompany receivable | 2,323.1 | 143.5 | — | (2,466.6 | ) | — | |||||||||||||
Goodwill | — | 1,603.7 | — | 6,062.0 | 7,665.7 | ||||||||||||||
Intangible assets, net | 11.5 | 1,259.1 | 2,365.5 | — | 3,636.1 | ||||||||||||||
Other assets | 37.2 | 38.0 | 58.5 | — | 133.7 | ||||||||||||||
Total assets | $ | 13,809.0 | $ | 7,579.5 | $ | 4,005.6 | $ | (8,702.7 | ) | $ | 16,691.4 | ||||||||
Liabilities and Equity | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Current portion of long-term debt | $ | 35.0 | $ | 0.5 | $ | 11.3 | $ | — | $ | 46.8 | |||||||||
Accounts payable | 1.6 | 23.6 | 29.7 | — | 54.9 | ||||||||||||||
Accrued salaries and benefits | 4.7 | 127.8 | 284.1 | — | 416.6 | ||||||||||||||
Accrued interest | 34.5 | — | — | — | 34.5 | ||||||||||||||
Other accrued liabilities | 6.0 | 154.0 | 98.9 | (3.1 | ) | 255.8 | |||||||||||||
Current liabilities held for sale | — | 737.9 | — | — | 737.9 | ||||||||||||||
Total current liabilities | 81.8 | 1,043.8 | 424.0 | (3.1 | ) | 1,546.5 | |||||||||||||
Long-term debt | 5,744.4 | 0.3 | 41.2 | — | 5,785.9 | ||||||||||||||
Deferred income taxes | 1,655.9 | — | 165.9 | — | 1,821.8 | ||||||||||||||
Insurance reserves | 4.0 | 159.2 | 125.0 | — | 288.2 | ||||||||||||||
Other long-term liabilities | 31.9 | 53.9 | 32.2 | — | 118.0 | ||||||||||||||
Intercompany payable | — | 2,034.4 | 432.2 | (2,466.6 | ) | — | |||||||||||||
Noncontrolling interests – redeemable | — | — | 62.3 | 120.3 | 182.6 | ||||||||||||||
Equity: | |||||||||||||||||||
Total Envision Healthcare Corporation equity | 6,291.0 | 4,287.9 | 2,579.9 | (6,867.8 | ) | 6,291.0 | |||||||||||||
Noncontrolling interests – non-redeemable | — | — | 142.9 | 514.5 | 657.4 | ||||||||||||||
Total equity | 6,291.0 | 4,287.9 | 2,722.8 | (6,353.3 | ) | 6,948.4 | |||||||||||||
Total liabilities and equity | $ | 13,809.0 | $ | 7,579.5 | $ | 4,005.6 | $ | (8,702.7 | ) | $ | 16,691.4 |
29 |
Item 1. Financial Statements - (continued) |
Condensed Consolidating Balance Sheet - December 31, 2016 (In millions) | |||||||||||||||||||
Parent Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Total Consolidated | |||||||||||||||
Assets | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 41.6 | $ | 45.0 | $ | 230.3 | $ | — | $ | 316.9 | |||||||||
Insurance collateral | — | 0.8 | 86.2 | — | 87.0 | ||||||||||||||
Accounts receivable, net | — | 282.2 | 1,015.6 | — | 1,297.8 | ||||||||||||||
Supplies inventory | — | — | 23.4 | — | 23.4 | ||||||||||||||
Prepaid and other current assets | 21.2 | 58.3 | 56.6 | (1.0 | ) | 135.1 | |||||||||||||
Current assets held for sale | — | 551.1 | — | — | 551.1 | ||||||||||||||
Total current assets | 62.8 | 937.4 | 1,412.1 | (1.0 | ) | 2,411.3 | |||||||||||||
Property and equipment, net | 11.6 | 96.5 | 192.7 | — | 300.8 | ||||||||||||||
Investments in and advances to affiliates | 11,289.9 | 2,250.9 | — | (13,426.1 | ) | 114.7 | |||||||||||||
Intercompany receivable | 2,324.9 | 291.2 | — | (2,616.1 | ) | — | |||||||||||||
Goodwill | — | 1,580.6 | — | 6,003.4 | 7,584.0 | ||||||||||||||
Intangible assets, net | 12.8 | 1,276.4 | 2,386.3 | — | 3,675.5 | ||||||||||||||
Other assets | 31.3 | 54.2 | 59.4 | (10.7 | ) | 134.2 | |||||||||||||
Noncurrent assets held for sale | — | 2,488.4 | — | — | 2,488.4 | ||||||||||||||
Total assets | $ | 13,733.3 | $ | 8,975.6 | $ | 4,050.5 | $ | (10,050.5 | ) | $ | 16,708.9 | ||||||||
Liabilities and Equity | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Current portion of long-term debt | $ | 35.0 | $ | 0.6 | $ | 11.0 | $ | — | $ | 46.6 | |||||||||
Accounts payable | 5.0 | 34.1 | 30.8 | — | 69.9 | ||||||||||||||
Accrued salaries and benefits | 13.4 | 186.1 | 284.3 | — | 483.8 | ||||||||||||||
Accrued interest | 51.4 | — | — | — | 51.4 | ||||||||||||||
Other accrued liabilities | 3.9 | 147.4 | 102.9 | (1.0 | ) | 253.2 | |||||||||||||
Current liabilities held for sale | — | 249.4 | — | — | 249.4 | ||||||||||||||
Total current liabilities | 108.7 | 617.6 | 429.0 | (1.0 | ) | 1,154.3 | |||||||||||||
Long-term debt | 5,749.0 | 0.3 | 40.9 | — | 5,790.2 | ||||||||||||||
Deferred income taxes | 1,109.9 | — | 233.8 | — | 1,343.7 | ||||||||||||||
Insurance reserves | 4.2 | 127.6 | 147.1 | — | 278.9 | ||||||||||||||
Other long-term liabilities | 30.4 | 33.1 | 38.9 | — | 102.4 | ||||||||||||||
Noncurrent liabilities held for sale | — | 468.6 | — | — | 468.6 | ||||||||||||||
Intercompany payable | — | 2,290.1 | 326.0 | (2,616.1 | ) | — | |||||||||||||
Noncontrolling interests – redeemable | — | — | 70.5 | 112.4 | 182.9 | ||||||||||||||
Equity: | |||||||||||||||||||
Total Envision Healthcare Corporation equity | 6,731.1 | 5,438.3 | 2,558.9 | (7,997.2 | ) | 6,731.1 | |||||||||||||
Noncontrolling interests – non-redeemable | — | — | 205.4 | 451.4 | 656.8 | ||||||||||||||
Total equity | 6,731.1 | 5,438.3 | 2,764.3 | (7,545.8 | ) | 7,387.9 | |||||||||||||
Total liabilities and equity | $ | 13,733.3 | $ | 8,975.6 | $ | 4,050.5 | $ | (10,050.5 | ) | $ | 16,708.9 |
30 |
Item 1. Financial Statements - (continued) |
Condensed Consolidating Statement of Operations - For the Three Months Ended March 31, 2017 (In millions) | |||||||||||||||||||
Parent Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Total Consolidated | |||||||||||||||
Net revenue | $ | 8.2 | $ | 440.1 | $ | 1,468.7 | $ | (38.4 | ) | $ | 1,878.6 | ||||||||
Operating expenses: | |||||||||||||||||||
Salaries and benefits | 22.7 | 398.2 | 927.4 | (0.2 | ) | 1,348.1 | |||||||||||||
Supply cost | — | 1.1 | 52.9 | — | 54.0 | ||||||||||||||
Insurance expense | 0.5 | 15.8 | 55.7 | (23.2 | ) | 48.8 | |||||||||||||
Other operating expenses | 6.7 | 35.2 | 157.0 | (15.0 | ) | 183.9 | |||||||||||||
Transaction and integration costs | 2.3 | 18.7 | 0.5 | — | 21.5 | ||||||||||||||
Impairment charges | — | 0.3 | — | — | 0.3 | ||||||||||||||
Depreciation and amortization | 1.5 | 54.3 | 15.5 | — | 71.3 | ||||||||||||||
Total operating expenses | 33.7 | 523.6 | 1,209.0 | (38.4 | ) | 1,727.9 | |||||||||||||
Net gain (loss) on disposals and deconsolidations | — | 1.8 | (1.5 | ) | — | 0.3 | |||||||||||||
Equity in earnings of unconsolidated affiliates | (399.3 | ) | 163.7 | — | 240.5 | 4.9 | |||||||||||||
Operating income | (424.8 | ) | 82.0 | 258.2 | 240.5 | 155.9 | |||||||||||||
Interest expense, net | 9.0 | 33.0 | 10.4 | — | 52.4 | ||||||||||||||
Other income, net | 1.0 | — | 0.1 | — | 1.1 | ||||||||||||||
Earnings before income taxes | (432.8 | ) | 49.0 | 247.9 | 240.5 | 104.6 | |||||||||||||
Income tax expense (benefit) | 12.4 | (29.9 | ) | 35.0 | — | 17.5 | |||||||||||||
Net earnings (loss) from continuing operations | (445.2 | ) | 78.9 | 212.9 | 240.5 | 87.1 | |||||||||||||
Net loss from discontinued operations | — | (478.2 | ) | — | — | (478.2 | ) | ||||||||||||
Net earnings (loss) | (445.2 | ) | (399.3 | ) | 212.9 | 240.5 | (391.1 | ) | |||||||||||
Less net earnings attributable to noncontrolling interests | — | — | 54.1 | — | 54.1 | ||||||||||||||
Net earnings (loss) attributable to Envision Healthcare Corporation stockholders | (445.2 | ) | (399.3 | ) | 158.8 | 240.5 | (445.2 | ) | |||||||||||
Preferred stock dividends | (2.3 | ) | — | — | — | (2.3 | ) | ||||||||||||
Net earnings (loss) attributable to Envision Healthcare Corporation common stockholders | $ | (447.5 | ) | $ | (399.3 | ) | $ | 158.8 | $ | 240.5 | $ | (447.5 | ) |
31 |
Item 1. Financial Statements - (continued) |
Condensed Consolidating Statement of Operations - For the Three Months Ended March 31, 2016 (In millions) | |||||||||||||||||||
Parent Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Total Consolidated | |||||||||||||||
Net revenue | $ | 8.5 | $ | 251.7 | $ | 477.5 | $ | (13.0 | ) | $ | 724.7 | ||||||||
Operating expenses: | |||||||||||||||||||
Salaries and benefits | 24.0 | 198.4 | 189.2 | (0.1 | ) | 411.5 | |||||||||||||
Supply cost | — | 0.8 | 46.2 | — | 47.0 | ||||||||||||||
Insurance expense | 0.2 | 9.9 | 7.6 | — | 17.7 | ||||||||||||||
Other operating expenses | 7.3 | 8.7 | 85.3 | (12.9 | ) | 88.4 | |||||||||||||
Transaction and integration costs | 0.2 | 1.2 | — | — | 1.4 | ||||||||||||||
Depreciation and amortization | 1.1 | 18.7 | 9.2 | — | 29.0 | ||||||||||||||
Total operating expenses | 32.8 | 237.7 | 337.5 | (13.0 | ) | 595.0 | |||||||||||||
Equity in earnings of unconsolidated affiliates | 69.0 | 85.8 | — | (148.2 | ) | 6.6 | |||||||||||||
Operating income | 44.7 | 99.8 | 140.0 | (148.2 | ) | 136.3 | |||||||||||||
Interest expense (income), net | (2.8 | ) | 27.0 | 6.6 | — | 30.8 | |||||||||||||
Earnings before income taxes | 47.5 | 72.8 | 133.4 | (148.2 | ) | 105.5 | |||||||||||||
Income tax expense | 16.6 | 3.8 | 0.4 | — | 20.8 | ||||||||||||||
Net earnings from continuing operations | 30.9 | 69.0 | 133.0 | (148.2 | ) | 84.7 | |||||||||||||
Less net earnings attributable to noncontrolling interests | — | — | 53.8 | — | 53.8 | ||||||||||||||
Net earnings (loss) attributable to Envision Healthcare Corporation stockholders | 30.9 | 69.0 | 79.2 | (148.2 | ) | 30.9 | |||||||||||||
Preferred stock dividends | (2.3 | ) | — | — | — | (2.3 | ) | ||||||||||||
Net earnings attributable to Envision Healthcare Corporation common stockholders | $ | 28.6 | $ | 69.0 | $ | 79.2 | $ | (148.2 | ) | $ | 28.6 |
32 |
Item 1. Financial Statements - (continued) |
Condensed Consolidating Statement of Cash Flows - For the Three Months Ended March 31, 2017 (In millions) | |||||||||||||||||||
Parent Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Total Consolidated | |||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Net cash flows provided by operating activities | $ | 26.8 | $ | 123.2 | $ | 95.5 | $ | (147.4 | ) | $ | 98.1 | ||||||||
Cash flows from investing activities: | |||||||||||||||||||
Acquisitions and related expenses | — | (73.3 | ) | — | 0.2 | (73.1 | ) | ||||||||||||
Acquisition of property and equipment | (0.2 | ) | (27.7 | ) | (12.8 | ) | — | (40.7 | ) | ||||||||||
Purchases of marketable securities | — | — | (3.4 | ) | — | (3.4 | ) | ||||||||||||
Maturities of marketable securities | — | — | 0.5 | — | 0.5 | ||||||||||||||
Other, net | — | 11.7 | (4.6 | ) | — | 7.1 | |||||||||||||
Net cash flows used in investing activities | (0.2 | ) | (89.3 | ) | (20.3 | ) | 0.2 | (109.6 | ) | ||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Proceeds from long-term borrowings | — | — | 3.7 | — | 3.7 | ||||||||||||||
Repayment on long-term borrowings | (8.7 | ) | (0.3 | ) | (2.9 | ) | — | (11.9 | ) | ||||||||||
Distributions to owners, including noncontrolling interests | — | (77.3 | ) | (130.6 | ) | 147.4 | (60.5 | ) | |||||||||||
Changes in intercompany balances with affiliates, net | 1.8 | 19.0 | (20.8 | ) | — | — | |||||||||||||
Other, net | (9.2 | ) | (2.3 | ) | 3.3 | (0.2 | ) | (8.4 | ) | ||||||||||
Net cash flows used in financing activities | (16.1 | ) | (60.9 | ) | (147.3 | ) | 147.2 | (77.1 | ) | ||||||||||
Net increase (decrease) in cash and cash equivalents | 10.5 | (27.0 | ) | (72.1 | ) | — | (88.6 | ) | |||||||||||
Cash and cash equivalents, beginning of period | 41.6 | 59.7 | 230.3 | — | 331.6 | ||||||||||||||
Less cash and cash equivalents of held for sale assets, end of period | — | 17.7 | — | — | 17.7 | ||||||||||||||
Cash and cash equivalents, end of period | $ | 52.1 | $ | 15.0 | $ | 158.2 | $ | — | $ | 225.3 |
Condensed Consolidating Statement of Cash Flows - For the Three Months Ended March 31, 2016 (In millions) | |||||||||||||||||||
Parent Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Adjustments | Total Consolidated | |||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Net cash flows provided by operating activities | $ | 18.1 | $ | 32.4 | $ | 162.9 | $ | (131.7 | ) | $ | 81.7 | ||||||||
Cash flows from investing activities: | |||||||||||||||||||
Acquisitions and related expenses | — | (3.0 | ) | — | — | (3.0 | ) | ||||||||||||
Acquisition of property and equipment | (1.5 | ) | (7.3 | ) | (6.9 | ) | — | (15.7 | ) | ||||||||||
Maturities of marketable securities | — | — | 2.2 | — | 2.2 | ||||||||||||||
Other, net | — | (0.9 | ) | (0.6 | ) | — | (1.5 | ) | |||||||||||
Net cash flows used in investing activities | (1.5 | ) | (11.2 | ) | (5.3 | ) | — | (18.0 | ) | ||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Proceeds from long-term borrowings | 15.0 | — | 1.2 | — | 16.2 | ||||||||||||||
Repayment on long-term borrowings | (37.2 | ) | — | (3.1 | ) | — | (40.3 | ) | |||||||||||
Distributions to owners, including noncontrolling interests | — | (68.5 | ) | (120.0 | ) | 131.7 | (56.8 | ) | |||||||||||
Changes in intercompany balances with affiliates, net | (0.9 | ) | 40.4 | (39.5 | ) | — | — | ||||||||||||
Other, net | (4.5 | ) | — | 0.8 | — | (3.7 | ) | ||||||||||||
Net cash flows used in financing activities | (27.6 | ) | (28.1 | ) | (160.6 | ) | 131.7 | (84.6 | ) | ||||||||||
Net decrease in cash and cash equivalents | (11.0 | ) | (6.9 | ) | (3.0 | ) | — | (20.9 | ) | ||||||||||
Cash and cash equivalents, beginning of period | 20.4 | 24.4 | 61.9 | — | 106.7 | ||||||||||||||
Cash and cash equivalents, end of period | $ | 9.4 | $ | 17.5 | $ | 58.9 | $ | — | $ | 85.8 |
33 |
34 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued) |
35 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued) |
36 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued) |
37 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued) |
Three Months Ended March 31, | |||||
2017 | 2016 | ||||
Net revenue | 100.0 | % | 100.0 | % | |
Operating expenses: | |||||
Salaries and benefits | 71.8 | 56.8 | |||
Supply cost | 2.9 | 6.5 | |||
Insurance expense | 2.6 | 2.4 | |||
Other operating expenses | 9.8 | 12.2 | |||
Transaction and integration costs | 1.1 | 0.2 | |||
Impairment charges | — | — | |||
Depreciation and amortization | 3.8 | 4.0 | |||
Total operating expenses | 92.0 | 82.1 | |||
Net gain on disposals and deconsolidations | — | — | |||
Equity in earnings of unconsolidated affiliates | 0.3 | 0.9 | |||
Operating income | 8.3 | 18.8 | |||
Interest expense, net | 2.8 | 4.3 | |||
Other income, net | 0.1 | — | |||
Earnings from operations before income taxes | 5.6 | 14.6 | |||
Income tax expense | 0.9 | 2.9 | |||
Net earnings from continuing operations | 4.6 | 11.7 | |||
Discontinued operations: | |||||
Earnings from discontinued operations | 0.5 | — | |||
Income tax expense from discontinued operations | (26.0 | ) | — | ||
Net loss from discontinued operations | (25.5 | ) | — | ||
Net earnings (loss) | (20.8 | ) | 11.7 | ||
Net earnings attributable to noncontrolling interests | 2.9 | 7.4 | |||
Net earnings (loss) attributable to Envision Healthcare Corporation stockholders | (23.7 | )% | 4.3 | % |
• | an increase of $1.145 billion during the three months ended March 31, 2017 associated with our physician services segment, driven primarily by a full period of results from the Merger in the current period. Additionally contributing to the increase were the results of acquisitions completed during 2016 and 2017, increases in our same-contract growth and the consolidation of a partnership during 2016 previously accounted for as an equity method investment; and |
• | an increase of $8.8 million during the three months ended March 31, 2017 associated with our ambulatory services segment driven primarily by the results of acquisitions completed during 2016 and 2017 and increases in our same-center growth. |
• | an increase of $10.3 million during the three months ended March 31, 2017 associated with results from our physician services segment primarily due to the Merger and completed acquisitions during 2017 and 2016; and |
• | an increase of $9.3 million during the three months ended March 31, 2017 experienced by our ambulatory services segment |
38 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued) |
Three Months Ended March 31, 2017 | ||
Contribution to Net Revenue Growth: | ||
Same contract | 3.3 | % |
New contracts | 6.3 | |
Terminated contracts | (10.1 | ) |
Acquired contract and other | 9.7 | |
Total net revenue growth | 9.2 | % |
Patient encounters per day (day adjusted) | 2.3 | % |
Net revenue per encounter | 2.7 | |
Same contract revenue growth | 5.0 | % |
39 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued) |
Percentage of Net Revenue | Percentage of Total Volume | ||||||||||
Three Months Ended March 31, | Three Months Ended March 31, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Medicare | 20 | % | 13 | % | 33 | % | 34 | % | |||
Medicaid | 8 | 6 | 24 | 22 | |||||||
Commercial and managed care | 56 | 71 | 29 | 35 | |||||||
Self-pay | 2 | 1 | 14 | 9 | |||||||
Net fee for service revenue | 86 | % | 91 | % | 100 | % | 100 | % | |||
Contract and other revenue | 14 | 9 | |||||||||
Net revenue for physician services | 100 | % | 100 | % |
Three Months Ended March 31, | |||||||||||||
2017 | 2016 | ||||||||||||
Net revenue | $ | 1,562.7 | 100.0 | % | $ | 417.6 | 100.0 | % | |||||
Operating expenses: | |||||||||||||
Salaries and benefits | 1,248.6 | 79.9 | 312.6 | 74.9 | |||||||||
Supply cost | 5.8 | 0.4 | 1.0 | 0.2 | |||||||||
Insurance expense | 46.9 | 3.0 | 16.2 | 3.9 | |||||||||
Other operating expenses | 120.1 | 7.7 | 26.6 | 6.4 | |||||||||
Transaction and integration costs | 19.2 | 1.2 | 1.2 | 0.3 | |||||||||
Impairment charges | 0.3 | — | — | — | |||||||||
Depreciation and amortization | 61.6 | 3.9 | 20.3 | 4.9 | |||||||||
Total operating expenses | 1,502.5 | 96.1 | 377.9 | 90.5 | |||||||||
Net loss on disposals and deconsolidations | (7.1 | ) | (0.5 | ) | — | — | |||||||
Equity in earnings (loss) of unconsolidated affiliates | (0.3 | ) | — | 2.8 | 0.7 | ||||||||
Operating income | $ | 52.8 | 3.4 | % | $ | 42.5 | 10.2 | % |
40 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued) |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Procedures performed during the period at consolidated surgery centers | 420,487 | 416,584 | |||||
Surgery centers in operation, end of period (consolidated) | 238 | 235 | |||||
Surgery centers in operation, end of period (unconsolidated) | 26 | 21 | |||||
Average number of continuing surgery centers in operation (consolidated) | 239 | 236 | |||||
New surgery centers added, during period | 4 | — | |||||
Surgery centers merged into existing centers, during period | — | 1 | |||||
Surgery centers under development, end of period | — | 1 | |||||
Surgery centers under letter of intent, end of period | 2 | 6 | |||||
Average revenue per consolidated surgery center (in millions) | $ | 1,324 | $ | 1,303 | |||
Same-center revenues increase, day adjusted (consolidated) | 1.4 | % | 7.1 | % | |||
Surgical hospitals in operation at end of period (unconsolidated) | 1 | 1 |
41 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued) |
Three Months Ended March 31, | |||||||||||||
2017 | 2016 | ||||||||||||
Net revenue | $ | 315.9 | 100.0 | % | $ | 307.1 | 100.0 | % | |||||
Operating expenses: | |||||||||||||
Salaries and benefits | 99.5 | 31.5 | 98.9 | 32.2 | |||||||||
Supply cost | 48.2 | 15.3 | 46.0 | 15.0 | |||||||||
Insurance expense | 1.9 | 0.6 | 1.5 | 0.5 | |||||||||
Other operating expenses | 63.8 | 20.2 | 61.8 | 20.1 | |||||||||
Transaction and integration costs | 2.3 | 0.7 | 0.2 | 0.1 | |||||||||
Depreciation and amortization | 9.7 | 3.1 | 8.7 | 2.8 | |||||||||
Total operating expenses | 225.4 | 71.4 | 217.1 | 70.7 | |||||||||
Net gain on disposals and deconsolidations | 7.4 | 2.3 | — | — | |||||||||
Equity in earnings of unconsolidated affiliates | 5.2 | 1.6 | 3.8 | 1.2 | |||||||||
Operating income | $ | 103.1 | 32.6 | % | $ | 93.8 | 30.5 | % |
• | revenue growth of $4.2 million, or 1.4%, for the three months ended March 31, 2017 recognized by our 2017 same-center group; |
• | centers acquired in 2016, which contributed $7.9 million of additional revenues in the three months ended March 31, 2017 due to having a full period of operations in 2017; |
• | centers acquired in 2017, which contributed $1.1 million of additional revenues in the three months ended March 31, 2017; |
• | reduced revenue recognized during the three months ended March 31, 2017 of $1.9 million resulting from the deconsolidation of centers that were consolidated in prior periods. The deconsolidated centers represented a reduction of 4,535 procedures reported during the three months ended March 31, 2016. Our share of the results of operations from the deconsolidated centers is reflected in equity in earnings of unconsolidated affiliates in our consolidated statements of operations; and |
• | reduced revenue recognized during the three months ended March 31, 2017 of $2.3 million resulting from the disposal of centers that had a full period of operations during the three months ended March 31, 2016. |
• | an increase of $2.4 million in other operating expenses at our 2017 same-center group; |
• | centers acquired or opened during 2016, which resulted in an increase of $1.5 million; |
• | centers acquired during 2017, which resulted in an increase of $0.3 million; |
42 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued) |
• | deconsolidation of centers in the current and prior periods, which resulted in a decrease of $0.4 million; and |
• | disposal of centers in the current and prior periods, which resulted in a decrease of $1.0 million. |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Net cash provided by (used in): | |||||||
Operating activities | $ | 98.1 | $ | 81.7 | |||
Investing activities | (109.6 | ) | (18.0 | ) | |||
Financing activities | (77.1 | ) | (84.6 | ) |
• | increased operating cash flows as a result of the Merger; |
• | the payment of transaction and integration costs related to the Merger of $26.3 million; and |
• | the timing of payments on accounts payable and certain accrued expenses, including incentive compensation based upon achieving certain performance goals for the year ended December 31, 2016. In accordance with most of our incentive plans, payments are typically made in the first six months of each fiscal year. |
43 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued) |
• | $55.4 million for the acquisition of physician practices; |
• | $17.7 million for the acquisition of interests in surgery centers; and |
• | $40.7 million for new or replacement property. |
44 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued) |
45 |
46 |
Issuer Purchases of Equity Securities | ||||||||||||||
(d) Maximum Number | ||||||||||||||
(a) Total | (c) Total Number of | (or Approximate Dollar | ||||||||||||
Number of | (b) Average | Shares (or Units) | Value) of Shares (or | |||||||||||
Shares | Price Paid | Purchased as Part of | Units) That May Yet | |||||||||||
(or Units) | per Share | Publicly Announced | Be Purchased Under | |||||||||||
Period | Purchased (1) | (or Unit) | Plans or Programs | the Plans or Programs | ||||||||||
January 1, 2017 through January 31, 2017 | 48,504 | $ | 67.55 | — | $ | — | ||||||||
February 1, 2017 through February 28, 2017 | 77,813 | 69.31 | — | — | ||||||||||
March 1, 2017 through March 31, 2017 | 1,869 | 61.32 | — | — | ||||||||||
Total | 128,186 | $ | 68.53 | — | $ | — |
(1) | During the three months ended March 31, 2017, we repurchased 128,186 shares with a value of approximately $8.8 million to cover payroll withholding taxes in connection with the vesting of restricted stock awards under the Envision Healthcare Corporation 2014 Equity and Incentive Plan. |
47 |
Exhibit | Description | |
10.1* | ||
10.2* | ||
10.3* | ||
10.4* | ||
101 | Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets at March 31, 2017 and December 31, 2016, (ii) the Consolidated Statements of Operations for the three month periods ended March 31, 2017 and 2016, (iii) the Consolidated Statements of Comprehensive Income for the three month periods ended March 31, 2017 and 2016,(iv) the Consolidated Statements of Changes in Equity for the three month periods ended March 31, 2017 and 2016, (v) the Consolidated Statements of Cash Flows for the three month periods ended March 31, 2017 and 2016 and (vi) the notes to the Unaudited Consolidated Financial Statements for the three month periods ended March 31, 2017 and 2016 |
48 |
ENVISION HEALTHCARE CORPORATION | ||||
Date: | May 5, 2017 | |||
By: | /s/ Claire M. Gulmi | |||
Claire M. Gulmi | ||||
Executive Vice President and | ||||
Chief Financial Officer | ||||
(Principal Financial and Duly Authorized Officer) | ||||
49 |
1. | I have reviewed this quarterly report on Form 10-Q of Envision Healthcare Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer 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 registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
By: | /s/ Christopher A. Holden | |
Name: | Christopher A. Holden | |
Title: | President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Envision Healthcare Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer 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 registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
By: | /s/ Claire M. Gulmi | |
Name: | Claire M. Gulmi | |
Title: | Executive Vice President and | |
Chief Financial Officer |
(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. |
/s/ Christopher A. Holden | ||
Christopher A. Holden | ||
President and Chief Executive | ||
Officer of the Company | ||
May 5, 2017 |
/s/ Claire M. Gulmi | ||
Claire M. Gulmi | ||
Executive Vice President and | ||
Chief Financial Officer of the Company | ||
May 5, 2017 |
Document And Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
May 01, 2017 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Envision Healthcare Corp | |
Entity Central Index Key | 0001678531 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 117,531,082 |
Consolidated Balance Sheets (unaudited) (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowances for accounts receivable | $ 1,427.8 | $ 584.0 |
Deferred financing costs, net | $ 106.9 | $ 111.0 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, shares issued (in shares) | 1,725,000 | 1,725,000 |
Preferred stock, shares outstanding (in shares) | 1,725,000 | 1,725,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 117,520,000 | 117,478,000 |
Common stock, shares outstanding (in shares) | 117,520,000 | 117,478,000 |
Consolidated Statements of Comprehensive Income (unaudited) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||
Net earnings (loss) | $ (391.1) | $ 84.7 |
Other comprehensive income, net of income tax: | ||
Unrealized holding gain during the period, net of income tax | 0.9 | 0.0 |
Comprehensive income (loss), net of income tax | (390.2) | 84.7 |
Less comprehensive income attributable to noncontrolling interests | 54.1 | 53.8 |
Comprehensive income (loss) attributable to Envision Healthcare Corporation stockholders | $ (444.3) | $ 30.9 |
Description of Business and Basis of Presentation |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Description of Business and Basis of Presentation | Description of Business and Basis of Presentation Description of Business Envision Healthcare Corporation (the Company) was formed on June 10, 2016 for the purpose of effecting the merger (the Merger) of AmSurg Corp. (AmSurg) and Envision Healthcare Holdings, Inc. (EHH). Prior to the Merger, the Company did not conduct any activities other than those incidental to its formation and matters in connection with the consummation of the Merger. On December 1, 2016, AmSurg and EHH completed the Merger and the strategic combination of their respective businesses. In connection with the Merger, (i) AmSurg merged with and into the Company, a wholly owned subsidiary of AmSurg, with the Company as the surviving entity and (ii) EHH merged with and into the Company, with the Company as the surviving entity. AmSurg was the accounting acquirer in the Merger; therefore, the historical consolidated financial statements of AmSurg for periods prior to the Merger are considered to be the historical financial statements of the Company. The Company's unaudited consolidated financial statements reflect AmSurg's results for the three months ended March 31, 2016, and the Company’s results as of December 31, 2016 and for the three months ended March 31, 2017. Following the completion of the Merger, the Company had three reportable segments: physician services, medical transportation and ambulatory services. The physician services segment reflects the combination of AmSurg’s physician services segment and EHH’s physician services segment, while the ambulatory services segment reflects AmSurg's ambulatory services segment. On February 28, 2017, the Company announced it would explore strategic alternatives for the medical transportation business. During the three months ended March 31, 2017, the Company's board of directors (the Board) approved a plan to actively market and divest the medical transportation business. Accordingly, the results of the medical transportation business have been recorded in discontinued operations for the three months ended March 31, 2017 and assets held for sale as of March 31, 2017 and December 31, 2016, and medical transportation is no longer a separate reportable segment. Basis of Presentation These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial reporting and in accordance with Rule 10-01 of Regulation S-X. In the opinion of management, the unaudited interim consolidated financial statements contained in this report reflect all normal recurring adjustments, which are necessary for a fair presentation of the financial position and the results of operations for the interim periods presented. The results of operations for any interim period are not necessarily indicative of results for the full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016. Restricted Cash and Marketable Securities As of March 31, 2017 and December 31, 2016, the Company held restricted cash and cash equivalents of $39.0 million and $43.5 million, respectively, classified within insurance collateral in the accompanying consolidated balance sheets. The cash was restricted for the purpose of satisfying the obligations of the Company's wholly owned captive insurance companies. Supplemental Cash Flow Data The following presents supplemental cash flow statement disclosure (in millions):
Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications Certain prior year amounts in the accompanying consolidated financial statements and these notes have been reclassified to reflect the impact of discontinued operations as further discussed in Note 5 and also to conform to current year classifications as a result of the Merger. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09 “Revenue from Contracts with Customers,” which will eliminate the transaction and industry-specific revenue recognition guidance under current GAAP and replace it with a principle-based approach using the following steps: identify the contract(s) with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when (or as) the entity satisfies a performance obligation. In August 2015, the FASB issued ASU 2015-14 “Revenue from Contracts with Customers (Topic 606), Deferral of the Effective Date,” which granted a one-year deferral of this ASU. In 2016, the FASB issued the following ASUs to provide entities further clarity on the application of ASU 2014-09:
The guidance in ASU 2014-09 and the subsequently related ASUs will now be effective for public entities for annual reporting periods beginning after December 15, 2017, including interim periods therein. The Company is continuing to assess the method of adoption it expects to utilize. The Company does not believe adoption of the standard will have a material impact on the results of operations or cash flows for the ambulatory services segment. The Company is continuing its evaluation of the impact on the physician services segment to determine the impact, if any, on the results of operations and cash flows. However, the Company does anticipate that, as a result of certain changes by ASU 2014-09 and the subsequently related ASUs, the majority of its provision for uncollectibles will be recognized as a direct reduction to revenues, instead of separately as a deduction to arrive at revenue. In February 2016, the FASB issued ASU No. 2016-02, “Leases,” which amends existing accounting standards for lease accounting, including requiring lessees to recognize most leases on the balance sheet and making changes to lessor accounting. The standard is effective for annual periods beginning after December 15, 2018, with early adoption permitted. The new standard requires a modified retrospective application for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company will adopt the new standard effective January 1, 2019. The Company expects that nearly all leases currently classified as operating leases will be classified as operating leases under the new standard with a right-of-use asset and a corresponding obligation recognized on the balance sheet at the adoption date. The Company has not yet determined the impact this ASU will have on the Company's results of operations or cash flows. In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which will change how companies account for certain aspects of share-based payments to employees by requiring companies to recognize the income tax effects of awards in the income statement when the awards vest or are settled. The standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company adopted this standard effective January 1, 2017 and determined there were no unrecognized tax benefits which required reclassification from additional paid in capital to retained earnings. As a result of the adoption, the Company has recognized approximately $2.9 million of tax benefit associated with the awards that were either exercised or vested during the three months ended March 31, 2017. In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash (A Consensus of the FASB Emerging Issues Task Force),” which requires entities to show the changes in cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. Entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. The standard is effective for annual periods beginning after December 15, 2017, and interim periods within those years and is to be adopted retrospectively. The Company has not yet determined the impact this ASU will have on the Company's cash flows. In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805) - Clarifying the Definition of a Business,” which changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The guidance requires an entity to evaluate if substantially all of the fair value of gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. The guidance is effective for annual periods beginning after December 15, 2017, and interim periods within those years. The Company has not yet determined the impact this ASU will have on the Company's consolidated financial position, results of operations or cash flows. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment,” which eliminates the requirement to calculate the implied fair value of goodwill to measure an impairment charge. Instead, companies will record an impairment charge based on the excess of a reporting unit's carrying amount over its fair value. The standard is effective for annual periods beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has not yet determined the impact this ASU will have on the Company's consolidated financial position, results of operations or cash flows. |
Variable Interest Entitites |
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Variable Interest Entity, Measure of Activity [Abstract] | |
Variable Interest Entities | Variable Interest Entities GAAP requires variable interest entities (VIEs) to be consolidated if an entity’s interest in the VIE is a controlling financial interest. Under the variable interest model, a controlling financial interest is determined based on which entity, if any, has (i) the power to direct the activities of the VIE that most significantly impacts the VIE’s economic performance and (ii) the obligations to absorb the losses that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company performs ongoing reassessments of (i) whether entities previously evaluated under the majority voting-interest framework have become VIEs, based on certain triggering events, and therefore would be subject to the VIE consolidation framework, and (ii) whether changes in the facts and circumstances regarding the Company’s involvement with a VIE cause the Company’s consolidation conclusion to change. The consolidation status of the VIEs with which the Company is involved may change as a result of such reassessments. Changes in consolidation status are applied prospectively with assets and liabilities of a newly consolidated VIE initially recorded at fair value. Physician Services Segment The physician services segment structures its contractual arrangements for services in various ways. In most states, a wholly owned subsidiary contracts with hospitals to provide management services. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries along with the accounts of affiliated professional corporations (PCs) with which the Company has management arrangements. The Company's agreements with these PCs provide that the term of the arrangements is permanent, subject only to termination by the Company, except in the case of gross negligence, fraud or bankruptcy of the Company. The PC structure is necessary in states which prohibit the corporate practice of medicine but this structure is utilized by the Company in the majority of its physician practices regardless of the state the PC operates. The arrangements are captive in nature as a majority of the outstanding voting equity instruments of the PCs are owned by nominee shareholders appointed at the sole discretion of the Company. The nominee shareholder is a medical doctor who is generally a senior corporate employee of the Company. The Company has a contractual right to transfer the ownership of the PCs at any time to any person it designates as the nominee shareholder. The Company has the right to all assets and to receive income, both as ongoing fees and as proceeds from the sale of any interest in the PCs, in an amount that fluctuates based on the performance of the PCs and the change in the fair value of the interest in the PCs. The Company has exclusive responsibility for the provision of all non-medical services required for the day-to-day operation and management of the PCs and establishes the guidelines for the employment and compensation of the physicians and other employees of the PCs, which is consistent with the operation of the Company's wholly owned subsidiaries. Based on the provisions of these agreements, the Company has determined that the PCs are variable interest entities and that the Company is the primary beneficiary as defined in ASC 810 “Consolidations.” The Company has a variable interest in the PCs through the management contracts and the PCs are considered VIEs due to its equity holder lacking the obligation to absorb expected losses or receive expected residual returns. The contractual arrangement to provide management services allows the Company to direct the economic activities considered most significant to the PC. Accordingly, the Company is the primary beneficiary of the PCs and consolidates the PCs under the variable interest model in ASC 810. The physician services segment also has partnerships with health systems that are considered variable interest entities. The Company consolidates the majority of the partnerships with health systems as the Company is the primary beneficiary due to its ability to direct the majority of activities that most significantly impact the economic performance of the partnership which occurs generally through a management services agreement. Therefore, the results of consolidated partnerships are reflected as a component of the accompanying consolidated balance sheets, statements of operations and statements of cash flows. The total assets (excluding goodwill and intangible assets, net) of the consolidated VIEs within the physician services segment, which are included in the accompanying consolidated balance sheets, as of March 31, 2017 and December 31, 2016, were $1.30 billion and $1.31 billion, respectively, and the total liabilities of the consolidated VIEs were $1.08 billion and $1.10 billion, respectively. Included in total assets as of March 31, 2017 and December 31, 2016 were $233.2 million and $215.7 million, respectively, of assets which were restricted as to use due to the Company's ownership percentage in certain of the partnerships with health systems and could only be used to settle the obligations of the VIEs. The creditors of the consolidated VIEs within the physician services segment have no recourse to the Company. Ambulatory Services Segment The Company, through its wholly owned subsidiaries, owns interests, primarily 51%, in limited liability companies (LLCs) and limited partnerships (LPs) which own and operate ambulatory surgery centers (ASCs or surgery centers). The Company has variable interests in the LLCs and LPs through its equity ownership interests. Each LLC and LP is considered a VIE due to its structure as a limited partnership or functional equivalent under ASU No. 2015-02. For those LLCs and LPs which the Company consolidates, the Company is considered the primary beneficiary due to the partnership agreements allowing the Company to govern the day-to-day activities and thereby control the most significant economic activities. The total assets (excluding goodwill and intangible assets, net) of the consolidated VIEs within the ambulatory services segment, which are included in the accompanying consolidated balance sheets, as of March 31, 2017 and December 31, 2016, were $380.5 million and $388.1 million, respectively, and the total liabilities of the consolidated VIEs were $117.7 million and $117.9 million, respectively. Included in total assets as of March 31, 2017 and December 31, 2016, were $182.3 million and $185.5 million of assets, respectively, which were restricted as to use due to the Company's ownership percentage in these entities from the ambulatory services segments and could only be used to settle the obligations of the VIEs. The creditors of the VIEs have no recourse to the Company, with the exception of $16.4 million and $14.7 million of debt guaranteed by the Company at March 31, 2017 and December 31, 2016, respectively. Unconsolidated Variable Interest Entities The Company also has certain equity interests in unconsolidated affiliates which meet the definition of a VIE. The Company has a variable interest in 27 LLCs and LPs through its equity interests; however, the Company is not the primary beneficiary of these entities as it does not have the power to direct the activities that most significantly impact the entities' economic performance as a result of the Company's shared or lack of control. In each of the investments, the Company is not obligated to contribute any additional capital beyond its initial contribution and its maximum exposure to loss is limited to the initial capital contribution. As a result, the Company has accounted for these investments under the equity method of accounting and net earnings or loss from these investments is included in equity in earnings of unconsolidated affiliates in the accompanying consolidated statements of operations. See Note 7 for further information. The Company recognized management and billing fees associated with these investments totaling $1.7 million and $6.3 million during the three months ended March 31, 2017 and 2016, respectively, which are included in net revenue in the accompanying consolidated statements of operations. The Company has also recorded receivables from these entities in the amount of $5.9 million and $6.1 million as of March 31, 2017 and December 31, 2016, respectively. These receivables are included in the other current assets in the accompanying consolidated balance sheets. |
Revenue Recognition and Accounts Receivable |
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Revenue Recognition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition and Accounts Receivable | Revenue Recognition and Accounts Receivable Revenue Recognition Net revenue primarily consists of fee for service revenue and is derived principally from the provision of physician services to patients of the healthcare facilities and communities served and from facility fees for the procedures performed at surgery centers. Contract revenue and other revenue primarily represents income earned from hospital customers to supplement payments from third-party payors, contract staffing assignments and subscription fees. Revenue is billed to patients for services provided, and the Company receives payments for these services from patients or their third-party payors. Payments for services provided are generally less than billed charges. The Company recognizes fee for service revenue, net of contractual adjustments and provision for uncollectibles, at the time services are provided by healthcare providers. Services provided but not yet billed are estimated and recognized in the period services are provided. Revenue is recognized for services provided during the period but not yet billed based on fees and negotiated payment rates in the case of third-party payors, the specific benefits provided for under each patients’ healthcare plan, mandated payment rates under the Medicare and Medicaid programs, and historical cash collections. The Company records net revenue from uninsured patients at an estimated realizable value, which includes a provision for uncollectible balances, based on historical cash collections (net of recoveries). The Company records revenue net of an allowance for contractual adjustments, which represents the net revenue expected to collect from third-party payors (including managed care, commercial and governmental payors such as Medicare and Medicaid) and patients insured by these payors. These expected collections are based on fees and negotiated payment rates in the case of third-party payors, the specific benefits provided for under each patient's healthcare plans, mandated payment rates in the case of Medicare and Medicaid programs, and historical cash collections (net of recoveries). The provision for uncollectibles includes an estimate of uncollectible balances due from uninsured patients, uncollectible co-pay and deductible balances due from insured patients and special charges, if any, for uncollectible balances due from managed care, commercial and governmental payors. In certain circumstances, federal law requires providers to render emergency medical services to any patient who requires care regardless of their ability to pay. Services to these patients are not considered to be charity care and provisions for uncompensated care for these services are estimated accordingly. Although the Company does provide a level of charity care, it is not significant to the Company's net revenues. Estimating net revenue is a complex process, largely due to the volume of transactions, the number and complexity of contracts with payors, the limited availability, at times, of certain patient and payor information at the time services are provided, and the length of time it takes for collections to fully mature. In the period services are provided, the Company estimates gross charges based on billed services plus an estimate for unbilled services based on pending case data collected, estimates contractual allowances based on contracted rates and historical or actual cash collections (net of recoveries), when available, and estimates the provision for uncollectibles based on historical cash collections (net of recoveries) from uninsured patients. The relationship between gross charges and the allowances for both contractual adjustments and provision for uncollectibles is significantly influenced by payor mix, as collections on gross charges may vary significantly depending on whether and with whom the patients the Company provides services to in the period are insured and the Company's contractual relationships with their payors. Payor mix is subject to change as additional patient and payor information is obtained after the period services are provided. The Company periodically assesses the estimates of unbilled revenue, contractual adjustments, provision for uncollectibles and payor mix for a period of at least one year following the date of service by analyzing actual results, including cash collections, against estimates. Changes in these estimates are charged or credited to the consolidated statement of operations in the period that the assessment is made. Significant changes in payor mix, contractual arrangements with payors, specialty mix, acuity, business office operations, general economic conditions and health care coverage provided by federal or state governments or private insurers may have a significant impact on estimates and significantly affect the results of operations and cash flows. Concentration of credit risk with respect to other payors is limited due to the large number of such payors. The Company's billing and accounting systems provide historical trends of cash collections and contractual write-offs, accounts receivable agings and established fee adjustments from third-party payors. These estimates are recorded and monitored monthly as revenues are recognized. These estimates are not, however, established from billing system generated contractual adjustments based on fee schedules for the patient’s insurance plan for each patient encounter. The principal exposure for uncollectible fee for service visits is from self-pay patients and, to a lesser extent, for co-payments and deductibles from patients with insurance. Net revenue for the Company consists of the following major payors (in millions):
During the three months ended March 31, 2017, the Company's net fee for service revenue associated with self-pay, prior to the provision for uncollectibles, has significantly increased primarily due to the payor mix of EHH, which has a higher percentage of self-pay patients from the concentration of emergency medicine services. Due to the nature of the Company's operations, it is required to separate the presentation of its bad debt expense on the consolidated statements of operations. The Company records the portion of its bad debts associated with its physician services segment as a component of net revenue in the accompanying consolidated statements of operations, and the remaining portion, which is associated with its ambulatory services segment, is recorded as a component of other operating expenses in the accompanying consolidated statements of operations. The bifurcation is a result of the Company's ability to assess the ultimate collection of the patient service revenue associated with its ambulatory services segment before services are provided as those services are pre-scheduled and non-emergent. Bad debt expense for ambulatory services is included in other operating expenses and was $6.9 million and $5.8 million for the three months ended March 31, 2017 and 2016, respectively. Accounts Receivable The Company manages accounts receivable by regularly reviewing its accounts and contracts and by providing appropriate allowances for contractual adjustments and uncollectible amounts. Some of the factors considered by management in determining the amount of such allowances are the historical trends of cash collections, contractual and bad debt write-offs, accounts receivable agings, established fee schedules, contracts with payors, changes in payor mix and procedure statistics. Actual collections of accounts receivable in subsequent periods may require changes in the estimated contractual allowances and provision for uncollectibles. The Company tests its analysis by comparing cash collections to net patient revenues and monitoring self-pay utilization. In addition, when actual collection percentages differ from expected results, on a contract by contract basis, supplemental detailed reviews of the outstanding accounts receivable balances may be performed by the Company’s billing operations to determine whether there are facts and circumstances existing that may cause a different conclusion as to the estimate of the collectability of that contract’s accounts receivable from the estimate resulting from using the historical collection experience. The Company also supplements its allowance for doubtful accounts analysis for its physician services segment quarterly using a hindsight calculation that utilizes write-off data for all payor classes during the previous twelve month period to estimate the allowance for doubtful accounts at a point in time. Changes in these estimates, if any, are charged or credited to the consolidated statements of operations in the period of change. Material changes in estimates may result from unforeseen write-offs of patient or third-party accounts receivable, unsuccessful disputes with managed care payors, adverse macro-economic conditions which limit patients’ ability to meet their financial obligations for the care provided by physicians, or broad changes to government regulations that adversely impact reimbursement rates for services provided by the Company. Significant changes in payor mix, changes in contractual arrangements with payors, business office operations, general economic conditions and health care coverage provided by federal or state governments or private insurers may have a significant impact on the Company’s estimates and significantly affect its results of operations and cash flows. Concentration of credit risk is limited by the diversity and number of facilities, patients, payors and by the geographic dispersion of the Company’s operations. At March 31, 2017 and December 31, 2016, allowances for doubtful accounts were $1.43 billion and $584.0 million, respectively. The increase in the allowance for doubtful accounts from December 31, 2016 to March 31, 2017 is attributable to the growth of the allowance from the accounts receivable acquired in the Merger that was recorded at net realizable value. Additionally, the allowance at December 31, 2016 has been reduced by $68.2 million related to the amount reclassified as part of the medical transportation business held for sale. |
Acquisitions |
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Acquisitions | Acquisitions The Company accounts for its business combinations under the fundamental requirements of the acquisition method of accounting and under the premise that an acquirer be identified for each business combination. The acquirer is the entity that obtains control of one or more businesses in the business combination and the acquisition date is the date the acquirer achieves control. The assets acquired, liabilities assumed and any noncontrolling interests in the acquired business at the acquisition date are recognized at their fair values as of that date, and the direct costs incurred in connection with the business combination are recorded and expensed separately from the business combination. Acquisitions in which the Company is able to exert significant influence but does not have control are accounted for using the equity method. EHH Merger On December 1, 2016, AmSurg and EHH completed the Merger and the strategic combination of their respective businesses. We believe the Merger combined two industry leaders to create a premier healthcare services provider offering clinical solutions on a national scale, enabling the Company to create value for health systems, payors, providers and patients. Based on an evaluation of the provisions of ASC Topic 805, Business Combinations, AmSurg was determined to be the acquirer for accounting purposes. Under the terms of the Merger, each share of AmSurg common stock was converted into one share of Company common stock, each share of AmSurg 5.25% mandatory convertible preferred stock, Series A-1 (AmSurg Preferred Stock) was converted into one share of Company 5.25% mandatory convertible preferred stock, Series A-1 (Company Preferred Stock), and each share of EHH common stock was converted into 0.334 shares of Company common stock. Pursuant to the Merger, the Company issued 62,582,161 shares of common stock to former EHH stockholders, which were valued at approximately $4.26 billion based on the closing price of AmSurg's common stock on November 30, 2016. In addition, the Company issued replacement equity awards, which were valued at $180.3 million. Concurrently with the Merger, on December 1, 2016, the Company entered into a new senior secured credit facility, incurring a new $3.50 billion term loan and a $850.0 million ABL revolving credit facility (as defined in Note 10). At the closing of the Merger, the Company also completed a private offering of $550.0 million aggregate principal amount of 6.25% senior unsecured notes due 2024 to provide incremental financing to the Company, adjust scheduled maturities and reallocate between variable and fixed rate debt. See Note 10 for further information. Fees and expenses associated with the Merger, which includes fees incurred related to the Company's equity issuances and debt financings, was approximately $199.0 million during the year ended December 31, 2016. Approximately $94.9 million was capitalized as deferred financing costs, $73.8 million was expensed as transaction and integration costs, and $30.3 million was recorded as debt extinguishment costs during the year ended December 31, 2016. Physician Services Activity The Company completed the acquisition of three physician practices in the three months ended March 31, 2017 and one physician practice in the three months ended March 31, 2016. The aggregate amount paid for the physician practices and for settlement of purchase price payable obligations during the three months ended March 31, 2017 and 2016 was approximately $55.4 million and $3.0 million, respectively, and was paid in cash and funded by either operating cash flow or borrowings under the Company's existing or prior credit agreement or a combination thereof. Ambulatory Services Activity During the three months ended March 31, 2017, the Company, through a wholly-owned subsidiary, acquired a controlling interest in two surgery centers. The aggregate amount paid for the centers during the three months ended March 31, 2017 was approximately $17.7 million and was paid in cash and funded by operating cash flow. During the three months ended March 31, 2016, the Company did not acquire any surgery centers. Purchase Price Allocations Acquired assets and assumed liabilities include, but are not limited to, accounts receivable, fixed assets, intangible assets, deferred income taxes and insurance liabilities. The valuations are based on appraisal reports, discounted cash flow analyses, actuarial analyses or other appropriate valuation techniques to determine the fair value of the assets acquired or liabilities assumed. The preliminary estimated fair value assigned to goodwill is primarily attributable to synergies expected to arise after the Merger by enhancing the growth profile and diversity of the Company across the healthcare continuum. The Merger did not result in additional tax deductible goodwill. A majority of the deferred income taxes recognized as a component of the Company's purchase price allocation is a result of the difference between the book and tax basis of the intangible assets recognized. The amount allocated to the deferred income tax liability is subject to change as a result of the final allocation of purchase price to amortizable intangibles. The accounting for the Merger is currently preliminary. The Company continues to obtain information relative to the fair values of assets acquired, liabilities assumed and any noncontrolling interests in the transaction which could result in material changes to the amounts allocated below. The Company expects to finalize the purchase price allocation for EHH as soon as practical. The acquisition date fair value of the total consideration transferred and acquisition date fair value of each major class of consideration for the acquisition of EHH are as follows (in millions):
During the three months ended March 31, 2017, factors became known to the Company that resulted in changes to the purchase price allocation of assets and liabilities, existing at the date of acquisition, related to EHH and resulted in a net increase to goodwill of $11.9 million primarily resulting from an increase to insurance reserves and an increase to other accrued liabilities. The acquisition date fair value of the total consideration transferred and acquisition date fair value of each major financial class for individual acquisitions in both the ambulatory services and physician services segments completed in the three months ended March 31, 2017, including post acquisition date adjustments, are as follows (in millions):
During the three months ended March 31, 2017, no significant changes were made to the purchase price allocation of assets and liabilities, existing at the date of acquisition, related to individual acquisitions completed in 2016. For the three months ended March 31, 2017 and 2016 approximately $23.4 million and $1.1 million, respectively, of goodwill recorded was deductible for tax purposes. The total fair value of acquisitions completed by the Company include amounts allocated to goodwill, which result from the acquisitions' favorable reputations in their markets, their market positions and their ability to deliver quality care with high patient satisfaction consistent with the Company’s business model. Fair value attributable to noncontrolling interests is based on significant inputs that are not observable in the market. Key inputs used to determine the fair value include financial multiples used in the purchase of noncontrolling interests primarily from acquisitions of centers. Such multiples, based on earnings, are used as a benchmark for the discount to be applied for the lack of control or marketability. The fair value of noncontrolling interests for acquisitions where the purchase price allocation is not finalized may be subject to adjustment as the Company completes its initial accounting for acquired intangible assets. Additionally, the Company continues to obtain information relative to the fair values of assets acquired, liabilities assumed and any noncontrolling interests associated with acquisitions completed in the last 12 months. Acquired assets and assumed liabilities include, but are not limited to, fixed assets, licenses, intangible assets and professional liabilities. The valuations are based on appraisal reports, discounted cash flow analyses, actuarial analyses or other appropriate valuation techniques used to determine the fair value of the assets acquired or liabilities assumed. A majority of the deferred income taxes recognized as a component of the Company's purchase price allocation is a result of the difference between the book and tax basis of the amortizable intangible assets recognized. The amount allocated to the deferred income tax liability is subject to change as a result of the final allocation of purchase price to amortizable intangibles. The Company expects to finalize the purchase price allocation for its most recent acquisitions as soon as practical. During the three months ended March 31, 2017 and March 31, 2016, the Company incurred approximately $21.5 million and $1.4 million of transaction and integration costs, respectively. The costs incurred during the three months ended March 31, 2017 were primarily a result of the Merger. During the three months ended March 31, 2016, the net revenue and net earnings attributable to the physician practice acquisition were not considered significant. Net revenue and net earnings associated with completed acquisitions during the three months ended March 31, 2017 are as follows (in millions):
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Discontinued Operations |
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Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations | Discontinued Operations During the three months ended March 31, 2017, the Company initiated a strategic review of each of the Company's lines of business. As a result of that review, management and the Board determined that the Company will focus on physician centric services, including facility based physician services, post-acute services and ambulatory services, which partners with community based physicians across the country. Accordingly, Board approved a plan to market and divest the medical transportation business, representing the historical medical transportation reportable segment. The Company determined that the planned divestiture of the medical transportation business meets the criteria for classification as discontinued operations. All historical operating results for the medical transportation business are reflected within discontinued operations in the consolidated statements of operations. Furthermore, all assets and liabilities associated with the medical transportation business were classified as assets and liabilities held for sale in our consolidated balance sheets for all periods presented and are preliminary due to the purchase price allocation from the Merger. While the Company has not entered into a definitive agreement to divest of the medical transportation business, the Company expects to complete a transaction during 2017, subject to regulatory and other customary approvals. In accordance with ASC 740, “Income Taxes”, a tax liability should be recognized for the excess of the financial reporting basis over the tax basis (or the tax benefit when the tax basis exceeds the financial reporting basis) of an investment in a subsidiary (outside basis difference) when it is apparent that the temporary differences will reverse in the foreseeable future. In connection with presenting the medical transportation business as a discontinued operation as of March 31, 2017, the Company was required to re-evaluate its position related to the recognition of a deferred tax asset or liability for the outside basis differences of the entities being held for sale. Previously, deferred taxes for such outside basis differences had not been recognized as the Company applied one of the exceptions provided for in ASC 740. However, the outside basis differences are now expected to reverse in the foreseeable future and therefore, these exceptions no longer applied at March 31, 2017. As a result, the Company recorded deferred tax expense and associated deferred tax liability in the amount of $484.0 million, which is a component of income tax expense of discontinued operations, as March 31, 2017 and will be the obligation of the Company upon the divestiture of the medical transportation business. The following table is a reconciliation of the major classes of assets and liabilities classified as held for sale in the accompanying consolidated balance sheets representing the medical transportation business as of March 31, 2017 and December 31, 2016 (in millions):
The following table summarizes the results of discontinued operations for the three months ended March 31, 2017 (in millions):
In accordance with ASC 205, "Presentation of Financial Statements", for purposes of discontinued operations presentation, general corporate expenses are not permitted to be allocated to the operations of a business to be disposed. Accordingly, for the three months ended March 31, 2017 and on a before tax basis, approximately $14.5 million of general corporate expenses, including allocations for corporate salaries and stock-based compensation, general and administrative costs and depreciation, were removed from the medical transportation business and reallocated to the Company's remaining segments. In addition, ASC 205 requires interest associated with debt that is required to be repaid as a result of the disposal transaction to be allocated to discontinued operations. Accordingly, during the three months ended March 31, 2017, the Company allocated $21.8 million in interest expense to the medical transportation business, which is reflected in the loss from discontinued operations. The Company estimated the interest allocation by applying the effective interest rate of the Company's Term Loan B by the estimated proceeds, less taxes and professional fees, from the potential divestiture of the medical transportation business. For the three months ended March 31, 2017, the net cash flows provided by operating activities attributable to discontinued operations were $29.0 million and the net cash flows used in investing activities were $8.7 million. There were no cash flows attributable to the discontinued operation for the three months ended March 31, 2016. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The fair value of a financial instrument is the amount at which the instrument could be exchanged in an orderly transaction between market participants to sell the asset or transfer the liability. The inputs used by the Company to measure fair value are classified into the following hierarchy: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data at the measurement date. Level 3: Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. In determining the fair value of assets and liabilities that are measured on a recurring basis at March 31, 2017 and December 31, 2016, with the exception of contingent purchase price payables, the Company utilized Level 1 and 2 inputs to perform such measurements methods, which were commensurate with the market approach. The Company utilizes Level 3 inputs to measure the fair value of the contingent consideration. There were no transfers to or from Levels 1 and 2 during the three months ended March 31, 2017. The Company's non-patient receivables and accounts payable are reflected in the financial statements at cost, which approximates fair value. The following table summarizes the valuation of the Company’s financial instruments by the above fair value hierarchy levels as of March 31, 2017 and December 31, 2016 (in millions):
Insurance Collateral Insurance collateral is comprised of investments in U.S. Treasuries and marketable equity and debt securities held by the Company’s wholly owned captive insurance subsidiaries that support the Company’s insurance programs and reserves, as well as cash deposits with third parties. Certain of these investments, if sold or otherwise liquidated, would have to be replaced by other suitable financial assurances and are, therefore, considered restricted. These investments are designated as available-for-sale and reported at fair value with the related temporary unrealized gains and losses reported as a separate component of accumulated other comprehensive income (loss), net of deferred income tax. Declines in the fair value of a marketable investment security which are determined to be other-than-temporary are recognized in the statements of operations, thus establishing a new cost basis for such investment. Investment income earned on these investments is reported as a component of other income, net in the accompanying statements of operations. Realized gains and losses are determined based on an average cost basis. Investments are generally classified within Level 1 or Level 2 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. Insurance collateral consisted of the following as of March 31, 2017 and December 31, 2016 (in millions):
Amortized cost basis and aggregate fair value of the Company's available-for-sale securities as of March 31, 2017 and December 31, 2016 were as follows (in millions):
As of March 31, 2017, available-for-sale securities included U.S. Treasuries, corporate bonds and fixed income securities of $2.5 million with contractual maturities within one year and $28.1 million with contractual maturities extending longer than one year through five years and $1.8 million with contractual maturities extending longer than five years. Actual maturities may differ from contractual maturities as a result of the Company's ability to sell these securities prior to maturity. The Company's available-for-sale investment securities that were temporarily impaired as of March 31, 2017 and December 31, 2016 consisted of corporate equity securities that had a fair value of $5.4 million and $7.6 million with a cumulative unrealized loss position of $0.1 million and $0.3 million for less than twelve months, respectively. There were no available-for-sale investment securities that were other-than-temporarily impaired as of March 31, 2017. The Company evaluates the investment securities available-for-sale on a quarterly basis to determine whether declines in the fair value of these securities are other-than-temporary. The evaluation consists of reviewing the fair value of the security compared to the carrying amount, the historical volatility of the price of each security, and any industry and company specific factors related to each security. The Company is not aware of any specific factors indicating that the underlying issuers of the corporate bonds/fixed income securities would not be able to pay interest as it becomes due or repay the principal amount at maturity. Therefore, the Company believes that the changes in the estimated fair values of these debt securities are related to temporary market fluctuations and the Company does not intend to dispose of these investments. Additionally, the Company is not aware of any specific factors which indicate the unrealized losses on the investments in corporate equity securities are due to anything other than temporary market fluctuations. The Company received proceeds of $0.5 million on the sale and maturities of available-for-sale securities for the three months ended March 31, 2017. For the three months ended March 31, 2017, a gain of less than $0.1 million was reclassified from accumulated other comprehensive income to other income, net in the accompanying consolidated statements of operations. For the three months ended March 31, 2017, unrealized gains on available-for-sale securities of $0.9 million were recorded in accumulated other comprehensive income. The Company did not receive any proceeds from the maturity or sale of available-for-sale securities for the three months ended March 31, 2016. |
Investments in Unconsolidated Affiliates |
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Equity Method Investments and Joint Ventures [Abstract] | |
Investments in Unconsolidated Affiliates | Investments in Unconsolidated Affiliates Investments in unconsolidated affiliates in which the Company exerts significant influence but does not control or otherwise consolidate are accounted for using the equity method. Equity method investments are initially recorded at cost, unless such investments are a result of the Company entering into a transaction whereby the Company loses control of a previously controlled entity but retains a noncontrolling interest. Such transactions, which result in the deconsolidation of a previously consolidated entity, are measured at fair value. The fair value measurement utilizes Level 3 inputs, which include unobservable data, to measure the fair value of the retained noncontrolling interest. The fair value determination is generally based on a combination of multiple valuation methods, which can include discounted cash flow, income approach, or market value approach, which incorporates estimates of future earnings and market valuation multiples for certain guideline companies. These investments are included as investments in unconsolidated affiliates in the accompanying consolidated balance sheets. The Company’s share of the profits and losses from these investments is reported in equity in earnings of unconsolidated affiliates in the accompanying consolidated statements of operations. The Company monitors its investments for other-than-temporary impairment by considering factors such as current economic and market conditions and the operating performance of the companies and records reductions in carrying values when necessary. As of March 31, 2017 and December 31, 2016, the Company recorded in the accompanying consolidated balance sheets its investments in unconsolidated affiliates of $131.4 million and $114.7 million, respectively. The Company's net earnings from these investments during the three months ended March 31, 2017 and 2016 were approximately $4.9 million and $6.6 million, respectively. During the three months ended March 31, 2017, the Company entered into two equity method investments. As a result of these investments, the Company contributed its controlling interest in two centers in exchange for a noncontrolling interest in the new investments and net cash consideration of $1.2 million. These investments are jointly owned by health systems and the Company. The newly formed investments (including the contributed centers) are controlled by the health systems. Also, as part of these transactions, the Company obtained a non-controlling interest in two additional centers which were contributed by the health systems. There was no deconsolidation activity during the three months ended March 31, 2016. As a result of these transactions, the Company recorded in the accompanying consolidated balance sheet, as a component of investments in unconsolidated affiliates, the fair value of the Company's investment in these entities of approximately $15.4 million during the three months ended March 31, 2017. In each of these transactions, the gain or loss on deconsolidation, which is primarily non-cash in nature, was determined based on the difference between the fair value of the Company’s interest, which was based on estimates of the expected future earnings, in the new entity and the carrying value of both the tangible and intangible assets of the contributed center immediately prior to the transaction. In certain cases, the Company evaluated likely scenarios which were weighted by a range of expected probabilities of 10% to 50% which were primarily based on third-party valuations received by the Company. Accordingly, the Company recognized a net gain on deconsolidation which is included in net gain on disposals and deconsolidations in the accompanying consolidated statements of operations of approximately $7.4 million during the three months ended March 31, 2017. |
Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets The changes in the carrying amount of goodwill for the three months ended March 31, 2017 are as follows (in millions):
During the three months ended March 31, 2017, goodwill was recorded in the Company's physician services segment due to the acquisition of three physician practices and, in the Company's ambulatory services segment, goodwill increased due to the acquisition of two surgery centers. The increase in goodwill from acquisitions was offset by $12.2 million of goodwill disposed due to the deconsolidation of two surgery centers within the ambulatory services segment.
Intangible assets at March 31, 2017 and December 31, 2016 consisted of the following (in millions):
Amortization of intangible assets for the three months ended March 31, 2017 and 2016 was $56.1 million and $20.4 million, respectively. Estimated amortization of intangible assets for the remainder of 2017 and each of the following five years and thereafter is $164.0 million, $192.1 million, $184.1 million, $177.3 million, $170.3 million, $165.7 million and $2.11 billion, respectively. The Company expects to recognize amortization of all intangible assets over a weighted average period of 18.2 years with no expected residual values. |
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Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current [Text Block] | Other Accrued Liabilities The following table presents a summary of items comprising other accrued liabilities in the accompanying consolidated balance sheets as of March 31, 2017 and December 31, 2016 (in millions):
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Long-term Debt |
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Long-term Debt | Long-term Debt Long-term debt at March 31, 2017 and December 31, 2016 consisted of the following (in millions):
The fair value of fixed rate long-term debt, with a carrying value of $2.45 billion, was $2.50 billion at March 31, 2017. The fair value of variable rate long-term debt approximates its carrying value of $3.49 billion at March 31, 2017. With the exception of the Company’s senior unsecured notes, the fair value of fixed rate debt (Level 2) is determined based on an estimation of discounted future cash flows of the debt at rates currently quoted or offered to the Company for similar debt instruments of comparable maturities by its lenders. The fair value of the Company’s senior unsecured notes (Level 1) is determined based on quoted prices in an active market. |
Insurance Reserves |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance Reserves | Insurance Reserves Insurance reserves are established for professional and general liability claims utilizing policies with both fully-insured and self-insured components. This includes the use of an off-shore captive insurance program through wholly owned subsidiaries for certain professional (medical malpractice) and general liability programs. In those instances where the Company has obtained third-party insurance coverage, the Company normally retains liability for the first $1 to $3 million of the loss. Insurance reserves cover known claims and incidents within the level of Company retention that may result in the assertion of additional claims, as well as claims from unknown incidents that may be asserted arising from activities through March 31, 2017. The Company establishes reserves for claims based upon an assessment of claims reported and claims incurred but not reported. The reserves are established based on consultation with third-party independent actuaries using actuarial principles and assumptions that consider a number of factors, including historical claim payment patterns (including legal costs) and changes in case reserves and the assumed rate of inflation in health care costs and property damage repairs. Claims are not discounted. Provisions for insurance expense included in the statements of operations include annual provisions determined in consultation with third-party actuaries and premiums paid to third-party insurers. At March 31, 2017 and December 31, 2016, the Company's accrued professional liabilities are presented in the accompanying consolidated balance sheets as a component of other accrued liabilities and insurance reserves as follows (in millions):
The changes to the Company's estimated losses under insurance programs as of March 31, 2017 were as follows (in millions):
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Stockholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Stockholders’ Equity a. Common Stock On December 1, 2016, the Company completed the Merger. Under the terms of the Merger, upon completion of the Merger, each share of AmSurg common stock was converted into one share of Company common stock, par value of $0.01 per share, and each share of EHH common stock was converted into 0.334 shares of Company common stock. Pursuant to the Merger, the Company issued 62,582,161 shares of common stock to the former stockholders of EHH, which represented the conversion of all outstanding common stock of EHH as of December 1, 2016. The Company repurchases shares by withholding a portion of employee restricted stock that vested to cover payroll withholding taxes in accordance with the restricted stock agreements. During the three months ended March 31, 2017 and 2016, the Company repurchased approximately 128,186 shares and 77,780 shares, respectively, of common stock for approximately $8.8 million and $5.7 million, respectively. b. Preferred Stock Under the terms of the Merger, upon completion of the Merger, each share of AmSurg 5.25% mandatory convertible preferred stock, Series A-1 (“AmSurg Preferred Stock”) was converted into one share, par value of $0.01 per share, of Company 5.25% mandatory convertible preferred stock, Series A-1 (“Company Preferred Stock”). Pursuant to the Merger, the Company issued 1,725,000 shares of Company Preferred Stock. The mandatory convertible preferred stock pays dividends at an annual rate of 5.25% of the initial liquidation preference of $100 per share. Dividends accrue and cumulate from the date of issuance and, to the extent lawful and declared by the Board, will be paid on each January 1, April 1, July 1 and October 1 in cash or, at the Company's election (subject to certain limitations), by delivery of any combination of cash and shares of common stock. Each share of the mandatory convertible preferred stock has a liquidation preference of $100, plus an amount equal to accrued and unpaid dividends. Each share of the mandatory convertible preferred stock will automatically convert on July 1, 2017 (subject to postponement in certain cases), into between 1.8141 and 2.2222 shares of common stock (the “minimum conversion rate” and “maximum conversion rate,” respectively), each subject to adjustment. The number of shares of common stock issuable on conversion will be determined based on the average volume weighted average price per share of the Company's common stock over the 20 consecutive trading day period commencing on and including the 22nd scheduled trading day prior to July 1, 2017. At any time prior to July 1, 2017, holders may elect to convert all or a portion of their shares of mandatory convertible preferred stock into shares of common stock at the minimum conversion rate. If any holder elects to convert shares of mandatory convertible preferred stock during a specified period beginning on the effective date of a fundamental change the conversion rate will be adjusted under certain circumstances and such holder will also be entitled to a fundamental change dividend make-whole amount. During the three months ended March 31, 2017 and 2016, the Board declared a dividend totaling $1.3125 per share in cash, or $2.3 million, for the Company's mandatory convertible preferred stock. As of March 31, 2017, the dividend declared in the current period was funded to the paying agent and paid to stockholders of record as of March 15, 2017. c. Stock Incentive Plans Transactions in which the Company receives employee and non-employee services in exchange for the Company’s equity instruments or liabilities that are based on the fair value of the Company’s equity securities or may be settled by the issuance of these securities are accounted using a fair value method. The Company applies the Black-Scholes method of valuation in determining share-based compensation expense for option awards. For performance share units, the Company utilizes the Monte-Carlo method of valuation. For awards with graded vesting schedules, the Company recognizes compensation expense using the accelerated method. Forfeitures are recognized as incurred. In May 2014, the Company adopted the AmSurg Corp. 2014 Equity and Incentive Plan (the “2014 Plan”), which was amended in both 2016 and 2017, most recently to change the name of the plan to the Envision Healthcare Corporation 2014 Equity and Incentive Plan, among other things. Under this plan, the Company has granted restricted stock unit awards, non-qualified options and market-based performance share units to employees and outside directors. At March 31, 2017, 3,200,000 shares were authorized for grant under the 2014 Plan and 2,336,997 shares were available for future equity grants. Restricted stock and stock units granted to outside directors vest on the first anniversary of the date of grant. Restricted stock granted to employees generally vests over three to four years in three equal installments. The fair value of restricted stock is determined based on the closing bid price of the Company’s common stock on the grant date. The market-based performance share units vest based on achievement of both the three year service condition and market condition. Under the terms of the 2014 Plan, all equity awards granted thereunder are subject to a one year minimum vesting period. During the three months ended March 31, 2017, the Company issued 58,022 market-based performance share units with a grant date fair value of $57.47 per unit using a Monte Carlo simulation model. In addition, as a result of the Merger, 191,927 market-based performance share units were converted at a fair value of $62.69 per share. At March 31, 2017, 241,874 market-based performance shares were outstanding. The market-based performance share units continue to have the same terms and conditions as were in effect prior to the Merger. The Monte Carlo simulation used to calculate the fair value of the market-based performance share units simulates the present value of the potential outcomes of future stock prices of the Company and the companies included in the defined performance index over the performance cycle. The projection of stock prices are based on the risk-free rate of return, the volatilities of the stock price of the Company and the companies included in the defined performance index, and the correlation of the stock price of the Company with these companies. If the financial performance goal is not achieved, the market based performance share units will be forfeited. The number of market based performance share units that will ultimately be received by the holders range from 0% to 150% of the units granted, depending on the Company’s level of achievement with respect to the financial performance goal. During the three months ended March 31, 2017, the Company issued 350,753 performance-based share units which vest in a range from 0% to 150% of the number of target units awarded, depending on the Company’s level of achievement with respect to the financial performance goal, after three years. The Company has not recognized stock compensation expense for the performance-based share units during the three months ended March 31, 2017 as the performance conditions have not been determined as of March 31, 2017. The Company expects the performance conditions to be determined during the third year of vesting. The Company did not issue options subsequent to 2008 from the 2014 Plan, and all outstanding options issued under the 2014 Plan are fully vested. Options previously issued under the 2014 Plan were granted at market value on the date of the grant and vested over four years. Outstanding options issued under the 2014 Plan have a term of ten years from the date of grant. Under Company policy, shares held by outside directors and senior management are subject to certain stock ownership guidelines and restrictions on hedging and pledging. On December 1, 2016, upon completion of the Merger, each outstanding option to purchase shares of EHH common stock and each outstanding EHH stock unit (including stock units subject to time-based and performance-based vesting conditions) were converted into an option to purchase 0.334 shares of common stock of the Company and 0.334 stock units of the Company, respectively. Each option and stock unit continues to have the same terms and conditions as were in effect under the Envision Healthcare Holdings, Inc. 2013 Omnibus Incentive Plan ("2013 Plan") prior to the completion of the Merger. During the three months ended March 31, 2017, the plan was renamed to the Envision Healthcare Corporation 2013 Omnibus Incentive Plan. At March 31, 2017, 5,580,568 shares were authorized for grant under the 2013 Plan and 4,096,341 shares were available for future equity grants. Non-performance and performance-based awards issued under the 2013 Plan have a time-based vesting ranging from one to three years. All options issued under the 2013 Plan have a term of ten years from the date of grant. Under the terms of the 2013 Plan, all equity awards granted thereunder are subject to a one year minimum vesting period. A summary of the status of non-vested restricted shares at March 31, 2017 and changes during the three months ended March 31, 2017 is as follows:
A summary of stock option activity for the three months ended March 31, 2017 is summarized as follows:
The aggregate intrinsic value represents the total pre-tax intrinsic value received by the option holders on the exercise date or that would have been received by the option holders had all holders of in-the-money outstanding options at March 31, 2017 exercised their options at the Company’s closing stock price on March 31, 2017. The fair value of each stock option award converted as part of the Merger was calculated on the merger date, December 1, 2016, using the Black-Scholes valuation model with the following assumptions indicated in the below table. The volatility assumptions were based on the historical stock volatility of the Company.
Other information pertaining to share-based activity during the three months ended March 31, 2017 and 2016 is as follows (in millions):
As of March 31, 2017, the Company had total unrecognized compensation cost of approximately $68.4 million related to non-vested awards, which the Company expects to recognize through 2020 and over a weighted average period of 1.1 years. For the three months ended March 31, 2017 and 2016, there were 66,463 and no options that were anti-dilutive, respectively. d. Earnings per Share Basic net earnings (loss) attributable to Envision Healthcare Corporation common stockholders, per common share, excludes dilution and is computed by dividing net earnings (loss) attributable to Envision Healthcare Corporation common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net earnings (loss) attributable to Envision Healthcare Corporation common stockholders, per common share is computed by dividing net earnings (loss) attributable to Envision Healthcare Corporation common stockholders by the weighted-average number of common shares outstanding during the period plus any potential dilutive common share equivalents, including shares issuable (i) upon the vesting of restricted stock awards, restricted stock units and performance stock units as determined under the treasury stock method and (ii) upon conversion of the Company's mandatory convertible preferred stock as determined under the if-converted method. For purposes of calculating diluted earnings (loss) per share, preferred stock dividends have been subtracted from both net earnings (loss) from continuing operations attributable to Envision Healthcare Corporation and net earnings (loss) attributable to Envision Healthcare Corporation common stockholders in periods in which utilizing the if-converted method would be anti-dilutive. The following is a reconciliation of the numerator and denominators of basic and diluted earnings (loss) per share (dollars in millions, except per share amounts):
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Income Taxes |
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Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company files a consolidated federal income tax return. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company applies recognition thresholds and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return as it relates to accounting for uncertainty in income taxes. In addition, it is the Company’s policy to recognize interest accrued and penalties, if any, related to unrecognized benefits as income tax expense in its consolidated statements of operations. The Company does not expect significant changes to its tax positions or liability for tax uncertainties during the next 12 months. The Company and its subsidiaries file U.S. federal and various state tax returns. With few exceptions, the Company is no longer subject to U.S. federal or state income tax examinations for years prior to 2012. |
Commitments and Contingencies |
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Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation From time to time the Company is named as a party to legal claims and proceedings in the ordinary course of business. Other than the proceedings described below, the Company's management is not aware of any claims or proceedings that are expected to have a material adverse impact on the Company's consolidated financial condition, results of operations or cash flows. The Company is subject to litigation arising in the ordinary course of business, including litigation principally relating to professional and general liability. There can be no assurance that the Company's insurance coverage and self-insured liabilities will be adequate to cover all liabilities occurring out of such claims. The Company believes that it is not engaged in any legal proceedings that are expected to have a material adverse effect on the Company's business, financial condition, cash flows or results of operations. From time to time, in the ordinary course of business and like others in the industry, the Company receives requests for information from government agencies in connection with their regulatory or investigational authority. Such requests can include subpoenas or demand letters for documents to assist the government in audits or investigations. The Company reviews such requests and notices and takes appropriate action. The Company has been subject to certain requests for information and investigations in the past and could be subject to such requests for information and investigations in the future. On August 7, 2012, EmCare received a subpoena from the Office of Inspector General of the Department of Health and Human Services (OIG) requesting documents focused on EmCare’s contracts for services at hospitals affiliated with Health Management Associates, Inc. (HMA). The Company is a named defendant in two lawsuits filed by whistleblowers alleging misconduct by HMA and certain other parties (the HMA Lawsuits). The federal government has not intervened in these matters as they relate to allegations against EmCare. The Company continues to engage in dialogue with the government to resolve this matter. As the Company has made significant progress towards resolution with the government, the Company has recorded a reserve of $30.0 million based on estimates of probable exposure. Four putative class action lawsuits were filed against certain subsidiaries of the Company's medical transportation business in California alleging violations of California wage and hour laws, including failures to pay overtime wages and to provide required meal and rest breaks to employees. On April 16, 2008, L. Bartoni commenced a suit in the Superior Court of California, Alameda County, on July 8, 2008, Vaughn Banta filed suit in the Superior Court of California, Los Angeles County (L.A. Superior Court), on January 22, 2009, Laura Karapetian filed suit in the L.A. Superior Court, and on March 11, 2010, Melanie Aguilar filed suit in L.A. Superior Court. The Aguilar and Karapetian cases were consolidated into a single action. In the Bartoni case, the court denied class certification of the meal break claim, but the appellate court reversed and remanded the ruling on rest breaks for further proceedings. The plaintiffs in Bartoni have asserted representative claims on behalf of similarly situated employees under the California Private Attorney General Act (PAGA). In each of the Banta and Karapetian/Aguilar cases, while all classes have been decertified, the plaintiffs have also asserted representative claims under PAGA. The Company is unable at this time to estimate the amount of potential damages, if any. In 2012, the Company's Rural/Metro subsidiary entered into a Corporate Integrity Agreement (CIA) with the OIG in connection with a qui tam action alleging that Rural/Metro had falsified Medicare documents and improperly billed for ambulance services. The CIA requires the Company to maintain a compliance program. This program includes, among other elements, the appointment of a compliance officer and committee, training of employees nationwide, safeguards for ambulance billing operations, review by an independent review organization, and reporting of certain events. The term of the CIA is five years and is set to expire in June 2017. AMR was previously subject to a separate CIA with the OIG relating to AMR, pursuant to which the Company agreed to adopt certain compliance related policies and practices. While the Company continues to maintain its corporate compliance program, and is still subject to Rural/Metro’s CIA, the Company was released from AMR’s CIA in January 2017. Insurance Programs Given the nature of the services provided, the Company and its subsidiaries are subject to professional and general liability claims and related lawsuits in the ordinary course of business. The Company maintains professional insurance with third-party insurers generally on a claims-made basis, subject to self-insured retentions, exclusions and other restrictions. A substantial portion of the professional liability loss risks are being provided by a third-party insurer which is fully reinsured by the Company's wholly owned captive insurance subsidiary. The assets, liabilities and results of operations of the wholly owned captive are consolidated in the accompanying consolidated financial statements. The liabilities for self-insurance in the accompanying consolidated balance sheets include estimates of the ultimate costs related to both reported claims on an individual and aggregate basis and unreported claims. The Company also obtains professional liability insurance on a claims-made basis from third-party insurers for its surgery centers and certain of its owned practices and employed physicians. The Company’s reserves for professional liability claims within the self-insured retention are based upon periodic actuarial calculations. These actuarial estimates consider historical claims frequency and severity, loss development patterns and other actuarial assumptions and are not discounted to present value. The Company also maintains insurance for director and officer liability, workers’ compensation liability and property damage. Certain policies are subject to deductibles. In addition to the insurance coverage provided, the Company indemnifies its officers and directors for actions taken on behalf of the Company and its subsidiaries. Redeemable Noncontrolling Interests Certain of the Company’s wholly owned subsidiaries are responsible for all debts incurred but unpaid by the Company's less than wholly owned partnerships as these subsidiaries are the general partner. As manager of the operations of these partnerships, the Company has the ability to limit potential liabilities by curtailing operations or taking other operating actions. In the event of a change in current law that would prohibit the physicians’ current form of ownership in the partnerships, the Company would be obligated to purchase the physicians’ interests in a substantial majority of the Company’s partnerships. The purchase price to be paid in such event would be determined by a predefined formula, as specified in the partnership agreements. The Company believes the likelihood of a change in current law that would trigger such purchases was remote as of March 31, 2017. As a result, the noncontrolling interests that are subject to this redemption feature are not included as part of the Company’s equity and are classified as noncontrolling interests – redeemable on the Company’s consolidated balance sheets. |
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Segment Reporting | Segment Reporting Prior to the classification of the medical transportation business into discontinued operations, the Company operated in three major lines of business, physician services, medical transportation and ambulatory services, which had been identified as its operating and reportable segments. Subsequent to the discontinued operations classification, the Company has aligned financial results into two operating and reportable segments: physician services and ambulatory services. The physician services segment includes the Company’s hospital-based and non-hospital-based physician services business. The ambulatory services segment includes the Company’s ambulatory surgery business, which acquires, develops, owns and operates ASCs and surgical hospitals in partnership with physicians and health systems. The Company’s financial information by segment is prepared on an internal management reporting basis and includes allocations of corporate expenses. This financial information is used by the chief operating decision maker to allocate resources and assess the performance of the segments. The Company’s segments have been defined based on the separate financial information that is regularly produced and reviewed by the Company’s chief operating decision maker which is its Chief Executive Officer. The following table presents financial information for each reportable segment (in millions):
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Financial Information for the Company and Its Subsidiaries |
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Information for the Company and Its Subsidiaries | Financial Information for the Company and Its Subsidiaries The 2022 Senior Unsecured Notes are senior unsecured obligations of the Company and are guaranteed by its existing and subsequently acquired or organized 100% owned domestic subsidiaries. The 2022 Senior Unsecured Notes are guaranteed on a full and unconditional and joint and several basis, with limited exceptions considered customary for such guarantees, including the release of the guarantee when a subsidiary's assets are sold. The following condensed consolidating financial statements present the Company (as parent issuer), the subsidiary guarantors, the subsidiary non-guarantors and consolidating adjustments. These condensed consolidating financial statements have been prepared and presented in accordance with Rule 3-10 of Regulation S-X “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.” The operating and investing activities of the separate legal entities are fully interdependent and integrated. Accordingly, the results of the separate legal entities are not representative of what the operating results would be on a stand-alone basis. As a result of the refinancing related to the Merger, the guarantor structure of certain entities changed and these statements have been revised to reflect the current structure post-Merger.
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Description of Business and Basis of Presentation (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial reporting and in accordance with Rule 10-01 of Regulation S-X. In the opinion of management, the unaudited interim consolidated financial statements contained in this report reflect all normal recurring adjustments, which are necessary for a fair presentation of the financial position and the results of operations for the interim periods presented. The results of operations for any interim period are not necessarily indicative of results for the full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016. |
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Restricted Cash and Marketable Securities | Restricted Cash and Marketable Securities As of March 31, 2017 and December 31, 2016, the Company held restricted cash and cash equivalents of $39.0 million and $43.5 million, respectively, classified within insurance collateral in the accompanying consolidated balance sheets. The cash was restricted for the purpose of satisfying the obligations of the Company's wholly owned captive insurance companies. |
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
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Reclassifications | Reclassifications Certain prior year amounts in the accompanying consolidated financial statements and these notes have been reclassified to reflect the impact of discontinued operations as further discussed in Note 5 and also to conform to current year classifications as a result of the Merger. |
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Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09 “Revenue from Contracts with Customers,” which will eliminate the transaction and industry-specific revenue recognition guidance under current GAAP and replace it with a principle-based approach using the following steps: identify the contract(s) with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when (or as) the entity satisfies a performance obligation. In August 2015, the FASB issued ASU 2015-14 “Revenue from Contracts with Customers (Topic 606), Deferral of the Effective Date,” which granted a one-year deferral of this ASU. In 2016, the FASB issued the following ASUs to provide entities further clarity on the application of ASU 2014-09:
The guidance in ASU 2014-09 and the subsequently related ASUs will now be effective for public entities for annual reporting periods beginning after December 15, 2017, including interim periods therein. The Company is continuing to assess the method of adoption it expects to utilize. The Company does not believe adoption of the standard will have a material impact on the results of operations or cash flows for the ambulatory services segment. The Company is continuing its evaluation of the impact on the physician services segment to determine the impact, if any, on the results of operations and cash flows. However, the Company does anticipate that, as a result of certain changes by ASU 2014-09 and the subsequently related ASUs, the majority of its provision for uncollectibles will be recognized as a direct reduction to revenues, instead of separately as a deduction to arrive at revenue. In February 2016, the FASB issued ASU No. 2016-02, “Leases,” which amends existing accounting standards for lease accounting, including requiring lessees to recognize most leases on the balance sheet and making changes to lessor accounting. The standard is effective for annual periods beginning after December 15, 2018, with early adoption permitted. The new standard requires a modified retrospective application for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company will adopt the new standard effective January 1, 2019. The Company expects that nearly all leases currently classified as operating leases will be classified as operating leases under the new standard with a right-of-use asset and a corresponding obligation recognized on the balance sheet at the adoption date. The Company has not yet determined the impact this ASU will have on the Company's results of operations or cash flows. In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which will change how companies account for certain aspects of share-based payments to employees by requiring companies to recognize the income tax effects of awards in the income statement when the awards vest or are settled. The standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company adopted this standard effective January 1, 2017 and determined there were no unrecognized tax benefits which required reclassification from additional paid in capital to retained earnings. As a result of the adoption, the Company has recognized approximately $2.9 million of tax benefit associated with the awards that were either exercised or vested during the three months ended March 31, 2017. In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash (A Consensus of the FASB Emerging Issues Task Force),” which requires entities to show the changes in cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. Entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. The standard is effective for annual periods beginning after December 15, 2017, and interim periods within those years and is to be adopted retrospectively. The Company has not yet determined the impact this ASU will have on the Company's cash flows. In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805) - Clarifying the Definition of a Business,” which changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The guidance requires an entity to evaluate if substantially all of the fair value of gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. The guidance is effective for annual periods beginning after December 15, 2017, and interim periods within those years. The Company has not yet determined the impact this ASU will have on the Company's consolidated financial position, results of operations or cash flows. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment,” which eliminates the requirement to calculate the implied fair value of goodwill to measure an impairment charge. Instead, companies will record an impairment charge based on the excess of a reporting unit's carrying amount over its fair value. The standard is effective for annual periods beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has not yet determined the impact this ASU will have on the Company's consolidated financial position, results of operations or cash flows. |
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Revenue Recognition | Revenue Recognition Net revenue primarily consists of fee for service revenue and is derived principally from the provision of physician services to patients of the healthcare facilities and communities served and from facility fees for the procedures performed at surgery centers. Contract revenue and other revenue primarily represents income earned from hospital customers to supplement payments from third-party payors, contract staffing assignments and subscription fees. Revenue is billed to patients for services provided, and the Company receives payments for these services from patients or their third-party payors. Payments for services provided are generally less than billed charges. The Company recognizes fee for service revenue, net of contractual adjustments and provision for uncollectibles, at the time services are provided by healthcare providers. Services provided but not yet billed are estimated and recognized in the period services are provided. Revenue is recognized for services provided during the period but not yet billed based on fees and negotiated payment rates in the case of third-party payors, the specific benefits provided for under each patients’ healthcare plan, mandated payment rates under the Medicare and Medicaid programs, and historical cash collections. The Company records net revenue from uninsured patients at an estimated realizable value, which includes a provision for uncollectible balances, based on historical cash collections (net of recoveries). The Company records revenue net of an allowance for contractual adjustments, which represents the net revenue expected to collect from third-party payors (including managed care, commercial and governmental payors such as Medicare and Medicaid) and patients insured by these payors. These expected collections are based on fees and negotiated payment rates in the case of third-party payors, the specific benefits provided for under each patient's healthcare plans, mandated payment rates in the case of Medicare and Medicaid programs, and historical cash collections (net of recoveries). The provision for uncollectibles includes an estimate of uncollectible balances due from uninsured patients, uncollectible co-pay and deductible balances due from insured patients and special charges, if any, for uncollectible balances due from managed care, commercial and governmental payors. In certain circumstances, federal law requires providers to render emergency medical services to any patient who requires care regardless of their ability to pay. Services to these patients are not considered to be charity care and provisions for uncompensated care for these services are estimated accordingly. Although the Company does provide a level of charity care, it is not significant to the Company's net revenues. Estimating net revenue is a complex process, largely due to the volume of transactions, the number and complexity of contracts with payors, the limited availability, at times, of certain patient and payor information at the time services are provided, and the length of time it takes for collections to fully mature. In the period services are provided, the Company estimates gross charges based on billed services plus an estimate for unbilled services based on pending case data collected, estimates contractual allowances based on contracted rates and historical or actual cash collections (net of recoveries), when available, and estimates the provision for uncollectibles based on historical cash collections (net of recoveries) from uninsured patients. The relationship between gross charges and the allowances for both contractual adjustments and provision for uncollectibles is significantly influenced by payor mix, as collections on gross charges may vary significantly depending on whether and with whom the patients the Company provides services to in the period are insured and the Company's contractual relationships with their payors. Payor mix is subject to change as additional patient and payor information is obtained after the period services are provided. The Company periodically assesses the estimates of unbilled revenue, contractual adjustments, provision for uncollectibles and payor mix for a period of at least one year following the date of service by analyzing actual results, including cash collections, against estimates. Changes in these estimates are charged or credited to the consolidated statement of operations in the period that the assessment is made. Significant changes in payor mix, contractual arrangements with payors, specialty mix, acuity, business office operations, general economic conditions and health care coverage provided by federal or state governments or private insurers may have a significant impact on estimates and significantly affect the results of operations and cash flows. Concentration of credit risk with respect to other payors is limited due to the large number of such payors. The Company's billing and accounting systems provide historical trends of cash collections and contractual write-offs, accounts receivable agings and established fee adjustments from third-party payors. These estimates are recorded and monitored monthly as revenues are recognized. These estimates are not, however, established from billing system generated contractual adjustments based on fee schedules for the patient’s insurance plan for each patient encounter. The principal exposure for uncollectible fee for service visits is from self-pay patients and, to a lesser extent, for co-payments and deductibles from patients with insurance. |
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Accounts Receivable | Accounts Receivable The Company manages accounts receivable by regularly reviewing its accounts and contracts and by providing appropriate allowances for contractual adjustments and uncollectible amounts. Some of the factors considered by management in determining the amount of such allowances are the historical trends of cash collections, contractual and bad debt write-offs, accounts receivable agings, established fee schedules, contracts with payors, changes in payor mix and procedure statistics. Actual collections of accounts receivable in subsequent periods may require changes in the estimated contractual allowances and provision for uncollectibles. The Company tests its analysis by comparing cash collections to net patient revenues and monitoring self-pay utilization. In addition, when actual collection percentages differ from expected results, on a contract by contract basis, supplemental detailed reviews of the outstanding accounts receivable balances may be performed by the Company’s billing operations to determine whether there are facts and circumstances existing that may cause a different conclusion as to the estimate of the collectability of that contract’s accounts receivable from the estimate resulting from using the historical collection experience. The Company also supplements its allowance for doubtful accounts analysis for its physician services segment quarterly using a hindsight calculation that utilizes write-off data for all payor classes during the previous twelve month period to estimate the allowance for doubtful accounts at a point in time. Changes in these estimates, if any, are charged or credited to the consolidated statements of operations in the period of change. Material changes in estimates may result from unforeseen write-offs of patient or third-party accounts receivable, unsuccessful disputes with managed care payors, adverse macro-economic conditions which limit patients’ ability to meet their financial obligations for the care provided by physicians, or broad changes to government regulations that adversely impact reimbursement rates for services provided by the Company. Significant changes in payor mix, changes in contractual arrangements with payors, business office operations, general economic conditions and health care coverage provided by federal or state governments or private insurers may have a significant impact on the Company’s estimates and significantly affect its results of operations and cash flows. Concentration of credit risk is limited by the diversity and number of facilities, patients, payors and by the geographic dispersion of the Company’s operations. |
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Acquisitions | The Company accounts for its business combinations under the fundamental requirements of the acquisition method of accounting and under the premise that an acquirer be identified for each business combination. The acquirer is the entity that obtains control of one or more businesses in the business combination and the acquisition date is the date the acquirer achieves control. The assets acquired, liabilities assumed and any noncontrolling interests in the acquired business at the acquisition date are recognized at their fair values as of that date, and the direct costs incurred in connection with the business combination are recorded and expensed separately from the business combination. Acquisitions in which the Company is able to exert significant influence but does not have control are accounted for using the equity method. |
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Investments in Unconsolidated Affiliates | Investments in Unconsolidated Affiliates Investments in unconsolidated affiliates in which the Company exerts significant influence but does not control or otherwise consolidate are accounted for using the equity method. Equity method investments are initially recorded at cost, unless such investments are a result of the Company entering into a transaction whereby the Company loses control of a previously controlled entity but retains a noncontrolling interest. Such transactions, which result in the deconsolidation of a previously consolidated entity, are measured at fair value. The fair value measurement utilizes Level 3 inputs, which include unobservable data, to measure the fair value of the retained noncontrolling interest. The fair value determination is generally based on a combination of multiple valuation methods, which can include discounted cash flow, income approach, or market value approach, which incorporates estimates of future earnings and market valuation multiples for certain guideline companies. These investments are included as investments in unconsolidated affiliates in the accompanying consolidated balance sheets. The Company’s share of the profits and losses from these investments is reported in equity in earnings of unconsolidated affiliates in the accompanying consolidated statements of operations. The Company monitors its investments for other-than-temporary impairment by considering factors such as current economic and market conditions and the operating performance of the companies and records reductions in carrying values when necessary. |
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Goodwill and Intangible Assets |
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Earnings per Share | Earnings per Share Basic net earnings (loss) attributable to Envision Healthcare Corporation common stockholders, per common share, excludes dilution and is computed by dividing net earnings (loss) attributable to Envision Healthcare Corporation common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net earnings (loss) attributable to Envision Healthcare Corporation common stockholders, per common share is computed by dividing net earnings (loss) attributable to Envision Healthcare Corporation common stockholders by the weighted-average number of common shares outstanding during the period plus any potential dilutive common share equivalents, including shares issuable (i) upon the vesting of restricted stock awards, restricted stock units and performance stock units as determined under the treasury stock method and (ii) upon conversion of the Company's mandatory convertible preferred stock as determined under the if-converted method. For purposes of calculating diluted earnings (loss) per share, preferred stock dividends have been subtracted from both net earnings (loss) from continuing operations attributable to Envision Healthcare Corporation and net earnings (loss) attributable to Envision Healthcare Corporation common stockholders in periods in which utilizing the if-converted method would be anti-dilutive. |
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Income Taxes | Income Taxes The Company files a consolidated federal income tax return. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company applies recognition thresholds and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return as it relates to accounting for uncertainty in income taxes. In addition, it is the Company’s policy to recognize interest accrued and penalties, if any, related to unrecognized benefits as income tax expense in its consolidated statements of operations. The Company does not expect significant changes to its tax positions or liability for tax uncertainties during the next 12 months. |
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Insurance Programs | Insurance Reserves Insurance reserves are established for professional and general liability claims utilizing policies with both fully-insured and self-insured components. This includes the use of an off-shore captive insurance program through wholly owned subsidiaries for certain professional (medical malpractice) and general liability programs. In those instances where the Company has obtained third-party insurance coverage, the Company normally retains liability for the first $1 to $3 million of the loss. Insurance reserves cover known claims and incidents within the level of Company retention that may result in the assertion of additional claims, as well as claims from unknown incidents that may be asserted arising from activities through March 31, 2017. The Company establishes reserves for claims based upon an assessment of claims reported and claims incurred but not reported. The reserves are established based on consultation with third-party independent actuaries using actuarial principles and assumptions that consider a number of factors, including historical claim payment patterns (including legal costs) and changes in case reserves and the assumed rate of inflation in health care costs and property damage repairs. Claims are not discounted. Provisions for insurance expense included in the statements of operations include annual provisions determined in consultation with third-party actuaries and premiums paid to third-party insurers. Insurance Programs Given the nature of the services provided, the Company and its subsidiaries are subject to professional and general liability claims and related lawsuits in the ordinary course of business. The Company maintains professional insurance with third-party insurers generally on a claims-made basis, subject to self-insured retentions, exclusions and other restrictions. A substantial portion of the professional liability loss risks are being provided by a third-party insurer which is fully reinsured by the Company's wholly owned captive insurance subsidiary. The assets, liabilities and results of operations of the wholly owned captive are consolidated in the accompanying consolidated financial statements. The liabilities for self-insurance in the accompanying consolidated balance sheets include estimates of the ultimate costs related to both reported claims on an individual and aggregate basis and unreported claims. The Company also obtains professional liability insurance on a claims-made basis from third-party insurers for its surgery centers and certain of its owned practices and employed physicians. The Company’s reserves for professional liability claims within the self-insured retention are based upon periodic actuarial calculations. These actuarial estimates consider historical claims frequency and severity, loss development patterns and other actuarial assumptions and are not discounted to present value. The Company also maintains insurance for director and officer liability, workers’ compensation liability and property damage. Certain policies are subject to deductibles. In addition to the insurance coverage provided, the Company indemnifies its officers and directors for actions taken on behalf of the Company and its subsidiaries. |
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Stock Incentive Plans | Stock Incentive Plans Transactions in which the Company receives employee and non-employee services in exchange for the Company’s equity instruments or liabilities that are based on the fair value of the Company’s equity securities or may be settled by the issuance of these securities are accounted using a fair value method. The Company applies the Black-Scholes method of valuation in determining share-based compensation expense for option awards. For performance share units, the Company utilizes the Monte-Carlo method of valuation. For awards with graded vesting schedules, the Company recognizes compensation expense using the accelerated method. Forfeitures are recognized as incurred. |
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Segments | Prior to the classification of the medical transportation business into discontinued operations, the Company operated in three major lines of business, physician services, medical transportation and ambulatory services, which had been identified as its operating and reportable segments. Subsequent to the discontinued operations classification, the Company has aligned financial results into two operating and reportable segments: physician services and ambulatory services. The physician services segment includes the Company’s hospital-based and non-hospital-based physician services business. The ambulatory services segment includes the Company’s ambulatory surgery business, which acquires, develops, owns and operates ASCs and surgical hospitals in partnership with physicians and health systems. The Company’s financial information by segment is prepared on an internal management reporting basis and includes allocations of corporate expenses. This financial information is used by the chief operating decision maker to allocate resources and assess the performance of the segments. The Company’s segments have been defined based on the separate financial information that is regularly produced and reviewed by the Company’s chief operating decision maker which is its Chief Executive Officer. |
Description of Business and Basis of Presentation (Tables) |
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Flow, Supplemental Disclosures | The following presents supplemental cash flow statement disclosure (in millions):
|
Revenue Recognition and Accounts Receivable (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue and Fees by Segment and Major Payors | Net revenue for the Company consists of the following major payors (in millions):
|
Acquisitions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The acquisition date fair value of the total consideration transferred and acquisition date fair value of each major financial class for individual acquisitions in both the ambulatory services and physician services segments completed in the three months ended March 31, 2017, including post acquisition date adjustments, are as follows (in millions):
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Consolidated Pro Forma Results Of Acquisition | Net revenue and net earnings associated with completed acquisitions during the three months ended March 31, 2017 are as follows (in millions):
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EHH Merger [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The acquisition date fair value of the total consideration transferred and acquisition date fair value of each major class of consideration for the acquisition of EHH are as follows (in millions):
|
Discontinued Operations (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal Groups, Including Discontinued Operations | The following table is a reconciliation of the major classes of assets and liabilities classified as held for sale in the accompanying consolidated balance sheets representing the medical transportation business as of March 31, 2017 and December 31, 2016 (in millions):
The following table summarizes the results of discontinued operations for the three months ended March 31, 2017 (in millions):
|
Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Measurement Inputs, Disclosure | The following table summarizes the valuation of the Company’s financial instruments by the above fair value hierarchy levels as of March 31, 2017 and December 31, 2016 (in millions):
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Schedule Of Restricted Cash And Investments | Insurance collateral consisted of the following as of March 31, 2017 and December 31, 2016 (in millions):
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Schedule of Available-for-sale Securities Reconciliation | Amortized cost basis and aggregate fair value of the Company's available-for-sale securities as of March 31, 2017 and December 31, 2016 were as follows (in millions):
|
Goodwill and Intangible Assets (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes In Carrying Amount Of Goodwill | The changes in the carrying amount of goodwill for the three months ended March 31, 2017 are as follows (in millions):
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Schedule of Finite-Lived Intangible Assets |
Intangible assets at March 31, 2017 and December 31, 2016 consisted of the following (in millions):
|
Other Accrued Liabilities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Payable and Accrued Liabilities | The following table presents a summary of items comprising other accrued liabilities in the accompanying consolidated balance sheets as of March 31, 2017 and December 31, 2016 (in millions):
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Long-term Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components Of Long-Term Debt | Long-term debt at March 31, 2017 and December 31, 2016 consisted of the following (in millions):
|
Insurance Reserves (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Professional Liabilities | At March 31, 2017 and December 31, 2016, the Company's accrued professional liabilities are presented in the accompanying consolidated balance sheets as a component of other accrued liabilities and insurance reserves as follows (in millions):
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Schedule of Self Insurance Reserve Roll Forward | The changes to the Company's estimated losses under insurance programs as of March 31, 2017 were as follows (in millions):
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Stockholders' Equity (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Changes In Non-Vested Restricted Shares | A summary of the status of non-vested restricted shares at March 31, 2017 and changes during the three months ended March 31, 2017 is as follows:
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Schedule Of Stock Option Activity | A summary of stock option activity for the three months ended March 31, 2017 is summarized as follows:
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Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The fair value of each stock option award converted as part of the Merger was calculated on the merger date, December 1, 2016, using the Black-Scholes valuation model with the following assumptions indicated in the below table. The volatility assumptions were based on the historical stock volatility of the Company.
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Share-Based Activity | Other information pertaining to share-based activity during the three months ended March 31, 2017 and 2016 is as follows (in millions):
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Schedule of Earnings Per Share, Basic and Diluted | The following is a reconciliation of the numerator and denominators of basic and diluted earnings (loss) per share (dollars in millions, except per share amounts):
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Segment Reporting (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following table presents financial information for each reportable segment (in millions):
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Financial Information for the Company and Its Subsidiaries (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Balance Sheet |
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Condensed Consolidating Statement of Operations |
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Condensed Consolidating Statement of Cash Flows |
|
Description of Business and Basis of Presentation (Details) $ in Millions |
3 Months Ended | 11 Months Ended | 12 Months Ended |
---|---|---|---|
Mar. 31, 2017
USD ($)
segment
|
Nov. 30, 2016
segment
|
Dec. 31, 2016
USD ($)
segment
|
|
Variable Interest Entity [Line Items] | |||
Number of reportable segments | segment | 2 | 3 | 3 |
Restricted Cash [Member] | |||
Variable Interest Entity [Line Items] | |||
Cash deposits and other | $ | $ 39.0 | $ 43.5 |
Description of Business and Basis of Presentation - Supplemental Cash Flow Data (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Supplemental cash flow information: | ||
Interest payments | $ 65.3 | $ 41.3 |
Income tax paid, net of refunds | $ 5.3 | $ 8.9 |
Description of Business and Basis of Presentation - Reclassifications (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2017
USD ($)
| |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Excess tax benefit, amount | $ 2.9 |
Revenue Recognition and Accounts Receivable - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Revenue, Major Customer [Line Items] | ||
Provision for uncollectibles | $ 977.2 | $ 93.6 |
Other Operating Expenses [Member] | Ambulatory Services [Member] | ||
Revenue, Major Customer [Line Items] | ||
Provision for uncollectibles | $ 6.9 | $ 5.8 |
Acquisitions (Physician and Ambulatory Services Activity) (Details) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017
USD ($)
physician_practice
center
|
Mar. 31, 2016
USD ($)
physician_practice
|
|
Business Acquisition [Line Items] | ||
Acquisitions and related expenses, net | $ 73.1 | $ 3.0 |
Physician Services [Member] | Series of Individually Immaterial Business Acquisitions [Member] | ||
Business Acquisition [Line Items] | ||
Number of business acquisitions | physician_practice | 3 | 1 |
Cash paid to acquire business | $ 55.4 | $ 3.0 |
Ambulatory Services [Member] | ||
Business Acquisition [Line Items] | ||
Number of business acquisitions | center | 2 | |
Acquisitions and related expenses, net | $ 17.7 |
Acquisitions (Fair Value of Assets Acquired and Liabilities Assumed During EHH Merger) (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2016 |
Dec. 01, 2016 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 7,665.7 | $ 7,584.0 | |
EHH Merger [Member] | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | $ 165.8 | ||
Insurance collateral | 59.9 | ||
Accounts receivable | 1,269.6 | ||
Supplies inventory | 38.7 | ||
Prepaid and other current assets | 115.8 | ||
Property and equipment | 375.8 | ||
Goodwill | 4,520.8 | ||
Intangible assets | 3,120.8 | ||
Other long-term assets | 95.0 | ||
Accounts payable | (63.6) | ||
Accrued salaries and benefits | (338.0) | ||
Accrued interest | (17.3) | ||
Other accrued liabilities | (319.3) | ||
Deferred income taxes | (1,041.5) | ||
Long term insurance reserves | (291.2) | ||
Other long-term liabilities | (62.8) | ||
Long-term debt | (3,063.1) | ||
Total fair value | 4,565.4 | ||
Less: Fair value attributable to noncontrolling interests | 122.0 | ||
Acquisition date fair value of total consideration transferred | $ 4,443.4 |
Acquisitions (Fair Value Of Total Consideration Transferred And Major Class Of Consideration) (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Business Acquisition [Line Items] | ||
Goodwill | $ 7,665.7 | $ 7,584.0 |
Series of Individually Immaterial Business Acquisitions [Member] | ||
Business Acquisition [Line Items] | ||
Accounts receivable | 4.7 | |
Prepaid and other current assets | 0.1 | |
Property and equipment | 0.1 | |
Goodwill | 73.1 | |
Intangible assets | 10.8 | |
Accounts payable | (0.1) | |
Other accrued liabilities | (0.3) | |
Deferred income taxes | (1.5) | |
Total fair value | 86.9 | |
Less: Fair value attributable to noncontrolling interests | 13.8 | |
Acquisition date fair value of total consideration transferred | $ 73.1 |
Acquisitions (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Business Combinations [Abstract] | ||
Goodwill deductible for tax purposes | $ 23.4 | $ 1.1 |
Transaction and integration costs | $ 21.5 | $ 1.4 |
Acquisitions (Revs and Earnings) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Business Acquisition [Line Items] | ||
Net Revenue: | $ 1,878.6 | $ 724.7 |
Net earnings (loss) | (391.1) | 84.7 |
Less net earnings attributable to noncontrolling interests | 54.1 | 53.8 |
Net earnings (loss) attributable to Envision Healthcare Corporation stockholders | (445.2) | $ 30.9 |
Series of Individually Immaterial Business Acquisitions [Member] | ||
Business Acquisition [Line Items] | ||
Net Revenue: | 15.2 | |
Net earnings (loss) | 0.8 | |
Less net earnings attributable to noncontrolling interests | 0.3 | |
Net earnings (loss) attributable to Envision Healthcare Corporation stockholders | $ 0.5 |
Discontinued Operations (Narrative) (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Deferred income taxes | $ 504,200,000 | $ 6,600,000 |
Net cash flows provided by operating activities attributable to discontinued operations | 29,000,000 | |
Net cash flows provided by investing activities attributable to discontinued operations | 8,700,000 | |
Net Cash Provided by (Used in) Discontinued Operations | $ 0 | |
Medical Transportation Segment [Member] | Discontinued Operations, Held-for-sale [Member] | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Deferred income taxes | 484,000,000 | |
Deferred tax liability, deferred expense | 484,000,000 | |
Operating costs and expenses | 14,500,000 | |
Interest expense, net allocated to discontinued operations | $ 21,800,000 |
Fair Value Measurements - Insurance Collateral (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities: | $ 47.3 | $ 43.5 |
Insurance collateral | 86.3 | 87.0 |
US Treasuries [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities: | 1.5 | 1.0 |
Corporate bonds/Fixed income [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities: | 30.9 | 28.3 |
Corporate equity [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities: | 14.9 | 14.2 |
Restricted Cash [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash deposits and other | $ 39.0 | $ 43.5 |
Goodwill and Intangible Assets (Goodwill Rollforward) (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2017
USD ($)
| |
Goodwill [Roll Forward] | |
Balance at December 31, 2016 | $ 7,584.0 |
Goodwill acquired, including post acquisition adjustments | 93.9 |
Goodwill disposed, including impact of deconsolidation transactions | (12.2) |
Balance at March 31, 2017 | 7,665.7 |
Physician Services [Member] | |
Goodwill [Roll Forward] | |
Balance at December 31, 2016 | 5,509.7 |
Goodwill acquired, including post acquisition adjustments | 63.0 |
Goodwill disposed, including impact of deconsolidation transactions | 0.0 |
Balance at March 31, 2017 | 5,572.7 |
Ambulatory Services [Member] | |
Goodwill [Roll Forward] | |
Balance at December 31, 2016 | 2,074.3 |
Goodwill acquired, including post acquisition adjustments | 30.9 |
Goodwill disposed, including impact of deconsolidation transactions | (12.2) |
Balance at March 31, 2017 | $ 2,093.0 |
Other Accrued Liabilities (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Accrued Liabilities, Current [Abstract] | ||
Insurance reserves | $ 76.6 | $ 78.2 |
Refunds payable | 33.3 | 33.6 |
Deferred revenue | 12.1 | 9.4 |
Other | 133.8 | 132.0 |
Total other accrued liabilities | $ 255.8 | $ 253.2 |
Long-term Debt (Narrative) (Details) $ in Millions |
Mar. 31, 2017
USD ($)
|
---|---|
Fixed Interest Rate [Member] | |
Schedule of Capitalization, Long-term Debt [Line Items] | |
Long-term debt | $ 2,450 |
Long-term debt, fair value | 2,500 |
Variable Interest Rate [Member] | |
Schedule of Capitalization, Long-term Debt [Line Items] | |
Long-term debt, fair value | $ 3,490 |
Insurance Reserves (Narrative) (Details) $ in Millions |
Mar. 31, 2017
USD ($)
|
---|---|
Minimum [Member] | |
Loss Contingencies [Line Items] | |
Amount of loss at which third party insurance becomes effective | $ 1 |
Maximum [Member] | |
Loss Contingencies [Line Items] | |
Amount of loss at which third party insurance becomes effective | $ 3 |
Insurance Reserves (Components of Reserves) (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Payables and Accruals [Abstract] | ||
Third-party insurance reserves | $ 90.6 | $ 92.8 |
Estimated losses under self-insured programs | 174.7 | 170.0 |
Incurred but not reported losses | 99.5 | 94.3 |
Total accrued insurance reserves | 364.8 | 357.1 |
Less estimated losses payable within one year | 76.6 | 78.2 |
Total | $ 288.2 | $ 278.9 |
Insurance Reserves (Rollforward of Reserves) (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2017
USD ($)
| |
Self Insurance Reserve [Roll Forward] | |
Balance at December 31, 2016 | $ 357.1 |
Provision related to current period reserves | 18.3 |
Payments for prior period reserves | (15.2) |
Change in third-party insurance reserves | (3.0) |
Other, net including post-acquisition adjustments | 7.6 |
Balance at March 31, 2017 | $ 364.8 |
Stockholder's Equity (Common Stock) (Details) $ / shares in Units, $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Dec. 01, 2016
shares
|
Mar. 31, 2017
USD ($)
$ / shares
shares
|
Mar. 31, 2016
USD ($)
shares
|
Dec. 31, 2016
$ / shares
|
|
Class of Stock [Line Items] | ||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | ||
Stock Repurchased To Cover Employee Tax Withholdings [Member] | ||||
Class of Stock [Line Items] | ||||
Stock repurchased (in shares) | 128,186 | 77,780 | ||
Stock repurchased | $ | $ 8.8 | $ 5.7 | ||
EHH Merger [Member] | ||||
Class of Stock [Line Items] | ||||
Number of shares to be issued for one share of acquiree's stock (in shares) | 0.334 | |||
EHH Merger [Member] | Common Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Shares issued for acquisition (in shares) | 62,582,161 |
Stockholders Equity (Schedule Of Changes In Non-Vested Restricted Shares) (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Number of Shares | ||
Non-vested awards at December 31, 2016 (in shares) | 1,240,526 | |
Shares granted (in shares) | 571,084 | |
Shares vested (in shares) | (372,945) | |
Shares forfeited (in shares) | (2,204) | |
Non-vested awards at March 31, 2017 (in shares) | 1,436,461 | |
Weighted Average Grant Price | ||
Non-vested awards at December 31, 2016 (in dollars per share) | $ 66.72 | $ 63.09 |
Shares granted (in dollars per share) | 66.08 | |
Shares vested (in dollars per share) | 53.66 | |
Shares forfeited (in dollars per share) | 67.36 | |
Non-vested awards at March 31, 2017 (in dollars per share) | $ 66.72 |
Stockholder's Equity (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2017 |
Dec. 01, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Compensation cost not yet recognized | $ 68.4 | $ 68.4 | ||
Compensation cost not yet recognized, period for recognition | 1 year 1 month | |||
Performance Shares [Member] | ||||
Instruments converted in period (in shares) | 241,874 | 191,927 | ||
Equity instruments other than options, converted in period, weighted average grant date fair value (in dollars per share) | $ 62.69 | |||
Employee Stock Option [Member] | ||||
Antidilutive securities excluded from computation of earnings per share, amount (in dollars per share) | 66,463 | 0 |
Stockholder's Equity (Assumptions Used in Valuation) (Details) |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Volatility | 31.90% |
Risk free rate, minimum | 0.82% |
Risk free rate, maximum | 1.90% |
Expected dividend yield | 0.00% |
Minimum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term of options in years | 1 year |
Maximum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term of options in years | 5 years |
Stockholders' Equity (Share-Based Activity) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Equity [Abstract] | ||
Share-based compensation expense from continuing operations | $ 14.6 | $ 7.2 |
Share-based compensation | 16.1 | 7.2 |
Fair value of shares vested | 28.4 | 17.0 |
Cash received from option exercises | 1.1 | 0.3 |
Tax benefit from exercises of share based awards | $ 2.9 | $ 3.6 |
Commitments and Contingencies (Details) $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Apr. 16, 2008
lawsuit
|
Dec. 31, 2012 |
Mar. 31, 2017
USD ($)
|
Aug. 07, 2012
lawsuit
|
|
Schedule Of Operating Leases Square Footage [Line Items] | ||||
Estimate of possible loss | $ | $ 30.0 | |||
EmCare [Member] | Subpoena From Office Of Inspector General Member [Member] | ||||
Schedule Of Operating Leases Square Footage [Line Items] | ||||
Number of lawsuits in which entity is defendant | 2 | |||
AMR [Member] | Violation Of The Federal Anti-kickback Statute [Member] | ||||
Schedule Of Operating Leases Square Footage [Line Items] | ||||
Loss contingency term of corporate integrity agreement | 5 years | |||
AMR [Member] | Predecessor [Member] | ||||
Schedule Of Operating Leases Square Footage [Line Items] | ||||
Loss contingency number of lawsuits purporting to be class actions filed | 4 |
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