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General (Tables)
 9 Months Ended
Sep. 30, 2014
General  
Schedule of customers generating in excess of ten percent of net revenues for respective segment

In addition to the Maricopa Contract previously discussed, the following customers generated in excess of ten percent of net revenues for the respective segment for the nine months ended September 30, 2013 and 2014 (in thousands):

                                                                                                                                                                                    

Segment

 

Term Date

 

2013

 

2014

 

Commercial

 

 

 

 

 

 

 

 

 

Customer A

 

June 30, 2014(1)

 


$
156,269 

 


$
110,138 

 

Customer B

 

December 31, 2019

 

 
106,433 

 

 
138,944 

 

Customer C

 

August 14, 2017

 

 
47,625 

*

 
76,863 

 

Customer D

 

December 14, 2013(1)

 

 
58,246 

 

 

—

 

Public Sector

 

 

 

 


 

 

 


 

 

Customer E

 

June 30, 2015 to July 1, 2016(2)

 

 
215,396 

 

 
337,893 

 

Specialty Solutions

 

 

 

 


 

 

 


 

 

Customer F

 

December 31, 2015

 

 
96,402 

 

 
109,138 

 

Customer G

 

June 30, 2016(3)

 

 
43,490 

 

 
28,046 

 

Customer H

 

July 31, 2015

 

 
47,161 

 

 
55,768 

 

Customer A

 

November 30, 2016

 

 
1,623 

*

 
40,003 

 

Customer I

 

January 31, 2016

 

 
34,338 

 

 
38,282 

 

Pharmacy Management

 

 

 

 


 

 

 


 

 

Customer J

 

November 30, 2014 to December 31, 2014(2)

 

 
99,599 

 

 
92,793 

 

Customer K

 

December 31, 2013(4)

 

 
68,166 

 

 
2,339 

*

Customer L

 

March 31, 2014(1)(5)

 

 
48,527 

 

 
18,055 

*

Customer M

 

December 16, 2016

 

 

—

 

 
105,079 

 

*

Revenue amount did not exceed ten percent of net revenues for the respective segment for the period presented. Amount is shown for comparative purposes only.

(1)

The contract has terminated.

(2)

The customer has more than one contract. The individual contracts are scheduled to terminate at various points during the time period indicated above.

(3)

This contract transitioned from risk to ASO based services effective July 1, 2014.

(4)

The contract has terminated, however, the Company continues to provide services as the contract is transitioned to the new vendor.

(5)

This customer represented a subcontract with a Public Sector customer and was eliminated in consolidation.

 

Schedule of fair value of financial assets and liabilities

In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company's assets and liabilities that are required to be measured at fair value as of December 31, 2013 and September 30, 2014 (in thousands):

                                                                                                                                                                                    

 

 

December 31, 2013

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents(1)

 

$

—

 

$
101,028 

 

$

—

 

$
101,028 

 

Restricted cash(2)

 

 

—

 

 
128,318 

 

 

—

 

 
128,318 

 

Investments:

 

 


 

 

 


 

 

 


 

 

 


 

 

U.S. government and agency securities

 

 
1,129 

 

 

—

 

 

—

 

 
1,129 

 

Obligations of government-sponsored enterprises(3)

 

 

—

 

 
8,440 

 

 

—

 

 
8,440 

 

Corporate debt securities

 

 

—

 

 
198,594 

 

 

—

 

 
198,594 

 

Certificates of deposit

 

 

—

 

 
150 

 

 

—

 

 
150 

 

 

 

 

 

 

 

 

 

 

 

Total assets held at fair value

 

$
1,129 

 

$
436,530 

 

$

—

 

$
437,659 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                                                                                                                                    

 

 

September 30, 2014

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents(4)

 

$

—

 

$
73,194 

 

$

—

 

$
73,194 

 

Restricted cash(5)

 

 

—

 

 
76,428 

 

 

—

 

 
76,428 

 

Investments:

 

 


 

 

 


 

 

 


 

 

 


 

 

U.S. government and agency securities

 

 
2,393 

 

 

—

 

 

—

 

 
2,393 

 

Obligations of government-sponsored enterprises(3)

 

 

—

 

 
15,222 

 

 

—

 

 
15,222 

 

Corporate debt securities

 

 

—

 

 
182,659 

 

 

—

 

 
182,659 

 

Certificates of deposit

 

 

—

 

 
1,150 

 

 

—

 

 
1,150 

 

 

 

 

 

 

 

 

 

 

 

Total assets held at fair value

 

$
2,393 

 

$
348,653 

 

$

—

 

$
351,046 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration

 

 

—

 

 

—

 

 
51,981 

 

 
51,981 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities held at fair value

 

$

—

 

$

—

 

$
51,981 

 

$
51,981 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Excludes $102.2 million of cash held in bank accounts by the Company.

(2)

Excludes $108.4 million of restricted cash held in bank accounts by the Company.

(3)

Includes investments in notes issued by the Federal Home Loan Bank.

(4)

Excludes $295.1 million of cash held in bank accounts by the Company.

(5)

Excludes $88.7 million of restricted cash held in bank accounts by the Company.

 

Summary of the Company's liability for contingent consideration

The following table summarizes the Company's liability for contingent consideration (in thousands):

                                                                                                                                                                                    

 

 

September 30,
2014

 

Balance as of beginning of period

 

$

—

 

Acquisition of CDMI

 

 
45,778 

 

Acquisition of Cobalt

 

 
3,071 

 

Interest accretion

 

 
3,132 

 

 

 

 

 

Balance as of end of period

 

$
51,981 

 

 

 

 

 

 

 

 

 

 

Summary of short-term and long-term "available-for-sale" investments

The following is a summary of short-term and long-term investments at December 31, 2013 and September 30, 2014 (in thousands):

                                                                                                                                                                                    

 

 

December 31, 2013

 

 

 

Amortized
Cost

 

Gross
Unrealized
Gains

 

Gross
Unrealized
Losses

 

Estimated
Fair Value

 

U.S. government and agency securities

 

$
1,129

 

$

—

 

$

—

 

$
1,129

 

Obligations of government-sponsored enterprises(1)

 

 
8,441

 

 
2

 

 
(3

)

 
8,440

 

Corporate debt securities

 

 
198,748

 

 
18

 

 
(172

)

 
198,594

 

Certificates of deposit

 

 
150

 

 

—

 

 

—

 

 
150

 

 

 

 

 

 

 

 

 

 

 

Total investments at December 31, 2013

 

$
208,468

 

$
20

 

$
(175

)

$
208,313

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                                                                                                                                    

 

 

September 30, 2014

 

 

 

Amortized
Cost

 

Gross
Unrealized
Gains

 

Gross
Unrealized
Losses

 

Estimated
Fair Value

 

U.S. government and agency securities

 

$
2,394

 

$

—

 

$
(1

)

$
2,393

 

Obligations of government-sponsored enterprises(1)

 

 
15,222

 

 
2

 

 
(2

)

 
15,222

 

Corporate debt securities

 

 
182,809

 

 
27

 

 
(177

)

 
182,659

 

Certificates of deposit

 

 
1,150

 

 

—

 

 

—

 

 
1,150

 

 

 

 

 

 

 

 

 

 

 

Total investments at September 30, 2014

 

$
201,575

 

$
29

 

$
(180

)

$
201,424

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Includes investments in notes issued by the Federal Home Loan Bank.

 

Summary of maturity dates of investments

The maturity dates of the Company's investments as of September 30, 2014 are summarized below (in thousands):

                                                                                                                                                                                    

 

 

Amortized
Cost

 

Estimated
Fair Value

 

2014

 

$
32,325 

 

$
32,297 

 

2015

 

 
141,233 

 

 
141,169 

 

2016

 

 
28,017 

 

 
27,958 

 

 

 

 

 

 

 

Total investments at September 30, 2014

 

$
201,575 

 

$
201,424 

 

 

 

 

 

 

 

 

Schedule of stock option activity

Summarized information related to the Company's stock options for the nine months ended September 30, 2014 is as follows:

                                                                                                                                                                                    

 

 

Options

 

Weighted
Average
Exercise
Price

 

Outstanding, beginning of period

 

 
4,010,146

 

$
47.23

 

Granted

 

 
729,636

 

 
59.89

 

Forfeited

 

 
(232,948

)

 
53.91

 

Exercised

 

 
(941,070

)

 
44.27

 

 

 

 

 

 

 

Outstanding, end of period

 

 
3,565,764

 

$
50.17

 

 

 

 

 

 

 

 

 

 

 

 

 

Vested and expected to vest at end of period

 

 
3,530,403

 

$
50.11

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable, end of period

 

 
1,911,740

 

$
46.20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schedule of nonvested restricted stock award activity

Summarized information related to the Company's nonvested restricted stock awards ("RSAs") for the nine months ended September 30, 2014 is as follows:

                                                                                                                                                                                    

 

 

Shares

 

Weighted
Average
Grant Date
Fair Value

 

Outstanding, beginning of period

 

 
192,165

 

$
56.59

 

Awarded(1)

 

 
1,450,316

 

 
57.74

 

Vested

 

 
(16,569

)

 
52.82

 

Forfeited

 

 

—

 

 

—

 

 

 

 

 

 

 

Outstanding, ending of period

 

 
1,625,912

 

$
57.66

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Includes 1,433,946 shares associated with the CDMI acquisition.

 

Schedule of nonvested restricted stock units

Summarized information related to the Company's nonvested restricted stock units ("RSUs") for the nine months ended September 30, 2014 is as follows:

                                                                                                                                                                                    

 

 

Shares

 

Weighted
Average
Grant Date
Fair Value

 

Outstanding, beginning of period

 

 
194,913

 

$
50.21

 

Awarded

 

 
76,306

 

 
60.39

 

Vested

 

 
(91,510

)

 
49.53

 

Forfeited

 

 
(18,079

)

 
54.77

 

 

 

 

 

 

 

Outstanding, ending of period

 

 
161,630

 

$
54.89

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schedule of allocation of goodwill by reporting units

Goodwill for each of the Company's reporting units at December 31, 2013 and September 30, 2014 were as follows (in thousands):

                                                                                                                                                                                    

 

 

December 31,
2013

 

September 30,
2014

 

Health Plan

 

$
120,485 

 

$
129,042 

 

Public Sector

 

 
20,882 

 

 
20,879 

 

Specialty Solutions

 

 
104,549 

 

 
104,549 

 

Pharmacy Management

 

 
242,290 

 

 
311,636 

 

 

 

 

 

 

 

Total

 

$
488,206 

 

$
566,106 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary changes in the carrying amount of goodwill

The changes in the carry amount of goodwill for the year ended December 31, 2013 and the nine months ended September 30, 2014 are reflected in the table below (in thousands):

                                                                                                                                                                                    

 

 

December 31,
2013

 

September 30,
2014

 

Balance as of beginning of period

 

$
426,939

 

$
488,206

 

Acquisition of Partners Rx(1)

 

 
40,385

 

 
254

 

Acquisition of AlphaCare Holdings(1)

 

 
20,882

 

 
(3

)

Acquisition of CDMI

 

 

—

 

 
69,092

 

Acquisition of Cobalt

 

 

—

 

 
8,557

 

 

 

 

 

 

 

Balance as of end of period

 

$
488,206

 

$
566,106

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Activity for the period ended September 30, 2014 represents measurement period adjustments.

 

Schedule of intangible assets

The following is a summary of intangible assets at December 31, 2013 and September 30, 2014, and the estimated useful lives for such assets (in thousands):

                                                                                                                                                                                    

 

 

December 31, 2013

 

Asset

 

Estimated Useful Life

 

Gross Carrying Amount

 

Accumulated Amortization

 

Net Carrying Amount

 

Customer agreements and lists

 

2.5 to 18 years

 

$
163,990

 

$
(100,482

)

$
63,508

 

Provider networks and other

 

1 to 16 years

 

 
11,593

 

 
(5,407

)

 
6,186

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$
175,583

 

$
(105,889

)

$
69,694

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                                                                                                                                    

 

 

September 30, 2014

 

Asset

 

Estimated
Useful Life

 

Gross
Carrying
Amount

 

Accumulated
Amortization

 

Net
Carrying
Amount

 

Customer agreements and lists

 

2.5 to 18 years

 

$
249,390

 

$
(115,598

)

$
133,792

 

Provider networks and other

 

1 to 16 years

 

 
13,013

 

 
(6,492

)

 
6,521

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$
262,403

 

$
(122,090

)

$
140,313