Discontinued Operations

3 Months Ended

Mar. 31, 2017

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

At December 31, 2015, Torchmark met the criteria to account for its Medicare Part D Prescription Drug Plan business as a discontinued operation. Historically, the business was a reportable segment. Effective July 1, 2016, Torchmark sold its Medicare Part D Prescription Drug Plan business to an unaffiliated third party.

The sale resulted in a net gain of $1.8 million ($1.2 million net of tax) in 2016. The operating results from discontinued operations are reflected in income as of March 31, 2017. The remaining assets and liabilities reflected on the Torchmark balance sheet related to discontinued operations are receivables and payables associated with the 2016 and prior plan years that are expected to be settled in the ordinary course of business during 2017 and 2018.

The net assets related to discontinued operations at March 31, 2017 and December 31, 2016 were as follows:

	March 31, 2017		December 31, 2016
Assets:
Due premiums	$	3,945	$	8,840
Other receivables(1)	79,400		118,692
Total assets related to discontinued operations	83,345		127,532
Liabilities:
Risk sharing payable	8,528		8,374
Current and deferred income taxes payable	3,128		3,820
Other(2)	2,068		15,230
Total liabilities related to discontinued operations	13,724		27,424
Net assets	$	69,621	$	100,108

(1) At March 31, 2017, receivables included $65 million from the Centers for Medicare and Medicaid Services (CMS) and $14 million from drug manufacturer rebates. At December 31, 2016, the comparable amounts were $50 million and $69 million, respectively.

(2) Balance at December 31, 2016 includes $3.6 million representing a contingent purchase price reserve.

Income from discontinued operations for the three months ended March 31, 2017 and 2016 was as follows:

	Three Months Ended   March 31,
	2017			2016
Revenue:
Health premium	$	(224	)	$	54,699
Benefits and expenses:
Health policyholder benefits	4,184			61,481
Amortization of deferred acquisition costs	—			1,008
Commissions, premium taxes, and non-deferred acquisition expenses	576			5,109
Other operating expense	611			1,780
Total benefits and expenses	5,371			69,378
Income (loss) before income taxes for discontinued operations	(5,595		)	(14,679		)
Income tax benefit (expense)	1,958			5,138
Income (loss) from discontinued operations	$	(3,637	)	$	(9,541	)

Operating cash flows of the discontinued operations for the three months ended March 31, 2017 and 2016 were as follows:

	Three Months Ended   March 31,
	2017		2016
Net cash provided from (used for) discontinued operations	$	26,850	$	14,061