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Restructuring Plan
12 Months Ended
Mar. 31, 2017
Restructuring Costs [Abstract]  
Restructuring Plan
Restructuring Plan
We continue to evaluate the organizational structure of our company with the objective of achieving greater synergies and further integration of our products and services, in support of our business strategies. In fiscal year 2016, we initiated a three-phase plan intended to better position our organization for future success. In the first phase, we redesigned the organization to more effectively support the execution of our strategy. This phase included implementing a series of actions with the objective of enabling a more efficient, integrated and client-centered delivery of the holistic solutions that we believe is required by our ambulatory care clients. During this phase, we transformed our management team with the appointment of a new Chief Executive Officer, Chief Financial Officer, Chief Technology Officer, Chief Operating Officer, and Chief Strategy Officer. Under phase two of our reorganization, we have continued to build our infrastructure and enhance our healthcare information technology capabilities to drive future revenue growth. The third phase of the plan will consist of developing and marketing the services and solutions that we believe will accelerate revenue growth.
The overall plan also includes a multi-year initiative, called NextGen 2.0, to merge our business units into a more streamlined, functional-based organization structure and to realign our organizational structure by consolidating the sales, marketing, information services, and software development responsibilities into single, company-wide roles to achieve greater efficiency. As a result, our reportable segments have changed.
The first phase was completed in April 2016, when we announced a corporate restructuring plan, which was approved by our Board of Directors. For the fiscal year ended March 31, 2017, we recorded $7,078 of restructuring costs within operating expenses in our consolidated statements of net income and comprehensive income. The restructuring costs consist primarily of payroll-related costs, such as severance, outplacement costs, and continuing healthcare coverage, associated with the involuntary separation of employees pursuant to a one-time benefit arrangement, which were accrued when it was probable that the benefits will be paid and the amount were reasonably estimable. Also included in restructuring costs was $1,661 of facilities-related costs associated with accruals for the remaining lease obligations at certain locations, including Solana Beach, Costa Mesa, and a portion of Horsham with contractual lease terms ending between January 2018 and September 2023. We have vacated each of the locations or portions thereof and are actively marketing the locations for sublease. We estimated the remaining lease obligations at fair value as of the cease-use date for each location based on the future contractual lease obligations, reduced by projected sublease rentals that could be reasonably obtained for the locations after a period of marketing, and adjusted for the effect deferred rents that have been recognized under the lease. The effect of discounting future cash flows using a credit-adjusted risk free rate was not significant. Sublease income and commencement dates were estimated based on data available from rental activity in the local markets. Significant judgment was required to estimate the remaining lease obligations at fair value and actual results could vary from the estimates, resulting in potential future adjustments to amounts previously recorded.
As of March 31, 2017, the remaining restructuring liability associated with payroll-related costs was $606, which we expect to settle in the first quarter of fiscal 2018, and the remaining lease obligation, net of estimated projected sublease rentals, was $2,285. Refer to Note 14 for estimated timing of payments related to remaining lease obligations. The restructuring plan was substantially complete by the end of fiscal 2017.