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Share Name | Share Symbol | Market | Type |
---|---|---|---|
The Advisory Board Company (MM) | NASDAQ:ABCO | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 53.825 | 53.70 | 53.85 | 0 | 01:00:00 |
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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52-1468699
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Title of each class
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Name of each exchange on which registered
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Common Stock, par value $0.01
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The NASDAQ Stock Market LLC
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(NASDAQ Global Select Market)
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Large accelerated filer
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þ
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if smaller reporting company)
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Smaller reporting company
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¨
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Page
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16.
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•
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Best practices research
. Our best practices research and insight programs provide the foundation for all of our other programs. These programs are focused on understanding industry dynamics, identifying best-demonstrated management practices, critically evaluating widely-followed but ineffective practices, and analyzing emerging trends within the health care and education industries. We communicate and teach best practices across our broad network through independent forums for each key leadership constituency.
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•
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Technology.
Our cloud-based software applications allow members to combine insights derived from our best practices research with their own operational and financial data and third-party and proprietary data to benchmark performance; identify and assess revenue, cost, quality, and performance improvement opportunities; and implement identified best practices.
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•
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Data-enabled services
. We draw on our extensive data assets, distinctive technology platforms, proven processes, and deep expertise gained over years of experience to apply best practices and enablement services to directly produce results for our members.
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•
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Consulting services.
Our consulting services programs assist our members’ own efforts to set strategic direction, address key operational challenges, and improve their performance. We deploy our experts to work side-by-side with members implementing best practice solutions and driving change in their organizations.
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•
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Undergoing transformation:
Both the health care and education industries are undergoing tremendous change. Health care providers are facing an aging population, increasing cost and margin pressures, new regulations related to the Affordable Care Act and now the potential amendment or repeal of certain components of the Affordable Care Act, and movement from fee-for-service to value-based reimbursement. Colleges and universities are confronting a slower growing student population, shrinking state budgets, rising cost concerns, heightened attention to value and outcomes, and a movement towards performance-based funding. During these times of significant change, health care and education institutions are in greater need of, and are actively seeking, best practices to address their mounting challenges.
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•
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Common and complex industry-wide issues:
Health care and education organizations of all types and sizes face many of the same complex strategic, operational, and management issues. Institutions are working to increase revenue, reduce costs, improve productivity and performance, manage innovation, reengineer business processes, and comply with new government regulations. Because the delivery of health care and education services is based on complex, interrelated processes, there is widespread interest in, and broad applicability of, standardized programs that address the major challenges facing the industries.
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•
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Fragmented target industries:
We believe that our target market consists of over 15,000 health care organizations and over 5,000 education institutions. Many of these organizations deliver services primarily on a local or regional basis. As a result of this fragmentation, best practices that are pioneered in local or regional markets are rarely widely known throughout the industry.
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•
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Willingness to share best practices:
We believe that health care and education organizations display a relatively high propensity to share best practices. Many health systems and universities are non-profit organizations or compete in a limited geographic market and do not consider organizations outside their market to be their competitors. In addition, the health care and education industries have a charter above commerce in serving their communities and their end customers, and have a long tradition of disseminating information as part of ongoing research and education activities.
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•
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Need for data and analytics
: Health care data resides in numerous source systems both within and dispersed across a variety of organizations, including hospitals, physician practices, and government and commercial payers. Education data similarly is derived from a broad range of sources, which encompass students, parents, employers, high schools, colleges and universities, and other non-traditional education institutions. To achieve higher-quality outcomes and control costs, organizations within these markets exhibit a strong and continuing need for data and the systematic analysis of data to help them understand their current performance and identify opportunities for improvement.
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•
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Value orientation:
A membership model that provides access to best practice insight, software applications, and value-added services on a syndicated basis appeals to many value-focused health care and education organizations that may be reluctant to make discretionary investments in an exclusive, higher-priced, customized engagement or tailored software solution to address their critical issues.
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•
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Market leader in rapidly changing markets.
We are a market leader in both the health care and education markets, serving executives at more than 3,000 U.S. hospitals and health systems since 1986 and over 1,100 U.S. colleges and universities since 2007. The ongoing transformation of these industries is presenting new challenges and creating demand for new programs and services. We believe our reputation and success to date have positioned us as a premier source and partner for identifying, evaluating, communicating, and providing solutions that respond to evolving market needs.
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•
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A superior value proposition to members
. Members use our programs to improve the effectiveness of their organizations by increasing productivity, reducing operating costs, and enhancing revenue. We believe that our program costs generally represent a small percentage of the potential benefit members can achieve through successful application of the best practices research, software, and consulting that they receive. In fact, we generated over $2.0 billion in documented value for our members. In addition, our fixed-fee pricing for research and software promotes frequent use of our programs by our members, which we believe increases both the value members receive and their loyalty to our programs.
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•
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Extensive membership base and longstanding member relationships.
Our membership includes some of the largest and most prestigious health care and education institutions in the United States, including all 20 of the
2016-2017 U.S. News and World Report
honor roll hospitals and 91 of the
U.S. News and World Report
’s top 100 national universities for 2017. Our programs reach more than 10,000 chief executive and chief operating officers, and over 300,000 other senior executives, operational and clinical leaders, department heads, and product-line managers. Our membership-based model, in which members participate in our research on an annual basis, gives us privileged access to our members’ business practices, proprietary data, and strategic plans, enabling us not only to identify and share emerging best practices but also to develop first-in-class and best-in-class new programs and services to meet our members’ changing needs.
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•
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Broad, insight-driven offerings.
We provide a distinctively broad and deep set of best practices research, technology programs, data-enabled services, and consulting services, allowing us to assist our members in a variety of ways depending on their specific needs and problem areas. Our health care programs address key areas where hospitals and health systems require comprehensive and continuous support to address perennial challenges, including: driving health system growth, reducing care variation, and optimizing the revenue cycle. Our education programs focus on topics that include enrollment management, student success, academic programming, faculty productivity, and advancement. Our technology programs and data-enabled services differ from those of most of our competitors in that they are rooted in best practices, aggregate and standardize data from disparate source systems, and are part of a complementary platform of offerings.
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•
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Highly recurring, visible, and scalable business model.
We derive the majority of our revenue from multi-year memberships across our distinct programs. Our member renewal rate for our research and software programs has equaled or exceeded
90%
for each of the twelve-month fiscal periods in the five year period ended December 31, 2016, which we believe reflects our members’ recognition of the value they derive from participating in our programs. In addition, we can identify over 80% of our expected annual revenues at the beginning of the fiscal year based on our deferred revenue balance and historical program renewal trends. Our economic model, which features a standardized set of services and a largely fixed-cost structure, enables us to add new members to our programs at a low incremental cost of delivery, thereby disproportionately increasing operating profit for our members.
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•
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Consistent financial performance and strong cash flows.
Since becoming a public company in 2001, we have increased our number of members, contract value per member, total contract value, and revenue nearly every year, including during economic downturns. Since March 31, 2012, our number of members has grown from 3,726 to 5,633, while our contract value per member has expanded from approximately $107,000 to approximately $140,000. The combination of revenue growth, profitable operations, and payment for memberships in advance of accrual revenue typically results in our cash flows from operations exceeding our net income and often approximating our adjusted EBITDA.
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•
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Add new health care and education members.
We believe there are over 15,000 potential members in the health care market and over 5,000 potential members in the education market. Although we currently have an established membership base in these markets, we actively seek to continue adding new members. In addition, we believe that our business model and existing membership base represent significant assets that we can use to attract additional non-provider health care members and international health care and education members. We currently serve approximately 400 non-U.S. health care organizations through programs that rely on research and analysis primarily derived from our work with U.S. health care organizations. In addition, we are seeking to expand our work with independent medical groups, pharmaceutical, biotechnology, medical device, and health insurance companies, as well as with other organizations with an interest in U.S. hospital and health system operations, performance, and data.
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•
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Expand relationships with and create additional value for existing members.
We have developed broad and deep relationships with approximately 4,400 members and over 200,000 executives across our health care programs, and approximately 1,100 members and over 80,000 executives across our education programs. As members recognize benefits from one program, they may seek out or become strong candidates for other programs and services. In addition, our steady interaction with members through research, sales, program development and delivery, and account management provides us with insight into which of our programs would be most suitable for them. Since 2011, we have increased contract value per member by 47%, from approximately $95,000 to approximately $140,000 as of December 31, 2016, by selling additional programs to existing members and adding new members. The average contract value is approximately $124,000 per health care member and approximately $193,000 per education member. This average contract value continues to remain a small portion of many institutions’ total expenditures on professional services per year.
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•
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Continue innovating through member-driven product development.
As our markets rapidly evolve, we seek to expand our portfolio of programs and services through development of new programs and successful execution and integration of acquisitions and strategic partnerships. Each year, we pursue a rigorous research process involving extensive member feedback, in which we build a large pipeline of potential new program concepts and existing program extensions and innovations. We then concentrate our efforts on areas of greatest interest to our members. Our research and development process benefits from insight derived through our research programs and the involvement of industry thought leaders from progressive and well-known organizations that act as advisors, as well as from information we gather from hundreds of member interviews. We currently plan to continue introducing new programs and existing program extensions and innovations through a mixture of internal development activities, partnerships, and acquisitions.
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•
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Use differentiated data and expertise to provide comprehensive solutions to members.
As the health care and education industries continue their transformation, our members are increasingly looking to consolidate and replace their individual vendors and products with strategic partners, integrated technology platforms, and comprehensive solutions. We believe many of our members will consider us particularly well suited to respond to this demand based on our unique research and best-practice insights, differentiated data acquisition and standardization capabilities, compiled data sets across thousands of physicians, patients, and students, and reputation for deep industry expertise and a strategic approach to solving issues.
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•
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Health Care Advisory Board:
Through the Advisory Board's flagship research program, we provide CEOs and their executive teams strategic guidance, tools, and implementation support needed to win market share, protect margins, and drive population health return on investment.
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Clinical Roundtables:
We provide tools and benchmarks, best practices from health system peers, and expert insight to help our members strategically address specific service-line challenges in areas such as cardiovascular and oncology, as well as physician practices alignment and performance improvement.
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Nursing Executive Center:
We arm nurse executives with market insights and guidance to help set strategy, and provide support with the best practices and tools to help them achieve their top goals.
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Post-Acute Care Collaborative:
We provide best practice research and supporting tools to help our members navigate delivery system and payment reform challenges while helping to strengthen their acute and post-acute relationships and care quality.
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Planning 20/20
is a recently redesigned planning solution that integrates Crimson Market Advantage with several key research assets, enhanced analytics, and business development guidance to support hospital strategic planners’ need to meet new and evolving industry demands across the continuum of care.
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•
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Crimson Continuum of Care
helps hospitals achieve physician alignment, identify outliers in care delivery, and measure and sustain outcomes from unwarranted care variation reduction initiatives in order to advance quality goals and secure cost savings.
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Integrated Revenue Cycle Management Platform
spans the revenue lifecycle from patient access to mid-cycle to business office and contract/payer management, delivering workflow, analytics, and data-enabled automation that enables health systems to dramatically improve revenue capture, eliminate re-work, and optimize reimbursement.
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Driving Health System Growth:
Driving the acquisition and retention of patients by assembling the network needed to effectively bring care in the right setting
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Reducing Care Variation:
Improving care quality and reducing cost by eliminating unwarranted care variation
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•
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Optimizing the Revenue Cycle:
Ensuring members’ financial viability by improving the efficiency and effectiveness of revenue management
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Executive Officers
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Age
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Position
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Robert W. Musslewhite
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47
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Chief Executive Officer and Chairman
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David L. Felsenthal
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46
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President and Director
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Michael T. Kirshbaum
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40
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Chief Financial Officer and Treasurer
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Evan R. Farber
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44
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Chief Legal Officer and Corporate Secretary
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Cormac F. Miller
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43
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Chief Product Officer
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Richard A. Schwartz
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51
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Chief Operating Officer, Health Care
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Mary D. Van Hoose
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52
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Chief Talent Officer
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•
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as to how we will use and disclose the protected health information;
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•
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that we will implement reasonable administrative, physical, and technical safeguards to protect such information from misuse;
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that we will enter into similar agreements with our agents and subcontractors that have access to the information;
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that we will report security incidents and other inappropriate uses or disclosures of the information; and
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that we will assist the covered entity with certain of its duties under the Privacy Rule.
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register our company and list products with the FDA;
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notify the FDA and demonstrate substantial equivalence to other products on the market before marketing our functionality;
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obtain FDA approval by demonstrating the safety and effectiveness of the regulated products prior to marketing; and
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comply with various FDA regulations, including the agency’s quality system regulation, medical device reporting regulations, corrections and removal reporting regulations, and post-market surveillance regulations.
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•
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suffer the diversion of financial and management resources from existing operations;
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•
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incur indebtedness and assume additional liabilities, known and unknown, including liabilities relating to the use of intellectual property we acquire;
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incur significant additional capital expenditures, transaction expenses, operating expenses, and non-recurring acquisition-related and integration charges;
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experience an adverse impact on our earnings from the amortization or impairment of acquired goodwill and other intangible assets;
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fail to integrate successfully the operations and personnel of the acquired businesses;
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enter new markets or market new products with which we are not entirely familiar; and
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fail to retain key personnel of, vendors to, and clients of the acquired businesses.
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require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, and other general corporate purposes;
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limit our ability to obtain additional financing to expand our business or alleviate liquidity constraints, as a result of financial and other restrictive covenants in our indebtedness;
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limit our ability to pursue our acquisition strategy;
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increase our vulnerability to general adverse economic and industry conditions;
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limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and
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place us at a competitive disadvantage relative to companies that have less indebtedness.
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incur indebtedness;
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create liens on assets;
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pay cash dividends;
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repurchase shares of our common stock or make other restricted payments;
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make investments in or loans to other parties;
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•
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sell assets;
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engage in mergers and acquisitions;
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•
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enter into transactions with affiliates;
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enter into sale and leaseback transactions; and
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engage in businesses other than businesses of the type we conduct currently.
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•
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provide that the number of directors that will constitute the entire board of directors will be determined by a resolution of a majority of the board of directors;
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•
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provide that any vacancy on the board of directors may be filled only by the affirmative vote of a majority of the remaining directors then in office;
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provide that a special meeting of stockholders may be called only by a majority of the directors then in office, by the chairman of the board of directors, or by any holder or holders of at least 40% of the outstanding shares of capital stock then entitled to vote on any matter for which the special meeting is being called;
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•
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prohibit stockholders from taking action by written consent in lieu of a meeting with respect to any actions that are required or permitted to be taken by stockholders at any annual or special meeting of stockholders;
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•
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provide authority for our board of directors without stockholder approval to provide for the issuance of up to 5,000,000 shares of preferred stock, in one or more classes or series, with terms and conditions, and having rights, privileges and preferences, to be determined by the board of directors; and
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•
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establish advance notice procedures for stockholders to make nominations of candidates for election as directors or to present any other business for consideration at any annual or special stockholder meeting.
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Item 5.
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Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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High
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Low
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||||
Year Ended December 31, 2016:
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First quarter
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$
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49.17
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$
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18.87
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Second quarter
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$
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36.45
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$
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28.99
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Third quarter
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$
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48.86
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$
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34.48
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Fourth quarter
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$
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44.85
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$
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24.85
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Year Ended December 31, 2015:
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|
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||||
First quarter
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$
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56.49
|
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$
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43.00
|
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Second quarter
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$
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54.94
|
|
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$
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46.67
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Third quarter
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$
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60.38
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|
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$
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43.59
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Fourth quarter
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$
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54.84
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$
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40.70
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The Advisory Board Company
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|
S&P 500
Index
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Russell
2000 Index
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NASDAQ
Composite Index
|
||||||||
March 31, 2012
|
|
$
|
100
|
|
|
$
|
100
|
|
|
$
|
100
|
|
|
$
|
100
|
|
March 31, 2013
|
|
$
|
119
|
|
|
$
|
114
|
|
|
$
|
116
|
|
|
$
|
107
|
|
March 31, 2014
|
|
$
|
145
|
|
|
$
|
139
|
|
|
$
|
145
|
|
|
$
|
139
|
|
December 31, 2014
|
|
$
|
111
|
|
|
$
|
155
|
|
|
$
|
151
|
|
|
$
|
159
|
|
December 31, 2015
|
|
$
|
112
|
|
|
$
|
157
|
|
|
$
|
144
|
|
|
$
|
170
|
|
December 31, 2016
|
|
$
|
75
|
|
|
$
|
176
|
|
|
$
|
175
|
|
|
$
|
185
|
|
|
|
Year Ended December 31,
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Nine Months Ended December 31,
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|
Year Ended March 31,
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||||||||||||||
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2016
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2015
|
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2014
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|
2014
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2013
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||||||||||
(In thousands except per share amounts)
|
|
|
|
|
|
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||||||||||
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||||||||||
Statements of Operations Data:
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||||||||||
Revenue
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$
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803,424
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|
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$
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768,348
|
|
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$
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434,002
|
|
|
$
|
519,429
|
|
|
$
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450,286
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of services, excluding depreciation and amortization
|
|
392,956
|
|
|
392,676
|
|
|
230,769
|
|
|
271,923
|
|
|
237,605
|
|
|||||
Member relations and marketing
|
|
130,028
|
|
|
120,958
|
|
|
81,244
|
|
|
96,298
|
|
|
85,264
|
|
|||||
General and administrative
|
|
126,634
|
|
|
128,669
|
|
|
75,483
|
|
|
74,169
|
|
|
62,185
|
|
|||||
Depreciation and amortization
|
|
77,268
|
|
|
73,134
|
|
|
30,317
|
|
|
31,084
|
|
|
20,108
|
|
|||||
Impairment of capitalized software
|
|
—
|
|
|
8,166
|
|
|
2,086
|
|
|
—
|
|
|
—
|
|
|||||
Goodwill impairment
|
|
—
|
|
|
99,145
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total costs and expenses
|
|
726,886
|
|
|
822,748
|
|
|
419,899
|
|
|
473,474
|
|
|
405,162
|
|
|||||
Operating income (loss)
|
|
76,538
|
|
|
(54,400
|
)
|
|
14,103
|
|
|
45,955
|
|
|
45,124
|
|
|||||
Other (expense) income:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
|
(18,137
|
)
|
|
(21,121
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other (expense) income, net
|
|
(2,789
|
)
|
|
(6,499
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)
|
|
(1,327
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)
|
|
2,706
|
|
|
2,604
|
|
|||||
Loss on financing activities
|
|
—
|
|
|
(17,398
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total other (expense) income, net
|
|
(20,926
|
)
|
|
(45,018
|
)
|
|
(1,327
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)
|
|
2,706
|
|
|
2,604
|
|
|||||
Income (loss) before provision for income taxes and gains (losses) from equity method investments
|
|
55,612
|
|
|
(99,418
|
)
|
|
12,776
|
|
|
48,661
|
|
|
47,728
|
|
|||||
Provision for income taxes
|
|
(11,040
|
)
|
|
(15,200
|
)
|
|
(3,530
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)
|
|
(18,737
|
)
|
|
(17,899
|
)
|
|||||
Gains (losses) from equity method investments
|
|
46,666
|
|
|
(4,396
|
)
|
|
(6,540
|
)
|
|
(6,051
|
)
|
|
(6,756
|
)
|
|||||
Net income (loss) before allocation to noncontrolling interest
|
|
91,238
|
|
|
(119,014
|
)
|
|
2,706
|
|
|
23,873
|
|
|
23,073
|
|
|||||
Net (loss) income and accretion to redemption value attributable to noncontrolling interest
|
|
—
|
|
|
—
|
|
|
(6,253
|
)
|
|
119
|
|
|
108
|
|
|||||
Net income (loss) attributable to common stockholders
|
|
$
|
91,238
|
|
|
$
|
(119,014
|
)
|
|
$
|
(3,547
|
)
|
|
$
|
23,992
|
|
|
$
|
23,181
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) attributable to common stockholders per share – basic
|
|
$
|
2.25
|
|
|
$
|
(2.84
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
0.67
|
|
|
$
|
0.67
|
|
Net income (loss) attributable to common stockholders per share – diluted
|
|
$
|
2.23
|
|
|
$
|
(2.84
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
0.65
|
|
|
$
|
0.64
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
40,528
|
|
|
41,888
|
|
|
36,213
|
|
|
35,909
|
|
|
34,723
|
|
|||||
Diluted
|
|
40,871
|
|
|
41,888
|
|
|
36,213
|
|
|
36,959
|
|
|
36,306
|
|
|
|
Year Ended December 31,
|
|
Nine Months Ended December 31,
|
|
Year Ended March 31,
|
||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2014
|
|
2013
|
||||||||||
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Stock-based compensation expense included in Statement of Operations:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of services
|
|
$
|
9,231
|
|
|
$
|
9,211
|
|
|
$
|
5,977
|
|
|
$
|
5,527
|
|
|
$
|
3,975
|
|
Member relations and marketing
|
|
5,028
|
|
|
5,176
|
|
|
3,348
|
|
|
3,688
|
|
|
2,643
|
|
|||||
General and administrative
|
|
15,176
|
|
|
14,706
|
|
|
8,640
|
|
|
9,002
|
|
|
7,295
|
|
|||||
Total costs and expenses
|
|
29,435
|
|
|
29,093
|
|
|
17,965
|
|
|
18,217
|
|
|
13,913
|
|
|||||
Operating income
|
|
(29,435
|
)
|
|
(29,093
|
)
|
|
(17,965
|
)
|
|
(18,217
|
)
|
|
(13,913
|
)
|
|
|
December 31,
|
|
March 31,
|
||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2014
|
|
2013
|
||||||||||
(In thousands)
|
|
|
|
|
||||||||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
91,151
|
|
|
$
|
71,825
|
|
|
$
|
72,936
|
|
|
$
|
23,129
|
|
|
$
|
57,829
|
|
Marketable securities
|
|
—
|
|
|
—
|
|
|
14,714
|
|
|
164,396
|
|
|
156,839
|
|
|||||
Working capital (deficit)
|
|
8,826
|
|
|
(25,454
|
)
|
|
46,635
|
|
|
(61,038
|
)
|
|
(26,720
|
)
|
|||||
Total assets
|
|
2,036,878
|
|
|
1,979,477
|
|
|
1,125,643
|
|
|
1,042,064
|
|
|
898,849
|
|
|||||
Deferred revenue
|
|
734,594
|
|
|
755,424
|
|
|
672,743
|
|
|
589,077
|
|
|
503,576
|
|
|||||
Total stockholders’ equity
|
|
517,044
|
|
|
449,091
|
|
|
317,810
|
|
|
336,665
|
|
|
283,185
|
|
(1)
|
Represents the aggregate annualized revenue attributable to all agreements in effect at a particular date, without regard to the initial term or remaining duration of any such agreement.
|
•
|
Cost of services
includes the costs associated with the production and delivery of our products and services, consisting of compensation for research, creative, data, and analysis personnel, consultants, software developers, and in-house faculty; costs of the organization and delivery of membership meetings, teleconferences, and other events; production and distribution of published materials; technology license fees; costs of developing and supporting our cloud-based content and software; and fair value adjustments to acquisition-related earn-out liabilities.
|
•
|
Member relations and marketing expense
includes the costs of acquiring new members and the costs of account management, and consists of compensation (including sales incentives), travel and entertainment expenses, and costs for training of personnel, sales and marketing materials, and associated support services.
|
•
|
General and administrative expense
includes the costs of human resources and recruiting; finance and accounting; legal support; management information systems; real estate and facilities management; corporate development; new program development; and other administrative functions.
|
•
|
Depreciation and amortization expense
includes the cost of depreciation of our property and equipment; amortization of costs associated with the development of software and tools that are offered as part of certain of our membership programs; and amortization of acquired intangibles.
|
•
|
Impairment of capitalized software
includes the impairment charge taken to write down acquired technology and internally developed capitalized software balances to their fair value.
|
•
|
Goodwill impairment
includes the impairment charge taken to write down goodwill to its estimated fair value.
|
(1)
|
Shows the audited results for our fiscal year ended December 31, 2016 and 2015, the unaudited results for the calendar year ended December 31, 2014, and the audited results for the nine-month transition period that began on April 1, 2014 and ended on December 31, 2014.
|
|
Year Ended
|
|
Year Ended
|
||||||||
|
December 31,
|
|
December 31,
|
||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Stock-based compensation expense included in:
|
|
|
|
|
(unaudited)
|
||||||
Costs and expenses:
|
|
|
|
|
|
||||||
Cost of services
|
$
|
9,231
|
|
|
$
|
9,211
|
|
|
$
|
7,358
|
|
Member relations and marketing
|
5,028
|
|
|
5,176
|
|
|
4,190
|
|
|||
General and administrative
|
15,176
|
|
|
14,706
|
|
|
10,839
|
|
|||
Depreciation and amortization
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total costs and expenses
|
29,435
|
|
|
29,093
|
|
|
22,387
|
|
|||
Operating income
|
(29,435
|
)
|
|
(29,093
|
)
|
|
(22,387
|
)
|
|
Year Ended
|
|
Year Ended
|
||||||||
|
December 31,
|
|
December 31,
|
||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Stock-based compensation expense by award type:
|
|
|
|
|
(unaudited)
|
||||||
Stock options
|
$
|
13,270
|
|
|
$
|
10,908
|
|
|
$
|
6,585
|
|
Restricted stock units
|
16,165
|
|
|
18,185
|
|
|
15,802
|
|
|||
Total stock-based compensation
|
$
|
29,435
|
|
|
$
|
29,093
|
|
|
$
|
22,387
|
|
|
Payment due by period
(in thousands)
|
||||||||||||||||||
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
||||||||||
Long-term debt
|
$
|
522,086
|
|
|
$
|
49,347
|
|
|
$
|
156,540
|
|
|
$
|
316,199
|
|
|
$
|
—
|
|
Build-to-suit lease obligation
|
$
|
446,133
|
|
|
$
|
—
|
|
|
$
|
16,515
|
|
|
$
|
50,407
|
|
|
$
|
379,211
|
|
Non-cancelable operating leases
|
$
|
62,053
|
|
|
$
|
17,421
|
|
|
$
|
27,398
|
|
|
$
|
11,621
|
|
|
$
|
5,613
|
|
Purchase obligation
|
$
|
2,375
|
|
|
$
|
1,375
|
|
|
$
|
1,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest payments on debt obligations
|
$
|
37,247
|
|
|
$
|
14,086
|
|
|
$
|
22,448
|
|
|
$
|
713
|
|
|
$
|
—
|
|
•
|
acquired technologies and other intangible assets, including valuation methodology, estimations of future cash flows, and discount rates, as well as the estimated useful life of assets;
|
•
|
the acquired company’s trademark, as well as assumptions about the period of time the acquired trademark will continue to be used;
|
•
|
deferred tax assets and liabilities, uncertain tax positions, and tax-related valuation allowances, which are initially estimated as of the acquisition date;
|
•
|
property and equipment, pre-existing liabilities, deferred revenue, and contingent consideration, as each may be applicable; and
|
•
|
goodwill as measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed.
|
•
|
Effect on revenue of fair value adjustments to acquisition-related deferred revenue:
We adjust revenue to exclude the impact of acquisition-related deferred revenue fair value adjustments. Our management believes that the adjustments for these items more closely correlate the reported financial measure with the ordinary and ongoing course of our operations.
|
•
|
Accretion of noncontrolling interest to redemption value:
We have excluded a charge resulting from management’s determination during 2014 that it was probable that a put option owned by a variable interest entity would become exercisable prior to its expiration. The charge represents an increase in the carrying value to estimated redemption value. We do not expect this type of transaction to recur.
|
•
|
Goodwill impairment:
We have excluded the impact of impairments of goodwill resulting from acquisitions, as such non-cash amounts are inconsistent in amount and frequency and are significantly affected by the timing and size of acquisitions.
|
•
|
Impairments of capitalized software:
We have has excluded the impact of impairments of finite-lived software assets, as such non-cash amounts are inconsistent in amount and frequency and are significantly affected by the timing and extent of our software development efforts. Our management believes that the adjustments for these items more closely correlate the reported financial measure with the ordinary and ongoing course of our operations.
|
•
|
Gain (loss) from equity method investments:
We have excluded our proportionate share of income (loss) and other gains recorded in connection with our equity method investments. Our management believes that the exclusion of such amounts allows investors to better understand our core operating results.
|
•
|
Amortization of acquisition-related intangible assets:
Amortization of acquisition-related intangible assets consists of amortization of customer relationships, developed technology, and trade names. Amortization charges for acquired intangible assets are significantly affected by the timing and magnitude of our acquisitions, and these charges may vary in amount from period to period. We exclude these charges to
|
•
|
Loss on financing activities:
We have excluded loss on financing activities, as this item represents a non-cash charge. In addition, the amount and frequency of such charges are not consistent over time and are significantly affected by the timing and size of debt refinancing transactions.
|
•
|
Acquisition and similar transaction charges:
We have excluded certain acquisition-related charges resulting from acquisitions (including legal, accounting, and due diligence costs) to allow more comparable comparisons of our financial results to our historical operations. Such charges generally are not relevant to assessing the long-term performance of the acquired assets, and are not a material consideration in management’s evaluation of potential acquisitions. In addition, the frequency and amount of such charges vary significantly based on the size and timing of the acquisitions and the maturities of the businesses being acquired.
|
•
|
Fair value adjustments to acquisition-related earn-out liabilities:
We have excluded the impact of acquisition-related contingent consideration non-cash adjustments due to the inherent uncertainty and volatility associated with such amounts based on changes in assumptions with respect to fair value estimates. The amount and frequency of such adjustments are not consistent across transactions and are significantly affected by the timing and size of our acquisitions, the future outlook of the acquired business, the estimated discount rate, and the nature of the transaction consideration.
|
•
|
Stock-based compensation expense:
Although stock-based compensation is a key incentive offered to our employees, we evaluate our operating results excluding such expense because the expense can vary significantly from period to period based on our share price, as well as the timing, size, and nature of equity awards granted. In addition, our management believes that the exclusion of this expense facilitates the ability of our investors to compare our operating results with those of other companies, many of which also exclude such expense in determining their non-GAAP financial measures.
|
•
|
Other corporate expenses:
We have excluded certain other expenses that are the result of other, non-comparable events, primarily charges associated with the fair valuing of certain equity instruments. These events arise outside of the ordinary course of our continuing operations. We exclude these charges to facilitate a more meaningful evaluation of our current operating performance and comparisons to our past operating performance.
|
•
|
Income tax effects and adjustments:
During the twelve months ended December 31, 2015, we adjusted for the impact of certain discrete items included in the effective tax rate, including items unrelated to the current year, changes in statutory tax rates, or other items that are not indicative of our ongoing operations. We exclude these items because management believes it will facilitate the comparison of the annual effective tax rate over time. The adjusted effective tax rate is calculated by dividing the adjusted provision for income taxes, which excludes discrete items and the tax effects of the other non-GAAP adjustments (using statutory rates), by the adjusted income before the provision for income taxes.
|
•
|
the non-GAAP financial measures generally do not reflect all depreciation and amortization, and although the assets being depreciated and amortized will in some cases have to be replaced in the future, the measures do not reflect any cash requirements for such replacements;
|
•
|
the non-GAAP financial measures do not reflect the expense of equity awards to employees; and
|
•
|
the non-GAAP financial measures do not reflect the effect of earnings or charges resulting from matters that our management considers not indicative of our ongoing operations, but which may recur from year to year.
|
|
Year Ended December 31,
|
|
Nine Months Ended December 31,
|
||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2014
|
||||||||
Revenue
|
$
|
803,424
|
|
|
$
|
768,348
|
|
|
$
|
571,805
|
|
|
$
|
434,002
|
|
Effect on revenue of fair value adjustments to acquisition-related deferred revenue
|
—
|
|
|
12,499
|
|
|
—
|
|
|
—
|
|
||||
Adjusted revenue
|
$
|
803,424
|
|
|
$
|
780,847
|
|
|
$
|
571,805
|
|
|
$
|
434,002
|
|
|
Year Ended December 31,
|
|
Nine Months Ended December 31,
|
||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2014
|
||||||||
Net income (loss) attributable to common stockholders
|
$
|
91,238
|
|
|
$
|
(119,014
|
)
|
|
$
|
4,790
|
|
|
$
|
(3,547
|
)
|
Effect on revenue of fair value adjustments to acquisition-related deferred revenue
|
—
|
|
|
12,499
|
|
|
—
|
|
|
—
|
|
||||
(Gains) losses from equity method investments
|
(46,666
|
)
|
|
4,396
|
|
|
9,271
|
|
|
6,540
|
|
||||
Accretion of noncontrolling interest to redemption value
|
—
|
|
|
—
|
|
|
6,253
|
|
|
6,253
|
|
||||
Provision for income taxes
|
11,040
|
|
|
15,200
|
|
|
10,463
|
|
|
3,530
|
|
||||
Interest expense
|
18,137
|
|
|
21,121
|
|
|
—
|
|
|
—
|
|
||||
Other expense (income), net
|
2,789
|
|
|
6,499
|
|
|
595
|
|
|
1,327
|
|
||||
Loss on financing activities
|
—
|
|
|
17,398
|
|
|
—
|
|
|
—
|
|
||||
Depreciation and amortization
|
77,268
|
|
|
73,134
|
|
|
39,101
|
|
|
30,317
|
|
||||
Impairment of capitalized software
|
—
|
|
|
8,166
|
|
|
2,086
|
|
|
2,086
|
|
||||
Goodwill impairment
|
—
|
|
|
99,145
|
|
|
—
|
|
|
—
|
|
||||
Acquisition and similar transaction charges
|
—
|
|
|
6,610
|
|
|
4,592
|
|
|
4,592
|
|
||||
Build-to-suit land rent
|
3,733
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Fair value adjustments to acquisition-related earn-out liabilities
|
1,292
|
|
|
(1,665
|
)
|
|
(4,700
|
)
|
|
(600
|
)
|
||||
Vacation accrual adjustment
|
—
|
|
|
(850
|
)
|
|
850
|
|
|
850
|
|
||||
Stock-based compensation expense
|
29,435
|
|
|
29,093
|
|
|
22,388
|
|
|
17,965
|
|
||||
Adjusted EBITDA
|
$
|
188,266
|
|
|
$
|
171,732
|
|
|
$
|
95,689
|
|
|
$
|
69,313
|
|
|
Year Ended December 31,
|
|
Nine Months Ended December 31,
|
||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2014
|
||||||||
Net income (loss) attributable to common stockholders
|
$
|
91,238
|
|
|
$
|
(119,014
|
)
|
|
$
|
4,790
|
|
|
$
|
(3,547
|
)
|
Effect on revenue of fair value adjustments to acquisition-related deferred revenue
|
—
|
|
|
12,499
|
|
|
—
|
|
|
—
|
|
||||
(Gains) losses from equity method investments
|
(46,666
|
)
|
|
4,396
|
|
|
9,271
|
|
|
6,540
|
|
||||
Accretion of noncontrolling interest to redemption value
|
—
|
|
|
—
|
|
|
6,253
|
|
|
6,253
|
|
||||
Impairment of capitalized software
|
—
|
|
|
8,166
|
|
|
1,502
|
|
|
1,502
|
|
||||
Goodwill impairment
|
—
|
|
|
99,145
|
|
|
—
|
|
|
—
|
|
||||
Amortization of acquisition-related intangibles
|
28,408
|
|
|
31,033
|
|
|
9,893
|
|
|
7,566
|
|
||||
Loss on financing activities
|
—
|
|
|
17,398
|
|
|
—
|
|
|
—
|
|
||||
Acquisition and similar transaction charges
|
—
|
|
|
6,610
|
|
|
4,592
|
|
|
4,592
|
|
||||
Fair value adjustments to acquisition-related earn-out liabilities
|
1,292
|
|
|
(1,665
|
)
|
|
(4,700
|
)
|
|
(600
|
)
|
||||
Loss on investment in common stock warrants
|
—
|
|
|
370
|
|
|
180
|
|
|
180
|
|
||||
Impairment of cost method investment
|
1,800
|
|
|
3,200
|
|
|
—
|
|
|
—
|
|
||||
Build-to-suit land rent
|
3,733
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Vacation accrual adjustment
|
—
|
|
|
(850
|
)
|
|
850
|
|
|
850
|
|
||||
Stock-based compensation expense
|
29,435
|
|
|
29,093
|
|
|
22,388
|
|
|
17,965
|
|
||||
Income tax effects and adjustments
|
(19,835
|
)
|
|
(26,180
|
)
|
|
(7,722
|
)
|
|
(6,704
|
)
|
||||
Adjusted net income
|
$
|
89,405
|
|
|
$
|
64,201
|
|
|
$
|
47,297
|
|
|
$
|
34,597
|
|
|
Year Ended December 31,
|
|
Nine Months Ended December 31,
|
||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2014
|
||||||||
Net income (loss) attributable to common shareholders per share - diluted
|
$
|
2.23
|
|
|
$
|
(2.84
|
)
|
|
$
|
0.13
|
|
|
$
|
(0.10
|
)
|
Effect of adjusted weighted average common shares outstanding - diluted on earnings (loss) per share
|
—
|
|
|
0.02
|
|
|
—
|
|
|
0.01
|
|
||||
Effect on revenue of fair value adjustments to acquisition-related deferred revenue
|
—
|
|
|
0.30
|
|
|
—
|
|
|
—
|
|
||||
(Gains) losses from equity method investments
|
(1.14
|
)
|
|
0.10
|
|
|
0.25
|
|
|
0.18
|
|
||||
Accretion of noncontrolling interest to redemption value
|
—
|
|
|
—
|
|
|
0.17
|
|
|
0.17
|
|
||||
Impairment of capitalized software
|
—
|
|
|
0.19
|
|
|
0.04
|
|
|
0.04
|
|
||||
Goodwill impairment
|
—
|
|
|
2.34
|
|
|
—
|
|
|
—
|
|
||||
Amortization of acquisition-related intangibles
|
0.70
|
|
|
0.73
|
|
|
0.27
|
|
|
0.20
|
|
||||
Loss on financing activities
|
—
|
|
|
0.41
|
|
|
—
|
|
|
—
|
|
||||
Acquisition and similar transaction charges
|
—
|
|
|
0.16
|
|
|
0.12
|
|
|
0.12
|
|
||||
Fair value adjustments to acquisition-related earn-out liabilities
|
0.03
|
|
|
(0.04
|
)
|
|
(0.13
|
)
|
|
(0.02
|
)
|
||||
Loss on investment in common stock warrants
|
—
|
|
|
0.01
|
|
|
0.01
|
|
|
—
|
|
||||
Impairment of cost method investment
|
0.04
|
|
|
0.08
|
|
|
—
|
|
|
—
|
|
||||
Build-to-suit land rent
|
0.09
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Vacation accrual adjustment
|
—
|
|
|
(0.02
|
)
|
|
0.02
|
|
|
0.02
|
|
||||
Stock-based compensation expense
|
0.72
|
|
|
0.69
|
|
|
0.61
|
|
|
0.49
|
|
||||
Income tax effects and adjustments
|
(0.48
|
)
|
|
(0.62
|
)
|
|
(0.21
|
)
|
|
(0.18
|
)
|
||||
Non-GAAP earnings per diluted share
|
$
|
2.19
|
|
|
$
|
1.51
|
|
|
$
|
1.28
|
|
|
$
|
0.93
|
|
|
Year Ended December 31,
|
|
Nine Months Ended December 31,
|
||||||||
|
2016
|
|
2015
|
|
2014
|
|
2014
|
||||
Effective tax rate
|
19.9
|
%
|
|
(15.3
|
)%
|
|
34.0
|
%
|
|
27.6
|
%
|
Effect on tax rate of Washington, D.C. tax law change including write-off of DC income tax credits
|
—
|
%
|
|
18.0
|
%
|
|
—
|
%
|
|
—
|
%
|
Effect on tax rate of loss on financing activities
|
—
|
%
|
|
(13.0
|
)%
|
|
—
|
%
|
|
—
|
%
|
Effect on tax rate of asset impairment
|
—
|
%
|
|
52.1
|
%
|
|
—
|
%
|
|
—
|
%
|
Effect on tax rate of unconsolidated equity method investment related FIN 48 liability
|
—
|
%
|
|
—
|
%
|
|
(5.6
|
)%
|
|
—
|
%
|
Effect on tax rate of Royall acquisition costs and other acquisition-related tax items
|
—
|
%
|
|
(2.6
|
)%
|
|
—
|
%
|
|
—
|
%
|
Adjusted effective tax rate
|
19.9
|
%
|
|
39.2
|
%
|
|
28.4
|
%
|
|
27.6
|
%
|
|
Year Ended December 31,
|
|
Nine Months Ended December 31,
|
||||||||
|
2016
|
|
2015
|
|
2014
|
|
2014
|
||||
Weighted average common shares outstanding - diluted
|
40,871
|
|
|
41,888
|
|
|
36,877
|
|
|
36,213
|
|
Dilutive shares outstanding
|
—
|
|
|
516
|
|
|
—
|
|
|
555
|
|
Adjusted weighted average common shares outstanding - diluted
|
40,871
|
|
|
42,404
|
|
|
36,877
|
|
|
36,768
|
|
|
|
/s/ Robert W. Musslewhite
|
|
|
|
Robert W. Musslewhite
|
|
Chief Executive Officer and Director
|
|
March 15, 2017
|
|
|
|
/s/ Michael T. Kirshbaum
|
|
|
|
Michael T. Kirshbaum
|
|
Chief Financial Officer and Treasurer
|
|
March 15, 2017
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
91,151
|
|
|
$
|
71,825
|
|
Membership fees receivable, net
|
605,517
|
|
|
605,444
|
|
||
Prepaid expenses and other current assets
|
18,965
|
|
|
22,543
|
|
||
Total current assets
|
715,633
|
|
|
699,812
|
|
||
Construction in progress
|
63,368
|
|
|
2,700
|
|
||
Property and equipment, net
|
171,281
|
|
|
180,357
|
|
||
Intangible assets, net
|
255,053
|
|
|
274,721
|
|
||
Deferred incentive compensation and other charges
|
72,178
|
|
|
81,181
|
|
||
Goodwill
|
739,507
|
|
|
738,200
|
|
||
Investments in and advances to unconsolidated entities
|
19,858
|
|
|
706
|
|
||
Other non-current assets
|
—
|
|
|
1,800
|
|
||
Total assets
|
$
|
2,036,878
|
|
|
$
|
1,979,477
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Deferred revenue, current
|
$
|
564,237
|
|
|
$
|
581,471
|
|
Accounts payable and accrued liabilities
|
67,702
|
|
|
74,879
|
|
||
Accrued incentive compensation
|
25,521
|
|
|
41,173
|
|
||
Debt, current
|
49,347
|
|
|
27,743
|
|
||
Total current liabilities
|
706,807
|
|
|
725,266
|
|
||
Deferred revenue, net of current portion
|
170,357
|
|
|
173,953
|
|
||
Deferred income taxes
|
89,013
|
|
|
93,893
|
|
||
Debt, net of current portion
|
472,739
|
|
|
522,086
|
|
||
Financing obligation
|
63,368
|
|
|
2,700
|
|
||
Other long-term liabilities
|
17,550
|
|
|
12,488
|
|
||
Total liabilities
|
1,519,834
|
|
|
1,530,386
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, par value $0.01; 5,000,000 shares authorized, zero shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, par value $0.01; 135,000,000 shares authorized, 40,192,980 and 41,572,523 shares issued and outstanding as of December 31, 2016 and 2015, respectively
|
402
|
|
|
416
|
|
||
Additional paid-in capital
|
782,399
|
|
|
744,333
|
|
||
Accumulated deficit
|
(266,218
|
)
|
|
(295,860
|
)
|
||
Accumulated other comprehensive income
|
461
|
|
|
202
|
|
||
Total stockholders’ equity
|
517,044
|
|
|
449,091
|
|
||
Total liabilities and stockholders’ equity
|
$
|
2,036,878
|
|
|
$
|
1,979,477
|
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
|
Nine Months Ended December 31,
|
||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
||||||
Revenue
|
$
|
803,424
|
|
|
$
|
768,348
|
|
|
$
|
434,002
|
|
Costs and expenses:
|
|
|
|
|
|
||||||
Cost of services, excluding depreciation and amortization
|
392,956
|
|
|
392,676
|
|
|
230,769
|
|
|||
Member relations and marketing
|
130,028
|
|
|
120,958
|
|
|
81,244
|
|
|||
General and administrative
|
126,634
|
|
|
128,669
|
|
|
75,483
|
|
|||
Depreciation and amortization
|
77,268
|
|
|
73,134
|
|
|
30,317
|
|
|||
Impairment of capitalized software
|
—
|
|
|
8,166
|
|
|
2,086
|
|
|||
Goodwill impairment
|
—
|
|
|
99,145
|
|
|
—
|
|
|||
Operating income (loss)
|
76,538
|
|
|
(54,400
|
)
|
|
14,103
|
|
|||
Other (expense) income
|
|
|
|
|
|
||||||
Interest expense
|
(18,137
|
)
|
|
(21,121
|
)
|
|
—
|
|
|||
Other (expense) income, net
|
(2,789
|
)
|
|
(6,499
|
)
|
|
(1,327
|
)
|
|||
Loss on financing activities
|
—
|
|
|
(17,398
|
)
|
|
—
|
|
|||
Total other (expense) income, net
|
(20,926
|
)
|
|
(45,018
|
)
|
|
(1,327
|
)
|
|||
Income (loss) before provision for income taxes and gains (losses) from equity method investments
|
55,612
|
|
|
(99,418
|
)
|
|
12,776
|
|
|||
Provision for income taxes
|
(11,040
|
)
|
|
(15,200
|
)
|
|
(3,530
|
)
|
|||
Gains (losses) from equity method investments
|
46,666
|
|
|
(4,396
|
)
|
|
(6,540
|
)
|
|||
Net income (loss) before allocation to noncontrolling interest
|
91,238
|
|
|
(119,014
|
)
|
|
2,706
|
|
|||
Net loss and accretion to redemption value attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(6,253
|
)
|
|||
Net income (loss) attributable to common stockholders
|
$
|
91,238
|
|
|
$
|
(119,014
|
)
|
|
$
|
(3,547
|
)
|
|
|
|
|
|
|
||||||
Net income (loss) attributable to common stockholders per share — basic
|
2.25
|
|
|
(2.84
|
)
|
|
(0.10
|
)
|
|||
Net income (loss) attributable to common stockholders per share — diluted
|
2.23
|
|
|
(2.84
|
)
|
|
(0.10
|
)
|
|||
Weighted average number of shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
40,528
|
|
|
41,888
|
|
|
36,213
|
|
|||
Diluted
|
40,871
|
|
|
41,888
|
|
|
36,213
|
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
|
Nine Months Ended December 31,
|
||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
||||||
Net income (loss) attributable to common stockholders
|
$
|
91,238
|
|
|
$
|
(119,014
|
)
|
|
$
|
(3,547
|
)
|
Other comprehensive income:
|
|
|
|
|
|
||||||
Net unrealized (losses) gains on marketable securities, net of tax
|
—
|
|
|
(81
|
)
|
|
1,623
|
|
|||
Net unrealized gain on cash flow hedges, net of taxes
|
259
|
|
|
201
|
|
|
—
|
|
|||
Comprehensive income (loss)
|
$
|
91,497
|
|
|
$
|
(118,894
|
)
|
|
$
|
(1,924
|
)
|
|
|
|
|
|
|
|
|
|
Accumulated
Other Comprehensive
Income (Loss)
|
|
|
|
|
|
|
|||||||||||||||
|
Common Shares
|
|
Additional Paid-in
Capital
|
|
Retained
Earnings
|
|
|
Treasury
Stock
|
|
Noncontrolling
Interest |
|
|
||||||||||||||||||
|
Stock
|
|
Amount
|
|
|
|
|
|
|
Total
|
||||||||||||||||||||
Balance as of March 31, 2014
|
36,321,825
|
|
|
$
|
363
|
|
|
$
|
428,628
|
|
|
$
|
(90,557
|
)
|
|
$
|
(1,541
|
)
|
|
$
|
—
|
|
|
$
|
(227
|
)
|
|
$
|
336,666
|
|
Proceeds from exercise of stock options
|
233,999
|
|
|
3
|
|
|
4,294
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,297
|
|
|||||||
Vesting of restricted stock units, net of shares withheld to satisfy minimum employee tax withholding
|
254,248
|
|
|
3
|
|
|
(7,611
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,608
|
)
|
|||||||
Excess tax benefits from stock-based awards
|
—
|
|
|
—
|
|
|
392
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
392
|
|
|||||||
Proceeds from issuance of common stock under employee stock purchase plan
|
9,241
|
|
|
—
|
|
|
432
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
432
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
17,964
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,964
|
|
|||||||
Retirement of treasury stock
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(36,006
|
)
|
|
—
|
|
|
36,014
|
|
|
—
|
|
|
—
|
|
|||||||
Purchases of treasury stock
|
(731,559
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(36,014
|
)
|
|
—
|
|
|
(36,014
|
)
|
|||||||
Net activity related to noncontrolling interests
|
—
|
|
|
—
|
|
|
3,378
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
227
|
|
|
3,605
|
|
|||||||
Change in net unrealized gains (losses) on available-for-sale marketable securities, net of income taxes of ($1,147)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,623
|
|
|
—
|
|
|
—
|
|
|
1,623
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
(6,253
|
)
|
|
2,706
|
|
|
—
|
|
|
—
|
|
|
|
|
|
(3,547
|
)
|
|||||||
Balance as of December 31, 2014
|
36,087,754
|
|
|
$
|
361
|
|
|
$
|
441,224
|
|
|
$
|
(123,857
|
)
|
|
$
|
82
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
317,810
|
|
Proceeds from exercise of stock options
|
218,109
|
|
|
3
|
|
|
4,744
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,747
|
|
|||||||
Vesting of restricted stock units, net of shares withheld to satisfy minimum employee tax withholding
|
247,157
|
|
|
2
|
|
|
(6,060
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,058
|
)
|
|||||||
Excess tax benefits from stock-based awards
|
—
|
|
|
—
|
|
|
4,855
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,855
|
|
|||||||
Proceeds from issuance of common stock under employee stock purchase plan
|
10,496
|
|
|
—
|
|
|
505
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
505
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
29,092
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,092
|
|
|||||||
Retirement of treasury stock
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
(52,989
|
)
|
|
—
|
|
|
53,000
|
|
|
—
|
|
|
—
|
|
|||||||
Purchases of treasury stock
|
(1,069,357
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(53,000
|
)
|
|
—
|
|
|
(53,000
|
)
|
|||||||
Issuance of common stock to purchase Royall
|
2,428,364
|
|
|
24
|
|
|
121,224
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
121,248
|
|
|||||||
Common stock offering
|
3,650,000
|
|
|
37
|
|
|
148,749
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
148,786
|
|
|||||||
Change in net unrealized gains (losses) on cash flow hedge, net of income taxes of $354
|
|
|
|
|
|
|
|
|
201
|
|
|
|
|
|
|
201
|
|
|||||||||||||
Change in net unrealized gains (losses) on available-for-sale marketable securities, net of income taxes of $(143)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(81
|
)
|
|
—
|
|
|
—
|
|
|
(81
|
)
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(119,014
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(119,014
|
)
|
|||||||
Balance as of December 31, 2015
|
41,572,523
|
|
|
$
|
416
|
|
|
$
|
744,333
|
|
|
$
|
(295,860
|
)
|
|
$
|
202
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
449,091
|
|
Proceeds from exercise of stock options
|
284,843
|
|
|
3
|
|
|
4,341
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,344
|
|
|||||||
Vesting of restricted stock units, net of shares withheld to satisfy minimum employee tax withholding
|
210,562
|
|
|
2
|
|
|
(3,516
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,514
|
)
|
|||||||
Excess tax benefits from stock-based awards and other
|
—
|
|
|
—
|
|
|
4,628
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,628
|
|
|||||||
Proceeds from issuance of common stock under employee stock purchase plan
|
14,041
|
|
|
—
|
|
|
476
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
476
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
29,435
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,435
|
|
|||||||
Retirement of treasury stock
|
—
|
|
|
(20
|
)
|
|
—
|
|
|
(61,596
|
)
|
|
—
|
|
|
61,616
|
|
|
—
|
|
|
—
|
|
|||||||
Purchases of treasury stock
|
(1,951,258
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(61,616
|
)
|
|
—
|
|
|
(61,616
|
)
|
|||||||
Issuance of common stock for contingent earnout
|
62,269
|
|
|
1
|
|
|
2,702
|
|
|
|
|
|
|
|
|
|
|
2,703
|
|
|||||||||||
Change in net unrealized gains (losses) on cash flow hedge, net of income taxes of $83
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
259
|
|
|
—
|
|
|
—
|
|
|
259
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
91,238
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
91,238
|
|
|||||||
Balance as of December 31, 2016
|
40,192,980
|
|
|
$
|
402
|
|
|
$
|
782,399
|
|
|
$
|
(266,218
|
)
|
|
$
|
461
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
517,044
|
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
|
Nine Months Ended December 31,
|
||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income (loss) before allocation to noncontrolling interest
|
$
|
91,238
|
|
|
$
|
(119,014
|
)
|
|
$
|
2,706
|
|
Adjustments to reconcile net income before allocation to noncontrolling interest to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
77,268
|
|
|
73,134
|
|
|
30,317
|
|
|||
Impairment of capitalized software
|
—
|
|
|
8,166
|
|
|
2,086
|
|
|||
Goodwill impairment
|
—
|
|
|
99,145
|
|
|
—
|
|
|||
Loss on financing activities
|
—
|
|
|
17,398
|
|
|
—
|
|
|||
Amortization of debt issuance costs
|
940
|
|
|
1,270
|
|
|
—
|
|
|||
Deferred income taxes
|
(6,807
|
)
|
|
6,670
|
|
|
(2,383
|
)
|
|||
Excess tax benefits from stock-based awards
|
(1,285
|
)
|
|
(4,855
|
)
|
|
(392
|
)
|
|||
Stock-based compensation expense
|
29,435
|
|
|
29,093
|
|
|
17,964
|
|
|||
Amortization of marketable securities premiums
|
—
|
|
|
—
|
|
|
1,274
|
|
|||
Loss on investment in common stock warrants
|
—
|
|
|
370
|
|
|
180
|
|
|||
Impairment of cost method investment
|
1,800
|
|
|
3,200
|
|
|
—
|
|
|||
(Gains) losses from equity method investments
|
(16,987
|
)
|
|
4,396
|
|
|
6,540
|
|
|||
Gain on partial sale of equity method investment, net of taxes
|
(29,679
|
)
|
|
—
|
|
|
—
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Membership fees receivable
|
(73
|
)
|
|
(37,144
|
)
|
|
(82,689
|
)
|
|||
Prepaid expenses and other current assets
|
(10,500
|
)
|
|
13,276
|
|
|
4,936
|
|
|||
Deferred incentive compensation and other charges
|
9,915
|
|
|
5,937
|
|
|
102
|
|
|||
Other non-current assets
|
—
|
|
|
(258
|
)
|
|
—
|
|
|||
Deferred revenue
|
(20,830
|
)
|
|
64,381
|
|
|
80,386
|
|
|||
Accounts payable and accrued liabilities
|
380
|
|
|
(6,678
|
)
|
|
5,107
|
|
|||
Acquisition-related earn-out payments
|
(1,432
|
)
|
|
(2,531
|
)
|
|
(3,348
|
)
|
|||
Accrued incentive compensation
|
(15,652
|
)
|
|
9,100
|
|
|
3,602
|
|
|||
Other long-term liabilities
|
4,828
|
|
|
(3,122
|
)
|
|
(1,815
|
)
|
|||
Net cash provided by operating activities
|
112,559
|
|
|
161,934
|
|
|
64,573
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(45,392
|
)
|
|
(52,941
|
)
|
|
(47,535
|
)
|
|||
Capitalized external use software development costs
|
(3,131
|
)
|
|
(3,749
|
)
|
|
(3,826
|
)
|
|||
Cash paid for acquisition, net of cash acquired
|
(1,900
|
)
|
|
(746,693
|
)
|
|
(70,208
|
)
|
|||
Investments in and advances to unconsolidated entities
|
—
|
|
|
(3,006
|
)
|
|
—
|
|
|||
Redemptions of marketable securities
|
—
|
|
|
14,714
|
|
|
151,420
|
|
|||
Cash received from partial sale of equity method investment
|
48,565
|
|
|
—
|
|
|
—
|
|
|||
Net cash (used in) provided by investing activities
|
(1,858
|
)
|
|
(791,675
|
)
|
|
29,851
|
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Payment for acquisition of noncontrolling interest
|
—
|
|
|
—
|
|
|
(6,110
|
)
|
|||
Proceeds from debt, net
|
17,000
|
|
|
1,840,734
|
|
|
—
|
|
|||
Pay down of debt
|
(45,750
|
)
|
|
(1,307,188
|
)
|
|
—
|
|
|||
Debt issuance costs
|
—
|
|
|
(3,251
|
)
|
|
—
|
|
|||
Equity offering
|
—
|
|
|
148,786
|
|
|
—
|
|
|||
Proceeds from issuance of common stock from exercise of stock options
|
4,344
|
|
|
4,747
|
|
|
4,294
|
|
|||
Withholding of shares to satisfy minimum employee tax withholding for vested restricted stock units
|
(3,514
|
)
|
|
(6,058
|
)
|
|
(7,611
|
)
|
|||
Proceeds from issuance of common stock under employee stock purchase plan
|
476
|
|
|
505
|
|
|
432
|
|
|||
Excess tax benefits from stock-based awards
|
1,285
|
|
|
4,855
|
|
|
392
|
|
|||
Acquisition-related earn-out payments
|
(3,600
|
)
|
|
(1,500
|
)
|
|
—
|
|
|||
Purchases of treasury stock
|
(61,616
|
)
|
|
(53,000
|
)
|
|
(36,014
|
)
|
|||
Net cash (used in) provided by financing activities
|
(91,375
|
)
|
|
628,630
|
|
|
(44,617
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
19,326
|
|
|
(1,111
|
)
|
|
49,807
|
|
|||
Cash and cash equivalents, beginning of period
|
71,825
|
|
|
72,936
|
|
|
23,129
|
|
|||
Cash and cash equivalents, end of period
|
$
|
91,151
|
|
|
$
|
71,825
|
|
|
$
|
72,936
|
|
Note 1.
|
Business description
|
Note 2.
|
Summary of significant accounting policies
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
|
Nine Months Ended December 31,
|
|||
|
2016
|
|
2015
|
|
2014
|
|||
Basic weighted average common shares outstanding
|
40,528
|
|
|
41,888
|
|
|
36,213
|
|
Effect of dilutive outstanding stock-based awards
|
343
|
|
|
—
|
|
|
—
|
|
Diluted weighted average common shares outstanding
|
40,871
|
|
|
41,888
|
|
|
36,213
|
|
|
As reported
|
|
Adjustments
|
|
As adjusted
|
||||||
Prepaid expenses and other current assets
|
$
|
22,651
|
|
|
$
|
(108
|
)
|
|
$
|
22,543
|
|
Deferred incentive compensation and other charges
|
81,462
|
|
|
(281
|
)
|
|
81,181
|
|
|||
Total assets
|
1,979,866
|
|
|
(389
|
)
|
|
1,979,477
|
|
|||
Debt, current
|
27,851
|
|
|
(108
|
)
|
|
27,743
|
|
|||
Debt, net of current portion
|
522,367
|
|
|
(281
|
)
|
|
522,086
|
|
|||
Total liabilities
|
1,530,775
|
|
|
(389
|
)
|
|
1,530,386
|
|
|||
Total liabilities and stockholders’ equity
|
1,979,866
|
|
|
(389
|
)
|
|
1,979,477
|
|
Note 3.
|
Acquisitions
|
|
|
||
Net cash paid (1)
|
$
|
744,193
|
|
Fair value of equity issued
|
121,224
|
|
|
Total
|
$
|
865,417
|
|
|
|
As of January 9, 2015
|
||
Consideration paid for the acquisition
|
|
$
|
865,417
|
|
|
|
|
||
Allocated to:
|
|
|
||
Membership fees receivable, net
|
|
29,239
|
|
|
Prepaid expenses and other current assets
|
|
8,237
|
|
|
Property and equipment
|
|
44,209
|
|
|
Intangible assets, net
|
|
262,000
|
|
|
Deferred revenue, current
|
|
(18,300
|
)
|
|
Accounts payable and accrued liabilities
|
|
(5,621
|
)
|
|
Deferred income taxes, net of current portion
|
|
(102,599
|
)
|
|
Fair value of net assets acquired
|
|
$
|
217,165
|
|
Allocation to goodwill
|
|
$
|
648,252
|
|
|
|
Unaudited Pro Forma Results
|
||||||
|
|
Year Ended December 31,
|
|
Nine Months Ended December 31,
|
||||
|
|
2015
|
|
2014
|
||||
Revenue
|
|
$
|
783,640
|
|
|
$
|
502,319
|
|
Net income (loss) attributable to common stockholders
|
|
(90,705
|
)
|
|
(29,962
|
)
|
(i)
|
an increase in non-recurring transaction expenses of
$9.9 million
in the nine months ended December 31, 2014 to reflect the assumption that the Royall acquisition occurred on April 1, 2014;
|
(ii)
|
the elimination of
$6.6 million
of acquisition costs recorded in the year ended December 31, 2015 as these are now presented in the nine months ended December 31, 2014;
|
(iii)
|
an increase in amortization expense related to the fair value of the identifiable intangible assets of
$0.4 million
in the year ended December 31, 2015 and
$11.6 million
in the nine months ended December 31, 2014;
|
(iv)
|
a reduction in revenue of
$12.5 million
in the nine months ended December 31, 2014, representing the purchase accounting fair value effect to revenue the Company would have recognized during the year ended December 31, 2014 had the acquisition of Royall occurred on April 1, 2014 and an increase in revenue of
$12.5 million
in the year ended December 31, 2015, representing the purchase accounting fair value effect to revenue that was recognized in the year ended December 31, 2015;
|
(v)
|
an increase in revenue of
$2.8 million
and an increase in expense of
$1.7 million
for the year ended December 31, 2015 for Royall's activity from January 1, 2015 to the January 9, 2015 acquisition date;
|
(vi)
|
the elimination and replacement of the historical Royall interest expense with the interest expense from the Company's senior secured term credit facility totaling
$19.9 million
in the year ended December 31, 2015 and
$13.6 million
in the nine months ended December 31, 2014;
|
(vii)
|
an increase in compensation expense related to the inducement equity awards issued to certain Royall employees totaling
$0.1 million
in the year ended December 31, 2015 and
$4.4 million
in the nine months ended December 31, 2014;
|
(viii)
|
an increase in non-recurring loss on financing activities expenses of
$17.4 million
in the nine months ended December 31, 2014 to reflect the assumption that the Royall acquisition and related financings occurred during the nine months ended December 31, 2014; and
|
(ix)
|
the elimination of
$17.4 million
of loss on financing activities recorded in the year ended December 31, 2015 as this is now presented in the corresponding period of 2014.
|
Note 4.
|
Fair value measurements
|
•
|
Level 1—Quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2—Observable market-based inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities in active markets; quoted prices for similar or identical assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
|
•
|
Level 3—Unobservable inputs that are supported by little or no market activity, such as discounted cash flow methodologies.
|
|
Fair value as of
|
|
Fair value measurement as of December 31, 2016
using fair value hierarchy
|
||||||||||||
|
December 31, 2016
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||
Financial assets
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents (1)
|
$
|
91,151
|
|
|
$
|
91,151
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate swaps (2)
|
1,044
|
|
|
—
|
|
|
1,044
|
|
|
—
|
|
||||
Financial liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent earn-out liabilities (3)
|
1,164
|
|
|
—
|
|
|
—
|
|
|
1,164
|
|
|
Fair value as of
|
|
Fair value measurement as of December 31, 2015
using fair value hierarchy |
||||||||||||
|
December 31, 2015
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Financial assets
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents (1)
|
$
|
71,825
|
|
|
$
|
71,825
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate swaps (2)
|
419
|
|
|
—
|
|
|
419
|
|
|
—
|
|
||||
Financial liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent earn-out liabilities (3)
|
7,250
|
|
|
—
|
|
|
—
|
|
|
7,250
|
|
(1)
|
Fair value is based on quoted market prices.
|
(2)
|
Fair value is determined using market standard models with observable inputs.
|
(3)
|
This fair value measurement is based on unobservable inputs that are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value using the income approach. In developing these estimates, the Company considered certain performance projections, historical results, and general macro-economic environment and industry trends.
|
|
Year Ended
|
||||||
|
December 31, 2016
|
|
December 31, 2015
|
||||
Beginning balance
|
$
|
7,250
|
|
|
$
|
12,946
|
|
Fair value change in Southwind contingent earn-out liability (1)
|
—
|
|
|
261
|
|
||
Fair value change in GradesFirst contingent earn-out liability (1)
|
—
|
|
|
400
|
|
||
Fair value change in Clinovations contingent earn-out liability (1)
|
1,103
|
|
|
(2,326
|
)
|
||
Fair value change in other contingent earn-out liabilities (1)
|
546
|
|
|
|
|||
Southwind earn-out payment
|
(1,032
|
)
|
|
(2,531
|
)
|
||
360 Fresh earn-out payment
|
—
|
|
|
(1,500
|
)
|
||
Clinovations earn-out payment
|
(2,703
|
)
|
|
—
|
|
||
Grade First earn-out payment
|
(4,000
|
)
|
|
—
|
|
||
Ending balance
|
$
|
1,164
|
|
|
$
|
7,250
|
|
(1)
|
Amounts were recognized in cost of services on the consolidated statements of operations.
|
Note 5.
|
Membership fees receivable
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
Billed fees receivable
|
$
|
149,117
|
|
|
$
|
138,100
|
|
Unbilled fees receivable
|
462,780
|
|
|
473,053
|
|
||
Membership fees receivable, gross
|
611,897
|
|
|
611,153
|
|
||
Allowance for uncollectible revenue
|
(6,380
|
)
|
|
(5,709
|
)
|
||
Membership fees receivable, net
|
$
|
605,517
|
|
|
$
|
605,444
|
|
Note 6.
|
Property and equipment
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
Leasehold improvements
|
$
|
69,465
|
|
|
$
|
63,608
|
|
Furniture, fixtures and equipment
|
70,362
|
|
|
62,790
|
|
||
Software
|
231,952
|
|
|
202,384
|
|
||
Property and equipment, gross
|
371,779
|
|
|
328,782
|
|
||
Accumulated depreciation and amortization
|
(200,498
|
)
|
|
(148,425
|
)
|
||
Property and equipment, net
|
$
|
171,281
|
|
|
$
|
180,357
|
|
Note 7.
|
Goodwill and intangibles
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
Beginning of period
|
$
|
738,200
|
|
|
$
|
186,895
|
|
Goodwill acquired
|
2,258
|
|
|
650,289
|
|
||
Goodwill impairment
|
—
|
|
|
(99,145
|
)
|
||
Purchase accounting adjustment
(1)
|
(951
|
)
|
|
161
|
|
||
Ending balance
|
$
|
739,507
|
|
|
$
|
738,200
|
|
|
|
|
As of December 31, 2016
|
|
As of December 31, 2015
|
||||||||||||||||||||
|
Weighted
average
useful life
|
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
carrying
amount
|
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
carrying
amount
|
||||||||||||
Intangibles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Internally developed intangible for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Capitalized software
|
5.0
|
|
$
|
20,034
|
|
|
$
|
(9,998
|
)
|
|
$
|
10,036
|
|
|
$
|
16,902
|
|
|
$
|
(6,796
|
)
|
|
$
|
10,106
|
|
Acquired intangibles:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Developed software
|
5.2
|
|
9,450
|
|
|
(8,575
|
)
|
|
875
|
|
|
9,450
|
|
|
(8,075
|
)
|
|
1,375
|
|
||||||
Customer relationships
|
16.2
|
|
277,710
|
|
|
(42,978
|
)
|
|
234,732
|
|
|
277,710
|
|
|
(25,769
|
)
|
|
251,941
|
|
||||||
Trademarks
|
8.6
|
|
14,900
|
|
|
(5,923
|
)
|
|
8,977
|
|
|
14,900
|
|
|
(4,490
|
)
|
|
10,410
|
|
||||||
Non-compete agreements
|
3.8
|
|
1,400
|
|
|
(1,400
|
)
|
|
—
|
|
|
1,400
|
|
|
(1,379
|
)
|
|
21
|
|
||||||
Customer contracts
|
4.7
|
|
6,449
|
|
|
(6,016
|
)
|
|
433
|
|
|
6,449
|
|
|
(5,581
|
)
|
|
868
|
|
||||||
Total other intangibles
|
|
|
$
|
329,943
|
|
|
$
|
(74,890
|
)
|
|
$
|
255,053
|
|
|
$
|
326,811
|
|
|
$
|
(52,090
|
)
|
|
$
|
274,721
|
|
Note 8.
|
Equity method investments
|
|
|
Year ended December 31,
|
|
Year ended December 31,
|
|
Nine Months Ended
December 31, |
||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Allocated share of losses
|
|
$
|
(10,366
|
)
|
|
$
|
(11,616
|
)
|
|
$
|
(6,540
|
)
|
Gain on partial sale of investment
|
|
48,565
|
|
|
—
|
|
|
—
|
|
|||
Dilution gains
|
|
29,704
|
|
|
—
|
|
|
—
|
|
|||
Tax (expense) benefits
|
|
(21,237
|
)
|
|
7,220
|
|
|
—
|
|
|||
Gains (losses) from equity method investments
|
|
$
|
46,666
|
|
|
$
|
(4,396
|
)
|
|
$
|
(6,540
|
)
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
Assets:
|
|
|
|
||||
Current assets
|
$
|
264,966
|
|
|
$
|
184,463
|
|
Non-current assets
|
934,873
|
|
|
831,051
|
|
||
Total assets
|
$
|
1,199,839
|
|
|
$
|
1,015,514
|
|
Liabilities and shareholders' equity:
|
|
|
|
||||
Current liabilities
|
$
|
131,941
|
|
|
$
|
59,506
|
|
Non-current liabilities
|
155,784
|
|
|
21,429
|
|
||
Total liabilities
|
287,725
|
|
|
80,935
|
|
||
Total shareholders’ equity attributable to Evolent Health, Inc.
|
702,526
|
|
|
649,341
|
|
||
Non-controlling interests
|
209,588
|
|
|
285,238
|
|
||
Total liabilities and shareholders’ equity
|
$
|
1,199,839
|
|
|
$
|
1,015,514
|
|
|
Year Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
Revenue
|
$
|
254,188
|
|
|
$
|
96,878
|
|
Cost of revenue (exclusive of depreciation and amortization)
|
155,177
|
|
|
57,398
|
|
||
Gross profit
|
99,011
|
|
|
39,480
|
|
||
|
|
|
|
||||
(Loss) income before income taxes and non-controlling interests
|
(237,533
|
)
|
|
343,289
|
|
||
Net (loss) income
|
(226,778
|
)
|
|
319,814
|
|
||
Net (loss) income attributable to Evolent Health, Inc.
|
(159,742
|
)
|
|
332,494
|
|
Note 9.
|
Noncontrolling interest
|
Note 10.
|
Debt
|
|
As of
December 31, 2016
|
||
2.77%
term facility due fiscal 2020 ($424,687 face value less unamortized discount of $2,601)
|
$
|
422,086
|
|
Revolving credit facility
|
100,000
|
|
|
Less: Amounts due in next twelve months ($50,312 face value less unamortized discount of $965)
|
(49,347
|
)
|
|
Total
|
$
|
472,739
|
|
Note 11.
|
Stockholders’ equity
|
Note 12.
|
Stock-based compensation
|
|
Number of Performance-Based Options
|
|
Weighted
Average Exercise Price |
|
Number of Service-Based
Options |
|
Weighted
Average Exercise Price |
|
||||||
Outstanding as of March 31, 2014
|
20,000
|
|
|
$
|
29.58
|
|
|
1,810,323
|
|
|
$
|
32.86
|
|
|
Granted
|
974,605
|
|
|
51.40
|
|
|
170,368
|
|
|
57.31
|
|
|
||
Exercised
|
—
|
|
|
—
|
|
|
(233,999
|
)
|
|
18.36
|
|
|
||
Forfeited
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||
Outstanding, as of December 31, 2014
|
994,605
|
|
|
$
|
50.96
|
|
|
1,746,692
|
|
|
$
|
37.19
|
|
|
Granted
|
1,774,820
|
|
|
$
|
49.90
|
|
|
328,096
|
|
|
$
|
53.42
|
|
|
Exercised
|
—
|
|
|
—
|
|
|
(218,109
|
)
|
|
21.76
|
|
|
||
Forfeited
|
(756,100
|
)
|
|
49.92
|
|
|
(13,569
|
)
|
|
60.27
|
|
|
||
Outstanding, as of December 31, 2015
|
2,013,325
|
|
|
$
|
50.42
|
|
|
1,843,110
|
|
|
$
|
41.73
|
|
|
Granted
|
319,900
|
|
|
$
|
28.20
|
|
|
1,025,100
|
|
|
$
|
28.52
|
|
|
Exercised
|
—
|
|
|
—
|
|
|
(303,490
|
)
|
|
16.05
|
|
|
||
Forfeited
|
(215,370
|
)
|
|
49.92
|
|
|
(39,542
|
)
|
|
52.68
|
|
|
||
Outstanding, as of December 31, 2016
|
2,117,855
|
|
|
$
|
47.11
|
|
(1)
|
2,525,178
|
|
|
$
|
39.28
|
|
(3)
|
Exercisable, as of December 31, 2016
|
26,872
|
|
|
$
|
34.91
|
|
(2)
|
1,021,192
|
|
|
$
|
43.29
|
|
(4)
|
(1)
|
The weighted average remaining contractual term for all performance-based options outstanding at
December 31, 2016
is approximately
five years
and the aggregate intrinsic value is
$1.7 million
.
|
(2)
|
The weighted average remaining contractual term for all performance-based options exercisable as of
December 31, 2016
is approximately
two years
and the aggregate intrinsic value is
$0.1 million
.
|
(3)
|
The weighted average remaining contractual term for all service-based options outstanding at
December 31, 2016
is approximately
four years
and the aggregate intrinsic value is
$7.4 million
.
|
(4)
|
The weighted average remaining contractual term for all service-based options exercisable as of
December 31, 2016
is approximately
two years
and the aggregate intrinsic value is
$2.5 million
.
|
|
Options Outstanding
|
|||||||
Range of Exercise Prices
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Life - Years
|
|||
$ 0.00 – $ 9.99
|
—
|
|
|
$
|
—
|
|
|
0.0
|
10.00 – 19.99
|
70,500
|
|
|
16.58
|
|
|
0.3
|
|
20.00 – 29.99
|
1,469,478
|
|
|
27.83
|
|
|
5.6
|
|
30.00 – 39.99
|
46,432
|
|
|
35.18
|
|
|
6.4
|
|
40.00 – 49.99
|
1,495,769
|
|
|
48.14
|
|
|
3.4
|
|
50.00 – 59.99
|
1,476,482
|
|
|
52.57
|
|
|
4.6
|
|
60.00 – 69.99
|
84,372
|
|
|
66.90
|
|
|
4.2
|
|
$ 0.00 – $ 69.99
|
4,643,033
|
|
|
$
|
42.85
|
|
|
4.5
|
|
Number of
Performance-Based RSUs |
|
Weighted Average Grant Date Fair Value
|
|
Number of
RSUs |
|
Weighted Average Grant Date Fair Value
|
||||||
Non-vested, March 31, 2014
|
42,880
|
|
|
$
|
47.87
|
|
|
1,067,582
|
|
|
$
|
41.81
|
|
Granted
|
152,957
|
|
|
28.43
|
|
|
183,156
|
|
|
55.02
|
|
||
Forfeited
|
(8,540
|
)
|
|
51.15
|
|
|
(4,076
|
)
|
|
48.83
|
|
||
Vested
|
—
|
|
|
—
|
|
|
(387,377
|
)
|
|
32.27
|
|
||
Non-vested, December 31, 2014
|
187,297
|
|
|
$
|
31.85
|
|
|
859,285
|
|
|
$
|
48.89
|
|
Granted
|
191,740
|
|
|
$
|
49.87
|
|
|
376,771
|
|
|
$
|
52.99
|
|
Forfeited
|
(78,005
|
)
|
|
48.16
|
|
|
(33,789
|
)
|
|
55.74
|
|
||
Vested
|
—
|
|
|
—
|
|
|
(362,654
|
)
|
|
43.43
|
|
||
Non-vested, December 31, 2015
|
301,032
|
|
|
$
|
39.10
|
|
|
839,613
|
|
|
$
|
52.82
|
|
Granted
|
23,580
|
|
|
$
|
32.28
|
|
|
510,625
|
|
|
$
|
31.01
|
|
Forfeited
|
(66,139
|
)
|
|
51.15
|
|
|
(64,170
|
)
|
|
47.18
|
|
||
Vested
|
(893
|
)
|
|
50.41
|
|
|
(317,984
|
)
|
|
51.48
|
|
||
Non-vested, December 31, 2016
|
257,580
|
|
|
$
|
35.34
|
|
|
968,084
|
|
|
$
|
42.13
|
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
|
Nine Months Ended December 31,
|
|||
|
2016
|
|
2015
|
|
2014
|
|||
Stock option grants:
|
|
|
|
|
|
|||
Risk-free interest rate
|
.95% – 1.64%
|
|
|
1.18% – 1.67%
|
|
|
1.53% – 1.75%
|
|
Expected lives in years
|
5.04 – 5.54
|
|
|
4.00 – 5.45
|
|
|
5.00 – 5.47
|
|
Expected volatility
|
36.4% – 38.4%
|
|
|
31.2% – 33.0%
|
|
|
29.8% – 30.9%
|
|
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Weighted average exercise price of options granted
|
28.44
|
|
|
50.45
|
|
|
52.28
|
|
Weighted average grant date fair value of options granted
|
10.00
|
|
|
15.49
|
|
|
14.49
|
|
Number of options granted
|
1,345,000
|
|
|
2,102,916
|
|
|
1,144,973
|
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
|
Nine Months Ended December 31,
|
||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Stock-based compensation expense included in:
|
|
|
|
|
|
||||||
Costs and expenses:
|
|
|
|
|
|
||||||
Cost of services
|
$
|
9,231
|
|
|
$
|
9,211
|
|
|
$
|
5,977
|
|
Member relations and marketing
|
5,028
|
|
|
5,176
|
|
|
3,348
|
|
|||
General and administrative
|
15,176
|
|
|
14,706
|
|
|
8,640
|
|
|||
Total costs and expenses
|
29,435
|
|
|
29,093
|
|
|
17,965
|
|
|||
Operating income
|
$
|
(29,435
|
)
|
|
$
|
(29,093
|
)
|
|
$
|
(17,965
|
)
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
|
Nine Months Ended December 31,
|
||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Stock-based compensation expense by award type:
|
|
|
|
|
|
||||||
Stock options
|
$
|
13,270
|
|
|
$
|
10,908
|
|
|
$
|
5,431
|
|
Restricted stock units
|
16,165
|
|
|
18,185
|
|
|
12,534
|
|
|||
Total stock-based compensation
|
$
|
29,435
|
|
|
$
|
29,093
|
|
|
$
|
17,965
|
|
Note 13.
|
Income taxes
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
|
Nine Months Ended December 31,
|
||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Current tax expense
|
|
|
|
|
|
|
|
||||
Federal
|
$
|
13,527
|
|
|
$
|
6,225
|
|
|
$
|
3,613
|
|
State and local
|
3,694
|
|
|
1,781
|
|
|
1,680
|
|
|||
Foreign
|
626
|
|
|
524
|
|
|
620
|
|
|||
Total current tax expense
|
$
|
17,847
|
|
|
$
|
8,530
|
|
|
$
|
5,913
|
|
Deferred tax (benefit) expense
|
|
|
|
|
|
|
|||||
Federal
|
$
|
(7,279
|
)
|
|
$
|
(6,376
|
)
|
|
$
|
(297
|
)
|
State and local
|
472
|
|
|
13,046
|
|
|
(2,086
|
)
|
|||
Foreign
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total deferred tax (benefit) expense
|
$
|
(6,807
|
)
|
|
$
|
6,670
|
|
|
$
|
(2,383
|
)
|
Provision for income taxes
|
$
|
11,040
|
|
|
$
|
15,200
|
|
|
$
|
3,530
|
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
|
Nine Months Ended December 31,
|
||||||
|
2016
|
|
2015
|
|
2014
|
||||||
U.S. sources
|
$
|
53,433
|
|
|
$
|
(101,386
|
)
|
|
$
|
10,445
|
|
Non-U.S. sources
|
2,179
|
|
|
1,968
|
|
|
2,331
|
|
|||
Total
|
$
|
55,612
|
|
|
$
|
(99,418
|
)
|
|
$
|
12,776
|
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
|
Nine Months Ended December 31,
|
|||
|
2016
|
|
2015
|
|
2014
|
|||
Statutory U.S. federal income tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Section 162(m) compensation
|
0.5
|
%
|
|
(0.8
|
)%
|
|
11.7
|
%
|
State income tax, net of U.S. federal income tax benefit
|
4.6
|
%
|
|
3.5
|
%
|
|
7.4
|
%
|
Washington, D.C. QHTC income tax credits and D.C. law changes
|
—
|
%
|
|
(13.4
|
)%
|
|
(9.8
|
)%
|
Uncertain tax position
|
(0.3
|
)%
|
|
0.7
|
%
|
|
5.4
|
%
|
Federal R&D credit (net of associated UTP)
|
(22.7
|
)%
|
|
1.8
|
%
|
|
(25.7
|
)%
|
Return to provision adjustment
|
1.2
|
%
|
|
(0.4
|
)%
|
|
3.2
|
%
|
Goodwill impairment
|
—
|
%
|
|
(38.3
|
)%
|
|
—
|
%
|
Meals and entertainment
|
2.7
|
%
|
|
(1.5
|
)%
|
|
5.5
|
%
|
Stock-based compensation
|
(2.8
|
)%
|
|
—
|
%
|
|
—
|
%
|
Other permanent differences, net
|
1.7
|
%
|
|
(1.9
|
)%
|
|
(5.1
|
)%
|
Effective tax rate
|
19.9
|
%
|
|
(15.3
|
)%
|
|
27.6
|
%
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
Deferred income tax assets (liabilities):
|
|
|
|
||||
Federal R&D credits
|
$
|
6,107
|
|
|
$
|
420
|
|
Deferred compensation accrued for financial reporting purposes
|
7,139
|
|
|
13,284
|
|
||
Stock-based compensation
|
21,384
|
|
|
15,724
|
|
||
Acquired net operating loss carryforwards
|
2,794
|
|
|
5,421
|
|
||
Reserve for uncollectible revenue
|
2,508
|
|
|
2,119
|
|
||
Basis difference on investment in unconsolidated entities
|
962
|
|
|
7,208
|
|
||
Debt issuance costs
|
2,066
|
|
|
2,801
|
|
||
Deferred rent
|
3,248
|
|
|
1,466
|
|
||
Depreciation
|
1,057
|
|
|
—
|
|
||
Tax credit carryforwards
|
1,094
|
|
|
332
|
|
||
Unrealized foreign exchange loss
|
667
|
|
|
—
|
|
||
Outside basis difference on cost method investment
|
1,967
|
|
|
—
|
|
||
Other
|
1,490
|
|
|
835
|
|
||
Total deferred tax assets
|
52,483
|
|
|
49,610
|
|
||
Valuation allowance
|
—
|
|
|
(49
|
)
|
||
Total deferred tax assets, net of valuation allowance
|
52,483
|
|
|
49,561
|
|
||
Capitalized software development costs
|
(33,599
|
)
|
|
(31,042
|
)
|
||
Deferred incentive compensation and other deferred charges
|
(11,211
|
)
|
|
(11,940
|
)
|
||
Acquired intangibles and goodwill; and acquisition related costs
|
(94,947
|
)
|
|
(97,278
|
)
|
||
Depreciation
|
—
|
|
|
(3,031
|
)
|
||
Other
|
(1,739
|
)
|
|
(163
|
)
|
||
Total deferred tax liabilities
|
(141,496
|
)
|
|
(143,454
|
)
|
||
Net deferred income tax (liabilities) assets
|
$
|
(89,013
|
)
|
|
$
|
(93,893
|
)
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
|
Nine Months Ended December 31,
|
||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Balance at beginning of the period
|
$
|
1,385
|
|
|
$
|
828
|
|
|
$
|
—
|
|
Additions based on tax positions related to the current periods
|
1,126
|
|
|
281
|
|
|
497
|
|
|||
Additions for tax positions of prior periods
|
4,905
|
|
|
—
|
|
|
331
|
|
|||
Positions assumed in acquisition
|
—
|
|
|
276
|
|
|
—
|
|
|||
Balance at end of the period
|
$
|
7,416
|
|
|
$
|
1,385
|
|
|
$
|
828
|
|
Note 14.
|
Commitments and contingencies
|
Year Ending December 31,
|
Operating leases
|
|
Build-to-suit lease obligation
|
|
Total lease obligations
|
||||||
2017
|
$
|
17,421
|
|
|
$
|
—
|
|
|
$
|
17,421
|
|
2018
|
16,255
|
|
|
—
|
|
|
16,255
|
|
|||
2019
|
11,143
|
|
|
16,515
|
|
|
27,658
|
|
|||
2020
|
6,741
|
|
|
25,018
|
|
|
31,759
|
|
|||
2021
|
4,880
|
|
|
25,389
|
|
|
30,269
|
|
|||
Thereafter
|
5,613
|
|
|
379,211
|
|
|
384,824
|
|
|||
Total
|
$
|
62,053
|
|
|
$
|
446,133
|
|
|
$
|
508,186
|
|
Note 15.
|
Segment and geographic areas
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
|
Nine Months Ended December 31,
|
||||||
|
2016
|
|
2015
|
|
2014
|
||||||
United States
|
$
|
784,447
|
|
|
$
|
749,880
|
|
|
$
|
417,194
|
|
Other countries
|
18,977
|
|
|
18,468
|
|
|
16,808
|
|
|||
Total revenue
|
$
|
803,424
|
|
|
$
|
768,348
|
|
|
$
|
434,002
|
|
|
Fiscal 2015 Quarter Ended
|
||||||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||
Revenue
|
$
|
179,322
|
|
|
$
|
183,583
|
|
|
$
|
200,492
|
|
|
$
|
204,951
|
|
Operating Income
|
4,158
|
|
|
12,320
|
|
|
19,151
|
|
|
(90,029
|
)
|
||||
(Loss) income from continuing operations before provision for income taxes and and gains (losses) in equity method investments
|
(19,971
|
)
|
|
7,038
|
|
|
12,551
|
|
|
(99,036
|
)
|
||||
Net (loss) income attributable to common stockholders
|
(22,072
|
)
|
|
7,666
|
|
|
672
|
|
|
(105,280
|
)
|
||||
Earnings per share:
|
|
|
|
|
|
|
|
||||||||
Net (loss) income attributable to common stockholders per share — basic
|
$
|
(0.54
|
)
|
|
$
|
0.18
|
|
|
$
|
0.02
|
|
|
$
|
(2.52
|
)
|
Net (loss) income attributable to common stockholders per share — diluted
|
$
|
(0.54
|
)
|
|
$
|
0.18
|
|
|
$
|
0.02
|
|
|
$
|
(2.52
|
)
|
|
|
|
|
|
|
|
|
||||||||
|
Fiscal 2016 Quarter Ended
|
||||||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
(1)
|
|
December 31,
|
||||||||
Revenue
|
$
|
200,735
|
|
|
$
|
198,382
|
|
|
$
|
200,455
|
|
|
$
|
203,852
|
|
Operating Income
|
20,796
|
|
|
18,088
|
|
|
12,134
|
|
|
25,520
|
|
||||
Income from continuing operations before provision for income taxes and gains (losses) in equity method investments
|
16,036
|
|
|
12,776
|
|
|
6,088
|
|
|
20,712
|
|
||||
Net income attributable to common stockholders
|
10,339
|
|
|
7,495
|
|
|
37,538
|
|
|
35,866
|
|
||||
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|||||
Net income attributable to common stockholders per share — basic
|
$
|
0.25
|
|
|
$
|
0.19
|
|
|
$
|
0.94
|
|
|
$
|
0.89
|
|
Net income attributable to common stockholders per share — diluted
|
$
|
0.25
|
|
|
$
|
0.18
|
|
|
$
|
0.93
|
|
|
$
|
0.88
|
|
|
Year Ended
December 31, |
|
Nine Months Ended December 31,
|
||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash paid (received) for:
|
|
|
|
|
|
||||||
Income taxes
|
$
|
25,919
|
|
|
$
|
(4,695
|
)
|
|
$
|
32
|
|
Interest
|
$
|
14,090
|
|
|
$
|
17,646
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Non-cash activities:
|
|
|
|
|
|
||||||
Clinovations earn-out liability share-based payment
|
$
|
2,703
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Increase in estimated cost of construction of a building under a build-to-suit lease
|
$
|
60,667
|
|
|
$
|
2,700
|
|
|
$
|
—
|
|
1.
|
With respect to the material weakness in the revenue recognition controls, we have made control improvements, including a process for a contemporaneous review of contracts and the dedication of additional subject matter expert staff, and are planning an upgraded software solution to properly account for complex contract terms, including customer cancellation provisions and contingent fee arrangements. We have concluded that this material weakness was remediated as of December 31, 2016.
|
2.
|
With respect to the material weakness in the business combination controls, we have made improvements to the design of the related controls, including standardized review procedures over third-party valuations and related projections. In addition, we have added resources to our accounting and financial reporting functions to facilitate the timely execution of the process improvements. However, as the Company did not complete another material acquisition in 2016, neither we nor our external auditors tested the operating effectiveness of these newly designed controls.
|
3.
|
With respect to the material weakness in the tax controls, although we have made control improvements, we have concluded that the material weakness has not been remediated as of December 31, 2016. Specifically, we have concluded that the internal controls over the tax accounts have not been designed or do not operate at a sufficient level of precision to prevent or detect and correct a material misstatement. The Company identified errors in current and prior periods in the tax accounts that resulted from control deficiencies in the tax process. These errors were not material to the affected financial statements. However, the Company concluded that these control deficiencies in aggregate represent a material weakness as there is a reasonable possibility the controls as currently operating would not prevent or detect and correct a material misstatement. The Company is evaluating these control deficiencies and plans to add resources with additional experience and technical capability to provide effective oversight of our tax function.
|
•
|
A lump sum cash payment equal to the sum of the participant’s base salary plus the greater of the participant’s annual bonuses earned in each of the two years prior to termination;
|
•
|
Accelerated vesting of time-based equity awards that would have vested within one year of termination; and
|
•
|
Continued health and medical coverage for up to one year.
|
•
|
A lump sum cash payment equal to one and a half times the sum of the participant’s base salary plus the greater of the participant’s annual bonuses earned in each of the two years prior to termination;
|
•
|
Accelerated vesting of time-based equity awards, and continued vesting of performance-based equity awards based on the actual level of performance; and
|
•
|
Continued health and medical coverage for up to one year.
|
Robert W. Musslewhite
|
|
David L. Felsenthal
|
Chairman
|
|
President,
|
Chief Executive Officer,
|
|
The Advisory Board Company
|
The Advisory Board Company
|
|
|
|
|
|
Sanju K. Bansal
|
|
Peter J. Grua
|
Founder and Chief Executive Officer,
|
|
Partner, HLM Venture Partners
|
Hunch Analytics, LLC
|
|
|
|
|
|
Nancy Killefer
|
|
Kelt Kindick
|
Director Emeritus,
|
|
Advisory Partner,
|
McKinsey & Company
|
|
Bain & Company, Inc.
|
|
|
|
Mark R. Neaman
|
|
Leon D. Shapiro
|
President and Chief Executive Officer,
|
|
Director,
|
NorthShore University HealthSystem
|
|
Vistage International, Inc.
|
|
|
|
LeAnne M. Zumwalt
|
|
|
Group Vice President,
|
|
|
DaVita HealthCare Partners Inc.
|
|
|
Exhibit
Number |
|
Description of Exhibit
|
|
|
|
3.1
|
|
Restated Certificate of Incorporation of the Company. Incorporated by reference to Exhibit 3.1 of the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2012.
|
|
|
|
3.2.1
|
|
Amendment to Amended and Restated Bylaws of the Company adopted March 13, 2017. Filed herewith.
|
|
|
|
3.2.2
|
|
Amended and Restated Bylaws of the Company as in effect on March 13, 2017. Filed herewith.
|
|
|
|
4.1
|
|
Form of Common Stock Certificate. Incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form S-1/A (Commission File No. 333-68146) filed with the Commission on October 29, 2001
|
|
|
|
10.1*
|
|
Form of Indemnity Agreement between the Company and certain officers, directors and employees. Incorporated by reference to Exhibit 10.33 of the Company’s Registration Statement on Form S-1/A (Commission File No. 333-68146) filed with the Commission on October 29, 2001.
|
|
|
|
10.2*
|
|
Form of Indemnification Agreement between the Company and certain officers, directors and employees. Incorporated by reference to Exhibit 10.5 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009.
|
|
|
|
10.3*
|
|
Employee Stock Purchase Plan. Incorporated by reference to Exhibit 10.34 of the Company’s Registration Statement on Form S-1/A (Commission File No. 333-68146) filed with the Commission on October 29, 2001.
|
|
|
|
10.4*
|
|
The Advisory Board Company 2005 Stock Incentive Plan. Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Commission on November 17, 2005.
|
|
|
|
10.5*
|
|
Form of Standard Terms and Conditions for Restricted Stock Units pursuant to The Advisory Board Company 2005 Stock Incentive Plan. Incorporated by reference to Exhibit 10.39 of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2006.
|
|
|
|
10.6*
|
|
Form of Restricted Stock Unit Award Agreement pursuant to The Advisory Board Company 2005 Stock Incentive Plan. Incorporated by reference to Exhibit 10.40 of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2006.
|
|
|
|
10.7*
|
|
The Advisory Board Company 2006 Stock Incentive Plan. Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Commission on November 17, 2006.
|
|
|
|
10.8*
|
|
Form of Restricted Stock Award Agreement pursuant to The Advisory Board Company 2005 and 2006 Stock Incentive Plans. Incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.
|
|
|
|
10.9*
|
|
Form of Award Agreement for Non-qualified Stock Options pursuant to The Advisory Board Company 2005 and 2006 Stock Incentive Plans. Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for quarter ended September 30, 2008.
|
|
|
|
10.10*
|
|
The Advisory Board Company Amended and Restated 2009 Stock Incentive Plan. Incorporated by reference to Appendix A to the Definitive Proxy Statement of the Company filed with the Commission on July 26, 2013.
|
|
|
|
10.11*
|
|
Form of Award Agreement for Restricted Stock Units pursuant to The Advisory Board Company 2005 and 2009 Stock Incentive Plans. Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Commission on September 16, 2009.
|
|
|
|
10.12*
|
|
Form of Award Agreement for Qualified Stock Options pursuant to The Advisory Board Company 2005 and 2009 Stock Incentive Plans. Incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the Commission on September 16, 2009.
|
|
|
|
10.13*
|
|
Form of Award Agreement for Non-Qualified Stock Options pursuant to The Advisory Board Company 2005 and 2009 Stock Incentive Plans. Incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed with the Commission on September 16, 2009.
|
|
|
|
10.14*
|
|
2014 Form of Award Agreement for Non-Qualified Stock Options for certain employees pursuant to The Advisory Board Company 2005 and 2009 Stock Incentive Plans. Incorporated by reference to Exhibit 10.18 of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2014.
|
|
|
|
10.15*
|
|
Amended and Restated Employment Agreement, dated as of April 3, 2013, between the Company and Robert W. Musslewhite. Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Commission on April 8, 2013.
|
|
|
|
10.16*
|
|
Amended and Restated Employment Agreement, dated as of April 3, 2013, between the Company and David L. Felsenthal. Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Commission on April 8, 2013.
|
Exhibit
Number |
|
Description of Exhibit
|
|
|
|
10.17*
|
|
Executive Nonqualified Excess Plan of The Advisory Board Company, effective May 1, 2013. Incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the Commission on April 8, 2013.
|
|
|
|
10.18
|
|
Agreement of Lease, dated October 20, 2003, between the Company and 2445 M Street Property LLC. Incorporated by reference to Exhibit 10.37 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003.
|
|
|
|
10.19
|
|
Collaboration Agreement, dated as of February 6, 2007, between The Corporate Executive Board Company and the Company (the “Collaboration Agreement”). Incorporated by reference to Exhibit 10.42 of the Company’s Annual Report on Form 10-K filed for the fiscal year ended March 31, 2007. On May 27, 2008, the Commission granted confidential treatment with respect to certain portions of the Collaboration Agreement.
|
|
|
|
10.20
|
|
Letter agreement, dated February 4, 2010, between the Company and The Corporate Executive Board Company concerning the Collaboration Agreement, dated February 6, 2007. Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended December 30, 2009.
|
|
|
|
10.21
|
|
Letter agreement, dated November 7, 2011, between the Company and The Corporate Executive Board Company concerning the Collaboration Agreement, dated February 6, 2007. Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011.
|
|
|
|
10.22
|
|
Letter agreement, dated February 5, 2014, between the Company and The Corporate Executive Board Company concerning the Collaboration Agreement, dated February 6, 2007. Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2013.
|
|
|
|
10.23
|
|
Registration Rights and Governance Agreement, dated as of January 9, 2015, among the Company and Royall Holdings, LLC. Incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed with the Commission on January 12, 2015.
|
|
|
|
10.24
|
|
The Advisory Board Company Inducement Stock Incentive Plan for Royall Employees. Incorporated by reference to Exhibit 4.4 of the Company’s Registration Statement on Form S-8 (Commission File No. 333-201982) filed with the Commission on February 9, 2015.
|
|
|
|
10.25
|
|
Form of Award Agreement for Restricted Stock Units pursuant to The Advisory Board Company Inducement Stock Incentive Plan for Royall Employees. Incorporated by reference to Exhibit 10.40 of the Company’s Transition Report on Form 10-K for the period ended December 31, 2014.
|
|
|
|
10.26
|
|
Form of Award Agreement for Non-Qualified Stock Options pursuant to The Advisory Board Company Inducement Stock Incentive Plan for Royall Employees. Incorporated by reference to Exhibit 10.41 of the Company’s Transition Report on Form 10-K for the period ended December 31, 2014.
|
|
|
|
10.27
|
|
Credit Agreement, dated as of February 6, 2015, among the Company, the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other parties thereto. Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Commission on February 10, 2015.
|
|
|
|
10.28
|
|
Pledge and Security Agreement, entered into as of February 6, 2015, among the Company and the Subsidiaries of the Company party thereto, as Grantors, and JPMorgan Chase Bank, N.A., as Administrative Agent. Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Commission on February 10, 2015.
|
|
|
|
10.29
|
|
Guaranty made as of February 6, 2015 by the Subsidiaries of the Company party thereto in favor of JPMorgan Chase Bank, N.A., as Administrative Agent. Incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the Commission on February 10, 2015.
|
|
|
|
10.30
|
|
Amendment No. 1, dated as of March 31, 2015, to Credit Agreement, dated as of February 6, 2015, among the Company, the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other parties thereto. Incorporated by reference to Exhibit 10.9 of the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2015.
|
|
|
|
10.31
|
|
Amendment No. 2, dated as of October 30, 2015, to that certain Credit Agreement, dated as of February 6, 2015, among the Company, the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other parties thereto. Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Commission on November 5, 2015.
|
|
|
|
Exhibit
Number |
|
Description of Exhibit
|
10.32
|
|
Amendment No. 3, dated as of January 15, 2016, to Credit Agreement, dated as of February 6, 2015, among the Company, the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other parties thereto. Incorporated by reference to Exhibit 10.32 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.
|
|
|
|
10.33*
|
|
The Advisory Board Company Amended and Restated 2009 Stock Incentive Plan. Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Commission on June 15, 2015.
|
|
|
|
10.34*
|
|
2015 Form of Award Agreement for Restricted Stock Units pursuant to The Advisory Board Company 2009 Stock Incentive Plan. Incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form 8-K filed with the Commission on June 15, 2015.
|
|
|
|
10.35*
|
|
2015 Form of Award Agreement for Qualified Stock Options pursuant to The Advisory Board Company 2009 Stock Incentive Plan. Incorporated by reference to Exhibit 10.3 of the Company's Current Report on Form 8-K filed with the Commission on June 15, 2015.
|
|
|
|
10.36*
|
|
2015 Form of Award Agreement for Non-Qualified Stock Options pursuant to The Advisory Board Company 2009 Stock Incentive Plan. Incorporated by reference to Exhibit 10.4 of the Company's Current Report on Form 8-K filed with the Commission on June 15, 2015.
|
|
|
|
10.37*
|
|
Director compensation plans. Incorporated by reference to “Board Corporate Governance Matters - Board of Directors Compensation” in the Company’s Definitive Proxy Statement on Schedule 14A for the 2015 Annual Meeting of Stockholders, filed on April 28, 2015 (Commission File No. 000-33283).
|
|
|
|
10.38*
|
|
The Advisory Board Company Senior Management Severance and Change of Control Plan. Filed herewith.
|
|
|
|
12.1
|
|
Computation of Ratio of Earnings to Fixed Charges. Filed herewith.
|
|
|
|
21.1
|
|
Subsidiaries of the Registrant. Filed herewith.
|
|
|
|
23.1
|
|
Consent of Independent Registered Public Accounting Firm with respect to the consolidated financial statements of the Company. Filed herewith.
|
|
|
|
23.2
|
|
Consent of Independent Auditor with respect to the financial statements of Evolent Health, Inc. Filed herewith.
|
|
|
|
23.3
|
|
Consent of Independent Auditor with respect to the financial statements of Evolent Health LLC (Predecessor). Filed herewith.
|
|
|
|
23.4
|
|
Consent of Independent Auditor with respect to the financial statements of Evolent Health LLC (Successor). Filed herewith.
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended. Filed herewith.
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended. Filed herewith.
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350. Filed herewith.
|
|
|
|
99.1
|
|
Audited financial statements as of December 31, 2016 and 2015, and for the three years ended December 31, 2016, of Evolent Health LLC. Filed herewith.
|
|
|
|
101
|
|
XBRL (Extensible Business Reporting Language). The following financial statements from the Company’s Annual Report on Form 10-K for the period ended December 31, 2015, formatted in XBRL: (i) Consolidated Balance Sheets (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements.
|
*
|
Management contracts or compensation plans or arrangements in which directors or executive officers participate.
|
|
Balance
at
Beginning
of Year
|
|
Additions
Charged
to
Revenue
|
|
Additions
Charged to
Other
Accounts
|
|
Deductions
From
Reserve
|
|
Balance
at End of
Year
|
||||||||||
Nine months ended December 31, 2014 Allowance for uncollectible revenue
|
$
|
6,850
|
|
|
$
|
8,938
|
|
|
$
|
—
|
|
|
$
|
8,258
|
|
|
$
|
7,530
|
|
Year ended December 31, 2015 Allowance for uncollectible revenue
|
$
|
7,530
|
|
|
$
|
4,893
|
|
|
$
|
310
|
|
|
$
|
7,024
|
|
|
$
|
5,709
|
|
Year ended December 31, 2016 Allowance for uncollectible revenue
|
$
|
5,709
|
|
|
$
|
5,577
|
|
|
$
|
—
|
|
|
$
|
4,906
|
|
|
$
|
6,380
|
|
|
|
|
|
|
|
|
|
|
The Advisory Board Company
|
|
|
|
||
March 15, 2017
|
|
|
|
/s/ Robert W. Musslewhite
|
|
|
|
||
|
|
|
|
Robert W. Musslewhite,
|
|
|
|
|
Chief Executive Officer and Chairman
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/s/ Robert W. Musslewhite
|
|
Chief Executive Officer and Chairman
|
|
March 15, 2017
|
Robert W. Musslewhite
|
|
(Principal Executive Officer)
|
|
|
|
|
|
||
/s/ Michael T. Kirshbaum
|
|
Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)
|
|
March 15, 2017
|
Michael T. Kirshbaum
|
|
|
|
|
|
|
|
||
/s/ Sanju K. Bansal
|
|
Director
|
|
March 15, 2017
|
Sanju K. Bansal
|
|
|
|
|
|
|
|
||
/s/ David L. Felsenthal
|
|
Director
|
|
March 15, 2017
|
David L. Felsenthal
|
|
|
|
|
|
|
|
||
/s/ Peter J. Grua
|
|
Director
|
|
March 15, 2017
|
Peter J. Grua
|
|
|
|
|
|
|
|
|
|
/s/ Nancy Killefer
|
|
Director
|
|
March 15, 2017
|
Nancy Killefer
|
|
|
|
|
|
|
|
||
/s/ Kelt Kindick
|
|
Lead Director
|
|
March 15, 2017
|
Kelt Kindick
|
|
|
|
|
|
|
|
||
/s/ Mark R. Neaman
|
|
Director
|
|
March 15, 2017
|
Mark R. Neaman
|
|
|
|
|
|
|
|
||
/s/ Leon D. Shapiro
|
|
Director
|
|
March 15, 2017
|
Leon D. Shapiro
|
|
|
|
|
|
|
|
||
/s/ LeAnne M. Zumwalt
|
|
Director
|
|
March 15, 2017
|
LeAnne M. Zumwalt
|
|
|
|
|
Exhibit
Number
|
|
Description of Exhibit
|
|
|
|
|
|
|
3.1
|
|
Restated Certificate of Incorporation of the Company. Incorporated by reference to Exhibit 3.1 of the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2012.
|
|
|
|
3.2.1
|
|
Amendment to Amended and Restated Bylaws of the Company adopted March 13, 2017. Filed herewith.
|
|
|
|
3.2.2
|
|
Amended and Restated Bylaws of the Company as in effect on March 13, 2017. Filed herewith.
|
|
|
|
4.1
|
|
Form of Common Stock Certificate. Incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form S-1/A (Commission File No. 333-68146) filed with the Commission on October 29, 2001
|
|
|
|
10.1*
|
|
Form of Indemnity Agreement between the Company and certain officers, directors and employees. Incorporated by reference to Exhibit 10.33 of the Company’s Registration Statement on Form S-1/A (Commission File No. 333-68146) filed with the Commission on October 29, 2001.
|
|
|
|
10.2*
|
|
Form of Indemnification Agreement between the Company and certain officers, directors and employees. Incorporated by reference to Exhibit 10.5 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009.
|
|
|
|
10.3*
|
|
Employee Stock Purchase Plan. Incorporated by reference to Exhibit 10.34 of the Company’s Registration Statement on Form S-1/A (Commission File No. 333-68146) filed with the Commission on October 29, 2001.
|
|
|
|
10.4*
|
|
The Advisory Board Company 2005 Stock Incentive Plan. Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Commission on November 17, 2005.
|
|
|
|
10.5*
|
|
Form of Standard Terms and Conditions for Restricted Stock Units pursuant to The Advisory Board Company 2005 Stock Incentive Plan. Incorporated by reference to Exhibit 10.39 of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2006.
|
|
|
|
10.6*
|
|
Form of Restricted Stock Unit Award Agreement pursuant to The Advisory Board Company 2005 Stock Incentive Plan. Incorporated by reference to Exhibit 10.40 of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2006.
|
|
|
|
10.7*
|
|
The Advisory Board Company 2006 Stock Incentive Plan. Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Commission on November 17, 2006.
|
|
|
|
10.8*
|
|
Form of Restricted Stock Award Agreement pursuant to The Advisory Board Company 2005 and 2006 Stock Incentive Plans. Incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.
|
|
|
|
10.9*
|
|
Form of Award Agreement for Non-qualified Stock Options pursuant to The Advisory Board Company 2005 and 2006 Stock Incentive Plans. Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for quarter ended September 30, 2008.
|
|
|
|
10.10*
|
|
The Advisory Board Company Amended and Restated 2009 Stock Incentive Plan. Incorporated by reference to Appendix A to the Definitive Proxy Statement of the Company filed with the Commission on July 26, 2013.
|
|
|
|
10.11*
|
|
Form of Award Agreement for Restricted Stock Units pursuant to The Advisory Board Company 2005 and 2009 Stock Incentive Plans. Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Commission on September 16, 2009.
|
|
|
|
10.12*
|
|
Form of Award Agreement for Qualified Stock Options pursuant to The Advisory Board Company 2005 and 2009 Stock Incentive Plans. Incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the Commission on September 16, 2009.
|
|
|
|
10.13*
|
|
Form of Award Agreement for Non-Qualified Stock Options pursuant to The Advisory Board Company 2005 and 2009 Stock Incentive Plans. Incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed with the Commission on September 16, 2009.
|
|
|
|
10.14*
|
|
2014 Form of Award Agreement for Non-Qualified Stock Options for certain employees pursuant to The Advisory Board Company 2005 and 2009 Stock Incentive Plans. Incorporated by reference to Exhibit 10.18 of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2014.
|
|
|
|
10.15*
|
|
Amended and Restated Employment Agreement, dated as of April 3, 2013, between the Company and Robert W. Musslewhite. Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Commission on April 8, 2013.
|
|
|
|
Exhibit
Number
|
|
Description of Exhibit
|
10.16*
|
|
Amended and Restated Employment Agreement, dated as of April 3, 2013, between the Company and David L. Felsenthal. Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Commission on April 8, 2013.
|
|
|
|
10.17*
|
|
Executive Nonqualified Excess Plan of The Advisory Board Company, effective May 1, 2013. Incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the Commission on April 8, 2013.
|
|
|
|
10.18
|
|
Agreement of Lease, dated October 20, 2003, between the Company and 2445 M Street Property LLC. Incorporated by reference to Exhibit 10.37 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003.
|
|
|
|
10.19
|
|
Collaboration Agreement, dated as of February 6, 2007, between The Corporate Executive Board Company and the Company (the “Collaboration Agreement”). Incorporated by reference to Exhibit 10.42 of the Company’s Annual Report on Form 10-K filed for the fiscal year ended March 31, 2007. On May 27, 2008, the Commission granted confidential treatment with respect to certain portions of the Collaboration Agreement.
|
|
|
|
10.20
|
|
Letter agreement, dated February 4, 2010, between the Company and The Corporate Executive Board Company concerning the Collaboration Agreement, dated February 6, 2007. Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended December 30, 2009.
|
|
|
|
10.21
|
|
Letter agreement, dated November 7, 2011, between the Company and The Corporate Executive Board Company concerning the Collaboration Agreement, dated February 6, 2007. Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011.
|
|
|
|
10.22
|
|
Letter agreement, dated February 5, 2014, between the Company and The Corporate Executive Board Company concerning the Collaboration Agreement, dated February 6, 2007. Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2013.
|
|
|
|
10.23
|
|
Registration Rights and Governance Agreement, dated as of January 9, 2015, among the Company and Royall Holdings, LLC. Incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed with the Commission on January 12, 2015.
|
|
|
|
10.24
|
|
The Advisory Board Company Inducement Stock Incentive Plan for Royall Employees. Incorporated by reference to Exhibit 4.4 of the Company’s Registration Statement on Form S-8 (Commission File No. 333-201982) filed with the Commission on February 9, 2015.
|
|
|
|
10.25
|
|
Form of Award Agreement for Restricted Stock Units pursuant to The Advisory Board Company Inducement Stock Incentive Plan for Royall Employees. Incorporated by reference to Exhibit 10.40 of the Company’s Transition Report on Form 10-K for the period ended December 31, 2014.
|
|
|
|
10.26
|
|
Form of Award Agreement for Non-Qualified Stock Options pursuant to The Advisory Board Company Inducement Stock Incentive Plan for Royall Employees. Incorporated by reference to Exhibit 10.41 of the Company’s Transition Report on Form 10-K for the period ended December 31, 2014.
|
|
|
|
10.27
|
|
Credit Agreement, dated as of February 6, 2015, among the Company, the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other parties thereto. Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Commission on February 10, 2015.
|
|
|
|
10.28
|
|
Pledge and Security Agreement, entered into as of February 6, 2015, among the Company and the Subsidiaries of the Company party thereto, as Grantors, and JPMorgan Chase Bank, N.A., as Administrative Agent. Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Commission on February 10, 2015.
|
|
|
|
10.29
|
|
Guaranty made as of February 6, 2015 by the Subsidiaries of the Company party thereto in favor of JPMorgan Chase Bank, N.A., as Administrative Agent. Incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the Commission on February 10, 2015.
|
|
|
|
10.30
|
|
Amendment No. 1, dated as of March 31, 2015, to Credit Agreement, dated as of February 6, 2015, among the Company, the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other parties thereto. Incorporated by reference to Exhibit 10.9 of the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2015.
|
|
|
|
10.31
|
|
Amendment No. 3, dated as of January 15, 2016, to Credit Agreement, dated as of February 6, 2015, among the Company, the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other parties thereto. Incorporated by reference to Exhibit 10.32 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.
|
|
|
|
Exhibit
Number
|
|
Description of Exhibit
|
10.32
|
|
Amendment No. 3, dated as of January 15, 2016, to that certain Credit Agreement, dated as of February 6, 2015, among the Company, the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other parties thereto. Incorporated by reference to Exhibit 10.32 of the Company’s Annual Report on Form 10-K for the period ended December 31, 2015.
|
|
|
|
10.33*
|
|
The Advisory Board Company Amended and Restated 2009 Stock Incentive Plan. Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Commission on June 15, 2015.
|
|
|
|
10.34*
|
|
2015 Form of Award Agreement for Restricted Stock Units pursuant to The Advisory Board Company 2009 Stock Incentive Plan. Incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form 8-K filed with the Commission on June 15, 2015.
|
|
|
|
10.35*
|
|
2015 Form of Award Agreement for Qualified Stock Options pursuant to The Advisory Board Company 2009 Stock Incentive Plan. Incorporated by reference to Exhibit 10.3 of the Company's Current Report on Form 8-K filed with the Commission on June 15, 2015.
|
|
|
|
10.36*
|
|
2015 Form of Award Agreement for Non-Qualified Stock Options pursuant to The Advisory Board Company 2009 Stock Incentive Plan. Incorporated by reference to Exhibit 10.4 of the Company's Current Report on Form 8-K filed with the Commission on June 15, 2015.
|
|
|
|
10.37*
|
|
Director compensation plans. Incorporated by reference to “Board Corporate Governance Matters - Board of Directors Compensation” in the Company’s Definitive Proxy Statement on Schedule 14A for the 2015 Annual Meeting of Stockholders, filed on April 28, 2015 (Commission File No. 000-33283).
|
|
|
|
10.38*
|
|
The Advisory Board Company Senior Management Severance and Change of Control Plan. Filed herewith.
|
|
|
|
12.1
|
|
Computation of Ratio of Earnings to Fixed Charges. Filed herewith.
|
|
|
|
21.1
|
|
Subsidiaries of the Registrant. Filed herewith.
|
|
|
|
23.1
|
|
Consent of Independent Registered Public Accounting Firm with respect to the consolidated financial statements of the Company. Filed herewith.
|
|
|
|
23.2
|
|
Consent of Independent Auditor with respect to the financial statements of Evolent Health, Inc. Filed herewith.
|
|
|
|
23.3
|
|
Consent of Independent Auditor with respect to the financial statements of Evolent Health LLC (Predecessor). Filed herewith.
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23.4
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Consent of Independent Auditor with respect to the financial statements of Evolent Health LLC (Successor). Filed herewith.
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31.1
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Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended. Filed herewith.
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31.2
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Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended. Filed herewith.
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32.1
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Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350. Filed herewith.
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99.1
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Audited financial statements as of December 31, 2016 and 2015, and for the three years ended December 31, 2016, of Evolent Health LLC. Filed herewith.
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101
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XBRL (Extensible Business Reporting Language). The following financial statements from the Company’s Annual Report on Form 10-K for the period ended December 31, 2016, formatted in XBRL: (i) Consolidated Balance Sheets (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements.
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Management contracts or compensation plans or arrangements in which directors or executive officers participate.
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