2014 Q4 Form 10-K Financial Statement

#000163883316000019 Filed on March 11, 2016

View on sec.gov

Income Statement

Concept 2014 Q4 2014 Q3 2014 Q2
Revenue $179.7M $76.30M $76.82M
YoY Change
Cost Of Revenue $120.6M $45.38M $45.16M
YoY Change
Gross Profit $59.10M $30.93M $31.65M
YoY Change
Gross Profit Margin 32.89% 40.53% 41.2%
Selling, General & Admin $25.10M $11.80M $11.80M
YoY Change
% of Gross Profit 42.47% 38.16% 37.28%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $6.500M $2.834M $2.800M
YoY Change
% of Gross Profit 11.0% 9.16% 8.85%
Operating Expenses $31.60M $56.65M $14.60M
YoY Change
Operating Profit $27.50M $19.65M $17.05M
YoY Change
Interest Expense -$28.10M -$11.26M -$11.30M
YoY Change
% of Operating Profit -102.17% -57.31% -66.27%
Other Income/Expense, Net $3.400M $0.00
YoY Change
Pretax Income -$33.10M $8.391M $9.100M
YoY Change
Income Tax $3.700M $7.961M $2.100M
% Of Pretax Income 94.88% 23.08%
Net Earnings -$54.26M -$6.908M -$606.0K
YoY Change
Net Earnings / Revenue -30.2% -9.05% -0.79%
Basic Earnings Per Share -$1.69 -$0.22 -$0.02
Diluted Earnings Per Share -$1.69 -$0.22 -$0.02
COMMON SHARES
Basic Shares Outstanding 31.70M shares
Diluted Shares Outstanding 31.70M shares

Balance Sheet

Concept 2014 Q4 2014 Q3 2014 Q2
SHORT-TERM ASSETS
Cash & Short-Term Investments $74.90M
YoY Change
Cash & Equivalents $74.92M $4.386M
Short-Term Investments
Other Short-Term Assets $9.399M
YoY Change
Inventory $23.69M
Prepaid Expenses $7.050M
Receivables $145.0M
Other Receivables $8.600M
Total Short-Term Assets $268.6M
YoY Change
LONG-TERM ASSETS
Property, Plant & Equipment $175.0M
YoY Change
Goodwill $1.299B
YoY Change 282.53%
Intangibles $54.89M
YoY Change 103.47%
Long-Term Investments $36.00M
YoY Change
Other Assets $5.879M
YoY Change
Total Long-Term Assets $1.590B
YoY Change
TOTAL ASSETS
Total Short-Term Assets $268.6M
Total Long-Term Assets $1.590B
Total Assets $1.859B
YoY Change
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $43.06M
YoY Change
Accrued Expenses $46.30M
YoY Change
Deferred Revenue
YoY Change
Short-Term Debt $0.00
YoY Change
Long-Term Debt Due $22.10M
YoY Change
Total Short-Term Liabilities $141.4M
YoY Change
LONG-TERM LIABILITIES
Long-Term Debt $1.390B
YoY Change
Other Long-Term Liabilities $90.61M
YoY Change
Total Long-Term Liabilities $90.61M
YoY Change
TOTAL LIABILITIES
Total Short-Term Liabilities $141.4M
Total Long-Term Liabilities $90.61M
Total Liabilities $232.0M
YoY Change
SHAREHOLDERS EQUITY
Retained Earnings -$322.2M
YoY Change
Common Stock
YoY Change
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity -$264.1M
YoY Change
Total Liabilities & Shareholders Equity $1.859B
YoY Change

Cashflow Statement

Concept 2014 Q4 2014 Q3 2014 Q2
OPERATING ACTIVITIES
Net Income -$54.26M -$6.908M -$606.0K
YoY Change
Depreciation, Depletion And Amortization $6.500M $2.834M $2.800M
YoY Change
Cash From Operating Activities -$7.300M $14.30M $10.60M
YoY Change
INVESTING ACTIVITIES
Capital Expenditures -$6.000M -$1.200M -$1.200M
YoY Change
Acquisitions
YoY Change
Other Investing Activities -$260.9M -$600.0K $0.00
YoY Change
Cash From Investing Activities -$266.9M -$1.800M -$1.200M
YoY Change
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 344.8M -14.10M -7.400M
YoY Change
NET CHANGE
Cash From Operating Activities -7.300M 14.30M 10.60M
Cash From Investing Activities -266.9M -1.800M -1.200M
Cash From Financing Activities 344.8M -14.10M -7.400M
Net Change In Cash 70.60M -1.600M 2.000M
YoY Change
FREE CASH FLOW
Cash From Operating Activities -$7.300M $14.30M $10.60M
Capital Expenditures -$6.000M -$1.200M -$1.200M
Free Cash Flow -$1.300M $15.50M $11.80M
YoY Change

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181000 USD
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24996000 USD
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242000 USD
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381000 USD
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1402000 USD
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1059000 USD
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23692000 USD
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25591000 USD
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33441000 USD
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34103000 USD
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13500000 USD
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18800000 USD
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40100000 USD
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2106684000 USD
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181314000 USD
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LongTermAccountsNotesAndLoansReceivableNetNoncurrent
182000 USD
CY2015Q4 us-gaap Long Term Accounts Notes And Loans Receivable Net Noncurrent
LongTermAccountsNotesAndLoansReceivableNetNoncurrent
212000 USD
CY2015Q4 us-gaap Long Term Debt
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CY2014Q4 us-gaap Long Term Debt And Capital Lease Obligations
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CY2015Q4 us-gaap Long Term Debt And Capital Lease Obligations
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CY2014Q4 us-gaap Long Term Debt And Capital Lease Obligations Current
LongTermDebtAndCapitalLeaseObligationsCurrent
22088000 USD
CY2015Q4 us-gaap Long Term Debt And Capital Lease Obligations Current
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27272000 USD
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1361354000 USD
CY2015Q4 us-gaap Long Term Debt And Capital Lease Obligations Including Current Maturities
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1257600000 USD
CY2015Q4 us-gaap Long Term Debt Maturities Repayments Of Principal After Year Five
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248032000 USD
CY2015Q4 us-gaap Long Term Debt Maturities Repayments Of Principal In Next Twelve Months
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27272000 USD
CY2015Q4 us-gaap Long Term Debt Maturities Repayments Of Principal In Year Five
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CY2015Q4 us-gaap Long Term Debt Maturities Repayments Of Principal In Year Four
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137420000 USD
CY2015Q4 us-gaap Long Term Debt Maturities Repayments Of Principal In Year Three
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14679000 USD
CY2015Q4 us-gaap Long Term Debt Maturities Repayments Of Principal In Year Two
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25253000 USD
CY2014 us-gaap Minority Interest Decrease From Distributions To Noncontrolling Interest Holders
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32414000 USD
CY2015 us-gaap Minority Interest Decrease From Distributions To Noncontrolling Interest Holders
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CY2014 us-gaap Net Cash Provided By Used In Financing Activities
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33374000 USD
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49078000 USD
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21949000 USD
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CY2014Q4 us-gaap Net Income Loss
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CY2014 us-gaap Net Income Loss
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CY2015Q1 us-gaap Net Income Loss
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CY2015Q4 us-gaap Net Income Loss
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CY2015 us-gaap Net Income Loss
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1429000 USD
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CY2014Q3 us-gaap Net Income Loss Attributable To Noncontrolling Interest
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CY2014Q4 us-gaap Net Income Loss Attributable To Noncontrolling Interest
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CY2014 us-gaap Net Income Loss Attributable To Noncontrolling Interest
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38845000 USD
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0 USD
CY2014 us-gaap Notes Issued1
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0 USD
CY2015 us-gaap Notes Issued1
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7430000 USD
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4 Entity
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3 segment
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17250000 USD
CY2015Q2 us-gaap Net Income Loss Attributable To Noncontrolling Interest
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17905000 USD
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CY2015Q4 us-gaap Off Market Lease Unfavorable
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CY2015 us-gaap Operating Expenses
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CY2015Q4 us-gaap Net Income Loss Attributable To Noncontrolling Interest
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19355000 USD
CY2015 us-gaap Net Income Loss Attributable To Noncontrolling Interest
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71416000 USD
CY2014 us-gaap Net Income Loss Attributable To Redeemable Noncontrolling Interest
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4079000 USD
CY2015 us-gaap Net Income Loss Attributable To Redeemable Noncontrolling Interest
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17616000 USD
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17727000 USD
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55229000 USD
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58226000 USD
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OperatingIncomeLoss
50807000 USD
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144754000 USD
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256392000 USD
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21401000 USD
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25677000 USD
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29721000 USD
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33019000 USD
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110131000 USD
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19389000 USD
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16918000 USD
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9399000 USD
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2099000 USD
CY2014Q4 us-gaap Other Assets Noncurrent
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5879000 USD
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8504000 USD
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0 USD
CY2014 us-gaap Other Comprehensive Income Loss Net Of Tax
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0 USD
CY2015 us-gaap Other Comprehensive Income Loss Net Of Tax
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0 USD
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13775000 USD
CY2014 us-gaap Other Cost And Expense Operating
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20561000 USD
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54127000 USD
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53870000 USD
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68410000 USD
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90610000 USD
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85613000 USD
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297000 USD
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1989000 USD
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7694000 USD
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0 USD
CY2014 us-gaap Other Tax Expense Benefit
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0 USD
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119911000 USD
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0 USD
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3143000 USD
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0 USD
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17840000 USD
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4974000 USD
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7496000 USD
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0 USD
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-503000 USD
CY2014 us-gaap Payments Of Distributions To Affiliates
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CY2015 us-gaap Payments Of Distributions To Affiliates
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12175000 USD
CY2013 us-gaap Payments Of Dividends Minority Interest
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25253000 USD
CY2014 us-gaap Payments Of Dividends Minority Interest
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35182000 USD
CY2015 us-gaap Payments Of Dividends Minority Interest
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69720000 USD
CY2013 us-gaap Payments To Acquire Businesses Net Of Cash Acquired
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486000 USD
CY2014 us-gaap Payments To Acquire Businesses Net Of Cash Acquired
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263280000 USD
CY2015 us-gaap Payments To Acquire Businesses Net Of Cash Acquired
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112596000 USD
CY2013 us-gaap Payments To Acquire Property Plant And Equipment
PaymentsToAcquirePropertyPlantAndEquipment
4150000 USD
CY2014 us-gaap Payments To Acquire Property Plant And Equipment
PaymentsToAcquirePropertyPlantAndEquipment
7736000 USD
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33439000 USD
CY2014Q4 us-gaap Preferred Stock Par Or Stated Value Per Share
PreferredStockParOrStatedValuePerShare
0
CY2015Q4 us-gaap Preferred Stock Par Or Stated Value Per Share
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0.01
CY2014Q4 us-gaap Preferred Stock Shares Authorized
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0 shares
CY2015Q4 us-gaap Preferred Stock Shares Authorized
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20000000 shares
CY2014Q4 us-gaap Preferred Stock Shares Issued
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0 shares
CY2015Q4 us-gaap Preferred Stock Shares Issued
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0 shares
CY2014Q4 us-gaap Preferred Stock Value
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0 USD
CY2015Q4 us-gaap Preferred Stock Value
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0 USD
CY2014Q4 us-gaap Prepaid Expense And Other Assets Current
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24005000 USD
CY2015Q4 us-gaap Prepaid Expense And Other Assets Current
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34620000 USD
CY2014Q4 us-gaap Prepaid Expense Current
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7050000 USD
CY2013 us-gaap Proceeds From Divestiture Of Businesses
ProceedsFromDivestitureOfBusinesses
1014000 USD
CY2014 us-gaap Proceeds From Divestiture Of Businesses
ProceedsFromDivestitureOfBusinesses
0 USD
CY2015 us-gaap Proceeds From Divestiture Of Businesses
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11193000 USD
CY2013 us-gaap Proceeds From Issuance Initial Public Offering
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0 USD
CY2014 us-gaap Proceeds From Issuance Initial Public Offering
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0 USD
CY2015 us-gaap Proceeds From Issuance Initial Public Offering
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250979000 USD
CY2013 us-gaap Proceeds From Issuance Of Long Term Debt
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462983000 USD
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1477288000 USD
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196366000 USD
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CY2014 us-gaap Proceeds From Payments For Other Financing Activities
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3558000 USD
CY2013 us-gaap Professional Fees
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18028000 USD
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CY2013 us-gaap Profit Loss
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17727000 USD
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2258000 USD
CY2014Q2 us-gaap Profit Loss
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7025000 USD
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430000 USD
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10488000 USD
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13784000 USD
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36094000 USD
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72845000 USD
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230703000 USD
CY2015Q4 us-gaap Property Plant And Equipment Gross Excluding Capital Leased Assets
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254788000 USD
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175006000 USD
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184550000 USD
CY2013 us-gaap Provision For Doubtful Accounts
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5885000 USD
CY2014 us-gaap Provision For Doubtful Accounts
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9509000 USD
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23578000 USD
CY2013Q4 us-gaap Redeemable Noncontrolling Interest Equity Carrying Amount
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CY2014Q4 us-gaap Redeemable Noncontrolling Interest Equity Carrying Amount
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192589000 USD
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339908000 USD
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1009874000 USD
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316000 USD
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316000 USD
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CY2013 us-gaap Revenues
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284599000 USD
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Revenues
70480000 USD
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76815000 USD
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76303000 USD
CY2014Q4 us-gaap Revenues
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179691000 USD
CY2014 us-gaap Revenues
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403289000 USD
CY2014 us-gaap Share Based Compensation
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942000 USD
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7502000 USD
CY2015Q4 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Exercisable Number
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0 shares
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224143000 USD
CY2015Q2 us-gaap Revenues
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232827000 USD
CY2015Q3 us-gaap Revenues
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239599000 USD
CY2015Q4 us-gaap Revenues
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263322000 USD
CY2015 us-gaap Revenues
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959891000 USD
CY2014Q4 us-gaap Security Deposit
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CY2014Q4 us-gaap Self Insurance Reserve
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7400000 USD
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455000 USD
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0 shares
CY2015 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Grants In Period Gross
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CY2014Q4 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Number
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber
0 shares
CY2015Q4 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Number
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20.03
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20.03
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P3Y
CY2015 us-gaap Sharebased Compensation Arrangement By Sharebased Payment Award Options Outstanding Weighted Average Remaining Contractual Term2
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P3Y
CY2015 us-gaap Stock Issued During Period Shares Stock Options Exercised
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CY2015 us-gaap Stock Issued During Period Value Acquisitions
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124105000 USD
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29536000 USD
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297927000 USD
CY2013 us-gaap Supplies Expense
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63726000 USD
CY2014 us-gaap Supplies Expense
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94224000 USD
CY2015 us-gaap Supplies Expense
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242083000 USD
CY2014Q4 us-gaap Taxes Payable Current
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3189000 USD
CY2013Q4 us-gaap Unrecognized Tax Benefits
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0 USD
CY2014Q4 us-gaap Unrecognized Tax Benefits
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2755000 USD
CY2015Q4 us-gaap Unrecognized Tax Benefits
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1403000 USD
CY2015 us-gaap Unrecognized Tax Benefits Decreases Resulting From Prior Period Tax Positions
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996000 USD
CY2015 us-gaap Unrecognized Tax Benefits Decreases Resulting From Settlements With Taxing Authorities
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492000 USD
CY2014Q4 us-gaap Unrecognized Tax Benefits Income Tax Penalties And Interest Accrued
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357000 USD
CY2015Q4 us-gaap Unrecognized Tax Benefits Income Tax Penalties And Interest Accrued
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322000 USD
CY2014 us-gaap Unrecognized Tax Benefits Increases Resulting From Acquisition
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1766000 USD
CY2015 us-gaap Unrecognized Tax Benefits Increases Resulting From Acquisition
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0 USD
CY2014 us-gaap Unrecognized Tax Benefits Increases Resulting From Current Period Tax Positions
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66000 USD
CY2015 us-gaap Unrecognized Tax Benefits Increases Resulting From Current Period Tax Positions
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0 USD
CY2014 us-gaap Unrecognized Tax Benefits Increases Resulting From Prior Period Tax Positions
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923000 USD
CY2015 us-gaap Unrecognized Tax Benefits Increases Resulting From Prior Period Tax Positions
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136000 USD
CY2015Q4 us-gaap Unrecognized Tax Benefits That Would Impact Effective Tax Rate
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548000 USD
CY2015 us-gaap Valuation Allowance Deferred Tax Asset Change In Amount
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-136000000 USD
CY2013 us-gaap Weighted Average Number Diluted Shares Outstanding Adjustment
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0 shares
CY2014 us-gaap Weighted Average Number Diluted Shares Outstanding Adjustment
WeightedAverageNumberDilutedSharesOutstandingAdjustment
0 shares
CY2015 us-gaap Weighted Average Number Diluted Shares Outstanding Adjustment
WeightedAverageNumberDilutedSharesOutstandingAdjustment
1398154 shares
CY2013 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
31815520 shares
CY2014 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
32295364 shares
CY2015 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
37464387 shares
CY2013 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
31815520 shares
CY2014 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
32295364 shares
CY2015 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
36066233 shares
CY2015 us-gaap Use Of Estimates
UseOfEstimates
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:10px;text-align:justify;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;font-weight:bold;">Use of Estimates</font></div><div style="line-height:120%;padding-bottom:10px;text-align:justify;text-indent:24px;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;">The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and footnotes. Examples include, but are not limited to, estimates of accounts receivable allowances, professional and general liabilities and the estimate of deferred tax assets or liabilities. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All adjustments are of a normal, recurring nature. Actual results could differ from those estimates.</font></div></div>
CY2015 us-gaap Nature Of Operations
NatureOfOperations
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:10px;text-align:left;padding-left:24px;text-indent:-24px;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;font-weight:bold;">Organization</font></div><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:9pt;">Surgery Partners, Inc.</font><font style="font-family:inherit;font-size:9pt;">,</font><font style="font-family:inherit;font-size:10pt;"> a </font><font style="font-family:inherit;font-size:9pt;">Delaware corporation (together with its subsidiaries, the &#8220;Company&#8221;), was formed April 2, 2015, as a holding company for the purpose of facilitating an initial public offering (the &#8220;IPO&#8221;) of shares of common stock. Prior to September 30, 2015, the Company conducted business through Surgery Center Holdings, Inc. and its subsidiaries. Surgery Center Holdings, LLC was and is the sole direct owner of the equity interests of Surgery Center Holdings, Inc. and had no other material assets. </font></div><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:justify;text-indent:24px;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;">On September 30, 2015, Surgery Partners, Inc. became the direct parent and sole member of Surgery Center Holdings, LLC (the "Reorganization"). In the Reorganization, all of the equity interests held by the pre-IPO Owners of Surgery Center Holdings, LLC were contributed to Surgery Partners, Inc. in exchange for </font><font style="font-family:inherit;font-size:9pt;">33,871,990</font><font style="font-family:inherit;font-size:9pt;"> shares of common stock of Surgery Partners, Inc. and certain rights to additional payments under a tax receivable agreement. After giving effect to the Reorganization, Surgery Partners, Inc. is a holding company, and its sole material asset is an equity interest in Surgery Center Holdings, LLC. The Company's consolidated financial statements for periods prior to the Reorganization represent the historical operating results and financial position of Surgery Center Holdings, Inc. and certain of its subsidiaries.</font></div><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:left;text-indent:24px;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;">On </font><font style="font-family:inherit;font-size:9pt;">October&#160;1, 2015</font><font style="font-family:inherit;font-size:9pt;">, the Company completed its IPO of </font><font style="font-family:inherit;font-size:9pt;">14,285,000</font><font style="font-family:inherit;font-size:9pt;"> shares of common stock at an offering price of </font><font style="font-family:inherit;font-size:9pt;">$19.00</font><font style="font-family:inherit;font-size:9pt;"> per share. On </font><font style="font-family:inherit;font-size:9pt;">October&#160;6, 2015</font><font style="font-family:inherit;font-size:9pt;">, the Company received net proceeds from the sale of common stock in this offering of </font><font style="font-family:inherit;font-size:9pt;">$255.8 million</font><font style="font-family:inherit;font-size:9pt;">, after deducting underwriting discounts and other fees of </font><font style="font-family:inherit;font-size:9pt;">$15.6 million</font><font style="font-family:inherit;font-size:9pt;">. These net proceeds were used to repay a portion of the borrowings outstanding under the 2014 Second Lien and to pay fees associated with this offering. The Company also incurred an additional </font><font style="font-family:inherit;font-size:9pt;">$4.8 million</font><font style="font-family:inherit;font-size:9pt;"> in costs directly related to the IPO.</font></div><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:justify;text-indent:24px;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;">On </font><font style="font-family:inherit;font-size:9pt;">November&#160;3, 2014</font><font style="font-family:inherit;font-size:9pt;">, the Company completed the acquisition of Symbion Holdings Corp. ("Symbion") ("the Merger"), which added </font><font style="font-family:inherit;font-size:9pt;">55</font><font style="font-family:inherit;font-size:9pt;"> surgical facilities, including </font><font style="font-family:inherit;font-size:9pt;">49</font><font style="font-family:inherit;font-size:9pt;"> ambulatory surgery centers ("ASCs") and </font><font style="font-family:inherit;font-size:9pt;">six</font><font style="font-family:inherit;font-size:9pt;"> surgical hospitals, to its network of existing facilities. The Company acquired Symbion for a purchase price of </font><font style="font-family:inherit;font-size:9pt;">$792.0 million</font><font style="font-family:inherit;font-size:9pt;"> pursuant to the terms of an Agreement and Plan of Merger dated as of </font><font style="font-family:inherit;font-size:9pt;">June&#160;13, 2014</font><font style="font-family:inherit;font-size:9pt;">. The Symbion acquisition was financed&#160;through the issuance of approximately </font><font style="font-family:inherit;font-size:9pt;">$1.4 billion</font><font style="font-family:inherit;font-size:9pt;"> under the Company's Term Loans and Revolving Facility. </font></div><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:9pt;">As of </font><font style="font-family:inherit;font-size:9pt;">December&#160;31, 2015</font><font style="font-family:inherit;font-size:9pt;">, the Company owned and operated a national network of surgical facilities and ancillary services in </font><font style="font-family:inherit;font-size:9pt;">29</font><font style="font-family:inherit;font-size:9pt;"> states.&#160; The surgical facilities, which include ASCs and surgical hospitals, primarily provide non-emergency surgical procedures across many specialties, including, among others, otolaryngology</font><font style="font-family:inherit;font-size:10pt;">&#160;</font><font style="font-family:inherit;font-size:9pt;">("ENT"), gastroenterology</font><font style="font-family:inherit;font-size:10pt;">&#160;("</font><font style="font-family:inherit;font-size:9pt;">GI"), general surgery, ophthalmology, orthopedics, cardiology and pain management.&#160;The Company's surgical hospitals provide services such as diagnostic imaging, laboratory, obstetrics, oncology, pharmacy, physical therapy and wound care. Ancillary services are comprised of a diagnostic laboratory, multi-specialty physician practices, urgent care facilities, anesthesia services, optical services and specialty pharmacy services. </font></div><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:justify;text-indent:24px;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;"> As of </font><font style="font-family:inherit;font-size:9pt;">December&#160;31, 2015</font><font style="font-family:inherit;font-size:9pt;">, the Company owned or operated a portfolio of </font><font style="font-family:inherit;font-size:9pt;">101</font><font style="font-family:inherit;font-size:9pt;"> surgical facilities, comprised of </font><font style="font-family:inherit;font-size:9pt;">96</font><font style="font-family:inherit;font-size:9pt;"> ASCs and </font><font style="font-family:inherit;font-size:9pt;">five</font><font style="font-family:inherit;font-size:9pt;"> surgical hospitals. The Company owns these facilities in partnership with physicians and, in some cases, healthcare systems in the markets and communities it serves.&#160;The Company owned a majority interest in </font><font style="font-family:inherit;font-size:9pt;">72</font><font style="font-family:inherit;font-size:9pt;"> of the surgical facilities and consolidated </font><font style="font-family:inherit;font-size:9pt;">90</font><font style="font-family:inherit;font-size:9pt;"> of these facilities for financial reporting purposes.&#160;In addition, the Company owned or operated a network of </font><font style="font-family:inherit;font-size:9pt;">46</font><font style="font-family:inherit;font-size:9pt;"> physician practices.</font></div></div>
CY2015 us-gaap Prior Period Reclassification Adjustment Description
PriorPeriodReclassificationAdjustmentDescription
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:10px;text-align:justify;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;font-weight:bold;">Reclassifications</font></div><div style="line-height:120%;padding-bottom:10px;text-align:justify;text-indent:24px;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;">Certain reclassifications have been made to the comparative periods' financial statements to conform to the current year presentation. The reclassifications primarily related to the presentation of certain expenses within costs of revenue and had no impact on the Company's consolidated financial position, results of operations or cash flows.</font></div></div>
CY2015 us-gaap Revenue Recognition Sales Of Services
RevenueRecognitionSalesOfServices
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:justify;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;font-weight:bold;">Revenues</font></div><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:justify;text-indent:24px;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;">The Company recognizes revenues in the period in which the services are performed. Patient service revenues and receivables from third-party payors are recorded net of estimated contractual adjustments and allowances, which the Company estimates based on the historical trend of its cash collections and contractual write-offs, accounts receivable agings, established fee schedules, contracts with payors and procedure statistics.</font></div></div><div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:justify;text-indent:24px;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;font-style:italic;">Other service revenues.</font><font style="font-family:inherit;font-size:9pt;font-style:italic;font-weight:bold;"> </font><font style="font-family:inherit;font-size:9pt;"> Optical service revenues consist of product sales from the Company's optical laboratories as well as handling charges billed to the members of the Company's optical products purchasing organization and sales from the Company's marketing products and services business. The Company's optical products purchasing organization negotiates volume buying discounts with optical products manufacturers. The buying discounts and any handling charges billed to the members of the buying group represent the revenue recognized for financial reporting purposes. Revenue is recognized as orders are shipped to members. The Company bases its estimates for sales returns and discounts on historical experience and has not experienced significant fluctuations between estimated and actual return activity and discounts given. The Company's optical laboratories manufacture and distribute corrective lenses and eyeglasses to ophthalmologists and optometrists. Revenue is recognized when product is shipped, net of allowance for discounts. The Company's marketing products and services businesses recognize revenue when product is shipped or services are rendered. </font></div><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:justify;text-indent:24px;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;">Other revenues include management and administrative service fees derived from the non-consolidated facilities that the Company accounts for under the equity method, management of surgical facilities in which it does not own an interest, and management services provided to physician practices for which the Company is not required to provide capital or additional assets. The fees derived from these management arrangements are based on a predetermined percentage of the revenues of each facility or practice and are recognized in the period in which services are rendered.</font></div></div><div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-indent:24px;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;font-style:italic;">Patient service revenues.</font><font style="font-family:inherit;font-size:9pt;">&#160; The fee charged for healthcare procedures performed in surgical facilities varies depending on the type of service provided, but usually includes all charges for usage of an operating room, a recovery room, special equipment, medical supplies, nursing staff and medications.&#160; The fee does not normally include professional fees charged by the patient&#8217;s surgeon, anesthesiologist or other attending physician, which are billed directly by such physicians to the patient or third-party payor.&#160; However, in several surgical facilities, the Company charges for anesthesia services. Ancillary service revenues include fees for patient visits to the Company's physician practices, pharmacy services and diagnostic tests ordered by physicians. Patient service revenues are recognized on the date of service, net of estimated contractual adjustments and discounts from third-party payors, including Medicare and Medicaid.&#160; Changes in estimated contractual adjustments and discounts are recorded in the period of change. During the </font><font style="font-family:inherit;font-size:9pt;">year ended</font><font style="font-family:inherit;font-size:9pt;"> </font><font style="font-family:inherit;font-size:9pt;">December&#160;31, 2015</font><font style="font-family:inherit;font-size:9pt;">, the Company recognized an increase to patient service revenues as a result of changes in estimates to third-party settlements related to prior years of approximately </font><font style="font-family:inherit;font-size:9pt;">$2.3 million</font><font style="font-family:inherit;font-size:9pt;"> compared to a reduction to patient service revenues of </font><font style="font-family:inherit;font-size:9pt;">$104,000</font><font style="font-family:inherit;font-size:9pt;"> during the </font><font style="font-family:inherit;font-size:9pt;">year ended</font><font style="font-family:inherit;font-size:9pt;"> </font><font style="font-family:inherit;font-size:9pt;">December&#160;31, 2014</font><font style="font-family:inherit;font-size:9pt;">. These adjustments were related to </font><font style="font-family:inherit;font-size:9pt;">two</font><font style="font-family:inherit;font-size:9pt;"> of the Company's surgical hospitals that were acquired in connection with the acquisition of Symbion on </font><font style="font-family:inherit;font-size:9pt;">November&#160;3, 2014</font><font style="font-family:inherit;font-size:9pt;">.</font></div></div>

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