Fair Value Measurements

3 Months Ended

Jun. 30, 2020

Fair Value Measurements [Abstract]

Fair Value Measurements

10. Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities that are measured at fair value on a recurring basis consist of derivative financial instruments and contingent consideration obligations. The following table summarizes these items, aggregated by the level in the fair value hierarchy within which those measurements fall, as of June 30, 2020 and March 31, 2020:

			Quoted in		Significant Other		Significant
	Balance at		Identical Markets		Observable Inputs		Unobservable Inputs
Description	June 30, 2020		(Level 1)		(Level 2)		(Level 3)
Interest rate cap agreements	$	(44,503)	$	—	$	(44,503)	$	—
Contingent consideration obligation		(550)		—		—		(550)
Total	$	(45,053)	$	—	$	(44,503)	$	(550)

			Quoted in		Significant Other		Significant
	Balance at		Identical Markets		Observable Inputs		Unobservable Inputs
Description	March 31, 2020		(Level 1)		(Level 2)		(Level 3)
Interest rate cap agreements	$	(47,408)	$	—	$	(47,408)	$	—
Contingent consideration obligation		(3,000)		—		—		(3,000)
Total	$	(50,408)	$	—	$	(47,408)	$	(3,000)

Derivative Financial Instruments

The valuation of our derivative financial instruments is determined using widely accepted valuation techniques, including a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair value of the interest rate cap agreements is determined using the market standard methodology of netting the discounted future fixed cash payments (or receipts) and the discounted expected variable cash receipts (or payments) using the overnight index swap rate as the discount rate.

We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we considered the impact of netting and any applicable credit enhancements and measured the credit risk of our derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments utilize Level 3 inputs to evaluate the likelihood of both our own default and counterparty default. As of June 30, 2020, we determined that the credit valuation adjustments are not significant to the overall valuation of the derivatives. As a result, the derivative valuations are classified in Level 2 of the fair value hierarchy.

Contingent Consideration

The valuation of our contingent consideration obligations was determined using a discounted cash flow method that involved a Monte Carlo simulation. This analysis reflects the contractual terms of the purchase agreements (i.e., minimum and maximum payments, length of earn-out periods, manner of calculating amounts due, etc.) and utilizes assumptions with regard to future cash flows that were determined using a Monte Carlo simulation which were then discounted to present value using an appropriate discount rate. Significant increases with respect to assumptions as to future revenue would have resulted in a higher fair value measurement while an increase in the discount rate would have resulted in a lower fair value measurement.

The table below presents a reconciliation of the fair value of the liabilities that use significant unobservable inputs (Level 3):

	Three Months Ended		Three Months Ended
	June 30, 2020		June 30, 2019
Balance at beginning of period	$	(3,000)	$	—
Gain/(loss) included in contingent consideration		2,450		—
Balance at end of period	$	(550)	$	—

Assets and Liabilities Measured at Fair Value upon Initial Recognition

The carrying amounts and fair values of financial instruments held as of June 30, 2020 and March 31, 2020 were as follows:

	June 30, 2020				March 31, 2020
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and cash equivalents	$	178,351	$	178,351	$	410,405	$	410,405
Accounts receivable	$	627,305	$	627,305	$	740,105	$	740,105
Investment in business purchase option	$	—	$	—	$	146,500	$	146,500
Senior Credit Facilities (Level 2)	$	3,689,853	$	3,674,961	$	3,682,457	$	3,452,687
Senior Notes (Level 2)	$	1,316,928	$	1,318,375	$	997,772	$	950,000
Debt component of tangible equity units (Level 2)	$	32,008	$	31,966	$	35,431	$	34,806

Additionally, the assets acquired and liabilities assumed as part of the acquisitions of eRx and PDX were recorded at fair value upon initial recognition. See Note 4, Business Combinations, for additional information.