Business Segment Information

12 Months Ended

Dec. 31, 2015

Business Segment Information

Business Segment Information

10. Business Segment Information

        The accounting policies of the Company's segments are the same as those described in Note 1—"General." The Company evaluates performance of its segments based on profit or loss from operations before stock compensation expense, depreciation and amortization, interest expense, interest and other income, changes in the fair value of contingent consideration recorded in relation to acquisitions, gain on sale of assets, special charges or benefits, and income taxes ("Segment Profit"). Management uses Segment Profit information for internal reporting and control purposes and considers it important in making decisions regarding the allocation of capital and other resources, risk assessment and employee compensation, among other matters. Healthcare subcontracts with Pharmacy Management to provide pharmacy benefits management services for certain of Healthcare's customers. In addition, Pharmacy Management provides pharmacy benefits management for the Company's employees covered under its medical plan. As such, revenue, cost of goods sold and direct service costs and other related to these arrangements are eliminated. The Company's segments are defined above.

        The following tables summarize, for the periods indicated, operating results by business segment (in thousands):

	Healthcare			Pharmacy Management			Corporate and Elimination			Consolidated
Year Ended December 31, 2013
Managed care and other revenue	$	2,900,592		$	228,705		$	(66,248	)	$	3,063,049
PBM and dispensing revenue		—			483,268			—			483,268
Cost of care		(2,239,997	)		(59,227	)		66,248			(2,232,976	)
Cost of goods sold		—			(455,601	)		—			(455,601	)
Direct service costs and other		(352,644	)		(128,427	)		(138,475	)		(619,546	)
Stock compensation expense(1)		3,171			1,172			16,909			21,252
Segment profit (loss)	$	311,122		$	69,890		$	(121,566	)	$	259,446
Identifiable assets by business segment(3)
Restricted cash	$	221,758		$	—		$	14,938		$	236,696
Net accounts receivable		120,752			115,527			1,906			238,185
Investments		109,457			—			98,856			208,313
Pharmaceutical inventory		—			49,609			—			49,609
Goodwill		245,916			242,290			—			488,206
Other intangible assets, net		11,789			57,905			—			69,694

	Healthcare			Pharmacy Management			Corporate and Elimination			Consolidated
Year Ended December 31, 2014
Managed care and other revenue	$	2,780,905		$	205,524		$	(18,055	)	$	2,968,374
PBM and dispensing revenue		—			844,512			(52,768	)		791,744
Cost of care		(2,090,352	)		(16,298	)		18,055			(2,088,595	)
Cost of goods sold		—			(784,758	)		51,809			(732,949	)
Direct service costs and other		(420,092	)		(182,833	)		(120,573	)		(723,498	)
Stock compensation expense(1)		2,899			28,829			8,856			40,584
Changes in fair value of contingent consideration(1)		38			6,134			—			6,172
Less: non-controlling interest segment profit (loss)(2)		(5,087	)		—			—			(5,087	)
Segment profit (loss)	$	278,485		$	101,110		$	(112,676	)	$	266,919
Identifiable assets by business segment(3)
Restricted cash	$	213,681		$	—		$	1,644		$	215,325
Net accounts receivable		170,488			180,535			2,690			353,713
Investments		142,957			—			124,697			267,654
Pharmaceutical inventory		—			39,375			—			39,375
Goodwill		254,470			311,636			—			566,106
Other intangible assets, net		10,840			122,878			—			133,718

	Healthcare			Pharmacy Management			Corporate and Elimination			Consolidated
Year Ended December 31, 2015
Managed care and other revenue	$	2,959,252		$	238,456		$	(63	)	$	3,197,645
PBM and dispensing revenue		—			1,510,180			(110,425	)		1,399,755
Cost of care		(2,274,755	)		—			—			(2,274,755	)
Cost of goods sold		—			(1,427,680	)		105,803			(1,321,877	)
Direct service costs and other		(438,019	)		(265,661	)		(118,712	)		(822,392	)
Stock compensation expense(1)		2,556			34,864			12,964			50,384
Changes in fair value of contingent consideration(1)		(1,404	)		45,661			—			44,257
Less: non-controlling interest segment profit (loss)(2)		(2,439	)		—			(195	)		(2,634	)
Segment profit (loss)	$	250,069		$	135,820		$	(110,238	)	$	275,651
Identifiable assets by business segment(3)
Restricted cash	$	133,597		$	—		$	—		$	133,597
Net accounts receivable		153,036			270,975			4,633			428,644
Investments		313,045			—			13,120			326,165
Pharmaceutical inventory		—			50,749			—			50,749
Goodwill		260,618			360,772			—			621,390
Other intangible assets, net		12,227			121,147			—			133,374

(1)	Stock compensation expense, as well as changes in the fair value of contingent consideration recorded in relation to the acquisitions, are included in direct service costs and other operating expenses; however, these amounts are excluded from the computation of Segment Profit.
(2)	The non-controlling interest portion of AlphaCare's segment profit (loss) is excluded from the computation of Segment Profit.
(3)	Identifiable assets by business segment are those assets that are used in the operations of each segment. The remainder of the Company's assets cannot be specifically identified by segment.

        The following table reconciles Segment Profit to consolidated income before income taxes for the years ended December 31, 2013, 2014 and 2015 (in thousands):

	2013			2014			2015
Segment Profit	$	259,446		$	266,919		$	275,651
Stock compensation expense		(21,252	)		(40,584	)		(50,384	)
Changes in fair value of contingent consideration		—			(6,172	)		(44,257	)
Non-controlling interest segment profit (loss)		—			(5,087	)		(2,634	)
Depreciation and amortization		(71,994	)		(91,070	)		(102,844	)
Interest expense		(3,000	)		(7,387	)		(6,581	)
Interest and other income		1,985			1,301			2,165
Income before income taxes	$	165,185		$	117,920		$	71,116