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Business Segment Information (Tables)
 12 Months Ended
Dec. 31, 2016
Business Segment Information  
Schedule of operating results by business segment

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

 

 

    

Corporate

    

 

 

 

 

 

 

 

 

Pharmacy

 

and

 

 

 

 

 

    

Healthcare

    

Management

    

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 (4)

 

 
(485,388)

 

 
(200,198)

 

 
(37,912)

 

 
(723,498)

 

Stock compensation expense (1)

 

 
6,654

 

 
29,767

 

 
4,163

 

 
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)

 

$
216,944

 

$
84,683

 

$
(34,708)

 

$
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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

 

 

    

Corporate

    

 

 

 

 

 

 

 

 

Pharmacy

 

and

 

 

 

 

 

    

Healthcare

    

Management

    

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 (4)

 

 
(510,811)

 

 
(284,968)

 

 
(26,613)

 

 
(822,392)

 

Stock compensation expense (1) (4)

 

 
8,502

 

 
36,351

 

 
5,531

 

 
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)

 

$
183,223

 

$
118,000

 

$
(25,572)

 

$
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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

 

 

    

Corporate

    

 

 

 

 

 

 

 

 

Pharmacy

 

and

 

 

 

 

 

    

Healthcare

    

Management

    

Elimination

    

Consolidated

 

Year Ended December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

Managed care and other revenue

 

$
2,659,685

 

$
243,561

 

$
(304)

 

$
2,902,942

 

PBM and dispensing revenue

 

 

 —

 

 
2,053,188

 

 
(119,246)

 

 
1,933,942

 

Cost of care

 

 
(1,882,614)

 

 

 —

 

 

 —

 

 
(1,882,614)

 

Cost of goods sold

 

 

 —

 

 
(1,933,086)

 

 
114,366

 

 
(1,818,720)

 

Direct service costs and other (4)

 

 
(573,706)

 

 
(261,570)

 

 
(41,336)

 

 
(876,612)

 

Stock compensation expense (1) (4)

 

 
4,440

 

 
20,509

 

 
12,473

 

 
37,422

 

Changes in fair value of contingent consideration (1)

 

 
(231)

 

 
127

 

 

 —

 

 
(104)

 

Impairment of intangible assets (1)

 

 
4,800

 

 

 —

 

 

 —

 

 
4,800

 

Less: non-controlling interest segment profit (loss) (2)

 

 
(567)

 

 

 —

 

 
(170)

 

 
(737)

 

Segment profit (loss)

 

$
212,941

 

$
122,729

 

$
(33,877)

 

$
301,793

 

Identifiable assets by business segment (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted cash

 

$
81,608

 

$
1

 

$
167

 

$
81,776

 

Net accounts receivable

 

 
191,058

 

 
405,611

 

 
10,095

 

 
606,764

 

Investments

 

 
293,034

 

 
10,703

 

 
1,516

 

 
305,253

 

Pharmaceutical inventory

 

 

 —

 

 
58,995

 

 

 —

 

 
58,995

 

Goodwill

 

 
350,576

 

 
391,478

 

 

 —

 

 
742,054

 

Other intangible assets, net

 

 
55,756

 

 
130,476

 

 

 —

 

 
186,232

 

(1)

Stock compensation expense, changes in the fair value of contingent consideration recorded in relation to the acquisitions and impairment of intangible assets 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.

(4)

Effective January 1, 2016, the Company implemented changes related to the allocation of Corporate operational and support functions. These changes were applied retrospectively. The following tables summarize, for the periods indicated, the changes by business segment (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pharmacy

 

Corporate and

 

 

 

 

    

Healthcare

    

Management

    

Elimination

    

Consolidated

Year Ended December 31, 2014

 

 

 

 

 

 

 

 

 

 

 

 

Segment profit (loss) before Corporate allocations

 

$
278,485

 

$
101,110

 

$
(112,676)

 

$
266,919

Allocated Corporate costs

 

 
(65,296)

 

 
(17,365)

 

 
82,661

 

 

 —

Allocated Corporate stock compensation expense

 

 
3,755

 

 
938

 

 
(4,693)

 

 

 —

Segment profit (loss)

 

$
216,944

 

$
84,683

 

$
(34,708)

 

$
266,919

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pharmacy

 

Corporate and

 

 

 

 

 

    

Healthcare

 

Management

    

Elimination

    

Consolidated

 

Year Ended December 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment profit (loss) before Corporate allocations

 

$
250,069

 

$
135,820

 

$
(110,238)

 

$
275,651

 

Allocated Corporate costs

 

 
(72,792)

 

 
(19,307)

 

 
92,099

 

 

 —

 

Allocated Corporate stock compensation expense

 

 
5,946

 

 
1,487

 

 
(7,433)

 

 

 —

 

Segment profit (loss)

 

$
183,223

 

$
118,000

 

$
(25,572)

 

$
275,651

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pharmacy

 

Corporate and

 

 

 

 

 

    

Healthcare

    

Management

    

Elimination

    

Consolidated

 

Year Ended December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment profit (loss) before Corporate allocations

 

$
282,421

 

$
140,625

 

$
(121,253)

 

$
301,793

 

Allocated Corporate costs

 

 
(74,498)

 

 
(19,150)

 

 
93,648

 

 

 —

 

Allocated Corporate stock compensation expense

 

 
5,018

 

 
1,254

 

 
(6,272)

 

 

 —

 

Segment profit (loss)

 

$
212,941

 

$
122,729

 

$
(33,877)

 

$
301,793

 

 

Schedule of reconciliation of Segment Profit to income before income taxes

The following table reconciles consolidated income before income taxes to Segment Profit for the years ended December 31, 2014, 2015 and 2016 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

2014

    

2015

    

2016

 

Income before income taxes

 

$
117,920

 

$
71,116

 

$
145,517

 

Stock compensation expense

 

 
40,584

 

 
50,384

 

 
37,422

 

Changes in fair value of contingent consideration

 

 
6,172

 

 
44,257

 

 
(104)

 

Impairment of intangible assets

 

 

 —

 

 

 —

 

 
4,800

 

Non-controlling interest segment profit (loss)

 

 
5,087

 

 
2,634

 

 
737

 

Depreciation and amortization

 

 
91,070

 

 
102,844

 

 
106,046

 

Interest expense

 

 
7,387

 

 
6,581

 

 
10,193

 

Interest and other income

 

 
(1,301)

 

 
(2,165)

 

 
(2,818)

 

Segment Profit

 

$
266,919

 

$
275,651

 

$
301,793