Shareholders' Equity

12 Months Ended

Dec. 31, 2015

Equity [Abstract]

Shareholders' Equity

Shareholders’ Equity

a. Common Stock

During December 2015, the Company issued 5,835,000 shares of its common stock in a public offering, at $80.00 per share, prior to underwriting discounts, commissions and other related offering expenses of approximately $19.1 million. Proceeds were used to repay a portion of the Company's revolving credit facility, to fund a portion of the acquisitions completed during the year ended 2015 and for general corporate purposes.

On July 2, 2014, the Company issued 9,775,000 shares of its common stock in a public offering, at $45.00 per share, prior to underwriting discounts, commissions and other related offering expenses of approximately $18.5 million. Proceeds from the issuance were used to satisfy certain debt obligations with the remaining amount utilized to fund a portion of the Sheridan acquisition. In addition, on July 16, 2014, the Company issued 5,713,909 shares of its common stock directly to the former owners of Sheridan as part of the total consideration for the Sheridan acquisition. The Company registered these shares with the SEC in October of 2014. The former owners of Sheridan subsequently sold their shares in November of 2014.

During 2013, under a board authorized stock repurchase program, the Company purchased 1,154,378 shares of the Company's common stock for approximately $42.7 million, at an average price of $36.93 per share, in order to mitigate the dilutive effect of shares issued upon the exercise of stock options pursuant to the Company's stock incentive plans. The stock repurchase program expired during 2014.

In addition, the Company repurchases shares by withholding a portion of employee restricted stock that vested to cover payroll withholding taxes in accordance with the restricted stock agreements. During 2015 and 2014, the Company repurchased 67,000 shares and 100,720 shares, respectively, of common stock for approximately $3.7 million and $4.6 million, respectively.

b. Preferred Stock

On July 2, 2014, the Company issued 1,725,000 shares of its mandatory convertible preferred stock in a public offering, at $100.00 per share, prior to underwriting discounts, commissions and other related offering expenses of approximately $5.9 million.

The mandatory convertible preferred stock pays dividends at an annual rate of 5.25% of the initial liquidation preference of $100 per share. Dividends accrue and cumulate from the date of issuance and, to the extent lawful and declared by the Company's Board of Directors, will be paid on each January 1, April 1, July 1 and October 1 in cash or, at the Company's election (subject to certain limitations), by delivery of any combination of cash and shares of common stock. Each share of the mandatory convertible preferred stock has a liquidation preference of $100, plus an amount equal to accrued and unpaid dividends. Each share of the mandatory convertible preferred stock will automatically convert on July 1, 2017 (subject to postponement in certain cases), into between 1.8141 and 2.2222 shares of common stock (the “minimum conversion rate” and “maximum conversion rate,” respectively), each subject to adjustment. The number of shares of common stock issuable on conversion will be determined based on the average volume weighted average price per share of the Company's common stock over the 20 consecutive trading day period commencing on and including the 22nd scheduled trading day prior to July 1, 2017. At any time prior to July 1, 2017, holders may elect to convert all or a portion of their shares of mandatory convertible preferred stock into shares of common stock at the minimum conversion rate. If any holder elects to convert shares of mandatory convertible preferred stock during a specified period beginning on the effective date of a fundamental change the conversion rate will be adjusted under certain circumstances and such holder will also be entitled to a fundamental change dividend make-whole amount.

During the year ended December 31, 2015, the Company's Board of Directors declared four dividends each totaling $1.3125 per share in cash, or $2.3 million, for the Company's mandatory convertible preferred stock. All dividends declared during 2015 have been paid except those dividends declared on November 19, 2015, which were funded to the paying agent to be paid on January 1, 2016 to the shareholders of record as of December 15, 2015.

On August 29, 2014, the Company's Board of Directors declared its first dividend of $1.2979 per share in cash, or $2.2 million and on November 25, 2014, the Company's Board of Directors declared a dividend for $1.3125 per share, or $2.3 million for the Company's mandatory convertible preferred stock.

c. Stock Incentive Plans

Transactions in which the Company receives employee and non-employee services in exchange for the Company’s equity instruments or liabilities that are based on the fair value of the Company’s equity securities or may be settled by the issuance of these securities are accounted using a fair value method. The Company applies the Black-Scholes method of valuation in determining share-based compensation expense for option awards. 

Benefits of tax deductions in excess of recognized compensation cost are reported as a financing cash flow, thus reducing the Company’s net operating cash flows and increasing its financing cash flows by $4.0 million, $3.2 million and $7.2 million for the years ended December 31, 2015, 2014 and 2013, respectively.

The Company examines its concentrations of holdings, its historical patterns of award exercises and forfeitures as well as forward-looking factors, in an effort to determine if there were any discernible employee populations. From this analysis, the Company has identified three employee populations, consisting of senior executives, officers and all other recipients. The expected volatility rate applied was estimated based on historical volatility. The expected term assumption applied is based on contractual terms, historical exercise and cancellation patterns and forward-looking factors where present for each population identified. The risk-free interest rate used is based on the U.S. Treasury yield curve in effect at the time of the grant. The pre-vesting forfeiture rate is based on historical rates and forward-looking factors for each population identified. The Company will adjust the estimated forfeiture rate to its actual experience. The Company intends to retain its earnings to finance growth and development of the business and does not expect to declare or pay any cash dividends in the foreseeable future except as required in accordance with the terms of the Company's mandatory convertible preferred stock.

In May 2014, the Company adopted the AmSurg Corp. 2014 Equity and Incentive Plan. The Company also has unvested restricted stock and fully vested options outstanding under the AmSurg Corp. 2006 Stock Incentive Plan, as amended, and the AmSurg Corp. 1997 Stock Incentive Plan, as amended, under which no additional awards may be granted. Under these plans, the Company has granted restricted stock and non-qualified options to purchase shares of common stock to employees and outside directors from its authorized but unissued common stock. At December 31, 2015, 1,200,000 shares were authorized for grant under the 2014 Equity and Incentive Plan and 900,039 shares were available for future equity grants. Restricted stock granted to outside directors vests on the first anniversary of the date of grant. Restricted stock granted to employees vests over four years in three equal installments beginning on the second anniversary of the date of grant. The fair value of restricted stock is determined based on the closing bid price of the Company’s common stock on the grant date. Under Company policy, shares held by outside directors and senior management are subject to certain holding requirements and restrictions.

The Company has not issued options subsequent to 2008, and all outstanding options are fully vested. Options were granted at market value on the date of the grant and vested over four years. Outstanding options have a term of ten years from the date of grant.

Other information pertaining to share-based activity for the years ended December 31, 2015, 2014 and 2013 was as follows (in thousands):

	2015		2014		2013
Share-based compensation expense	$	15,009	$	10,104	$	8,321
Fair value of shares vested	13,220		15,126		11,742
Cash received from option exercises	2,584		2,630		33,349
Tax benefit from option exercises	4,001		3,177		7,247

As of December 31, 2015, the Company had total unrecognized compensation cost of approximately $16.6 million related to non-vested awards, which the Company expects to recognize through 2019 and over a weighted average period of 1.1 years. During the years ended December 31, 2015, 2014 and 2013, there were no options that were anti-dilutive.

A summary of the status of and changes for non-vested restricted shares for the three years ended December 31, 2015, is as follows:

			Weighted
	Number		Average
	of Shares		Grant Price
Non-vested shares at January 1, 2013	828,686		$	22.50
Shares granted	291,863		31.66
Shares vested	(360,337	)	21.55
Shares forfeited	(16,343	)	23.11
Non-vested shares at December 31, 2013	743,869		$	26.54
Shares granted	272,780		43.12
Shares vested	(336,160	)	25.69
Shares forfeited	(12,380	)	38.94
Non-vested shares at December 31, 2014	668,109		$	33.51
Shares granted	313,498		56.19
Shares vested	(233,831	)	28.19
Shares forfeited	(13,675	)	42.15
Non-vested shares at December 31, 2015	734,101		$	44.73

In addition to the non-vested restricted shares, during the year ended December 31, 2015, the Company granted 68,533 performance-based restricted stock units (RSUs) to certain of its officers and physician employees. The fair value of the Company's common stock on the grant date of these RSUs was $55.40. The RSUs will vest ratably over a three year period from the grant date. The conversion of the RSUs to restricted stock is contingent on the Company’s achievement of a specified one-year financial performance goal for the year ended December 31, 2015 and, if achieved, would occur during the first quarter of 2016. If the financial performance goal is not achieved, the RSUs will be forfeited. The number of RSUs that will ultimately be received by the holders range from 0% to 150% of the units granted, depending on the Company’s level of achievement with respect to the financial performance goal. At December 31, 2015, the financial performance goal was achieved at a level that will result in the conversion of the RSUs to restricted stock at 150%.

A summary of stock option activity for the three years ended December 31, 2015 is summarized as follows:

					Weighted
			Weighted		Average
			Average		Remaining
	Number		Exercise		Contractual
	of Shares		Price		Term (in years)
Outstanding at January 1, 2013	1,662,830		$	23.82	2.9
Options exercised with total intrinsic value of $33.3 million	(1,392,366	)	23.95
Outstanding at December 31, 2013	270,464		$	23.16	2.5
Options exercised with total intrinsic value of $2.6 million	(111,743	)	23.53
Outstanding at December 31, 2014	158,721		$	22.89	1.7
Options exercised with total intrinsic value of $4.9 million	(113,220	)	22.81
Options terminated	(11,750	)	23.42
Outstanding, Vested and Exercisable at December 31, 2015 with an aggregate intrinsic value of $1.8 million	33,751		$	22.98	1.1

The aggregate intrinsic value represents the total pre-tax intrinsic value received by the option holders on the exercise date or that would have been received by the option holders had all holders of in-the-money outstanding options at December 31, 2015 exercised their options at the Company’s closing stock price on December 31, 2015.

d. Earnings per Share

Basic net earnings attributable to AmSurg Corp. common stockholders, per common share, excludes dilution and is computed by dividing net earnings attributable to AmSurg Corp. common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net earnings attributable to AmSurg common stockholders, per common share is computed by dividing net earnings attributable to AmSurg Corp. common stockholders by the weighted-average number of common shares outstanding during the period plus any potential dilutive common share equivalents, including shares issuable (1) upon the vesting of restricted stock awards as determined under the treasury stock method and (2) upon conversion of the Company's mandatory convertible preferred stock as determined under the if-converted method. For purposes of calculating diluted earnings per share, preferred stock dividends have been subtracted from both net earnings from continuing operations attributable to AmSurg Corp. and net earnings attributable to AmSurg Corp. common shareholders in periods in which utilizing the if-converted method would be anti-dilutive.

The following is a reconciliation of the numerator and denominators of basic and diluted earnings per share (in thousands, except per share amounts):

	Earnings		Shares	Per Share
	(Numerator)		(Denominator)	Amount
For the year ended December 31, 2015:
Net earnings from continuing operations attributable to AmSurg Corp. common shareholders (basic)	$	154,892	48,058	$	3.22
Preferred stock dividends	9,056		—
Effect of dilutive securities, options and non-vested shares	—		3,554
Net earnings from continuing operations attributable to AmSurg Corp. common shareholders (diluted)	$	163,948	51,612	$	3.18
For the year ended December 31, 2014:
Net earnings from continuing operations attributable to AmSurg Corp. common shareholders (basic)	$	50,777	39,311	$	1.29
Effect of dilutive securities, options and non-vested shares	—		314
Net earnings from continuing operations attributable to AmSurg Corp. common shareholders (diluted)	$	50,777	39,625	$	1.28
For the year ended December 31, 2013:
Net earnings from continuing operations attributable to AmSurg Corp. common shareholders (basic)	$	71,009	31,338	$	2.27
Effect of dilutive securities, options and non-vested shares	—		616
Net earnings from continuing operations attributable to AmSurg Corp. common shareholders (diluted)	$	71,009	31,954	$	2.22