Investments in Unconsolidated Affiliates

3 Months Ended

Mar. 31, 2016

Equity Method Investments and Joint Ventures [Abstract]

Investments in Unconsolidated Affiliates

Investments in Unconsolidated Affiliates

Investments in unconsolidated affiliates in which the Company exerts significant influence but does not control or otherwise consolidate are accounted for using the equity method. Equity method investments are initially recorded at cost, unless such investments are a result of the Company entering into a transaction whereby the Company loses control of a previously controlled entity but retains a noncontrolling interest. Such transactions, which result in the deconsolidation of a previously consolidated entity, are measured at fair value. The fair value measurement utilizes Level 3 inputs, which include unobservable data, to measure the fair value of the retained noncontrolling interest. The fair value determination is generally based on a combination of multiple valuation methods, which can include discounted cash flow, income approach, or market value approach which incorporates estimates of future earnings and market valuation multiples for certain guideline companies. These investments are included as investments in unconsolidated affiliates in the accompanying consolidated balance sheets. The Company’s share of the profits and losses from these investments is reported in equity in earnings of unconsolidated affiliates in the accompanying consolidated statements of earnings. The Company monitors its investments for other-than-temporary impairment by considering factors such as current economic and market conditions and the operating performance of the companies and records reductions in carrying values when necessary.

As of March 31, 2016 and December 31, 2015, the Company recorded in the accompanying consolidated balance sheets its investments in unconsolidated affiliates of $172.8 million and $169.2 million, respectively. The Company's net earnings from these investments during the three months ended March 31, 2016 and 2015 were approximately $6.6 million and $2.7 million, respectively.

During the three months ended March 31, 2015, the Company's ambulatory services segment entered into one equity method investment. As a result of this investment, the Company contributed its controlling interest in a center and received cash of $0.6 million and a noncontrolling interest in an entity that owned one ASC prior to the transaction and, after the completion of the transaction, controls the contributed center and the center it previously owned. As a result of the transaction, the Company recorded in the accompanying consolidated balance sheets, as a component of investments in unconsolidated affiliates, the fair value of the Company's investment in the entity which controls the contributed center of approximately $1.3 million during the three months ended March 31, 2015. The Company did not enter into any equity method investments during the three months ended March 31, 2016.

During the three months ended March 31, 2015, the loss on deconsolidation, which was primarily non-cash in nature, was determined based on the difference between the fair value of the Company’s interest, which was based on estimates of the expected future earnings, in the new entity and the carrying value of both the tangible and intangible assets of the contributed center immediately prior to each transaction. During the three months ended March 31, 2015, the Company recognized a net loss on deconsolidation in the accompanying consolidated statements of earnings of approximately $0.2 million. There was no deconsolidation activity during the three months ended March 31, 2016.