Long-term debt

3 Months Ended

Mar. 31, 2019

Long-term debt was comprised of the following:



								As of March 31, 2019
	March 31, 2019			December 31, 2018			Maturity date	Interest rate	Estimated fair value ⁽²⁾
Senior Secured Credit Facilities:
Term Loan A⁽¹⁾	$	650,000		$	675,000		12/24/2019	2.00% + LIBOR	$	649,155
Term Loan A-2⁽¹⁾	995,000			995,000			12/24/2019	1.00% + LIBOR	$	999,975
Term Loan B	3,333,750			3,342,500			6/24/2021	2.75% + LIBOR⁽³⁾	$	3,350,419
Revolver⁽¹⁾	575,000			175,000			12/24/2019	2.00% + LIBOR	$	575,000
Senior Notes:
5 3/4% Senior Notes	1,250,000			1,250,000			8/15/2022	5.75%	$	1,271,875
5 1/8% Senior Notes	1,750,000			1,750,000			7/15/2024	5.125%	$	1,729,175
5% Senior Notes	1,500,000			1,500,000			5/1/2025	5%	$	1,439,250
Acquisition obligations and other notes payable⁽⁴⁾	181,885			183,979			2019-2026	6.30%	$	181,885
Financing lease obligations⁽⁵⁾	276,564			282,737			2019-2036	4.84%	$	276,564
Total debt principal outstanding	10,512,199			10,154,216
Discount and deferred financing costs⁽⁶⁾	(48,495		)	(52,000		)
	10,463,704			10,102,216
Less current portion	(4,676,691		)	(1,929,369		)
	$	5,787,013		$	8,172,847


(1)	On May 6, 2019, the Company entered into an agreement to extend the maturity dates of its Term Loan A, Term Loan A-2 and Revolver by six months, to December 24, 2019.


(2)	Fair values are based upon quoted market prices for similar instruments, a level 2 input. The balances of acquisition obligations and other notes payable and financing lease obligations are presented in the condensed consolidated financial statements at March 31, 2019 at their approximate fair values due to the short-term nature of their settlements.


(3)	Term Loan B is subject to a LIBOR component floor of 0.75%.


(4)	The acquisition obligations and other notes payable interest rate is the weighted average interest rate based on the current interest rate in effect and assuming no changes to the LIBOR based interest rates.


(5)	The interest rate presented for financing lease obligations is the weighted average discount rate.


(6)	The carrying amount of the Company’s senior secured credit facilities includes a discount of $5,487 and deferred financing costs of $11,319, and the carrying amount of the Company’s senior notes includes deferred financing costs of $31,689 as of March 31, 2019.

Scheduled maturities of long-term debt at March 31, 2019 were as follows:



2019 (remainder of the year)⁽¹⁾	4,654,038
2020	83,658
2021	940,050
2022	1,291,930
2023	52,538
2024	1,784,606
Thereafter	1,705,379


(1)	Includes $2,372,764 representing our estimate of Term Loan B principal prepayments expected to be paid in 2019 from net cash proceeds of the DMG sale, as described below.

The Company's senior secured credit facilities become subject to partial mandatory prepayment if, and when, the Company consummates the sale of its DMG division to Collaborative Care Holdings, LLC (Optum), a subsidiary of UnitedHealth Group Inc. (the DMG sale).

As disclosed in the Company’s current report on Form 8-K filed November 26, 2018, the first amendment to the credit agreement governing the Company’s senior secured credit facilities amended existing covenants to permit the sale of the DMG business and require net cash proceeds from the sale in excess of $750,000 to be used to prepay debt outstanding under the Company’s credit facilities.

As of March 31, 2019, the Company expects to close the DMG sale in the near term and to prepay debt without immediately drawing down replacement debt. Accordingly, the Company has classified as current its estimate of the portion of its otherwise noncurrent debt that is expected to be prepaid with the expected net proceeds from the sale.

During the first three months of 2019, the Company made mandatory principal payments under its senior secured credit facilities totaling $25,000 on Term Loan A and $8,750 on Term Loan B.

As of March 31, 2019, the Company maintains several interest rate cap agreements entered into in October 2015 that have the economic effect of capping the Company's maximum exposure to LIBOR variable interest rate changes on specific portions of the Company's floating rate debt, including all of Term Loan B and part of Term Loan A. The remaining $483,750 outstanding principal balance of Term Loan A and the entire outstanding balance on Term Loan A-2 and Revolver are subject to LIBOR-based interest rate volatility. The cap agreements are designated as cash flow hedges and, as a result, changes in the fair values of these cap agreements are reported in other comprehensive (loss) income. The amortization of the original cap premium is recognized as a component of debt expense on a straight-line basis over the terms of the cap agreements. These cap agreements do not contain credit-risk contingent features.

The following table summarizes the Company’s derivative instruments outstanding as of March 31, 2019 and December 31, 2018, which are classified in "Other long-term assets" on its consolidated balance sheet:



						March 31, 2019				Fair value
	Notional amount		LIBOR maximum rate	Effective date	Expiration date	Debt expense		Recorded OCI loss		March 31, 2019		December 31, 2018
October 2015 caps	$	3,500,000	3.5%	6/29/2018	6/30/2020	$	2,163	$	781	$	70	$	851

The following table summarizes the effects of the Company’s interest rate cap agreements for the three months ended March 31, 2019 and 2018:



	Amount of unrecognized (losses) gains in OCI on interest rate cap agreements						Income statement location	Reclassification from accumulated other comprehensive income into net income
	Three months ended March 31,							Three months ended March 31,
Derivatives designated as cash flow hedges	2019			2018				2019			2018
Interest rate cap agreements	$	(781	)	$	1,414		Debt expense	$	2,163		$	2,070
Tax expense (benefit)	201			(364		)	Tax expense	(557		)	(533		)
Total	$	(580	)	$	1,050			$	1,606		$	1,537

See Note 14 to these condensed consolidated financial statements for further details on amounts recorded and reclassified from accumulated other comprehensive income.

The Company’s weighted average effective interest rate on the senior secured credit facilities at the end of the first quarter was 5.00%, based on the current margins in effect for Term Loan A, Term Loan A-2, Term Loan B and Revolver, as of March 31, 2019, as described above.

The Company’s overall weighted average effective interest rate during the quarter ended March 31, 2019 was 5.16% and as of March 31, 2019 was 5.14%.

As of March 31, 2019, the Company’s interest rates are fixed on approximately 46.31% of its total debt.

As of March 31, 2019, the Company had $575,000 drawn on its $1,000,000 revolving line of credit under its senior secured credit facilities, of which approximately $38,017 was committed for outstanding letters of credit. The Company also has approximately $40,871 of additional outstanding letters of credit under a separate bilateral secured letter of credit facility, and $211 of committed outstanding letters of credit which are backed by a certificate of deposit.