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Debt

Term Loan

Our Term Loan was established pursuant to a credit agreement (the “Credit Agreement”) on April 29, 2014. The Credit Agreement contains financial covenants consisting of a total leverage and an interest coverage ratio which became applicable on March 31, 2015. The total leverage and interest coverage ratios are based on consolidated EBITDA as defined in the Credit Agreement and are not to exceed 6.50:1 or be less than 2.150:1, respectively, as of March 31, 2015. We were in compliance with all applicable operating covenants at March 31, 2015.

Based on an election we made pursuant to the terms of the Credit Agreement with respect to the interest period and optional rate, borrowings under the Credit Agreement bore interest at a rate of 7.00% per annum through March 31, 2015. As of March 31, 2015, borrowings had a weighted average interest rate of 7.00%. Interest is currently payable on the last business day of each month.

We are required to make quarterly principal payments totaling $2,938 over the life of the Term Loan. We have made all required quarterly principal payments through March 31, 2015. The Credit Agreement also includes a required annual repayment of principal at no premium in the first quarter of each year based upon a defined calculation of excess cash flows generated by us. As of March 31, 2015, the future maturities of principal under the Term Loan for the remainder of 2015 will be $8,813 and for each of the years ending December 31, 2016, 2017, 2018, 2019 are $11,750, respectively, with $170,375 due in 2020.

Our prior term loan and revolving credit facility were both terminated on April 29, 2014. During 2014, we made required principal payments of $592 against the prior term loan as well as additional voluntary payments of $8,000.

2015 Waiver and First Amendment to Credit Agreement

We received a waiver and amended the Credit Agreement (the “First Amendment”) on February 25, 2015 in connection with our acquistion of DR Systems. Our lenders agreed to waive the requirement under the Credit Agreement to make a mandatory prepayment of the term loans to the extent that the excess cash flow for the 2014 excess cash flow period was used for the purchase of DR Systems and for related fees, costs or expenses. The First Amendment allowed for the issuance of the Preferred Stock, including dividends due thereunder and future issuances on similar terms, and the acquisition of DR Systems. We are also permitted to make payment-in-kind dividends on the Preferred Stock or any replacement Preferred Stock. The First Amendment also expanded the definition of events of default such as a default under the Preferred Stock agreement, our inability to redeem Preferred Stock within 90 days of exercise by the preferred holder and certain situations in which replacement Preferred Stock would be issued by us.

In connection with the First Amendment, we paid our lenders a fee of $573 which was capitalized as additional debt discount and will be amortized over the remaining life of the Term Loan in accordance with ASC 470-50 Debt – Modifications and Extinguishments since our debt was considered modified. Third party fees of $145 were expensed and are included in other income expense in our condensed consolidated statement of operations.

Interest Expense and Other

In the three months ended March 31, 2015 and 2014, we recorded $4,244 and $4,119, respectively, of interest expense related to our debt, including $36 and $316 respectively, of amortization of debt issuance costs and $186 and $176, respectively, of amortization of debt discount. In the three months ended March 31, 2015 and 2014, we made interest payments of $4,010 and $3,551, respectively, related to the Term Loan and our prior term loan. Our borrowings under the Term Loan had an effective interest rate of 7.57% at March 31, 2015.

As of March 31, 2015 and December 31, 2014, the long term debt balance in our condensed consolidated balance sheets include $4,086 and $3,699 of unamortized debt discount, respectively and the balance of unamortized issuance costs included in other assets is $747 and $783 respectively. The debt discount is being amortized over the life of the Term Loan using the effective interest method.

Variable Interest Rate Risk

To partially offset variable interest rate risks, we maintain an interest rate cap at 3.00% (versus the 1.00% LIBOR floor) with a notional amount equal to $122,269 as of March 31, 2015. The notional amount of the interest rate cap decreases over time to $121,950 as of September 29, 2015, and thereafter is equal to $62,316 until termination on October 23, 2015.