SEC Filings

10-Q
ENVISION HEALTHCARE CORP filed this Form 10-Q on 08/08/2017
Entire Document
 
Item 1. Financial Statements - (continued)

Net revenue and net earnings associated with completed acquisitions during the six months ended June 30, 2017 and 2016 are as follows (in millions):
 
Six Months Ended June 30,
 
2017
 
2016
Net revenue
$
88.6

 
$
12.7

 
 
 
 
Net earnings
$
5.6

 
$
2.2

Less: Net earnings attributable to noncontrolling interests
0.7

 
0.6

Net earnings attributable to Envision Healthcare Corporation stockholders
$
4.9

 
$
1.6


The unaudited consolidated pro forma results for the six months ended June 30, 2017 and 2016, assuming all 2017 acquisitions had been consummated on January 1, 2016, and the Merger and all 2016 acquisitions had been consummated on January 1, 2015 are as follows (in millions):
 
Six Months Ended June 30,
 
2017
 
2016
Net revenue
$
4,017.1

 
$
3,995.0

Net earnings from continuing operations attributable to Envision Healthcare Corporation stockholders
155.6

 
143.5


The unaudited pro forma results for the six months ended June 30, 2017 were adjusted to exclude $48.9 million of transaction costs, which is reflected in the unaudited pro forma results for 2016. The unaudited pro forma results for the six months ended June 30, 2017 and 2016 were adjusted to exclude the results from the medical transportation business, including $29.6 million of pre-tax corporate overhead expenses allocated to continuing operations during the six months ended June 30, 2017. In addition, the unaudited pro forma results assumes proceeds from the sale of the medical transportation business would be used to repay outstanding debt obligations. Certain other adjustments, including those related to conforming accounting policies, have not been reflected in the supplemental pro forma operating results due to the impracticability of estimating such impacts.

(5Discontinued Operations
 
During the six months ended June 30, 2017, the Company initiated a strategic review of each of the Company's lines of business. As a result of that review, management and the Board determined that the Company will focus on physician centric services, including facility based physician services, post-acute services and ambulatory services, which partners with community based physicians across the country. Accordingly, the Board approved a plan to market and divest the medical transportation business, representing the historical medical transportation reportable segment. The Company determined that the planned divestiture of the medical transportation business meets the criteria for classification as discontinued operations. All historical operating results for the medical transportation business are reflected within discontinued operations in the consolidated statements of operations. Furthermore, all assets and liabilities associated with the medical transportation business were classified as assets and liabilities held for sale in our consolidated balance sheets for all periods presented and are preliminary due to the purchase price allocation from the Merger. See Note 17 for more information regarding the divestiture of the medical transportation business.

In accordance with ASC 740, Income Taxes, a tax liability should be recognized for the excess of the financial reporting basis over the tax basis (or the tax benefit when the tax basis exceeds the financial reporting basis) of an investment in a subsidiary (outside basis difference) when it is apparent that the temporary differences will reverse in the foreseeable future. In connection with presenting the medical transportation business as a discontinued operation as of June 30, 2017, the Company was required to re-evaluate its position related to the recognition of a deferred tax asset or liability for the outside basis differences of the entities being held for sale. Previously, deferred taxes for such outside basis differences had not been recognized as the Company applied one of the exceptions provided in ASC 740. However, the outside basis differences are now expected to reverse in the foreseeable future and therefore, these exceptions no longer applied at June 30, 2017. As a result, the Company recorded deferred tax expense and associated deferred tax liability in the amount of $484.0 million, which is a component of income tax expense of discontinued operations, as of June 30, 2017, and will be the obligation of the Company upon the completion of the divestiture of the medical transportation business.


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