SEC Filings

10-Q
ENVISION HEALTHCARE CORP filed this Form 10-Q on 11/03/2017
Entire Document
 
Item 1. Financial Statements - (continued)

deconsolidation which is included in net gain on disposals and deconsolidations in the accompanying consolidated statements of operations of approximately $7.4 million during the nine months ended September 30, 2017. There was no deconsolidation activity during the three months ended September 30, 2017. During both the three and nine months ended September 30, 2016, the Company recognized a net loss on deconsolidation in the accompanying consolidated statements of operations of approximately $0.7 million

During the three months ended September 30, 2017, the Company disposed of an equity method investment, which included two unconsolidated centers in the ambulatory services segment, and resulted in a loss on disposal of $2.7 million.

(8Goodwill and Intangible Assets

Due to the Merger, and as a result of purchase accounting, the book value of the indefinite-lived intangibles acquired from the legacy EHH physician services reporting unit was recorded at fair value as of the acquisition date and subsequently was combined within the Company's existing physician services reporting unit. As a result, the excess of fair value over carrying value of the indefinite-lived intangibles as of December 31, 2016 was not significant. During the three months ended September 30, 2017, the Company experienced lower than expected operating results in its physician services reporting unit combined with an observed decline in market capitalization, which prompted the Company to evaluate whether circumstances had changed that would more likely than not reduce the fair value of the physician services reporting unit below its carrying amount. While conducting this evaluation, the Company considered macroeconomic and industry conditions, overall financial performance of the reporting unit and the decline in the share price, among other factors, all of which require considerable judgment. After considering the totality of the events and circumstances, the Company concluded that an interim impairment test was not required. The Company will perform its annual goodwill impairment test during the fourth quarter of 2017 and there can be no assurance that the estimates and assumptions made for purposes of this qualitative evaluation will prove to be an accurate prediction of future results. Factors that could impact the final determination of fair value in connection with the completion of the annual goodwill impairment process include a sustained decline in market capitalization, changes in the estimated fair values of the physician services assets and liabilities, changes in projected future earnings and net cash flows, changes in market related multiples, and changes in valuation related assumptions such as discount rates and perpetual growth rates.

Goodwill 

The changes in the carrying amount of goodwill for the nine months ended September 30, 2017 are as follows (in millions):
 
Physician Services
 
Ambulatory Services
 
Total
Balance at December 31, 2016
$
5,509.7

 
$
2,074.3

 
$
7,584.0

Goodwill acquired, including post acquisition adjustments
456.1

 
75.2

 
531.3

Goodwill disposed, including impact of deconsolidation transactions

 
(14.1
)
 
(14.1
)
Balance at September 30, 2017
$
5,965.8

 
$
2,135.4

 
$
8,101.2


During the nine months ended September 30, 2017, goodwill was recorded in the Company's physician services segment due to the acquisition of ten physician practices. In the Company's ambulatory services segment, goodwill increased due to the acquisition of four surgery centers and was offset by $14.1 million of goodwill from the disposal or deconsolidation of consolidated surgery centers within the ambulatory services segment.

Intangible Assets
Amortizable Intangible Assets
 
Estimated Useful Life
 
Weighted Average Amortization Period
Customer relationships
 
17 to 20 years
 
18.4
Capitalized software
 
3 to 7 years
 
4.5
Trade names
 
1 year
 
0.2
Agreements, contracts and other
 
3 to 10 years
 
3.3


21