Segment Reporting
 12 Months Ended
Dec. 31, 2016
Segment Reporting [Abstract]  
Segment Reporting
Segment Reporting
A public company is required to report annual and interim financial and descriptive information about its reportable operating segments. Operating segments, as defined, are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or "CODM," in deciding how to allocate resources and in assessing performance.
The Company operates in three major lines of business that are also the Company's reportable operating segments - the operation of surgical facilities, the operation of optical services and the operation of ancillary services, which includes physician practices, a diagnostic laboratory and a specialty pharmacy.
During the second quarter of 2016, the Company reassessed its segment reporting and realigned the disclosures to reflect the review and decision making made by the CODM. The purpose of these changes was to replace operating income with adjusted EBITDA as the primary profit/loss metric reviewed by the CODM in making key business decisions and on allocation of resources. The Company has revised the segment disclosures below to replace operating income with adjusted EBITDA and has provided a reconciliation from adjusted EBITDA back to net income in the reported condensed consolidated financial information. These changes had no effect on the Company’s reportable segments, which are presented consistent with prior periods.
The following tables present financial information for each reportable segment (in thousands):


Year Ended December 31,


2016

2015

2014
Net Revenues:





 
Surgical facility services

$
1,042,097

 
$
884,144


$
339,309

Ancillary services

90,836

 
61,175


49,787

Optical services

12,505

 
14,572


14,193

        Total revenues

$
1,145,438


$
959,891


$
403,289


 
Year Ended December 31,
 
2016
 
2015
 
2014
Segment Adjusted EBITDA:
 
 
 
 
 
Surgical facility services
$
214,218

 
$
180,113

 
$
83,149

Ancillary services
12,685

 
18,715

 
18,354

Optical services
3,308

 
3,905

 
3,880

        Total segment adjusted EBITDA (3)
$
230,211

 
$
202,733

 
$
105,383

 
 
 
 
 
 
General and administrative expenses
$
(60,246
)
 
$
(55,992
)
 
$
(31,452
)
Non-cash stock compensation expense
2,021

 
7,502

 
942

Contingent acquisition compensation expense
5,092

 
—

 
—

Management fee (4)
—

 
2,250

 
2,161

Acquisition related costs
2,185

 
1,560

 
—

Total adjusted EBITDA (3)
179,263

 
158,053

 
77,034

 
 
 
 
 
 
Net income attributable to non-controlling interests
75,630

 
71,416

 
38,845

Depreciation and amortization
(39,551
)
 
(34,545
)
 
(15,061
)
Interest and other expense, net
(100,571
)
 
(100,980
)
 
(62,101
)
Income tax (expense) benefit
(7,095
)
 
148,982

 
(15,758
)
Non-cash stock compensation expense
(2,021
)
 
(7,502
)
 
(942
)
Contingent acquisition compensation expense
(5,092
)
 
—

 
—

Termination of management agreement and IPO costs
—

 
(5,834
)
 
—

Management fee (4)
—

 
(2,250
)
 
(2,161
)
Merger transaction, integration and practice acquisition costs (5)
(11,617
)
 
(20,579
)
 
(21,690
)
Gain on litigation settlement
14,101

 
—

 
—

(Loss) gain on disposal or impairment of long-lived assets, net
(2,355
)
 
2,097

 
(1,804
)
Tax receivable agreement expense
(3,733
)
 
(119,911
)
 
—

Loss on debt refinancing
(11,876
)
 
(16,102
)
 
(23,414
)
Total net income (loss)
$
85,083

 
$
72,845

 
$
(27,052
)
(3) The above table reconciles adjusted EBITDA by segment to net income as reflected in the unaudited condensed consolidated statements of operations.
When the Company uses the term “Adjusted EBITDA,” it is referring to net income minus (a) net income attributable to non-controlling interests plus (b) income tax (benefit) expense, (c) interest and other expense, net, (d) depreciation and amortization, (e) termination of management agreement and IPO costs, (f) management fee, (g) merger transaction, integration and practice acquisition costs, (h) non-cash stock compensation expense, (i) loss on debt refinancing, (j) contingent acquisition compensation expense, (k) tax receivable agreement expense, (l) gain on litigation settlement and (m) (loss) gain on disposal or impairment of long-lived assets. Non-controlling interests represent the interests of third parties, such as physicians, and in some cases, healthcare systems that own an interest in surgical facilities that the Company consolidates for financial reporting purposes. The Company's operating strategy is to apply a market-based approach in structuring its partnerships with individual market dynamics driving the structure. The Company believes that it is helpful to investors to present Adjusted EBITDA as defined above because it excludes the portion of net income attributable to these third-party interests and clarifies for investors the Company's portion of Adjusted EBITDA generated by its surgical facilities and other operations.
The Company uses Adjusted EBITDA as a measure of liquidity. It is included because the Company believes that it provides investors with additional information about its ability to incur and service debt and make capital expenditures.
Adjusted EBITDA is not a measurement of financial performance or liquidity under GAAP. It should not be considered in isolation or as a substitute for net income, operating income, cash flows from operating, investing or financing activities, or any other measure calculated in accordance with generally accepted accounting principles. The items excluded from Adjusted EBITDA are significant components in understanding and evaluating financial performance and liquidity. The Company's calculation of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.
(4) Fee payable pursuant the Management and Investment Advisory Services Agreement between the Company and Bayside, which was terminated in connection with the Company's IPO.
(5) This amount includes merger transaction and integration costs of $8.7 million and $17.9 million for the years ended December 31, 2016 and 2015, respectively, and practice acquisition costs of $2.9 million and $2.7 million for the years ended December 31, 2016 and 2015, respectively.



 
 
December 31, 2016
 
December 31, 2015
Assets:
 
 
 
 
Surgical facility services
 
$
1,914,842

 
$
1,762,396

Ancillary services
 
184,002

 
118,198

Optical services
 
22,478

 
25,537

           Total
 
$
2,121,322

 
$
1,906,131

 
 
 
 
 
General and administrative
 
$
183,636

 
$
198,312

Total assets
 
$
2,304,958

 
$
2,104,443


 
 
Year Ended December 31,
 
 
2016

2015

2014
Supplemental Information:
 
 
 
 
 
 
Cash purchases of property and equipment, net:
 
 
 
 
 
 
    Surgical facility services
 
$
29,157

 
$
26,723

 
$
5,158

    Ancillary services
 
5,388

 
1,051

 
1,034

    Optical services
 
351

 
128

 
335

           Total
 
$
34,896

 
$
27,902

 
$
6,527

 
 
 
 
 
 
 
General and administrative
 
$
4,213

 
$
5,537

 
$
1,209

Total cash purchases of property and equipment, net
 
$
39,109

 
$
33,439

 
$
7,736