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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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27-2170749
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer
Identification Number)
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500 Cummings Center
Beverly, Massachusetts
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01915
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(Address of principal executive offices)
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(Zip code)
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Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated filer
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☒ (Do not check if a smaller reporting company)
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Smaller reporting company
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☐
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Emerging growth company
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☒
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PAGE
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•
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decline in the number of patients with commercial insurance, including as a result of changes to the healthcare exchanges or changes in regulations or enforcement of regulations regarding the healthcare exchanges and challenges from commercial payors or any regulatory changes leading to changes in the ability of patients with commercial insurance coverage to receive charitable premium support;
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•
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decline in commercial payor reimbursement rates;
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•
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the ultimate resolution of the Centers for Medicare and Medicaid Services (“CMS”) Interim Final Rule published December 14, 2016 related to dialysis facilities Conditions for Coverage (CMS 3337-IFC);
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•
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reduction of government-based payor reimbursement rates or insufficient rate increases or adjustments that do not cover all of our operating costs;
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•
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our ability to successfully develop de novo clinics, acquire existing clinics and attract new physician partners;
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•
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our ability to compete effectively in the dialysis services industry;
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•
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the performance of our joint venture subsidiaries and their ability to make distributions to us;
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•
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changes to the Medicare ESRD program that could affect reimbursement rates and evaluation criteria, as well as changes in Medicaid or other non-Medicare government programs or payment rates, including the ESRD PPS final rule for 2017 issued on October 28, 2016;
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•
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federal or state healthcare laws that could adversely affect us;
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•
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our ability to comply with all of the complex federal, state and local government regulations that apply to our business, including those in connection with federal and state anti-kickback laws and state laws prohibiting the corporate practice of medicine or fee-splitting;
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•
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heightened federal and state investigations and enforcement efforts;
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•
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the impact of the litigation by affiliates of UnitedHealth Group, Inc., the Department of Justice inquiry, securities litigation and related matters;
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•
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changes in the availability and cost of erythropoietin-stimulating agents (“ESAs”) and other pharmaceuticals used in our business;
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•
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development of new technologies that could decrease the need for dialysis services or decrease our in-center patient population;
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•
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our ability to timely and accurately bill for our services and meet payor billing requirements;
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•
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claims and losses relating to malpractice, professional liability and other matters; the sufficiency of our insurance coverage for those claims and rising insurances costs; and any negative publicity or reputational damage arising from such matters;
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•
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loss of any members of our senior management;
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•
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damage to our reputation or our brand and our ability to maintain brand recognition;
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•
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our ability to maintain relationships with our medical directors and renew our medical director agreements;
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•
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shortages of qualified skilled clinical personnel, or higher than normal turnover rates;
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•
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competition and consolidation in the dialysis services industry;
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•
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deteriorations in economic conditions, particularly in states where we operate a large number of clinics, or disruptions in the financial markets;
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•
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the participation of our physician partners in material strategic and operating decisions and our ability to favorably resolve any disputes;
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•
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our ability to honor obligations under the joint venture operating agreements with our physician partners were they to exercise certain put rights and other rights;
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•
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unauthorized disclosure of personally identifiable, protected health or other sensitive or confidential information;
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•
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our ability to meet our obligations and comply with restrictions under our substantial level of indebtedness; and
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•
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the ability of our principal stockholder, whose interests may conflict with yours, to strongly influence or effectively control our corporate decisions.
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ITEM 1.
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FINANCIAL STATEMENTS
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Cash
|
$
|
84,003
|
|
|
$
|
100,916
|
|
Accounts receivable, less allowance for doubtful accounts of $9,227 and $8,726, respectively
|
77,495
|
|
|
81,127
|
|
||
Inventories
|
4,648
|
|
|
4,676
|
|
||
Prepaid expenses and other current assets
|
18,217
|
|
|
18,498
|
|
||
Income tax receivable
|
9,415
|
|
|
5,163
|
|
||
Total current assets
|
193,778
|
|
|
210,380
|
|
||
Property and equipment, net of accumulated depreciation of $129,540 and $121,242, respectively
|
167,338
|
|
|
170,118
|
|
||
Intangible assets, net of accumulated depreciation of $23,005 and $23,489, respectively
|
25,681
|
|
|
25,626
|
|
||
Other long-term assets
|
7,472
|
|
|
6,753
|
|
||
Goodwill
|
573,147
|
|
|
573,147
|
|
||
Total assets
|
$
|
967,416
|
|
|
$
|
986,024
|
|
|
|
|
|
||||
Liabilities and Equity
|
|
|
|
||||
Accounts payable
|
$
|
24,605
|
|
|
$
|
31,127
|
|
Accrued compensation and benefits
|
26,092
|
|
|
29,103
|
|
||
Accrued expenses and other current liabilities
|
45,075
|
|
|
45,286
|
|
||
Current portion of long-term debt
|
45,559
|
|
|
48,274
|
|
||
Total current liabilities
|
141,331
|
|
|
153,790
|
|
||
Long-term debt, less current portion
|
520,364
|
|
|
522,058
|
|
||
Income tax receivable agreement payable
|
16,683
|
|
|
21,200
|
|
||
Other long-term liabilities
|
12,826
|
|
|
11,670
|
|
||
Deferred tax liabilities
|
1,522
|
|
|
1,278
|
|
||
Total liabilities
|
692,726
|
|
|
709,996
|
|
||
Commitments and contingencies (Note 14 and Note 15)
|
|
|
|
||||
Noncontrolling interests subject to put provisions
|
132,465
|
|
|
130,365
|
|
||
Equity:
|
|
|
|
||||
Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued
|
|
|
|
||||
Common stock, $0.01 par value; 300,000,000 shares authorized; 31,143,998 and 30,894,962 issued and outstanding at March 31, 2017 and December 31, 2016, respectively
|
184
|
|
|
184
|
|
||
Additional paid-in capital
|
93,596
|
|
|
95,062
|
|
||
Receivable from noncontrolling interests
|
(747
|
)
|
|
(544
|
)
|
||
Accumulated deficit
|
(129,897
|
)
|
|
(128,646
|
)
|
||
Accumulated other comprehensive loss, net of tax
|
(744
|
)
|
|
(100
|
)
|
||
Total American Renal Associates Holdings, Inc. deficit
|
(37,608
|
)
|
|
(34,044
|
)
|
||
Noncontrolling interests not subject to put provisions
|
179,833
|
|
|
179,707
|
|
||
Total equity
|
142,225
|
|
|
145,663
|
|
||
Total liabilities and equity
|
$
|
967,416
|
|
|
$
|
986,024
|
|
|
Three Months Ended March 31,
|
|
||||||
|
2017
|
|
2016
|
|
||||
Patient service operating revenues
|
$
|
178,632
|
|
|
$
|
173,554
|
|
|
Provision for uncollectible accounts
|
(1,607
|
)
|
|
(1,423
|
)
|
|
||
Net patient service operating revenues
|
177,025
|
|
|
172,131
|
|
|
||
Operating expenses:
|
|
|
|
|
||||
Patient care costs
|
120,301
|
|
|
105,455
|
|
|
||
General and administrative
|
31,244
|
|
|
21,499
|
|
|
||
Transaction-related costs (Note 1)
|
—
|
|
|
24
|
|
|
||
Depreciation and amortization
|
9,074
|
|
|
7,677
|
|
|
||
Certain legal matters (Note 15)
|
3,936
|
|
|
—
|
|
|
||
Total operating expenses
|
164,555
|
|
|
134,655
|
|
|
||
Operating income
|
12,470
|
|
|
37,476
|
|
|
||
Interest expense, net
|
(7,609
|
)
|
|
(12,258
|
)
|
|
||
Income tax receivable agreement income
|
4,517
|
|
|
—
|
|
|
||
Income before income taxes
|
9,378
|
|
|
25,218
|
|
|
||
Income tax (benefit) expense
|
(3,524
|
)
|
|
2,661
|
|
|
||
Net income
|
12,902
|
|
|
22,557
|
|
|
||
Less: Net income attributable to noncontrolling interests
|
(14,153
|
)
|
|
(18,801
|
)
|
|
||
Net (loss) income attributable to American Renal Associates Holdings, Inc.
|
$
|
(1,251
|
)
|
|
$
|
3,756
|
|
|
|
|
|
|
|
||||
(Loss) earnings per share (Note 12):
|
|
|
|
|
||||
Basic
|
$
|
(0.40
|
)
|
|
$
|
0.17
|
|
|
Diluted
|
$
|
(0.40
|
)
|
|
$
|
0.16
|
|
|
Weighted-average number of common shares outstanding
|
|
|
|
|
||||
Basic
|
30,907,482
|
|
|
22,213,967
|
|
|
||
Diluted
|
30,907,482
|
|
|
22,785,670
|
|
|
|
Three Months Ended March 31,
|
|
||||||
|
2017
|
|
2016
|
|
||||
Net income
|
$
|
12,902
|
|
|
$
|
22,557
|
|
|
Unrealized (loss) gain on derivative agreements, net of tax
|
(644
|
)
|
|
100
|
|
|
||
Total comprehensive income
|
12,258
|
|
|
22,657
|
|
|
||
Less: Comprehensive income attributable to noncontrolling interests
|
(14,153
|
)
|
|
(18,801
|
)
|
|
||
Total comprehensive (loss) income attributable to American Renal Associates Holdings, Inc.
|
$
|
(1,895
|
)
|
|
$
|
3,856
|
|
|
|
|
|
Total American Renal Associates Holdings, Inc. Equity (Deficit)
|
|
|
|||||||||||||||||||||||||||||
|
Noncontrolling
Interests
subject to put provisions
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Receivable
from
Noncontrolling
Interest
Holders
|
|
Retained Earnings (Deficit)
|
|
Accumulated
Other
Comprehensive Income (loss)
|
|
|
|
Noncontrolling
Interests not
subject to put provisions
|
|||||||||||||||||||
|
|
Shares
|
|
Par Value
|
|
|
|
|
|
Total
|
|
|||||||||||||||||||||||
Balance at December 31, 2016
|
$
|
130,365
|
|
|
30,894,962
|
|
|
$
|
184
|
|
|
$
|
95,062
|
|
|
$
|
(544
|
)
|
|
$
|
(128,646
|
)
|
|
$
|
(100
|
)
|
|
$
|
(34,044
|
)
|
|
$
|
179,707
|
|
Net income (loss)
|
4,354
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
(1,251
|
)
|
|
—
|
|
|
(1,251
|
)
|
|
9,799
|
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
10,088
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,088
|
|
|
—
|
|
||||||||
Exercise of stock options
|
—
|
|
|
28,786
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|
—
|
|
||||||||
Issuance of restricted stock
|
—
|
|
|
220,250
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Cash dividend equivalents paid on share-based payments
|
—
|
|
|
—
|
|
|
—
|
|
|
(271
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(271
|
)
|
|
—
|
|
||||||||
Cash dividend equivalents accrued on share-based payments
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,563
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,563
|
)
|
|
—
|
|
||||||||
Distributions to noncontrolling interests
|
(6,889
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,155
|
)
|
||||||||
Contributions from noncontrolling interests
|
565
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(203
|
)
|
|
—
|
|
|
—
|
|
|
(203
|
)
|
|
1,348
|
|
||||||||
Purchases of noncontrolling interests
|
(3,274
|
)
|
|
—
|
|
|
—
|
|
|
(1,272
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,272
|
)
|
|
—
|
|
||||||||
Reclassification/other adjustments
|
(1,134
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,134
|
|
||||||||
Change in fair value of derivative agreements, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(644
|
)
|
|
(644
|
)
|
|
—
|
|
||||||||
Change in fair value of noncontrolling interests
|
8,478
|
|
|
—
|
|
|
—
|
|
|
(8,478
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,478
|
)
|
|
—
|
|
||||||||
Balance at March 31, 2017
|
$
|
132,465
|
|
|
31,143,998
|
|
|
$
|
184
|
|
|
$
|
93,596
|
|
|
$
|
(747
|
)
|
|
$
|
(129,897
|
)
|
|
$
|
(744
|
)
|
|
$
|
(37,608
|
)
|
|
$
|
179,833
|
|
|
Three Months Ended March 31,
|
||||||
Operating activities
|
2017
|
|
2016
|
||||
Net income
|
$
|
12,902
|
|
|
$
|
22,557
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
9,074
|
|
|
7,677
|
|
||
Amortization of discounts, fees and deferred financing costs
|
530
|
|
|
797
|
|
||
Stock-based compensation
|
10,088
|
|
|
386
|
|
||
Premium paid for interest rate cap agreements
|
(1,186
|
)
|
|
—
|
|
||
Deferred taxes
|
673
|
|
|
67
|
|
||
Income tax receivable agreement income
|
(4,517
|
)
|
|
—
|
|
||
Non-cash charge related to derivative agreements
|
173
|
|
|
623
|
|
||
Non-cash rent charges
|
289
|
|
|
512
|
|
||
Loss on disposal of assets
|
57
|
|
|
—
|
|
||
Change in operating assets and liabilities, net of acquisitions:
|
|
|
|
||||
Accounts receivable
|
3,632
|
|
|
1,088
|
|
||
Inventories
|
28
|
|
|
(1,224
|
)
|
||
Prepaid expenses and other current assets
|
(3,870
|
)
|
|
(152
|
)
|
||
Other assets
|
(63
|
)
|
|
(18
|
)
|
||
Accounts payable
|
(6,522
|
)
|
|
1,286
|
|
||
Accrued compensation and benefits
|
(3,011
|
)
|
|
(1,008
|
)
|
||
Accrued expenses and other liabilities
|
(1,755
|
)
|
|
3,985
|
|
||
Cash provided by operating activities
|
16,522
|
|
|
36,576
|
|
||
Investing activities
|
|
|
|
|
|||
Purchases of property, equipment and intangible assets
|
(6,406
|
)
|
|
(16,396
|
)
|
||
Cash used in investing activities
|
(6,406
|
)
|
|
(16,396
|
)
|
||
|
|
|
|
||||
Financing activities
|
|
|
|
|
|||
Proceeds from term loans, net of deferred financing costs
|
4,881
|
|
|
12,282
|
|
||
Payments on long-term debt
|
(9,689
|
)
|
|
(7,462
|
)
|
||
Dividends and dividend equivalents paid
|
(271
|
)
|
|
—
|
|
||
Proceeds from exercise of stock options
|
30
|
|
|
—
|
|
||
Payments of deferred offering costs
|
—
|
|
|
(467
|
)
|
||
Distributions to noncontrolling interests
|
(19,044
|
)
|
|
(21,440
|
)
|
||
Contributions from noncontrolling interests
|
1,710
|
|
|
1,884
|
|
||
Purchases of noncontrolling interests
|
(4,546
|
)
|
|
—
|
|
||
Cash used in financing activities
|
(26,929
|
)
|
|
(15,203
|
)
|
||
|
|
|
|
||||
(Decrease) increase in cash and restricted cash
|
(16,813
|
)
|
|
4,977
|
|
||
Cash and restricted cash at beginning of period
|
100,916
|
|
|
90,988
|
|
||
Cash and restricted cash at end of period
|
$
|
84,103
|
|
|
$
|
95,965
|
|
|
|
|
|
||||
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
|||
Cash paid for income taxes
|
$
|
127
|
|
|
$
|
193
|
|
Cash paid for interest
|
6,832
|
|
|
10,581
|
|
||
|
|
|
|
||||
Supplemental Disclosure of Non-Cash Financing Activities
|
|
|
|
|
|||
Accrued offering expense
|
—
|
|
|
680
|
|
||
Liability for accrued dividend equivalent payments
|
1,563
|
|
|
—
|
|
|
March 31, 2017
|
|
||
Cash
|
$
|
84,003
|
|
|
Restricted cash included in prepaid expenses and other current assets
|
100
|
|
|
|
Total cash and restricted cash shown in the statement of cash flows
|
$
|
84,103
|
|
|
|
March 31, 2017
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Interest rate derivative agreements (included in Prepaid expenses and other current assets)
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
Interest rate derivative agreements (included in Other long-term assets)
|
795
|
|
|
—
|
|
|
795
|
|
|
—
|
|
||||
Total Assets
|
$
|
796
|
|
|
$
|
—
|
|
|
$
|
796
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||
Tax Receivable Agreement Liability (included in Income tax receivable agreement payable)
|
$
|
16,500
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16,500
|
|
Interest rate swap agreement (included in Other long-term liabilities)
|
849
|
|
|
—
|
|
|
849
|
|
|
—
|
|
||||
Total Liabilities
|
$
|
17,349
|
|
|
$
|
—
|
|
|
$
|
849
|
|
|
$
|
16,500
|
|
Temporary Equity
|
|
|
|
|
|
|
|
|
|
||||||
Noncontrolling interests subject to put provisions
|
$
|
132,465
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
132,465
|
|
|
December 31, 2016
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Interest rate swap agreements (included in Prepaid expenses and other current assets)
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|||||||
Tax Receivable Agreement Liability
|
$
|
21,200
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21,200
|
|
Temporary Equity
|
|
|
|
|
|
|
|
|
|||||||
Noncontrolling interests subject to put provisions
|
$
|
130,365
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
130,365
|
|
|
Three Months Ended March 31, 2017
|
||
|
|||
Balance at December 31, 2016
|
$
|
21,200
|
|
Options exercised and dividend equivalent payment vesting
|
(183
|
)
|
|
Total realized/unrealized gains:
|
|
||
Included in earnings and reported as Income tax receivable agreement income
|
(4,517
|
)
|
|
Balance at March 31, 2017
|
$
|
16,500
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Accrued compensation
|
$
|
13,509
|
|
|
$
|
18,077
|
|
Accrued vacation pay
|
12,583
|
|
|
11,026
|
|
||
|
$
|
26,092
|
|
|
$
|
29,103
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Payor refunds and retractions
|
$
|
30,578
|
|
|
$
|
32,902
|
|
Dividend equivalent payments
|
7,909
|
|
|
6,438
|
|
||
Other
|
6,588
|
|
|
5,946
|
|
||
|
$
|
45,075
|
|
|
$
|
45,286
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
First Lien Credit Agreement
|
$
|
432,599
|
|
|
$
|
433,758
|
|
Term Loans (1)
|
126,991
|
|
|
118,503
|
|
||
Lines of Credit
|
7,301
|
|
|
19,360
|
|
||
Other
|
2,962
|
|
|
3,041
|
|
||
|
569,853
|
|
|
574,662
|
|
||
Less: discounts and fees, net of accumulated amortization
|
(3,930
|
)
|
|
(4,330
|
)
|
||
Less: current maturities
|
(45,559
|
)
|
|
(48,274
|
)
|
||
|
$
|
520,364
|
|
|
$
|
522,058
|
|
2017 (remainder)
|
$
|
36,431
|
|
2018
|
38,263
|
|
|
2019
|
455,425
|
|
|
2020
|
19,859
|
|
|
2021
|
12,159
|
|
|
Thereafter
|
7,716
|
|
|
|
$
|
569,853
|
|
|
Three Months Ended March 31,
|
|
||||||
|
2017
|
|
2016
|
|
||||
Patient care costs
|
$
|
1,828
|
|
|
$
|
93
|
|
|
General and administrative
|
8,260
|
|
|
293
|
|
|
||
Total stock-based compensation before tax
|
$
|
10,088
|
|
|
$
|
386
|
|
|
Income tax benefit
|
(4,035
|
)
|
|
(154
|
)
|
|
|
Three months ended March 31, 2017
|
Expected volatility
|
30.00%
|
Weighted average expected term in years
|
6.00
|
Weighted average risk-free interest rate
|
2.26%
|
Expected annual dividend yield
|
—%
|
Weighted average grant-date fair value
|
$5.85
|
|
Three months ended March 31, 2017
|
|||||
|
Number
of Options
|
|
Weighted-Average
Exercise Price
|
|||
Outstanding, beginning of period
|
318,877
|
|
|
$
|
21.90
|
|
Granted (1)
|
422,529
|
|
|
17.39
|
|
|
Forfeited
|
(13,625
|
)
|
|
19.40
|
|
|
Outstanding, end of period
|
727,781
|
|
|
$
|
19.33
|
|
Options vested and expected to vest, end of period
|
727,781
|
|
|
$
|
19.33
|
|
Options exercisable, end of period
|
22,131
|
|
|
$
|
22.87
|
|
|
Three Months Ended March 31, 2017
|
|||||
|
Number Outstanding
|
|
Weighted Average Grant Date Fair Value per Award
|
|||
Balance at December 31, 2016
|
—
|
|
|
—
|
|
|
Granted
|
220,250
|
|
|
$
|
17.39
|
|
Vested
|
25,304
|
|
|
$
|
17.39
|
|
Balance at March 31, 2017
|
194,946
|
|
|
$
|
17.39
|
|
|
Three Months Ended March 31,
|
|
||||||
|
2017
|
|
2016
|
|
||||
Basic
|
|
|
|
|
|
|
||
Net (loss) income attributable to American Renal Associates Holdings, Inc.
|
$
|
(1,251
|
)
|
|
$
|
3,756
|
|
|
Change in the difference between the estimated fair values of contractual noncontrolling interest put provisions and estimated fair values for accounting purposes of the related noncontrolling interests
|
(11,083
|
)
|
|
—
|
|
|
||
Net (loss) income attributable to American Renal Associates Holdings, Inc. for basic earnings per share calculation
|
$
|
(12,334
|
)
|
|
$
|
3,756
|
|
|
Weighted-average common shares outstanding used to calculate basic net income (loss) per share
|
30,907,482
|
|
|
22,213,967
|
|
|
||
(Loss) earnings per share, basic
|
$
|
(0.40
|
)
|
|
$
|
0.17
|
|
|
Diluted
|
|
|
|
|
|
|
||
Net (loss) income attributable to American Renal Associates Holdings, Inc.
|
$
|
(1,251
|
)
|
|
$
|
3,756
|
|
|
Change in the difference between the estimated fair values of contractual noncontrolling interest put provisions and estimated fair values for accounting purposes of the related noncontrolling interests
|
(11,083
|
)
|
|
—
|
|
|
||
Net (loss) income attributable to American Renal Associates Holdings, Inc. for diluted earnings per share calculation
|
$
|
(12,334
|
)
|
|
$
|
3,756
|
|
|
Weighted-average common shares outstanding, basic
|
30,907,482
|
|
|
22,213,967
|
|
|
||
Weighted-average effect of dilutive securities:
|
|
|
|
|
|
|
||
Effect of assumed exercise of stock options
|
—
|
|
|
571,703
|
|
|
||
Weighted-average common shares outstanding used to calculate diluted net income (loss) per share
|
30,907,482
|
|
|
22,785,670
|
|
|
||
(Loss) earnings per share, diluted
|
$
|
(0.40
|
)
|
|
$
|
0.16
|
|
|
Outstanding options excluded as impact would be anti-dilutive
|
1,315,091
|
|
|
116,937
|
|
|
|
Three Months Ended March 31,
|
|
||||||
|
2017
|
|
2016
|
|
||||
Net (loss) income attributable to American Renal Holdings Associates, Inc.
|
$
|
(1,251
|
)
|
|
$
|
3,756
|
|
|
Increase in paid-in capital for the sales of noncontrolling interest
|
—
|
|
|
—
|
|
|
||
Decrease in paid-in capital for the purchase of noncontrolling interest and adjustments to ownership interest
|
(1,272
|
)
|
|
—
|
|
|
||
Net transfers to noncontrolling interests
|
(1,272
|
)
|
|
—
|
|
|
||
Net (loss) income attributable to American Renal Holdings Associates, Inc., net of transfers to noncontrolling interests
|
$
|
(2,523
|
)
|
|
$
|
3,756
|
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended March 31,
|
|
||||
|
2017
|
|
2016
|
|
||
De novo clinics(1)
|
3
|
|
|
2
|
|
|
(1)
|
Clinics formed by us which began to operate and dialyze patients in the applicable period.
|
|
Three Months Ended
|
|
|
|||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
Total
|
|||||
2017
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
2016
|
2
|
|
|
6
|
|
|
5
|
|
|
7
|
|
|
20
|
|
2015
|
1
|
|
|
5
|
|
|
6
|
|
|
4
|
|
|
16
|
|
2014
|
2
|
|
|
4
|
|
|
3
|
|
|
6
|
|
|
15
|
|
2013
|
1
|
|
|
3
|
|
|
2
|
|
|
11
|
|
|
17
|
|
|
Three Months Ended March 31,
|
|
||||
Source of Treatment Growth:
|
2017
|
|
2016
|
|
||
Non-acquired treatment growth(1)
|
9.2
|
%
|
|
14.4
|
%
|
|
Acquired treatment growth(2)
|
0.9
|
%
|
|
0.5
|
%
|
|
Total treatment growth
|
10.1
|
%
|
|
14.9
|
%
|
|
(1)
|
Represents net growth in treatments attributable to clinics operating at the end of the period that were also open at the end of the prior period and de novo clinics opened since the end of the prior period.
|
(2)
|
Represents net growth in treatments attributable to clinics acquired since the end of the prior period.
|
|
Three Months Ended March 31,
|
|
||||
Source of Revenues:
|
2017
|
|
2016
|
|
||
Government-based and other(1)
|
63.9
|
%
|
|
57.5
|
%
|
|
Commercial and other(2)
|
36.1
|
%
|
|
42.5
|
%
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
(1)
|
Principally Medicare and Medicaid and also includes hospitals and patient pay which we refer to collectively as “Government and other”. “Patient pay” revenues consist of payments received directly from patients who are either uninsured or self-pay a portion of the bill.
|
(2)
|
Principally commercial insurance companies and also includes the Department of Veterans Affairs, which we refer to collectively as “Commercial and other”.
|
|
Three Months Ended March 31,
|
|
||||||
Operating Data and Other Non-GAAP Financial Data:
|
2017
|
|
2016
|
|
||||
Number of clinics (as of end of period)
|
217
|
|
|
194
|
|
|
||
Number of de novo clinics opened (during period)
|
3
|
|
|
2
|
|
|
||
Patients (as of end of period)
|
14,735
|
|
|
13,420
|
|
|
||
Number of treatments
|
531,220
|
|
|
482,666
|
|
|
||
Non-acquired treatment growth
|
9.2
|
%
|
|
14.4
|
%
|
|
||
Patient service operating revenues per treatment
|
$
|
336
|
|
|
$
|
360
|
|
|
Patient care costs per treatment
|
$
|
226
|
|
|
$
|
218
|
|
|
Adjusted patient care costs per treatment (1)
|
$
|
223
|
|
|
$
|
218
|
|
|
General and administrative expenses per treatment
|
$
|
59
|
|
|
$
|
45
|
|
|
Adjusted general and administrative expenses per treatment (2)
|
$
|
45
|
|
|
$
|
45
|
|
|
Provision for uncollectible accounts per treatment
|
$
|
3
|
|
|
$
|
3
|
|
|
Adjusted EBITDA (including noncontrolling interests) (3)
|
$
|
35,568
|
|
|
$
|
46,020
|
|
|
Adjusted EBITDA-NCI (3)
|
$
|
21,415
|
|
|
$
|
27,219
|
|
|
(1)
|
Excludes $1.7 million of Modification Expense during the three months ended March 31, 2017.
|
(2)
|
Excludes $7.4 million of Modification Expense during the three months ended March 31, 2017.
|
(3)
|
See “Non-GAAP Financial Measures” below.
|
•
|
do not include stock-based compensation expense;
|
•
|
do not include transaction-related costs;
|
•
|
do not include depreciation and amortization—because construction and operation of our dialysis clinics requires significant capital expenditures, depreciation and amortization are a necessary element of our costs and ability to generate profits;
|
•
|
do not include interest expense—as we have borrowed money for general corporate purposes, interest expense is a necessary element of our costs and ability to generate profits and cash flows;
|
•
|
do not include income tax receivable agreement income and expense;
|
•
|
do not include loss on early extinguishment of debt;
|
•
|
do not include costs related to certain legal matters;
|
•
|
beginning with the quarter ended December 31, 2016, do not include executive severance costs;
|
•
|
do not include management fees;
|
•
|
do not include certain income tax payments that represent a reduction in cash available to us; and
|
•
|
do not reflect changes in, or cash requirements for, our working capital needs.
|
|
Three Months Ended March 31,
|
|
||||||
(in thousands)
|
2017
|
|
2016
|
|
||||
Net Income
|
$
|
12,902
|
|
|
$
|
22,557
|
|
|
Add:
|
|
|
|
|
||||
Stock-based compensation
|
10,088
|
|
|
386
|
|
|
||
Depreciation and amortization
|
9,074
|
|
|
7,677
|
|
|
||
Interest expense, net
|
7,609
|
|
|
12,258
|
|
|
||
Income tax (benefit) expense
|
(3,524
|
)
|
|
2,661
|
|
|
||
Transaction-related costs (a)
|
—
|
|
|
24
|
|
|
||
Income tax receivable agreement income (b)
|
(4,517
|
)
|
|
—
|
|
|
||
Certain legal matters (c)
|
3,936
|
|
|
—
|
|
|
||
Management fees (d)
|
—
|
|
|
457
|
|
|
||
Adjusted EBITDA (including noncontrolling interests)
|
35,568
|
|
|
46,020
|
|
|
||
Less: Net income attributable to noncontrolling interests
|
(14,153
|
)
|
|
(18,801
|
)
|
|
||
Adjusted EBITDA –NCI
|
$
|
21,415
|
|
|
$
|
27,219
|
|
|
(a)
|
Represents costs related to debt refinancing and other transactions. See “Note 2—Initial Public Offering” of the notes to the consolidated financial statements.
|
(b)
|
Represents income associated with the change in fair value of the TRA liability. See “—Components of Earnings—Interest, and Taxes” and “Note 5—Fair Value Measurements” of the notes to the consolidated financial statements.
|
(c)
|
Represents costs related to the specific legal and regulatory matters described in “Part II. Item 1. Legal Proceedings” and “Note 15—Certain Legal Matters” of the notes to the consolidated financial statements.
|
(d)
|
Represents management fees paid to Centerbridge prior to the termination of our Advisory Services Agreement in connection with our IPO. See “Note 13—Related Party Transactions” of the notes to the consolidated financial statements.
|
|
Three Months Ended March 31,
|
|
Increase (Decrease)
|
|||||||||||
|
|
|
|
|
|
|
Percentage
|
|||||||
|
2017
|
|
2016
|
|
Amount
|
|
Change
|
|||||||
Patient service operating revenues
|
$
|
178,632
|
|
|
$
|
173,554
|
|
|
$
|
5,078
|
|
|
2.9
|
%
|
Provision for uncollectible accounts
|
(1,607
|
)
|
|
(1,423
|
)
|
|
(184
|
)
|
|
12.9
|
%
|
|||
Net patient service operating revenues
|
177,025
|
|
|
172,131
|
|
|
4,894
|
|
|
2.8
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|||||
Patient care costs
|
120,301
|
|
|
105,455
|
|
|
14,846
|
|
|
14.1
|
%
|
|||
General and administrative
|
31,244
|
|
|
21,499
|
|
|
9,745
|
|
|
45.3
|
%
|
|||
Transaction-related costs
|
—
|
|
|
24
|
|
|
(24
|
)
|
|
NM
|
|
|||
Depreciation and amortization
|
9,074
|
|
|
7,677
|
|
|
1,397
|
|
|
18.2
|
%
|
|||
Certain legal matters
|
3,936
|
|
|
—
|
|
|
3,936
|
|
|
NM
|
|
|||
Total operating expenses
|
164,555
|
|
|
134,655
|
|
|
29,900
|
|
|
22.2
|
%
|
|||
Operating income
|
12,470
|
|
|
37,476
|
|
|
(25,006
|
)
|
|
(66.7
|
)%
|
|||
Interest expense, net
|
(7,609
|
)
|
|
(12,258
|
)
|
|
4,649
|
|
|
(37.9
|
)%
|
|||
Income tax receivable agreement income
|
4,517
|
|
|
—
|
|
|
4,517
|
|
|
NM
|
|
|||
Income before income taxes
|
9,378
|
|
|
25,218
|
|
|
(15,840
|
)
|
|
(62.8
|
)%
|
|||
Income tax (benefit) expense
|
(3,524
|
)
|
|
2,661
|
|
|
(6,185
|
)
|
|
NM
|
|
|||
Net income
|
12,902
|
|
|
22,557
|
|
|
(9,655
|
)
|
|
(42.8
|
)%
|
|||
Less: Net income attributable to noncontrolling interests
|
(14,153
|
)
|
|
(18,801
|
)
|
|
4,648
|
|
|
(24.7
|
)%
|
|||
Net (loss) income attributable to American Renal Associates Holdings, Inc.
|
$
|
(1,251
|
)
|
|
$
|
3,756
|
|
|
$
|
(5,007
|
)
|
|
NM
|
|
|
Three Months Ended March 31,
|
||||||
(dollars in thousands)
|
2017
|
|
2016
|
||||
Net cash provided by operating activities
|
$
|
16,522
|
|
|
$
|
36,576
|
|
Net cash used in investing activities
|
(6,406
|
)
|
|
(16,396
|
)
|
||
Net cash used in financing activities
|
(26,929
|
)
|
|
(15,203
|
)
|
||
Net (decrease) increase in cash and restricted cash
|
$
|
(16,813
|
)
|
|
$
|
4,977
|
|
Scheduled payments under contractual obligations (dollars in thousands)
|
|
Total
|
|
Less than 1
year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5
years
|
||||||||||
Third-party clinic-level debt
|
|
$
|
134,292
|
|
|
$
|
32,593
|
|
|
$
|
63,423
|
|
|
$
|
30,777
|
|
|
$
|
7,499
|
|
Term B loans(1)
|
|
432,599
|
|
|
3,477
|
|
|
429,122
|
|
|
—
|
|
|
—
|
|
|||||
Other corporate debt
|
|
2,962
|
|
|
361
|
|
|
1,144
|
|
|
1,240
|
|
|
217
|
|
|||||
Operating leases(2)
|
|
180,511
|
|
|
26,340
|
|
|
49,176
|
|
|
40,749
|
|
|
64,246
|
|
|||||
Interest payments(3)
|
|
64,014
|
|
|
20,096
|
|
|
41,701
|
|
|
2,025
|
|
|
192
|
|
|||||
Total
|
|
$
|
814,378
|
|
|
$
|
82,867
|
|
|
$
|
584,566
|
|
|
$
|
74,791
|
|
|
$
|
72,154
|
|
(1)
|
Bear interest at a variable rate, with principal payments of $1.2 million and interest payments due quarterly.
|
(2)
|
Net of estimated sublease proceeds of approximately $1.0 million per year from 2017 through 2022 and approximately $0.5 million or less thereafter.
|
(3)
|
Represents interest payments on debt obligations, including the term B loans under the first lien credit agreement. To project interest payments on floating rate debt, we have used the rate as of March 31, 2017.
|
(dollars in thousands)
Year
|
|
Amount
Exercisable
|
||
2017
|
|
23,540
|
|
|
2018
|
|
12,020
|
|
|
2019
|
|
16,631
|
|
|
2020
|
|
20,563
|
|
|
2021
|
|
14,067
|
|
|
Thereafter
|
|
9,444
|
|
|
Total
|
|
$
|
96,265
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 6.
|
EXHIBITS
|
EXHIBIT
NUMBER
|
|
EXHIBIT DESCRIPTION
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation of American Renal Associates Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on April 26, 2016)
|
|
|
|
3.2
|
|
Amended and Restated Bylaws of American Renal Associates Holdings, Inc. (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on April 26, 2016)
|
|
|
|
10.1*†
|
|
Form of Option Agreement under the American Renal Associates Holdings, Inc. 2016 Omnibus Incentive Plan
|
|
|
|
10.2*†
|
|
Form of Restricted Stock Agreement under the American Renal Associates Holdings, Inc. 2016 Omnibus Incentive Plan
|
|
|
|
10.3*†
|
|
Form of Restricted Stock Agreement for Non-Employee Directors under the American Renal Associates Holdings, Inc. 2016 Omnibus Incentive Plan
|
|
|
|
10.4*†
|
|
Form of Restricted Stock Unit Agreement under the American Renal Associates Holdings, Inc. 2016 Omnibus Incentive Plan
|
|
|
|
31.1*
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2*
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1*
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2*
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101*
|
|
The following financial information from the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017, formatted in XBRL (Extensible Business Reporting Language) and furnished electronically herewith: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations ; (iii) the Consolidated Statements of Cash Flows; and (iv) the Notes to the Consolidated Financial Statements.
|
|
AMERICAN RENAL ASSOCIATES HOLDINGS INC.
|
|
(Registrant)
|
|
|
|
/s/ Jonathan L. Wilcox
|
|
Name: Jonathan L. Wilcox
|
|
Title: Chief Financial Officer
(Principal Financial Officer and Authorized Signatory)
|
May 9, 2017
|
|
(Date)
|
Participant
:
|
[
Insert Participant Name
]
|
Date of Grant
:
|
[
Insert Date of Grant
]
|
Number of Options
:
|
[
Insert No. of Options Granted
]
|
Exercise Price
:
|
[
Insert Exercise Price per share
]
|
Option Period Expiration Date
:
|
Ten (10) years from the Date of Grant.
|
Type of Option
:
|
Nonqualified Stock Option
|
Vesting Schedule
:
|
Provided the Participant has not undergone a Termination at the time of each applicable vesting date (or event):
|
AMERICAN RENAL ASSOCIATES HOLDINGS, INC.
|
|
|
PARTICIPANT
1
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
Title:
|
|
|
|
|
1
|
To the extent that the Company has established, either itself or through a third-party plan administrator, the ability to accept this award electronically, such acceptance shall constitute the Participant’s signature hereof.
|
|||
|
Participant
:
|
[
Insert Participant Name
]
|
Date of Grant
:
|
[
Insert Date of Grant
]
|
of Restricted Stock
:
|
[
Insert No. of Shares of Restricted Stock Granted
]
|
Vesting Schedule
:
|
Provided the Participant has not undergone a Termination at the time of each applicable vesting date (or event):
|
AMERICAN RENAL ASSOCIATES HOLDINGS, INC.
|
|
|
PARTICIPANT
1
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
Title:
|
|
|
|
|
1
|
To the extent that the Company has established, either itself or through a third-party plan administrator, the ability to accept this award electronically, such acceptance shall constitute the Participant’s signature hereof.
|
|||
|
Participant
:
|
[
Insert Participant Name
]
|
Date of Grant
:
|
[
Insert Date of Grant
]
|
of Restricted Stock
:
|
[
Insert No. of Shares of Restricted Stock Granted
]
|
Vesting Schedule
:
|
Provided the Participant has not undergone a Termination at the time of each applicable vesting date (or event):
|
AMERICAN RENAL ASSOCIATES HOLDINGS, INC.
|
|
|
PARTICIPANT
1
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
Title:
|
|
|
|
|
1
|
To the extent that the Company has established, either itself or through a third-party plan administrator, the ability to accept this award electronically, such acceptance shall constitute the Participant’s signature hereof.
|
|||
|
Participant
:
|
[
Insert Participant Name
]
|
Date of Grant
:
|
[
Insert Date of Grant
]
|
Number of Restricted Stock Units
:
|
[
Insert No. of RSUs Granted
]
|
Vesting Schedule
:
|
Provided the Participant has not undergone a Termination at the time of each applicable vesting date (or event):
|
AMERICAN RENAL ASSOCIATES HOLDINGS, INC.
|
|
|
PARTICIPANT
1
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
Title:
|
|
|
|
|
1
|
To the extent that the Company has established, either itself or through a third-party plan administrator, the ability to accept this award electronically, such acceptance shall constitute the Participant’s signature hereof.
|
|||
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended
March 31, 2017
of American Renal Associates Holdings, Inc. (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and 15d-15(e)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(c)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Joseph A. Carlucci
|
Joseph A. Carlucci
|
Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended
March 31, 2017
of American Renal Associates Holdings, Inc. (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and 15d-15(e)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(c)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Jonathan L. Wilcox
|
Jonathan L. Wilcox
|
Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Joseph A. Carlucci
|
Joseph A. Carlucci
|
Chief Executive Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Jonathan L. Wilcox
|
Jonathan L. Wilcox
|
Chief Financial Officer
|