v2.4.1.9
Fair values of financial instruments
 12 Months Ended
Dec. 31, 2014
Fair Value Disclosures [Abstract]  
Fair values of financial instruments

24.

Fair values of financial instruments

The Company measures the fair value of certain assets, liabilities and noncontrolling interests subject to put provisions (temporary equity) based upon certain valuation techniques that include observable or unobservable inputs and assumptions that market participants would use in pricing these assets, liabilities, temporary equity and commitments. The Company has also classified certain assets, liabilities and temporary equity that are measured at fair value into the appropriate fair value hierarchy levels as defined by FASB.

The following tables summarize the Company’s assets, liabilities and temporary equity measured at fair value on a recurring basis as of December 31, 2014 and 2013:

 

 

 

Total

 

 

Quoted prices in

active markets for

identical assets

(Level 1)

 

 

Significant other

observable inputs

(Level 2)

 

 

Significant

unobservable

inputs

(Level 3)

 

December 31, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for sale securities

 

$

28,123

 

 

$

28,123

 

 

$

—

 

 

$

—

 

Interest rate cap agreements

 

$

13,934

 

 

$

—

 

 

$

13,934

 

 

$

—

 

Interest rate swap agreements

 

$

3,281

 

 

$

—

 

 

$

3,281

 

 

$

—

 

Funds on deposit with third parties

 

$

81,276

 

 

$

81,276

 

 

$

—

 

 

$

—

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap agreements

 

$

1,457

 

 

$

—

 

 

$

1,457

 

 

$

—

 

Contingent earn-out obligations

 

$

39,129

 

 

$

—

 

 

$

—

 

 

$

39,129

 

Temporary equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncontrolling interests subject to put provisions

 

$

829,965

 

 

$

—

 

 

$

—

 

 

$

829,965

 

December 31, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for sale securities

 

$

19,421

 

 

$

19,421

 

 

$

—

 

 

$

—

 

Interest rate cap agreements

 

$

7,567

 

 

$

—

 

 

$

7,567

 

 

$

—

 

Interest rate swap agreements

 

$

10,004

 

 

$

—

 

 

$

10,004

 

 

$

—

 

Funds on deposit with third parties

 

$

79,317

 

 

$

79,317

 

 

$

—

 

 

$

—

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap agreements

 

$

12,069

 

 

$

—

 

 

$

12,069

 

 

$

—

 

Contingent earn-out obligations

 

$

28,058

 

 

$

—

 

 

$

—

 

 

$

28,058

 

Temporary equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncontrolling interests subject to put provisions

 

$

697,300

 

 

$

—

 

 

$

—

 

 

$

697,300

 

 

The available for sale securities represent investments in various open-ended registered investment companies, or mutual funds, and are recorded at fair value based upon quoted prices reported by each mutual fund. See Note 9 to these consolidated financial statements for further discussion.

The interest rate swap and cap agreements are recorded at fair value based upon valuation models utilizing the income approach and commonly accepted valuation techniques that use inputs from closing prices for similar assets and liabilities in active markets as well as other relevant observable market inputs at quoted intervals such as current interest rates, forward yield curves, implied volatility and credit default swap pricing. The Company does not believe the ultimate amount that could be realized upon settlement of these interest rate swap and cap agreements would be materially different from the fair values currently reported. See Note 14 to the consolidated financial statements for further discussion.

The funds on deposit with third parties represent funds held with various third parties as required by regulation or contract and invested by those parties in various investments, which are measured at estimated fair value based primarily on quoted market prices.

The estimated fair value measurements of contingent earn-out obligations are primarily based on unobservable inputs including projected EBITDA, estimated probabilities of achieving gross margin of certain medical procedures and the estimated probability of earn-out payments being made using an option pricing technique and a simulation model for expected EBITDA and operating income. In addition, a probability adjusted model was used to estimate the fair values of the quality results amounts. The estimated fair value of these contingent earn-out obligations will be remeasured as of each reporting date and could fluctuate based upon any significant changes in key assumptions, such as changes in the Company credit risk adjusted rate that is used to discount obligations to present value.

See Note 18 to these consolidated financial statements for a discussion of the Company’s methodology for estimating the fair value of noncontrolling interests subject to put obligations.

Other financial instruments consist primarily of cash, accounts receivable, life insurance contracts, accounts payable, other accrued liabilities and debt. The balances of the non-debt financial instruments are presented in the consolidated financial statements at December 31, 2014 and 2013 at their approximate fair values due to the short-term nature of their settlements. The carrying balance of the Company’s Senior Secured Credit Facilities totaled $4,441,292 as of December 31, 2014, and the fair value was approximately $4,420,238 based upon quoted market prices. The fair value of the Company’s senior notes was approximately $3,924,715 at December 31, 2014 based upon quoted market prices, as compared to the carrying amount of $3,775,000.