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Acquisitions and Dispositions of Businesses
 9 Months Ended
Sep. 30, 2022
Acquisitions And Dispositions [Abstract]  
Acquisitions and Dispositions of Businesses ACQUISITIONS AND DISPOSITIONS OF BUSINESSES
Acquisitions. During 2022, the Company acquired seven businesses: five in healthcare and two in automotive, for $142.8 million in cash and contingent consideration and the assumption of floor plan payables. The assets and liabilities of the companies acquired were recorded at their estimated fair values at the date of acquisition.
In August 2022, Graham Healthcare Group (GHG) acquired two small businesses which are included in healthcare.
In July 2022, GHG acquired a 100% interest in a multi-state provider of Applied Behavior Analysis clinics. The acquisition is expected to expand the product offerings of the healthcare division and is included in healthcare.
On July 5, 2022, the Company’s automotive subsidiary acquired two automotive dealerships, including the real property for the dealership operations. In addition to a cash payment and the assumption of $10.9 million in floor plan payables, the automotive subsidiary borrowed $77.4 million to finance the acquisition. The dealerships are operated and managed by an entity affiliated with Christopher J. Ourisman, a member of the Ourisman Automotive Group family of dealerships. These acquisitions expand the Company’s automotive business operations and will be included in automotive.
In May 2022, GHG acquired two small businesses which are included in healthcare.
During 2021, the Company acquired six businesses: two in education, two in healthcare, one in automotive, and one in other businesses for $392.4 million in cash and contingent consideration and the assumption of floor plan payables. The assets and liabilities of the companies acquired were recorded at their estimated fair values at the date of the acquisition.
On June 14, 2021, the Company acquired all of the outstanding common shares of Leaf Group Ltd. (Leaf) for $308.6 million in cash and the assumption of $9.2 million in liabilities related to their previous stock compensation
plan, which will be paid in the future. Leaf is a consumer internet company that builds creator-driven brands in lifestyle and home and art design categories. The acquisition is expected to provide benefits in the future by diversifying the Company’s business operations and providing operating synergies with other business units. The Company includes Leaf in other businesses.
Kaplan acquired certain assets of Projects in Knowledge, a continuing medical education provider for healthcare professionals, and another small business in November 2021. These acquisitions are expected to build upon Kaplan’s existing customer base in the medical and test preparation fields. Both businesses are included in Kaplan’s supplemental education division.
In December 2021, GHG acquired two businesses, a home health business in Florida and a 50.1% interest in Weiss, a physician practice specializing in allergies, asthma and immunology. The minority shareholder of Weiss has an option to put 10% of the shares to the Company annually starting in 2026 and may put all of the shares starting in 2033. The fair value of the redeemable noncontrolling interest in Weiss was $6.6 million at the acquisition date, determined using an income approach. These acquisitions are expected to expand the market the healthcare division serves and are included in healthcare.
On December 28, 2021, the Company’s automotive subsidiary acquired a Ford automotive dealership for cash and the assumption of $16.6 million in floor plan payables (see Note 5). In connection with the acquisition, the automotive subsidiary of the Company borrowed $22.5 million to finance the acquisition. The dealership is operated and managed by an entity affiliated with Christopher J. Ourisman, a member of the Ourisman Automotive Group family of dealerships. The acquisition expands the Company’s automotive business operations and is included in automotive.
Acquisition-related costs for acquisitions that closed during the first nine months of 2022 and 2021 were $1.6 million in each period and were expensed as incurred. The aggregate purchase price of the 2022 and 2021 acquisitions was allocated as follows (2022 on a preliminary basis), based on acquisition date fair values to the following assets and liabilities:
Purchase Price Allocation
Nine Months EndedYear Ended
(in thousands)September 30, 2022December 31, 2021
Accounts receivable$2,026 $17,878 
Inventory21,278 25,383 
Property, plant and equipment36,254 13,126 
Lease right-of-use assets5,397 25,890 
Goodwill56,902 204,151 
Indefinite-lived intangible assets41,800 22,200 
Amortized intangible assets1,200 99,800 
Other assets474 4,911 
Deferred income taxes241 44,975 
Floor plan payables(10,908)(16,636)
Other liabilities(3,798)(52,567)
Current and noncurrent lease liabilities(6,482)(25,593)
Redeemable noncontrolling interest(2,164)(6,616)
Noncontrolling interest(512)— 
Aggregate purchase price, net of cash acquired$141,708 $356,902 
The 2021 fair values include measurement period adjustments related to accounts receivable, goodwill, amortized intangible assets, current and noncurrent lease liabilities, deferred income taxes and contingent consideration. The 2022 fair values recorded were based upon preliminary valuations and the estimates and assumptions used in such valuations are subject to change within the measurement period (up to one year from the acquisition date). The recording of deferred tax assets and liabilities, working capital and the amounts of residual goodwill and other intangibles are not yet finalized. Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The goodwill recorded due to these acquisitions is attributable to the assembled workforces of the acquired companies and expected synergies. The Company expects to deduct $38.0 million and $80.1 million of goodwill for income tax purposes for the acquisitions completed in 2022 and 2021, respectively.
The acquired companies were consolidated into the Company’s financial statements starting on their respective acquisition dates. The Company’s Condensed Consolidated Statements of Operations for the third quarter of 2022 include aggregate revenues and operating income for the companies acquired in 2022 of $73.2 million and $2.4
million, respectively. The Company’s Condensed Consolidated Statements of Operations include aggregate revenues and operating income of $74.7 million and $2.2 million, respectively, for the first nine months of 2022. The following unaudited pro forma financial information presents the Company’s results as if the current year acquisitions had occurred at the beginning of 2021. The unaudited pro forma information also includes the 2021 acquisitions as if they occurred at the beginning of 2020:
Three Months Ended 
 September 30		Nine Months Ended 
 September 30
(in thousands)2022202120222021
Operating revenues$1,012,438 $948,465 $3,026,240 $2,830,653 
Net income34,827 49,563 74,491 283,499 
These pro forma results were based on estimates and assumptions, which the Company believes are reasonable, and include the historical results of operations of the acquired companies and adjustments for depreciation and amortization of identified assets and the effect of pre-acquisition transaction related expenses incurred by the Company and the acquired entities. The pro forma information does not include efficiencies, cost reductions and synergies expected to result from the acquisitions. They are not the results that would have been realized had these entities been part of the Company during the periods presented and are not necessarily indicative of the Company’s consolidated results of operations in future periods.
Other Transactions. In March 2021, Hoover’s minority shareholders put the remaining outstanding shares to the Company, which had a redemption value of $3.5 million. Following the redemption, the Company owns 100% of Hoover.