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Business Combinations, Asset Acquisitions, and Goodwill
 3 Months Ended
Mar. 31, 2024
Business Combination and Asset Acquisition [Abstract]  
Business Combinations, Asset Acquisitions, and Goodwill Business Combinations, Asset Acquisitions, and Goodwill
Advanced Health Management Systems, L.P. (“AHMS”)

On March 31, 2024, the Company, through its wholly owned subsidiary, purchased all of the outstanding general and limited partnership interests of Advanced Health Management Systems, L.P. (“AHMS”). AHMS is engaged in the business of providing management, consulting, administrative and other support services to entities that provide or arrange for the provision of professional healthcare services. In addition, one of AHMS’s wholly owned subsidiaries is a Restricted Knox-Keene licensed health plan with members in the Los Angeles, California area. Total consideration for the acquisition was $63.9 million. As the cash was not paid on the closing date, the purchase price was accrued and presented within accounts payable and accrued expenses in the accompanying condensed consolidated balance sheet as of March 31, 2024.
Prime Community Care of Central Valley, Inc. (“PCCCV”)
On March 29, 2024, the Company, through its consolidated subsidiary, acquired certain assets of Prime Community Care of Central Valley, Inc., a California professional medical corporation (“PCCCV”). Total consideration of the acquisition was approximately $10.3 million, consisting of cash funded upon the close date and contingent considerations of $2.3 million (“PCCCV contingent considerations”). Refer to Note 19 - “Fair Value Measurements of Financial Instruments” for additional information on contingent considerations.
Community Family Care Medical Group IPA, Inc. (“CFC”)
On January 31, 2024, the Company, through its consolidated subsidiary, acquired certain assets of CFC. CFC is an IPA that manages the healthcare of members in the Los Angeles, California area. The group serves patients across Medicare, Medicaid, and Commercial payers. The total consideration for the purchase was $120.2 million, consisting of $91.0 million cash funded upon the close date, $22.0 million of the Company’s common stock, resulting in the issuance of 631,712 shares of common stock., and contingent considerations of $7.3 million (“CFC contingent considerations”). Refer to Note 19 - “Fair Value Measurements of Financial Instruments” for additional information on contingent considerations.
Advanced Diagnostic and Surgical Center, Inc. (“ADSC”)
On January 1, 2024, the Company acquired 95% of the equity interest of Advanced Diagnostic and Surgical Center, Inc. (“ADSC”). ADSC is a diagnostic and surgical center that also provides ambulatory surgery services. The total consideration consisted of cash funded upon close of the transaction and contingent considerations of $3.6 million (“ADSC contingent considerations”). Refer to Note 19 - “Fair Value Measurements of Financial Instruments” for additional information on contingent considerations.
The Company is still in the process of finalizing the purchase price allocation for these acquisitions, and therefore, the balances are subject to change as a result of any working capital or fair value adjustments, and seller indemnification obligations. The following table summarizes the preliminary purchase price allocation of the fair value of assets acquired and liabilities assumed related to each acquisition at the acquisition date (in thousands):
CFC
 AHMS
 Others *
Net  Total
 Total purchase consideration:
 Cash paid $90,998 $— $12,500 $103,498 
 Cash payable — 63,935 — 63,935 
 Contingent consideration 7,264 — 5,897 13,161 
 Common stock issued 21,952 — — 21,952 
$120,214 $63,935 $18,397 $202,546 
Assets:
 Cash and cash equivalents $16,674 $33,950 $3,515 $54,139 
 Investment in marketable securities 50 — 30 80 
 Receivables 5,351 11,847 — 17,198 
 Prepaid expenses and other current assets — 36 11 47 
Amounts due from affiliates
3,909 — — 3,909 
 Land, property and equipment — — 823 823 
 Intangible assets 26,000 23,800 2,703 52,503 
 Goodwill 90,148 29,876 12,318 132,342 
 Restricted cash — 300 — 300 
Total identifiable assets acquired
$142,132 $99,809 $19,400 $261,341 
Liabilities:
 Accounts payable and accrued expenses $4,376 $7,232 $250 $11,858 
 Medical liabilities 17,508 13,137 — 30,645 
Amounts due to affiliates— 7,241 54 7,295 
 Income taxes payable 34 1,604 — 1,638 
 Deferred tax liability — 6,660 271 6,931 
 Noncontrolling interest
— — 428 428 
Total identified liabilities assumed
$21,918 $35,874 $1,003 $58,795 
Total net identifiable assets acquired
$120,214 $63,935 $18,397 $202,546 
    
* Others consist of estimated fair values of the assets acquired, net of cash acquired, related to ADSC and PCCCV.

Following the acquisition dates of CFC, AHMS, ADSC and PCCCV, the operating results have been included in our consolidated financial statements. For the period from the acquisition dates through March 31, 2024, total revenues and net income were $33.2 million and $5.1 million, respectively.
Unaudited Pro Forma Financial Information

The pro forma financial information in the table below presents the combined results of the Company and CFC, AHMS, ADSC and PCCCV as if the acquisitions had occurred on January 1, 2023. The pro forma information presented is shown for illustrative purposes only and is not necessarily indicative of future results of operations of the Company or results of operations of the Company that would have actually occurred had the transactions been in effect for the periods presented.
Three Months Ended
March 31,
(in thousands, except per share amounts)
20242023
Total revenue
$493,006 $382,462 
Net income
$16,661 $20,324 
Net income per share - basic
$0.35 $0.44 
Net income per share - diluted
$0.35 $0.43 

The acquisitions were accounted for under the acquisition method of accounting. The fair value of the consideration for the acquired companies was allocated to acquired tangible and intangible assets and liabilities based upon their fair values. The excess of the purchase consideration over the fair value of the net tangible and identifiable intangible assets acquired was recorded as goodwill. Factors leading to goodwill being recognized are the Company’s expectation of synergies from combining operations of entities acquired and the Company, as well as the value of intangible assets that are not separately recognized, such as assembled workforce. The determination of the fair value of assets and liabilities acquired requires the Company to make estimates and use valuation techniques when market value is not readily available. The results of operations from the acquisitions have been included in the Company’s financial statements from the date of acquisition. Transaction costs associated with business acquisitions are expensed as they are incurred.

At the time of acquisition, the Company estimates the amount of the identifiable intangible assets based on a valuation and the facts and circumstances available at the time. The Company determines the final value of the identifiable intangible assets as soon as information is available, but not more than one year from the date of acquisition.
Goodwill is not deductible for tax purposes. The Company had no impairment of its goodwill or indefinite-lived intangible assets during the three months ended March 31, 2024 and 2023.
The change in the carrying value of goodwill for the three months ended March 31, 2024 was as follows (in thousands):
Amount
Balance, January 1, 2024$278,831 
Acquisitions132,342 
Adjustments(906)
Balance, March 31, 2024$410,267