Acquisitions And Disposals

9 Months Ended

Sep. 30, 2011

Acquisitions And Disposals [Abstract]

Acquisitions And Disposals

3. Acquisitions and Disposals

Pursuant to the Company's strategy for becoming the leading provider of post-acute health care services in the United States, the Company acquired five home health entities and eight hospices during the nine months ended September 30, 2011. As a result of the acquisitions, the Company maintains an ownership interest in the entities set forth below.

Acquired Entity	Ownership Percentage			State of Operations		Acquisition Date
LHCG XX, III		75	%		KY		01/01/2011
LHCG XXII, LLC		100	%		AL		01/01/2011
Vital Hospice, Inc.		100	%		LA		01/01/2011
LHCG XIX, LLC		75	%		FL		02/01/2011
Texas Health Care Group of Texarkana, LLC		73.68	%		TX		03/01/2011
LHCG XXV, LLC		100	%		MO		04/01/2011
LHCG XXIX, LLC		67	%		AL		04/05/2011

Each of the acquisitions was accounted for under the acquisition method of accounting, and accordingly, the accompanying condensed consolidated financial statements include the results of operations of each acquired entity from the date of acquisition.

The total purchase price for the Company's acquisitions was $12.3 million, which was paid primarily in cash. The purchase prices are determined based on the Company's analysis of comparable acquisitions and the target market's potential future cash flows. Consideration for one of the Company's acquisitions was a transfer of a 26.32% ownership interest in one of the Company's wholly owned home health agencies. The transfer of the noncontrolling interest in the Company's existing home health agency was accounted for as an equity transaction, resulting in the Company recognizing additional paid in capital of $206,000.

The Company's home-based segment recognized goodwill of $7.4 million, including $658,000 of noncontrolling goodwill. Goodwill generated from the acquisitions was recognized based on the expected contributions of each acquisition to the overall corporate strategy. The Company expects its portion of goodwill to be fully tax deductible. The following table summarizes the consideration paid for the acquisitions and the amounts of the assets acquired and liabilities assumed at the acquisition dates, as well as the fair value at the acquisition dates of the noncontrolling interest acquired (all amounts are in thousands).

Consideration
Cash	$	11,745
Equity instruments (the Company exchanged a noncontrolling interest in one of its entities)		369
Working capital		143
Fair value of total consideration transferred	$	12,257
Acquisition-related costs (included in general and administrative expenses)	$	420
Recognized amounts of identifiable assets acquired and liabilities assumed
Trade name	$	4,471
Certificate of need/license		1,354
Other identifiable intangible assets		398
Other assets		13
Total identifiable assets	$	6,236
Noncontrolling interest	$	1,372
Goodwill, including noncontrolling interest of $658,000	$	7,393

Trade names, certificates of need and licenses are indefinite-lived assets and, therefore, not subject to amortization. The other identifiable assets include non-compete agreements that are amortized over the life of the agreements ranging from two to five years. Noncontrolling interest is valued at fair value by applying a discount to the value of the acquired entity for lack of control. The fair value of the acquired intangible assets is preliminary pending the final valuations of those assets.

During the nine months ended September 30, 2011, the Company purchased additional ownership interests in two of its joint ventures. The total purchase price for the additional ownership was $816,000 and was accounted for as an equity transaction, resulting in the Company reducing additional paid in capital by $816,000.

During the three months ended September 30, 2011, the Company sold membership interests in three of its wholly owned subsidiaries. The total sales price was $275,800 for the sale of 22% membership interests and was accounted for as equity transactions, resulting in the Company increasing additional paid in capital by $184,000.

During the three months ended September 30, 2011, the Company settled the working capital amounts acquired on a 2011 acquisition. An additional $155,000 was paid in cash related to the settlements.