Acquisitions and Disposals

9 Months Ended

Sep. 30, 2013

Business Combinations [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 the home-based service line of Addus HomeCare, which consisted of 19 home health agencies and one hospice agency, during the nine months ended September 30, 2013. Additionally, in separate acquisitions, the Company acquired one hospice agency and four home health agencies. The Company maintains an ownership interest in the acquired entities as set forth below:

Acquired Entity	Ownership Percentage			State of Operations	Acquisition Date
LHCG XXXVII, LLC (d/b/a Addus HealthCare)		90	%	Illinois	03/01/2013
LHCG XXXVIII, LLC (d/b/a Addus HealthCare)		90	%	California	03/01/2013
LHCG XLII, LLC (d/b/a/ Arkansas HomeCare)		100	%	Arkansas	03/01/2013
LHCG XLI, LLC (d/b/a South Carolina HomeCare)		100	%	South Carolina	03/01/2013
LHCG XXXIX, LLC (d/b/a Addus HealthCare)		100	%	Nevada	03/01/2013
LHCG XXXIV, LLC (d/b/a Alabama Hospice Care of Mobile)		100	%	Alabama	04/01/2013
LHCG XL, LLC (d/b/a Georgia Home Health)		100	%	Georgia	07/01/2013

Acquired Entity	Ownership Percentage			State of Operations	Acquisition Date
LHCG XXVII, LLC (d/b/a Pennsylvania Home Health)		100	%	Pennsylvania		07/01/2013
LHCG XLVIII, LLC (d/b/a Minnesota Home Health)		100	%	Minnesota		07/01/2013
LHCG XLVII, LLC (d/b/a Wisconsin Home Health)		100	%	Wisconsin		07/01/2013

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 aggregate purchase price for the Company’s acquisitions was $27.3 million, of which $26.9 million was paid in cash and $380,000 in assumed liabilities. The purchase prices are determined based on the Company’s analysis of comparable acquisitions and the target market’s potential future cash flows. The Company paid $569,000 in acquisition-related costs, which was recorded in general and administrative expenses.

The Company’s home-based services segment recognized aggregate goodwill of $25.7 million for the acquisitions, including $622,000 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 aggregate 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	$	26,920
Fair value of total consideration transferred	$	26,920
Recognized amounts of identifiable assets acquired and liabilities assumed
Trade name	$	1,177
Certificate of need/license		598
Other identifiable intangible assets		331
Other assets and (liabilities), net		(321	)
Total identifiable assets	$	1,785
Noncontrolling interest	$	608
Goodwill, including noncontrolling interest of $622	$	25,743

Trade names, certificates of need and licenses are indefinite-lived assets and, therefore, not subject to amortization. Acquired trade names that are not being used actively are amortized over the estimated useful life on the straight line basis. 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 valuation of those assets.

Purchase of Membership Interest in Company’s Subsidiary

During the nine months ended September 30, 2013, the Company purchased additional membership interests in six of its equity joint ventures. The total purchase price for the additional ownership from these equity transactions was $1.9 million, resulting in the Company reducing noncontrolling interest-redeemable by $612,000 and additional paid in capital by $1.3 million.