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Acquisitions and Disposals
 9 Months Ended
Sep. 30, 2014
Business Combinations [Abstract]  
Acquisitions and Disposals
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 44 home-based agencies and six hospice agencies during the nine months ended September 30, 2014. The Company maintains an ownership interest in the acquired businesses as set forth below:
 
Acquired Businesses
Ownership
Percentage
 
State of Operations
 
Acquisition
Date
EAMC — Lanier Home Health
75
%
 
Alabama
 
2/1/2014
Lifeline Home Health
100
%
 
Kentucky
 
2/1/2014
Louisiana Hospice & Palliative Care of New Orleans
100
%
 
Louisiana
 
3/1/2014
West Virginia Home Health
100
%
 
West Virginia
 
4/1/2014
St. Joseph’s Hospice
100
%
 
West Virginia
 
4/1/2014
Northwestern Illinois Home Health
100
%
 
Illinois
 
4/1/2014
Deaconess-Lifeline Home Health
100
%
 
Kentucky
 
4/1/2014
Deaconess HomeCare
100
%
 
Mississippi
 
4/1/2014
Deaconess HomeCare
100
%
 
Tennessee
 
4/1/2014
Deaconess Hospice
100
%
 
Mississippi
 
4/1/2014
Elk Valley Health Services, LLC
100
%
 
Tennessee
 
4/1/2014
North Carolina Home Health
100
%
 
North Carolina
 
5/1/2014
Professional Nursing Services
100
%
 
North Carolina
 
5/1/2014
Life Care at Home
100
%
 
Massachusetts
 
9/1/2014
Life Care at Home of Tennessee
100
%
 
Tennessee
 
9/1/2014
Life Care at Home
100
%
 
Utah
 
9/1/2014
Life Care at Home
100
%
 
Arizona
 
9/1/2014
At Home Healthcare
100
%
 
Colorado
 
9/1/2014
Life Care at Home
100
%
 
Washington
 
9/1/2014

Each of the acquisitions was accounted for under the acquisition method of accounting, and, accordingly, the accompanying interim financial information includes the results of operations of each acquired entity from the date of acquisition.
The total aggregate purchase price for the Company’s acquisitions was $74.7 million, of which $73.2 million was paid 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. The Company paid $0.9 million in acquisition-related costs, which was recorded in general and administrative expenses.
The Company’s home-based services segment recognized aggregate goodwill of $43.8 million for the acquisitions and hospice services segment recognized aggregate goodwill of $3.6 million. 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 (amounts in thousands):
 
Consideration
 
Cash
$
73,194

Fair value of total consideration transferred
$
73,194

Recognized amounts of identifiable assets acquired and liabilities assumed
 
Trade name
$
15,878

Certificates of need/licenses
3,088

Other identifiable intangible assets
448

Accounts receivable
9,739

Fixed assets
486

Accounts payable
(1,170
)
Other assets and (liabilities), net
(2,552
)
Total identifiable assets acquired and liabilities assumed
$
25,917

Noncontrolling interest
$
98

Goodwill, including noncontrolling interest of $38
$
47,375


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.
The net service revenue of the Deaconess and Elk Valley acquisition from the acquisition date through September 30, 2014 was $35.1 million and contributed $0.7 million to net income. The following pro forma information presents the combined results of operations of the Company and Deaconess and Elk Valley for the nine months ended September 30, 2014 and 2013 as if the acquisition occurred on January 1, 2013 (amounts in thousands, except earnings per share):
 
 
Nine months ended September 30,
 
2014
 
2013
Net service revenue
$
557,802

 
$
547,210

Net income attributable to LHC Group, Inc.’s common stockholders
16,118

 
18,120

Earnings per share — basic
0.94

 
1.06

Earnings per share — diluted
0.93

 
1.06


The pro forma information presented above includes adjustments for (i) depreciation expense, (ii) amortization of identifiable intangible assets, (iii) income tax provision using the Company’s effective tax rate and (iv) estimate of additional costs to provide administrative costs for these locations. This pro forma information is presented for illustrative purposes only and may not be indicative of the results of operations that would have actually occurred. In addition, future results may vary significantly from the results reflected in the pro forma information.
Sale of Membership Interest in Company’s Subsidiary
During the nine months ended September 30, 2014, the Company sold membership interests in one equity joint venture. The total sale price was $0.2 million.
Purchase of Membership Interest in Company’s Subsidiary
During the nine months ended September 30, 2014, the Company purchased additional membership interests in two equity joint ventures. The total purchase price for the additional membership interests was $0.4 million, which resulted in the Company reducing additional paid in capital by the full purchase price.