Acquisitions, Divestiture and Joint Venture Activities

6 Months Ended

Jun. 30, 2021

Equity Method Investments and Joint Ventures [Abstract]

Acquisitions, Divestiture and Joint Venture Activities

Acquisitions

The Company acquired the majority-ownership of one home health agency and one home and community-based agency during the six months ended June 30, 2021. The total aggregate purchase price for these transactions was $0.7 million. The purchase prices were determined based on the Company's analysis of comparable acquisitions and the target market's potential future cash flows.

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 acquisitions were accounted for under the acquisition method of accounting. Accordingly, the accompanying interim financial information includes the results of operations of the acquired entities from the date of acquisition.

The following table summarizes the amounts of the assets acquired and liabilities assumed at their acquisition dates, as well as their fair value at the acquisition dates and the noncontrolling interest acquired during the six months ended June 30, 2021

(amounts in thousands):


Fair value of total consideration transferred
Recognized amounts of identifiable assets acquired and liabilities assumed:
Trade names	$	26
Certificates of need/licenses	129
Other assets and (liabilities), net	9
Total identifiable assets	$	164

Noncontrolling interest	$	113
Goodwill, including noncontrolling interest of $78	$	599

Trade names and certificates of need/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. Trade names are valued using the relief from royalty method, a form of the income approach. Certificates of need are valued using the replacement cost approach based on registration fees and opportunity costs. Licenses are valued based on the estimated direct costs associated with recreating the asset, including opportunity costs based on an income approach. In the case of states with a moratorium in place, the licenses are valued using the multi-period excess earnings method. Noncontrolling interest is recorded at fair value.

Divestiture

During the six months ended June 30, 2021, the Company sold its controlling membership interests in a home health agency previously operated as an equity joint venture and sold its pharmacy location which was wholly-owned. The total consideration for these controlling interest sales was $1.5 million and resulted in a loss of $0.1 million, which was accounted for as a loss on the sale of entities and recorded in general and administrative expenses.

Joint Venture Activities

During the six months ended June 30, 2021, the Company purchased the noncontrolling membership interest in four of our equity joint venture partnerships, whereby the agencies became wholly-owned subsidiaries of the Company. The total consideration for these noncontrolling interest purchases was $2.1 million. The transactions were accounted for as equity transactions.

During the six months ended June 30, 2021, the Company sold noncontrolling membership interest in a home health agency previously operated as an equity joint venture. The total consideration for this noncontrolling interest sale was $0.3 million. The transactions were accounted for as equity transactions.