3. Acquisitions

Effective June 1, 2014, the Company acquired Cura Partners, LLC, which conducts business under the name Aid & Assist at Home, LLC (Aid & Assist), in order to further expand the Companys presence in the State of Tennessee. The total consideration for the transaction was $8,206,000, comprised of $7,186,000 in cash and $1,020,000, which has not yet been paid, representing the estimated fair value, subject to the achievement of certain performance targets set forth in an earn-out agreement. The related acquisition costs were $543,000 and were expensed as incurred. The results of operations from this acquired entity are included in the Companys statement of operations from the date of the acquisition.

The Companys acquisition of Aid & Assist has been accounted for in accordance with ASC Top 805, Business Combinations, and the resultant goodwill and other intangible assets will be accounted for under ASC Topic 350 Goodwill and Other Intangible Assets. The acquisition was recorded at its fair value as of June 1, 2014. The total purchase price is $8,206,000 and is comprised of:


		Total
		(Amounts in
		Thousands)
Cash	$	7,186
Contingent earn-out obligation (net of $148 discount)		1,020
Total purchase price	$	8,206

The contingent earn-out obligation has been recorded at its fair value of $1,020,000, which is the present value of the Companys obligation to pay up to $1,168,000 based on probability-weighted estimates of the achievement of certain performance targets, as defined.

Under business combination accounting, the total purchase price will be allocated to Aid & Assists net tangible and identifiable intangible assets based on their estimated fair values. Based upon managements preliminary valuation, the total purchase price has been allocated as follows:


		Total
		(Amounts in
		Thousands)
Goodwill	$	4,331
Identifiable intangible assets		3,950
Accounts receivable (net)		521
Furniture, fixtures and equipment		65
Other current assets		60
Accrued liabilities		(553	)
Accounts payable		(168	)
Total purchase price allocation	$	8,206

Identifiable intangible assets acquired consist of trade names and trademarks, customer relationships and non-compete agreements. The estimated fair value of identifiable intangible assets was determined by the Companys management. It is anticipated that the net intangible and identifiable intangible assets are deductible for tax purposes. These estimates are provisional and are subject to change.

The Aid & Assist acquisition accounted for $3,295,000 and $4,358,000 of net service revenues from continuing operations for the three and nine months ended September 30, 2014, respectively.

The Company acquired two home and community based businesses during 2013 and the first quarter of 2014 to further its presence in both existing states and to expand into new states. On November 1, 2013, the Company acquired two agencies located in South Carolina from the Medi Home Private Care Division of Medical Services of America, Inc. On January 24, 2014, the Company acquired an additional four agencies located in Tennessee and two agencies located in Ohio from the Medi Home Private Care Division of Medical Services of America, Inc. On December 1, 2013, the Company acquired the assets of Coordinated Home Health Care, LLC, a personal care business located in New Mexico (CHHC), which included sixteen offices located in southern New Mexico. The combined purchase price for the foregoing acquisitions was $12,325,000 paid at closing and a maximum of $2,250,000 in future cash consideration based on certain performance criteria. The related acquisition costs totaled $660,000 and were expensed as incurred. The results of operations from these acquired entities are included in the Companys Statements of Income from the dates of the respective acquisitions.

The Companys acquisition of the assets of CHHC has been accounted for in accordance with ASC Top 805, Business Combinations and the resultant goodwill and other intangible assets will be accounted for under ASC Topic 350 Goodwill and Other Intangible Assets. Assets acquired and liabilities assumed were recorded at their fair values as of December 1, 2013. The total purchase price was $12,825,000 and is comprised of:


		Total
		(Amounts in
		Thousands)
Cash	$	11,725
Contingent earn-out obligation (net of discount of $1,125)		1,100
Total purchase price	$	12,825

The contingent earn-out obligation was recorded at its fair value of $1,100,000, which is the present value of the Companys obligation to up to $2,250,000 based on probability-weighted estimates of the achievement of certain performance targets, as defined in the earn-out agreement between the parties.

Under business combination accounting, the total purchase price was allocated to CHHCs net tangible and identifiable intangible assets based on their estimated fair values. Based upon managements valuation, the total purchase price was allocated as follows:


		Total
		(Amounts in
		Thousands)
Goodwill	$	9,488
Identifiable intangible assets		3,300
Accounts receivable		888
Prepaid expenses		35
Furniture, fixtures and equipment		58
Deposits		15
Accounts payable		(81	)
Accrued liabilities		(864	)
Other liabilities		(14	)
Total purchase price allocation	$	12,825

Identifiable intangible assets acquired consist of trade names and trademarks, customer relationships and non-compete agreements. The estimated fair value of identifiable intangible assets was determined by management. It is anticipated that the net intangible and identifiable intangible assets are deductible for tax purposes.

Acquisitions completed during the fourth quarter 2013 accounted for $5,821,000 and $16,004,000 of net service revenues from continuing operations for the three and nine months ended September 30, 2014, respectively.