3. Acquisitions

Effective February 23, 2016, the Company acquired certain assets of Lutheran Social Services of Illinois ("LSSI") for approximately $0.1 million. The results of operations from the acquisition of LSSI are included in the Company's statement of income from the date of the acquisition. The LSSI acquisition accounted for $0.2 million and $0.1 million of net service revenues and $7.5 thousand and $3.7 thousand of net income for the three months ended March 31, 2017 and 2016, respectively. In order to focus on providing services to consumers in their homes, effective March 1, 2017, Addus ceased providing adult day services and sold substantially all of the assets used in our adult day services centers, including LSSI.

On April 24, 2015, Addus HealthCare entered into a Securities Purchase Agreement with Margaret Coffey and Carol Kolar (the "South Shore Sellers"), South Shore Home Health Service Inc. ("South Shore") and Acaring Home Care, LLC ("Acaring"), pursuant to which Addus HealthCare agreed to acquire all of the issued and outstanding securities of each of South Shore and Acaring. On February 5, 2016, Addus HealthCare completed its acquisition of all the outstanding securities of South Shore and Acaring for a total purchase price of $20.0 million (the "South Shore Purchase Price"). The related acquisition costs, included in general and administrative expenses on the Consolidated Statements of Income, were $1.3 million and were expensed as incurred. The results of operations from South Shore and Acaring are included in the Company's Condensed Consolidated Statements of Income from the date of the acquisition. Acaring was dissolved on March 1, 2016, and its assets were transferred to South Shore.

The Company's acquisition of South Shore and Acaring has been accounted for in accordance with ASC Topic 805, "Business Combinations, " and the resulting goodwill and other intangible assets was accounted for under ASC Topic 350 "Goodwill and Other Intangible Assets." The acquisition was recorded at its fair value as of February 5, 2016. Under business combination accounting, the South Shore Purchase Price was $20.0 million and was allocated to South Shore's net tangible and identifiable intangible assets based on their estimated fair values. Based upon management's valuation, the total purchase price has been allocated as follows:


		Total
		(Amounts in
		Thousands)
Goodwill	$	5,265
Identifiable intangible assets		9,957
Accounts receivable		6,807
Other current assets		858
Accrued liabilities		(1,593	)
Accounts payable		(1,268	)
Total purchase price allocation	$	20,026

Management's assessment of qualitative factors affecting goodwill for South Shore includes: estimates of market share at the date of purchase; ability to grow in the market; synergy with existing Company operations and the presence of managed care payors in the market.

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 Company's management. The net intangible and identifiable intangible assets, including goodwill, are deductible for tax purposes.

The South Shore acquisition accounted for $14.3 million and $8.2 million of net service revenues and $1.0 million and $0.3 million of net income for the three months ended March 31, 2017 and 2016, respectively.

The following table contains unaudited pro forma condensed consolidated income statement information assuming the South Shore and Acaring acquisition closed on January 1, 2015.


		For the Three Months
		Ended March 31,
		(Amounts in Thousands)
		2017		2016
Net service revenues	$	101,606	$	97,438
Operating income		6,961		(145	)
Net income		4,259		(361	)
Net income per common share
Basic income per share	$	0.37	$	(0.03	)
Diluted income per share	$	0.37	$	(0.03	)

The pro forma disclosures in the table above include adjustments for amortization of intangible assets and tax expense and acquisition costs to reflect results that are more representative of the combined results of the transactions as if South Shore and Acaring had been acquired effective January 1, 2015. 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. The unaudited pro forma financial information does not reflect the impact of future events that may occur after the acquisition, such as anticipated cost savings from operating synergies.