Acquisitions

6 Months Ended

Jun. 30, 2022

NOTE 3 ACQUISITIONS

During the three and six months ended June 30, 2022 and 2021, the Company completed the acquisitions of 4, 10, 6 and 11 outpatient mental health practices, respectively. The Company accounted for the acquisitions as business combinations using the acquisition method of accounting. The purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the respective acquisition dates.

Total consideration transferred for these acquisitions consisted of the following:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Cash consideration	$	12,600	$	40,612	$	35,925	$	41,312
Cash consideration to be paid		—		325		—		325
Contingent consideration, at initial fair value		3,213		1,931		5,683		2,739
Class A-2 common units		—		1,486		—		1,486
Total consideration transferred	$	15,813	$	44,354	$	41,608	$	45,862

The results of the acquired businesses have been included in the Company’s consolidated financial statements beginning as of their acquisition dates. It is impracticable to provide historical supplemental pro forma financial information along with revenue and earnings subsequent to the acquisition dates for acquisitions during the period due to a variety of factors, including access to historical information and the operations of acquirees being integrated within the Company shortly after closing and not operating as discrete entities within the Company’s organizational structure.

Fair Values of Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the dates of acquisition:


	Three Months Ended June 30,				Six Months Ended June 30,
Allocation of Purchase Price	2022		2021		2022		2021
Cash	$	430	$	2,008	$	851	$	2,048
Patient accounts receivable		707		3,515		1,193		3,799
Property and equipment		19		676		53		694
Prepaid expenses and other current assets		166		221		230		227
Other noncurrent assets		53		86		56		91
Intangible assets		901		2,936		1,683		3,061
Goodwill		14,526		40,170		39,227		41,287
Total assets acquired		16,802		49,612		43,293		51,207
Total liabilities assumed		989		5,258		1,685		5,345
Fair value of net assets	$	15,813	$	44,354	$	41,608	$	45,862

The fair value of assets and liabilities other than intangible assets approximate the carrying amounts as of acquisition dates.

The following table summarizes the fair values of acquired intangible assets as of the dates of acquisition:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Regional trade names (1)	$	555	$	1,839	$	897	$	1,916
Non-competition agreements (2)		346		1,097		786		1,145
Total	$	901	$	2,936	$	1,683	$	3,061

(1)

Useful lives for regional trade names are 5 years.

(2)

Useful lives for non-competition agreements are 5 years.

Contingent Consideration

Under the provisions of the acquisition agreements, the Company may pay additional cash consideration in the form of earnouts, contingent upon the acquirees achieving certain performance and operational targets (see Note 6).

The following table summarizes the maximum contingent consideration based on the acquisition agreements:


	Three Months Ended June 30,				Six Months Ended June 30,
Contingent consideration	2022		2021		2022		2021
Maximum contingent consideration based on acquisition agreements	$	4,200	$	2,350	$	7,200	$	3,350

Goodwill

Goodwill represents the excess of the purchase price over the net identifiable assets acquired and liabilities assumed. Goodwill is primarily attributable to the assembled workforce, customer and payor relationships and anticipated synergies and economies of scale expected from the integration of the businesses. The synergies include certain cost savings, operating efficiencies, and other strategic benefits projected to be achieved as a result of the acquisition. Goodwill deductible for tax purposes is $36,091 from the acquisitions in 2022.