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Acquisitions
 3 Months Ended
Mar. 31, 2014
Business Combinations [Abstract]  
Acquisitions

(4) Acquisitions and Investments in Unconsolidated Affiliates

As a significant part of its growth strategy, the Company primarily acquires controlling interests in centers. The Company accounts for its business combinations under the fundamental requirements of the acquisition method of accounting and under the premise that an acquirer be identified for each business combination. The acquirer is the entity that obtains control of one or more businesses in the business combination and the acquisition date is the date the acquirer achieves control. The assets acquired, liabilities assumed and any noncontrolling interests in the acquired business at the acquisition date are recognized at their fair values as of that date, and the direct costs incurred in connection with the business combination are recorded and expensed separately from the business combination. Acquisitions in which the Company is able to exert significant influence but does not have control are accounted for using the equity method. Equity method investments are initially recorded at cost, unless such investments are a result of the Company entering into a transaction whereby the Company loses control of a previously controlled entity but retains a noncontrolling interest. Such transactions, which result in the deconsolidation of a previously consolidated entity, are measured at fair value.

During the three months ended March 31, 2014 the Company, through a wholly owned subsidiary, acquired a controlling interest in one center. The aggregate amount paid for the center acquired during the three months ended March 31, 2014 was approximately $5,038,000, net of cash acquired, and was paid in cash and funded by a combination of operating cash flow and borrowings under the Company’s revolving credit facility. The total fair value of an acquisition includes an amount allocated to goodwill, which results from the centers’ favorable reputations in their markets, their market positions and their ability to deliver quality care with high patient satisfaction consistent with the Company’s business model.

In conjunction with the Company’s acquisition of 17 centers from National Surgical Care, Inc. (“NSC”) on September 1, 2011, the Company agreed to pay as additional consideration an amount up to $7,500,000 based on a multiple of the excess earnings over the targeted earnings of the acquired centers, if any, from the period of January 1, 2012 to December 31, 2012. During the three months ended March 31, 2013, the Company paid NSC $2,744,000 as final settlement of the additional consideration due in accordance with the purchase agreement.

The acquisition date fair value of the total consideration transferred and acquisition date fair value of each major class of consideration for the acquisition completed in the three months ended March 31, 2014 and 2013, including post acquisition date adjustments recorded to finalize purchase price allocations, are as follows (in thousands):

Three Months Ended March 31,
20142013
Accounts receivable $ 417$ -
Supplies, inventory, prepaid and other current assets 81 -
Property and equipment 429 -
Goodwill 8,260 -
Accounts payable (125) -
Other accrued liabilities (39) -
Total fair value 9,023 -
Less: Fair value attributable to noncontrolling interests 3,985 -
Acquisition date fair value of total consideration transferred $ 5,038$ -

Fair value attributable to noncontrolling interests is based on significant inputs that are not observable in the market. Key inputs used to determine the fair value include financial multiples used in the purchase of noncontrolling interests in centers. Such multiples, based on earnings, are used as a benchmark for the discount to be applied for the lack of control or marketability. The fair value of noncontrolling interests for acquisitions where the purchase price allocation is not finalized may be subject to adjustment as the Company completes its initial accounting for acquired intangible assets. For the three months ended March 31, 2014 approximately $4,670,000 of goodwill recorded was deductible for tax purposes. The acquisition related costs incurred by the Company were not significant for the three months ended March 31, 2014 and 2013, respectively.

Revenues and net earnings included in the three months ended March 31, 2014 and 2013 associated with this acquisition are as follows (in thousands):

Three Months Ended March 31,
20142013
Revenues $ 1,031$ -
Net earnings 245 -
Less: Net earnings attributable to noncontrolling interests 151 -
Net earnings attributable to AmSurg Corp. common shareholders $ 94$ -

The unaudited consolidated pro forma results for the three months ended March 31, 2014 and 2013, assuming all 2014 acquisitions had been consummated on January 1, 2013 and all 2013 acquisitions had been consummated on January 1, 2012, are as follows (in thousands, except per share data):

Three Months Ended March 31,
20142013
Revenues $ 263,107$ 270,371
Net earnings 60,114 65,385
Amounts attributable to AmSurg Corp. common shareholders:
Net earnings from continuing operations 17,504 18,830
Net earnings 17,195 18,891
Net earnings from continuing operations per common share:
Basic $ 0.55$ 0.60
Diluted $ 0.54$ 0.59
Net earnings:
Basic $ 0.54$ 0.61
Diluted $ 0.54$ 0.59
Weighted average number of shares and share equivalents:
Basic 31,716 31,217
Diluted 32,120 31,881

During the three months ended March 31, 2014, the Company entered into a transaction whereby it contributed a controlling interest in one center in exchange for $600,000 and a noncontrolling interest in an entity jointly owned by a hospital that, after the completion of the transaction, controls the contributed center. During the three months ended March 31, 2013, the Company entered into a transaction whereby it contributed cash of $252,000 plus a controlling interest in one center in exchange for a noncontrolling interest in an entity jointly owned by a hospital that, after the completion of the transaction, controlled the contributed center and one additional center. Management of the Company believes these structures provide both economies of scale and potential future growth opportunities in the markets in which the centers are located. As a result of these transactions, the Company recorded in the accompanying consolidated balance sheets as a component of investments in unconsolidated affiliates and other, the fair value of the noncontrolling interest in the entities which control the contributed centers of approximately $1,238,000 and $5,200,000 as of the three months ended March 31, 2014 and 2013, respectively. Accordingly, during the three months ended March 31, 2014 and 2013, the Company recognized a gain on deconsolidation in the accompanying consolidated statements of earnings and comprehensive income of approximately $2,045,000 and $2,237,000, respectively. In each of these transactions, the gain on deconsolidation was determined based on the difference between the fair value of the Company’s noncontrolling interest in the new entity and the carrying value of both the tangible and intangible assets of the contributed centers immediately prior to each transaction.