ACQUISITIONS

12 Months Ended

Dec. 31, 2019

We complete acquisitions from time to time in order to pursue our strategy of increasing our market presence by expanding our service base and enhancing our position in certain geographic areas as a leading provider of home health, hospice and personal care services. The purchase price paid for acquisitions is negotiated through arm’s length transactions, with consideration based on our analysis of, among other things, comparable acquisitions and expected cash flows. Acquisitions are accounted for as purchases and are included in our consolidated financial statements from their respective acquisition dates. Goodwill generated from acquisitions is recognized for the excess of the purchase price over tangible and identifiable intangible assets because of the expected contributions of the acquisitions to our overall corporate strategy. We typically engage outside appraisal firms to assist in the fair value determination of identifiable intangible assets for significant acquisitions. The preliminary purchase price allocation is adjusted, as necessary, up to one year after the acquisition closing date if management obtains more information regarding asset valuation and liabilities assumed.

2019 Acquisitions

Hospice Division

On February 1, 2019, we acquired CCH, a national hospice care provider headquartered in New Jersey, for a purchase price of $327.9 million, net of cash acquired of $6.7 million.

The Company has finalized its valuation of the assets acquired and liabilities assumed. The total consideration of $327.9 million has been allocated to assets acquired and liabilities assumed as of the acquisition date as follows (amounts in millions):



	Amount
Patient accounts receivable	$	24.5
Prepaid expenses	0.8
Other current assets	0.1
Property and equipment	0.2
Intangible assets	27.2
Operating lease right of use assets	3.4
Other assets	1.1
Total assets acquired	57.3
Accounts payable	(14.9		)
Payroll and employee benefits	(11.7		)
Accrued expenses	(11.7		)
Deferred tax liability	(0.9		)
Operating lease liabilities	(3.4		)
Total liabilities acquired	(42.6		)
Net identifiable assets acquired	14.7
Goodwill	313.2
Total estimated consideration	$	327.9

Intangible assets acquired include licenses, certificates of need, acquired names and non-compete agreements. The acquired names and non-compete agreements will be amortized over a weighted-average period of 2.0 and 2.3 years, respectively.

CCH contributed approximately $167.4 million in net service revenue and an operating loss of $5.6 million (inclusive of acquisition and integration costs totaling $14.5 million) during the year ended December 31, 2019.

We expect $278.8 million of goodwill recorded for this acquisition to be deductible for income tax purposes over approximately 15 years.

The following table contains unaudited pro forma condensed consolidated statement of operations information for the years ended December 31, 2019 and 2018 assuming that the CCH acquisition closed on January 1, 2018 (amounts in millions, except per share data):



	For the Year Ended December 31,
	2019		2018
Net service revenue	$	1,971.7	$	1,852.8
Operating income	183.8		175.7
Net income attributable to Amedisys, Inc.	130.5		124.6
Basic earnings per share	4.06		3.80
Diluted earnings per share	$	3.96	$	3.71

The pro forma information presented above includes adjustments for (i) amortization of identifiable intangible assets, (ii) interest on additional debt required to fund the CCH acquisition, (iii) non-recurring transaction costs and (iv) income taxes based on the Company’s statutory tax rate. 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.

On April 1, 2019, we acquired RoseRock Healthcare ("RoseRock"), an Oklahoma based hospice provider, for a purchase price of $17.5 million. The purchase price was paid with cash on hand on the date of the transaction. Based on the Company's preliminary valuation, we have recorded goodwill ($15.8 million) and other intangibles including acquired names ($1.0 million) and non-compete agreements ($0.7 million). The acquired names and non-compete agreement will each be amortized over a weighted-average period of 3.0 years. RoseRock contributed approximately $6.8 million in net service revenue and $0.8 million in operating income for the year ended December 31, 2019. We expect the entire amount of goodwill recorded for this acquisition to be deductible for income tax purposes over approximately 15 years.

2018 Acquisitions

Home Health Division

On March 1, 2018, we acquired the assets of Christian Care at Home which provided home health services to the state of Kentucky for a total purchase price of $2.3 million. The purchase price was paid with cash on hand on the date of the transaction. We recorded goodwill ($2.1 million) and other intangibles - certificate of need ($0.2 million) in connection with the acquisition. We expect the entire amount of goodwill recorded for this acquisition to be deductible for income tax purposes over approximately 15 years.

Personal Care Division

On May 1, 2018, we acquired the assets of East Tennessee Personal Care Services which owned and operated one personal-care care center servicing the state of Tennessee for a total purchase price of $2.0 million (subject to certain adjustments, of which $0.2 million was placed in a promissory note to be paid over 24 months, subject to any offsets or withholds for indemnification purposes). The purchase price was paid with cash on hand on the date of the transaction. We recorded goodwill ($1.9 million) and other intangibles - non-compete agreements ($0.1 million) in connection with the acquisition. We expect the entire amount of goodwill recorded for this acquisition to be deductible for income tax purposes over approximately 15 years.

On October 1, 2018, we acquired the assets of Bring Care Home which serviced the state of Massachusetts for a total purchase price of $5.7 million (subject to certain adjustments, of which $0.6 million was placed in a promissory note to be paid over 24 months, subject to any offsets or withholds for indemnification purposes). The purchase price was paid with cash on hand on the date of the transaction. We recorded goodwill ($5.5 million) and other intangibles - non-compete agreements ($0.2 million) in connection with the acquisition. We expect the entire amount of goodwill recorded for this acquisition to be deductible for income tax purposes over approximately 15 years.