Acquisitions and divestitures

6 Months Ended

Jun. 30, 2019

Routine acquisitions

During the six months ended June 30, 2019, the Company acquired dialysis businesses consisting of five dialysis centers located in the U.S. and seven dialysis centers located outside the U.S. for a total of $63,945 in net cash, $453 in deferred purchase price obligations, and $12,484 in earn-out obligations and assumed liabilities. The assets and liabilities for these acquisitions were recorded at their estimated fair values at the dates of the acquisitions and are included in the Company’s condensed consolidated financial statements, as are their operating results, from the designated effective dates of the acquisitions.

The initial purchase price allocations for these transactions have been recorded at estimated fair values based on the best information available to management and will be finalized when certain information arranged to be obtained has been received. In particular, certain income tax amounts are pending final evaluation and quantification of pre-acquisition tax contingencies and filing of final tax returns. In addition, valuation of certain working capital items, fixed assets and intangibles are pending final audits and related valuation reports.

The following table summarizes the assets acquired and liabilities assumed in these transactions at their estimated acquisition date fair values:



Current assets	$	3,607
Property and equipment	2,135
Intangible and other long-term assets	8,443
Goodwill	66,614
Current liabilities	(2,067		)
Long-term liabilities	(88		)
Noncontrolling interests	(1,762		)
	$	76,882

Amortizable intangible assets acquired during the first six months of 2019 primarily represent non-compete agreements which had weighted-average estimated useful lives of approximately six years. The total estimated amount of goodwill deductible for tax purposes associated with these acquisitions was approximately $64,905.

Contingent earn-out obligations

The Company has several contingent earn-out obligations associated with acquisitions that could result in the Company paying the former owners of acquired companies a total of up to $25,875 if certain EBITDA, operating income performance targets or quality margins are met primarily over the next one year to five years. As of June 30, 2019, the estimated fair values of these contingent earn-out obligations is $14,730, of which $4,090 is included in other liabilities and the remaining $10,640 is included in other long-term liabilities in the Company’s consolidated balance sheet.

The following is a reconciliation of changes in contingent earn-out obligations for the six months ended June 30, 2019:



Beginning balance December 31, 2018	$	2,608
Contingent earn-out obligations associated with acquisitions	12,440
Remeasurement of fair value for contingent earn-out obligations	(101		)
Payments on contingent earn-out obligations	(217		)
Ending balance June 30, 2019	$	14,730