Acquisitions and divestitures

3 Months Ended

Mar. 31, 2020

During the three months ended March 31, 2020, the Company acquired dialysis businesses consisting of two dialysis centers located in the U.S. and 22 dialysis centers located outside the U.S. for a total of $34,107 in net cash, $875 in deferred purchase price obligations, and $5,007 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	$	7,412
Property and equipment	8,892
Intangible and other long-term assets	6,107
Goodwill	26,770
Deferred income taxes	1,513
Current liabilities	(10,705		)
	$	39,989

Amortizable intangible assets acquired during the three months ended March 31, 2020 primarily represent non-compete agreements which had weighted-average estimated useful lives of approximately four years. The total estimated amount of goodwill deductible for tax purposes associated with these acquisitions was approximately $11,241.

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 $31,723 if certain performance targets or quality margins are met primarily over the next one year to five years. As of March 31, 2020, the estimated fair values of these contingent earn-out obligations is $22,386, of which $4,579 is included in other current liabilities and the remaining $17,807 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 three months ended March 31, 2020:



Balance at December 31, 2019	$	24,586
Contingent earn-out obligations associated with acquisitions	2,672
Foreign currency translation adjustment for contingent earn-out obligations	(4,874		)
Remeasurement of fair value for contingent earn-out obligations	2
Balance at March 31, 2020	$	22,386