Acquisitions and divestitures

9 Months Ended

Sep. 30, 2020

Routine acquisitions

During the nine months ended September 30, 2020, the Company acquired dialysis businesses consisting of eight dialysis centers located in the U.S. and 36 dialysis centers located outside the U.S. for a total of $112,597 in net cash, $6,917 in deferred purchase price obligations, and $21,021 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	$	17,606
Property and equipment	15,714
Intangible and other long-term assets	14,969
Goodwill	110,248
Deferred income taxes	1,513
Current liabilities	(17,786		)
Noncontrolling interests	(1,729		)
	$	140,535

Amortizable intangible assets acquired during the nine months ended September 30, 2020 primarily represent non-compete agreements which had weighted-average estimated useful lives of approximately five years. The total estimated amount of goodwill deductible for tax purposes associated with these acquisitions was approximately $91,157.

Sale of RMS Lifeline

The Company also divested its vascular access business, RMS Lifeline, Inc., effective May 1, 2020 and recognized a loss on sale of approximately $16,252.

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 $37,467 if certain performance targets or quality margins are met primarily over the next one year to five years. As of September 30, 2020, the estimated fair value of these contingent earn-out obligations is $26,314, of which $7,400 is included in other current liabilities and the remaining $18,914 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 and nine month periods ended September 30, 2020:



	Three months ended September 30, 2020			Nine months ended September 30, 2020
Beginning balance	$	24,057		$	24,586
Acquisitions	5,815			11,676
Foreign currency translation	(975		)	(6,358		)
Fair value remeasurements	(1,990		)	(2,630		)
Payments or other settlements	(593		)	(960		)
Ending balance	$	26,314		$	26,314