BUSINESS ACQUISITIONS (Tables)

12 Months Ended

Dec. 31, 2019

Under the acquisition method of accounting, the calculation of total consideration exchanged is as follows (in thousands):



	Amount
Number of BioScrip common shares outstanding at time of the Merger (1)	129,181
Common shares issued to warrant and preferred stockholders at time of the Merger (1)	3,458
Total shares of BioScrip common stock outstanding at time of the Merger (1)	132,639
BioScrip share price as of August 6, 2019	$	2.67
Fair value of common shares	$	354,146
Fair value of share-based instruments	$	32,898
Cash paid in conjunction with the Merger included in purchase consideration	$	714,957
Fair value of total consideration transferred	$	1,102,001
Less: cash acquired	$	14,787
Fair value of total consideration acquired, net of cash acquired	$	1,087,214

(1) These shares were not adjusted for the one share for four share reverse stock split, which occurred on February 3, 2020. See Note 20, Subsequent Events, for further discussion of this stock split.

Schedule of Acquired Identifiable Assets and Assumed Liabilities

The following is a preliminary estimate of the allocation of the consideration transferred to acquired identifiable assets and assumed liabilities, net of cash acquired, in the Merger as of August 6, 2019 (in thousands):



	Amount
Accounts receivable, net (1)	$	96,532
Inventories (2)	19,683
Property and equipment, net (3)	48,732
Intangible assets, net (4)	193,245
Deferred tax assets, net of deferred tax liabilities (5)	26,731
Operating lease right-of-use asset (6)	22,378
Operating lease liability (6)	(28,897		)
Accounts payable (7)	(64,030		)
Other assumed liabilities, net of other acquired assets (7)	(20,233		)
Total acquired identifiable assets and liabilities	294,141
Goodwill (8)	793,073
Total consideration transferred	$	1,087,214


(1)	Management has valued accounts receivables based on the estimated future collectability of the receivables portfolio.


(2)	Inventories are stated at fair value as of the Merger Date.


(3)	The fair value of the property and equipment was determined based upon the best and highest use of the property with final values determined based upon an analysis of the cost, sales comparison, and income capitalization approaches for each property appraised.


(4)	The allocation of consideration exchanged to intangible assets acquired is as follows (in thousands):



	Fair Value		Weighted Average Estimated Life (in years)
Trademarks/Names	$	12,536	2
Patient referral sources	180,329		20
Licenses	380		1.5
Total intangible assets, net	$	193,245	18.8

The Company valued trademarks/names utilizing the relief of royalty method and patient referral sources utilizing the multi-period excess earnings method, a form of the income approach.


(5)	Net deferred tax assets represented the expected future tax consequences of temporary differences between the fair values of the assets acquired and liabilities assumed and their tax bases. See Note 6, Income Taxes, for additional discussion of the Company’s combined income tax position subsequent to the Merger.


(6)	The fair value of the operating lease liability and corresponding right-of-use asset (current and long-term) was based on current market rates available to the Company.


(7)	Accounts payable as well as certain other current and non-current assets and liabilities are stated at fair value as of the Merger Date.


(8)	The Merger preliminarily resulted in $793.1 million of goodwill, which is attributable to cost synergies resulting from procurement and operational efficiencies and elimination of duplicative administrative costs. The goodwill created in the Merger is not expected to be deductible for tax purposes.

Schedule of Allocation of Consideration to Intangible Assets Acquired

The allocation of consideration exchanged to intangible assets acquired is as follows (in thousands):



	Fair Value		Weighted Average Estimated Life (in years)
Trademarks/Names	$	12,536	2
Patient referral sources	180,329		20
Licenses	380		1.5
Total intangible assets, net	$	193,245	18.8

The Company valued trademarks/names utilizing the relief of royalty method and patient referral sources utilizing the multi-period excess earnings method, a form of the income approach.


(5)	Net deferred tax assets represented the expected future tax consequences of temporary differences between the fair values of the assets acquired and liabilities assumed and their tax bases. See Note 6, Income Taxes, for additional discussion of the Company’s combined income tax position subsequent to the Merger.


(6)	The fair value of the operating lease liability and corresponding right-of-use asset (current and long-term) was based on current market rates available to the Company.


(7)	Accounts payable as well as certain other current and non-current assets and liabilities are stated at fair value as of the Merger Date.


(8)	The Merger preliminarily resulted in $793.1 million of goodwill, which is attributable to cost synergies resulting from procurement and operational efficiencies and elimination of duplicative administrative costs. The goodwill created in the Merger is not expected to be deductible for tax purposes.

Schedule of Pro Forma Financial Information

Assuming BioScrip had been acquired as of January 1, 2018, and the results of BioScrip had been included in operations beginning on January 1, 2018, the following tables provide estimated unaudited pro forma results of operations for the years ended December 31, 2019 and 2018 (in thousands). The estimated pro forma net income adjusts for the effect of fair value adjustments related to the Merger, transaction costs and other non-recurring costs directly attributable to the Merger and the impact of the additional debt to finance the Merger.



	Year Ended December 31,
	2019			2018
Net revenue	$	2,755,361		$	2,648,694
Net loss	(49,566		)	(70,932		)