ACQUISITIONS

The Company’s acquisition policy is generally to purchase or lease facilities to complement the Company’s existing portfolio of long-term care facilities. The results of all the Company’s operations are included in the accompanying Interim Financial Statements subsequent to the date of acquisition. Acquisitions are typically paid for in cash and are accounted for using the acquisition method of accounting. Where the Company enters into facility lease agreements, the Company typically does not pay any material amount to the prior facility operator nor does the Company acquire any assets or assume any liabilities, other than rights and obligations under the lease and operations transfer agreement, as part of the transaction. Some leases include options to purchase the facilities. As a result, from time to time, the Company will acquire facilities that the Company has been operating under third-party leases.

During the nine months ended September 30, 2011, the Company acquired seven stand alone skilled nursing facilities, four skilled nursing facilities which also offer assisted living services, two skilled nursing facilities which also offer assisted living and independent living services, two stand alone assisted living facilities, one assisted living facility which also offers independent living services, one stand alone independent living facility, three home health operations and one hospice operation. The aggregate purchase price of the 21 business acquisitions was approximately $86,539, which was paid in cash. The Company also entered into a separate operations transfer agreement with the prior tenant as part of each transaction. The facilities acquired during the nine months ended September 30, 2011 are as follows:

•

On January 1, 2011, the Company purchased one skilled nursing facility which also offers assisted living and independent living services and one independent living facility in Texas for approximately $14,580 which was paid in cash. This acquisition added 123 operational skilled nursing beds, 77 assisted living units, 72 independent living units and 20 independent living cottages to the Company's operations.


•	On February 1, 2011, the Company purchased one skilled nursing facility in Utah, which also offers assisted living and independent living services for approximately $16,569 which was paid in cash. This acquisition added 233 operational skilled nursing beds, 48 assisted living units and 68 independent living apartments to the Company's operations.


•	On March 18, 2011, the Company purchased one assisted living facility in California for $5,925, which was paid in cash. This acquisition added 125 assisted living units to the Company's operations.


•	On May 15, 2011, the Company purchased a home health and hospice operation in Utah for $2,001, which was paid in cash. The acquisition did not have an impact on the Company's operational bed count. Goodwill and other indefinite lived intangible assets recognized in this transaction amounted to $1,412 and $569, respectively, and are expected to be fully deductible for tax purposes.


•	On June 1, 2011, the Company purchased an assisted living facility in Nevada for $5,954, which was paid in cash. The acquisition added 100 assisted living and 52 independent living units to the Company's operations. .

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On July 18, 2011, the Company acquired nine skilled nursing facilities, of which four also offer assisted living services, and a home health operation in Nebraska and Iowa for $27,649, which was paid in cash. This acquisition added 549 operational skilled nursing beds and 103 operational assisted living units. Goodwill recognized in this transaction amounted to $2,797, which is expected to be fully deductible for tax purposes.


•	On August 1, 2011, the Company acquired an independent living facility which also offers assisted living services in Texas for $5,808, which was paid in cash. This acquisition added 129 independent living and 39 assisted living units to the Company's operations.


•	On August 1, 2011, the Company acquired a skilled nursing facility in Texas for $5,206, which was paid in cash. This acquisition added 134 operational skilled nursing beds to the Company's operations.


•	On August 1, 2011, the Company acquired a skilled nursing facility in Utah for $2,607, which was paid in cash. This acquisition added 48 operational skilled nursing beds to the Company's operations.


•	On September 3, 2011, the Company entered into a management agreement to operate a home health operation in Colorado. The Company paid $240 to acquire the agreement. The acquisition did not have an impact on the Company's operational bed count. Other indefinite lived intangible assets recognized in this transaction amounted to $240, which is expected to be fully deductible for tax purposes.

In addition, the Company purchased the underlying assets of three of its leased skilled nursing facilities in California. The facilities were purchased for an aggregate purchase price of $16,583, which was paid in cash. These acquisitions did not impact the Company's operational bed count.

The Company expensed $362 in acquisition related costs during the nine months ended September 30, 2011.

The table below presents the allocation of the purchase price for the facilities acquired in business combinations during the nine months ended September 30, 2011 and 2010:



	September 30,
	2011		2010
Land	$	8,229	$	2,709
Building and improvements	69,883		11,029
Equipment, furniture, and fixtures	2,399		1,003
Goodwill	4,209		3,092
Other indefinite lived intangible assets	809		672
Other intangible assets	1,010		304
	$	86,539	$	18,809

There were no changes in goodwill during the period other than shown above.

Subsequent to the quarter ended September 30, 2011, the Company has acquired one skilled nursing facility in California, for approximately $9,750, which was paid in cash. This acquisition increased the Company's operational skilled nursing bed capacity by 59 beds, which increased the Company's collective capacity to 11,520 operational skilled nursing, assisted living and independent living beds. The table below presents the allocation of the purchase price for the facilities acquired in business combinations subsequent to the nine months ended September 30, 2011:



Land	$	4,286
Building and improvements	5,324
Equipment, furniture, and fixtures	120
Other intangible assets	20
	$	9,750