Business Combinations

As set forth below, the Company completed five acquisitions from January 1, 2013 through December 31, 2015. The Company accounted for each acquisition using the acquisition method of accounting. Accordingly, it recorded the tangible and intangible assets acquired and liabilities assumed at their estimated fair values as of the applicable date of acquisition. For each acquisition, the Company did not incur any material acquisition-related costs. The acquisition of Onward Healthcare, Inc. (“Onward Healthcare”), including its two wholly-owned subsidiaries, Locum Leaders and Medefis (collectively with Onward Healthcare, “OH”), described below is the only acquisition considered significant. As a result, pro forma information for the other four acquisitions is not provided.

MillicanSolutions Acquisition

On October 5, 2015, the Company acquired MillicanSolutions, Inc. (“Millican”), a physician and executive leadership search firm. The total purchase price of $3,985 included (1) $2,985 cash consideration paid upon acquisition, funded by cash-on-hand, (2) $500 to be paid on December 31, 2016, and (3) $500 to be paid on December 31, 2017. The acquisition enhances the Company’s ability to respond to the specialized leadership needs within academic pediatrics and children’s medical centers and expands its expertise in serving academic medical centers and teaching hospitals in physician and leadership search. The results of operations of Millican have been included in the Company’s physician permanent placement segment since the date of acquisition.

The preliminary allocation of the $3,985 purchase price consisted of (1) $636 of fair value of tangible assets acquired, (2) $662 of liabilities assumed, (3) $645 of identified intangible assets and (4) $3,366 of goodwill, a portion of which is deductible for tax purposes. The intangible assets include the fair value of tradenames and trademarks, staffing databases, customer relationships, and a covenant not to compete with a weighted average useful life of approximately five years.

The First String Healthcare Acquisition

On September 15, 2015, the Company completed its acquisition of The First String Healthcare, Inc. (“TFS”), a provider of interim staffing and permanent placement of nurse leaders and executives. The total purchase price of $7,653 included (1) $4,453 cash consideration paid upon acquisition, funded by cash-on-hand, net of cash received, (2) $500 to be paid on the first anniversary of the acquisition date, and (3) a tiered contingent earn-out payment of up to $4,000 with an estimated fair value of $2,700 as of the acquisition date. The contingent earn-out payment is comprised of (1) up to $1,000 based on the operating results of TFS for the year ended December 31, 2015, which was earned in its entirety, and (2) up to $3,000 based on the operating results of TFS for the year ending December 31, 2016. The acquisition agreement also provides for an additional $1,000 payment to be paid on the second anniversary of the acquisition date conditioned upon the continued employment of the selling shareholders. Accordingly, this amount is recorded as compensation expense over the two year service period. The acquisition enhances the Company’s capabilities to provide interim and permanent nursing leadership. The results of operations of TFS have been included in the Company’s nurse and allied healthcare staffing segment since the date of acquisition.

The preliminary allocation of the $7,653 purchase price consisted of (1) $919 of fair value of tangible assets acquired, (2) $867 of liabilities assumed, (3) $3,373 of identified intangible assets and (4) $4,228 of goodwill, a portion of which is deductible for tax purposes. The intangible assets include the fair value of tradenames and trademarks, customer relationships, a staffing database and covenants not to compete with a weighted average useful life of approximately seven years.

Onward Healthcare Acquisition

On January 7, 2015, the Company completed its acquisition of OH for approximately $76,643 in cash paid upon acquisition, funded by cash-on-hand and borrowings under the Company’s revolving credit facility, net of cash received. Onward Healthcare is a national nurse and allied healthcare staffing firm, Locum Leaders is a national locum tenens provider, and Medefis is a provider of a SaaS-based VMS for healthcare facilities. The acquisition helps the Company to expand its service lines and its supply and placement capabilities of healthcare professionals to its clients. The results of Onward Healthcare and Medefis have been included in the Company’s nurse and allied healthcare staffing segment and the results of Locum Leaders in the Company’s locum tenens staffing segment since the date of acquisition.

The preliminary allocation of the $76,643 purchase price consisted of (1) $25,216 of fair value of tangible assets acquired (including $21,313 of accounts receivable), (2) $21,425 of liabilities assumed (including $11,113 of accounts payable and accrued expenses), (3) $30,219 of identified intangible assets and (4) $42,633 of goodwill, a portion of which is deductible for tax purposes. The intangible assets acquired and their weighted average useful life is as follows:



		Fair Value		Useful Life
				(in years)
Identifiable intangible assets
	Tradenames and Trademarks	$	8,100	3 - 15
	Customer Relationships	17,600		10 - 15
	Staffing Database	2,600		5
	Acquired Technologies	1,700		8
	Non-compete agreements	219		2
		$	30,219

Of the $42,633 allocated to goodwill, $37,392 and $5,241 were allocated to the Company’s nurse and allied healthcare staffing segment and locum tenens staffing segment, respectively.

Approximately $145,178 of revenue and $16,229 of income before income taxes of the OH entities were included in the consolidated statement of comprehensive income for the year ended December 31, 2015. The following summary presents unaudited pro forma consolidated results of operations of the Company for the years ended December 31, 2015 and 2014 as if the OH acquisition had occurred on January 1, 2014, which gives effect to certain adjustments, including the reduction in compensation expense related to non-recurring executive salary expense, acquisition-related costs and the amortization of acquired intangible assets. The pro forma financial information is not necessarily indicative of the operating results that would have occurred had the acquisition been consummated as of the date indicated, nor is it necessarily indicative of future operating results.



	Years Ended December 31,
(Unaudited)	2015		2014
Revenue	$	1,465,350	$	1,138,481
Net income	$	80,033	$	34,230
Net income per common share:
Basic	$	1.68	$	0.74
Diluted	$	1.64	$	0.71

Avantas Acquisition

On December 22, 2014, the Company acquired Avantas, LLC (“Avantas”), a provider of clinical workforce management services, including its proprietary SaaS-based scheduling technology. The initial purchase price of $17,520 included (1) $14,470 cash consideration paid at acquisition, funded through cash-on-hand and borrowings under the Company’s revolving credit facility, (2) $1,650 cash holdback for potential indemnification claims and (3) a tiered contingent earn-out of up to $8,500 based on the operating performance of Avantas during the 12-month period ending June 30, 2016, with an estimated fair value at acquisition of $1,400. During the year ended December 31, 2015, the Company paid an additional $165 to the selling equityholders for a working capital adjustment. The acquisition expanded the Company’s ability to provide workforce optimization services. The results of operations of Avantas have been included in the Company’s nurse and allied healthcare staffing segment since the date of acquisition.

The allocation of the total $17,685 purchase price (which gives effect to the $165 working capital adjustment on the initial purchase price) consisted of (1) $1,631 of fair value of tangible assets acquired, (2) $3,821 of liabilities and deferred revenue assumed, (3) $9,960 of identified intangible assets, including tradenames and trademarks, customer relationships and acquired technologies with a weighted average useful life of approximately 14 years and (4) $9,915 of goodwill, a portion of which is deductible for tax purposes.

ShiftWise Acquisition

On November 20, 2013, the Company completed its acquisition of ShiftWise, a national provider of web-based healthcare workforce solutions, including its VMS technology utilized by hospitals and other healthcare systems. The purchase price of the acquisition totaled $39,500, of which $6,000 was deposited in escrow to satisfy any potential indemnification claims by the Company and is scheduled to be released to the selling shareholders over three years following the closing date at $2,000 per annum minus any resolved or unresolved indemnification claims. As of December 31, 2015, a total of $3,970 has been released from the escrow, of which $3,614 has been released to the selling shareholders and the remaining has been returned to the Company for certain indemnification payments and payroll taxes the Company paid on behalf of the selling shareholders. The acquisition expanded the Company’s workforce solution offerings to include a standalone VMS technology. The results of operations of ShiftWise have been included in the Company’s nurse and allied healthcare staffing segment since the date of acquisition.

The allocation of the $39,500 purchase price consisted of (1) $9,899 of fair value of tangible assets acquired, (2) $11,502 of liabilities assumed (including $2,701 of deferred tax liabilities), (3) $19,790 of identified intangible assets including tradenames and trademarks, customer relationships, non-compete agreements and acquired technologies with a weighted average useful life of approximately 8 years and (4) $21,313 of non-deductible goodwill.