Note 4 - Acquisition

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Business Combination Disclosure [Text Block]

4. Acquisitions

(a) Eliza Holding Corp.

On

April 17, 2017,

the Company completed the acquisition of

100%

of the outstanding capital stock of Eliza, for a purchase price of

$171.6

million funded with available liquidity of approximately

75%

cash on hand and

25%

from the Company’s existing credit line.

The allocation of the purchase price to the fair value of the assets acquired and the liabilities assumed as of

April 

17,

2017,

the effective date of the acquisition, is as follows (

in thousands

):

Cash and cash equivalents	$	435
Accounts receivable		8,902
Prepaid expenses		1,427
Property and equipment		1,146
Intangible assets		76,240
Goodwill		107,754
Other assets		63
Accounts payable		(2,620	)
Deferred tax liability		(19,681	)
Other liabilities		(2,057	)
Total purchase price	$	171,609

The purchase price allocated to the intangibles acquired was as follows (

in thousands

):

	Useful Life (in years)
Customer relationships		15	$	56,200
Intellectual property		6		19,600
Trade name		1.5		310
Restrictive covenants		1		130
Fair value of intangibles acquired			$	76,240

Acquisition costs recorded to selling, general and administrative expenses were as follows (

in thousands

):

Other operating expenses - consulting fees	$	3,515
Other operating expenses - legal fees		832
Other operating expenses - transaction costs		185
Acquisition-related costs	$	4,532

The financial results of Eliza’s operations since

April 17, 2017

have been included in the Company’s consolidated financial statements. Eliza contributed

$51.9

million and

$30.4

million in revenue to HMS results of operations in the years ended

December 31, 2018

and

2017,

respectively.

(b) Essette

On

September 2, 2016,

the Company acquired the outstanding capital stock of Essette for a purchase price of

$24.2

million funded by cash on hand. The immaterial results of Essette’s operations since

September 2, 2016

have been included in the Company’s consolidated financial statements.