Business Acquisitions

12 Months Ended

Dec. 31, 2021

Business Combination and Asset Acquisition [Abstract]

Business Acquisitions

BUSINESS ACQUISITIONS

Doctor’s Medical Center, LLC and its affiliates

On July 2, 2021, the Company acquired Doctor’s Medical Center, LLC and its affiliates (“DMC”) for a purchase price of $300.7 million in cash. DMC sellers entered into non-compete agreements with the Company. The Company recorded non-compete intangible assets totaling $1.7 million with a weighted-average amortization period of five years.

The purchase price has been allocated to accounts receivable, net of unpaid service provider costs, property and equipment, net, other assets, favorable leasehold interest, non-compete intangibles, trade name, payor relationships, net, goodwill, and accounts payable and accrued expenses. The portion of the purchase price that is allocated to the non-compete is not considered part of the consideration transferred to acquire the business and is accounted for separately.

The following table provides the allocation of the purchase price:

(in thousands)
Accounts receivable, net of unpaid service provider costs	$	6,641
Property and equipment, net		1,283
Other assets		142
Favorable leasehold interest		110
Non-compete intangibles		1,700
Trade name		25,500
Payor relationships		115,100
Goodwill		151,188
Accounts payable and accrued expenses		(1,001	)
Total purchase price, including non-compete intangibles	$	300,663

Total revenues and net income attributable to the assets acquired in the DMC acquisition were approximately $94.3 million and $11.9 million, respectively, for the year ended December 31, 2021.

University Health Care and its affiliates

On June 11, 2021, the Company acquired University Health Care and its affiliates (collectively, “University”). The purchase price totaled $607.9 million, of which $538.3 million was paid in cash, $9.6 million in contingent consideration from forfeited acquisition add-ons based on terms negotiated by University prior to closing, and $60.0 million in 4,055,698 shares of the Company’s Class A common stock. University sellers entered into non-compete agreements with the Company. The Company recorded non-compete intangible assets totaling $45.2 million with a weighted-average amortization period of five years.

The purchase price has been allocated to accounts receivable, net of unpaid service provider costs, inventory, property and equipment, payor relationships, net, non-compete intangibles, other acquired intangibles, other assets, goodwill, and accounts payable and accrued expenses. The portion of the purchase price that is allocated to the non-compete is not considered part of the consideration transferred to acquire the business and is accounted for separately. In the accompanying consolidated balance sheet as of December 31, 2021, a $3.2 million adjustment to goodwill and cash consideration has been made to correct an error in the final purchase price allocation.

The following table provides the allocation of the purchase price:

(in thousands)
Accounts receivable, net of unpaid service provider costs	$	2,217
Inventory		264
Property and equipment, net		1,636
Payor relationships		175,172
Non-compete intangibles		45,191
Other acquired intangibles		113,237
Other assets		116
Goodwill		270,245
Accounts payable and accrued expenses		(140	)
Total purchase price, including non-compete intangibles	$	607,938

Total revenues attributable to the assets acquired in the University acquisition were approximately $188.4 million for the year ended December 31, 2021. Net income attributable to the assets acquired in the University acquisition was approximately $17.4 million for the year ended December 31, 2021.

HP Enterprises II, LLC and related entities

On June 1, 2020, the Company acquired all of the assets of HP Enterprises II, LLC and related entities (collectively, “Healthy Partners”). The purchase price totaled $195.4 million, of which $149.3 million was paid in cash (including $18.0 million paid to an escrow agent, of which $17.1 million was released on January 13, 2021 and $0.9 million is to be released on June 1, 2022), and $30.0 million in 923,076 Class A-4 Units of Primary Care (ITC) Intermediate Holdings, LLC’s securities. The remaining amount of $16.1 million related to payment reconciliations was held back and was paid in equity in February 2022. The physicians entered into employment agreements with the Company which included covenants not to compete. The Company recorded non-compete intangible assets totaling $1.0 million with a weighted-average amortization period of five years.

The purchase price has been allocated to property and equipment, non-compete intangibles, acquired intangibles, goodwill, and other assets. The portion of the purchase price that is allocated to the non-compete is not considered part of the consideration transferred to acquire the business and is accounted for separately.

The following table provides the allocation of the purchase price:

(in thousands)
Property and equipment	$	2,409
Non-compete intangibles		1,022
Acquired intangibles		117,014
Goodwill		74,852
Other assets		87
Total purchase price, including non-compete intangibles	$	195,384

Total revenues attributable to the assets acquired in the Healthy Partners acquisition were approximately $331.5 million and $191.1 million for the years ended December 31, 2021 and 2020, respectively. Net income attributable to the assets acquired in the Healthy Partners acquisition was approximately $41.1 million and $17.6 million for the years ended December 31, 2021 and 2020, respectively.

Primary Care Physicians and related entities

On January 2, 2020, the Company acquired all of the assets of Primary Care Physicians and related entities (collectively, “PCP”). The purchase price totaled $60.2 million, of which $53.6 million was paid in cash and $4.0 million was paid in 123,077 Class A-4 Units of Primary Care (ITC) Intermediate Holdings, LLC. The remaining amount includes $1.5 million related to the pay-down of debt, and $1.1 million related to the pay-down of accounts payable and accrued expenses of PCP. The physicians entered into employment agreements with the Company and these agreements included covenants not to compete. The Company recorded non-compete intangible assets totaling $0.8 million with a weighted-average amortization period of three years.

The purchase price has been allocated to cash, cash equivalent and restricted cash, accounts receivable, inventory, property and equipment, non-compete intangibles, acquired intangibles, goodwill, and accounts payable and accrued expenses. The portion of the purchase price that is allocated to the non-compete is not considered part of the consideration transferred to acquire the business and is accounted for separately.

The following table provides the allocation of the purchase price:

(in thousands)
Cash and cash equivalents	$	191
Accounts receivable		486
Inventory		155
Property and equipment		1,518
Non-compete intangibles		846
Acquired intangibles		43,549
Goodwill		13,738
Accounts payable		(274	)
Total purchase price, including non-compete intangibles	$	60,209

Total revenues attributable to the assets acquired in the Primary Care Physicians acquisition were approximately $99.9 million and $74.8 million for the years ended December 31, 2021 and 2020, respectively. Net income attributable to the assets acquired in the Primary Care Physicians acquisition was $18.7 million and $8.6 million for the years ended December 31, 2021 and 2020, respectively.

Belen Medical Centers, LLC and related entities

On September 3, 2019, the Company acquired all of the assets of Belen Medical Centers, LLC and related entities (“Belen”). The purchase price totaled $110.0 million, of which $63.1 million was paid in cash, 254,545 Class A-4 Units of Primary Care (ITC) Holdings, LLC’s securities with a value of $7.0 million were issued, and $4.6 million was withheld and paid to Belen during the year ended December 31, 2020. The remaining amount of $35.3 million is related to payment reconciliations which were held-back and paid to Belen during the year ended December 31, 2020. The physicians entered into employment agreements with the Company and these agreements include covenants not to compete. The Company recorded non-compete intangible assets totaling $0.3 million with a weighted-average amortization period of 2 years.

The purchase price has been allocated to accounts receivable, property and equipment, non-compete intangible assets, acquired intangible assets, goodwill, and other assets. The portion of the legal purchase price that is allocated to the non-compete is not considered part of consideration transferred to acquire the business and is accounted for separately.

The following table provides the allocation of the purchase price:

(in thousands)
Accounts receivable	$	321
Property and equipment		942
Non-compete intangibles		270
Acquired intangibles		40,400
Goodwill		68,019
Other assets		60
Total Purchase Price	$	110,012

The acquired intangible assets that make up the amount include $3.4 million for the brand and payor relationships amounting to $37.0 million. Total revenues attributable to the assets acquired in the Belen acquisition were approximately $78.0 million for the year ended December 31, 2021, $80.5 million for the year ended December 31, 2020 and $25.9 million for the year ended December 31, 2019. Net income attributable to the assets acquired in the Belen acquisition was $12.3 million for the year ended 2021, $20.8 million for the year ended December 31, 2020 and $4.4 million for the year ended December 31, 2019.

The net effect of acquisitions to the Company’s assets and liabilities and reconciliation of cash paid for net assets acquired for the years ended December 31, 2021, 2020 and 2019, including amounts related to acquisitions not disclosed above, was as follows:

	Years Ended December 31,
(in thousands)	2021		2020		2019
Assets acquired
Accounts receivable	$	50,979	$	486	$	321
Other assets		2,108		433		632
Property and equipment		3,582		4,011		1,220
Goodwill		535,318		92,289		77,971
Intangibles		637,766		162,542		52,212
Total assets acquired		1,229,753		259,761		132,356
Liabilities Assumed
Amounts due to seller		49,195		16,288		39,751
Other liabilities		45,782		1,548		—
Total liabilities assumed		94,977		17,836		39,751
Net Assets Acquired		1,134,776		241,925		92,605
Issuance of equity in connection with acquisitions		64,469		34,300		9,250
Acquisitions of subsidiaries, including non-compete intangibles, net of cash acquired	$	1,070,307	$	207,625	$	83,355

Pro forma information is not presented for all of the Company’s acquisitions during the years ended December 31, 2021 and 2020 as historical financial results were unavailable for all businesses acquired. The following unaudited pro forma financial information summarizes the combined results of operations for the Company and its acquisitions of University and HP, as if the companies were combined as of January 1, 2020:​​​​​​​

	Years Ended December 31,
(in thousands)	2021			2020
Revenue	$	1,763,820		$	1,241,294
Net loss	$	(123,926	)	$	(55,341	)

Revenue and net income for other acquisitions not individually disclosed for the year ended December 31, 2021 were $25.0 million and $8.0 million, respectively.