Acquisition of Businesses

9 Months Ended

Sep. 30, 2022

Business Combinations [Abstract]

Acquisition of Businesses

4. Acquisition of Businesses

Government Medical Services, LLC

On July 6, 2022, Holdings, acquired 100% of the outstanding shares of common stock of Government Medical Services, LLC (“GMS”), a provider of medical services. The aggregate purchase price consisted of $20.3 million in cash consideration. Holdings also agreed to pay GMS an additional $3.0 million upon GMS meeting certain performance conditions within a year of the Closing Date. Acquisition costs are included in general and administrative expenses and totaled $0 for the three months ended September 30, 2022 and $800,000 for the nine months ended September 30, 2022.

The acquisition was accounted for under the acquisition method of accounting, with the Company identified as the acquirer. The Company’s unaudited condensed consolidated financial statements include the results of operations of GMS from the date of acquisition. The historical results of operations of GMS were not significant to the Company’s unaudited condensed consolidated results of operations for the periods presented. Under the acquisition method of accounting, the aggregate amount of consideration paid by the Company was allocated to GMS’s net tangible assets and intangible assets based on their estimated fair value on the acquisition date. The preliminary purchase price allocation, as set forth in the table below, reflects various preliminary fair value estimates and analysis prepared by the Company. Any change in the fair value of the net assets of GMS will change the amount of the purchase price allocable to goodwill. Final purchase accounting adjustments may differ materially from preliminary purchase price allocation presented here. The primary areas of the purchase price allocation that are not yet finalized relate to the valuation of the intangible assets acquired, fair value of right to use assets and associated operating lease liabilities assumed, and net working capital adjustments.

Exceptional Medical Transportation, LLC

On July 13, 2022, the Company acquired 100% of the outstanding shares of common stock of Exceptional Medical Transportation, LLC (“Exceptional”) in exchange for $13.7 million consisting of $7.7 million in cash at closing and $6 million payable over a 24 month period. Exceptional is in the business of providing medical transportation services. Acquisition costs are included in general and administrative expenses totaled $0 for the three months ended September 30, 2022 and $0 for the nine months ended September 30, 2022.

The acquisition was accounted for under the acquisition method of accounting, with the Company identified as the acquirer. The Company’s unaudited condensed consolidated financial statements include the results of operations of Exceptional from the date of acquisition. The historical results of operations of Exceptional were not significant to the Company’s unaudited condensed consolidated results of operations for the periods presented. Under the acquisition method of accounting, the aggregate amount of consideration paid by the Company was allocated to Exceptional’s net tangible assets and intangible assets based on their estimated fair value on the acquisition date. The preliminary purchase price allocation, as set forth in the table below, reflects various preliminary fair value estimates and analysis prepared by the Company. Any change in the fair value of the net assets of Exceptional will change the amount of the purchase price allocable to goodwill. Final purchase accounting adjustments may differ materially from preliminary purchase price allocation presented here. The primary areas of the purchase price allocation that are not yet finalized relate to the valuation of the intangible assets acquired, fair value of right to use assets and associated operating lease liabilities assumed, and net working capital adjustments. 

Ryan Brothers Fort Atkinson, LLC

On August 9, 2022, the Company acquired 100% of the outstanding shares of common stock of Ryan Brothers Fort Atkinson, LLC (“RT”) in exchange for $11.4 million consisting of $7.4 million in cash at closing and $4.0 million of estimated contingent consideration to be paid out over 24 months based on performance of certain obligations. RT is in the business of providing medical transportation services. Acquisition costs are included in general and administrative expenses totaled $0 for the three months ended September 30, 2022 and $0 for the nine months ended September 30, 2022.

The acquisition was accounted for under the acquisition method of accounting, with the Company identified as the acquirer. The Company’s unaudited condensed consolidated financial statements include the results of operations of RT from the date of acquisition. The historical results of operations of RT were not significant to the Company’s unaudited condensed consolidated results of operations for the periods presented. Under the acquisition method of accounting, the aggregate amount of consideration paid by the Company was allocated to RT’s net tangible assets and intangible assets based on their estimated fair value on the acquisition date. The preliminary purchase price allocation, as set forth in the table below, reflects various preliminary fair value estimates and analysis prepared by the Company. Any change in the fair value of the net assets of RT will change the amount of the purchase price allocable to goodwill. Final purchase accounting adjustments may differ materially from preliminary purchase price allocation presented here. The primary areas of the purchase price allocation that are not yet finalized relate to the valuation of the intangible assets acquired, fair value of right to use assets and associated operating lease liabilities assumed, and net working capital adjustments.

The following table presents the preliminary allocation of the assets acquired and liabilities assumed:

	Ryan Brothers		Exceptional Medical Transport		GMS		Total
Consideration:
Cash Consideration	$	7,422,252	$	6,375,000	$	20,338,789	$	34,136,041
Due to Seller		-		6,000,000		-		6,000,000
Contingent Consideration		4,000,000		-		-		4,000,000
Amounts held under an escrow account		-		1,333,333		-		1,333,333
Total consideration		11,422,252		13,708,333		20,338,789		45,469,374
Recognized amounts of identifiable assets acquired and liabilities assumed
Cash	$	620,548	$	299,050	$	1,005,453	$	1,925,051
Accounts receivable		-		-		3,975,160		3,975,160
Other current assets		136,157		-		30,734		166,891
Property, plant and equipment		2,125,134		2,450,900		4,092		4,580,126
Intangible assets		387,550		125,000		9,794,000		10,306,550
Total identifiable assets acquired		3,269,389		2,874,950		14,809,439		20,953,778
Accounts payable		44,911		-		137,239		182,150
Due to Seller		-		299,050		-		299,050
Other current liabilities		286,792		-		562,809		849,601
Total liabilities assumed		331,703		299,050		700,048		1,330,801
Goodwill		8,484,566		11,132,433		6,229,398		25,846,397
Total purchase price	$	11,422,252	$	13,708,333	$	20,338,789	$	45,469,374