Acquisitions

12 Months Ended

Dec. 31, 2020

Acquisitions

Acquisitions

3. Acquisitions

Acquisition of Aurelia Health, LLC

Pursuant to the December 18, 2020 purchase agreement (the “Bayless Agreement”) between Bella Vista Enterprises, Inc., Aurelia Health, LLC and the Company, on December 21, 2020 the Company acquired 70 percent of the outstanding membership interests of Aurelia Health, LLC and its subsidiary Michael B. Bayless, LLC (collectively “Bayless”) (the “Bayless Acquisition”).

The base purchase price for the Bayless Acquisition per the Bayless Agreement was $78.4 million, subject to working capital adjustments. The Company reports the results of operations of Bayless within its Healthcare segment.

The purchase price has been allocated based upon the estimated fair value of net assets acquired at the date of acquisition. A portion of the excess purchase price over tangible net assets acquired has been allocated to identified intangible assets totaling $38.0 million, consisting of total customer contract intangible assets in the amount of $33.8 million, which are being amortized over ten years, non-compete agreements in the amount of $2.4 million, which are being amortized over two to five years, trade name in the amount of $1.6 million, which has an indefinite life, and payor contracts in the amount of $0.2 million, which is being amortized over two years. The acquisition resulted in $67.4 million in goodwill related primarily to anticipated synergies and the assembled workforce of Bayless. The entire excess purchase price over tangible net assets acquired is amortizable for tax purposes, although the Company’s effective rate will not be impacted by the tax amortization.

The estimated fair value of Bayless’ assets acquired and liabilities assumed at the date of the acquisition are summarized as follows (in thousands):

Assets acquired:
Current assets (includes $330 and $7,189 of cash and accounts receivable, respectively)	$	9,974
Property and equipment, net		699
Other assets		3,182
Identified intangible assets		38,011
Goodwill		67,358
Total assets acquired		119,224
Liabilities assumed:
Current liabilities		1,825
Other liabilities		4,294
Total liabilities assumed		6,119
Net assets acquired		113,105
Redeemable non-controlling interest		33,006
Total Consideration	$	80,099

The Company’s estimated fair values of Bayless’ assets acquired, liabilities assumed and the redeemable non-controlling interest at the date of acquisition are determined based on certain valuations and analyses that have yet to be finalized, and accordingly, the assets acquired, liabilities assumed, and non-controlling interest, as detailed above, are subject to adjustment once the analyses are completed. The Company will make appropriate adjustments to the purchase price allocation prior to the completion of the measurement period as required.

In connection with the Bayless acquisition, the Company incurred acquisition related costs of $2.0 million during the year ended December 31, 2020. These costs are included within direct service costs and other operating expenses in the accompanying consolidated statements of income.