ACQUISITIONS

12 Months Ended

Dec. 31, 2023

Business Combination and Asset Acquisition [Abstract]

In December 2023, we purchased 55% of the ownership interest held by NextCare, Inc. and certain of its affiliates (“NextCare”) in NextCare Arizona I JV, LLC (“NextCare JV I”), a joint venture established to own and operate 41 UCCs and a telehealth center in Arizona. We paid $75 million from cash on hand on the acquisition date and retained an additional $10 million in escrow pending NextCare’s compliance with certain conditions. We recognized goodwill of $133 million from our acquisition of NextCare JV I. This transaction allowed us to expand our existing network in Arizona with UCCs which are already established and operational. NextCare JV I is included in our Hospital Operations segment.

During the year ended December 31, 2023, we acquired controlling ownership interests in 20 ambulatory surgery centers through a series of transactions. In addition, we acquired controlling ownership interests in 11 previously unconsolidated ambulatory surgery centers during 2023. We paid an aggregate of $149 million to acquire controlling ownership interests in all of the aforementioned facilities.

In July 2022, we acquired controlling ownership interests in 19 fully operational ambulatory surgery centers and three centers then in development from United Urology Group. We paid $104 million, net of cash acquired, for our ownership interests in these facilities and recognized goodwill of $316 million. The aggregate acquisition date fair value of the non‑controlling interests in the facilities we acquired was $223 million. The acquisition of these facilities provided us with access to new markets and further diversified our ambulatory care services portfolio.

We acquired controlling interests in an additional 11 ambulatory surgery centers through a series of transactions during the year ended December 31, 2022. We paid an aggregate purchase price of $65 million, net of cash acquired, for these facilities. During 2022, we also acquired controlling interests in 23 ambulatory surgery centers in which we previously owned a noncontrolling interest for an aggregate purchase price of $65 million.

In December 2021, subsidiaries of USPI acquired ownership interests in 86 ambulatory surgery centers and related ambulatory support services (collectively, the “SCD Centers”) from Surgical Center Development #3, LLC and Surgical Center Development #4, LLC (together, “SCD”). Of these, we acquired controlling interests in 15 ambulatory surgery centers, noncontrolling interests in 57 centers and interests in 14 centers still in the development stage. The newly acquired facilities augmented our Ambulatory Care segment’s existing musculoskeletal service line and expanded the number of markets it serves. We made a cash payment of $1.125 billion, net of cash acquired, to acquire these facilities.

In addition to the SCD Centers, we paid an aggregate purchase price of $74 million to acquire controlling interests in 11 outpatient businesses and various physician practices during the year ended December 31, 2021. During 2021, we also acquired controlling interests in three surgical hospitals and two ambulatory surgery centers in which we previously owned a noncontrolling interest for $21 million.

We are required to allocate the purchase prices of acquired businesses to assets acquired or liabilities assumed and, if applicable, noncontrolling interests based on their fair values. The excess of the purchase price allocated over those fair values is recorded as goodwill. The purchase price allocations for certain acquisitions completed in 2023 are preliminary. We are in process of assessing working capital balances as well as obtaining and evaluating valuations of the acquired property and equipment, management contracts and other intangible assets, and noncontrolling interests. Therefore, those purchase price allocations, including goodwill, recorded in the accompanying consolidated financial statements are subject to adjustment once the assessments and valuation work are completed and evaluated. Such adjustments will be recorded as soon as practical and within the measurement period as defined by the accounting literature. During the year ended December 31, 2023, we adjusted the initial purchase allocation of certain acquisitions completed in 2022 based on the results of completed valuations. These adjustments resulted in a net decrease in our Ambulatory Care segment’s goodwill of $18 million.

Preliminary or final purchase price allocations for all the acquisitions made during the years ended December 31, 2023, 2022 and 2021 are as follows:


	Years Ended December 31,
	2023		2022		2021
Current assets	$	34	$	38	$	59
Property and equipment	28		54		88
Other intangible assets	5		2		8
Goodwill	644		860		664
Other long-term assets	32		99		796
Previously held equity method investments	(99)		(207)		(43)
Current liabilities	(36)		(41)		(25)
Long-term liabilities	(37)		(118)		(70)
Redeemable noncontrolling interests in equity of consolidated subsidiaries	(229)		(180)		(139)
Noncontrolling interests	(102)		(273)		(95)
Cash paid, net of cash acquired	(224)		(234)		(1,220)
Gains on consolidations	$	16	$	—	$	23

With the exception of NextCare JV I, which is included in our Hospital Operations segment, all of the facilities described above are included in our Ambulatory Care segment. The majority of the goodwill generated from our 2023 and 2021 acquisitions will be deductible for income tax purposes; however, the majority of the goodwill generated from our 2022 transactions will not be. The goodwill generated from these transactions can be attributed to the benefits that we expect to realize from operating efficiencies and growth strategies. Approximately $15 million, $14 million and $20 million in transaction costs related to prospective and closed acquisitions were expensed during the years ended December 31, 2023, 2022 and 2021, respectively, and are included in impairment and restructuring charges, and acquisition‑related costs in the accompanying Consolidated Statements of Operations.

During the year ended December 31, 2023 and 2021, we recognized gains totaling $16 million and $23 million, respectively, associated with stepping up our ownership interests in previously held equity investments, which we began consolidating after we acquired controlling interests. No such gain or loss was recognized in the year ended December 31, 2022.