NOTE G — ACQUISTIONS

2019 Acquisition Activity

On January 28, 2019, we acquired all of the outstanding equity interests of an O&P business for a total aggregate purchase price of $32.5 million, of which $27.7 million was cash consideration, net of cash acquired, $4.5 million was issued in the form of notes to the shareholders at fair value, and $0.3 million of estimated additional consideration expected to be paid in the second quarter of 2019. The notes to shareholders are unsecured and payable in quarterly installments over a period of three years. The primary reason for the acquisition was to expand our continuum of patient care through the acquisition of high quality O&P providers in new geographic markets.

We accounted for this transaction under the acquisition method of accounting and have reported the results of operations of the acquisition as of the date of the acquisition. The estimated fair values of intangible assets was based on an income approach utilizing primarily discounted cash flow techniques for non-compete agreements and an income approach utilizing the excess earnings method for customer relationships. The income approach utilizes management's estimates of future operating results and cash flows using a weighted average cost of capital that reflects market participant assumptions. Other significant judgments used in the valuation of tangible assets acquired in the acquisition include estimated selling price of inventory and estimated replacement cost for acquired property, plant and equipment. For all other assets acquired and liabilities assumed, the fair value reflects the carrying value of the asset or liability due to their short maturity. The excess of the fair value of the consideration transferred in the acquisition over the fair value of net assets acquired was recorded as goodwill. The goodwill reflects our expectations of favorable future growth opportunities, anticipated synergies through the scale of our O&P operations, and the assembled workforce. We expect that substantially all of the Goodwill, which has been assigned to our Patient Care reporting unit, will be deductible for federal income tax purposes.

Acquisition-related costs of $0.2 million for the three months ended March 31, 2019 related to the acquisition are included in General and administrative expenses in our consolidated statement of operations.

We have not presented pro forma combined results for this acquisition because the impact on previously reported statements of operations would not have been material.

Purchase Price Allocation

The Company has performed a preliminary valuation analysis of the fair market value of the assets and liabilities acquired in the acquisition. The final purchase price allocation will be determined when we have completed and fully reviewed the detailed valuation and could differ materially from the preliminary allocation. The final allocation may include changes in allocations of acquired intangible assets as well as goodwill and other changes to assets and liabilities including deferred taxes. The estimated useful lives of acquired intangible assets are also preliminary.

The aggregate purchase price of this acquisition was allocated on a preliminary basis as follows:


	For the Three Months Ended
(in thousands)	March 31, 2019
Cash paid, net of cash acquired	$	27,679
Issuance of seller notes		4,451
Additional consideration (1)		345
Aggregate purchase price		32,475

Accounts receivable, net		3,318
Inventories		1,466
Customer relationships (Useful life of 3.0 years)		1,963
Non-compete agreements (Weighted average useful life of 4.9 years)		349
Other assets		329
Accounts payable		(1,191)
Accrued expenses and other liabilities		(1,649)
Net assets acquired		4,585
Goodwill	$	27,890

(1)

Represents additional consideration payable to the seller in the second quarter of 2019 subject to agreement of certain tax elections with the seller.

2018 Acquisition Activity

In the fourth quarter of 2018, we acquired two O&P businesses for an aggregate purchase price of $3.1 million, net of cash acquired. These acquisitions were accounted for using the acquisition method of accounting whereby assets acquired and liabilities assumed were recognized at fair value on the date of the transaction.

The aggregate purchase price for these acquisitions was allocated as follows:


	For The Year Ended
(in thousands)	December 31, 2018
Cash paid, net of cash acquired	$	1,978
Issuance of seller notes		1,120
Aggregate purchase price		3,098

Accounts receivable, net		256
Inventories		302
Customer relationships (Weighted average useful life of 4.0 years)		260
Non-compete agreements (Weighted average useful life of 4.6 years)		214
Other assets		90
Accounts payable		(59)
Accrued expenses and other liabilities		(364)
Net assets acquired		699
Goodwill	$	2,399