Business Combinations

9 Months Ended

Sep. 30, 2014

Business Combinations [Abstract]

Business Combinations

Business Combinations

    The Company seeks to execute accretive business acquisitions in combination with organic growth initiatives as part of its comprehensive business growth and expansion strategy. The Company looks to acquire businesses that are complementary to Ebix's existing products and services.

During the nine months ended September 30, 2014, the Company completed two business acquisitions. The first being CurePet, Inc. ("CurePet") effective January 27, 2014. Previously Ebix had a minority investment in CurePet, which is more fully described in Note 9. Ebix acquired the entire business of CurePet in an asset purchase agreement with total purchase consideration being $6.35 million which includes a possible future one time contingent earnout payment of up to $5.0 million based on earned revenues over the subsequent thirty-six month period following the effective date of the acquisition. This contingent earnout liability is currently estimated to have a fair value of $1.6 million. The valuation and purchase price allocation for the CurePet acquisition remains preliminary and will be finalized prior to December 31, 2014.

The other business acquisition completed during the nine months ended September 30, 2014 was HealthCare Magic Private Limited ("HealthCare Magic") which was acquired on May 21, 2014. HealthCare Magic is a medical advisory service with an online network of approximately 15,000 General Physicians and Surgeons spread across 50 specialties including alternative medicine. The Company acquired HealthCare Magic for aggregate cash consideration in the amount of $6.0 million plus a possible future one time contingent earnout payment of up to $12.36 million based on earned revenues over the subsequent twenty-four month period following the effective date of the acquisition. This contingent earnout liability is currently estimated to have a fair value of $4.72 million. The Company funded the HealthCare Magic acquisition from available cash reserves on hand. The valuation and purchase price allocation for the HealthCare Magic acquisition is considered preliminary and will be finalized prior to December 31, 2014.

A significant component of the purchase price consideration for many of the Company's business acquisitions is a potential subsequent cash earnout payment based on reaching certain specified future revenue targets. The Company recognizes these potential obligations as contingent liabilities and are reported accordingly on its Condensed Consolidated Balance Sheets. As discussed in more detail in Note 1, these contingent consideration liabilities are recorded at fair value on the acquisition date and are remeasured quarterly based on the then assessed fair value and adjusted if necessary. During the three months ended September 30, 2014 and 2013 these aggregate contingent accrued earn-out business acquisition consideration liabilities, were reduced by $5.8 million and $4.1 million, respectively, and during the nine months ended September 30, 2014 and 2013 these contingent liabilities were reduced by $7.5 million and $10.3 million, respectively, due to remeasurements as based on the then assessed fair value and changes in anticipated future revenue levels. These reductions to the contingent accrued earn-out liabilities resulted in corresponding reduction to general and administrative expenses as reported on the Condensed Consolidated Statements of Income. As of September 30, 2014, the total of these contingent liabilities was $10.85 million, of which $10.29 million is reported in long-term liabilities, and $564 thousand is included in current liabilities in the Company's Condensed Consolidated Balance Sheet. As of December 31, 2013 the total of these contingent liabilities was $14.42 million, of which $10.28 million is reported in long-term liabilities, and $4.14 million is included in current liabilities in the Company's Condensed Consolidated Balance Sheet.

Consideration paid by the Company for the businesses it purchases is allocated to the assets and liabilities acquired based upon their estimated fair values as of the date of the acquisition. The excess of the purchase price over the estimated fair values of assets acquired and liabilities assumed is recorded as goodwill. Recognized goodwill pertains to the value of the expected synergies to be derived from combining the operations of the businesses we acquire including the value of the acquired workforce.

The aggregated unaudited pro forma financial information pertaining to all of the Company's acquisitions made during the nine months ended September 30, 2013 and September 30, 2014, which includes the acquisitions of Qatarlyst, CurePet, and HealthCare Magic as presented in the table below is provided for informational purposes only and does not project the Company's expected results of operations for any future period. No effect has been given in this pro forma information for future synergistic benefits that may still be realized as a result of combining these companies or costs that may yet be incurred in integrating their operations. The 2014 and 2013 pro forma financial information below assumes that all such business acquisitions were made on January 1, 2013, whereas the Company's reported financial statements for the three and nine months ended September 30, 2014 only include the operating results from the businesses since the effective date that they were acquired by Ebix.

	Three Months Ended September 30, 2014				Three Months Ended September 30, 2013				Nine Months Ending September 30, 2014				Nine Months Ending September 30, 2013
	As Reported		Pro Forma		As Reported		Pro Forma		As Reported		Pro Forma		As Reported		Pro Forma
	(unaudited)				(unaudited)				(unaudited)				(unaudited)
	(In thousands, except per share data)
Revenue	$	50,808	$	50,808	$	50,293	$	50,697	$	153,688	$	154,227	$	153,863	$	154,997
Net Income	$	18,015	$	18,015	$	13,143	$	12,587	$	47,011	$	46,975	$	44,029	$	43,430
Basic EPS	$	0.47	$	0.47	$	0.35	$	0.33	$	1.23	$	1.23	$	1.18	$	1.16
Diluted EPS	$	0.47	$	0.47	$	0.34	$	0.33	$	1.22	$	1.22	$	1.14	$	1.12

In the above table, the unaudited pro forma revenue for the three months ended September 30, 2014 increased by $111 thousand from the unaudited pro forma revenue during the same period in 2013 of $50.7 million to $50.8 million, representing a 0.2% increase. Correspondingly, the reported revenue for the three months ended September 30, 2014 increased by $515 thousand or 1.0% from the reported revenue during the same period in 2013. The unaudited pro forma revenue for the nine months ended September 30, 2014 decreased by $770 thousand from the unaudited pro forma revenue during the same period in 2013 of $155.0 million to $154.2 million, representing a 0.5% decrease. The pro forma revenue decrease was primarily due to exchange rate changes which resulted in a decrease of $2.1 million. Correspondingly, the reported revenue for the nine months ended September 30, 2014 decreased by $175 thousand or 0.1% from the reported revenue during the same period in 2013.