

4.	Acquisitions

Our acquisition strategy includes the acquisition of animal hospitals, animal hospital chains, laboratories or related businesses. In accordance with that strategy, we acquired the following:



	For the Years Ended December 31,
	2015		2014		2013
Animal Hospitals:
Acquisitions	55		47		20
Acquisitions, merged	(7	)	(4	)	(2	)
Sold, closed or merged	(9	)	(9	)	(18	)
Net increase	39		34		—
Laboratories:
Acquisitions	1		—		1
Acquisitions, merged	(1	)	—		—
New facilities	1		3		—
Net increase	1		3		1

Animal Hospital and Laboratory Acquisitions

The purchase price allocations for some of the 2015 animal hospital acquisitions included in the table below are preliminary; however, adjustments, if any, are not expected to be material. The measurement periods for purchase price allocations do not exceed 12 months from the acquisition date. The following table summarizes the aggregate consideration for our acquired independent animal hospitals and the Abaxis Veterinary Reference Laboratory ("AVRL") and the allocation of the purchase price (in thousands):



	For Years Ended December 31,
	2015			2014			2013
Consideration:
Cash, net of cash acquired	$	147,121		$	122,803		$	52,688
Assumed debt	16,885			7,426			2,360
Holdbacks	5,040			3,000			1,092
Earn-outs	1,671			2,037			1,285
Fair value of total consideration transferred	$	170,717		$	135,266		$	57,425
Allocation of the Purchase Price:
Tangible assets	$	11,482		$	5,902		$	14,779
Identifiable intangible assets ⁽¹⁾	41,216			22,964			15,001
Goodwill ⁽²⁾	124,198			110,234			45,665
Notes payable and other liabilities assumed	(2,206		)	(115		)	(11,084		)
Fair value of assets acquired and liabilities assumed	$	174,690		$	138,985		$	64,361
Noncontrolling interest	(2,675		)	(1,705		)	(6,936		)
Notes receivable from shareholder for formation of noncontrolling interest	(1,298		)	—			—
Fair value of pre-existing investment	—			(2,014		)	—
Total	$	170,717		$	135,266		$	57,425

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⁽¹⁾	Identifiable intangible assets include customer relationships, trademarks and covenants-not-to-compete. The weighted-average amortization period for the total identifiable intangible assets is approximately eleven years. The weighted-average amortization period for customer relationships, trademarks and covenants-not-to-compete is approximately twelve, nine and five years, respectively.


⁽²⁾	We expect that $101.6 million, $67.2 million and $15.0 million of the goodwill recorded in 2015, 2014 and 2013, respectively, will be fully deductible for income tax purposes.



4.	Acquisitions, continued

Included in the table above is Antech Diagnostics, Inc.'s March 31, 2015 acquisition of AVRL for total consideration of $21.0 million. The purchase price allocation has been finalized during the quarter ended December 31, 2015.

2014 Camp Bow Wow

On August 15, 2014, we acquired 100% of D.O.G. Enterprises, LLC for $17.0 million in cash and contingent consideration of up to $3.0 million that may be earned over the next three years. Camp Bow Wow primarily franchises a premier provider of pet services including dog day care, overnight boarding, grooming and other ancillary services at specially designed pet care facilities, principally under the service mark Camp Bow Wow^®_.As of December 31, 2015, there were 126 Camp Bow Wow^® franchise locations operating in 34 states and one Canadian province.

The following table summarizes the total purchase price and the final allocation of the purchase price (in thousands):



Consideration:
Cash, net of cash acquired	$	15,174
Assumed debt	323
Holdbacks	1,500
Earn-outs	760
Fair value of total consideration transferred	$	17,757

Allocation of the Purchase Price:
Tangible assets	$	637
Identifiable intangible assets ⁽¹⁾	13,420
Goodwill ⁽²⁾	4,219
Other liabilities assumed	(519		)
Total	$	17,757

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⁽¹⁾

Identifiable intangible assets primarily include franchise rights, trademarks, covenants-not-to-compete and existing technology. The weighted-average amortization period for the total identifiable intangible assets is approximately ten years. The weighted-average amortization periods for franchise rights, covenants and existing technology is approximately ten, three and four years, respectively. The trademarks have an indefinite life and will be assessed annually for impairment.


⁽²⁾	As of December 31, 2015, we expect that the full amount of goodwill recorded for this acquisition will be deductible for income tax purposes.

Pro Forma Information (unaudited)

The following unaudited pro forma financial information for the years ended December 31, 2015 and 2014 presents, (i) the actual results of operations of our 2015 acquisitions and (ii) the combined results of operations for our company and our 2015 acquisitions as if those acquisitions had been completed on January 1, 2014, the first day of the comparable prior annual reporting period. The pro forma financial information considers principally (i) our company’s financial results, (ii) the unaudited historical financial results of our acquisitions, and (iii) select pro forma adjustments to the historical financial results of our acquisitions. Such pro forma adjustments represent principally estimates of (i) the impact of the hypothetical amortization of acquired intangible assets, (ii) the recognition of fair value adjustments relating to tangible assets, (iii) adjustments reflecting the new capital structure, including additional financing or repayments of debt as part of the acquisitions and (iv) the tax effects of the acquisitions and related adjustments as if those acquisitions had been completed on January 1, 2014. The unaudited pro forma financial information is not necessarily indicative of what our consolidated results of operations would have been had we completed the acquisition at the beginning of the comparable prior annual reporting period.



4.	Acquisitions, continued

In addition, the unaudited pro forma financial information does not attempt to project the future results of operations of our company:



	Revenue		Net Income
	(Unaudited)
(In thousands):
Actual from acquisition date to December 31, 2015	$	57,915	$	6,663
2015 supplemental pro forma from January 1, 2015 to December 31, 2015 ⁽¹⁾	$	2,215,252	$	217,421
2014 supplemental pro forma from January 1, 2014 to December 31, 2014 ⁽¹⁾	$	2,124,447	$	150,149

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⁽¹⁾	2015 supplemental pro forma net income was adjusted to exclude $0.1 million of acquisition-related costs incurred in 2015. 2014 supplemental pro forma net income was adjusted to include these charges.