3. ACQUISITIONS OF BUSINESSES

The purchase price for the 72% interest in the February 2013 Acquisition was $4.3 million in cash and $400,000 in a seller note, that is payable in two principal installments totaling $200,000 each, plus accrued interest, in February 2014 and 2015. The purchase price for the 50% interest in the April 2013 Acquisition was $2.4 million in cash and $200,000 in a seller note, that is payable in two principal installments totaling $100,000 each, plus accrued interest, in April of 2014 and 2015. The purchase price for the 80% interest in the May 2013 Acquisition was $3.6 million in cash and $200,000 in a seller note, that is payable in two principal installments totaling $100,000 each, plus accrued interest, in May of 2014 and 2015. On February 1, 2013, through a subsidiary, the Company acquired a 100% interest in a clinic for $5,000, on June 1, 2013, through another subsidiary, the Company acquired a 100% interest in a clinic for $95,000 and on September 16, 2013, through another subsidiary, the Company acquired a 100% interest in a clinic for $130,000. The purchase prices have been preliminarily allocated as follows (in thousands):


Cash paid, net of cash acquired	$	10,128
Seller notes		800

Total consideration	$	10,928

Estimated fair value of net tangible assets acquired:
Total current assets	$	1,342
Total non-current assets		719
Total liabilities		(264	)

Net tangible assets acquired		1,797
Referral relationships		400
Non competition		160
Tradename		600
Goodwill		13,399
Fair value of noncontrolling interest		(5,428	)

	$	10,928

The consideration for each transaction was agreed upon through arm’s length negotiations. Funding for the cash portion of the purchase price was derived from proceeds under the Credit Agreement.

The results of operations of these acquisitions have been included in the Company’s consolidated financial statements since acquired.

Because these acquisitions occurred during the nine months ended September 30, 2013, the purchase price plus the fair value of the non-controlling interest was allocated to the fair value of the assets acquired and liabilities assumed based on the preliminary estimates of the fair values at the acquisition date, with the amount exceeding the estimated fair values being recorded as goodwill. The Company is in the process of completing its formal valuation analysis to identify and determine the fair value of tangible and intangible assets acquired and the liabilities assumed. Thus, the final allocation of the purchase price may differ from the preliminary estimates used at September 30, 2013 based on additional information obtained. Changes in the estimated valuation of the tangible and intangible assets acquired and the completion by the Company of the identification of any unrecorded pre-acquisition contingencies, where the liability is probable and the amount can be reasonably estimated, will likely result in adjustments to goodwill.

On May 22, 2012, the Company purchased a 70% interest in a 7 clinic group (“May 2012 Acquisition”). The purchase price for the 70% interest in the May 2012 Acquisition was $6,090,000 in cash and $250,000 in seller notes, that are payable in two principal installments totaling $125,000 each, plus any accrued interest, in May 2013 and 2014. The seller notes accrue interest at 3.25% per annum. For the Company, 70% of the goodwill for the May 2012 Acquisition is tax deductible. During the quarter ended March 31, 2013, the Company determined that the amounts attributable to intangible assets other than goodwill are as follows: tradenames—$1,300,000; referral relationships—$800,000; and non competition agreement—$240,000. The value assigned to referral relationships and the non competition agreements will be amortized over the related expected lives which are estimated to be 12 and six years, respectively.

In addition to the May 2012 Acquisition, in 2012, the Company, through its subsidiaries, purchased 7 outpatient therapy practices in 7 transactions for aggregate cash consideration of $1,938,000 and, in one transaction, a $100,000 note payable. The purchase prices were allocated $43,000 to current assets, $213,000 to non-current assets, $25,000 to non competition agreements, $57,000 to referral relationships and $1,883,000 to goodwill.

The purchase prices for the acquisitions in 2012 have been allocated as follows (in thousands):


Cash paid, net of cash acquired	$	7,929
Seller notes		350

Total consideration	$	8,279

Estimated fair value of net tangible assets acquired:
Total current assets	$	363
Total non-current assets		478
Total liabilities		(331	)

Net tangible assets acquired	$	510
Tradenames		1,300
Referral relationships		857
Non competition agreements		265
Goodwill		8,239
Fair value of noncontrolling interest		(2,892	)

	$	8,279

The purchase price plus the fair value of the non-controlling interest for the 2012 acquisitions was allocated to the fair value of the assets acquired and liabilities assumed based on the fair values at the acquisition date, with the amount exceeding the fair values being recorded as goodwill.

Unaudited proforma consolidated financial information for acquisitions occurring in 2013 and 2012 have not been included as the results were not material to current operations.