Acquisitions

3 Months Ended

Mar. 31, 2012

Acquisitions

Acquisitions

3.Acquisitions

On January 3, 2012, we completed the acquisition of all of the outstanding stock of a Florida-based laser surgical laser equipment service provider for total consideration of approximately $16.1 million. The consideration total consists of $11.0 of cash paid at closing, $3.2 million of debt assumed that was paid off upon closing, and $1.9 million of holdback amounts expected to be paid by January 2013.  The acquisition was funded through our $195.0 million Senior Secured Credit Facility.

We have preliminarily allocated the following asset and liability amounts related to the acquisition within our March 31, 2012 consolidated balance sheet:  holdback amounts payable $1.9 million, other working capital items $0.4 million, fixed assets $5.4 million, identifiable intangible assets $5.3 million, non-deductible goodwill $8.4 million, deferred income tax liabilities $3.4 million and long-term debt (paid off subsequent to closing) $3.2 million. We will utilize additional information, particularly as it relates to intangible assets and income taxes, as it becomes available in order to finalize this purchase price allocation as soon as practicable, but no later than January 1, 2013, one year from the acquisition date.

On March 31, 2012 we completed the acquisition of certain assets of the southern California equipment rental division of a medical equipment manufacturer. Total purchase price of the transaction was approximately $0.8 million, including approximately $0.4 million in contingent consideration to be paid over four years based on future revenues. Assets acquired consist of medical equipment of $0.4 million and customer relationship intangibles of $0.3 million.

Acquistions completed during the first quarter of 2012 are not material individually or in the aggregate.

On April 1, 2011, we completed our acquisition of Emergent Group, which was, at December 31, 2011, merged into its principal operating subsidiary, PRI Medical, whose name was subsequently changed to UHS Surgical Services, Inc., and which we refer to as “Surgical Services”. Surgical Services is a provider of laser and mobile surgical equipment services primarily for the urology community.

We acquired Surgical Services (previously, Emergent Group), for a total purchase price of approximately $65.3 million, which represents the sum of $60.0 million of cash paid for equity, $4.8 million of capital lease liability assumed and $2.0 million of transaction costs, less cash acquired of $1.5 million. All outstanding shares were purchased at a price of $8.46 per share. The acquisition was funded primarily by drawings under our $195.0 million Senior Secured Credit Facility, which is described below in Note 8, Long-Term Debt.

As of March 31, 2012, we were substantially complete with our purchase price allocation, with the exception of income taxes, for which we will utilize additional information as we complete and file our related tax returns. We expect to finalize all aspects of the valuation and complete the purchase price allocation in the second quarter of fiscal 2012.

The amounts of revenue and net income of Surgical Services included in the Company’s consolidated statements of operations from the April 1, 2011 to March 31, 2012 are as follows:

	Revenue and income included in the Consolidated Statements of Operations from:
(in thousands)	January 1, 2012 to March 31, 2012			April 1, 2011 to December 31, 2011
Revenue	$	11,841		$	25,421
Net income attributable to Emergent Group	(178		)	(1,718		)

The following unaudited supplemental pro forma information presents the financial results as if the acquisition of Emergent Group had occurred on January 1, 2011 for the three months ended March 31, 2011. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been made on January 1, 2011, nor are they indicative of any future results.

	Three Months Ended
(in thousands)	March 31, 2011
Revenue	$	90,542
Net loss attributable to Universal Hospital Services, Inc.	(8,723		)

These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of Emergent Group to reflect the additional depreciation, amortization and interest that would have been charged assuming the fair value adjustments primarily to medical equipment and intangible assets, and draws on the line of credit to fund the acquisition had been applied on January 1, 2011, as applicable, together with the consequential tax effects.