ACQUISITIONS

6 Months Ended

Jun. 30, 2020

We complete acquisitions from time to time in order to pursue our strategy of increasing our market presence by expanding our service base and enhancing our position in certain geographic areas as a leading provider of home health, hospice and personal care services. The purchase price paid for acquisitions is negotiated through arm’s length transactions, with consideration based on our analysis of, among other things, comparable acquisitions and expected cash flows. Acquisitions are accounted for as purchases and are included in our condensed consolidated financial statements from their respective acquisition dates. Goodwill generated from acquisitions is recognized for the excess of the purchase price over tangible and identifiable intangible assets because of the expected contributions of the acquisitions to our overall corporate strategy. We typically engage outside appraisal firms to assist in the fair value determination of identifiable intangible assets for significant acquisitions. The preliminary purchase price allocation is adjusted, as necessary, up to one year after the acquisition closing date if management obtains more information regarding asset valuations and liabilities assumed.

Home Health Division

On March 1, 2020, we acquired the regulatory assets of a home health provider in Washington for a purchase price of $3.0 million. The purchase price was paid with cash on hand on the date of the transaction. Based on the Company's preliminary valuation, we recorded goodwill of $2.8 million and other intangibles (certificate of need) of $0.2 million in connection with the acquisition.

On April 18, 2020, we acquired the regulatory assets of a home health provider in Kentucky for a purchase price of $0.7 million. The purchase price was paid with cash on hand on the date of the transaction. Based on the Company's preliminary valuation, we recorded goodwill of $0.5 million and other intangibles (certificate of need) of $0.2 million in connection with the acquisition.

Hospice Division

On January 1, 2020, we acquired Asana Hospice ("Asana"), a hospice provider with locations in Pennsylvania, Ohio, Texas, Missouri and Kansas for a purchase price of $66.3 million, net of cash acquired of $0.7 million. Under the purchase agreement, the purchase price is subject to a net working capital adjustment, whereby the purchase price will be adjusted to the extent the actual net working capital of Asana as of the closing differs from the required net working capital under the purchase

agreement. The net working capital adjustment, which was finalized during the three-month period ended June 30, 2020, reduced the purchase price by $0.7 million, from $66.3 million to $65.6 million.

The Company is in the process of finalizing its valuation of the assets acquired and liabilities assumed. During the three-month period ended June 30, 2020, we recorded measurement period adjustments based on changes to management's estimates and assumptions related to the assets acquired and liabilities assumed. Based on the Company's preliminary valuation, the total estimated consideration of $65.6 million has been allocated to assets acquired and liabilities assumed as of the acquisition date as follows (amounts in millions):


	Amount
Patient accounts receivable	$	5.7
Property and equipment	0.2
Operating lease right of use assets	0.9
Intangible assets	5.6
Total assets acquired	12.4
Accounts payable	(3.1)
Payroll and employee benefits	(1.5)
Accrued expenses	(0.3)
Operating lease liabilities	(0.9)
Total liabilities assumed	(5.8)
Net identifiable assets acquired	6.6
Goodwill	59.0
Total estimated consideration	$	65.6

Intangible assets acquired include licenses ($2.0 million), acquired names ($1.3 million) and non-compete agreements ($2.3 million). The acquired names and non-compete agreements will be amortized over a weighted-average period of 2.0 years.

Asana contributed approximately $7.1 million in net service revenue and an operating loss of $0.9 million (inclusive of acquisition and integration costs totaling $0.3 million and intangibles amortization totaling $1.0 million) during the three-month period ended June 30, 2020 and $14.4 million in net service revenue and an operating loss of $2.2 million (inclusive of acquisition and integration costs totaling $1.4 million and intangibles amortization totaling $1.4 million) during the six-month period ended June 30, 2020.

On June 1, 2020, we acquired Homecare Preferred Choice, Inc., doing business as AseraCare Hospice ("AseraCare"), a national hospice care provider with 44 locations, for a purchase price of $230.4 million, net of cash acquired and inclusive of a $32 million tax asset.

Under the purchase agreement, the purchase price is subject to a net working capital adjustment, whereby the purchase price will be adjusted to the extent the actual net working capital of AseraCare as of the closing differs from the required net working capital under the purchase agreement. The net working capital adjustment will be finalized during the third quarter of 2020.

The Company is in the process of reviewing the fair value of the assets acquired and liabilities assumed. We have estimated the fair value of acquired names and licenses based on the values assigned in prior acquisitions. These amounts, along with the value of non-compete agreements, will be adjusted upon receipt of the final valuation report. Based on the Company's preliminary valuation, the total estimated consideration of $230.4 million has been allocated to assets acquired and liabilities assumed as of the acquisition date as follows (amounts in millions):


	Amount
Patient accounts receivable	$	14.7
Prepaid expenses	0.9
Property and equipment	0.6
Operating lease right of use assets	5.4
Intangible assets	16.7
Other assets	0.2
Total assets acquired	38.5
Accounts payable	(5.5)
Payroll and employee benefits	(6.4)
Accrued expenses	(6.9)
Operating lease liabilities	(5.4)
Other long-term obligations	(0.2)
Total liabilities assumed	(24.4)
Net identifiable assets acquired	14.1
Goodwill	216.3
Total estimated consideration	$	230.4

Intangible assets acquired include licenses ($10.2 million), acquired names ($5.8 million) and favorable lease contracts ($0.7 million). The acquired names will be amortized over a weighted-average period of 2.0 years. We recorded unfavorable lease contracts of $0.2 million in other long-term obligations within our condensed consolidated balance sheet as of June 30, 2020.

AseraCare contributed approximately $9.2 million in net service revenue and an operating loss of $3.0 million (inclusive of acquisition and integration costs totaling $3.3 million and intangibles amortization totaling $0.2 million) during the three and six-month periods ended June 30, 2020.

The following table contains unaudited pro forma condensed consolidated statement of operations information for the three and six-month periods ended June 30, 2020 and 2019 assuming that the AseraCare acquisition closed on January 1, 2019 (amounts in millions, except per share data). The pro forma financial information includes various assumptions, including those related to the preliminary purchase price allocation of assets acquired and liabilities assumed. The pro forma financial information may vary in future quarters based on the final valuations and analysis of the fair value of the assets acquired and liabilities assumed.


	For the Three- Month Periods Ended June 30,						For the Six- Month Periods Ended June 30,
	2020		2019		2020		2019
Net service revenue	$	504.3	$	523.6	$	1,025.3	$	1,020.5
Operating income	51.9		44.9		94.8		88.8
Net income attributable to Amedisys Inc.	35.5		32.0		65.1		61.1
Basic earnings per share	1.09		1.00		2.01		1.91
Diluted earnings per share	1.07		0.97		1.96		1.86

The pro forma information presented above includes adjustments for (i) amortization of identifiable intangible assets, (ii) interest on additional debt required to fund the acquisition, (iii) non-recurring transaction costs and (iv) income taxes based on the Company's statutory tax rate. This pro forma information is presented for illustrative purposes only and may not be

indicative of the results of operations that would have actually occurred. In addition, future results may vary significantly from the results reflected in the pro forma information.