Acquisitions

9 Months Ended

Sep. 30, 2011

Acquisitions [Abstract]

Acquisitions

3. ACQUISITIONS

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 and hospice 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 for each transaction. 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.

2011 Acquisitions

On June 7, 2011, we acquired Beacon Hospice, Inc. ("Beacon") for a total purchase price of $126.0 million, net of cash acquired (subject to certain adjustments), of which $8.2 million was placed in escrow for indemnification purposes and working capital price adjustments. The purchase price was paid with cash on hand on the date of the transaction. Beacon owns and operates 22 hospice agencies and one inpatient unit servicing the states of Massachusetts, Maine, New Hampshire, Rhode Island and Connecticut. In

connection with the acquisition, we recorded substantially the entire purchase price as goodwill ($109.4 million), other intangibles ($10.9 million) and other assets and liabilities, net ($5.7 million).

The following table contains pro forma condensed consolidated statement of operations information assuming that the Beacon transaction closed on January 1, 2010, for the nine-month periods ended September 30, 2011 and 2010 (amounts in millions, except per share data):

	2011			2010
Net service revenue	$	1,146.5		$	1,295.5
Operating income		(489.2	)		160.5
Net income		(386.1	)		92.8
Basic earnings per share	$	(13.51	)	$	3.31
Diluted earnings per share	$	(13.51	)	$	3.26

Beacon's revenue and net income included in our condensed consolidated statement of operations from the acquisition date through September 30, 2011 is $27.3 million and $6.7 million, respectively.