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 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 care centers and one inpatient unit servicing the states of Massachusetts, Maine, New Hampshire, Rhode Island and Connecticut. In connection with the acquisition, we recorded goodwill ($110.4 million), other intangibles ($10.0 million) and other assets and liabilities, net ($5.6 million). Approximately $51.0 million of the $110.4 million recorded as goodwill is expected to be deductible for income tax purposes over approximately 15 years.

On November 1, 2011, we acquired Hospice of Hackensack University Medical Center ("Hackensack Hospice") for a total purchase price of $4.0 million. The purchase price was paid with cash on hand on the date of the transaction. Hackensack Hospice owns and operates one hospice care center and one inpatient unit servicing the state of New Jersey. In connection with the acquisition, we recorded substantially the entire purchase price as goodwill ($3.7 million) and other intangibles ($0.3 million).

The following table contains unaudited pro forma condensed consolidated statement of operations information assuming that the Beacon and Hackensack Hospice transactions closed on January 1, 2010, for the years ended December 31, 2011 and 2010 (amounts in millions, except per share data):


	2011			2010
Net service revenue	$	1,504.7		$	1,684.9
Operating (loss) income		(468.2	)		218.3
Net (loss) income		(381.8	)		115.3
Basic (loss) earnings per share	$	(13.30	)	$	4.11
Diluted (loss) earnings per share	$	(13.30	)	$	4.05

Beacon's revenue and net income included in our consolidated statement of operations from the acquisition date through December 31, 2011 is $49.6 million and $11.7 million, respectively. Hackensack Hospice's revenue and net loss included in our consolidated statement of operations from the acquisition date through December 31, 2011 is $3.2 million and $(0.3) million, respectively.

Summary of 2010 Acquisitions

The following table presents details of our acquisitions (dollars in millions):


			Purchase Price				Purchase Price Allocation							Number of Care Centers
(1)	Date	Acquired Entity (location of assets)	Cash		Promissory Note		Goodwill		Other Intangible Assets		Other Assets (Liabilities), Net			Home Health		Hospice		Number of States
†	February 1, 2010	DeQueen Home Health (Arkansas)	$	2.0	$	0.5	$	2.2	$	0.3	$	—			1		—		1
†	April 5, 2010	Bluewater Hospice (Alabama)		0.7		0.3		1.1		0.1		(0.2	)		—		1		1
†	July 1, 2010	Pocahontas Memorial Hospital (West Virginia)		0.4		—		0.2		0.2		—			1		—		1
†	December 31, 2010	Valley Baptist (Texas) (70% ownership interest)		0.7		—		1.0		—		(0.3	)		1		—		1

			$	3.8	$	0.8	$	4.5	$	0.6	$	(0.5	)		3		1

(1)	The acquisitions marked with the cross symbol (†) were asset purchases.