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BUSINESS ACQUISITIONS | 12 Months Ended
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Dec. 31, 2015
Business Combinations [Abstract] |
BUSINESS ACQUISITIONS | BUSINESS ACQUISITIONS 2015 Acquisitions Acquisition of MemorialCare Health System's Laboratory Outreach Business On August 3, 2015, the Company completed the acquisition of MemorialCare Health System's laboratory outreach business ("MemorialCare") in an all-cash transaction valued at $35 million. The assets acquired primarily represent tax deductible goodwill and intangible assets, principally comprised of customer-related intangibles. Acquisition of the Business Assets of Superior Mobile Medics, Inc. On November 16, 2015, the Company completed the acquisition of the business assets of Superior Mobile Medics, Inc. ("Superior Mobile Medics"), a national provider of paramedical and health data collection services to the life insurance and employer health and wellness industries, in an all-cash transaction valued at $27 million. The assets acquired primarily represent accounts receivable, tax deductible goodwill and intangible assets, principally comprised of customer-related intangibles. 2014 Acquisitions Acquisition of Solstas Lab Partners Group On March 7, 2014, the Company completed its acquisition of Solstas Lab Partners Group and its subsidiaries ("Solstas") in an all-cash transaction valued at $572 million, or $563 million net of cash acquired. The Company financed the acquisition with borrowings under its secured receivables credit facility and senior unsecured revolving credit facility. The final consideration paid is subject to post closing adjustments related to working capital and other items. Through the acquisition, the Company acquired all of Solstas' operations. Solstas is a full-service commercial laboratory based in Greensboro, North Carolina and operates in nine states throughout the southeastern United States, including the Carolinas, Virginia, Tennessee, Georgia and Alabama. For the year ended December 31, 2014, Solstas contributed $300 million to the Company's consolidated net revenues and $294 million to operating expenses which included approximately $17 million of restructuring, integration and transaction related costs. Of the $17 million of restructuring, integration and transaction related costs recorded for the year ended December 31, 2014, $4 million and $13 million were in cost of services and selling, general and administrative expenses, respectively. Acquisition of Summit Health, Inc. On April 18, 2014, the Company completed its acquisition of Summit Health, Inc. ("Summit Health") for $152 million, which consisted of cash consideration of $125 million (which included $10 million of working capital adjustments), or $124 million net of cash acquired, estimated contingent consideration of $22 million and $5 million associated with certain transaction related costs due to the sellers of Summit Health. The contingent consideration arrangement was dependent on the achievement of certain revenue targets in 2015, with a maximum payment of $25 million in 2016. Based on actual 2015 revenue results for Summit Health compared to the earn-out target included in the contingent consideration arrangement, no payment is required, and therefore, the contingent consideration accrual was $0 at December 31, 2015. At December 31, 2014, the contingent consideration accrual was $13 million. Through the acquisition, the Company acquired all of Summit Health's operations. Summit is a provider of on-site prevention and wellness programs. For further details regarding the fair value of the estimated contingent consideration associated with the Summit Health acquisition, see Note 7. Acquisition of Steward Health Care Systems, LLC's Laboratory Outreach Business On April 16, 2014, the Company completed the acquisition of the laboratory outreach service operations of Steward Health Care Systems, LLC ("Steward") for $34 million, which consisted of cash consideration of $30 million and contingent consideration of $4 million. The assets acquired primarily represent goodwill and intangible assets, principally comprised of customer-related intangibles. The contingent consideration arrangement secures the seller's compliance with a non-compete agreement under which the Company will pay up to $5 million, ratably through 2018, provided the non-compete agreement is not violated. For further details regarding the fair value of the estimated contingent consideration associated with the Steward acquisition, see Note 7. 2013 Acquisitions During 2013, the Company completed four acquisitions for a total purchase price of $264 million, or $213 million net of cash acquired and deferred consideration associated with the UMass acquisition. Acquisition of UMass Memorial Medical Center's Laboratory Outreach Business On January 2, 2013, the Company completed the acquisition of the clinical outreach and anatomic pathology businesses of UMass Memorial Medical Center ("UMass"). The purchase price included $50 million of deferred consideration that is included in accounts payable and accrued expenses at December 31, 2014 and was paid in 2015. This purchase was the first step in a series of transactions between the parties whereby the two organizations expected to eventually have a financial stake in a new entity performing diagnostic information testing services in a defined territory within the state of Massachusetts (see Redeemable Noncontrolling Interest section of Note 15). The assets acquired at the acquisition date primarily represent goodwill and intangible assets, principally comprised of customer-related intangibles. In addition the Company granted to UMass a call option and UMass granted to the Company a put option for UMass to acquire an 18.90% equity interest in a newly formed entity. For further details regarding the put and call options, see Note 7. Acquisition of Advanced Toxicology Network On May 15, 2013, the Company completed the acquisition of the toxicology and clinical laboratory business of Advanced Toxicology Network ("ATN") from Concentra, a subsidiary of Humana Inc. The assets acquired at the acquisition date primarily represent goodwill and intangible assets, principally comprised of customer-related intangibles. Acquisition of Dignity Health's Laboratory Outreach Business On June 22, 2013, the Company completed the acquisition of certain lab-related clinical outreach service operations of Dignity Health ("Dignity"), a hospital system in California. The assets acquired at the acquisition date primarily represent goodwill and intangible assets, principally comprised of customer-related intangibles. Acquisition of ConVerge Diagnostics, LLC On October 7, 2013, the Company completed the acquisition of ConVerge Diagnostic Services, LLC ("ConVerge"). ConVerge is a leading full-service laboratory providing clinical, cytology and anatomic pathology testing services to patients, physicians and hospitals in New England. The assets acquired at the acquisition date primarily represent goodwill and intangible assets, principally comprised of customer-related intangibles. Total Consideration, Assets Acquired and Liabilities Assumed The acquisitions described above were accounted for under the acquisition method of accounting. As such, the assets acquired and liabilities assumed are recorded based on their estimated fair values as of the closing date. The consolidated financial statements include the results of operations of the acquisitions subsequent to the closing of each acquisition. All of the goodwill acquired in connection with the MemorialCare, Solstas, Summit Health, Steward, UMass, ATN, Dignity and ConVerge acquisitions has been allocated to the Company's DIS business. The goodwill associated with the Superior Mobile Medics acquisition has been allocated to the Company's risk assessment services business. The goodwill recorded as part of the acquisitions includes the expected synergies resulting from combining the operations of the acquired business with those of the Company and the value associated with an assembled workforce that has a historical track record of identifying opportunities. The following tables summarize the total consideration and the amounts of assets acquired and liabilities assumed for Solstas and Summit Health. The amounts of assets acquired and liabilities assumed for all other acquisitions have not been included in the tables below as these acquisitions were not material to the Company’s consolidated financial statements.
| Solstas |  |  |  | Summit Health |  |
Cash | $ | 572 |  |  |  |  | $ | 125 |  |  |
Estimated fair value of contingent consideration | — |  |  |  |  | 22 |  |  |
Transaction related costs due to sellers | — |  |  |  |  | 5 |  |  |
Total consideration | $ | 572 |  |  |  |  | $ | 152 |  |  |
| Solstas |  | Summit Health
| Fair Value |  | Weighted Average Useful Life (in years) |  | Fair Value |  | Weighted Average Useful Life (in years)
Allocation of purchase price: |  |  |  |  |  |  |
Cash and cash equivalents | $ | 9 |  |  |  |  | $ | 1 |  |  |
Accounts receivable, net | 48 |  |  |  |  | 9 |  |  |
Current deferred income taxes | 7 |  |  |  |  | — |  |  |
Other current assets | 12 |  |  |  |  | 16 |  |  |
Property, plant and equipment, net | 49 |  |  |  |  | 6 |  |  |
Goodwill | 271 |  |  |  |  | 92 |  |  |
Intangible assets: |  |  |  |  |  |  |
Customer relationships | 203 |  |  | 20 |  | 33 |  |  | 15
Tradename | 7 |  |  | 2 |  | 2 |  |  | 1
Software | — |  |  |  |  | 3 |  |  | 4
Total intangible assets | 210 |  |  |  |  | 38 |  |  |
Non-current deferred income taxes | 42 |  |  |  |  | — |  |  |
Total assets acquired | 648 |  |  |  |  | 162 |  |  |
Current liabilities | 64 |  |  |  |  | 10 |  |  |
Non-current deferred income taxes | 4 |  |  |  |  | — |  |  |
Other non-current liabilities | 8 |  |  |  |  | — |  |  |
Total liabilities assumed | 76 |  |  |  |  | 10 |  |  |
Net assets acquired | $ | 572 |  |  |  |  | $ | 152 |  |  |
Pro Forma Combined Financial Information The following unaudited pro forma combined financial information reflects the consolidated statement of operations of the Company as if the acquisitions of Solstas and Summit Health had occurred as of January 1, 2013. The unaudited pro forma information includes adjustments primarily related to the amortization of intangible assets acquired, interest expense associated with debt extinguished prior to the acquisitions, and transaction costs related to the Solstas and Summit Health acquisitions. The unaudited pro forma combined financial information does not include the estimated annual synergies expected to be realized upon completion of the integration of Solstas and Summit Health and is not indicative of the results of operations as they would have been had the transaction been effected on the assumed date. Pre-acquisition financial information for all other acquisitions has not been included in the table below as these acquisitions were not material to the Company’s consolidated financial statements.
| 2014 |  | 2013
| (unaudited)
Pro forma net revenues | $ | 7,520 |  |  | $ | 7,622 |
Pro forma income from continuing operations | $ | 585 |  |  | $ | 855 |
Earnings per share attributable to Quest Diagnostics’ common stockholders - basic: |  |  |
Pro forma income from continuing operations | $ | 3.79 |  |  | $ | 5.40 |
Earnings per share attributable to Quest Diagnostics’ common stockholders - diluted: |  |  |
Pro forma income from continuing operations | $ | 3.77 |  |  | $ | 5.36 |

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