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Business Combinations | 6 Months Ended
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Jun. 30, 2019
Business Combinations [Abstract] |
Business Combinations | Business Combinations Home Health and Hospice Alacare Acquisition On July 1, 2019, we completed the acquisition of privately owned Alacare Home Health & Hospice (“Alacare”) for a cash purchase price of $217.5 million. Alacare operates 23 home health locations and 23 hospice locations in Alabama. We funded the transaction with cash on hand and borrowings under our revolving credit facility. See Note 6, Long-term Debt. Other Home Health and Hospice Acquisitions During the six months ended June 30, 2019, we completed the following home health and hospice acquisitions, none of which were individually material to our financial position, results of operations, or cash flows. Each acquisition was made to enhance our position and ability to provide post-acute healthcare services to patients in the applicable geographic areas. Each acquisition was funded using cash on hand.
• | In February 2019, we acquired the assets of Tidewater Home Health, PA in Columbia, South Carolina.
• | In March 2019, we acquired the assets and assumed the liabilities of two home health locations from Care Resource Group in East Providence, Rhode Island and Westport, Massachusetts.
We accounted for these transactions under the acquisition method of accounting and reported the results of operations of the acquired locations from their respective dates of acquisition. Assets acquired and liabilities assumed were recorded at their estimated fair values as of the respective acquisition dates. The fair values of identifiable intangible assets were based on valuations using an income approach. The income approach is based on management’s estimates of future operating results and cash flows discounted using a weighted-average cost of capital that reflects market participant assumptions. The excess of the fair value of the consideration conveyed over the fair value of the net assets acquired was recorded as goodwill. The goodwill reflects our expectations of our ability to utilize the acquired locations’ mobile workforce and established relationships within each community and the benefits of being able to leverage operational efficiencies with favorable growth opportunities based on positive demographic trends in these markets. All goodwill recorded as a result of these transactions is deductible for federal income tax purposes. The fair value of the assets acquired and liabilities assumed at the acquisition date were as follows (in millions):
Identifiable intangible assets: |  |
Noncompete agreements (useful lives of 5 years) | $ | 0.2 |
Certificates of need (useful lives of 10 years) | 2.0 |
License (useful life of 10 years) | 0.8 |
Goodwill | 10.8 |
Other assets acquired | 0.2 |
Total assets acquired | 14.0 |
Liabilities assumed: |
Accrued payroll | (0.1 | )
Other current liabilities | (0.1 | )
Other long-term liabilities | (0.1 | )
Total liabilities assumed | (0.3 | )
Net assets acquired | $ | 13.7 |
Information regarding the net cash paid for the other home health and hospice acquisitions during each period presented is as follows (in millions):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Fair value of assets acquired | $ | — |  |  | $ | 41.9 |  |  | $ | 3.2 |  |  | $ | 42.0 |
Goodwill | — |  |  | 101.6 |  |  | 10.8 |  |  | 102.1 |
Fair value of liabilities assumed | — |  |  | (8.3 | ) |  | (0.3 | ) |  | (8.3 | )
Net cash paid for acquisitions | $ | — |  |  | $ | 135.2 |  |  | $ | 13.7 |  |  | $ | 135.8 |
Pro Forma Results of Operations The following table summarizes the results of operations of the above mentioned acquisitions from their respective dates of acquisition included in our consolidated results of operations and the unaudited pro forma results of operations of the combined entity had the date of the acquisitions been January 1, 2018 (in millions):
| Net Operating Revenues |  | Net Income Attributable to Encompass Health
Acquired entities only: Actual from acquisition date to June 30, 2019 |  |  |
Home Health and Hospice | $ | 3.2 |  |  | $ | (0.6 | )
Combined entity: Supplemental pro forma from 04/01/2019-06/30/2019 | 1,135.0 |  |  | 91.2 |
Combined entity: Supplemental pro forma from 04/01/2018-06/30/2018 | 1,071.1 |  |  | 92.4 |
Combined entity: Supplemental pro forma from 01/01/2019-06/30/2019 | 2,261.0 |  |  | 193.7 |
Combined entity: Supplemental pro forma from 01/01/2018-06/30/2018 | 2,119.5 |  |  | 176.4 |
The information presented above is for illustrative purposes only and is not necessarily indicative of results that would have been achieved if the acquisitions had occurred as of the beginning of our 2018 reporting period. See Note 2, Business Combinations, to the consolidated financial statements accompanying the 2018 Form 10‑K for information regarding acquisitions completed in 2018.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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