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Acquisitions and Divestitures | 12 Months Ended
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Dec. 31, 2013
Acquisitions and Divestitures | 2) ACQUISITIONS AND DIVESTITURES Year ended December 31, 2013: 2013 Acquisitions of Assets and Businesses: During 2013, we spent an aggregate of $13 million for the purchase of real property located in Pennsylvania, Nevada and Arizona. The aggregate net purchase price of these properties was allocated to property and equipment on our consolidated balance sheet. 2013 Divestiture of Assets and Businesses: During 2013, we received an aggregate of $37 million in connection with the divestiture of Peak Behavioral Health Services (sold during the second quarter of 2013) and certain other assets and real property including three previously closed behavioral health care facilities. As discussed below in Discontinued Operations, we agreed to sell Peak Behavioral Health Services as part of our agreement with the Federal Trade Commission (“FTC”) in connection with our acquisition of Ascend Health Corporation (“Ascend”) in October of 2012. The aggregate pre-tax gain on these divestitures was approximately $3 million and in included in our 2013 consolidated results of operations. Year ended December 31, 2012: 2012 Acquisitions of Assets and Businesses: During 2012, we spent $528 million to acquire the following assets and businesses:
| • |  | spent $503 million to acquire 9 behavioral health care facilities from Ascend in October, 2012, and;
| • |  | spent $25 million in connection with the acquisition of physician practices and various real property.
The aggregate net purchase price of the facilities was allocated to assets and liabilities based on their estimated fair values as follows:
|  | Amount (000s) |
Working capital, net |  | $ | 21,000 |
Property & equipment |  |  | 60,000 |
Goodwill |  |  | 446,000 |
Other assets |  |  | 9,000 |
Income tax assets, net of deferred tax liabilities |  |  | (1,000 | )
Other liabilities |  |  | (7,000 | )
Cash paid in 2012 for acquisitions |  | $ | 528,000 |
Goodwill of the facilities acquired is computed, pursuant to the residual method, by deducting the fair value of the acquired assets and liabilities from the total purchase price. The factors that contribute to the recognition of goodwill, which may also influence the purchase price, include the following for each of the acquired facilities: (i) the historical cash flows and income levels; (ii) the reputations in their respective markets; (iii) the nature of the respective operations, and; (iv) the future cash flows and income growth projections. Assuming the acquisition of Ascend occurred on January 1, 2011, our 2011 unaudited pro forma net revenues would have been approximately $6.90 billion and our unaudited pro forma net income attributable to UHS and unaudited pro forma net income attributable to UHS per diluted share would have been $401 million and $4.06 per diluted share, respectively. The 2011 unaudited pro forma net income attributable to UHS and unaudited pro forma net income attributable to UHS per diluted share include the after-tax impact of the transaction costs incurred by us in connection with the acquisition of Ascend amounting to $5 million or $.06 per diluted share. Our 2012 unaudited pro forma net revenues would have been approximately $7.11 billion and our unaudited pro forma net income attributable to UHS and unaudited pro forma net income attributable to UHS per diluted share would have been $464 million and $4.74 per diluted share, respectively. During the period of October 10, 2012 through December 31, 2012, the facilities acquired from Ascend generated $42 million of net revenues which are included in our consolidated net revenues for the year ended December 31, 2012. The aggregate effect of the earnings generated by these facilities since the date of acquisition, less the cost on the borrowings utilized to finance the acquisition, and less the above-mentioned transaction costs, was not material to our 2012 net income attributable to UHS and net income attributable to UHS per diluted share. 2012 Divestiture of Assets and Businesses: During 2012, we received $149 million from the divestiture of assets and businesses, including the following:
| • |  | received $93 million for the sale of Auburn Regional Medical Center (“Auburn”), a 159-bed acute care hospital located in Auburn, Washington (sold in October of 2012);
| • |  | received $50 million for the sale of the Hospital San Juan Capestrano, a 108-bed acute care hospital located in Rio Piedras, Puerto Rico (sold in January of 2012 pursuant to our below-mentioned agreement with the FTC in connection with our acquisition of PSI in November, 2010), and;
| • |  | received an aggregate of $6 million for the sale of the real property of two non-operating behavioral health facilities and our majority ownership interest in an outpatient surgery center located in Puerto Rico.
Included in our 2012 consolidated results of operations was a $26 million pre-tax gain on the divestiture of Auburn. The divestiture of San Juan Capestrano (in January, 2012) did not have a material impact on our consolidated results of operations. Year ended December 31, 2011: 2011 Acquisitions of Assets and Businesses: During 2011, we spent $29 million on the acquisition of businesses and real property, including the following:
| • |  | the acquisition of administrative office buildings located in Pennsylvania, Tennessee and a multi-tenant office building located in Washington D.C.;
| • |  | a deposit in made connection with execution of a purchase agreement for an acute care hospital in Texas which has since been terminated and the deposit returned to us in 2012, and;
| • |  | the acquisition of a cardiology practice in Texas.
The aggregate net cash expenditure related to the properties and/or businesses was allocated to assets and liabilities based on their estimated fair values as follows:
|  | Amount (000s) |
Property, plant & equipment |  | $ | 35,000 |
Other assets/deposits |  |  | 11,000 |
Debt |  |  | (17,000 | )
Cash paid in 2011 for acquisitions and deposits |  | $ | 29,000 |
2011 Divestitures of Assets and Businesses: During 2011, we received $68 million from the divestiture of assets and businesses, including the following:
| • |  | the sale of three behavioral healthcare facilities (one located in Delaware and two located in Nevada) pursuant to the below-mentioned agreement with the FTC in connection with our acquisition of PSI;
| • |  | sale of our majority ownership interest in a radiation oncology center located in Nevada, and;
| • |  | the real property of a closed acute care hospital.
The aggregate pre-tax net gain on these divestitures did not have a material impact on our 2011 consolidated results of operations. Discontinued Operations: In connection with the receipt of antitrust clearance from the FTC in connection with our acquisition of Ascend in October of 2012, we agreed to certain conditions, including the divestiture of Peak Behavioral Health Services (“Peak”), a 104-bed behavioral health care facility located in Santa Teresa, New Mexico. The divestiture of Peak was completed during the second quarter of 2013 for total cash proceeds of approximately $24 million resulting in a pre-tax gain of approximately $3 million which is included in our 2013 consolidated financial statements. In October of 2012, we completed the divestiture of Auburn, a 159-bed acute care hospital located in Auburn, Washington, for total cash proceeds of approximately $93 million. This divestiture resulted in a pre-tax gain of $26 million which was included in our 2012 consolidated financial statements. In connection with the receipt of antitrust clearance from the FTC in connection with our acquisition of PSI in November, 2010, we agreed to divest three former PSI facilities as well as one of our legacy behavioral health facilities in Puerto Rico. Pursuant to the terms of our agreement with the FTC, we divested:
| • |  | in July, 2011, the MeadowWood Behavioral Health System, a 58-bed facility located in New Castle, Delaware;
| • |  | in December, 2011, the Montevista Hospital (101-bed) and Red Rock Hospital (21-bed), both of which are located in Las Vegas, Nevada, and;
| • |  | in January, 2012, the Hospital San Juan Capestrano, a 108-bed facility located in Rio Piedras, Puerto Rico.
The operating results for Auburn, Peak and the three former PSI facilities located in Delaware and Nevada are reflected as discontinued operations during our period of ownership during each of the years presented herein. Since the aggregate income from discontinued operations before income tax expense for these facilities is not material to our consolidated financial statements, it is included as a reduction to other operating expenses. Assets and liabilities for Peak were reflected as “held for sale” on our Consolidated Balance Sheet as of December 31, 2012. The following table shows the results of operations for Auburn and Peak and the former PSI facilities located in Delaware and Nevada, on a combined basis, which were reflected as discontinued operations during our period of ownership for each of the years presented herein (amounts in thousands):
|  | 2013 |  |  | 2012 |  |  | 2011 |
Net revenues |  | $ | 7,813 |  |  | $ | 95,226 |  |  | $ | 159,218 |
Income (loss) from discontinued operations, before income taxes |  |  | 932 |  |  |  | (3,472 | ) |  |  | 10,422 |
Gain on divestiture |  |  | 3,080 |  |  |  | 26,419 |  |  |  | 442 |
Income from discontinued operations, before income tax expense |  |  | 4,012 |  |  |  | 22,947 |  |  |  | 10,864 |
Income tax expense |  |  | (1,506 | ) |  |  | (8,688 | ) |  |  | (4,113 | )
Income from discontinued operations, net of income taxes |  | $ | 2,506 |  |  | $ | 14,259 |  |  | $ | 6,751 |

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References No definition available. + Details
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