XML 34 R21.htm IDEA: XBRL DOCUMENT
v3.5.0.2

Acquisitions and Divestitures | 6 Months Ended
--- | ---
Jun. 30, 2016
Business Combinations [Abstract] |
Acquisitions and divestitures |
14. | Acquisitions and divestitures
Sales of Tandigm Health and HCP Arizona business interests Effective June 30, 2016, we sold a portion of HCP’s ownership interest in the Tandigm Health joint venture, reducing our ownership from fifty percent to nineteen percent and resulting in a gain of $40,280. In addition, on June 1, 2016, we sold our HCP Arizona business, resulting in a loss of $10,489. Acquisition of Everett Clinic Medical Group (TEC) On March 1, 2016, the Company completed its acquisition of TEC pursuant to an agreement and plan of merger dated November 23, 2015, whereby TEC became a 100% consolidated subsidiary of HCP. The total consideration paid at closing for all outstanding common units of TEC was approximately $398,094, net of cash acquired, plus the assumption of certain liabilities totaling approximately $7,284, subject to certain post-closing adjustments. The initial purchase price allocation for the TEC acquisition is recorded at estimated fair values based upon the best information available to management and will be finalized when certain information arranged to be obtained has been received. The fair values of property and equipment and intangible assets were valued by an independent third party and are pending issuance of the final valuation report. Certain income tax amounts are pending issuance of final tax returns. The following table summarizes the assets acquired and liabilities assumed in the transaction and recognized at the acquisition date at their estimated fair values:
|  | Six months ended |
|  | June 30, 2016 |
Current assets, net of cash acquired |  | $ | 95,999 |
Property and equipment |  |  | 108,533 |
Amortizable intangible and other long-term assets |  |  | 34,050 |
Goodwill |  |  | 244,502 |
Current liabilities assumed |  |  | (50,940 | )
Deferred income taxes |  |  | (16,881 | )
Noncontrolling interests assumed |  |  | (9,885 | )
Aggregate purchase price |  | $ | 405,378 |
Amortizable intangible assets acquired in this acquisition had a weighted average estimated useful life of six years. None of the goodwill recognized in this acquisition is expected to be deductible for tax purposes. The noncontrolling interests acquired as part of the acquisition are stated at estimated fair value based on the estimated fair values of the underlying assets and liabilities of each non-wholly-owned entity. The operating results of TEC are included in the Company’s condensed consolidated financial statements effective March 1, 2016. Other routine acquisitions During the first six months of 2016, the Company acquired dialysis businesses and other businesses consisting of four dialysis centers located in the U.S., three dialysis centers located outside the U.S., and three other medical businesses for a total of $75,220 in net cash and deferred purchase price obligations totaling $3,387. The assets and liabilities for all acquisitions were recorded at their estimated fair values at the dates of the acquisitions and are included in the Company’s condensed consolidated financial statements, as are their operating results from the designated effective dates of the acquisitions. Certain income tax amounts are pending final evaluation and quantification of any pre-acquisition tax contingencies. In addition, valuation of medical claims liabilities and certain other working capital items relating to these acquisitions is pending final quantification. The following table summarizes the assets acquired and liabilities assumed in these transactions and recognized at their acquisition dates at estimated fair values:
|  | Six months ended |
|  | June 30, 2016 |
Current assets |  | $ | 894 |
Property and equipment |  |  | 3,058 |
Amortizable intangible and other long-term assets |  |  | 5,509 |
Goodwill |  |  | 76,510 |
Deferred income taxes |  |  | 597 |
Noncontrolling interests assumed |  |  | (7,837 | )
Liabilities assumed |  |  | (124 | )
Aggregate purchase price |  | $ | 78,607 |
Amortizable intangible assets acquired during the first six months of 2016 had weighted-average estimated useful lives of eight years. The majority of the intangible assets acquired during the first six months of 2016 relate to non-compete agreements having a weighted-average useful life and amortization period of seven years. The total amount of goodwill deductible for tax purposes associated with these acquisitions was approximately $72,190. Pro forma financial information The following summary, prepared on a pro forma basis, combines the results of operations as if the acquisitions and divestitures through June 30, 2016 had been consummated as of the beginning of 2016 and 2015, after including the impact of certain adjustments such as amortization of intangibles and income tax effects.
|  | Three months ended June 30, |  |  | Six months ended June 30, |
|  | 2016 |  |  | 2015 |  |  | 2016 |  |  | 2015 |
|  | (unaudited) |
Pro forma net revenues |  | $ | 3,709,756 |  |  | $ | 3,530,347 |  |  | $ | 7,346,872 |  |  | $ | 6,918,308 |
Pro forma net income attributable to DaVita HealthCare Partners Inc. |  |  | 56,969 |  |  |  | 172,551 |  |  |  | 156,753 |  |  |  | 64,897 |
Pro forma basic net income per share attributable to DaVita HealthCare Partners Inc. |  |  | 0.28 |  |  |  | 0.81 |  |  |  | 0.77 |  |  |  | 0.30 |
Pro forma diluted net income per share attributable to DaVita HealthCare Partners Inc. |  |  | 0.27 |  |  |  | 0.79 |  |  |  | 0.75 |  |  |  | 0.30 |
Other pending transactions On August 17, 2015, the Company entered into a definitive agreement to acquire Colorado-based Renal Ventures Limited, LLC (Renal Ventures), including a 100 percent interest in all dialysis centers owned by Renal Ventures, for approximately $415,000 in cash, subject to, among other things, adjustments for certain items such as working capital. Renal Ventures currently operates 36 dialysis clinics in six states serving approximately 2,400 patients, and also operates other ancillary businesses. The transaction is subject to approval by the Federal Trade Commission (FTC), including Hart-Scott-Rodino antitrust clearance. The Company anticipates that it will be required by the FTC to divest a certain number of outpatient dialysis centers as a condition of the transaction. The Company expects the transaction to close in 2016. Contingent earn-out obligations The Company has several contingent earn-out obligations associated with acquisitions that could result in the Company paying the former shareholders of acquired companies a total of up to $98,600 if certain EBITDA, operating income performance targets or quality margins are met over the next one to two years. Contingent earn-out obligations are remeasured to fair value at each reporting date until the contingencies are resolved with changes in the liability due to the re-measurement recorded in earnings. See Note 16 to these condensed consolidated financial statements for further details. As of June 30, 2016, the Company has estimated the fair value of these contingent earn-out obligations to be $19,634, of which a total of $18,148 is included in other liabilities and the remaining $1,486 is included in other long-term liabilities in the Company’s condensed consolidated balance sheet. The following is a reconciliation of changes in the contingent earn-out obligations for the six months ended June 30, 2016:
Beginning balance, January 1, 2016 |  | $ | 34,135 |
Remeasurement of fair value for contingent earn-out obligations |  |  | (3,304 | )
Payments on contingent earn-out obligations |  |  | (11,197 | )
|  | $ | 19,634 |

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_MergersAcquisitionsAndDispositionsDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration