Acquisitions

12 Months Ended

Dec. 31, 2022

5. Acquisitions

The Company’s strategy is to acquire and develop behavioral healthcare facilities and improve operating results within its facilities and its other behavioral healthcare operations.

On November 7, 2022, the Company acquired four CTCs located in Georgia from Brand New Start Treatment Centers.

On December 31, 2021, the Company acquired the equity of CenterPointe Behavioral Health System, LLC and certain related entities (“CenterPointe”) for cash consideration of approximately $140 million. The acquisition was funded through a combination of cash on hand and a $70.0 million draw on the Revolving Facility. At the time of the acquisition, CenterPointe operated four acute inpatient hospitals with 306 beds and ten outpatient locations primarily in Missouri.

The fair values of assets acquired and liabilities assumed in the CenterPointe acquisition were as follows (in thousands):

Cash	$	5,640
Accounts receivable, net		9,358
Other current assets		1,981
Property and equipment		35,227
Goodwill		105,883
Intangible assets		825
Deferred tax assets		1,573
Operating lease right-of-use assets		29,245
Total assets acquired		189,732
Accounts payable		3,820
Accrued salaries and benefits		3,585
Current portion of operating lease liabilities		2,820
Other accrued liabilities		4,326
Deferred tax liability		1,805
Operating lease liabilities		27,850
Total liabilities assumed		44,206
Net assets acquired	$	145,526

The qualitative factors comprising the goodwill acquired in the CenterPointe acquisition include the value of the business and efficiencies derived through synergies expected by the elimination of certain redundant corporate functions and expenses, coordination of services provided across the combined network of facilities, achievement of operating efficiencies by benchmarking performance and applying best practices.

Goodwill

The following table summarizes changes in goodwill for the years ended December 31, 2022 and 2021 (in thousands):

Balance at January 1, 2021	$	2,105,264
Increase from acquisitions		97,122
2021 dispositions		(2,449	)
Balance at December 31, 2021		2,199,937
Increase from acquisitions		9,488
Adjustments related to 2021 acquisitions		8,761
Increase from contributions of redeemable noncontrolling interests		4,619
Balance at December 31, 2022	$	2,222,805

Of the increases to goodwill from acquisitions in 2022 and 2021, the Company expects $9.5 million and $56.1 million to be tax-deductible for the years ended December 31, 2022 and 2021, respectively.

Transaction-related expenses

Transaction-related expenses represent costs primarily related to legal, accounting, termination, restructuring, management transition, acquisition and other similar costs. Transaction-related expenses comprised the following costs for the years ended December 31, 2022, 2021 and 2020 (in thousands):

	Year Ended December 31,
	2022		2021		2020
Management transition costs	$	11,575	$	—	$	—
Termination and restructuring costs		6,476		5,343		3,468
Legal, accounting and other acquisition-related costs		5,741		7,435		8,252
	$	23,792	$	12,778	$	11,720