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Acquisitions | 12 Months Ended
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Dec. 31, 2020
Business Combinations [Abstract] |
Acquisitions | 4. Acquisitions The Company’s acquisitions have been accounted for in accordance with ASC Topic 805, Business Combinations, and the resulting goodwill and other intangible assets were accounted for under ASC Topic 350, Goodwill and Other Intangible Assets. Under business combination accounting, the assets and liabilities are generally recognized at their fair values and the difference between the consideration transferred, excluding transaction costs, and the fair values of the assets and liabilities is recognized as goodwill. The results of each business acquisition are included on the Consolidated Statements of Income from the date of the acquisition. Management’s assessment of qualitative factors affecting goodwill for each acquisition includes estimates of market share at the date of purchase, ability to grow in the market, synergy with existing Company operations and the payor profile in the markets. Queen City Hospice On December 4, 2020, we completed the acquisition of Queen City Hospice, LLC and its affiliate Miracle City Hospice, LLC (together “Queen City Hospice”). The purchase price was approximately $194.8 million, including the amount of acquired excess cash held by Queen City Hospice at the closing of the acquisition (approximately $15.4 million). The purchase of Queen City Hospice was funded with the Company’s revolving credit facility and available cash. With the purchase of Queen City Hospice, the Company expanded its hospice services in the state of Ohio. The related acquisition costs were $1.8 million and integration costs were $0.1 million for the year ended December 31, 2020. These costs were included in general and administrative expenses on the Consolidated Statements of Income and were expensed as incurred. Based upon management’s valuations, which are preliminary and subject to completion of working capital adjustments, the fair values of the assets and liabilities are as follows:
|  | Total (Amounts in Thousands) |
Goodwill |  | $ | 169,207 |
Identifiable intangible assets |  |  | 20,015 |
Cash |  |  | 15,444 |
Property and equipment |  |  | 759 |
Accounts receivable |  |  | 5,835 |
Operating lease assets, net |  |  | 3,028 |
Other assets |  |  | 121 |
Accounts payable |  |  | (2,092 | )
Accrued expenses |  |  | (503 | )
Accrued payroll |  |  | (1,598 | )
Long-term operating lease liabilities |  |  | (2,765 | )
Government stimulus advances |  |  | (12,694 | )
Total purchase price |  | $ | 194,757 |
Identifiable intangible assets acquired included $11.0 million in trade names, $1.5 million of non-competition agreements with estimated useful lives of fifteen years and five years, respectively, and $7.5 million of indefinite lived state licenses. The preliminary estimated fair value of identifiable intangible assets was determined with the assistance of a valuation specialist, using Level 3 inputs as defined under ASC Topic 820. The fair value analysis and related valuations reflect the conclusions of management. All estimates, key assumptions, and forecasts were either provided by or reviewed by the Company. The goodwill and intangible assets acquired are deductible for tax purposes. The Queen City Hospice acquisition accounted for $4.9 million of net service revenues and $0.6 million of operating income for the year ended December 31, 2020. County Homemakers On November 1, 2020, we completed the acquisition of County Homemakers. The purchase price was approximately $15.8 million, including the amount of acquired excess cash held by County Homemakers at the closing of the acquisition (approximately $1.1 million). The purchase of County Homemakers was funded with the Company’s available cash. With the purchase of County Homemakers, the Company expanded its personal care services in the state of Pennsylvania. The related acquisition costs were $0.3 million and integration costs were $0.2 million for the year ended December 31, 2020. These costs were included in general and administrative expenses on the Consolidated Statements of Income and were expensed as incurred. Based upon management’s valuations, which are preliminary and subject to completion of working capital adjustments, the fair values of the assets and liabilities are as follows:
|  | Total (Amounts in Thousands) |
Goodwill |  | $ | 13,363 |
Identifiable intangible assets |  |  | 474 |
Cash |  |  | 1,104 |
Property and equipment |  |  | 52 |
Accounts receivable |  |  | 1,387 |
Operating lease assets, net |  |  | 485 |
Other assets |  |  | 40 |
Accounts payable |  |  | (19 | )
Accrued expenses |  |  | (37 | )
Accrued payroll |  |  | (543 | )
Long-term operating lease liabilities |  |  | (485 | )
Total purchase price |  | $ | 15,821 |
Identifiable intangible assets acquired included approximately $0.3 million in state licenses and $0.1 million in trade names with estimated useful lives of eight years and one year, respectively. The preliminary estimated fair value of identifiable intangible assets was determined with the assistance of a valuation specialist, using Level 3 inputs as defined under ASC Topic 820. The fair value analysis and related valuations reflect the conclusions of management. All estimates, key assumptions, and forecasts were either provided by or reviewed by the Company. The goodwill and intangible assets acquired are deductible for tax purposes. The County Homemakers acquisition accounted for $2.3 million of net service revenues and $0.2 million of operating income for the year ended December 31, 2020. A Plus Health Care On July 1, 2020, we completed the acquisition of A Plus Health Care, Inc. (“A Plus”). The purchase price was approximately $14.5 million, including the amount of acquired excess cash held by A Plus at the closing of the acquisition (approximately $2.8 million). The purchase of A Plus was funded with the Company’s available cash. With the purchase of A Plus, the Company expanded its personal care services in the state of Montana. The related acquisition costs were $0.4 million and integration costs were $0.3 million for the year ended December 31, 2020. These costs were included in general and administrative expenses on the Consolidated Statements of Income and were expensed as incurred. Based upon management’s valuations, which are preliminary and subject to completion of working capital adjustments, the fair values of the assets and liabilities are as follows:
|  | Total (Amounts in Thousands) |
Goodwill |  | $ | 9,698 |
Identifiable intangible assets |  |  | 1,523 |
Cash |  |  | 2,819 |
Accounts receivable |  |  | 1,075 |
Operating lease assets, net |  |  | 180 |
Other assets |  |  | 26 |
Accounts payable |  |  | (21 | )
Accrued expenses |  |  | (362 | )
Accrued payroll |  |  | (311 | )
Long-term operating lease liabilities |  |  | (100 | )
Total purchase price |  | $ | 14,527 |
Identifiable intangible assets acquired included $1.4 million in trade names with an estimated useful life of fifteen years. The preliminary estimated fair value of identifiable intangible assets was determined with the assistance of a valuation specialist, using Level 3 inputs as defined under ASC Topic 820. The fair value analysis and related valuations reflect the conclusions of management. All estimates, key assumptions, and forecasts were either provided by or reviewed by the Company. The goodwill and intangible assets acquired are deductible for tax purposes. The A Plus acquisition accounted for $4.9 million of net service revenues and $1.0 million of operating income for the year ended December 31, 2020. SunLife Hospice On December 1, 2020, we completed the acquisition of SunLife Home Care (“SunLife”) for approximately $1.7 million and recorded goodwill of $1.6 million. With the purchase of SunLife Home Care, we expanded our personal care services in the state of Arizona. Goodwill generated from the acquisition is primarily attributable to expected synergies with existing Company operations and the goodwill acquired is deductible for tax purposes. Hospice Partners On October 1, 2019, the Company completed the acquisition of the assets of Hospice Partners of America, LLC (“Hospice Partners”). The purchase price was approximately $135.6 million, including the amount of acquired excess cash held by Hospice Partners at the closing of the acquisition (approximately $5.5 million). The purchase of Hospice Partners was funded through a portion of the net proceeds of our public offering of an aggregate 2,300,000 shares of common stock, par value $0.001 per share, including 300,000 shares of common stock sold pursuant to the exercise in full by the underwriters of their option to purchase additional shares at a public offering price of $79.50 per share, which the Company completed on September 9, 2019 (the “Public Offering”). With the purchase of Hospice Partners, we expanded our hospice operations through 21 locations in Idaho, Kansas, Missouri, Oregon, Texas and Virginia. The related acquisition costs were $1.6 million for the year ended December 31, 2019 and integration costs were $1.6 million and $0.6 million for the years ended December 31, 2020 and 2019, respectively. These costs were included in general and administrative expenses on the Con solidated Statements of Income and were expensed as incurred. Based upon management’s final valuations, the fair values of the assets and liabilities are as follows:
|  | Total (Amounts in Thousands) |
Goodwill |  | $ | 111,806 |
Identifiable intangible assets |  |  | 18,090 |
Cash |  |  | 5,489 |
Property and equipment |  |  | 164 |
Accounts receivable |  |  | 6,411 |
Operating lease assets, net |  |  | 2,425 |
Other assets |  |  | 702 |
Accounts payable |  |  | (1,737 | )
Accrued expenses |  |  | (3,635 | )
Accrued payroll |  |  | (1,110 | )
Deferred tax liability |  |  | (1,422 | )
Long-term operating lease liabilities |  |  | (1,615 | )
Total purchase price |  | $ | 135,568 |
Identifiable intangible assets acquired consist of $9.5 million in trade names with estimated useful lives of fifteen years, $2.5 million in non-competition agreements with estimated useful lives of three to five years and $6.1 million of indefinite lived state licenses. The estimated fair value of identifiable intangible assets was determined with the assistance of a valuation specialist, using Level 3 inputs as defined under ASC Topic 820. The fair value analysis and related valuations reflect the conclusions of management. All estimates, key assumptions, and forecasts were either provided by or reviewed by the Company. The goodwill and intangible assets acquired are deductible for tax purposes. The Hospice Partners acquisition accounted for $14.8 million of net service revenues and $2.3 million of operating income for the year ended December 31, 2019. Alliance Home Health Care On August 1, 2019, the Company completed the acquisition of all of the assets of Alliance Home Health Care (“Alliance”). The purchase price was approximately $23.5 million. The purchase of Alliance was funded through the Company’s revolving credit facility and available cash. With the purchase of Alliance, the Company expanded its personal care, home health and hospice operations in the state of New Mexico. The related acquisition costs were $0.4 million for the year ended December 31, 2019 and integration costs were $0.2 million and $0.4 million for the years ended December 31, 2020 and 2019, respectively. These costs were included in general and administrative expenses on the Consolidated Statements of Income and were expensed as incurred. Based upon management’s final valuations, the fair values of the assets and liabilities are as follows:
|  | Total (Amounts in Thousands) |
Goodwill |  | $ | 17,062 |
Identifiable intangible assets |  |  | 5,422 |
Cash |  |  | 177 |
Accounts receivable |  |  | 1,754 |
Accounts payable |  |  | (316 | )
Other liabilities |  |  | (641 | )
Total purchase price |  | $ | 23,458 |
Identifiable intangible assets acquired consist of $1.1 million in state licenses, subject to amortization, with an estimated useful life of ten years and $4.3 million of indefinite lived state licenses. The estimated fair value of identifiable intangible assets was determined with the assistance of a valuation specialist, using Level 3 inputs as defined under ASC Topic 820. The fair value analysis and related valuations reflect the conclusions of management. All estimates, key assumptions, and forecasts were either provided by or reviewed by the Company. The goodwill and intangible assets acquired are deductible for tax purposes. The Alliance acquisition accounted for $8.8 million of net service revenues and $2.1 million of operating income for the year ended December 31, 2019. VIP Health Care Services On June 1, 2019, the Company completed the acquisition of all of the assets of VIP Health Care Services (“VIP”). The purchase price was approximately $29.9 million. The purchase of VIP was funded through a combination of the Company’s delayed draw term loan portion of its credit facility and available cash. With the purchase of VIP, the Company expanded its personal care operations in the state of New York and into the New York City metropolitan area. The related acquisition costs were $0.3 million for the year ended December 31, 2019 and integration costs were $0.2 million and $0.5 million for the years ended December 31, 2020 and 2019, respectively. These costs were included in general and administrative expenses on the Consolidated Statements of Income and were expensed as incurred. Based upon management’s final valuations, the fair values of the assets and liabilities are as follows:
|  | Total (Amounts in Thousands) |
Goodwill |  | $ | 11,936 |
Identifiable intangible assets |  |  | 15,370 |
Cash |  |  | 130 |
Accounts receivable |  |  | 4,730 |
Operating lease assets, net |  |  | 2,278 |
Other assets |  |  | 30 |
Property and equipment |  |  | 27 |
Accounts payable |  |  | (540 | )
Accrued expenses |  |  | (770 | )
Accrued payroll |  |  | (1,742 | )
Long-term operating lease liabilities |  |  | (1,531 | )
Total purchase price |  | $ | 29,918 |
Identifiable intangible assets acquired consist of $10.7 million in state licenses, subject to amortization, and $4.7 million in customer relationships, with estimated useful lives of six and eight years, respectively. The estimated fair value of identifiable intangible assets was determined with the assistance of a valuation specialist, using Level 3 inputs as defined under ASC Topic 820. The fair value analysis and related valuations reflect the conclusions of management. All estimates, key assumptions, and forecasts were either provided by or reviewed by the Company. The goodwill and intangible assets acquired are deductible for tax purposes. The VIP acquisition accounted for $30.0 million of net service revenues and $0.2 million of operating loss for the year ended December 31, 2019. Ambercare Corporation On May 1, 2018, the Company completed the acquisition of all the issued and outstanding securities of Ambercare Corporation (“Ambercare”). The purchase price was approximately $39.6 million, plus the amount of excess cash held by Ambercare at the closing of the acquisition (approximately $12.0 million). The purchase of Ambercare was funded by a delayed draw term loan under the Company’s credit facility. With the purchase of Ambercare, the Company expanded its New Mexico personal care operations and entered into its hospice and home health segments in the state of New Mexico. The related acquisition costs were $0.8 million for the year ended December 31, 2018, and integration costs were $0.2 million and $1.6 million for the years ended December 31, 2019 and 2018, respectively. These costs were included in general and administrative expenses on the Company’s Consolidated Statements of Income, and were expensed as incurred. The results of Ambercare are included on the Company’s Consolidated Statements of Income from the date of the acquisition. Based upon management’s final valuations, the fair values of the assets and liabilities are as follows:
|  | Total (Amounts in Thousands) |
Goodwill |  | $ | 28,831 |
Cash |  |  | 12,028 |
Identifiable intangible assets |  |  | 9,944 |
Accounts receivable |  |  | 6,512 |
Other assets |  |  | 442 |
Property and equipment |  |  | 154 |
Accrued expenses |  |  | (4,073 | )
Deferred tax liability |  |  | (2,138 | )
Financing lease |  |  | (75 | )
Accounts payable |  |  | (3 | )
Total purchase price |  | $ | 51,622 |
The Company acquired all of the outstanding stock of Ambercare. Identifiable intangible assets acquired consist of trade names and customer relationships, with estimated useful lives ranging from three to fifteen years, as well as indefinite lived state licenses. The estimated fair value of identifiable intangible assets was determined with the assistance of a valuation specialist, using Level 3 inputs as defined under ASC Topic 820. The fair value analysis and related valuations reflect the conclusions of management. All estimates, key assumptions, and forecasts were either provided by or reviewed by the Company. The goodwill and intangible assets acquired are non-deductible for tax purposes. The Ambercare acquisition accounted for $36.7 million of net service revenues and $7.1 million of operating income for the year ended December 31, 2018. Arcadia Home Care & Staffing On April 1, 2018, the Company acquired certain assets of Arcadia Home Care & Staffing (“Arcadia”), expanding its personal care services. The total consideration for the transaction was $18.9 million and was funded by a delayed draw term loan under the Company’s credit facility. The related acquisition costs were $0.8 million for the year ended December 31, 2018, and integration costs were $0.2 million and $1.1 million for the years ended December 31, 2019 and 2018, respectively. These costs were included in general and administrative expenses on the Company’s Consolidated Statements of Income, and were expensed as incurred. Based upon management’s final valuations, the fair values of the assets and liabilities are as follows:
|  | Total (Amounts in Thousands) |
Goodwill |  | $ | 13,072 |
Accounts receivable |  |  | 5,317 |
Identifiable intangible assets |  |  | 2,264 |
Property and equipment |  |  | 155 |
Other assets |  |  | 92 |
Accrued expenses |  |  | (1,540 | )
Accounts payable |  |  | (508 | )
Total purchase price |  | $ | 18,852 |
Identifiable intangible assets acquired consist of trade name, customer relationships and state licenses, with estimated useful lives ranging from seven to fifteen years. The estimated fair value of identifiable intangible assets was determined with the assistance of a valuation specialist, using Level 3 inputs as defined under ASC Topic 820. The fair value analysis and related valuations reflect the conclusions of management. All estimates, key assumptions, and forecasts were either provided by or reviewed by the Company. The goodwill and intangible assets acquired are deductible for tax purposes. The Arcadia acquisition accounted for $32.7 million of net service revenues and $4.7 million of operating income for the year ended December 31, 2018. In September 2018, the Company acquired certain assets of affiliate branches of Arcadia for $0.6 million using available cash, the Company recorded goodwill of $0.6 million on the Company’s Consolidated Balance Sheets. Goodwill generated from the acquisition is primarily attributable to expected synergies with existing Company operations and the goodwill acquired is deductible for tax purposes. LifeStyle Options, Inc. Effective January 1, 2018, the Company acquired certain assets of LifeStyle Options, Inc. (“LifeStyle”) in order to expand private pay services in Illinois. The total consideration for the transaction was $4.1 million, comprised of $3.3 million in cash and $0.8 million, representing the estimated fair value of contingent consideration, subject to the achievement of certain performance targets set forth in an earn-out agreement. As of December 31, 2018, the performance targets were not met and the contingent consideration was remeasured to zero. Based upon management’s final valuations, the fair values of the assets and liabilities are as follows:
|  | Total (Amounts in Thousands) |
Goodwill |  | $ | 2,751 |
Identifiable intangible assets |  |  | 1,152 |
Accounts receivable |  |  | 573 |
Other assets |  |  | 32 |
Property and equipment |  |  | 18 |
Accrued expenses |  |  | (291 | )
Accounts payable |  |  | (105 | )
Total purchase price |  | $ | 4,130 |
Identifiable intangible assets acquired consist of trade name and customer relationships, with estimated useful lives ranging from ten to fifteen years. The estimated fair value of identifiable intangible assets was determined with the assistance of a valuation specialist, using Level 3 inputs as defined under ASC Topic 820. The fair value analysis and related valuations reflect the conclusions of management. All estimates, key assumptions, and forecasts were either provided by or reviewed by the Company. The goodwill and intangible assets acquired are deductible for tax purposes. The LifeStyle acquisition accounted for $5.8 million of net service revenues and $0.5 million of operating income for the year ended December 31, 2018. For the year ended December 31, 2020, the following table contains unaudited pro forma Consolidated Income Statement information of the Company as if each of the acquisitions of Queen City Hospice, A Plus and County Homemakers closed on January 1, 2019. For the year ended December 31, 2019, the following table contains unaudited pro forma Consolidated Income Statement information of the Company as if each of the acquisitions of Hospice Partners, Alliance and VIP closed on January 1, 2018. For the year ended December 31, 2018, the following table contains unaudited pro forma Consolidated Income Statement information of the Company as if each of the acquisitions of Ambercare, Arcadia and LifeStyle closed on January 1, 2017.
|  | For the Years Ended December 31, (Amounts in Thousands, Unaudited) |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Net service revenues |  | $ | 831,290 |  |  | $ | 726,727 |  |  | $ | 550,326 |
Operating income from continuing operations |  |  | 45,555 |  |  |  | 46,571 |  |  |  | 36,985 |
Net income from continuing operations |  |  | 34,564 |  |  |  | 35,748 |  |  |  | 24,346 |
Net income per common share from continuing operations |  |  |  |  |  |  |  |  |  |  |  |
Basic income per share |  | $ | 2.22 |  |  | $ | 2.59 |  |  | $ | 2.02 |
Diluted income per share |  | $ | 2.17 |  |  | $ | 2.51 |  |  | $ | 1.97 |
The pro forma disclosures in the table above include adjustments for amortization of intangible assets, tax expense and acquisition costs to reflect results that are more representative of the combined results of the transactions. This pro forma information is presented for illustrative purposes only and may not be indicative of the results of operations that would have actually occurred. In addition, future results may vary significantly from the results reflected in the pro forma information. The unaudited pro forma financial information does not reflect the impact of future events that may occur after the acquisition, such as anticipated cost savings from operating synergies.

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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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