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Business Acquisitions
 6 Months Ended
Jun. 30, 2011
Business Acquisitions  
Business Acquisitions
6. Business Acquisitions:

During the six months ended June 30, 2011, the Company completed the acquisition of three physician group practices for total consideration of $11.3 million, consisting of $8.5 million in cash and $2.8 million of contingent consideration. In connection with these acquisitions, the Company recorded goodwill of $10.7 million, other intangible assets consisting primarily of physician and hospital agreements of $0.5 million and fixed assets of $0.1 million. These acquisitions expand the Company's national network of physician practices. The Company expects to improve the results of these physician practices through improved commercial contracting, improved collections, identification of growth initiatives, as well as, operating and cost savings based upon the significant infrastructure it has developed.

 

The contingent consideration of $2.8 million recorded during the six months ended June 30, 2011 is related to an agreement to pay additional amounts based on the achievement of certain performance measures for up to four years ending after the acquisition date. The accrued contingent consideration related to this acquisition was recorded at acquisition-date fair value using the income approach with assumed discount rates ranging from 3.0% to 6.0% over the applicable terms and an assumed payment probability of 100% for each of the applicable years. The range of the undiscounted amount the Company could pay under this contingent consideration agreement is between $0 and $3.2 million.

During the six months ended June 30, 2011, the Company paid and accrued for payments of approximately $9.3 million for contingent consideration related to certain prior-period acquisitions, of which $5.0 million was accrued at December 31, 2010. In connection with prior-period acquisitions, the Company also recorded additional intangible assets consisting primarily of physician and hospital agreements of $1.3 million, fixed assets of approximately $1.0 million and other liabilities of $0.8 million during the six months ended June 30, 2011. The Company expects that approximately $12.5 million of the $13.5 million of goodwill recorded during the six months ended June 30, 2011 will be deductible for tax purposes.

The results of operations of the three practices acquired during the six months ended June 30, 2011 have been included in the Company's Condensed Consolidated Financial Statements from their respective dates of acquisition. The following unaudited pro forma information combines the consolidated results of operations of the Company on a GAAP basis and the acquisitions completed during 2011 as if the transactions had occurred at the beginning of the respective periods (in thousands, except for per share data):

 

     Six Months Ended
June 30,		  
     2011      2010  

Net patient service revenue

    $ 778,023       $ 686,723   

Net income

    $ 102,098       $ 88,968   

Net income per share:

      

Basic

    $ 2.16       $ 1.92   

Diluted

    $ 2.10       $ 1.88   

Weighted average shares:

      

Basic

      47,341         46,409   

Diluted

      48,547         47,398   

The pro forma results do not necessarily represent results which would have occurred if the acquisitions had taken place at the beginning of the periods, nor are they indicative of the results of future combined operations.