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Business Acquisitions
9 Months Ended
Sep. 30, 2011
Business Acquisitions [Abstract] 
Business Acquisitions
6. Business Acquisitions:

During the nine months ended September 30, 2011, the Company completed the acquisition of seven physician group practices for total consideration of $81.0 million, consisting of $72.3 million in cash and $8.7 million of contingent consideration. In connection with these acquisitions, the Company recorded goodwill of $77.2 million, other intangible assets consisting primarily of physician and hospital agreements of $4.8 million, fixed assets of $0.2 million and other liabilities of $1.2 million. The Company has not yet completed the purchase price allocation for a certain physician group practice acquired during the nine months ended September 30, 2011, but management does not believe the additional adjustments will be material. 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 $8.7 million recorded during the nine months ended September 30, 2011 is related to agreements to pay additional amounts based on the achievement of certain performance measures for up to four years ending after the acquisition dates. The accrued contingent consideration related to these acquisitions 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 these contingent consideration agreements is between $0 and $9.6 million.

During the nine months ended September 30, 2011, the Company paid approximately $11.3 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 nine months ended September 30, 2011. The Company expects that approximately $45.5 million of the $82.0 million of goodwill recorded during the nine months ended September 30, 2011 will be deductible for tax purposes.

The results of operations of the seven practices acquired during the nine months ended September 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 and 2010 as if the transactions had occurred on January 1, 2010 (in thousands, except for per share data):

 

     Nine Months Ended
September 30,		  
     2011      2010  

Net patient service revenue

    $ 1,206,979       $ 1,168,932   

Net income

    $ 163,469       $ 177,986   

Net income per share:

   

Basic

    $ 3.44       $ 3.82   

Diluted

    $ 3.36       $ 3.75   

Weighted average shares:

   

Basic

      47,564         46,535   

Diluted

      48,683         47,426   

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.