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Business Acquisitions
 12 Months Ended
Dec. 31, 2016
Business Combinations [Abstract]  
Business Acquisitions

6.    Business Acquisitions:

During the year ended December 31, 2016, the Company completed 15 acquisitions, of which 13 were physician group practices including eight anesthesiology practices, two other pediatric subspecialty practices, one neonatology practice, one maternal-fetal medicine practice and one pediatric cardiology practice. In addition, the Company acquired a third-party receivables company and a patient engagement software company as additions to its existing management services organization. The total consideration for the 15 acquisitions was $759.6 million, net of $15.0 million cash acquired, of which $756.1 million was paid in cash and $3.5 million was recorded as a contingent consideration liability.

The 13 physician practice acquisitions expand the Company’s national network of physician practices. The Company expects to improve the results of these physician practices through improved managed care contracting, improved collections, identification of growth initiatives, as well as, operating and cost savings based on the significant infrastructure it has developed. The acquisitions of the third-party receivables company and patient engagement software company are expected to further enhance the Company’s service offerings to its hospital and health system partners as part of its management services organization.

 

The Company’s preliminary allocation of purchase price is as follows (in thousands):

 

     Third-Party
Receivables
Acquisition		      Other
Acquisitions		      Total  

Current assets

    $ 17,819       $ 200       $ 18,019   

Property and equipment

      5,807         866         6,673   

Other noncurrent assets

      115         689         804   

Goodwill

      190,977         299,005         489,982   

Other intangible assets

      221,870         82,756         304,626   

Current liabilities

      (5,863 )       (333 )       (6,196 ) 

Deferred income tax liabilities—long-term

      (31,114 )       (22,388 )       (53,502 ) 

Other long-term liabilities

      (829 )       —           (829 ) 
  

 

 

     

 

 

     

 

 

  
   $ 398,782       $ 360,795       $ 759,577   
  

 

 

     

 

 

     

 

 

  

The Company recorded provisional estimates for deferred income taxes related to the third-party receivables acquisition. The final income tax acquisition accounting is expected to be completed during the measurement period, and management does not believe any adjustments to the provisional amounts will be material.

The contingent consideration of $3.5 million recorded during the year ended December 31, 2016 is related to an agreement to pay an additional cash amount based on the achievement of certain performance measures for up to five years after the acquisition date. The accrued contingent consideration was recorded as a liability at acquisition-date fair value using the income approach with assumed discount rates ranging from 4.5% to 5.3% over the applicable terms and an assumed payment probability of 100% over the applicable years. The range of the undiscounted amount the Company could pay under the contingent consideration agreement is between $0 and $4.1 million. In addition, during the year ended December 31, 2016, the Company paid $11.8 million for contingent consideration related to certain prior-period acquisitions, of which all but the accretion recorded during 2016 was accrued as of December 31, 2015.

In connection with certain prior-period acquisitions, the Company also made additional cash payments of $6.2 million, recorded an increase in deferred tax assets of $19.9 million, a decrease in current assets of $0.2 million, an increase of $2.5 million in deferred tax liabilities and a net decrease of $11.0 million in goodwill for measurement-period adjustments resulting from the finalization of certain income tax acquisition accounting. These adjustments did not have a material impact on the Company’s Consolidated Financial Statements in any period; therefore, the Company has not retrospectively adjusted such statements.

During 2015, the Company completed 12 acquisitions, composed of 10 physician group practices, a leading teleradiology physician services company and a complementary third-party receivables company for total consideration of $853.3 million, inclusive of cash acquired, of which $818.3 million was paid in cash, net of $23.0 million in cash acquired, $7.8 million was paid by issuing 114,306 shares of the Company’s common stock, $3.8 million was recorded as a contingent consideration liability, and $0.4 million was recorded within other current liabilities.

 

The results of operations of the acquisitions completed during the year ended December 31, 2016 and 2015 have been included in the Company’s Consolidated Financial Statements from the 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 2016 and 2015, including adjustments for pro forma amortization and interest expense, as if the transactions had occurred on January 1, 2015 and January 1, 2014, respectively (in thousands, except per share data):

 

     Years Ended December 31,  
     2016      2015  

Pro forma net revenue

    $ 3,336,120       $ 3,276,266   

Pro forma net income

      329,720         348,788   

Pro forma net income per common share (1):

      

Basic

    $ 3.57       $ 3.75   

Diluted

    $ 3.54       $ 3.71   

Weighted average common shares (1):

      

Basic

      92,422         93,077   

Diluted

      93,109         93,960   

 

(1) The comparison of net income per common share is affected by the changes in the number of weighted average shares outstanding in each period.

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 indicated, nor are they indicative of the results of future combined operations.