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Business Acquisitions
 3 Months Ended
Mar. 31, 2017
Business Combinations [Abstract]  
Business Acquisitions

5. Business Acquisitions:

During the three months ended March 31, 2017, the Company completed the acquisition of five physician group practices, including one radiology practice, one neonatology practice, one maternal-fetal medicine practice, one pediatric multi-specialty practice and one pediatric ophthalmology practice. The acquisition-date fair value of the total consideration for the five acquisitions was $112.9 million. Approximately $110.9 million was paid in cash, $0.5 million was paid by issuing 8,804 shares of the Company’s common stock and $1.5 million was recorded as accrued purchase consideration within other current liabilities.

These acquisitions expanded the Company’s national network of physician practices, including the Company’s first acquisition of a radiology physician group practice. The Company expects to improve the results of physician practices through improved managed care contracting, improved collections and identification of growth initiatives, as well as operating and cost savings based on the significant infrastructure it has developed. With respect to the Company’s initial acquisition of a radiology physician practice, the Company believes that it brings a unique value proposition to radiology physician groups, in that the Company can provide not only practice support, but also teleradiology capabilities that can enhance a physician group’s efficiency, provide subspecialty access and help them grow and remain competitive. In addition, the Company believes that radiology physician group practice physicians can complement the staffing needs for its teleradiology services business during certain times, such as nights and weekends, when such physicians are not providing services at their practices.

The 8,804 shares of the Company’s common stock issued as a component of the purchase consideration for an acquisition completed during the three months ended March 31, 2017 had an acquisition-date fair value of $0.5 million. The fair value of such shares was determined using the closing price on the New York Stock Exchange of the Company’s common stock less a discount for lack of marketability, reflecting a three year contractual restriction on the disposition or assignment of such common stock.

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

 

Current assets

    $ 5,469  

Property and equipment

      1,635  

Other noncurrent assets

      1,295  

Goodwill

      101,962  

Other intangible assets

      9,401  

Current liabilities

      (167 ) 

Deferred income tax liabilities – long-term

      (4,011 ) 

Other long-term liabilities

      (2,663 ) 
  

 

 

  
   $ 112,921  
  

 

 

  

Other intangible assets consist primarily of physician and hospital agreements. The Company recorded provisional amounts for certain assets acquired during the three months ended March 31, 2017. Any adjustment for these assets will be recorded during the measurement period and is not expected to be material. The Company expects that $45.4 million of the goodwill recorded during the three months ended March 31, 2017 will be deductible for tax purposes. In addition, during the three months ended March 31, 2017, the Company paid $0.5 million for contingent consideration related to certain prior-period acquisitions, of which all but the accretion recorded during 2017 was accrued as of December 31, 2016.

In connection with a certain prior period acquisition, the Company recorded an increase in deferred tax liabilities of $0.5 million with a corresponding increase in goodwill of $0.5 million resulting from the finalization of certain income tax acquisition accounting.

On March 31, 2017, the Company sold its 75% economic interest in a joint venture that was previously consolidated. The deconsolidation and removal of 100% of the carrying value of the joint venture’s net assets resulted in a gain on sale that was not material. The sale remains subject to a working capital true-up that is expected to be completed within the measurement period and not expected to be material.