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Business Acquisitions
12 Months Ended
Dec. 31, 2018
Business Combinations [Abstract]  
Business Acquisitions

6.    Business Acquisitions:

During the year ended December 31, 2018, the Company completed nine physician group practice acquisitions, including five radiology practices, two neonatology practices and two other pediatric subspecialty practices. The acquisition-date fair value of the total consideration for the nine acquisitions was $111.8 million, net of cash acquired. In connection with these acquisitions, the Company recorded goodwill of $95.0 million, other intangible assets consisting primarily of physician and hospital agreements of $17.2 million, current assets of $1.7 million and other liabilities of $2.1 million.

These acquisitions expanded the Company’s national network of physician practices. 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 acquisition of radiology physician practices, the Company believes that it brings a unique value proposition to radiology physician groups, in that the Company can provide practice management support and a technology platform enabling radiology to be practiced at a national level, as well as teleradiology capabilities that can enhance a physician group’s efficiency, provide subspecialty access and help them to grow strategically and remain competitive while meeting the demands of their hospital partners, third-party payors and regulatory bodies. 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.

During the year ended December 31, 2018, in connection with certain prior-period acquisitions, the Company paid $6.4 million for contingent consideration and $1.2 million for purchase consideration that had been held back pending satisfaction of certain conditions. Of these amounts, all except for the accretion recorded during 2018 were accrued as of December 31, 2017. In addition, the Company recorded a decrease of $5.3 million related to the change in the fair value of a contingent consideration agreement for which the probability of the achievement of certain performance measures was updated. This change in fair value of contingent consideration was recorded within operating expenses.

 

In connection with certain prior-period acquisitions, the Company also recorded a net increase in goodwill of $4.0 million composed of a decrease in current assets of $1.2 million, a decrease in noncurrent assets of $1.5 million and a decrease in liabilities of $0.2 million for measurement-period adjustments resulting from the finalization of acquisition accounting as well as additional cash consideration of $1.5 million related to a working capital true up.

In January 2018, the Company completed the sale of a controlling interest and the contribution of remaining assets to a joint venture related to the $46.0 million of assets held for sale at December 31, 2017. The Company accounts for its 49.0% economic interest in the joint venture as an equity method investment. The investment in this joint venture is included in other assets as presented in the Company’s Condensed Consolidated Balance Sheet.

On November 1, 2018, the Company announced the initiation of a process to potentially divest the Company’s management services service line to allow the Company to focus the organization on its core physician services business. There can be no assurance that this process will result in a transaction, and the Company may decide to retain all or part of the management services service line. The Company had expected that the management services service line could be classified as assets and liabilities held for sale within the Company’s Consolidated Balance Sheets and that historical operating results of the service line could be reported as discontinued operations in the Company’s Consolidated Statements of Income for the year ended December 31, 2018; however, the criteria for such classification was not met at December 31, 2018. The management services service line continues to be classified as held and used as of December 31, 2018.

During the year ended December 31, 2017, the Company completed 10 physician group practice acquisitions, including four radiology practices, two maternal-fetal medicine practices, one neonatology practice, one pediatric multi-specialty practice and two other pediatric subspecialty practices.

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.