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Business Combinations and Goodwill | 6 Months Ended
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Jun. 30, 2024
Business Combination and Asset Acquisition [Abstract] |
Business Combinations and Goodwill | 3. Business Combinations and Goodwill Advanced Health Management Systems, L.P. (“AHMS”) On March 31, 2024, the Company, through its wholly owned subsidiary, purchased all of the outstanding general and limited partnership interests of AHMS. AHMS's wholly owned subsidiary operates a Restricted Knox-Keene licensed health plan in Los Angeles, California. At June 30, 2024, total consideration for the acquisition was $63.9 million. The consideration is subject to change based on working capital adjustments. Prime Community Care of Central Valley, Inc. (“PCCCV”) On March 29, 2024, the Company, through its consolidated VIE, acquired certain assets of PCCCV, a professional medical corporation that operates in Central California. Total consideration of the acquisition was approximately $10.5 million, consisting of cash funded upon the close date and contingent considerations fair valued at $2.5 million on March 29, 2024 (“PCCCV contingent considerations”). Refer to Note 19 - “Fair Value Measurements of Financial Instruments” for additional information on contingent considerations. Community Family Care Medical Group IPA, Inc. (“CFC”) On January 31, 2024, the Company, through its consolidated VIE, acquired certain assets of CFC. CFC is an RBO that manages the healthcare of members in the Los Angeles, California area. The group serves patients across Medicare, Medicaid, and Commercial payers. At June 30, 2024, the total consideration for the purchase was $121.0 million, consisting of $91.0 million cash funded upon the close date, $22.0 million of the Company’s common stock, resulting in the issuance of 631,712 shares of common stock, and contingent considerations fair valued at $8.0 million on January 31, 2024 (“CFC contingent considerations”). The consideration is subject to change based on working capital adjustments. Refer to Note 19 - “Fair Value Measurements of Financial Instruments” for additional information on contingent considerations. Advanced Diagnostic and Surgical Center, Inc. (“ADSC”) On January 1, 2024, the Company acquired 95% of the equity interest of ADSC. ADSC is a diagnostic and surgical center that also provides ambulatory surgery services. The total consideration consisted of cash funded upon close of the transaction and contingent considerations fair valued at $3.6 million on January 1, 2024 (“ADSC contingent considerations”) and is subject to change based on working capital adjustments. Refer to Note 19 - “Fair Value Measurements of Financial Instruments” for additional information on contingent considerations. The Company is still in the process of finalizing the purchase price allocation for these acquisitions, and therefore, the balances are subject to change as a result of any working capital or fair value adjustments. The following table summarizes the preliminary purchase price allocation of the fair value of assets acquired and liabilities assumed related to each acquisition at the acquisition date (in thousands):
|  | CFC |  |  | AHMS |  |  | Others * |  |  | Net Total |
Total purchase consideration: |  |  |  |  |  |  |  |  |  |  |  |
Cash paid |  | $ | 90,998 |  |  | $ | 63,935 |  |  | $ | 12,500 |  |  | $ | 167,433 |
Contingent consideration |  |  | 8,026 |  |  |  | — |  |  |  | 6,161 |  |  |  | 14,187 |
Common stock issued |  |  | 21,952 |  |  |  | — |  |  |  | — |  |  |  | 21,952 |
|  | $ | 120,976 |  |  | $ | 63,935 |  |  | $ | 18,661 |  |  | $ | 203,572 |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 15,083 |  |  | $ | 33,950 |  |  | $ | 3,515 |  |  | $ | 52,548 |
Investment in marketable securities |  |  | — |  |  |  | — |  |  |  | 30 |  |  |  | 30 |
Receivables |  |  | 6,530 |  |  |  | 11,007 |  |  |  | — |  |  |  | 17,537 |
Other Receivables |  |  | 472 |  |  |  | — |  |  |  | — |  |  |  | 472 |
Prepaid expenses and other current assets |  |  | — |  |  |  | 36 |  |  |  | 11 |  |  |  | 47 |
Amount due from affiliates |  |  | 2,902 |  |  |  | — |  |  |  | — |  |  |  | 2,902 |
Land, property and equipment |  |  | — |  |  |  | — |  |  |  | 823 |  |  |  | 823 |
Intangible assets |  |  | 28,200 |  |  |  | 23,800 |  |  |  | 3,900 |  |  |  | 55,900 |
Goodwill |  |  | 85,208 |  |  |  | 31,811 |  |  |  | 11,121 |  |  |  | 128,140 |
Income tax receivable |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | 1 |
Restricted cash |  |  | — |  |  |  | 300 |  |  |  | — |  |  |  | 300 |
Total identifiable assets acquired |  | $ | 138,395 |  |  | $ | 100,904 |  |  | $ | 19,401 |  |  | $ | 258,700 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable and accrued expenses |  | $ | 1,641 |  |  | $ | 7,111 |  |  | $ | 250 |  |  | $ | 9,002 |
Medical liabilities |  |  | 15,754 |  |  |  | 15,849 |  |  |  | — |  |  |  | 31,603 |
Amount due from affiliates |  |  | — |  |  |  | 5,890 |  |  |  | 54 |  |  |  | 5,944 |
Income taxes payable |  |  | 24 |  |  |  | 1,689 |  |  |  | — |  |  |  | 1,713 |
Deferred tax liability |  |  | — |  |  |  | 6,430 |  |  |  | 8 |  |  |  | 6,438 |
Noncontrolling interest |  |  | — |  |  |  | — |  |  |  | 428 |  |  |  | 428 |
Total identified liabilities assumed |  | $ | 17,419 |  |  | $ | 36,969 |  |  | $ | 740 |  |  | $ | 55,128 |
Total net identifiable assets acquired |  | $ | 120,976 |  |  | $ | 63,935 |  |  | $ | 18,661 |  |  | $ | 203,572 |
* Others consist of estimated fair values of the assets acquired, net of cash acquired, related to ADSC and PCCCV. Following the acquisition dates, the operating results have been included in our condensed consolidated financial statements. For the period from the acquisition dates through June 30, 2024, the total revenue and net income of CFC, AHMS, ADSC and PCCCV, in aggregate, were $132.7 million and $11.4 million, respectively. Unaudited Pro Forma Financial Information The pro forma financial information in the table below presents the combined results of the Company and CFC, AHMS, ADSC and PCCCV as if the acquisitions had occurred on January 1, 2023. The pro forma information presented is shown for illustrative purposes only and is not necessarily indicative of future results of operations of the Company or results of operations of the Company that would have actually occurred had the transactions been in effect for the periods presented.
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
(in thousands, except per share amounts) |  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Total revenue |  | $ | 486,265 |  |  | $ | 395,006 |  |  | $ | 955,068 |  |  | $ | 777,468 |
Net income attributable to Astrana Health, Inc. |  | $ | 19,171 |  |  | $ | 18,337 |  |  | $ | 37,641 |  |  | $ | 38,660 |
Net income per share – basic |  | $ | 0.40 |  |  | $ | 0.39 |  |  | $ | 0.79 |  |  | $ | 0.83 |
Net income per share – diluted |  | $ | 0.40 |  |  | $ | 0.39 |  |  | $ | 0.79 |  |  | $ | 0.83 |
The acquisitions were accounted for under the acquisition method of accounting. The fair value of the consideration for the acquired companies was allocated to acquired tangible and intangible assets and liabilities based upon their fair values. The excess of the purchase consideration over the fair value of the net tangible and identifiable intangible assets acquired was recorded as goodwill. Factors leading to goodwill being recognized are the Company’s expectation of synergies from combining operations of entities acquired and the Company, as well as the value of intangible assets that are not separately recognized, such as assembled workforce. The determination of the fair value of assets and liabilities acquired requires the Company to make estimates and use valuation techniques when market value is not readily available. Transaction costs associated with business acquisitions are expensed as they are incurred. At the time of acquisition, the Company estimates the amount of the identifiable intangible assets based on a valuation and the facts and circumstances available at the time. The Company determines the final value of the identifiable intangible assets as soon as information is available, but not more than one year from the date of acquisition. Goodwill is not deductible for tax purposes. The Company had no impair ment of its goodwill or indefinite-lived intangible assets during the three and six months ended June 30, 2024 and 2023. The change in the carrying value of goodwill for the six months ended June 30, 2024 was as follows (in thousands):
|  | Amount |
Balance, January 1, 2024 |  | $ | 278,831 |
Acquisitions |  |  | 128,140 |
Adjustments |  |  | 2,610 |
Balance, June 30, 2024 |  | $ | 409,581 |

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
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