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ACQUISITIONS OF BUSINESSES
 6 Months Ended
Jun. 30, 2014
ACQUISITIONS OF BUSINESSES [Abstract]  
ACQUISITIONS OF BUSINESSES
3. ACQUISITIONS OF BUSINESSES

On April 30, 2014, the Company acquired a 70% interest in a 13-clinic physical therapy practice.  The purchase price for the 70% interest was $10,625,000 in cash and $400,000 in a seller note, that is payable in two principal installments totaling $200,000 each, plus accrued interest, in April 2015 and 2016. In addition, during the six months ended June 30, 2014, the Company acquired two individual clinic practices for an aggregate of $125,000 in cash.

The purchase prices for the 2014 acquisitions have been preliminarily allocated as follows (in thousands):

Cash paid, net of cash acquired
 
$
10,750
 
Seller notes
  
400
 
Total consideration
 
$
11,150
 
Estimated fair value of net tangible assets acquired:
    
Total current assets
 
$
1,203
 
Total non-current assets
  
1,200
 
Total liabilities
  
(374
)
Net tangible assets acquired
  
2,029
 
Referral relationships
  
-
 
Non-competition agreements
  
-
 
Tradename
  
-
 
Goodwill
  
13,846
 
Fair value of non-controlling interest
  
(4,725
)
 
 
$
11,150
 
 
During 2013, the Company completed the following multi-clinic acquisitions of physical therapy practices:

 
 
 
 
% Interest
 
 
Number of
Acquisition
 
Date
 
Acquired
 
 
Clinics
 
 
 
 
 
 
 
 
 
February 2013 Acquisition
 
February 28
 
 
72%
 
 
9
April 2013 Acquisition
 
April 30
 
 
50%
 
 
5
May 2013 Acquisition
 
May 24
 
 
80%
 
 
5
December 9, 2013 Acquisition
 
December 9
 
 
60%
 
 
12
December 13, 2013 Acquisition
 
December 13
 
 
90%
 
 
11

In addition to the five multi-clinic acquisitions detailed above, in 2013, the Company acquired three individual clinics in separate transactions.
 
The purchase price for the 72% interest in the February 2013 Acquisition was $4.3 million in cash and $400,000 in a seller note, that is payable in two principal installments totaling $200,000 each, plus accrued interest, in February 2014 and 2015. The purchase price for the 50% interest in the April 2013 Acquisition was $2.4 million in cash and $200,000 in a seller note, that is payable in two principal installments totaling $100,000 each, plus accrued interest, in April of 2014 and 2015. The purchase price for the 80% interest in the May 2013 Acquisition was $3.6 million in cash and $200,000 in a seller note, that is payable in two principal installments totaling $100,000 each, plus accrued interest, in May of 2014 and 2015. The purchase price for the 60% interest in the December 9, 2013 Acquisition was $1.7 million in cash. The purchase price for the 90% interest in the December 13, 2013 Acquisition was $35.5 million in cash and $500,000 in a seller note, that is payable in two principal installments totaling $250,000 each, plus accrued interest, in December 2014 and 2015.
 
On February 1, 2013, through a subsidiary, the Company acquired a 100% interest in a clinic for $5,000. On June 1, 2013, the Company acquired a 100% interest in a clinic for $95,000. On September 16, 2013, the Company acquired a 100% interest in a clinic for $130,000.
 
The purchase prices for the 2013 acquisitions have been preliminarily allocated as follows (in thousands):
 
Cash paid, net of cash acquired
 
$
46,628
 
Seller notes
  
1,300
 
Total consideration
 
$
47,928
 
Estimated fair value of net tangible assets acquired:
    
Total current assets
 
$
3,756
 
Total non-current assets
  
2,283
 
Total liabilities
  
(1,082
)
Net tangible assets acquired
  
4,957
 
Referral relationships
  
940
 
Non-competition agreements
  
400
 
Tradename
  
1,500
 
Goodwill
  
50,672
 
Fair value of non-controlling interest
  
(10,541
)
 
 
$
47,928
 

The consideration for each transaction was agreed upon through arm’s length negotiations. Funding for the cash portion of the purchase price for the 2014 and 2013 acquisitions was derived from proceeds under the Credit Agreement.
 
The results of operations of these acquisitions have been included in the Company’s consolidated financial statements since acquired.
 
For the 2014 acquistions and the two acquisitions which occurred in December, 2013, the purchase price plus the fair value of the non-controlling interest for those two acquisitions was allocated to the fair value of the assets acquired and liabilities assumed based on the preliminary estimates of the fair values at the acquisition date, with the amount exceeding the estimated fair values being recorded as goodwill. The Company is in the process of completing its formal valuation analysis to identify and determine the fair value of tangible and identifiable intangible assets acquired and the liabilities assumed. Thus, the final allocation of the purchase price may differ from the preliminary estimates used based on additional information obtained. Changes in the estimated valuation of the tangible and intangible assets acquired and the completion by the Company of the identification of any unrecorded pre-acquisition contingencies, where the liability is probable and the amount can be reasonably estimated, will likely result in adjustments to goodwill.
 
Except for the December 13, 2013 Acquisition, unaudited proforma consolidated financial information for acquisitions occurring in 2013 have not been included as the results were not material to current operations.
 
Unaudited proforma net revenue and net income from continuing operations for the Company as if the December 13, 2013 Acquisition occurred as of January 1, 2013 is as follows (in thousands, except per share data):
 
 
 
Three Months
  
Six Months
 
 
 
Ended
  
Ended
 
 
 
June 30, 2013
  
June 30, 2013
 
 
 
  
 
Net revenues
 
$
69,563
  
$
135,024
 
Net income attributable to common shareholders from continuing operations
 
$
5,717
  
$
9,750
 
 
        
Earnings per share:
        
Basic - net income attributable to common shareholders from continuing operations
 
$
0.47
  
$
0.81
 
Diluted - net income attributable to common shareholders from continuing operations
 
$
0.47
  
$
0.81
 
 
        
Shares used in computation:
        
Basic - net income attributable to common shareholders from continuing operations
  
12,089
   
12,022
 
Diluted - net income attributable to common shareholders from continuing operations
  
12,110
   
12,044