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Acquisitions of Businesses and Non-controlling Interests | 12 Months Ended
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Dec. 31, 2014
Acquisitions of Businesses and Non-controlling Interests [Abstract] |
Acquisitions of Businesses and Non-controlling Interests | 3. Acquisitions of Businesses and Non-controlling Interests Acquisition of Businesses During 2014, 2013 and 2012, the Company completed the following multi-clinic acquisitions of physical therapy practices:
Acquisition | Date |  | % Interest Acquired |  |  | Number of Clinics |
| 2014 |  |  |  |  |  |  |  |
April 2014 Acquisition | April 30, 2014 |  |  | 70 | % |  |  | 13 |
August 2014 Acquisition | August 1, 2014 |  |  | 100 | % |  |  | 3 |
| 2013 |  |  |  |  |  |  |  |
February 2013 Acquisition | February 28, 2013 |  |  | 72 | % |  |  | 9 |
April 2013 Acquisition | April 30, 2013 |  |  | 50 | % |  |  | 5 |
May 2013 Acquisition | May 24, 2013 |  |  | 80 | % |  |  | 5 |
December 9, 2013 Acquisition | December 9, 2013 |  |  | 60 | % |  |  | 12 |
December 13, 2013 Acquisition | December 13, 2013 |  |  | 90 | % |  |  | 11 |
| 2012 |  |  |  |  |  |  |  |
May 2012 Acquisition | May 22, 2012 |  |  | 70 | % |  |  | 7 |
In addition to the two multi-clinic acquisitions detailed above, in 2014, the Company acquired four individual clinics in separate transactions. In addition to the five multi-clinic acquisitions detailed above, in 2013, the Company acquired three individual clinics in separate transactions. In addition to the May 2012 Acquisition, in 2012, the Company acquired seven individual clinic in separate transactions. The purchase price for the 70% interest in the April 2014 Acquisition was $10.6 million in cash and a $400,000 seller note, that is payable in two principal installments totaling $200,000 each, plus accrued interest, in April 2015 and 2016. The purchase price for the August 2014 Acquisition was $1.0 million in cash. In addition, during 2014, the Company acquired three individual clinic practices for an aggregate of $595,000. The purchase prices for the 2014 acquisitions have been preliminarily allocated as follows:
Cash paid, net of cash acquired |  | $ | 12,270 |
Seller notes |  |  | 400 |
Total consideration |  | $ | 12,670 |
Estimated fair value of net tangible assets acquired: |  |  |  |
Total current assets |  | $ | 1,306 |
Total non-current assets |  |  | 1,312 |
Total liabilities |  |  | (407 | )
Net tangible assets acquired |  | $ | 2,211 |
Referral relationships |  |  | 280 |
Non-compete |  |  | 330 |
Tradename |  |  | 1,600 |
Goodwill |  |  | 12,974 |
Fair value of non-controlling interest |  |  | (4,725 | )
|  | $ | 12,670 |
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 December 13, 2013, U.S. Physical Therapy, Ltd. (“USPT Ltd.” and “Purchaser”), a wholly-owned subsidiary of the Company, entered into a Reorganization and Purchase Agreement (the “Purchase Agreement”) with ARC Rehabilitation Services, LLC, Athletic & Rehabilitation Center, LLC, Matthew J. Condon, Kevin O’Rourke (collectively referred to as “Sellers”). Prior to, and in connection with, the transaction contemplated by the Purchase Agreement, the Sellers and Purchaser, formed or caused to be formed ARC Physical Therapy Plus, Limited Partnership, a Texas limited partnership (“ARC PT”) and ARC PT Management GP, LLC, a Texas limited liability company (“ARC GP”). ARC GP, which owns a 1% interest in ARC PT, is the sole general partner of ARC PT. ARC PT owns and operates 11 outpatient physical and occupational therapy clinics and has three on site industrial client locations it serves. As a result of the transaction completed by the Purchase Agreement, USPT Ltd. owns 89% of the limited partnership interests of ARC PT and 100% general partnership interest in ARC GP (the “Acquired Interests”). The business acquired complements the Company’s business since it focuses on developing programs for traditional physical and occupational therapy, work hardening, corporate wellness, as well as pre and post offer employment testing and functional capacity testing. For 2013, the results of operations are included in the consolidated results of the Company since December 13, 2013 which includes $505,000 of net revenues and $119,000 of earnings from the December 13, 2013 Acquisition. 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):
|  | Year Ended December 31, 2013 |
Net revenues |  | $ | 275,511 |
Net income attributable to common shareholders from continuing operations |  | $ | 19,231 |
Earnings per share: |  |  |  |
Basic - net income attributable to common shareholders from continuing operations |  |  | 1.60 |
Diluted - net income attributable to common shareholders from continuing operations |  |  | 1.59 |
Shares used in computation: |  |  |  |
Basic - net income attributable to common shareholders from continuing operations |  |  | 12,050 |
Diluted - net income attributable to common shareholders from continuing operations |  |  | 12,069 |
The aggregate purchase price for the three individual clinic practices acquired in 2013 was $238,000. The purchase prices for the acquisitions in 2013 were 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 |  | $ | 3,177 |
Total non-current assets |  |  | 1,541 |
Total liabilities |  |  | (538 | )
Net tangible assets acquired |  | $ | 4,180 |
Referral relationships |  |  | 6,140 |
Non-compete |  |  | 1,080 |
Tradename |  |  | 3,700 |
Goodwill |  |  | 43,369 |
Fair value of non-controlling interest |  |  | (10,541 | )
|  | $ | 47,928 |
The purchase price for the 70% interest in the May 2012 Acquisition was $6,090,000 in cash and $250,000 in seller notes, that are payable in two principal installments totaling $125,000 each, plus any accrued interest, in May 2013 and 2014. The seller notes accrue interest at 3.25% per annum. For the Company, 70% of the goodwill for the May 2012 Acquisition is tax deductible. In addition to the above multi-clinic acquisitions, in 2012, the Company, through its subsidiaries, purchased seven outpatient therapy practices in seven transactions for aggregate cash consideration of $1,938,000 and, in one transaction, a $100,000 note payable. For the Company, approximately 67% of the goodwill for the acquisitions in 2012 is tax deductible. The purchase prices for the acquisitions in 2012 were allocated as follows (in thousands):
Cash paid, net of cash acquired |  | $ | 7,929 |
Seller notes |  |  | 350 |
Total consideration |  | $ | 8,279 |
Estimated fair value of net tangible assets acquired: |  |  |  |
Total current assets |  | $ | 410 |
Total non-current assets |  |  | 525 |
Total liabilities |  |  | (333 | )
Net tangible assets acquired |  | $ | 602 |
Referral relationships |  |  | 857 |
Non-compete |  |  | 265 |
Tradename |  |  | 1,300 |
Goodwill |  |  | 8,147 |
Fair value of non-controlling interest |  |  | (2,892 | )
|  | $ | 8,279 |
The purchase prices plus the fair value of the non-controlling interests for the acquisitions in 2013 and 2012 were allocated to the fair value of the assets acquired, inclusive of identifiable intangible assets, i.e. tradenames, referral relationships and non-compete agreements, and liabilities assumed based on the fair values at the acquisition date, with the amount exceeding the fair values being recorded as goodwill. For the acquisitions in 2014, the purchase prices plus the fair value of the non-controlling interests were allocated to the fair value of the assets acquired, inclusive of identifiable intangible assets 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. For the acquisitions in 2014, the Company is in the process of completing its formal valuation analysis to identify and determine the fair value of tangible and intangible assets acquired and the liabilities assumed. Thus, the final allocation of the purchase price may differ from the preliminary estimates used at December 31, 2014 based on additional information obtained and completion of the valuation of the identifiable intangible assets. Changes in the estimated valuation of the tangible assets acquired, the completion of the valuation of identifiable intangible assets 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. For the acquisitions in 2014, 2013 and 2012, the values assigned to the referral relationships and non-compete agreements are being amortized to expense equally over the respective estimated lives. For referral relationships, the range of the estimated lives was 4½ to 13 years, and for non-compete agreements the estimated lives was six years. Generally, the values assigned to tradenames are tested annually for impairment, however with regards to one acquisition in 2013, the tradename is being amortized over the term of the six year agreement in which the Company has acquired the rights to use the specific tradename. The values assigned to goodwill are tested annually for impairment. In April 2012, the Company sold 1% of its interest in an acquisition that occured in July 2011 ("July 2011 Acquisition") to the limited partners. As a result, the Company owns a 50% interest in the July 2011 Acquisition, 1% as a general partner and 49% as a limited partner. For the 2014, 2013 and 2012 acquisitions, total current assets primarily represent primarily patient accounts receivable. Total non-current assets are fixed assets, primarily equipment, used in the practices. The consideration paid for each of the acquisitions was derived through arm’s length negotiations. Funding for the cash portions was derived from proceeds from the Company’s previous revolving credit facility. The results of operations of the acquisitions have been included in the Company’s consolidated financial statements since their respective date of acquisition. Unaudited proforma consolidated financial information for the acquisitions in 2014, 2013, with the exception of the December 13, 2013 Acquisition, and 2012 acquisitions have not been included as the results, individually and in the aggregate, were not material to current operations. Acquisitions and Revaluation of Non-controlling Interests In four separate transactions during 2014, the Company purchased interests in two partnerships which were previously classified as redeemable non-controlling interest. The interests in the partnerships purchased ranged from 10.0% to 35.0%. The aggregate of the purchase prices paid was $4.9 million, which included $3.0 million of net book value. The remaining purchase price of $1.9 million, less future tax benefits of $0.8 million, was recognized as an adjustment to additional paid-in capital. For 2014, the following table details the changes in the carrying amount of redeemable non-controlling interest:
|  | Year Ended December 31, 2014 |
Beginning balance |  | $ | 4,104 |
Increase due to revaluation and operating results of redeemable non-controlling interests |  |  | 1,784 |
Reclass of non-controlling interests |  |  | 6,375 |
Purchases of redeemable non-controlling interests |  |  | (4,887 | )
Ending balance |  | $ | 7,376 |
The non-controlling interests that are reflected as redeemable non-controlling interests in the consolidated financial statements consist of those owners who have certain redemption rights that are currently exercisable, and that, if exercised, require that the Company purchase the non-controlling interest of those owners. The redeemable non-controlling interests are adjusted to the fair value in the reporting period in which the Company deems it probable that the limited partner will assert the redemption rights and it will be adjusted each reporting period thereafter. The adjustments are charged to additional paid-in capital and are not reflected in the statements of net income. Although the adjustments are not reflected in the statements of net income, current accounting rules require that the Company reflects the charge in the earnings per share calculation. Also, in four separate transactions during 2014, the Company purchased partnership interests in four partnerships. The interests in the partnerships purchased and sold ranged from less than 1% to 35%. The aggregate of the purchase prices paid was $0.6 million. The purchase prices paid included a net of $0.1 million of undistributed earnings. The remaining $0.5 million, less future tax benefits of $0.2 million, was recognized as an adjustment to additional paid-in capital. In 15 separate transactions during 2013, the Company purchased partnership interests in 10 partnerships and sold interests in five partnerships. The interests in the partnerships purchased and sold ranged from less than 1% to 35%. The aggregate of the purchase prices paid, was $1.9 million and the proceeds for the sales was $0.8 million, which included cash of $0.2 million and notes receivable of $0.6 million. The purchase prices paid included a net of $0.1 million of undistributed earnings. The remaining $1.0 million, less future tax benefits of $0.4 million, was recognized as an adjustment to additional paid-in capital. In 15 separate transactions during 2012, the Company purchased partnership interests in 15 partnerships. The interests in the partnerships purchased ranged from 10% to 35%. The aggregate of the purchase prices paid was $2.2 million, which included $0.2 million of undistributed earnings. The remaining purchase price of $2.0 million, less future tax benefits of $0.8 million, was recognized as an adjustment to additional paid-in capital. During 2012, the Company sold interests in the range of 0.64% to 1% in three partnerships for an aggregate price of $239,000. This amount less related undistributed earnings of $5,000 was credited to additional paid-in capital. The results of operations of the acquired non-controlling interests are included in the accompanying financial statements from the dates of purchase in the net income attributable to common shareholders.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1383-128463 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6996-128479 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=39739317&loc=d3e4922-128472 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=39739317&loc=d3e4934-128472 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=39739317&loc=d3e4926-128472 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7000-128479 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1392-128463 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1486-128463 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6927-128479 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1497-128463 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1490-128463 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7008-128479 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=39739317&loc=d3e4845-128472 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1500-128463 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1524-128463 + Details
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