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ACQUISITIONS OF BUSINESSES
 3 Months Ended
Mar. 31, 2015
ACQUISITIONS OF BUSINESSES [Abstract]  
ACQUISITIONS OF BUSINESSES
3. ACQUISITIONS OF BUSINESSES

On January 31, 2015, the Company acquired a 60% interest in a nine-clinic physical therapy practice.  The purchase price for the 60% interest was $6.7 million in cash and $0.5 million in a seller note that is payable in two principal installments totaling $250,000 each, plus accrued interest, in January 2016 and 2017. The purchase price for the 2015 acquisition has been preliminarily allocated as follows (in thousands):

Cash paid, net of cash acquired
 
$
6,445
 
Seller notes
  
500
 
Total consideration
 $ 
6,945
 
Estimated fair value of net tangible assets acquired:
    
Total current assets
 
$
652
 
Total non-current assets
  
533
 
Total liabilities
  
(376
)
Net tangible assets acquired
 
$
809
 
Goodwill
  
10,936
 
Fair value of non-controlling interest
  
(4,800
)
  
$
6,945
 
 
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 $10.6 million in cash and $0.4 million in a seller note that is payable in two principal installments totaling $200,000 each, plus accrued interest, in April 2015 and 2016. On August 1, 2014, the Company acquired 100% interest in a 3-clinic physical therapy practice. The purchase price for the 100% interest was $1.0 million in cash.   In addition, during 2014, the Company acquired three individual clinic practices for an aggregate of $595,000 in cash. The purchase prices for the 2014 acquisitions were allocated as follows (in thousands):

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
  
986
 
Total liabilities
  
(441
)
Net tangible assets acquired
 
$
1,851
 
Referral relationships
  
280
 
Non-compete agreements
  
330
 
Tradename
  
1,600
 
Goodwill
  
13,334
 
Fair value of non-controlling interest
  
(4,725
)
  
$
12,670
 

The consideration for each transaction was agreed upon through arm’s length negotiations. Funding for the cash portion of the purchase price for the 2015 and 2014 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 2015 acquisition, the purchase price plus the fair value of the non-controlling interest was allocated to the fair value of certain assets acquired (patient accounts receivable, equipment and prepaids and deposits) and liabilities assumed (accounts payable and accrued employee benefits) 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 (tradename, non-compete agreements and referral relationships) and the liabilities assumed. Thus, the final allocation of the purchase price will 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.
 
For the 2014 acquisitions, the purchase prices plus the fair value of the non-controlling interest were allocated to the fair value of the assets acquired and liabilities assumed based on the estimates of the fair values at the acquisition date, with the amount exceeding the estimated fair values being recorded as goodwill. 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 6 to 16 years, and for non-compete agreements the estimated lives was six years. The values assigned to tradenames and goodwill is tested annually for impairment.
 
Unaudited proforma consolidated financial information for acquisitions occurring in 2015 and 2014 have not been included as the results were not material to current operations.