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Acquisition | 9 Months Ended
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Sep. 30, 2022
Business Combination and Asset Acquisition [Abstract] |
Acquisition | Acquisition On March 29, 2022 (the Acquisition Date), we completed the acquisition of 100% of Apria, Inc. (Apria) pursuant to the Agreement and Plan of Merger (Apria Acquisition) dated January 7, 2022, in exchange for approximately $1.7 billion, net of $144 million of cash acquired. The purchase was funded with a combination of debt and cash on hand. At the time of the Apria Acquisition, each share of Apria’s common stock was converted into the right to receive $37.50 in cash. Apria is a leading provider of integrated home healthcare equipment and related services in the United States. This business is reported as part of the Patient Direct segment. The following table presents the preliminary estimated fair value of the assets acquired and liabilities assumed recognized as of the Acquisition Date. The fair value and useful lives of tangible and intangible assets acquired have been estimated based on various valuation methods, including the income and cost approach, using several significant unobservable inputs including, but not limited to projected cash flows and a discount rate. These inputs are considered Level 3 inputs. The allocation of purchase price to assets and liabilities acquired is not yet complete, as valuations of tangible and intangible assets and liabilities are still in process. The updated preliminary purchase price allocation resulted in an approximate $8.3 million reduction in intangible amortization expense during the three months ended September 30, 2022 that would have been recognized in previous periods if the adjustment to provisional amounts were recognized as of the Acquisition Date. This reduction resulted from a reallocation of intangible assets value to those with longer useful lives as compared to the purchase price allocation originally estimated as of the Acquisition Date.
| Preliminary Fair Value Originally Estimated as of Acquisition Date(1) |  | Differences Between Prior and the Current Periods Preliminary Fair Value Estimate |  | Preliminary Fair Value Currently Estimated as of Acquisition Date
Assets acquired: |  |  |  |  |
Current assets | $ | 142,136 |  |  | $ | (1,968) |  |  | $ | 140,168 |
Goodwill | 1,267,079 |  |  | (17,601) |  |  | 1,249,478 |
Intangible assets | 295,466 |  |  | 17,334 |  |  | 312,800 |
Other non-current assets | 371,320 |  |  | (11,149) |  |  | 360,171 |
Total assets | $ | 2,076,001 |  |  | $ | (13,384) |  |  | $ | 2,062,617 |
Liabilities assumed: |  |  |  |  |
Current liabilities | $ | 241,266 |  |  | $ | 5,012 |  |  | $ | 246,278 |
Noncurrent liabilities | 150,128 |  |  | (18,396) |  |  | 131,732 |
Total liabilities | 391,394 |  |  | (13,384) |  |  | 378,010 |
Fair value of net assets acquired, net of cash | $ | 1,684,607 |  |  | $ | — |  |  | $ | 1,684,607 |
(1) As previously reported in our first quarter 2022 Form 10-Q. Current assets acquired includes $89.3 million in fair value of receivables, which reflects the approximate amount contractually owed. We are amortizing the preliminary fair value of acquired intangible assets, primarily customer relationships, including payor and capitated relationships, and trade names over their estimated weighted average useful lives of one to 15 years. Goodwill of $1.2 billion, which we assigned to our Patient Direct segment, consists largely of expected opportunities to expand into new markets and further develop a presence in the home healthcare business. Approximately $32 million of the goodwill is expected to be deductible for income tax purposes. The following table provides pro forma results of net revenue and net (loss) income for the three and nine months ended September 30, 2022 and 2021 as if Apria was acquired on January 1, 2021. The pro forma results below are not necessarily indicative of the results that would have been if the acquisition had occurred on the dates indicated, nor are the pro forma results indicative of results which may occur in the future.
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Net revenue | $ | 2,497,401 |  |  | $ | 2,789,372 |  |  | $ | 7,681,481 |  |  | $ | 8,166,919 |
Net income (loss) | $ | 12,497 |  |  | $ | 66,935 |  |  | $ | (39,696) |  |  | $ | 227,540 |
Pro forma net loss of $39.7 million for the nine months ended September 30, 2022 includes pro forma adjustments for interest expense of $20.8 million and amortization of intangible assets of $10.9 million, which reflects the updated preliminary purchase price allocation. The pro forma net loss also includes $39.4 million in seller transaction expenses and stock compensation expense associated with $108 million owed to the holders of Apria stock awards in connection with the Apria Acquisition. Revenue and net income of Apria since the Acquisition Date for the three months ended September 30, 2022 included in the consolidated statement of operations were $310 million and $0.7 million, respectively. Revenue and net loss of Apria since the Acquisition Date included in the consolidated statement of operations for the nine months ended September 30, 2022 were $620 million and $38.4 million, respectively.

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