SEC Filings

10-Q
ENVISION HEALTHCARE CORP filed this Form 10-Q on 11/03/2017
Entire Document
 
Item 1. Financial Statements - (continued)

The acquisition date fair value of the total consideration transferred and acquisition date fair value of each major financial class for individual acquisitions in both the ambulatory services and physician services segments completed in the nine months ended September 30, 2017, including post acquisition date adjustments, are as follows (in millions):
Accounts receivable
$
58.9

Supplies inventory
0.3

Prepaid and other current assets
4.0

Property and equipment
5.4

Goodwill
490.9

Intangible assets
253.0

Other long-term assets
1.1

Accounts payable
(9.0
)
Accrued salaries and benefits
(24.1
)
Other accrued liabilities
(39.8
)
Deferred income taxes
(59.0
)
Other long-term liabilities
(40.8
)
Long-term debt
(0.5
)
Total fair value
640.4

Less: Fair value attributable to noncontrolling interests
31.1

Acquisition date fair value of total consideration transferred
$
609.3


Represents the preliminary allocation of fair value of acquired assets and liabilities associated with these acquisitions at September 30, 2017.

During the nine months ended September 30, 2017, no significant changes were made to the purchase price allocation of assets and liabilities, existing at the date of acquisition, related to individual acquisitions completed in 2016. For the nine months ended September 30, 2017 and 2016 approximately $246.6 million and $159.1 million, respectively, of goodwill recorded was deductible for tax purposes.

The total fair value of acquisitions completed by the Company include amounts allocated to goodwill, which result from the acquisitions' favorable reputations in their markets, their market positions and their ability to deliver quality care with high patient satisfaction consistent with the Company’s business model. Fair value attributable to noncontrolling interests is based on significant inputs that are not observable in the market. Key inputs used to determine the fair value include financial multiples used in the purchase of noncontrolling interests primarily from acquisitions of centers. Such multiples, based on earnings, are used as a benchmark for the discount to be applied for the lack of control or marketability. The fair value of noncontrolling interests for acquisitions where the purchase price allocation is not finalized may be subject to adjustment as the Company completes its initial accounting for acquired intangible assets. Additionally, the Company continues to obtain information relative to the fair values of assets acquired, liabilities assumed and any noncontrolling interests associated with acquisitions completed in the last 12 months. Acquired assets and assumed liabilities include, but are not limited to, fixed assets, licenses, intangible assets and professional liabilities. The valuations are based on appraisal reports, discounted cash flow analyses, actuarial analyses or other appropriate valuation techniques used to determine the fair value of the assets acquired or liabilities assumed. A majority of the deferred income taxes recognized as a component of the Company's purchase price allocation is a result of the difference between the book and tax basis of the amortizable intangible assets recognized. The amount allocated to the deferred income tax liability is subject to change as a result of the final allocation of purchase price to amortizable intangibles. The Company expects to finalize the purchase price allocation for its most recent acquisitions as soon as practical.

During the three and nine months ended September 30, 2017, the Company incurred approximately $18.8 million and $67.7 million of transaction and integration costs, respectively, and during the three and nine months ended September 30, 2016 the Company incurred approximately $16.9 million and $23.4 million, respectively. The costs incurred during these periods were primarily a result of the Merger and from recent acquisitions.
 

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