Humana 2008 Annual Report Download - page 88

Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
goodwill is not deductible for tax purposes. The purchase price allocation is preliminary, subject to completion of
valuation analyses including refining assumptions used to calculate the fair value of other intangible assets, fixed
assets, and certain reserves.
On August 29, 2008, we acquired Metcare Health Plans, Inc., or Metcare, for cash consideration of
approximately $14.9 million. The acquisition expanded our Medicare HMO membership in central Florida.
On May 22, 2008, we acquired OSF Health Plans, Inc., or OSF, a managed care company serving both
Medicare and commercial members in central Illinois, for cash consideration of approximately $84.0 million.
This acquisition expanded our presence in Illinois, broadening our ability to serve multi-location employers with
a wider range of products including our specialty offerings. The total consideration paid exceeded our estimated
fair value of the net tangible assets acquired by approximately $27.8 million of which we allocated $10.1 million
to other intangible assets and $17.7 million to goodwill. The other intangible assets, which primarily consist of
customer contracts, have a weighted-average useful life of 9.9 years. The acquired goodwill is not deductible for
tax purposes.
On April 30, 2008, we acquired UnitedHealth Group’s Las Vegas, Nevada individual SecureHorizons
Medicare Advantage HMO business, or SecureHorizons, for cash consideration of approximately $185.3 million,
plus subsidiary capital and surplus requirements of $40 million. The acquisition expanded our presence into the
rapidly growing Las Vegas market. The total consideration paid exceeded our estimated fair value of the net
tangible assets acquired by approximately $185.3 million of which we allocated $69.3 million to other intangible
assets and $116.0 million to goodwill. The other intangible assets, which primarily consist of customer and
provider contracts, have a weighted-average useful life of 10.9 years. The acquired goodwill is deductible for tax
purposes.
The Cariten, OSF, and Metcare purchase agreements contain provisions under which there may be future
contingent consideration paid or received, primarily related to balance sheet settlements associated with medical
claims runout and Medicare reconciliations with CMS. Any contingent consideration will be recorded as an
adjustment to goodwill when the contingencies are resolved.
The pro forma effects of the 2008 acquisitions, individually and in the aggregate, on the consolidated
statements of income were not material.
On November 30, 2007, we acquired KMG America Corporation, or KMG, for cash consideration of $155.2
million plus the assumption of $36.1 million of long-term debt. KMG provides long-duration insurance benefits
including supplemental health and life products. The acquisition expanded our commercial product offerings
allowing for significant cross-selling opportunities with our medical insurance products. The total consideration
paid exceeded our estimated fair value of the net tangible assets acquired by approximately $204.5 million of
which we allocated $43.0 million to other intangible assets and $161.5 million to goodwill. The other intangible
assets, which primarily consist of customer contracts, have a weighted-average useful life of 19.3 years. The
acquired goodwill is not deductible for tax purposes.
On October 1, 2007, we acquired CompBenefits Corporation, or CompBenefits, for cash consideration of
$369.6 million. CompBenefits provides dental and vision insurance benefits. The acquisition expanded our
commercial product offerings allowing for significant cross-selling opportunities with our medical insurance
products. The total consideration paid exceeded our estimated fair value of the net tangible assets acquired by
approximately $354.9 million of which we allocated $54.1 million to other intangible assets and $300.8 million
to goodwill. The other intangible assets, which primarily consist of customer and provider contracts, have a
weighted-average useful life of 11.5 years. The acquired goodwill is not deductible for tax purposes.
78