Humana 2010 Annual Report Download - page 101

Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
3. ACQUISITIONS
On December 21, 2010, we acquired Concentra Inc., or Concentra, a health care company based in Addison,
Texas, for cash consideration of $804.7 million. Through its affiliated clinicians, Concentra delivers occupational
medicine, urgent care, physical therapy, and wellness services to workers and the general public through its
operation of medical centers and worksite medical facilities. The Concentra acquisition provides entry into the
primary care space on a national scale, offering additional means for achieving health and wellness solutions and
providing an expandable platform for growth with a management team experienced in physician asset
management and alternate site care. The preliminary fair values of Concentra’s assets acquired and liabilities
assumed at the date of the acquisition are summarized as follows:
Concentra
(in thousands)
Cash and cash equivalents ......................... $ 21,317
Receivables .................................... 108,571
Other current assets .............................. 20,589
Property and equipment ........................... 131,837
Goodwill ...................................... 531,372
Other intangible assets ............................ 188,000
Other long-term assets ............................ 12,935
Total assets acquired ......................... 1,014,621
Current liabilities ................................ (100,091)
Other long-term liabilities ......................... (109,811)
Total liabilities assumed ...................... (209,902)
Net assets acquired ........................... $ 804,719
The other intangible assets, which primarily consist of customer relationships and trade name, have a
weighted average useful life of 13.7 years. Approximately $57.9 million of the acquired goodwill is deductible
for tax purposes. The purchase price allocation is preliminary, subject to completion of valuation analyses,
including, for example, refining assumptions used to calculate the fair value of other intangible assets. The
purchase agreement contains provisions under which there may be future consideration paid or received related
to the subsequent determination of working capital that existed at the acquisition date. Any payments or receipts
for provisional amounts for working capital will be recorded as an adjustment to goodwill when paid or received.
The results of operations and financial condition of Concentra have been included in our consolidated
statements of income and consolidated balance sheets from the acquisition date. In connection with the
acquisition, we recognized approximately $14.9 million of acquisition-related costs, primarily banker and other
professional fees, in selling, general and administrative expense. The proforma financial information assuming
the acquisition had occurred as of January 1, 2009 was not material to our results of operations.
On October 31, 2008, we acquired PHP Companies, Inc. (d/b/a Cariten Healthcare), or Cariten, for cash
consideration of approximately $291.0 million, including the payment of $34.9 million during 2010 to settle a
purchase price contingency. The Cariten acquisition increased our commercial fully-insured and ASO presence
as well as our Medicare HMO presence in eastern Tennessee. During 2009, we continued our review of the fair
value estimate of certain other intangible and net tangible assets acquired. This review resulted in a decrease of
$27.1 million in the fair value of other intangible assets, primarily related to the fair value assigned to the
customer contracts acquired. There was a corresponding adjustment to goodwill and deferred income taxes. The
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