Humana 2012 Annual Report Download - page 110

Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
On July 6, 2012, we acquired SeniorBridge Family Companies, Inc., or SeniorBridge, a chronic-care
provider of in-home care for seniors, expanding our existing clinical and home health capabilities and
strengthening our offerings for members with complex chronic-care needs. The preliminary allocation of the
purchase price resulted in goodwill of $99 million and other intangible assets of $14 million. The goodwill was
assigned to the Health and Well-Being Services segment and is not deductible for tax purposes. The other
intangible assets, which primarily consist of customer contracts, trade name, and technology, have a weighted
average useful life of 5.2 years.
Effective March 31, 2012, we acquired Arcadian Management Services, Inc., or Arcadian, a Medicare
Advantage health maintenance organization (HMO) serving members in 15 U.S. states, increasing Medicare
membership and expanding our Medicare footprint and future growth opportunities in these areas. The allocation
of the purchase price resulted in goodwill of $44 million and other intangible assets of $38 million. The goodwill
was assigned to the Retail segment and is not deductible for tax purposes. The other intangible assets, which
primarily consist of customer contracts and provider contracts, have a weighted average useful life of 9.7 years.
On December 6, 2011, we acquired Anvita, Inc., or Anvita, a San Diego-based health care analytics
company. The Anvita acquisition provides scalable analytics solutions that produce clinical insights which we
expect to enhance our ability to improve the quality and lower the cost of health care for our members and
customers. The allocation of the purchase price resulted in goodwill of $116 million and other intangible assets
of $60 million. The goodwill was assigned to the Retail segment and is not deductible for tax purposes. The other
intangible assets, which primarily consist of technology, have a weighted average useful life of 6.5 years.
On December 21, 2010, we acquired Concentra Inc., or Concentra, a health care company based in Addison,
Texas, for $805 million. During 2011, we accrued and paid $6 million related to the final determination of
working capital that existed at the acquisition date and recorded immaterial adjustments to the acquisition date
fair value of Concentra’s net tangible assets acquired with a corresponding adjustment to goodwill. 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 provided us entry into this space on a national scale, offering additional
means for achieving health and wellness solutions and providing an expandable platform for growth. The total
consideration of $811 million exceeded our estimated fair value of the net tangible assets acquired by
approximately $725 million, of which we allocated $188 million to other intangible assets and $537 million to
goodwill. The goodwill was assigned to the Health and Well-Being Services segment. Approximately $58
million of the acquired goodwill is deductible for tax purposes. The other intangible assets, which primarily
consist of customer relationships and trade name, have a weighted average useful life of 13.7 years.
The purchase price allocations of Metropolitan and SeniorBridge are preliminary, subject to completion of
valuation analyses, including, for example, refining assumptions used to calculate the fair value of other
intangible assets. The results of operations and financial condition of Metropolitan, SeniorBridge, Arcadian,
Anvita, and Concentra have been included in our consolidated statements of income and consolidated balance
sheets from the acquisition dates. In addition, during 2012 and 2011, we acquired other health and wellness and
technology related businesses which, individually or in the aggregate, have not had, or are not expected to have, a
material impact on our results of operations, financial condition, or cash flows. In 2012, we recognized
acquisition-related costs in connection with 2012 acquisitions of $27 million. Acquisition-related costs were not
material in 2011 or 2010. The pro forma financial information assuming the acquisitions had occurred as of the
beginning of the calendar year prior to the year of acquisition, as well as the revenues and earnings generated
during the current year were not material for disclosure purposes.
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