BUSINESS COMBINATIONS | BUSINESS COMBINATIONS Onward Healthcare Acquisition On January 7, 2015, the Company completed its acquisition of Onward Healthcare, including its two wholly-owned subsidiaries, Locum Leaders and Medefis (collectively, “OH”), for approximately $76,945 in cash, funded by cash-on-hand and borrowings under the Company’s revolving credit facility. Onward Healthcare is a national nurse and allied healthcare staffing firm, Locum Leaders is a national locum tenens provider, and Medefis is a provider of a software as a service, or “SaaS,” based vendor management system for healthcare facilities. The acquisition helps the Company to expand its service lines and its supply and placement capabilities of healthcare professionals to its clients. The Company accounted for the acquisition using the acquisition method of accounting and, accordingly, it recorded the tangible and intangible assets acquired and liabilities assumed at their estimated fair values as of the date of the acquisition. As of the filing date of this Form 10-Q, the Company is still finalizing the allocation of the purchase price, primarily related to tax matters. The preliminary allocation of the $76,945 purchase price consisted of $25,612 of fair value of tangible assets acquired (including $20,461 of accounts receivable), $21,659 of liabilities assumed (including $10,534 of accounts payable and accrued expenses), $30,219 of identified intangible assets, and $42,773 of goodwill, a portion of which is deductible for tax purposes. The intangible assets include the fair value of tradenames and trademarks, customer relationships, staffing database, acquired technologies and non-compete agreements. The weighted average useful life of the acquired intangible assets is approximately 11 years. The following table summarizes the fair value and useful life of each intangible asset acquired: Fair Value Useful Life (in years) Identifiable intangible assets Tradenames and Trademarks $ 8,100 3 - 15 Customer Relationships 17,600 10 - 15 Staffing Database 2,600 5 Acquired Technologies 1,700 8 Non-compete agreements 219 2 $ 30,219 Of the $42,773 allocated to goodwill, $37,496 and $5,277 were allocated to the Company’s nurse and allied healthcare staffing segment and locum tenens staffing segment, respectively. The results of Onward Healthcare and Medefis are included in the Company’s nurse and allied healthcare staffing segment and the results of Locum Leaders are included in the Company’s locum tenens staffing segment. For the three months ended June 30, 2015 , approximately $36,111 of revenue and $3,822 of income before income taxes of the Onward Healthcare entities were included in the unaudited condensed consolidated statement of operations. For the six months ended June 30, 2015 , approximately $67,347 of revenue and $6,642 of income before income taxes of the Onward Healthcare entities were included in the unaudited condensed consolidated statement of operations. The following summary presents unaudited pro forma consolidated results of operations of the Company for the three and six months ended June 30, 2015 and 2014 as if the OH acquisition described above had occurred on January 1, 2014. The following unaudited pro forma financial information gives effect to certain adjustments, including the reduction in compensation expense related to non-recurring executive salary expense, acquisition-related costs and the amortization of acquired intangible assets. The pro forma financial information is not necessarily indicative of the operating results that would have occurred had the acquisition been consummated as of the date indicated, nor are they necessarily indicative of future operating results. Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Revenue $350,144 $ 278,138 $ 679,939 $ 545,037 Net income $16,280 $ 7,336 $ 29,163 $ 14,996 Net income per common share: Basic $0.34 $ 0.16 $ 0.62 $ 0.32 Diluted $0.33 $ 0.15 $ 0.60 $ 0.31 Avantas Acquisition On December 22, 2014, the Company completed its acquisition of Avantas, a leading provider of clinical labor management services, including workforce consulting, data analytics, predictive modeling and SaaS-based scheduling technology, for $17,520 , which the Company funded through cash-on-hand and borrowings under its revolving credit facility. The total purchase price of $17,520 included $14,470 cash consideration paid, $1,650 cash holdback for potential claims, and contingent earn-out with a fair value of $1,400 . During the six months ended June 30, 2015 , the Company paid an additional $165 to the selling equityholders for a working capital adjustment. The acquisition is intended to help enable the Company to provide a level of workforce predictability to clients that can be integrated with its workforce and staffing solutions. The acquisition is not considered a material business combination and, accordingly, pro forma information is not provided. The Company did not incur any material acquisition-related costs. The Company accounted for the acquisition using the acquisition method of accounting and, accordingly, it recorded the tangible and intangible assets acquired and liabilities assumed at their estimated fair values as of the date of the acquisition. The acquisition agreement provides for a tiered contingent earn-out payment of up to $8,500 to be paid in 2016 based on the operating results of Avantas for the 12 month period ending June 30, 2016. As of the filing date of this Form 10-Q, the Company is still finalizing the allocation of the purchase price, primarily related to tax matters. The preliminary allocation of the purchase price consisted of $1,631 of fair value of tangible assets acquired, $3,821 of liabilities and deferred revenue assumed, $9,960 of identified intangible assets and $9,916 of goodwill, which goodwill is deductible for tax purposes. The intangible assets include the fair value of tradenames and trademarks, customer relationships and acquired technologies. The weighted average useful life of the acquired intangible assets subject to amortization is approximately 14 years . The results of operations of Avantas are included in the nurse and allied healthcare staffing segment in the Company’s consolidated financial statements. |