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.3

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Unaudited Pro Forma Condensed Combined Financial Information

 

 

The following unaudited pro forma combined financial information is presented to illustrate the effect of acquisition of the personal care business (the “Acquired Business”) of Curo Health Services, LLC, a Delaware limited liability company, which does business as Gentiva (“Gentiva”). The financial statements of KAH Hospice Company-Personal Care are in and we refer to KAH Hospice Company-Personal Care as Gentiva. The acquisition closed on December 2, 2024, and pursuant to the terms of the purchase agreement dated as of June 8, 2024, Addus HealthCare, Inc. (“Addus HealthCare” or the “Company”) acquired (A) all of the outstanding equity interests of (i) IntegraCare of Abilene, LLC, a Texas limited liability company, (ii) NP Plus, LLC, a Delaware limited liability company, (iii) Girling Health Care Services of Knoxville, Inc., a Tennessee corporation, and (iv) Girling Health Care, Inc., a Texas corporation and (B) certain assets and liabilities of (i) Central Arizona Home Health Care, Inc., an Arizona corporation, (ii) Community Home Care & Hospice, LLC, a Delaware limited liability company, (iii) TNMO Healthcare, LLC, a Delaware limited liability company, and (iv) Odyssey HealthCare Operating A, LP, a Delaware limited partnership, for an aggregate purchase price, in cash, of $350 million, subject to customary adjustments for working capital and other items. The purchase was funded through the Company’s existing revolving credit facility and a portion of the net proceeds of the Company’s public offering of common stock, which closed on June 28, 2024.

The following unaudited pro forma combined balance sheet as of September 30, 2024, and the unaudited pro forma combined statement of operations for the nine months ended September 30, 2024 and the year ended December 31, 2023 are based on the audited historical consolidated financial statements of Addus HealthCare as of and for the year ended December 31, 2023 and unaudited condensed interim financial statements of Addis HealthCare as of and for the nine months ended September 30, 2024 and the audited combined financial statements of KAH Hospice Company-Personal Care (a carve-out business of KAH Hospice Company, Inc.) as of and for the year ended December 31, 2023 and the unaudited condensed combined financial statements of KAH Hospice Company-Personal (a carve-out business of KAH Hospice Company, Inc.) as of and for the nine months ended September 30, 2024. The unaudited pro forma combined financial information gives effect to the Acquisition as if it occurred on (i) September 30, 2024 for the purposes of the unaudited pro forma combined balance sheet, and (ii) on January 1, 2023 for purposes of the unaudited pro forma combined statement of operations for the nine months ended September 30, 2024 and for the year ended December 31, 2023.

The unaudited pro forma combined financial data has been prepared using the acquisition method of accounting for business combinations under Generally Accepted Accounting Principles (“GAAP”). The adjustments necessary to fairly present the unaudited pro forma combined financial data have been made based on available information in the opinion of management are reasonable. Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with this unaudited pro forma combined financial data. The pro forma adjustments relating to the acquisition of Gentiva are preliminary and revisions to the fair value of assets acquired and liabilities assumed may have a significant impact on the pro forma adjustments. A final valuation of assets acquired and liabilities assumed has not been completed and the completion of fair value determinations may result in changes in the values assigned to property and equipment and other assets (including intangibles) acquired and liabilities assumed.

The unaudited pro forma combined financial data is for illustrative purposes only and does not purport to represent what the Company’s financial position or results of operations actually would have been had the events noted above in fact occurred on the assumed dates or to project our financial position or results of operations for any future date or future period. The unaudited pro forma combined financial data should be read in conjunction with the consolidated financial statements and notes thereto of the Company and Gentiva.

 

 

 

 

 

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

 

Pro forma Combined Balance Sheet

As of September 30, 2024

(Amounts in thousands)

(Unaudited)

 

 

Addus

 

 

KAH Hospice Company-Personal Care
Historical After Reclassifications
(Note 3)

 

 

Transaction Accounting Adjustments

 

 

 

Pro Forma Combined

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash

$

222,852

 

 

$

90

 

 

$

(128,766

)

 (b)

 

$

94,176

 

Accounts receivable, net of allowances

 

96,600

 

 

 

26,933

 

 

 

—

 

 

 

 

123,533

 

Prepaid expenses and other current assets

 

13,362

 

 

 

—

 

 

 

—

 

 

 

 

13,362

 

Total current assets

 

332,814

 

 

 

27,023

 

 

 

(128,766

)

 

 

 

231,071

 

Property and equipment, net of accumulated depreciation and amortization

 

23,716

 

 

 

1,585

 

 

 

(473

)

 (a)

 

 

24,828

 

Other assets

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

663,614

 

 

 

287,699

 

 

 

29,155

 

 (a)

 

 

980,468

 

Intangibles, net of accumulated amortization

 

86,606

 

 

 

13,596

 

 

 

19,404

 

 (a)

 

 

119,606

 

Operating lease assets, net

 

44,535

 

 

 

5,273

 

 

 

190

 

 (a)

 

 

49,998

 

Other long-term assets

 

1,616

 

 

 

123

 

 

 

—

 

 

 

 

1,739

 

Total other assets

 

796,371

 

 

 

306,691

 

 

 

48,749

 

 

 

 

1,151,811

 

Total assets

$

1,152,901

 

 

$

335,299

 

 

$

(80,490

)

 

 

$

1,407,710

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

$

27,726

 

 

$

896

 

 

$

—

 

 

 

$

28,622

 

Accrued payroll

 

57,982

 

 

 

5,935

 

 

 

—

 

 

 

 

63,917

 

Accrued expenses

 

34,257

 

 

 

11,394

 

 

 

—

 

 

 

 

45,651

 

Operating lease liabilities, current portion

 

11,155

 

 

 

1,817

 

 

 

—

 

 

 

 

12,972

 

Government stimulus advances

 

13,655

 

 

 

330

 

 

 

—

 

 

 

 

13,985

 

Accrued workers' compensation insurance

 

13,043

 

 

 

2,708

 

 

 

—

 

 

 

 

15,751

 

Total current liabilities

 

157,818

 

 

 

23,080

 

 

 

—

 

 

 

 

180,898

 

Long-term liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt, net of debt issuance costs

 

—

 

 

 

—

 

 

 

233,000

 

 (b)

 

 

233,000

 

Long-term operating lease liabilities

 

38,608

 

 

 

3,388

 

 

 

—

 

 

 

 

41,996

 

Other long-term liabilities

 

8,841

 

 

 

2,342

 

 

 

4,765

 

 (a)

 

 

15,948

 

Total long-term liabilities

 

47,449

 

 

 

5,730

 

 

 

237,765

 

 

 

 

290,944

 

Total liabilities

$

205,267

 

 

$

28,810

 

 

$

237,765

 

 

 

$

471,842

 

Stockholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

$

18

 

 

$

—

 

 

$

—

 

 

 

$

18

 

Additional paid-in capital

 

590,712

 

 

 

—

 

 

 

—

 

 

 

 

590,712

 

Retained earnings

 

356,904

 

 

 

306,489

 

 

 

(318,255

)

(c)

 

 

345,138

 

Total stockholders' equity

 

947,634

 

 

 

306,489

 

 

 

(318,255

)

 

 

 

935,868

 

Total liabilities and stockholders' equity

$

1,152,901

 

 

$

335,299

 

 

$

(80,490

)

 

 

$

1,407,710

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to unaudited pro forma financial information.

2

 

 

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

 

Pro Forma Combined Statement of Operations

For the Nine Months Ended September 30, 2024

(Amounts and shares in thousands, except per share data)

(Unaudited)

 

 

Addus

 

 

KAH Hospice Company-Personal Care

 

 

Transaction Accounting Adjustments

 

 

 

Pro Forma Combined

 

Net service revenues

$

857,455

 

 

$

210,823

 

 

$

—

 

 

 

$

1,068,278

 

Cost of service revenues

 

583,916

 

 

 

155,896

 

 

 

—

 

 

 

 

739,812

 

Gross profit

 

273,539

 

 

 

54,927

 

 

 

—

 

 

 

 

328,466

 

General and administrative expenses

 

187,444

 

 

 

43,506

 

 

 

72

 

(d)

 

 

231,022

 

Depreciation and amortization

 

10,316

 

 

 

1,433

 

 

 

1,870

 

(e)

 

 

13,619

 

Total operating expenses

 

197,760

 

 

 

44,939

 

 

 

1,942

 

 

 

 

244,641

 

Operating income

 

75,779

 

 

 

9,988

 

 

 

(1,942

)

 

 

 

83,825

 

Interest income

 

(2,805

)

 

 

(23

)

 

 

—

 

 

 

 

(2,828

)

Interest expense

 

5,445

 

 

 

34

 

 

 

11,239

 

(f)

 

 

16,718

 

Total interest expense, net

 

2,640

 

 

 

11

 

 

 

11,239

 

 

 

 

13,890

 

Income before income taxes

 

73,139

 

 

 

9,977

 

 

 

(13,181

)

 

 

 

69,935

 

Income tax expense

 

19,067

 

 

 

1,982

 

 

 

(3,436

)

(g)

 

 

17,613

 

Net income

$

54,072

 

 

$

7,995

 

 

$

(9,745

)

 

 

$

52,322

 

Net income per common share

 

 

 

 

 

 

 

 

 

 

 

 

Basic income per share

$

3.24

 

 

 

 

 

 

 

 

 

$

3.13

 

Diluted income per share

$

3.17

 

 

 

 

 

 

 

 

 

$

3.07

 

Weighted average number of common shares and potential common
   shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

16,707

 

 

 

 

 

 

 

 

 

 

16,707

 

Diluted

 

17,065

 

 

 

 

 

 

 

 

 

 

17,065

 

 

 

See accompanying notes to unaudited pro forma financial information.

3

 

 

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

 

Pro Forma Combined Statement of Operations

For the Year Ended December 31, 2023

(Amounts and shares in thousands, except per share data)

(Unaudited)

 

 

Addus

 

 

KAH Hospice Company-Personal Care

 

 

Transaction Accounting Adjustments

 

 

 

Pro Forma Combined

 

Net service revenues

$

1,058,651

 

 

$

279,550

 

 

$

—

 

 

 

$

1,338,201

 

Cost of service revenues

 

718,775

 

 

 

201,925

 

 

 

—

 

 

 

 

920,700

 

Gross profit

 

339,876

 

 

 

77,625

 

 

 

—

 

 

 

 

417,501

 

General and administrative expenses

 

234,794

 

 

 

56,363

 

 

 

11,862

 

(h)

 

 

303,019

 

Depreciation and amortization

 

14,126

 

 

 

2,010

 

 

 

2,394

 

(e)

 

 

18,530

 

Total operating expenses

 

248,920

 

 

 

58,373

 

 

 

14,256

 

 

 

 

321,549

 

Operating income

 

90,956

 

 

 

19,252

 

 

 

(14,256

)

 

 

 

95,952

 

Interest income

 

(1,476

)

 

 

(12

)

 

 

—

 

 

 

 

(1,488

)

Interest expense

 

11,106

 

 

 

51

 

 

 

14,972

 

(f)

 

 

26,129

 

Total interest expense, net

 

9,630

 

 

 

39

 

 

 

14,972

 

 

 

 

24,641

 

Income before income taxes

 

81,326

 

 

 

19,213

 

 

 

(29,228

)

 

 

 

71,311

 

Income tax expense

 

18,810

 

 

 

3,713

 

 

 

(6,760

)

(g)

 

 

15,763

 

Net income

$

62,516

 

 

$

15,500

 

 

$

(22,468

)

 

 

$

55,548

 

Net income per common share

 

 

 

 

 

 

 

 

 

 

 

 

Basic income per share

$

3.91

 

 

 

 

 

 

 

 

 

$

3.47

 

Diluted income per share

$

3.83

 

 

 

 

 

 

 

 

 

$

3.41

 

Weighted average number of common shares and potential common
   shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

15,996

 

 

 

 

 

 

 

 

 

 

15,996

 

Diluted

 

16,311

 

 

 

 

 

 

 

 

 

 

16,311

 

 

 

See accompanying notes to unaudited pro forma financial information.

4

 

 

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

 

Notes to Pro Forma Combined Financial Statements

 

Note 1 – Description of the Transaction

 

On December 2, 2024, the Company completed the acquisition of Gentiva. The purchase price was approximately $350.0 million, and is subject to the completion of working capital and related adjustments. The purchase was funded with the combination of a $233.0 million draw on the Company’s revolving credit facility. With the Gentiva Acquisition, the Company expanded its services within its personal care services segment to Arizona, Arkansas, California, Missouri, North Carolina and Texas. The home health segment was expanded in Tennessee.

 

Note 2 – Basis of Presentation

 

The unaudited pro forma combined financial information is based on historical financial statements of the Company and Gentiva, as adjusted for the unaudited pro forma effects of the transaction. The unaudited pro forma combined financial information should be read in conjunction with:

 

•
the historical consolidated financial statements and accompanying notes of the Company included in its Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 27, 2024;

 

•
the unaudited historical condensed consolidated financial statements and accompanying notes of the Company included in its Quarterly Report on Form 10-Q for the nine months ended September 30, 2024 filed with the SEC on November 5, 2024;

 

•
the historical consolidated financial statements and accompanying notes of KAH Hospice Company-Personal Care for the calendar year ended December 31, 2023 included in this Amendment No. 1 to Current Report on Form 8-K; and

 

•
the historical unaudited condensed financial statements and accompanying notes of KAH Hospice Company-Personal Care as of September 30, 2024 and for the nine months ended September 30, 2024 also included in this Amendment No. 1 to Current Report on Form 8-K.

 

The unaudited pro forma combined balance sheet presents the financial position of the Corporation as if the transaction was consummated on September 30, 2024. The unaudited pro forma combined statements of operations for the nine months ended September 30, 2024 and for the year ended December 31, 2023 give effect as if the transaction was consummated on January 1, 2023.

 

The unaudited pro forma adjustments and related assumptions are described in the accompanying notes to the unaudited pro forma combined financial information. The unaudited pro forma combined financial information has been prepared based upon currently available information and assumptions that are deemed appropriate by the Corporation’s management. The unaudited pro forma combined financial information is for informational and illustrative purposes only and is not intended to be indicative of what actual results would have been had the transaction occurred on the dates assumed, nor does such data purport to represent the consolidated financial results of the Corporation for future periods. The actual financial position and results of operations may differ significantly from the unaudited pro forma amounts reflected herein due to a variety of factors.

 

The unaudited pro forma combined financial information of the Corporation was prepared in accordance with Article 11 of Regulation S-X.

 

Note 3 - Reclassification adjustments

 

The unaudited pro forma condensed combined balance sheet has been adjusted to reflect certain reclassifications of KAH Hospice Company-Personal Care’s consolidated financial statements to conform to Addus’ financial statement presentation.

5

 

 

 

Reclassification adjustments that have been made to the historical presentation of KAH Hospice Company-Personal Care to conform to the financial statement presentation of Addus are as follows (in thousands):

 

Addus
Balance Sheet Presentation

 

KAH Hospice Company-Personal Care
Balance Sheet Presentation

 

Before Reclassification

 

 

Reclassification

 

 

After Reclassification

 

Intangibles, net of accumulated amortization

 

 

 

 

 

 

$

13,596

 

 

$

13,596

 

 

 

Certificates of need

 

$

4,400

 

 

$

(4,400

)

 

 

 

 

 

Other intangible assets, net

 

$

9,196

 

 

$

(9,196

)

 

 

 

Accrued Payable

 

 

 

 

 

$

896

 

 

$

896

 

 

 

Due to Payors

 

$

896

 

 

$

(896

)

 

 

 

Accrued payroll

 

 

 

 

 

 

$

5,935

 

 

$

5,935

 

 

 

Payroll and related taxed

 

$

5,935

 

 

$

(5,935

)

 

 

 

Accrued expenses

 

 

 

 

 

$

11,394

 

 

$

11,394

 

 

 

Other accrued expense

 

$

298

 

 

$

(298

)

 

 

 

 

 

Income taxes payable

 

$

11,096

 

 

$

(11,096

)

 

 

 

Government stimulus advances

 

 

 

 

 

 

$

330

 

 

$

330

 

 

 

American Rescue Plan Advance

 

$

330

 

 

$

(330

)

 

 

 

Accrued workers' compensation insurance

 

 

 

 

 

 

$

2,708

 

 

$

2,708

 

 

 

Obligations under insurance programs

 

$

2,708

 

 

$

(2,708

)

 

 

 

Other long-term liabilities

 

 

 

 

 

 

$

2,342

 

 

$

2,342

 

 

 

Obligations under insurance programs

 

$

1,714

 

 

$

(1,714

)

 

 

 

 

 

Deferred income tax liability

 

$

628

 

 

$

(628

)

 

 

 

Retained earnings

 

 

 

 

 

 

$

306,489

 

 

$

306,489

 

 

 

Net parent investment

 

$

306,489

 

 

$

(306,489

)

 

 

 

 

Note 4 – Purchase Consideration and Preliminary Purchase Price Allocation

 

The following preliminary schedule summarizes the consideration paid for Gentiva, the fair value of the assets acquired, and liabilities assumed. The final valuation could differ materially from the preliminary schedule summarized below. The excess of the aggregate fair value of the net tangible assets and identified intangible assets has been treated as goodwill in accordance with ASC 805. Management’s assessment of qualitative factors affecting goodwill includes estimates of market share at the date of purchase, ability to grow in the market, synergy with existing Corporation operations, and the payor profile in the market.

6

 

 

 

 

Based upon management’s valuation, which is preliminary and subject to completion of working capital adjustments, the total purchase price has been allocated as follows:

 

Assets acquired and liabilities assumed
(Amounts in Thousands)

Book Value

 

 

Adjustments

 

 

Fair Value

 

 

Cash

 

90

 

 

 

-

 

 

 

90

 

(i)

Accounts receivable, net

 

26,933

 

 

 

-

 

 

 

26,933

 

(i)

Property and equipment

 

1,585

 

 

 

(473

)

 

 

1,112

 

(ii)

Operating lease assets, net

 

5,273

 

 

 

190

 

 

 

5,463

 

(iii)

Intangible assets

 

9,196

 

 

 

19,404

 

 

 

28,600

 

(iv)

Goodwill

 

287,699

 

 

 

29,155

 

 

 

316,854

 

(v)

Other long-term assets

 

4,523

 

 

 

-

 

 

 

4,523

 

(i)

Accounts payable

 

(896

)

 

 

-

 

 

 

(896

)

(i)

Accrued expenses

 

(11,394

)

 

 

-

 

 

 

(11,394

)

(i)

Accrued payroll

 

(5,935

)

 

 

-

 

 

 

(5,935

)

(i)

Government stimulus advances

 

(330

)

 

 

-

 

 

 

(330

)

(i)

Accrued workers' compensation insurance

 

(2,708

)

 

 

-

 

 

 

(2,708

)

(i)

Operating lease liabilities, total

 

(5,205

)

 

 

-

 

 

 

(5,205

)

(i)

Other long-term liabilities

 

(2,342

)

 

 

(4,765

)

 

 

(7,107

)

(vi)

Total

$

306,489

 

 

$

43,511

 

 

$

350,000

 

 

 

 

 

 

 

 

 

 

 

 

 

(i)
A preliminary fair value equivalent to the current net book value has been assigned to the above respective acquired assets and assumed liabilities.
(ii)
Reflects the preliminary fair value adjustment relating to property and equipment.
(iii)
Reflects the preliminary net favorable lease assets adjustment.
(iv)
Reflects the preliminary fair value adjustment relating to identifiable intangible assets.

 

(Amounts in Thousands)

Estimated Fair Value

 

Intangible assets - Trade names

$

4,900

 

Intangible assets - Licenses

 

23,700

 

Total

$

28,600

 

 

 

 
(v)
The goodwill is measured as the excess of the purchase consideration over the fair value of identifiable assets acquired, less liabilities assumed.
(vi)
Reflects the preliminary estimate of deferred tax liabilities recognized on the estimated fair value adjustments to net assets acquired. This amount was calculated using an estimated blended statutory tax rate of 25.4%.

 

Note 5 – Transaction Accounting Adjustments

 

The pro forma adjustments are based on preliminary estimates that will likely differ from the final amounts the Company will calculate after completing a detailed valuation analysis, and any differences could have a material effect on the unaudited pro forma condensed consolidated financial statements or the Company’s financial statements for future periods.

 

The following is a summary of the unaudited pro forma adjustments reflected in the unaudited pro forma combined financial information. All adjustments are based on current valuations and assumptions, which are subject to change.

 

(a)
Reflects the preliminary purchase price allocation to the estimated fair value of identifiable assets acquired and liabilities assumed in the Acquisition, using the purchase method of accounting in Note 4.

 

7

 

 

 

(b)
Reflects the cash payment of $350.0 million for the acquisition of the Gentiva business and the payment of acquisition costs amounting to $11.8 million for the transaction, offset by draw on the Company’s revolving credit facility. The acquisition costs are non-recurring.

 

(Amounts in Thousands)

Total

 

Source:

 

 

Revolving Loan

$

233,000

 

Uses:

 

 

Gentiva cash consideration

 

(350,000

)

Acquisition costs

 

(11,766

)

Cash adjustment

$

(128,766

)

 

 

 
(c)
Reflects the elimination of the historical equity of Gentiva for an amount of $306.5 million and the impact to retained earnings from the recognition of the non-recurring acquisition related expenses of $11.8 million.

 

(d)
Reflects the adjustments to lease expense as a result of the net favorable lease assets.

 

 

 

 

 

 

 

 

 

Pro Forma Lease Expense

 

(Amounts in Thousands)

Estimated Fair Value

 

 

Estimated Useful Life

 

Monthly Lease Expense

 

 

For the Nine Months Ended
September 30, 2024

 

 

For the Year Ended
December 31,2023

 

Favorable lease assets, net

$

190

 

 

Lease term

 

$

8

 

 

$

72

 

 

$

96

 

 

(e)
Represents the adjustments to depreciation and amortization expense as a result of recording the property and equipment and intangible assets at preliminary estimates of fair value as of the respective dates of the acquisitions, as follows:

 

 

 

 

 

 

 

 

 

 

Pro Forma Depreciation and Amortization

 

(Amounts in Thousands)

Estimated Fair Value

 

 

Estimated Useful Life

 

Monthly Depreciation and Amortization

 

 

For the Nine Months Ended
September 30, 2024

 

 

For the Year Ended
December 31,2023

 

Furniture and equipment

$

523

 

 

5-7 years

 

$

9

 

 

$

81

 

 

$

108

 

Leasehold improvements

 

179

 

 

Lease term

 

 

10

 

 

 

90

 

 

 

120

 

Computer equipment

 

131

 

 

3-5 years

 

 

7

 

 

 

63

 

 

 

84

 

Computer software

 

279

 

 

3-10 years

 

 

13

 

 

 

117

 

 

 

156

 

 

 

1,112

 

 

 

 

 

 

 

 

 

 

 

 

Tradename

 

4,900

 

 

3 years

 

 

136

 

 

 

1,224

 

 

 

1,632

 

Licenses

 

23,000

 

 

10 years

 

 

192

 

 

 

1,728

 

 

 

2,304

 

Licenses

 

700

 

 

indefinite life

 

 

 

 

 

-

 

 

 

-

 

 

 

28,600

 

 

 

 

 

 

 

 

3,303

 

 

 

4,404

 

Less: historical depreciation and amortization expense

 

 

 

 

 

 

 

 

 

(1,433

)

 

 

(2,010

)

Pro forma adjustments

 

 

 

 

 

 

 

 

$

1,870

 

 

$

2,394

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The acquisition method of accounting is dependent upon certain valuations that are provisional and subject to change. Accordingly, the pro forma adjustments are preliminary and made solely for the purpose of providing this unaudited pro forma combined financial information. A final determination of the fair value for certain assets and liabilities will be completed as soon as the information necessary to complete the analysis is obtained, but no later than one year from the acquisition date. Difference between these preliminary estimates and the final acquisition accounting may occur and these differences could be material.

For each 10% increase or decrease in the preliminary fair value of the intangible assets assuming a weighted-average remaining useful life of 8.77 years, annual amortization expense would increase or decrease by approximately $0.4 million

8

 

 

 

 

(f)
Represents adjustments of interest expense to the draw on the Company’s revolving credit facility with an estimated interest rate of 6.34%.

 

 

 

Pro Forma Interest Expense

 

(Amounts in Thousands)

 

For the Nine Months Ended
September 30, 2024

 

 

For the Year Ended
December 31,2023

 

Revolving loan

 

$

233,000

 

 

$

233,000

 

Interest rate on closing of the transaction

 

 

6.34

%

 

 

6.34

%

Interest expense adjustments

 

$

11,239

 

 

$

14,972

 

 

 

 

 

 

 

 

 

The interest rates for pro forma purposes are based on the rates to be effective upon closing of the transaction. The revolving loan is subject to variable interest rates. Assuming 0.125% higher than the applicable rate would result in approximately $0.3 million change in the annual interest expense on the indebtedness under the Revolver.

 

(g)
Reflects tax adjustments using the Company’s combined federal and state statutory tax rates for the respective periods was 26.1% for the nine months ended September 30, 2024 and 23.1% for the year ended December 31, 2023.

 

(h)
Reflects the recognition of the non-recurring acquisition related expenses of $11.8 million, as described in note (b) above, and the adjustments to lease expense $0.1 million, as described in note (d) above.

9