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67
2014 Annual Report
New accounting pronouncement — In May 2014, the Financial Accounting Standards Board (“FASB”) issued
Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU
No. 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from
contracts with customers and supersedes most current revenue recognition guidance, including industry-specific
guidance. This new guidance is effective for annual reporting periods (including interim reporting periods within
those periods) beginning after December 15, 2016; early adoption is not permitted. Companies have the option
of using either a full retrospective or a modified retrospective approach to adopt the guidance. This update could
impact the timing and amounts of revenue recognized. The Company is currently evaluating the effect that imple-
mentation of this update will have on its consolidated financial position and results of operations upon adoption
and the method of transition.
2 | Coram Acquisition
On January 16, 2014, the Company acquired 100% of the voting interests of Coram LLC and its subsidiaries
(collectively, “Coram”), the specialty infusion services and enteral nutrition business unit of Apria Healthcare Group
Inc. (“Apria”), for cash consideration of approximately $2.1 billion, plus contingent consideration of approximately
$0.1 billion. The purchase price was also subject to a working capital adjustment, which resulted in the Company
receiving $9 million from Apria. Coram is one of the nation’s largest providers of comprehensive infusion services,
caring for approximately 240,000 patients annually. Coram has approximately 4,600 employees, including approxi-
mately 600 nurses and 250 dietitians, operating primarily through 84 branch locations and six centers of excellence
for patient intake.
The contingent consideration is based on the Company’s future realization of Coram’s tax net operating loss
carryforwards (“NOLs”) as of the date of the acquisition. The Company will pay the seller the first $60 million in tax
savings realized from the future utilization of the Coram NOLs, plus 50% of any additional future tax savings from
the remaining NOLs. The fair value of the contingent consideration liability associated with the future realization of
the Coram NOLs was determined using Level 3 inputs based on the present value of contingent payments expected
to be made based on the Company’s estimate of the amount and timing of Coram NOLs that will ultimately be
realized. The change in fair value of the contingent consideration liability recognized in earnings for the year ended
December 31, 2014 was immaterial.
The following is a summary of the fair values of the assets acquired and liabilities assumed:
IN MILLIONS
Accounts receivable $ 215
Inventory 77
Other assets 10
Property and equipment 49
Intangible assets 537
Goodwill 1,566
Current liabilities (128)
Deferred tax liabilities, net (97)
Other noncurrent liabilities (91)
Noncontrolling interest (2)
Total consideration $ 2,136