Quest Diagnostics 2013 Annual Report Download - page 92

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F- 20
Other Acquisitions
2012 Acquisition
On January 6, 2012, the Company completed the acquisition of S.E.D. Medical Laboratories ("S.E.D.") from Lovelace
Health System for approximately $51 million. The assets acquired at the acquisition date primarily represent goodwill and
intangible assets, principally comprised of customer-related intangibles (see Note 11).
2013 Acquisitions
During 2013, the Company completed four acquisitions for a total purchase price of $264 million, or $213 million net
of cash acquired and deferred consideration associated with the UMass acquisition.
On January 2, 2013, the Company completed the acquisition of the clinical outreach and anatomic pathology
businesses of UMass Memorial Medical Center ("UMass"). The purchase price included $50 million of deferred consideration
that is included in other liabilities at December 31, 2013. This purchase was the first step in a series of transactions between the
parties whereby the two organizations expect to eventually have a financial stake in a new entity that will perform diagnostic
information testing services in a defined territory within the state of Massachusetts. The assets acquired at the acquisition date
primarily represent goodwill and intangible assets, principally comprised of customer-related intangibles (see Note 11). In
addition the Company granted to UMass a call option and UMass granted to the Company a put option for UMass to acquire an
18.90% equity interest in a newly formed entity. The put and call options have a remaining vesting period of approximately 15
months (see Note 7).
On May 15, 2013, the Company completed the acquisition of the toxicology and clinical laboratory business of
Advanced Toxicology Network ("ATN") from Concentra, a subsidiary of Humana Inc. The assets acquired at the acquisition
date primarily represent goodwill and intangible assets, principally comprised of customer-related intangibles (see Note 11).
On June 22, 2013, the Company completed the acquisition of certain lab-related clinical outreach service operations
of Dignity Health ("Dignity"), a hospital system in California. The assets acquired at the acquisition date primarily represent
goodwill and intangible assets, principally comprised of customer-related intangibles (see Note 11).
On October 7, 2013, the Company completed the acquisition of ConVerge Diagnostic Services, LLC ("ConVerge").
ConVerge is a leading full-service laboratory providing clinical, cytology and anatomic pathology testing services to patients,
physicians and hospitals in New England. The assets acquired at the acquisition date primarily represent goodwill and
intangible assets, principally comprised of customer-related intangibles (see Note 11).
Pro Forma Combined Financial Information
Supplemental pro forma combined financial information has not been presented as the combined impact of the Athena
and Celera acquisitions in 2011, the S.E.D. acquisition in 2012, and the combined impact of the UMass, ATN, Dignity and
ConVerge acquisitions in 2013 were not material to the Company's consolidated financial statements.
6. DISPOSITIONS
Sale of Royalty Rights
As part of its acquisition of Celera in 2011, the Company gained rights to receive royalties on ibrutinib, an
experimental cancer therapy. In July 2013, the Company sold its right to receive royalties related to the commercialization of
ibrutinib for $485 million in cash. The Company has accounted for this transaction as a sale of royalty rights and recognized a
pre-tax gain of $474 million, net of transaction costs, associated with this sale.
Sale of Enterix
In September 2013, the Company completed the sale of Enterix and recorded a pre-tax loss of approximately $40
million associated with the sale, which is included in other operating expense (income), net. The Enterix business has not been
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(in millions unless otherwise indicated)