Quarterly report pursuant to Section 13 or 15(d)

Acquisition (Notes)

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Acquisition (Notes)
6 Months Ended
Jun. 30, 2014
Business Combinations [Abstract]  
Acquisition
Acquisition: U.S. Medical Management

In January 2014, the Company acquired 68% of U.S. Medical Management, LLC (USMM), a management services organization and provider of in-home health services for high acuity populations, for $213,664 in total consideration. The transaction consideration was financed through a combination of $132,686 of Centene common stock and $80,978 of cash.

The total fair value of 100% of USMM on the date of acquisition was $329,689 ($213,664 for the Company's interest and $116,025 for the redeemable noncontrolling interest). The Company's preliminary allocation of fair value resulted in goodwill of $294,074 and other identifiable intangible assets of $40,170. Approximately 70% of the goodwill is deductible for income tax purposes. The Company has not finalized the allocation of the fair value of assets and liabilities. The acquisition is recorded in the Specialty Services segment.

In connection with the acquisition, the Company entered into call and put agreements with the noncontrolling interest holder to purchase the noncontrolling interest at a later date. Under these agreements, the Company may purchase or be required to purchase up to the total remaining interests in USMM over a period beginning in 2015 and continuing through 2017. Under certain circumstances, the agreements may be extended through 2020. At the Company’s sole option, up to 50% of the consideration to be issued for the purchase of the additional interests under these agreements may be funded with shares of the Company's common stock.

As a result of the put option agreement, the noncontrolling interest is considered redeemable and is classified in the Redeemable Noncontrolling Interest section of the consolidated balance sheet. The noncontrolling interest was initially measured at fair value using the binomial lattice model as of the acquisition date. The Company has elected to accrete changes in the redemption value through additional paid-in capital over the period from the date of issuance to the earliest redemption date following the effective interest method.

A reconciliation of the changes in the Redeemable Noncontrolling Interest is as follows:
Balance, December 31, 2013
 
$

Fair value of noncontrolling interest at acquisition
 
116,025

Contribution from noncontrolling interest
 
5,407

Net losses attributable to noncontrolling interest
 
(1,761
)
Balance, June 30, 2014
 
$
119,671