4. Acquisitions, Disposals and Discontinued Operations

2023 ACQUISITION

On January 6, 2023, with an effective date of January 1, 2023, HPI, a Delaware limited liability company and subsidiary of the Partnership, entered into an agreement to acquire substantially all of the assets of ALN Medical Management, LLC, (“ALN”) a provider of revenue cycle management and business related management services for total purchase consideration of $27.9 million. The purchase consideration was comprised of cash consideration of $13.0 million (net of cash acquired of $0.1 million); the fair value of an earnout of $11.1 million, which is a Level 3 financial asset; and, the fair value of rollover units of $3.8 million, which are defined as 1,339 of Class A-1 Units of HPI Holdings, LLC, the parent of HPI (“HPI Holdings”), which are recorded in non-controlling interest in partners’ capital. Included in net assets is the assumption of promissory notes of $5.2 million. The terms of the assumed promissory notes are discussed in “Note 9. Borrowings”. The earnout was valued using a discounted cash flow analysis, significant assumptions include the risk-free rate of 4.3% and the credit spread rate of 8.4%, and is included in accrued expenses in the Condensed Consolidated Balance Sheets as of March 31, 2023.

The components of the assets acquired and liabilities assumed, which were recorded at preliminary estimated fair values, were as follows:

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The preliminary fair values of the acquired identifiable intangible assets, as well as the earnout liability, working capital adjustment  and the rollover units is provisional pending receipt of the final valuations for these amounts. The purchase of ALN resulted in the recognition of goodwill in the Partnership’s Condensed Consolidated Financial Statements, which is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from the other assets acquired that could not be individually identified and separately recognized and includes the expected synergies from combining ALN and HPI. ALN is included in the HPI reporting unit.

In connection with the ALN acquisition, the Partnership identified the following intangible assets:

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The accompanying Condensed Consolidated Statement of Operations for the three months ended March 31, 2023, includes $5.4 million of revenue and net loss of $0.6 million, related to ALN for the period from January 1, 2023 (date of acquisition), through March 31, 2023. The Partnership’s unaudited pro forma consolidated results of operations for the three months ended March 31, 2022, are summarized in the table below, assuming the acquisition of ALN occurred on January 1, 2022. These unaudited pro forma results of operations have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which would have actually resulted had the acquisition occurred on January 1, 2022, or are they indicative of future results of operations.

The Partnership’s unaudited pro forma consolidated results of operations (as if the acquisition of ALN had occurred on January 1, 2022) is as follows:

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2022 DISPOSITIONS

In January, 2022, Greenwave Energy, LLC (“Greenwave”), a subsidiary of the Partnership entered into an Asset Purchase Agreement with United Energy Trading, LLC (“UET”). The Asset Purchase Agreement became effective on January 1, 2022, at which time UET acquired all customer contracts for the sale of natural gas or renewable energy credits and carbon offsets as well as intellectual property rights to the Greenwave name in exchange for $4.4 million in net cash proceeds. The $4.4 million in net cash proceeds were received in January 2022. The Partnership recorded a gain of $4.4 million on disposal of the business in January 2022.

In March, 2022, the Partnership sold Middleneck, the real estate of its shuttered Tower Ford dealership for net proceeds of $9.9 million, to the current operator of an auto dealership on the site, subject to standard post-closing adjustments. The Partnership recorded a gain of approximately $2.3 million on disposal of the real estate in 2022.

Discontinued Operations

The following dispositions represent a strategic shift in the Partnership’s operations and financial results. Therefore, the Partnership is presenting the operating results and cash flows as discontinued operations in the accompanying Condensed Financial Statements for all periods presented.

Automotive Retail

GPB Prime, in which the Partnership continues to hold a 33.5% equity investment, completed the sale of substantially all of its assets, including real estate, three collision centers and 28 dealerships in 2021. The Partnership also sold its wholly owned dealership, Orangeburg Subaru LLC (“Orangeburg”), in 2021. The carrying value of the Partnership’s remaining investment in GPB Prime of $13.7 million and $21.6 million as of March 31, 2023 and December 31, 2022, respectively, is included in assets held for sale, discontinued operations on the Condensed Consolidated Balance Sheets. In March 2023 and 2022, GPB Prime reached additional agreements with M&T Bank to allow for distributions to the Partnership of $8.0 million and $28.5 million, respectively. Following the completion of the sale, the Partnership has no involvement in the operations of GPB Prime or Orangeburg.

Summarized operating results for the Automotive Retail segment for the three months ended March 31, 2023 and 2022 were as follows:

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Summarized cash flow for the Automotive Retail segment for the three months ended March 31, 2023 and 2022 were as follows:

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The cash flow amounts in the table above exclude the effects of transactions among and between Automotive Retail and the Partnership.