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Business Combination | 12 Months Ended
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Dec. 31, 2021
Business Combination and Asset Acquisition [Abstract] |
Business Combination | BUSINESS COMBINATION Acquisition of TruCode On May 12, 2021, we acquired all of the assets and liabilities of TruCode LLC, a Virginia limited liability company ("TruCode"), pursuant to a Stock Purchase Agreement dated May 12, 2021. Based in Alpharetta, Georgia, TruCode provides configurable, knowledge-based software that gives coders, clinical documentation improvement specialists and auditors the flexibility to code according to their knowledge, preferences and experience. The cloud-based medical coding solution is bundled with the TruBridge solutions and services to enhance revenue cycle performance for healthcare organizations of all sizes. Consideration for the acquisition included cash (net of cash of the acquired entity) of $59.6 million (inclusive of seller's transaction expenses), plus a contingent earnout payment of up to $15.0 million tied to TruCode's earnings before interest, tax, depreciation, and amortization ("EBITDA") (subject to certain pro-forma adjustments) for the twelve- month period concluding on the anniversary date of the acquisition. During 2021, we incurred approximately $0.9 million of pre-tax acquisition costs in connection with the acquisition of TruCode. Acquisition costs are included in general and administrative expenses in our consolidated statements of operations. Our acquisition of TruCode was treated as a purchase in accordance with ASC 805, Business Combinations, which requires allocation of the purchase price to the estimated fair values of assets and liabilities acquired in the transaction. Our allocation of the purchase price was based on management's judgment after evaluating several factors, including a preliminary valuation assessment. Final settlement is pending related to acquired working capital and certain amounts due to third parties which remain in ongoing negotiations. The allocation of the purchase price paid for TruCode was as follows:
(In thousands) | Purchase Price Allocation
Acquired cash | $ | 4,249 |
Accounts receivable | 924 |
Prepaid expenses | 2 |
Intangible assets | 37,300 |
Goodwill | 27,497 |
Accounts payable and accrued liabilities | (2,289) |
Contingent consideration | (2,500) |
Deferred revenue | (1,300) |
Net assets acquired | $ | 63,883 |
The intangible assets in the table above are being amortized on a straight-line basis over their estimated useful lives. The amortization is included in amortization of acquisition-related intangibles in our consolidated statements of operations. The fair value measurements of tangible and intangible assets and liabilities were based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value measurement hierarchy (see Note 17 - Fair Value). Level 3 inputs included, among others, discount rates that we estimated would be used by a market participant in valuing these assets and liabilities, projections of revenues and cash flows, client attrition rates and market comparables. Our consolidated statement of operations for the year ended December 31, 2021 includes revenues of approximately $7.1 million, and pre-tax income of approximately $3.2 million, attributed to the acquired business since the May 12, 2021 acquisition date. The following unaudited pro forma revenue, net income and earnings per share amounts for the years ended December 31, 2021 and 2020 give effect to the TruCode acquisition as if it had been completed on January 1, 2020. The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of what the operating results actually would have been during the periods presented had the TruCode acquisition been completed during the periods presented. In addition, the unaudited pro forma financial information does not purport to project future operating results. The pro forma information does not fully reflect: (1) any anticipated synergies (or costs to achieve synergies) or (2) the impact of non-recurring items directly related to the TruCode acquisition.
| Year Ended December 31,
(In thousands, except per share data, unaudited) | 2021 |  | 2020
Pro forma revenues | $ | 286,651 |  |  | $ | 275,641 |
Pro forma net income | $ | 20,635 |  |  | $ | 14,651 |
Pro forma diluted earnings per share | $ | 1.41 |  |  | $ | 1.01 |
Pro forma net income was calculated by adjusting the results for the applicable period to reflect (i) the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied on January 1, 2020 and (ii) adjustments to amortized revenue during fiscal 2021 and 2020 as a result of the acquisition date valuation of assumed deferred revenue. The pro forma results for each period also reflect the pro forma adjustment to interest expense as a result of utilizing revolver debt to finance the acquisition. Acquisition of Get Real Health On May 3, 2019, we acquired all of the assets and liabilities of iNetXperts, Corp., a Maryland corporation doing business as Get Real Health (“Get Real Health”), pursuant to a Stock Purchase Agreement dated April 23, 2019, as amended on May 2, 2019. Based in Rockville, Maryland, Get Real Health delivers technology solutions to improve patient outcomes and engagement strategies with care providers. Consideration for the acquisition included cash (net of cash of the acquired entity) of $10.8 million (inclusive of seller's transaction expenses), plus a contingent earnout payment of up to $14.0 million tied to Get Real Health's earnings before interest, tax, depreciation, and amortization ("EBITDA") (subject to certain pro-forma adjustments) for 2019. As of December 31, 2019, the $5.0 million contingent consideration estimated in determining the acquisition purchase price was fully reversed as Get Real Health's earnings did not achieve the required level for earnout payment. During 2019, we incurred approximately $0.6 million of pre-tax acquisition costs in connection with the acquisition of Get Real Health. Acquisition costs are included in general and administrative expenses in our consolidated statements of operations. Our acquisition of Get Real Health was treated as a purchase in accordance with ASC 805, Business Combinations, which requires allocation of the purchase price to the estimated fair values of assets and liabilities acquired in the transaction. Our allocation of the purchase price was based on management's judgment after evaluating several factors, including a valuation assessment. The allocation of the purchase price paid for Get Real Health was as follows:
(In thousands) | Purchase Price Allocation
Acquired cash | $ | 159 |
Accounts receivable | 364 |
Prepaid expenses | 107 |
Property and equipment | 365 |
Operating lease asset | 1,285 |
Intangible assets | 7,890 |
Goodwill | 9,767 |
Accounts payable and accrued liabilities | (594) |
Deferred taxes, net | (1,736) |
Operating lease liability | (1,285) |
Contingent consideration | (5,000) |
Deferred revenue | (430) |
Net assets acquired | $ | 10,892 |
The intangible assets in the table above are being amortized on a straight-line basis over their estimated useful lives. The amortization is included in amortization of acquisition-related intangibles in our consolidated statements of operations. The fair value measurements of tangible and intangible assets and liabilities were based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value measurement hierarchy (see Note 17 - Fair Value). Level 3 inputs included, among others, discount rates that we estimated would be used by a market participant in valuing these assets and liabilities, projections of revenues and cash flows, client attrition rates and market comparables.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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