On March 1, 2022, we acquired all of the assets and liabilities of Healthcare Resource Group, Inc., a Washington corporation ("HRG"), pursuant to a Stock Purchase Agreement dated March 1, 2022. Based in Spokane, Washington, HRG is a leading provider of customized RCM solutions and consulting services that enable hospitals and clinics to improve efficiency, profitability, and patient satisfaction.

Consideration for the acquisition included cash (net of cash of the acquired entity) of $43.9 million (inclusive of seller's transaction expenses). During 2022, we incurred approximately $1.2 million of pre-tax acquisition costs in connection with the acquisition of HRG. Acquisition costs are included in general and administrative expenses in our consolidated statements of operations.

Our acquisition of HRG 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.


(In thousands)	Purchase Price Allocation
Acquired cash	$	3,989
Accounts receivable	5,655

Prepaid expenses	398
Property and equipment	467
Other assets	73
Intangible assets	24,200
Operating lease assets	1,315
Goodwill	20,750
Accounts payable and accrued liabilities	(2,403)
Deferred taxes, net	(5,565)
Operating lease liability	(1,315)


Net assets acquired	$	47,564

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, 2022 includes revenues of approximately $34.1 million attributed to the acquired business since the March 1, 2022 acquisition date. However, due to the rapid pace of integration of HRG’s operations into the existing operations of our RCM business unit, the related costs are sufficiently commingled such that it is impracticable to distinguish those costs associated with HRG from those associated with the

remainder of our RCM business unit. As such, the disclosure of earnings associated with this acquisition during the year ended December 31, 2022 has been omitted.

The following unaudited pro forma revenue, net income and earnings per share amounts for the years ended December 31, 2022 and 2021 give effect to the HRG acquisition as if it had been completed on January 1, 2021. 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 HRG 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 HRG acquisition.


	Year Ended December 31,
(In thousands, except per share data, unaudited)	2022		2021
Pro forma revenues	$	332,988	$	314,474
Pro forma net income	$	16,629	$	16,572
Pro forma diluted earnings per share	$	1.13	$	1.13

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, 2021 and (ii) the pro forma adjustment to interest expense as a result of utilizing revolver debt to finance the acquisition.

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 $59.9 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 2022, the related contingent earnout payment was finalized and paid to the former sharholders of TruCode in the amount of $1.9 million. 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 valuation assessment.


(In thousands)	Purchase Price Allocation
Acquired cash	$	4,249
Accounts receivable	924

Prepaid expenses	2


Intangible assets	37,300
Goodwill	27,287
Accounts payable and accrued liabilities	(1,840)


Contingent consideration	(2,500)
Deferred revenue	(1,300)
Net assets acquired	$	64,122