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BUSINESS COMBINATIONS | 12 Months Ended
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Dec. 31, 2023
Business Combination and Asset Acquisition [Abstract] |
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS Acquisition of Viewgol, LLC On October 16, 2023, we acquired all of the assets and liabilities of Viewgol, LLC (“Viewgol”), a Delaware limited liability company, pursuant to a Securities Purchase Agreement dated October 16, 2023. Based in Frisco, Texas, Viewgol is a provider of ambulatory RCM analytics and complementary outsourcing services with an extensive offshore presence we intend to leverage and grow to accommodate the growing demand for RCM services by our pre-existing acute care customers. Consideration for the acquisition included cash (net of cash of the acquired entity) of $36.7 million (inclusive of seller's transaction expenses). Also included in the acquisition consideration were contingent earnout payments of (i) up to $21.5 million based on the Viewgol business achieving earnings before interest, taxes, depreciation, and amortization (“EBITDA”) of $6.0 million or more during fiscal year 2024 (the “EBITDA Earnout Amount”), and (ii) up to $10.0 million based on the number of productive agents the Viewgol business hires in India in fiscal year 2024 (the “Offshore Earnout Amount”); provided, however, that none of the Offshore Earnout Amounts may be earned if the EBITDA Earnout Amount’s minimum EBITDA threshold of $6.0 million is not achieved during fiscal 2024. During 2023, we incurred approximately $4.7 million of pre-tax acquisition expenses in our consolidated statements of operations. Our acquisition of Viewgol 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 Viewgol was as follows:
(In thousands) | Purchase Price Allocation
Acquired cash | $ | 1,449 |
Accounts receivable | 2,233 |
Prepaid expenses | 132 |
Property and equipment | 1,112 |
Intangible assets | 17,720 |
Goodwill | 17,263 |
Accounts payable and accrued liabilities | (711) |
Contingent consideration | (1,044) |
Net assets acquired | $ | 38,154 |
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 (including those related to contingent consideration) 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, 2023 includes revenues and earnings of approximately $3.8 million and $0.3 million, respectively, attributed to the acquired business since the October 16, 2023 acquisition date. The following unaudited pro forma revenue, net income and earnings per share amounts for the years ended December 31, 2023 and 2022 give effect to the Viewgol acquisition as if it had been completed on January 1, 2022. 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 Viewgol acquisition been completed on January 1, 2022. 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 Viewgol acquisition.
| Year Ended December 31,
(In thousands, except per share data, unaudited) | 2023 |  | 2022
Pro forma revenues | $ | 351,731 |  |  | $ | 338,009 |
Pro forma net income | $ | (47,735) |  |  | $ | 15,536 |
Pro forma diluted earnings per share | $ | (3.36) |  |  | $ | 1.10 |
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, 2022 and (ii) the pro forma adjustment to interest expense as a result of utilizing revolver debt to finance the acquisition. Acquisition of Healthcare Resource Group 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 $43.6 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. The allocation of the purchase price paid for HRG was as follows:
(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. 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 our RCM 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 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 shareholders 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. 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 | 27,287 |
Accounts payable and accrued liabilities | (1,840) |
Contingent consideration | (2,500) |
Deferred revenue | (1,300) |
Net assets acquired | $ | 64,122 |
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 (including those related to contingent consideration) 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://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent + Details
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