BUSINESS COMBINATIONS AND DISPOSITIONS

9 Months Ended

Sep. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Sale of American HealthTech, Inc.

On January 16, 2024, we entered into a Stock Purchase Agreement (the “Purchase Agreement”), by and among the Company, American HealthTech, Inc. a Mississippi corporation (“AHT”), and Healthland Inc., a Minnesota corporation and an indirect, wholly-owned subsidiary of the Company (“Healthland” and, together with the Company, the “Seller Parties”) and PointClickCare Technologies USA Corp., a Delaware corporation (“Buyer”). The Transaction (hereinafter

defined) also closed on January 16, 2024. Under the Purchase Agreement, Buyer purchased from Healthland all of the issued and outstanding capital stock of AHT (the “Transaction”), with AHT becoming a wholly-owned subsidiary of Buyer. Prior to this transaction, results for AHT were reported within our Patient Care operating segment.

The Purchase Agreement provided for an aggregate purchase price (the “Purchase Price”) of $25 million (the “Base Cash Consideration”), subject to adjustments based on working capital, cash, indebtedness and transaction expenses of AHT. Additionally, pursuant to the Purchase Agreement, a total of approximately $3.75 million was withheld from the Base Cash Consideration at the closing and deposited by Buyer into various escrow accounts with an escrow agent, including $2.5 million as a general indemnity escrow and $1 million as a special indemnity escrow. Based upon the adjustments and the various escrow holdbacks, Buyer paid a net amount of approximately $21.41 million to Healthland at the closing. The Purchase Price was subject to a post-closing true-up. In connection with the closing of the Transaction, Buyer provided offers of employment to certain key employees of the Company that primarily supported AHT’s business.

As part of the divestiture, as of January 16, 2024 we entered into a transition services agreement (“TSA”) with Buyer to assist them in the transition of certain functions, including, but not limited to, information technology, finance and accounting, for an initial period of 18 months, with certain services being completed prior to the 18-month period. In addition to the agreed upon services, the TSA allows for additional services to be offered by the Company pursuant to a mutually agreed upon amendment to the TSA. No such amendments have been executed as of September 30, 2024. The Company has $0.5 million in receivables from Buyer for the TSA services reflected under the caption “Accounts receivable” in the condensed consolidated balance sheet as of September 30, 2024.

The Company finalized the accounting for the sale during the three months ended March 31, 2024 and has recorded a $1.25 million gain on sale, which is reflected under the caption “Other income (expense)” in the condensed consolidated statement of operations.

The accompanying condensed consolidated balance sheet as of December 31, 2023 includes amounts related to this Transaction under the captions "Assets held for sale" and "Liabilities held for sale," the details of which are as follows as of December 31, 2023:


(In thousands)
Assets held for sale
Accounts receivable, net	$	3,087
Financing receivables, net	37
Prepaid expenses	34
Software costs, net	3,386
Intangibles, net	11,739
Goodwill	7,694
Total	$	25,977

Liabilities held for sale
Accounts payable	$	178
Other accrued liabilities	576
Deferred tax liability	223
Total	$	977

The following table presents the pretax loss for AHT that is included in our condensed consolidated statement of operations for the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2024		2023		2024		2023

Pretax loss	$	—	$	(391)	$	(241)	$	(767)

Acquisition of Viewgol, LLC

On October 16, 2023, the Company 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 expand to accommodate the growing demand for RCM services by our acute care customers.

Consideration for the acquisition included cash (net of cash of the acquired entity) of $37.4 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, amortization and other adjustments specified in the Securities Purchase Agreement of $6.0 million or more during fiscal year 2024 (“Earnout EBITDA 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 Amount may be earned if the Earnout EBITDA Amount’s minimum 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 condensed 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 preliminary estimated fair values of assets acquired and liabilities assumed as of December 31, 2023, and as updated through September 30, 2024, are as follows:


(In thousands)	Purchase Price Allocation as of December 31, 2023		Purchase Price Allocation as of September 30, 2024
Acquired cash	$	1,449	$	1,449
Accounts receivable	2,233		2,233
Prepaid expenses	132		132
Property and equipment	1,112		1,112
Intangible assets	17,720		17,720
Goodwill	17,263		17,927
Accounts payable and accrued liabilities	(711)		(711)
Contingent consideration	(1,044)		(1,044)
Net assets acquired	$	38,154	$	38,818

In April 2024, the Company paid an additional $0.7 million for working capital adjustments which is reflected under the caption “Goodwill” in the condensed consolidated balance sheet.

The intangible assets in the table above are being amortized on a straight-line basis over their estimated useful lives. The amortization is included under the caption “Amortization of acquisition-related intangibles” in our condensed 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 16 - 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 condensed consolidated statements of operations for the three and nine months ended September 30, 2024 include revenues of $5.2 million and $15.2 million, respectively, and net income of $2.7 million and $5.8 million, respectively, attributed to the Viewgol acquisition.