XML 31 R15.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Intangible Assets | 12 Months Ended
--- | ---
Dec. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Intangible Assets | GOODWILL AND INTANGIBLE ASSETS Acquisitions in 2021 There were no material acquisitions in 2021. Acquisitions in 2020 Orpheus Medical In February 2020, the Company acquired Orpheus Medical Ltd. and its wholly-owned subsidiaries to deepen and expand the Company’s integrated informatics platform. Orpheus Medical provides hospitals with information technology connectivity, as well as expertise in processing and archiving surgical videos. Acquisitions in 2019 Chindex During the first quarter of 2019, the Company’s majority-owned Joint Venture with Fosun Pharma acquired certain assets from Chindex and its affiliates, a subsidiary of Fosun Pharma, including distribution rights, customer relationships, and certain personnel on January 5, 2019, which collectively met the definition of a business. Chindex was the Company’s distributor of da Vinci products and services in China. The transaction enhances the Company’s ability to serve patients, surgeons, and hospitals in China. The total purchase consideration of $66.0 million, as of the acquisition date, included a contingent consideration liability of $64.7 million and an upfront cash payment of $1.3 million. As of the acquisition date, the estimated total undiscounted contingent consideration was approximately $81 million, based on the underlying performance of the business in 2019 and 2020 as well as the amount and timing of the contingent consideration payments. Since the acquisition date, the total undiscounted contingent consideration decreased by approximately $1 million due to changes in the timing of the milestone achievements. For the years ended December 31, 2021, 2020, and 2019, the contingent consideration liability changed due to payments of $12.9 million, $53.7 million, and $16.5 million, respectively, and net additional expenses, which were recorded to selling, general and administrative expenses, of zero, $11.3 million, and $7.2 million, respectively, primarily related to accretion due to the passage of time. As of December 31, 2021, all contingent consideration has been settled and paid. The Company recorded $1.7 million of net tangible assets, $58.6 million of intangible assets, and $5.7 million of residual goodwill. Intangible assets included distribution rights of $48.2 million and customer relationships of $10.4 million, which are being amortized over a weighted-average period of 2.9 years. Key assumptions included (1) the amount and timing of projected future cash flows, and (2) the discount rate used to determine the present value of these cash flows. The goodwill is not amortizable for income tax purposes. The allocation of purchase consideration was completed in the third quarter of 2019. There were no adjustments to the provisional amounts in the measurement period. Schölly During the third quarter of 2019, the Company acquired certain assets and operations from Schölly Fiberoptic GmbH (“Schölly”), including manufacturing process technology, a non-compete agreement, certain personnel, and net tangible assets on August 31, 2019, which collectively met the definition of a business. The Company believes that the transaction strengthens the Company’s supply chain and manufacturing capacity for imaging products used in the Company’s da Vinci systems. The total purchase consideration of $101.4 million consisted of an initial cash payment of $34.4 million and deferred cash payments totaling approximately $67.0 million, of which $13.6 million was deferred as of December 31, 2020. As of December 31, 2021, all deferred cash payments have been made. The Company recorded $11.5 million of net tangible assets, which included $6.7 million of inventory and $1.4 million of cash, $31.0 million of intangible assets, and $58.9 million of residual goodwill. The balances include the net impact of adjustments to the preliminary allocation of the purchase price within the one year measurement period, which decreased goodwill by $0.8 million during 2020. There was no significant impact to the Consolidated Statements of Income as result of these adjustments. Intangible assets included manufacturing process technology of $28.0 million and non-compete provisions of $3.0 million, which are being amortized over a weighted-average period of 6.6 years. Key assumptions included (1) the amount and timing of projected future cash flows, and (2) the discount rate used to determine the present value of these cash flows. The allocation of purchase consideration is considered preliminary with provisional amounts primarily related to working capital. Goodwill primarily consists of the manufacturing and other synergies of the combined operations and the value of the assembled workforce. The majority of goodwill is not deductible for income tax purposes. In 2019, the Company included the results of the acquired businesses, since their acquisition dates, in its Consolidated Financial Statements, and the revenues and earnings were not material in the year. Pro forma results of operations related to the acquisitions have not been presented, because the operating results of the acquired businesses are not considered material to the Consolidated Financial Statements. Goodwill The following table summarizes the changes in the carrying amount of goodwill (in millions):
|  | Amount
Balance as of December 31, 2019 |  | $ | 307.2 |
Acquisition activity |  | 29.3 |
Translation and other |  | 0.2 |
Balance as of December 31, 2020 |  | 336.7 |
Acquisition activity |  | 8.0 |
Translation and other |  | (1.1) |
Balance as of December 31, 2021 |  | $ | 343.6 |
The Company completed its annual goodwill impairment test and determined that no impairment existed. As of December 31, 2021, there has been no impairment of goodwill. Intangible Assets The following table summarizes the components of gross intangible asset, accumulated amortization, and net intangible asset balances as of December 31, 2021, and 2020 (in millions):
|  | December 31, 2021 |  | December 31, 2020
|  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount
Patents and developed technology |  | $ | 219.3 |  |  | $ | (173.2) |  |  | $ | 46.1 |  |  | $ | 198.4 |  |  | $ | (158.7) |  |  | $ | 39.7 |
Distribution rights and others |  | 26.3 |  |  | (19.4) |  |  | 6.9 |  |  | 91.9 |  |  | (77.4) |  |  | 14.5 |
Customer relationships |  | 31.8 |  |  | (14.3) |  |  | 17.5 |  |  | 59.0 |  |  | (35.8) |  |  | 23.2 |
Total intangible assets |  | $ | 277.4 |  |  | $ | (206.9) |  |  | $ | 70.5 |  |  | $ | 349.3 |  |  | $ | (271.9) |  |  | $ | 77.4 |
Amortization expense related to intangible assets was $27.4 million, $49.8 million, and $43.0 million for the years ended December 31, 2021, 2020, and 2019, respectively. The estimated future amortization expense related to intangible assets as of December 31, 2021, is as follows (in millions):
Fiscal Year | Amount
2022 | $ | 23.6 |
2023 | 19.0 |
2024 | 15.0 |
2025 | 9.6 |
2026 | 2.7 |
2027 and thereafter | 0.6 |
Total | $ | 70.5 |
The preceding expected amortization expense is an estimate. Actual amounts of amortization expense may differ from estimated amounts due to additional intangible asset acquisitions, changes in foreign currency exchange rates, impairment of intangible assets, accelerated amortization of intangible assets, and other events.

X
- References No definition available. + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI http://asc.fasb.org/topic&trid=2144416 + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration