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Business Combinations | 12 Months Ended
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Jun. 30, 2020
Business Combinations [Abstract] |
Business Combinations | (18) Business Combinations Fiscal year ended June 30, 2020 On January 31, 2020, we completed the acquisition of 100% of the membership interests in SnapWorx, LLC (“SnapWorx”), a software company providing patient contact management and workflow optimization for the sleep apnea resupply market. This acquisition has been accounted for as a business combination using purchase accounting and the results of SnapWorx are included in our consolidated financial statements from the acquisition date. This acquisition is not considered a material business combination and accordingly pro forma information is not provided. The acquisition was funded by drawing on our existing revolving credit facility and through cash on-hand. We completed our purchase price allocation during the quarter ending June 30, 2020, which was not materially different from the preliminary purchase price allocation. The cost of the acquisition was allocated to the assets acquired and liabilities assumed based on estimates of their fair values at the date of acquisition. The goodwill recognized as part of the acquisition is reflected in the Software as a Service segment and is deductible for tax purposes. It mainly represents the synergies that are unique to our combined businesses and the potential for new products and services to be developed in the future. During the year ended June 30, 2020 we did no t record any material acquisition-related expenses. Fiscal year ended June 30, 2019 MatrixCare On November 13, 2018, we completed the acquisition of 100% of the shares in MatrixCare, Inc. and its subsidiaries (“MatrixCare”), a provider of software solutions for skilled nursing, life plan communities, senior living and private duty, for base purchase consideration paid of $750.0 million. This acquisition has been accounted for as a business combination using purchase accounting and included in our consolidated financial statements from November 13, 2018. The acquisition was paid for using borrowings under our revolving credit facility. We completed the purchase price allocation in relation to this acquisition during the quarter ended December 31, 2019. The cost of the acquisition was allocated to the assets acquired and liabilities assumed based on estimates of their fair values at the date of acquisition. The goodwill recognized as part of the acquisition is reflected in the Software as a Service segment and is not deductible for tax purposes. It mainly represents the synergies that are unique to our combined businesses and the potential for new products and services to be developed in the future. The fair values of assets acquired and liabilities assumed, and the estimated useful lives of intangible assets acquired are as follows (in thousands):
|  | Preliminary as of ‎June 30, 2019 |  | Adjustments |  | Final |  | Intangible ‎assets - ‎useful life
Current assets |  | $ | 50,325 |  | $ | - |  | $ | 50,325 |  |  |
Property, plant and equipment |  |  | 4,401 |  |  | - |  |  | 4,401 |  |  |
Trade names |  |  | 18,000 |  |  | - |  |  | 18,000 |  |  | 7 years
Developed technology |  |  | 133,000 |  |  | - |  |  | 133,000 |  |  | 7 years
Customer relationships |  |  | 114,000 |  |  | 2,000 |  |  | 116,000 |  |  | 15 years
Goodwill |  |  | 517,995 |  |  | 5,664 |  |  | 523,659 |  |  |
Assets acquired |  | $ | 837,721 |  | $ | 7,664 |  | $ | 845,385 |  |  |
Current liabilities |  |  | (13,751) |  |  | (255) |  |  | (14,006) |  |  |
Deferred revenue |  |  | (18,339) |  |  | (166) |  |  | (18,505) |  |  |
Deferred tax liabilities |  |  | (41,570) |  |  | (7,243) |  |  | (48,813) |  |  |
Debt assumed |  |  | (151,665) |  |  | - |  |  | (151,665) |  |  |
Total liabilities assumed |  | $ | (225,325) |  | $ | (7,664) |  | $ | (232,989) |  |  |
Net assets acquired |  | $ | 612,396 |  | $ | - |  | $ | 612,396 |  |  |
A reconciliation of the base consideration to the net consideration is as follows (in thousands):
Base consideration |  | $ | 750,000
Cash acquired |  |  | 15,873
Debt assumed |  |  | (151,665)
Net working capital and other adjustments |  |  | (1,812)
Net consideration |  | $ | 612,396
During the year ended June 30, 2019, revenues of $79.2 million and losses from operations of $9.1 million related to MatrixCare were included in the consolidated statement of comprehensive income. The losses from operations for the year ended June 30, 2019 was negatively impacted by $19.0 million of amortization of acquired intangible assets and fair value purchase price adjustments relating to deferred revenue of $5.3 million. Excluding the impact of these items, revenue for the year ended June 30, 2019 was $84.6 million and income from operations was $15.3 million. The acquisition is considered a material business combination and accordingly unaudited pro forma information presented below for the year ended June 30, 2019, includes the effects of pro forma adjustments as if the acquisition of MatrixCare occurred on July 1, 2017. The pro forma results were prepared using the acquisition method of accounting and combine our historical results and MatrixCare’s for the years ended June 30, 2019 and June 30, 2018, including the effects of the business combination, primarily amortization expense related to the fair value of identifiable intangible assets acquired, interest expense associated with the financing obtained by us in connection with the acquisition, and the elimination of incurred acquisition-related costs. The pro forma financial information presented below is not necessarily indicative of the results of operations that would have been achieved if the acquisition occurred at the beginning of the earliest period presented, nor is it intended to be a projection of future results. The following table summarized unaudited pro forma consolidated results for the years ended June 30, 2019 and 2018 (in thousands, except per share information):
| 2019 |  | 2018
Revenue | $ | 2,652,059 |  | $ | 2,457,242
Net income | $ | 446,721 |  | $ | 295,628
Basic earnings per share | $ | 3.12 |  | $ | 2.07
Diluted earnings per share | $ | 3.09 |  | $ | 2.05
The unaudited pro forma consolidated results for the years ended June 30, 2019 and June 30, 2018 reflect primarily the following pro forma pre-tax adjustments: Net amortization expense related to the fair value of identifiable intangible assets acquired of $0.6 million and $8.3 million for the years ended June 30, 2019 and June 30, 2018, respectively. Net interest expense associated with debt that was issued to finance the acquisition of $2.6 million and $12.7 million for the years ended June 30, 2019 and June 30, 2018, respectively. Elimination of pre-tax acquisition-related costs incurred by ResMed and MatrixCare of $3.7 million and $16.7 million, respectively, for the year ended June 30, 2019. Net income tax expense of $1.8 million and $3.2 million for the years ended June 30, 2019 and June 30, 2018, respectively. Other acquisitions During the year ended June 30, 2019, we also completed the following acquisitions: On July 6, 2018, we completed the acquisition of 100% of the shares in HEALTHCAREfirst Holding Company (“HEALTHCAREfirst”), a provider of software solutions and services for home health and hospice agencies, for a total purchase consideration of $126.3 million. On October 15, 2018, we completed the acquisition of 100% of the shares in HB Healthcare, a homecare provider in South Korea. On December 11, 2018, we completed the acquisition of assets in Interactive Health Network, a provider of integrated clinical and financial management software solution for long-term care companies. On December 13, 2018, we completed the acquisition of assets in Apacheta, a provider of cloud-based SaaS software that manages the medical equipment delivery process for HME dealers. On January 6, 2019, we completed the acquisition of Propeller Health, a digital therapeutics company providing connected health solutions for people living with chronic obstructive pulmonary disease and asthma, for a total purchase consideration of $242.9 million, which adjusts for cash acquired and debt assumed at the time of acquisition. We previously held a non-controlling interest in Propeller Health’s outstanding shares. As a result of the acquisition, we recognized a fair value gain of $1.9 million in other income during the year ended June 30, 2019 associated with the previous equity investment. These acquisitions have been accounted for as business combinations using purchase accounting and are included in our consolidated financial statements from the acquisition dates. These acquisitions, individually and collectively, are not considered a material business combination and accordingly pro forma information is not provided. The acquisitions were funded by drawing on our existing revolving credit facility and through cash on-hand. We have completed the purchase price allocation in relation to all of these acquisitions. The cost of the share acquisitions was allocated to the assets acquired and liabilities assumed based on estimates of their fair values at the date of acquisition. The goodwill recognized as part of these acquisitions, which is predominantly not deductible for tax purposes, mainly represents the synergies that are unique to our combined businesses and the potential for new products and services to be developed in the future. Goodwill from these acquisitions has been reflected in the Software as a Service segment except for the goodwill resulting from the HB Healthcare and Propeller Health acquisitions, which have been recorded in the Sleep and Respiratory Care segment. The fair values of assets acquired and liabilities assumed of acquisitions during the year ended June 30, 2019, excluding MatrixCare, and the estimated useful lives of intangible assets acquired are as follows (in thousands):
|  | Final |  | Intangible ‎assets - ‎useful life
Current assets |  | $ | 31,648 |  |  |
Property, plant and equipment |  |  | 2,290 |  |  |
Deferred tax assets |  |  | 5,211 |  |  |
Trade names |  |  | 7,828 |  |  | 10 years
Non-compete |  |  | 1,000 |  |  | 3 years
Developed technology |  |  | 48,280 |  |  | 5 to 6 years
Customer relationships |  |  | 53,712 |  |  | 5 to 15 years
Goodwill |  |  | 287,469 |  |  |
Assets acquired |  | $ | 437,438 |  |  |
Current liabilities |  |  | (7,648) |  |  |
Deferred revenue |  |  | (3,619) |  |  |
Deferred tax liabilities |  |  | (2,367) |  |  |
Debt assumed |  |  | (35,104) |  |  |
Total liabilities assumed |  | $ | (48,738) |  |  |
Net assets acquired |  | $ | 388,700 |  |  |
During the year ended June 30, 2019, we recorded acquisition-related expenses of $6.1 million.

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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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