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Business Combinations
 12 Months Ended
Sep. 28, 2024
Business Combinations [Abstract]  
Business Combinations Business Combinations
Fiscal 2024 Acquisitions
Endomag
On July 25, 2024, the Company completed the acquisition of Endomagnetics Ltd (“Endomag”) for a purchase price of $313.9 million. Endomag, located in the U.K., develops and sells breast surgery localization and lymphatic tracing technologies. Endomag’s results of operations are reported in the Company's Breast Health reportable segment from the date of
acquisition.
The purchase price was allocated to Endomag's preliminary tangible and identifiable intangible assets and liabilities based on their preliminary estimated fair values as of July 25, 2024, as set forth below.
Cash$16.2 
Accounts receivable5.5 
Inventory14.9 
Other assets7.0 
Accounts payable and accrued expenses(22.6)
Identifiable intangible assets:
Developed technology180.9 
Trade names7.4 
Customer relationship6.5 
In-process research and development3.0 
Deferred income taxes, net(43.8)
Goodwill138.9 
Purchase Price$313.9 
In performing the preliminary purchase price allocation, the Company considered, among other factors, the intended future use of acquired assets, analysis of historical financial performance and estimates of future performance of Endomag’s business. The allocation of the purchase price is preliminary as the Company continues to gather information supporting the valuation of acquired assets and liabilities.
As part of the preliminary purchase price allocation, the Company determined the identifiable intangible assets are developed technology, trade names, customer relationship and in-process research and development project. The preliminary fair value of the intangible assets was estimated using the income approach, and the cash flow projections were discounted using a 15.0% rate. The cash flows were based on estimates used to price the transaction, and the discount rate applied was benchmarked with reference to the implied rate of return from the transaction model and the weighted average cost of capital.
The developed technology assets are comprised of know-how, patents and technologies embedded in Endomag’s products and relate to currently marketed products. The developed technology assets comprise the primary product families under the Sentimag, Magseed and Magtrace technology platforms.
The preliminary estimate of the weighted average life for the developed technology assets was 11 years, for customer relationships was 12 years and trade name assets was 11 years. The calculation of the excess of the purchase price over the estimated fair value of the tangible net assets and intangible assets acquired was recorded to goodwill. Factors contributing to the recognition of the amount of goodwill were primarily based on anticipated strategic and synergistic benefits that are expected to be realized from the Endomag acquisition. These benefits include expanding the Company’s breast care portfolio and utilizing Breast Health’s sales and regulatory expertise to drive adoption and revenue growth. None of the goodwill is expected to be deductible for income tax purposes.
Fiscal 2023 Acquisitions
JW Medical
On July 3, 2023, the Company completed the acquisition of assets from JW Medical Corporation (“JW Medical”) for a purchase price of $6.7 million. JW Medical was a long-standing distributor of the Company’s Breast Health products in South Korea. The majority of the purchase price was allocated to a customer relationship intangible asset with a useful life of 5 years.
Normedi
On April 3, 2023, the Company completed the acquisition of Normedi Nordic AS (“Normedi”) for a purchase price of $7.7 million, which included $1.1 million for contingent consideration. Normedi was a long-standing distributor of the Company’s Surgical products in the Nordics region of Europe. The Company allocated $3.0 million of the purchase price to a customer relationship intangible asset with a useful life of 5 years, and the excess of the purchase price over the net assets acquired was recorded to goodwill.
Fiscal 2022 Acquisitions
Bolder Surgical
On November 29, 2021, the Company completed the acquisition of Bolder Surgical Holdings, Inc. (“Bolder”), for a purchase price of $160.1 million. Bolder, located in Louisville, Colorado, is a developer and manufacturer of energy vessel sealing surgical devices used in both laparoscopic and open procedures. Bolder's results of operations are reported in the Company's GYN Surgical reportable segment from the date of acquisition.
The purchase price was allocated to Bolder’s tangible and identifiable intangible assets and liabilities based on their estimated fair values as of November 29, 2021, as set forth below.
Cash$1.9 
Accounts receivable1.3 
Inventory3.3 
Other assets3.0 
Accounts payable and accrued expenses(3.2)
Identifiable intangible assets:
Developed technology73.6 
Customer relationship21.7 
Trade names1.4 
Deferred income taxes, net(11.7)
Goodwill68.8 
Purchase Price$160.1 
In performing the purchase price allocation, the Company considered, among other factors, the intended future use of acquired assets, analysis of historical financial performance and estimates of future performance of Bolder’s business.
As part of the purchase price allocation, the Company determined the identifiable intangible assets were developed technology, customer relationships and trade names. The preliminary fair value of the intangible assets was estimated using the income approach, and the cash flow projections were discounted using a 16.0% rate. The cash flows were based on estimates used to price the transaction, and the discount rate applied was benchmarked with reference to the implied rate of return from the transaction model and the weighted average cost of capital.
The developed technology assets are comprised of know-how, patents and technologies embedded in Bolder’s products and relate to currently marketed products. The developed technology assets comprise the primary product families under the JustRight and CoolSeal technology platforms.
The estimate of the weighted average life for the developed technology, customer relationship, and trade name assets was 10 years. The calculation of the excess of the purchase price over the estimated fair value of the tangible net assets and intangible assets acquired was recorded to goodwill. Factors contributing to the recognition of the amount of goodwill were primarily based on anticipated strategic and synergistic benefits that are expected to be realized from the Bolder acquisition. These benefits include expanding the Company’s surgical portfolio and utilizing GYN Surgical’s sales and regulatory expertise to drive adoption and revenue growth. None of the goodwill is expected to be deductible for income tax purposes.
Contingent Consideration
The Company’s primary contingent consideration liability was related to its acquisition of Acessa Health, Inc. (“Acessa”), which was acquired in August 2020. Acessa developed the Acessa ProVu laparoscopic radiofrequency ablation system. The Company estimated the fair value of this liability to be $81.8 million as of the acquisition date. The contingent payments were based on a multiple of annual incremental revenue growth over a three-year period ending annually in December of each of 2021, 2022, and 2023. There was no maximum earnout. Pursuant to ASC 805, the Company recorded its estimate of the fair value of the contingent consideration liability utilizing the Monte Carlo simulation based on future revenue projections of Acessa, revenue growth rates of comparable companies, implied volatility and applying a risk adjusted discount rate. Each quarter the Company was required to remeasure the fair value of the liability as assumptions change, and such adjustments were recorded in operating expenses. This fair value measurement was based on significant inputs not observable in the market and thus represented a Level 3 measurement as defined in ASC 820. This fair value measurement was directly impacted by the Company's estimate of future incremental revenue growth of the business. Accordingly, if actual revenue growth were higher or lower than the estimates within the fair value measurement, the Company would record additional charges or gains. During the first quarter of fiscal 2024, the third and final measurement period was completed, and the Company recorded a loss of $1.7 million to increase the contingent consideration liability to fair value based on actual revenue
results in the final earn-out period. The Company made a final payment of $2.6 million during the second quarter of fiscal 2024.
During 2023, the Company remeasured the contingent consideration liability and recorded a gain of $14.9 million to record the liability to fair value. The reduction in fair value was due to a decrease in forecasted revenues over the remaining measurement period. The Company paid $7.6 million for the second earnout period. During fiscal 2022, the Company remeasured the contingent consideration and recorded a gain of $39.5 million to record the liability at fair value. The reduction in fair value was primarily due to a decrease in forecasted revenues over the measurement period and to a much lesser extent an increase in the discount rate driven by market rates. The Company paid $12.2 million for the first earnout period.