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ACQUISITIONS AND DIVESTITURES | 9 Months Ended
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Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract] |
ACQUISITIONS AND DIVESTITURES | ACQUISITIONS AND DIVESTITURES Business Combinations Resolution Bioscience, Inc. On September 12, 2023, the Company completed the acquisition (the “Resolution Bioscience Acquisition”) of all of the outstanding capital stock of Resolution Bioscience, Inc. (“Resolution Bioscience”) from Agilent Technologies, Inc. Resolution Bioscience develops and commercializes next-generation sequencing-based precision oncology solutions through its Clinical Laboratory Improvement Amendments (“CLIA”) certified lab based in Kirkland, Washington. The acquisition provides the Company with a high-quality blood-based therapy selection platform, complementing its comprehensive, tissue-based OncoExTra test. The Company has included the financial results of Resolution Bioscience in the condensed consolidated financial statements from the date of the acquisition. The acquisition date fair value of the consideration transferred for Resolution Bioscience was approximately $54.2 million, which consisted of the following:
(In thousands) |  |
Cash |  | $ | 52,527 |
Fair value of replaced equity awards |  | 1,675 |
Total purchase price |  | $ | 54,202 |
Of the $52.5 million of consideration to be settled through the payment of cash, $50.0 million was paid as of September 30, 2023. The remaining $2.5 million represents cash owed to the seller for reimbursement of employee-related compensation and benefit costs for pre-acquisition services. The remaining cash consideration will be held by the Company until settlement and was recorded in other current liabilities in the condensed consolidated balance sheet. The Company replaced unvested restricted stock units (“RSUs”) with a combination-date fair value of $4.6 million. Of the total consideration for replaced equity awards, $1.7 million was allocated to the consideration transferred, and $2.9 million was deemed compensatory as it was attributable to post acquisition vesting. The compensatory replaced equity awards will be expensed over the remaining service periods on a straight-line basis to general and administrative expenses in the condensed consolidated statement of operations. The purchase price was allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values as follows:
(In thousands) |  |
Net operating assets |  | $ | 14,663 |
Developed technology |  | 26,000 |
Total identifiable assets acquired |  | 40,663 |
Net operating liabilities |  | (7,029) |
Net identifiable assets acquired |  | 33,634 |
Goodwill |  | 20,568 |
Net assets acquired |  | $ | 54,202 |
The Company recorded a $26.0 million identifiable intangible asset related to the developed technology associated with Resolution Bioscience’s liquid biopsy therapy selection tests. Developed technology represents purchased technology that had reached technological feasibility and for which Resolution Bioscience had substantially completed development as of the acquisition date. The fair value of the developed technology has been determined using the multi-period excess earnings method of the income approach, which involves significant unobservable inputs (Level 3 inputs). These inputs include projected revenues, gross margins, operating expenses, obsolescence, and an estimated discount rate. The developed technology intangible asset is amortized on a straight-line basis over its estimated useful life of 17 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, which is primarily attributed to the acquired workforce expertise and expected sales force and therapy selection product portfolio synergies. The total goodwill related to this acquisition is deductible for tax purposes. The total purchase price allocation is preliminary and based upon estimates and assumptions that are subject to change within the measurement period as additional information for the estimates is obtained. Because of the close proximity between the acquisition date and quarter-end, the measurement period remains open pending the completion of valuation procedures related to the acquired assets and assumed liabilities, including in connection with the developed technology intangible asset. The following unaudited pro forma financial information summarizes the combined results of operations for the Company and Resolution Bioscience, as though the companies were combined as of the beginning of January 1, 2022.
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) |  | 2023 |  | 2022 |  | 2023 |  | 2022
Total revenues |  | $ | 629,857 |  |  | $ | 525,802 |  |  | $ | 1,859,353 |  |  | $ | 1,541,154 |
Net loss before tax |  | (7,257) |  |  | (163,261) |  |  | (181,660) |  |  | (535,017) |
The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results that would have been achieved if the acquisition had taken place at such time. Expected cost savings and other synergistic benefits resulting from the acquisition were not reflected in the unaudited pro forma financial information. The Company did not have any material, nonrecurring pro forma adjustments directly attributable to the acquisition included in the reported unaudited pro forma financial information. Revenue and net loss before tax from Resolution Bioscience included in the Company's condensed consolidated statements of operations for the three and nine months ended September 30, 2023 was not material. Acquisition-related costs were not material and have been recorded within general and administrative expenses in the condensed consolidated statement of operations. These costs include fees associated with financial, legal, accounting, and other advisors incurred to complete the acquisition. OmicEra Diagnostics, GmbH On May 2, 2022, the Company completed the acquisition (the “OmicEra Acquisition”) of all of the outstanding equity interests of OmicEra Diagnostics GmbH. The OmicEra Acquisition provided the Company a state-of-the-art proteomics lab based in Planegg, Germany. OmicEra combines its mass spectrometry-based proteome analysis technology with its in-house proteomics scientific expertise to discover more reliable and valuable protein biomarkers, which will expand the Company’s research and development capabilities. Refer to the Company’s 2022 Form 10-K for detailed disclosures on the combination, including the fair value of the consideration transferred, purchase price allocation, and goodwill and intangible assets identified in the transaction. During the three and nine months ended September 30, 2023, there were no changes to the purchase price and purchase price allocation, and the measurement period has closed. Divestitures Oncotype DX Genomic Prostate Score Test On August 2, 2022, pursuant to an asset purchase agreement (“Asset Purchase Agreement”) with MDxHealth SA, the Company completed the sale of the intellectual property and know-how related to the Company’s Oncotype DX Genomic Prostate Score test, which will allow the Company to focus on the highest impact projects core to the Company’s vision. Refer to the Company’s 2022 Form 10-K for additional details on the initial sale and fair value of the consideration received at the closing date. On August 23, 2023, the Company and MDxHealth executed the Second Amendment to the Asset Purchase Agreement (“Second Amendment”) related to the sale of the GPS test. Under the Second Amendment, the Company agreed to allow MDxHealth to defer the 2023 contingent consideration payment by three years in exchange for additional consideration and more favorable contingent consideration terms. The Company received additional consideration with a fair value of $3.1 million, which was recorded as a gain for the three and nine months ended September 30, 2023, and is included in other operating income (loss) in the condensed consolidated statement of operations. The Second Amendment also increases the maximum contingent consideration from $70.0 million to $82.5 million and eliminates the minimum revenue thresholds previously required to be met under the Asset Purchase Agreement. As a result of the elimination of the minimum revenue thresholds, the Company determined that a significant reversal of a gain is not probable and therefore the contingent consideration is no longer constrained. The Company recorded a contingent consideration gain of $68.9 million for the three and nine months ended September 30, 2023, which is included in other operating income (loss) in the condensed consolidated statement of operations. The gain was estimated using historical GPS test revenues by MDxHealth under the most likely amount method. As of September 30, 2023, the contingent consideration is classified as a contract asset. The contract asset, which is included in other long-term assets, net on the condensed consolidated balance sheet, was $68.9 million and zero as of September 30, 2023 and December 31, 2022, respectively.

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