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BUSINESS COMBINATIONS | 9 Months Ended
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Sep. 25, 2021
Business Combination and Asset Acquisition [Abstract] |
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS Fiscal 2021 Acquisitions Vigene Biosciences, Inc. On June 28, 2021 (third fiscal quarter of 2021), the Company acquired Vigene Biosciences, Inc. (Vigene), a gene therapy contract development and manufacturing organization (CDMO), providing viral vector-based gene delivery solutions. The acquisition enables clients to seamlessly conduct analytical testing, process development, and manufacturing for advanced modalities with the same scientific partner. The preliminary purchase price of Vigene was $326.1 million, net of $2.7 million in cash, subject to certain post-closing adjustments that may change the purchase price. Included in the purchase price are contingent payments fair valued at $34.5 million, which was estimated using a Monte Carlo Simulation model (the maximum contingent contractual payments are up to $57.5 million based on future performance). The acquisition was funded through a combination of available cash and proceeds from the Company’s Credit Facility. This business is reported as part of the Company’s Manufacturing reportable segment. The preliminary purchase price allocation was as follows:
| June 28, 2021
| (in thousands)
Trade receivables | $ | 3,548 |
Other current assets (excluding cash) | 1,657 |
Property, plant and equipment | 7,649 |
Operating lease right-of-use asset, net | 22,507 |
Goodwill | 242,822 |
Definite-lived intangible assets | 93,600 |
Other long-term assets | 694 |
Deferred revenue | (4,260) |
Current liabilities | (6,319) |
Operating lease right-of-use liabilities | (21,220) |
Deferred tax liabilities | (14,600) |
Total purchase price allocation | $ | 326,078 |
The preliminary purchase price allocation is subject to change as additional information becomes available concerning the fair value and tax basis of the assets acquired and liabilities assumed, including certain contracts and obligations. Any additional adjustments to the purchase price allocation will be made as soon as practicable but no later than one year from the date of acquisition. The definite-lived intangible assets acquired were as follows:
| Definite-Lived Intangible Assets |  | Weighted Average Amortization Life
| (in thousands) |  | (in years)
Client relationships | $ | 88,000 |  |  | 12
Backlog | 2,100 |  |  | 1
Other intangible assets | 3,500 |  |  | 4
Total definite-lived intangible assets | $ | 93,600 |  |  | 11
The goodwill resulting from the transaction is primarily attributable to the potential growth of the Company’s Manufacturing business from new customers introduced to Vigene and the assembled workforce of the acquired business. The goodwill attributable to Vigene is not deductible for tax purposes. The Company incurred transaction and integration costs in connection with the acquisition of $1.9 million and $4.4 million for the three and nine months ended September 25, 2021, respectively, which were included in Selling, general and administrative expenses within t he unaudited condensed consolidated statements of income. Beginning on June 28, 2021, Vigene has been included in the operating results of the Company. Vigene revenue and operating loss during the three months ended September 25, 2021 was $6.0 million and $2.6 million, respectively. Pro forma financial information as well as the disclosure of actual revenue and operating income (loss) is presented as if it had occurred as of the beginning of the period immediately preceding the period of acquisition, which is December 29, 2019, after giving effect to certain adjustments. See the bottom of this section for combined pro forma disclosure. Retrogenix Limited On March 30, 2021, the Company acquired Retrogenix Limited (Retrogenix), an early-stage contract research organization providing specialized bioanalytical services utilizing its proprietary cell microarray technology. The acquisition of Retrogenix enhances the Company’s scientific expertise with additional large molecule and cell therapy discovery capabilities. The purchase price of Retrogenix was $53.9 million, net of $8.5 million in cash. Included in the purchase price are contingent payments fair valued at $6.9 million, which is the maximum potential payout, and was based on a probability-weighted approach. The acquisition was funded through a combination of available cash and proceeds from the Company’s Credit Facility. This business is reported as part of the Company’s DSA reportable segment. The preliminary purchase price allocation was as follows:
| March 30, 2021
| (in thousands)
Trade receivables | $ | 2,266 |
Other current assets (excluding cash) | 209 |
Property, plant and equipment | 400 |
Goodwill | 34,489 |
Definite-lived intangible assets | 22,126 |
Other long-term assets | 1,385 |
Current liabilities | (1,575) |
Deferred tax liabilities | (4,174) |
Other long-term liabilities | (1,205) |
Total purchase price allocation | $ | 53,921 |
The preliminary purchase price allocation is subject to change as additional information becomes available concerning the fair value and tax basis of the assets acquired and liabilities assumed, including certain contracts and obligations. From the date of the acquisition through September 25, 2021, the Company recorded measurement-period adjustments related to the acquisition that resulted in an immaterial change to the purchase price allocation on a consolidated basis. Any additional adjustments to the purchase price allocation will be made as soon as practicable but no later than one year from the date of acquisition. The definite-lived intangible assets acquired were as follows:
| Definite-Lived Intangible Assets |  | Weighted Average Amortization Life
| (in thousands) |  | (in years)
Client relationships | $ | 17,340 |  |  | 13
Developed technology | 3,685 |  |  | 3
Other intangible assets | 1,101 |  |  | 2
Total definite-lived intangible assets | $ | 22,126 |  |  | 11
The goodwill resulting from the transaction is primarily attributable to the potential growth of the Company’s DSA business from new customers introduced to Retrogenix and the assembled workforce of the acquired business. The goodwill attributable to Retrogenix is not deductible for tax purposes. The Company incurred transaction and integration costs in connection with the acquisition of $0.1 million and $1.7 million for the three and nine months ended September 25, 2021, respectively, which were included in Selling, general and administrative expenses within t he unaudited condensed consolidated statements of income. Pro forma financial information as well as the disclosure of actual revenue and operating income (loss) have not been included because Retrogenix’s financial results are not significant when compared to the Company’s consolidated financial results. Cognate BioServices, Inc. On March 29, 2021, the Company acquired Cognate BioServices, Inc. (Cognate), a cell and gene therapy CDMO offering comprehensive manufacturing solutions for cell therapies, as well as for the production of plasmid DNA and other inputs in the CDMO value chain. The acquisition of Cognate establishes the Company as a scientific partner for cell and gene therapy development, testing, and manufacturing, providing clients with an integrated solution from basic research and discovery through cGMP production. The preliminary purchase price of Cognate was $876.1 million, net of $70.5 million in cash, subject to certain post-closing adjustments and includes $15.7 million of consideration for an approximate 2% ownership interest not acquired, which will be redeemed in 2022 with the ultimate payout tied to performance in 2021. The acquisition was funded through a combination of available cash and proceeds from the Company’s Credit Facility and recently issued Senior Notes. This business is reported as part of the Company’s Manufacturing reportable segment. The preliminary purchase price allocation was as follows:
| March 29, 2021
| (in thousands)
Trade receivables | $ | 18,566 |
Inventories | 4,231 |
Other current assets (excluding cash) | 10,601 |
Property, plant and equipment | 52,082 |
Operating lease right-of-use assets, net | 34,349 |
Goodwill | 608,792 |
Definite-lived intangible assets | 270,900 |
Other long-term assets | 6,098 |
Deferred revenue | (18,582) |
Current liabilities | (45,025) |
Operating lease right-of-use liabilities | (31,383) |
Deferred tax liabilities | (34,124) |
Other long-term liabilities | (414) |
Total purchase price allocation | $ | 876,091 |
The preliminary purchase price allocation is subject to change as additional information becomes available concerning the fair value and tax basis of the assets acquired and liabilities assumed, including certain contracts and obligations. From the date of the acquisition through September 25, 2021, the Company recorded measurement-period adjustments related to the acquisition that resulted in an immaterial change to the purchase price allocation on a consolidated basis. Any additional adjustments to the purchase price allocation will be made as soon as practicable but no later than one year from the date of acquisition. The definite-lived intangible assets acquired were as follows:
| Definite-Lived Intangible Assets |  | Weighted Average Amortization Life
| (in thousands) |  | (in years)
Client relationships | $ | 257,200 |  |  | 13
Other intangible assets | 4,800 |  |  | 2
Backlog | 8,900 |  |  | 1
Total definite-lived intangible assets | $ | 270,900 |  |  | 13
The goodwill resulting from the transaction is primarily attributable to the potential growth of the Company’s Manufacturing business from new customers introduced to Cognate and the assembled workforce of the acquired business. The goodwill attributable to Cognate is not deductible for tax purposes. The Company incurred transaction and integration costs in connection with the acquisition of $4.3 million and $22.7 million for the three and nine months ended September 25, 2021, respectively, which were included in Selling, general and administrative expenses within t he unaudited condensed consolidated statements of income. Beginning on March 29, 2021, Cognate has been included in the operating results of the Company. Cognate revenue for the three and nine months ended September 25, 2021 was $30.3 million and $65.1 million, respectively. Cognate had an operating loss of $0.8 million for the three months ended September 25, 2021, and income of $0.3 million for the nine months ended September 25, 2021. Pro forma financial information as well as the disclosure of actual revenue and operating income (loss) is presented as if it had occurred as of the beginning of the period immediately preceding the period of acquisition, which is December 29, 2019, after giving effect to certain adjustments. See the bottom of this section for combined pro forma disclosure. Distributed Bio, Inc. On December 31, 2020, the Company acquired Distributed Bio, Inc. (Distributed Bio), a next-generation antibody discovery company with technologies specializing in enhancing the probability of success for delivering high-quality, readily formattable antibody fragments to support antibody and cell and gene therapy candidates to biopharmaceutical clients. The acquisition of Distributed Bio expands the Company’s capabilities with an innovative, large-molecule discovery platform, and creates an integrated, end-to-end platform for therapeutic antibody and cell and gene therapy discovery and development. The preliminary purchase price of Distributed Bio was $97.0 million, net of $0.8 million in cash, subject to certain post-closing adjustments that may change the purchase price. The total consideration includes $80.8 million cash paid, settlement of $3.0 million in convertible promissory notes previously invested by the Company during prior fiscal years, and $14.0 million of contingent consideration, which is estimated using a Monte Carlo Simulation model (the maximum contingent contractual payments are up to $21.0 million based on future performance and milestone achievements over a one-year period). The acquisition was funded through a combination of available cash and proceeds from the Company’s Credit Facility. This business is reported as part of the Company’s DSA reportable segment. The preliminary purchase price allocation was as follows:
| December 31, 2020
| (in thousands)
Trade receivables | $ | 2,722 |
Other current assets (excluding cash) | 221 |
Property, plant and equipment | 2,382 |
Goodwill | 71,585 |
Definite-lived intangible assets | 24,540 |
Other long-term assets | 2,055 |
Current liabilities | (2,823) |
Deferred tax liabilities | (2,529) |
Other long-term liabilities | (1,123) |
Total purchase price allocation | $ | 97,030 |
The preliminary purchase price allocation is subject to change as additional information becomes available concerning the fair value and tax basis of the assets acquired and liabilities assumed, including certain contracts and obligations. Any additional adjustments to the purchase price allocation will be made as soon as practicable but no later than one year from the date of acquisition. The definite-lived intangible assets acquired were as follows:
| Definite-Lived Intangible Assets |  | Weighted Average Amortization Life
| (in thousands) |  | (in years)
Client relationships | $ | 16,080 |  |  | 9
Developed technology | 3,940 |  |  | 5
Other intangible assets | 4,520 |  |  | 4
Total definite-lived intangible assets | $ | 24,540 |  |  | 7
The goodwill resulting from the transaction is primarily attributable to the potential growth of the Company’s DSA business from new customers introduced to Distributed Bio and the assembled workforce of the acquired business. The goodwill attributable to Distributed Bio is not deductible for tax purposes. The Company incurred transaction and integration costs in connection with the acquisition of less than $0.1 million for the three months ended September 25, 2021 and $0.9 million for the nine months ended September 25, 2021 which were included in Selling, general and administrative expenses within t he unaudited condensed consolidated statements of income. Pro forma financial information as well as the disclosure of actual revenue and operating income (loss) have not been included because Distributed Bio's financial results are not significant when compared to the Company’s consolidated financial results. Other Acquisition On March 3, 2021, the Company acquired certain assets from a distributor that supports the Company’s DSA reportable segment. The purchase price was $35.4 million, which includes $19.5 million in cash paid ($5.5 million of which was paid in fiscal 2020), and $15.9 million of contingent consideration, which is estimated using a Monte Carlo Simulation model (the maximum contingent contractual payments are up to $17.5 million based on future performance over a three-year period). The fair value of the net assets acquired included $17.3 million of goodwill, $15.2 million attributed to supplier relationships (to be amortized over a 4-year period), and $3.0 million of property, plant, and equipment. The business is reported as part of the Company’s DSA reportable segment. Pro forma information and transaction and integration costs have not been presented because such information is not material to the unaudited condensed consolidated financial statements. Pro forma information The following selected unaudited pro forma consolidated results of operations are presented as if the Cognate and Vigene acquisitions had occurred as of the beginning of the period immediately preceding the period of acquisition, which is December 29, 2019, after giving effect to certain adjustments. For the nine months ended September 25, 2021, these adjustments included additional amortization of intangible assets and depreciation of fixed assets of $17.6 million, additional interest expense on borrowing of $5.6 million, elimination of intercompany activity and other one-time costs, and the tax impacts of these adjustments. For the nine months ended September 26, 2020, these adjustments included additional amortization of intangible assets and depreciation of fixed assets of $19.5 million, additional interest expense on borrowing of $7.7 million, elimination of intercompany activity and other one-time costs, and the tax impacts of these adjustments.
| Three Months Ended |  | Nine Months Ended
| September 25, 2021 |  | September 26, 2020 |  | September 25, 2021 |  | September 26, 2020
| (in thousands)
| (unaudited)
Revenue | $ | 895,937 |  |  | $ | 790,322 |  |  | $ | 2,678,596 |  |  | $ | 2,230,558 |
Net income attributable to common shareholders | 106,288 |  |  | 120,189 |  |  | 238,775 |  |  | 181,326 |
These unaudited pro forma results of operations have been prepared for comparative purposes only, and they do not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred on the dates indicated or that may result in the future. No effect has been given for synergies, if any, that may be realized through the acquisition. Fiscal 2020 Acquisitions Cellero, LLC On August 6, 2020, the Company acquired Cellero, LLC (Cellero), a provider of cellular products for cell therapy developers and manufacturers worldwide. The addition of Cellero enhances the Company’s unique, comprehensive solutions for the high-growth cell therapy market, strengthening the ability to help accelerate clients’ critical programs from basic research and proof-of-concept to regulatory approval and commercialization. It also expands the Company’s access to high-quality, human-derived biomaterials with Cellero’s donor sites in the United States. The purchase price for Cellero of $36.9 million, net of $0.5 million in cash, was funded through available cash. This business is reported as part of the Company’s RMS reportable segment. The purchase price allocation was as follows:
| August 6, 2020
| (in thousands)
Trade receivables | $ | 1,500 |
Inventories | 551 |
Other current assets (excluding cash) | 182 |
Property, plant and equipment | 1,648 |
Goodwill | 19,457 |
Definite-lived intangible assets | 16,230 |
Other long-term assets | 849 |
Current liabilities | (1,360) |
Deferred tax liabilities | (1,467) |
Other long-term liabilities | (740) |
Total purchase price allocation | $ | 36,850 |
From the date of the acquisition through June 26, 2021, the Company recorded measurement-period adjustments related to the acquisition that resulted in an immaterial change to the purchase price allocation on a consolidated basis. No further adjustments will be made to the purchase price allocation. The definite-lived intangible assets acquired were as follows:
| Definite-Lived Intangible Assets |  | Weighted Average Amortization Life
| (in thousands) |  | (in years)
Client relationships | $ | 14,740 |  |  | 13
Other intangible assets | 1,490 |  |  | 3
Total definite-lived intangible assets | $ | 16,230 |  |  | 12
The goodwill resulting from the transaction, $10.8 million of which is deductible for tax purposes due to a prior asset acquisition, is primarily attributable to the potential growth of the Company’s RMS business from new customers introduced through Cellero and the assembled workforce of the acquired business. The Company incurred integration costs in connection with the acquisition of $0.1 million and $0.7 million for the three and nine months ended September 25, 2021, respectively, and $2.0 million for the three and nine months ended September 26, 2020, which were included in Selling, general and administrative expenses within the unaudited condensed consolidated statements of income. Pro forma financial information as well as the disclosure of actual revenue and operating income (loss) have not been included because Cellero's financial results are not significant when compared to the Company’s consolidated financial results. HemaCare Corporation On January 3, 2020, the Company acquired HemaCare Corporation (HemaCare), a business specializing in the production of human-derived cellular products for the cell therapy market. The acquisition of HemaCare expands the Company’s comprehensive portfolio of early-stage research and manufacturing support solutions to encompass the production and customization of high-quality, human derived cellular products to better support clients’ cell therapy programs. The purchase price of HemaCare was $376.7 million, net of $3.1 million in cash, which was funded through a combination of available cash and proceeds from the Company’s Credit Facility. This business is reported as part of the Company’s RMS reportable segment. The purchase price allocation was as follows:
| January 3, 2020
| (in thousands)
Trade receivables | $ | 6,451 |
Inventories | 8,468 |
Other current assets (excluding cash) | 3,494 |
Property, plant and equipment | 10,033 |
Goodwill | 210,196 |
Definite-lived intangible assets | 183,540 |
Other long-term assets | 5,920 |
Current liabilities | (5,188) |
Deferred tax liabilities | (38,529) |
Other long-term liabilities | (7,664) |
Total purchase price allocation | $ | 376,721 |
From the date of the acquisition through December 26, 2020, the Company recorded measurement-period adjustments related to the acquisition that resulted in an immaterial change to the purchase price allocation on a consolidated basis. No further adjustments will be made to the purchase price allocation. The definite-lived intangible assets acquired were as follows:
| Definite-Lived Intangible Assets |  | Weighted Average Amortization Life
| (in thousands) |  | (in years)
Client relationships | $ | 170,390 |  |  | 19
Trade name | 7,330 |  |  | 10
Other intangible assets | 5,820 |  |  | 3
Total definite-lived intangible assets | $ | 183,540 |  |  | 18
The goodwill resulting from the transaction is primarily attributable to the potential growth of the Company’s RMS business from new customers introduced through HemaCare and the assembled workforce of the acquired business. The goodwill attributable to HemaCare is not deductible for tax purposes. The Company incurred transaction and integration costs in connection with the acquisition of $0.1 million and $0.5 million for the three and nine months ended September 25, 2021, respectively, and $0.1 million and $5.9 million for the three and nine months ended September 26, 2020, which were included in Selling, general and administrative expenses within the unaudited condensed consolidated statements of income. The following selected unaudited pro forma consolidated results of operations are presented as if the HemaCare acquisition had occurred as of the beginning of the p eriod immediately preceding the period of acquisition, which is December 30, 2018, after giving effect to certain adjustments. For t he nine months ended September 26, 2020, these adjustments included additional amortization of intangible assets and depreciation of fixed assets of $0.4 million, elimi nation of intercompany activity and other one-time costs, and the tax impacts of these adjustments.
| September 26, 2020 |  |  |
| Three Months Ended |  | Nine Months Ended |  |  |  |
| (unaudited) |  | (unaudited) |  |  |  |
Revenue | $ | 743,300 |  |  | $ | 2,132,961 |  |  |  |  |
Net income attributable to common shareholders | 102,802 |  |  | 225,890 |  |  |  |  |
These unaudited pro forma results of operations have been prepared for comparative purposes only, and they do not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred on the dates indicated or that may result in the future. No effect has been given for synergies, if any, that may be realized through the acquisition.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: 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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