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ACQUISITIONS AND STRATEGIC INVESTMENTS | 12 Months Ended
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Apr. 01, 2023
Business Combinations [Abstract] |
Acquisitions and Strategic Investments | ACQUISITIONS AND STRATEGIC INVESTMENTS Acquisitions Cardiva Medical, Inc. On January 17, 2021, the Company entered into an Agreement and Plan of Merger with Cardiva Medical, Inc. (“Cardiva”), an industry-leading manufacturer of vascular closure systems based in Santa Clara, California. In connection with this acquisition, which closed on March 1, 2021, the Company acquired 100% of the issued and outstanding shares of capital stock of Cardiva for total consideration of $489.8 million, which consisted of upfront payments in the aggregate of $465.5 million ($418.2 million net of cash acquired) and the fair value of contingent consideration of $24.3 million. Cardiva achieved the contingent consideration maximum payout of $35.0 million, of which the final payment was made in fiscal 2023. The Company financed the acquisition through a combination of cash, borrowings under its revolving credit facility and an additional $150.0 million term loan under its existing credit facility. Cardiva’s portfolio includes two catheter-based vascular access site closure devices. The VASCADE® vascular closure system is designed for “small-bore” femoral arterial and venous closure, generally used in interventional cardiology and peripheral vascular procedures. The VASCADE MVP® vascular closure system is designed for “mid-bore” multi-access femoral venous closure, generally used in electrophysiology procedures, and is the only U.S. Food and Drug Administration (“FDA”) approved closure device for use following cardiac ablation procedures requiring two or more access sites within the same vessel. The addition of the VASCADE portfolio to the Hospital business unit includes products with demonstrated benefits and enhances penetration into the large and growing interventional cardiology and electrophysiology markets. Purchase Price Allocation The Company accounted for the acquisition of Cardiva as a business combination, and in accordance with FASB ASC Topic 805, Business Combinations (Topic 805), recorded the assets acquired and liabilities assumed at their respective fair values as of the acquisition date. The following amounts represent the fair value of the identifiable assets acquired and liabilities assumed for Cardiva:
(In thousands) | March 1, 2021
Accounts receivable | $ | 7,304 |
Inventories | 18,765 |
Prepaid expenses and other current assets | 850 |
Property, plant and equipment | 1,186 |
Intangible assets | 250,560 |
Goodwill | 253,707 |
Other long-term assets | 1,868 |
Total assets acquired | $ | 534,240 |
Accounts payable | 3,292 |
Accrued payroll and related costs | 58,211 |
Other liabilities | 1,903 |
Deferred tax liability | 26,793 |
Other long-term liabilities | 1,772 |
Total liabilities assumed | $ | 91,971 |
Net assets acquired | $ | 442,269 |
The Company determined the identifiable intangible assets were completed technology, customer relationships, trademarks and in-process research and development (“IPR&D”). The fair values of intangible assets were based on valuation techniques with estimates and assumptions developed by the Company. Completed technology and IPR&D were valued using the excess earnings method. Customer relationships were valued using the distributor method. Trademarks were valued using the relief from royalty method. The cash flows used in the valuation of the intangible assets were based on estimates used to price the transaction. In developing the discount rates applied to the cash flow projections, the discount rates were benchmarked with reference to the implied rate of return from the transaction model and the weighted average cost of capital and then adjusted to reflect the relative risk of the asset. The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill. As a result of the acquisition of Cardiva, the Company recognized goodwill of $253.7 million, which is attributable to the revenue and cash flow projections associated with completed technologies and the development of future technology that does not exist in the current IPR&D pipeline. The goodwill is not deductible for tax purposes and relates entirely to the Hospital reportable segment. Intangible assets acquired consist of the following:
(In thousands) | Amount | Weighted-Average Amortization Period | Risk-Adjusted Discount Rates used in Purchase Price Allocation
Completed technology | $ | 213,290 |  | 13 years | 13.5 | %
Customer relationships | 18,166 |  | 12 years | 13.0 | %
Trademarks | 5,437 |  | 13 years | 13.5 | %
IPR&D | 13,667 |  | Indefinite | 15.0 | %
Total | $ | 250,560 |  |  |
The Company recorded a long-term deferred tax liability, net, of $26.8 million primarily related to acquired intangible assets which cannot be deducted for tax purposes, partially offset by deferred tax assets primarily related to net operating losses acquired. Acquisition-Related Costs The amount of acquisition-related costs incurred associated with the acquisition was $9.6 million for the fiscal year ending April 3, 2021. The Company incurred acquisition costs related to legal and other professional fees in the amount of $6.6 million and an additional $3.0 million of debt financing costs and lender fees which were recognized in selling, general and administrative and as interest expense on the consolidated statements of income, respectively. Unaudited Pro Forma Financial Information Cardiva contributed revenues of $7.7 million to net revenues and losses of $7.6 million to net income for the period post acquisition through April 3, 2021. The unaudited estimated pro forma results presented below include the effects of the acquisition of Cardiva as if it was consummated on March 31, 2019. In fiscal 2021, the Company incurred nonrecurring charges attributed to the acquisition of Cardiva, which are presented in the consolidated statements of income for this period. These charges include acquisition-related costs, retention bonuses and severance payments, adjusted for the related tax effects. These nonrecurring charges are reflected as adjustments to the pro forma earnings presented below for fiscal 2021. Additionally, these pro forma amounts have been calculated, net of tax, after adjusting the results of Cardiva to reflect the additional costs associated with fair value adjustments relating to inventories, leases and intangible assets as if the acquisition had occurred on March 31, 2019 and adjusting interest amounts related to long-term debt assumptions. There was no significant impact to the pro forma amounts after applying the Company’s accounting policies. The supplemental pro forma information presented below is for informational purposes only and should be read in conjunction with our historical financial statements. The pro forma results do not include any anticipated synergies or other expected benefits of the acquisition. Accordingly, the unaudited estimated pro forma financial information below is not necessarily indicative of what the actual results of operations of the combined companies would have been had the acquisition of Cardiva occurred as of March 31, 2019, nor are they indicative of future results of operations. The pro forma assumptions and adjustments are reasonable and appropriate under the circumstances and are factually supported based on information currently available.
(In thousands) (Unaudited) | 2021 |  |
Net revenues | $ | 916,601 |  |  |
Net income | $ | 53,884 |  |  |
HAS Intellectual Property In January 2021, the Company entered into an agreement to acquire certain intellectual property owned by HemoAssay Science and Technology (Suzhou) Co. Ltd., a China-incorporated company, and its affiliates (collectively, “HemoAssay”) underlying their HAS viscoelastic diagnostic devices, related assays and disposables. The Company previously entered into exclusive manufacturing and distribution agreements with HemoAssay pursuant to which it has exclusive rights to commercialize HemoAssay’s HAS devices in China. In connection with the transaction, the Company has agreed to pay up to $15.0 million to HemoAssay in contingent consideration based on certain developmental and manufacturing based milestones. In fiscal years 2023 and 2022, the Company made milestone payments of $2.9 million and $2.5 million, respectively, which were recorded within intangible assets on the consolidated balance sheets. These products augment the Company’s portfolio of hemostasis analyzers within the Hospital business unit. enicor GmbH On April 1, 2020, the Company acquired all of the outstanding equity of enicor GmbH (“enicor”), the manufacturer of ClotPro®, a new generation whole blood coagulation testing system that is currently available in select European and Asia Pacific markets, for total consideration of $20.5 million, which consisted of upfront payments of $16.6 million and the fair value of contingent consideration of $3.9 million. The contingent consideration, which could total a maximum of $4.5 million, consists of payments related to the achievement of certain revenue and regulatory milestones. As of April 1, 2023, the Company has made $2.3 million of milestone payments. The acquisition of this viscoelastic diagnostic device augments the Company’s portfolio of hemostasis analyzers within the Hospital business unit. Purchase Price Allocation The Company accounted for the acquisition of enicor as a business combination, and in accordance with FASB ASC Topic 805, Business Combinations (Topic 805), recorded the assets acquired and liabilities assumed at their respective fair values as of the acquisition date. The following amounts represent the fair value of the identifiable assets acquired and liabilities assumed for enicor completed during fiscal 2021:
(In thousands) |  | April 1, 2020
Inventory |  | $ | 634 |
Other current assets |  | 685 |
Property, plant and equipment |  | 289 |
Intangible assets |  | 14,090 |
Goodwill |  | 8,153 |
Total assets acquired |  | $ | 23,851 |
Other current liabilities |  | 289 |
Deferred tax liability |  | 3,036 |
Total liabilities assumed |  | $ | 3,325 |
Net assets acquired |  | $ | 20,526 |
The Company determined the identifiable intangible assets were completed technology, customer relationships and a trademark. The fair value of the intangible assets was estimated using the income approach, and the cash flow projections were discounted using a rate of 20%. The cash flows were based on estimates used to price the transaction, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model and the weighted average cost of capital. The benefits of adding a viscoelastic diagnostic device to the Company’s portfolio of hemostasis analyzers within the Hospital business unit contributed to an acquisition price in excess of the fair value of net assets acquired for enicor, which resulted in the establishment of goodwill. In addition, the benefits of lower cost manufacturing and complementary sales channels also contributed to the establishment of goodwill for this acquisition. The goodwill is not deductible for income tax purposes. Intangible assets acquired consist of the following:
(In thousands) |  | Amount |  | Weighted-Average Amortization Period |  | Risk-Adjusted Discount Rates used in Purchase Price Allocation
Completed technology |  | $ | 13,441 |  |  | 10 Years |  | 20 | %
Customer relationships |  | 347 |  |  | 10 Years |  | 20 | %
Trademark |  | 302 |  |  | 10 Years |  | 20 | %
Total |  | $ | 14,090 |  |  |  |  |
Acquisition-Related Costs During fiscal 2021, the Company incurred $0.2 million of acquisition-related costs associated with the acquisition. Unaudited Pro Forma Financial Information enicor had an immaterial impact to the Company’s net revenues and net income for fiscal 2021. The unaudited estimated pro forma impact of the results of the acquisition of enicor as if it was consummated on April 1, 2019 are immaterial. Strategic Investments During fiscal year 2023, the Company made investments in Vivasure Medical LTD (“Vivasure”), totaling €30 million. The investments include both preferred stock and a special share that allows the Company to acquire Vivasure in accordance with an agreement between the parties. The investments are classified as other long-term assets on the consolidated balance sheets and the Company has not recorded any adjustments to the carrying value of our strategic investments in fiscal 2023.

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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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