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Acquisition Of On-X Life Technologies | 12 Months Ended
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Dec. 31, 2016
Acquisition Of On-X Life Technologies [Abstract] |
Acquisition Of On-X Life Technologies | 4. Acquisition of On-X Life Technologies ﻿ Overview ﻿ On December 22, 2015 the Company entered into an Agreement and Plan of Merger (“On-X Agreement”) to acquire On-X Life Technologies Holdings, Inc. (“On-X”), an Austin, Texas-based, privately held mechanical heart valve company, for approximately $130.0 million, subject to certain adjustments. The transaction closed on January 20, 2016, and On-X is being operated as a wholly owned subsidiary of CryoLife. ﻿ The On-X catalogue of products includes the On-X prosthetic aortic and mitral heart valves and the On-X ascending aortic prosthesis (“AAP”). On-X also distributes CarbonAid CO2 diffusion catheters, manufactures Chord-X ePTFE sutures for mitral chordal replacement, and offers pyrolytic carbon coating services to other medical device manufacturers. CryoLife believes that the On-X products fit well into its product portfolio of medical devices for cardiac surgery and that the Company is capitalizing on the significant opportunity for CryoLife’s sales team to leverage their strong relationships with cardiac surgeons to introduce and to expand utilization of the On-X valves in the U.S. and internationally. ﻿ Accounting for the Transaction ﻿ The purchase price of the On-X transaction totaled approximately $128.2 million, consisting of cash of $93.6 million and 3,703,699 shares of CryoLife common stock, with a value of $34.6 million as determined on the date of the closing. The Company recorded an allocation of the $128.2 million purchase price to On-X’s tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of January 20, 2016. Goodwill was recorded based on the amount by which the purchase price exceeds the fair value of the net assets acquired and is not deductible for tax purposes. Goodwill from this transaction has been allocated to the Company’s Medical Devices segment. ﻿ The purchase price allocation as of December 31, 2016 is as follows (in thousands): ﻿ ﻿
﻿ |  |
﻿ | Opening
﻿ | Balance Sheet
﻿Cash and cash equivalents | $ | 2,472
﻿Receivables |  | 6,826
﻿Inventories |  | 12,889
﻿Intangible assets |  | 53,950
﻿Goodwill |  | 68,229
﻿Other assets |  | 6,891
﻿Liabilities assumed |  | (23,040)
﻿Total purchase price | $ | 128,217
﻿ CryoLife incurred transaction and integration costs of $7.4 million for the year ended December 31, 2016 related to the acquisition, which include, among other costs, expenses related to the termination of international and domestic distribution agreements. These costs were expensed as incurred and were primarily recorded as general, administrative, and marketing expenses on the Company’s Consolidated Statements of Operations and Comprehensive Income. ﻿ The Company paid approximately $10 million of the purchase price into an escrow account upon closing of the On-X transaction. The Company is currently negotiating with the shareholder representative of On-X concerning the resolution of these escrow funds. ﻿ Pro Forma Results ﻿ On-X revenues of $34.2 million from the date of acquisition through December 31, 2016 are included in the Consolidated Statements of Operations and Comprehensive Income. The Company’s pro forma results of operations for the years ended December 31, 2016 and 2015, assuming the On-X acquisition had occurred as of January 1, 2015, are presented for comparative purposes below. These amounts are based on available information of the results of operations of On-X prior to the acquisition date and are not necessarily indicative of what the results of operations would have been had the acquisition been completed on January 1, 2014. This unaudited pro forma information does not project operating results post acquisition. ﻿ This pro forma information is as follows (in thousands, except per share amounts): ﻿ ﻿
﻿ |  |  |  |  |
﻿ | Twelve Months Ended
﻿ | December 31,
﻿ | 2016 |  | 2015
﻿Total revenues | $ | 182,007 |  | $ | 179,266
﻿Net income (loss) |  | 17,692 |  |  | (4,787)
﻿ |  |  |  |  |
﻿Pro forma income (loss) per common share - basic | $ | 0.54 |  | $ | (0.15)
﻿Pro forma income (loss) per common share - diluted | $ | 0.53 |  | $ | (0.15)
﻿ Pro forma net income (loss) was calculated using a normalized tax rate of approximately 38%.

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