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Acquisition Of JOTEC | 6 Months Ended
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Jun. 30, 2018
Acquisition Of JOTEC [Abstract] |
Acquisition of JOTEC | 4. Acquisition of JOTEC ﻿ Overview ﻿ On December 1, 2017 we acquired JOTEC AG, a Swiss entity that we converted to JOTEC GmbH and subsequently merged with our Swiss acquisition entity, Jolly Buyer Acquisition GmbH (“JOTEC”) and its subsidiaries (the “JOTEC Acquisition”) for a contract value of approximately $225.0 million, subject to certain adjustments. JOTEC is being operated as a wholly-owned subsidiary of CryoLife. In connection with the closing of the JOTEC Acquisition, CryoLife entered into a senior secured credit facility in an aggregate principal amount of $255.0 million, which includes a $225.0 million term loan and a $30.0 million revolving credit facility. See Note 8 for further discussion of the senior secured credit facility. ﻿ Accounting for the Transaction ﻿ Based on our preliminary analysis, the purchase price of the JOTEC Acquisition totaled approximately $221.9 million, including debt and cash acquired as determined on the date of closing, consisting of $168.8 million in cash and 2,682,754 shares of CryoLife common stock, with an estimated value of $53.1 million as determined on the date of the closing. Upon closing of the JOTEC Acquisition, $22.5 million was paid into an escrow account for any amounts payable for indemnification claims or other payment obligations. Our preliminary allocation of the $221.9 million purchase consideration was allocated to JOTEC’s tangible and identifiable intangible assets acquired and liabilities assumed, based on their estimated fair values as of December 1, 2017. Goodwill was preliminarily recorded based on the amount by which the purchase price exceeded the fair value of the net assets acquired and is not deductible for tax purposes. Goodwill from this transaction has been allocated to our Medical Devices segment. The estimated allocation of assets acquired and liabilities assumed is based on the information available to us. As we complete our valuation procedures if new information regarding these values is received that would result in a material adjustment to the values recorded, we will recognize the adjustment, which may include the recognition of additional expenses, impairments, or other allocation adjustments, in the period this determination is made. As of June 30, 2018 goodwill increased by $1.4 million resulting from adjustments made during the measurement period. ﻿ The preliminary purchase price allocation as of December 1, 2017, reflecting the measurement period adjustments is as follows (in thousands): ﻿ ﻿
﻿ |  |
﻿ | Opening
﻿ | Balance Sheet
﻿Cash and cash equivalents | $ | 4,130
﻿Receivables |  | 13,337
﻿Inventories |  | 17,392
﻿Intangible assets |  | 115,820
﻿Property and equipment |  | 13,048
﻿Goodwill |  | 110,525
﻿Other assets |  | 4,005
﻿Debt acquired |  | (3,808)
﻿Liabilities assumed |  | (52,580)
﻿Total purchase price | $ | 221,869
﻿ We incurred transaction and integration costs of $851,000 and $4.3 million for the three and six months ended June 30, 2018, respectively, related to the JOTEC Acquisition, which included, among other costs, expenses related to the termination of international distribution agreements, severance costs, and legal, other professional, and consulting costs. These costs were expensed as incurred and were primarily recorded as general, administrative, and marketing expenses on our Summary Consolidated Statements of Operations and Comprehensive (Loss) Income. ﻿ Pro Forma Results - Unaudited ﻿ JOTEC revenues were $4.1 million and the net loss was $1.5 million from the date of the JOTEC Acquisition through December 31, 2017. Our unaudited pro forma results of operations for the years ended December 31, 2017 and 2016, assuming the JOTEC Acquisition had occurred as of January 1, 2016, are presented for comparative purposes below. These amounts are based on available information from the results of operations of JOTEC prior to the acquisition date and are not necessarily indicative of what the results of operations would have been had the JOTEC Acquisition been completed on January 1, 2016. Differences between the preliminary and final purchase price allocation could have an impact on the pro forma financial information presented below and that impact could be material. This unaudited pro forma information does not project operating results post JOTEC Acquisition. ﻿ A summary of this unaudited pro forma information is as follows (in thousands, except per share amounts): ﻿ ﻿
﻿ |  |  |  |  |
﻿ | Twelve Months Ended
﻿ | December 31,
﻿ | 2017 |  | 2016
﻿Total revenues | $ | 236,209 |  | $ | 224,896
﻿Net loss |  | (736) |  |  | (1,966)
﻿ |  |  |  |  |
﻿Pro forma loss per common share - basic | $ | (0.02) |  | $ | (0.06)
﻿Pro forma loss per common share - diluted | $ | (0.02) |  | $ | (0.06)
Pro forma net loss was calculated using a normalized tax rate of approximately 38%.

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