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Acquisition Of On-X Life Technologies | 12 Months Ended
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Dec. 31, 2018
Acquisition Of On-X Life Technologies [Abstract] |
Acquisition Of On-X Life Technologies | 5. Acquisition of On-X Life Technologies ﻿ Overview ﻿ On December 22, 2015 we 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. On-X also distributes CarbonAid CO2 diffusion catheters and manufactures Chord-X ePTFE sutures for mitral chordal replacement. On-X also generates revenue from pyrolytic carbon coating products produced for other medical device manufacturers. ﻿ Accounting for the Transaction ﻿ The purchase price of the On-X transaction totaled approximately $128.2 million, consisting of $93.6 million in cash and 3,703,699 shares of CryoLife common stock, with a value of $34.6 million as determined on the date of the closing. We 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 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 purchase price allocation was 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
﻿ We incurred transaction and integration costs of $383,000 and $7.4 million for the year ended December 31, 2017 and 2016, respectively, related to the acquisition, which included, 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 our Consolidated Statements of Operations and Comprehensive (Loss) Income. There were no transaction and integration costs related to On-X in 2018. ﻿ We paid approximately $10.0 million of the purchase price into an escrow account upon closing of the On-X transaction. We settled our indemnification claims against the representative of the former shareholders of On-X and the related litigation in July 2018. ﻿ Pro Forma Results ﻿ Our pro forma results of operations for the year ended December 31, 2016, 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, 2015. This unaudited pro forma information does not project operating results post acquisition. ﻿ This unaudited pro forma information is as follows (in thousands, except per share amounts): ﻿
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﻿ | Twelve Months Ended
﻿ | December 31,
﻿ | 2016
﻿Total revenues | $ | 182,007
﻿Net income |  | 17,692
﻿ |  |
﻿Pro forma income per common share - basic | $ | 0.54
﻿Pro forma income per common share - diluted | $ | 0.53
﻿ Pro forma net income (loss) was calculated using a normalized tax rate of approximately 38%.

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