Business Combinations

6 Months Ended

Jun. 30, 2022

Business Combination and Asset Acquisition [Abstract]

On June 13, 2022, we acquired In2Bones Global, Inc. ("In2Bones") and all of its stock (the "In2Bones Acquisition") for an aggregate upfront payment of $145.0 million in cash. We paid $143.0 million upon closing, with a $2.0 million purchase price adjustment holdback, pursuant to the merger agreement for the In2Bones Acquisition. In addition, there are potential earn-out payments to In2Bones’ equity holders in an amount up to $110.0 million based on the achievement of certain revenue targets for In2Bones products during the sixteen (16) successive quarters commencing on July 1, 2022. In2Bones is a global developer, manufacturer and distributor of medical devices for the treatment of disorders and injuries of the upper (hand, wrist, elbow) and lower (foot and ankle) extremities. The In2Bones Acquisition was funded through a combination of cash on hand and long-term borrowings as further described in Note 11.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as a result of the In2Bones Acquisition. The assessment of fair value is based on preliminary valuations and estimates that were available to management at the time the consolidated condensed financial statements were prepared. Accordingly, the allocation of purchase price is preliminary and therefore subject to adjustment during the measurement adjustment period.


Cash	$	445
Accounts receivable, net	5,036
Inventories	24,247
Prepaid expenses and other current assets	403
Current assets	30,131
Goodwill	140,338
Developed technology	37,300
Distributor relationships	26,600
Other long-term assets	2,875
Total assets acquired	$	237,244

Current liabilities assumed	5,972
Deferred income taxes	16,457
Contingent consideration	69,402
Other long-term liabilities	413
Total liabilities assumed	$	92,244
Net assets acquired	$	145,000

The goodwill recorded as part of the In2Bones Acquisition primarily represents revenue synergies, the related cost to enter into this new product offering and the In2Bones assembled workforce. Goodwill is not deductible for tax purposes. The weighted amortization period for intangibles acquired is 15 years. Distributor relationships and developed technology are each being amortized over a weighted average life of 15 years.

The contingent consideration was recorded at fair value at the date of acquisition based on the consideration expected to be transferred, estimated as the probability-weighted future cash flows, discounted back to present value. The fair value of contingent consideration is measured using projected payment dates, discount rates, probabilities of payment, and projected revenues. The recurring Level 3 fair value measurements of contingent consideration for which the liability is recorded include the following significant unobservable inputs:


Unobservable Input						Assumptions

Discount rate						5.67%
Revenue volatility						12.75%
Projected year of payment						2023-2026

Net sales and earnings were immaterial to both the three and six months ended June 30, 2022. We also believe the proforma information is immaterial for disclosure for the three and six months ended June 30, 2022 and 2021.