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Business Combinations | 12 Months Ended
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Dec. 31, 2016
Business Combinations [Abstract] |
Business Combinations | Business Combinations 2016 Acquisition Activity On January 5, 2016, the Company completed the acquisition of all of the membership interests of Aesynt pursuant to the Aesynt Securities Purchase Agreement. Aesynt is a provider of automated medication management systems, including dispensing robots with storage solutions, medication storage and dispensing carts and cabinets, I.V. sterile preparation robotics and software, including software related to medication management. The total consideration was $271.5 million, net of cash acquired of $8.2 million. The results of Aesynt's operations have been included in our consolidated results of operations as of the time of the acquisition, and presented as part of the Automation & Analytics segment. On December 8, 2016, the Company completed its acquisition of ateb, Inc., and Ateb Canada Ltd. (together, “Ateb”) pursuant to Ateb's Securities Purchase Agreement for $40.7 million of cash consideration, net of $0.9 million cash acquired. The cash consideration, included the repayment of Ateb indebtedness and other adjustments provided for in the Ateb's Securities Purchase Agreement. Ateb is a provider of pharmacy-based patient care solutions and the medication synchronization solutions leader to independent and chain pharmacies. The results of Ateb's operations have been included in our consolidated results of operations as of the time of the acquisition, and presented as part of the Medication Adherence segment. The Company accounted for the acquisitions of Aesynt and Ateb in accordance with the authoritative guidance on business combinations; therefore, the tangible and intangible assets acquired and liabilities assumed were recorded at fair value on the acquisition dates, respectively. The following table represents the allocation of the purchase price to the assets acquired and the liabilities assumed by the Company during each acquisition, respectively, reconciled to the purchase price transferred included in the Company's Consolidated Balance Sheet:
| Aesynt |  | Ateb (preliminary) |  | Total
| (In thousands)
Cash | $ | 8,164 |  |  | $ | 902 |  |  | $ | 9,066 |
Accounts receivable | 43,312 |  |  | 7,905 |  |  | 51,217 |
Inventory | 19,021 |  |  | 225 |  |  | 19,246 |
Other current assets | 3,787 |  |  | 1,239 |  |  | 5,026 |
Total current assets | 74,284 |  |  | 10,271 |  |  | 84,555 |
Property and equipment | 10,389 |  |  | 2,447 |  |  | 12,836 |
Intangible assets | 123,700 |  |  | 12,500 |  |  | 136,200 |
Goodwill | 163,599 |  |  | 20,832 |  |  | 184,431 |
Other non-current assets | 968 |  |  | 1,009 |  |  | 1,977 |
Total assets | 372,940 |  |  | 47,059 |  |  | 419,999 |
Current liabilities | 26,753 |  |  | 2,314 |  |  | 29,067 |
Deferred revenue, net | 25,512 |  |  | 2,776 |  |  | 28,288 |
Non-current deferred tax liabilities | 38,622 |  |  | — |  |  | 38,622 |
Other non-current liabilities | 2,431 |  |  | 367 |  |  | 2,798 |
Total liabilities | 93,318 |  |  | 5,457 |  |  | 98,775 |
Total purchase price | 279,622 |  |  | 41,602 |  |  | 321,224 |
Total purchase price, net of cash received | $ | 271,458 |  |  | $ | 40,700 |  |  | $ | 312,158 |
The $163.6 million of goodwill arising from the Aesynt acquisition is primarily attributed to sales of future products and services and Aesynt's assembled workforce. The Aesynt acquisition created one of the broadest product portfolio in the industry with significant offerings in automated dispensing systems, central pharmacy robotics, I.V. robotics and enterprise analytics. The goodwill has been assigned to the Automation & Analytics segment and is not deductible for tax purposes. Since the acquisition, the Company adjusted the preliminary value assigned to goodwill by $1.2 million to reflect measurement period adjustments related to account receivable, inventory, and other assets and liabilities (inclusive of deferred taxes) of $1.6 million, $1.1 million and ($3.9) million respectively. The $20.8 million of goodwill arising from the Ateb acquisition is primarily attributed to sales of future products and services and Ateb's assembled workforce. The Ateb acquisition positions further the Company’s medication adherence portfolio, helping to expand the retail pharmacy footprint. Intangibles eligible for recognition separate from goodwill were those that satisfied either the contractual/legal criterion or the separability criterion in the accounting guidance. The identifiable intangible assets acquired and their estimated useful lives for amortization are as follows:
| Aesynt |  | Ateb (preliminary)
| Fair value |  | Weighted average useful life |  | Fair value |  | Weighted average useful life
| (In thousands) |  | (In years) |  | (In thousands) |  | (In years)
Customer relationships | $ | 58,200 |  |  | 14-16 |  | $ | 8,900 |  |  | 12
Developed technology | 38,800 |  |  | 8 |  | 3,400 |  |  | 5
Backlog | 20,200 |  |  | 1-3 |  | — |  |  | -
In-process research and development ("IPR&D") (1) | 3,900 |  |  | - |  | — |  |  | -
Non-compete | 1,800 |  |  | 3 |  | 100 |  |  | 1
Trade names | 800 |  |  | 1 |  | 100 |  |  | 1
Total purchased intangible assets | $ | 123,700 |  |  |  |  | $ | 12,500 |  |  |
(1) The amortization of the in-process R&D assets begins when the in-process R&D projects are complete. Aesynt Acquisition Customer relationships represent the fair value of the underlying relationships and agreements with Aesynt’s customers, acquired developed technology represents the fair value of Aesynt products that have reached technological feasibility and were part of Aesynt’s product offerings at the date of acquisition, backlog represents the fair value of sales order backlog at the date of acquisition, non-compete intangible asset represents the fair value of non-compete agreements with former key members of Aesynt's management, and trade name represents the fair value of brand and name recognition associated with the marketing of Aesynt’s products and services. In-process research and development ("IPR&D") represents the fair value of incomplete Aesynt research and development projects that had not reached technological feasibility as of the date of acquisition. Incremental costs incurred for those projects are expensed as incurred in research and development. The fair value of Aesynt trade names, acquired developed technology, and acquired IPR&D was determined based on an income approach using the relief-from-royalty method at the royalty rates of 0.5%, 4% to 8% and 12.5%, respectively. The fair value of customer relationships, backlog, and non-compete intangible assets were determined based on an income approach using the discounted cash flow method, at the discounted rates of 13%, 10% and 13%, respectively. The intangible assets, except customer relationship and IPR&D, are being amortized over their estimated useful lives using the straight line method of amortization. The customer relationship intangible asset is being amortized using a double-declining method of amortization as such method better represents the economic benefits to be obtained. In accordance with authoritative guidance, the IPR&D is accounted for as an indefinite-lived intangible asset until completion or abandonment of the associated research and development efforts. IPR&D is tested for impairment during the period it is considered an indefinite lived asset. IPR&D related projects are expected to be completed in two to three years. As of December 31, 2016, none of the IPR&D projects have been completed, and they have progressed as previously estimated. Ateb Acquisition Customer relationships represent the fair value of the underlying relationships and agreements with Ateb’s customers expected to result in future sales, acquired developed technology represents the fair value of Ateb intellectual property incorporated in their products, non-compete intangible asset represents the fair value of non-compete agreements with former key members of Ateb's management, and trade name represents the fair value of brand and name recognition associated with the marketing of Ateb’s products and services. The fair value of Ateb trade names and acquired developed technology was determined based on an income approach using the relief-from-royalty method at the royalty rates of 0.5% and 5% to 6%, respectively. The fair value of customer relationships, and non-compete intangible assets were determined based on an income approach using the discounted cash flow method, both using a 15% discount rate. The intangible assets for non-compete agreements and trade name are being amortized over their estimated useful lives using the straight line method of amortization. The intangible assets for customer relationship and developed technology are being amortized using a double-declining method of amortization as such method better represents the economic benefits to be obtained. The Company incurred approximately $9.3 million in acquisition-related costs related to the Aesynt acquisition of which $6.4 million and $2.9 million were recognized in the years ended December 31, 2016 and 2015, respectively. These costs are included in selling, general and administrative expenses in the Company's Consolidated Statement of Operations. During the year ended December 31, 2016, the Company incurred and expensed approximately $1.7 million of acquisition-related costs for Ateb. Revenues and losses from the Aesynt operations since the acquisition date through December 31, 2016 were $155.8 million and $40.5 million, respectively. Losses from operations includes the amortization of intangible assets of $27.3 million for the period presented. Revenues and losses from the Ateb operations since the acquisition date through December 31, 2016 were $1.7 million and $0.1 million, respectively, which included $0.3 million of amortization expense of intangible assets. 2015 Acquisition Activity Mach4 Acquisition On April 21, 2015, the Company completed its acquisition of Mach4, a privately held German limited liability company with its registered office in Bochum, Germany pursuant to a share purchase agreement (the “Mach4 Agreement”), under which Omnicell International, Inc., a wholly-owned subsidiary of Omnicell Inc., purchased the entire issued share capital of Mach4 (the “Mach4 Acquisition”). Mach4 manufactures robotic dispensing systems used by retail and hospital pharmacies and the Mach4 acquisition provides the Company with a more robust product offering that is intended to be leveraged to create opportunities to sell additional Omnicell medication cabinets. The robotic storage and dispensing product offering provides the Company with a solution to better compete for international market share. Pursuant to the terms of the Mach4 Agreement, the Company paid approximately $17.3 million in cash after adjustments provided for in the Mach4 Agreement, of which $2.7 million was placed in an escrow fund, which were distributed to Mach4's former stockholders. Avantec Acquisition On April 30, 2015, the Company completed the acquisition of Avantec, the privately-held distributor of the Company’s products in the United Kingdom, pursuant to a share purchase agreement (the “Avantec Agreement”). Pursuant to the Avantec Agreement, the Company acquired the remaining 85% of issued and outstanding ordinary shares of Avantec that was not previously owned by the Company. Avantec develops medication and supply automation products that complement the Company's solutions for configurations suited to the United Kingdom marketplace, and had been the exclusive distributor of the Company's medication and supply automation solutions since 2005 in the United Kingdom. Pursuant to the terms of the Avantec Agreement, the Company agreed to pay $12.0 million in cash (the “Purchase Consideration”) and potential earn-out payments of up to $3.0 million payable after December 31, 2015 and an additional $3.0 million payable after December 31, 2016, based on bookings targets. The fair value of these potential earn-out payments as of the acquisition date was $5.6 million. Pursuant to the terms of the Avantec Agreement, the Company retained $1.8 million of the Purchase Consideration to be held to settle any future indemnification claims within 18 months period that the Company may make following the closing. During the year 2016, the Company paid out $3.0 million in earn-out payments, $1.8 million in held back payments for future indemnifications, and recognized $0.6 million of contingent gain as certain booking targets were not met. The Company expects to pay the remaining earn-out amount of $2.4 million in 2017. The fair value of the contingent consideration liability related to Avantec is revalued at each reporting date or more frequently if circumstances dictate. Changes in the fair value of this obligation are recorded as income or expense within other expense in the Company's Consolidated Statements of Operations. The significant unobservable inputs used in the fair value measurement of the contingent consideration are the achievement of booking targets and the discount rate. Significant increases or decreases in any of those inputs in isolation would result in a significantly lower or higher fair value measurement. Prior to the Avantec Acquisition, the Company accounted for its 15% ownership interest in Avantec as an equity-method investment. The Avantec acquisition date carrying book value of the Company's previous equity interest was $1.3 million. This transaction was accounted for as a step acquisition, which required the Company to re-measure its previously held 15% ownership interest to fair value and record the difference between the fair value and carrying value as a gain. The fair value of the equity investment was determined to be $4.7 million which resulted in a gain of $3.4 million. The Company accounted for the acquisitions of March4 and Avantec in accordance with the authoritative guidance on business combinations; therefore, the tangible and intangible assets acquired and liabilities assumed were recorded at fair value on the acquisition dates, respectively. The following table represents the allocation of the purchase price to the assets acquired and the liabilities assumed by the Company during each acquisition, respectively, reconciled to the purchase price transferred included in the Company's Consolidated Balance Sheet.
| Mach4 |  | Avantec |  | Total
| (In thousands)
Cash | $ | 397 |  |  | $ | 3,392 |  |  | $ | 3,789 |
Accounts receivable | 3,743 |  |  | 3,607 |  |  | 7,350 |
Inventory | 3,580 |  |  | 1,428 |  |  | 5,008 |
Deferred tax assets and other current assets | 368 |  |  | 89 |  |  | 457 |
Total current assets | 8,088 |  |  | 8,516 |  |  | 16,604 |
Property and equipment | 463 |  |  | — |  |  | 463 |
Intangibles | 7,710 |  |  | 6,341 |  |  | 14,051 |
Goodwill | 10,591 |  |  | 15,606 |  |  | 26,197 |
Other non-current assets | 52 |  |  | — |  |  | 52 |
Total assets | 26,904 |  |  | 30,463 |  |  | 57,367 |
Current liabilities | 3,684 |  |  | 4,125 |  |  | 7,809 |
Non-current deferred tax liabilities | 2,564 |  |  | 1,269 |  |  | 3,833 |
Deferred service revenue and gross profit | 2,314 |  |  | 928 |  |  | 3,242 |
Other non-current liabilities | 1,056 |  |  | — |  |  | 1,056 |
Total liabilities | 9,618 |  |  | 6,322 |  |  | 15,940 |
Total purchase price | 17,286 |  |  | 24,141 |  |  | 41,427 |
Total purchase price, net of cash received | $ | 16,889 |  |  | $ | 20,749 |  |  | $ | 37,638 |
The goodwill arising from these acquisitions is primarily attributed to sales of future products and services and the assembled workforce. Goodwill is not deductible for tax purposes. Goodwill is not being amortized but is reviewed annually for impairment or more frequently if impairment indicators arise, in accordance with authoritative guidance. Intangible assets acquired and their respective estimated remaining useful lives over which each asset will be amortized are as follows:
| Mach4 |  | Avantec
| Fair value |  | Weighted average useful life |  | Fair value |  | Weighted average useful life
| (In thousands) |  | (In years) |  | (In thousands) |  | (In years)
Developed technology | $ | 3,290 |  |  | 8 |  | $ | — |  |  | —
Trade name | 850 |  |  | 6 |  | 92 |  |  | 2
Customer relationships | 3,570 |  |  | 10 |  | 5,834 |  |  | 12
Backlog | — |  |  | — |  | 415 |  |  | 2
Total purchased intangible assets | $ | 7,710 |  |  |  |  | $ | 6,341 |  |  |
Pro forma financial information The following table presents certain unaudited pro forma information for illustrative purposes only, for the years ended December 31, 2016 and 2015 as if these acquisitions had been acquired on January 1, 2015. The pro forma information is not indicative of what would have occurred had the acquisitions taken place on January 1, 2015. The unaudited pro forma information combines the historical results of the acquisitions with the Company's consolidated historical results and includes certain adjustments reflecting the estimated impact of fair value adjustments for the respective periods. The pro forma adjustments include the impact of fair value adjustment related to deferred revenue, inventory fair value adjustment, amortization of intangible assets, stock-based compensation expense, interest expense and amortization of deferred issuance cost, and certain classification to conform to Omnicell's accounting policies.
| Twelve months ended December 31,
| 2016 |  | 2015
| (In thousands, except per share data)
Pro forma net revenues | $ | 718,439 |  |  | $ | 522,317 |
Pro forma net income (loss) | $ | (1,330 | ) |  | $ | 1,978 |
Pro forma net income (loss) per share | $ | (0.04 | ) |  | $ | 0.05 |
Weighted average number of shares | 36,156 |  |  | 36,699 |

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1497-128463 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1490-128463 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1392-128463 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7008-128479 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1486-128463 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6927-128479 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4845-128472 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1524-128463 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7000-128479 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4922-128472 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4934-128472 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4926-128472 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=73530397&loc=SL65897772-128472 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1383-128463 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6996-128479 + Details
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