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Business Combinations | 12 Months Ended
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Dec. 31, 2021
Business Combination and Asset Acquisition [Abstract] |
Business Combinations | Business Combinations The Company accounted for its acquisitions in accordance with ASC 805, Business Combinations. The tangible and intangible assets acquired and liabilities assumed were recorded at fair value on the respective acquisition dates. Intangible assets eligible for recognition separate from goodwill were those that satisfied either the contractual or legal criterion or the separability criterion in the accounting guidance. The preliminary fair values assume management’s best estimates based on information available at the respective acquisition date and may change over the measurement period, which will end no later than one year from the respective acquisition date, as additional information is received. The Company believes that the fair values assigned to the assets acquired and liabilities assumed are based on reasonable assumptions and estimates that market participants would use. Actual results may differ from these estimates and assumptions. The Company's Consolidated Financial Statements include the results of operations of each acquired company, commencing as of the respective acquisition dates. Acquisition-related costs were expensed as incurred, and are included in selling, general, and administrative expenses in the Company’s Consolidated Statements of Operations. 2021 Acquisitions MarkeTouch Media On December 31, 2021, the Company completed the acquisition of all of the outstanding equity interests in MarkeTouch Media pursuant to the terms and conditions of the Unit Purchase Agreement, dated December 31, 2021, by and among ateb, Inc. (a wholly-owned subsidiary of the Company), MarkeTouch Media, LLC, MarkeTouch Holdings, Inc., Toucan Enterprises, Inc., and certain beneficial stockholders specified therein for a base purchase price of $82.0 million, prior to customary adjustments for closing cash, net working capital, and assumed indebtedness. The MarkeTouch Media acquisition adds mobile and web-based technology and patient engagement solutions, which is expected to expand the footprint of EnlivenHealth across the retail pharmacy sector, while enhancing potential growth opportunities in new market segments like specialty pharmacy and pharmacy benefits management. The Company incurred approximately $1.2 million in acquisition-related costs related to the MarkeTouch Media acquisition during the year ended December 31, 2021. ReCept On December 29, 2021, the Company completed the acquisition of all outstanding equity securities of ReCept pursuant to the terms and conditions of the Agreement and Plan of Merger, dated December 1, 2021, by and among Omnicell, Inc., ReCept Holdings, Inc., Redfish Acquisition Corp, and the representative of the securityholders for a base purchase price of $100.0 million, prior to customary adjustments for closing cash, net working capital, and assumed indebtedness. The addition of ReCept’s specialty pharmacy management services for health systems, provider groups, and federally qualified health centers expands Omnicell’s Advanced Services portfolio in an effort to address the growing and complex specialty pharmacy market. The Company incurred approximately $2.5 million in acquisition-related costs related to the ReCept acquisition during the year ended December 31, 2021. FDS Amplicare On September 9, 2021, the Company completed the acquisition of all of the outstanding equity interests in FDS Amplicare pursuant to the terms and conditions of the Agreement and Plan of Merger, dated July 25, 2021, by and among RxInnovation Inc., Omnicell, Inc., Fleming Acquisition Corp., and the representative of the securityholders for a base purchase price of $177.0 million, prior to customary adjustments for closing cash, net working capital, and assumed indebtedness. The FDS Amplicare acquisition adds a comprehensive and complementary suite of SaaS financial management, analytics, and population health solutions to the Company’s EnlivenHealth offering. The Company incurred approximately $7.0 million in acquisition-related costs related to the FDS Amplicare acquisition during the year ended December 31, 2021. Revenues and net losses from the FDS Amplicare operations since the acquisition date through December 31, 2021 were $11.3 million and $0.9 million, respectively. The following tables represent the preliminary allocation of the respective purchase price to the assets acquired and the liabilities assumed by the Company as part of each acquisition included in the Company’s Consolidated Balance Sheets, and is reconciled to the respective purchase price transferred:
| FDS Amplicare (1) |  | ReCept (Preliminary) (2) |  | MarkeTouch Media (Preliminary)
| (In thousands)
Purchase price transferred: |  |  |  |  |
Base purchase price | $ | 177,000 |  |  | $ | 100,000 |  |  | $ | 82,000 |
Add: Closing cash | 465 |  |  | 6,664 |  |  | 191 |
Add: Net working capital adjustment | 1,654 |  |  | (2,296) |  |  | 448 |
Less: Assumed indebtedness | (653) |  |  | (1,902) |  |  | (13) |
Total purchase price transferred | $ | 178,466 |  |  | $ | 102,466 |  |  | $ | 82,626 |
| FDS Amplicare (Preliminary) (1) |  | ReCept (Preliminary) (2) |  | MarkeTouch Media (Preliminary)
Fair value of assets acquired and liabilities assumed: |  |  |  |  |
Cash and cash equivalents | $ | 465 |  |  | $ | — |  |  | $ | 237 |
Accounts receivable and unbilled receivables | 5,330 |  |  | 2,383 |  |  | 2,302 |
Prepaid expenses | 506 |  |  | 192 |  |  | 96 |
Other current assets | 45 |  |  | 13,955 |  |  | — |
Total current assets | 6,346 |  |  | 16,530 |  |  | 2,635 |
Property and equipment | 444 |  |  | 172 |  |  | 177 |
Operating lease right-of-use assets | 2,252 |  |  | 773 |  |  | 602 |
Goodwill | 117,374 |  |  | 81,588 |  |  | 42,530 |
Intangible assets | 70,000 |  |  | 28,100 |  |  | 38,000 |
Other long-term assets | 51 |  |  | 200 |  |  | 2,850 |
Total assets | 196,467 |  |  | 127,363 |  |  | 86,794 |
Accounts payable | 950 |  |  | 219 |  |  | 473 |
Accrued compensation | 1,312 |  |  | 1,756 |  |  | — |
Accrued liabilities | 1,396 |  |  | 18,499 |  |  | 292 |
Deferred revenues | 1,916 |  |  | 222 |  |  | 347 |
Long-term deferred tax liabilities | 11,377 |  |  | 3,587 |  |  | — |
Long-term operating lease liabilities | 920 |  |  | 614 |  |  | 206 |
Other long-term liabilities | 130 |  |  | — |  |  | 2,850 |
Total liabilities | 18,001 |  |  | 24,897 |  |  | 4,168 |
Total purchase price | $ | 178,466 |  |  | $ | 102,466 |  |  | $ | 82,626 |
Total purchase price, net of cash acquired | $ | 178,001 |  |  | $ | 95,897 |  |  | $ | 82,389 |
_________________________________________________ (1) During the fourth quarter of 2021, the Company recorded measurement period adjustments of $1.5 million to goodwill, consisting of an increase in intangible assets, accounts receivable and unbilled receivables, and long-term deferred tax liabilities of $0.4 million, $1.1 million, and $0.1 million, respectively, and a net working capital adjustment of $0.1 million. (2) Closing cash is included in other current assets due to its restrictive nature as cash held for customers. The $117.4 million of goodwill arising from the FDS Amplicare acquisition is primarily attributed to future sales of SaaS solutions and FDS Amplicare’s assembled workforce. None of the FDS Amplicare goodwill is expected to be deductible for tax purposes. The $81.6 million of goodwill arising from the ReCept acquisition is primarily attributed to future sales of its offerings and services and ReCept’s assembled workforce. None of the ReCept goodwill is expected to be deductible for tax purposes. The $42.5 million of goodwill arising from the MarkeTouch Media acquisition is primarily attributed to future sales of SaaS solutions and MarkeTouch Media’s assembled workforce. The full amount of the MarkeTouch Media goodwill is expected to be deductible for tax purposes. The identifiable intangible assets acquired and their estimated useful lives for amortization are as follows:
| FDS Amplicare (1) |  | ReCept |  | MarkeTouch Media
| Fair value |  | Useful life (years) |  | Fair value |  | Useful life (years) |  | Fair value |  | Useful life (years)
| (In thousands, except for years)
Customer relationships | $ | 59,900 |  |  | 23 |  | $ | 28,100 |  |  | 23 |  | $ | 34,100 |  |  | 26
Acquired technology | 7,700 |  |  | 5 - 7 |  | — |  |  | — |  | 2,100 |  |  | 4
Backlog | — |  |  | — |  | — |  |  | — |  | 1,800 |  |  | 2
Trade names | 2,400 |  |  | 5 |  | — |  |  | — |  | — |  |  | —
Total purchased intangible assets | $ | 70,000 |  |  |  |  | $ | 28,100 |  |  |  |  | $ | 38,000 |  |  |
_________________________________________________ (1) During the fourth quarter of 2021, the Company recorded a measurement period adjustment of $0.4 million in customer relationships. The customer relationships intangible assets represent the fair values of the underlying relationships and agreements with each acquired company's customers. The acquired technology intangible assets represent the fair values of the portfolio of SaaS solutions that have reached technological feasibility and were part of the respective acquired company’s offerings at their respective acquisition dates. The backlog intangible asset represents contractually committed future billings associated with MarkeTouch Media customer contracts. The trade names intangible asset represents the fair value of brand and name recognition associated with the marketing of certain FDS Amplicare SaaS solutions. The fair values of the customer relationships and backlog intangible assets were determined based on the excess earnings method, and the fair values of the acquired technology and trade names intangible assets were determined based on the relief-from-royalty method. The key assumptions used in estimating the fair values of intangible assets included forecasted financial information; customer attrition rates; royalty rate of 10.0% for the acquired technology intangible assets for both FDS Amplicare and MarkeTouch Media; royalty rate of 2.0% for the FDS Amplicare trade names intangible asset; discount rate of 13.0% for the FDS Amplicare acquisition; discount rate of 15.0% for the ReCept acquisition; discount rate of 11.5% for the MarkeTouch Media acquisition; and certain other assumptions. The customer relationships and acquired technology intangible assets are being amortized using a double-declining method of amortization as such method better represents the economic benefits to be obtained. The backlog and trade names intangible assets are being amortized over their respective estimated useful lives using the straight-line method of amortization. 2020 Acquisition 340B Link Business On October 1, 2020, the Company completed the acquisition of all of the outstanding equity of the 340B Link Business pursuant to the terms and conditions of the Equity Purchase Agreement, dated August 11, 2020, as amended, by and among the Company, PSGH, LLC, BW Apothecary Holdings, LLC, the sellers identified therein and the sellers’ representative for total cash consideration of $225.0 million. The 340B Link Business acquisition adds a comprehensive and differentiated suite of software-enabled services and solutions used by certain eligible hospitals, health systems, clinics, and entities to manage compliance and capture 340B drug cost savings on outpatient prescriptions filled through the eligible entity’s pharmacy or a contracted pharmacy partner. The Company incurred approximately $6.5 million in acquisition-related costs related to the 340B Link Business acquisition during the year ended December 31, 2020. Revenues and earnings from the 340B Link Business operations since the acquisition date through December 31, 2020 were $10.2 million and $1.3 million, respectively. The following table represents the allocation of the purchase price to the assets acquired and the liabilities assumed by the Company as part of the acquisition included in the Company's Consolidated Balance Sheets, and is reconciled to the purchase price transferred:
| 340B Link Business (1)
| (In thousands)
Accounts receivable and unbilled receivables | $ | 8,197 |
Prepaid expenses | 232 |
Other current assets | 23,040 |
Total current assets | 31,469 |
Property and equipment | 531 |
Operating lease right-of-use assets | 3,138 |
Goodwill | 160,268 |
Intangible assets | 62,800 |
Total assets | 258,206 |
Accounts payable | 568 |
Accrued liabilities | 23,715 |
Long-term deferred tax liabilities | 6,334 |
Long-term operating lease liabilities | 2,589 |
Total liabilities | 33,206 |
Total purchase price | $ | 225,000 |
_________________________________________________ (1) During the third quarter of 2021, the Company recorded measurement period adjustments of $0.9 million to goodwill, consisting of an increase in other current assets, a decrease in accrued liabilities, and a decrease in long-term deferred tax liabilities of $0.3 million, $0.1 million, and $0.5 million, respectively. The $160.3 million of goodwill arising from the 340B Link Business acquisition is primarily attributed to sales of future software-enabled services and solutions and the 340B Link Business’s assembled workforce. Approximately $93.7 million of the 340B Link Business goodwill is expected to be deductible for tax purposes. The identifiable intangible assets acquired and their estimated useful lives for amortization are as follows:
| 340B Link Business
| Fair value |  | Useful life (years)
| (In thousands, except for years)
Customer relationships | $ | 53,000 |  |  | 21
Acquired technology | 9,000 |  |  | 5
Trade names | 200 |  |  | 1
Non-compete agreements | 600 |  |  | 3
Total purchased intangible assets | $ | 62,800 |  |  |
The customer relationships intangible asset represents the fair value of the underlying relationships and agreements with the 340B Link Business’s customers. The acquired technology intangible asset represents the fair value of the 340B Link Business’s portfolio of software and solutions that have reached technological feasibility and were part of the 340B Link Business’s offerings at the acquisition date. The trade names intangible asset represents the fair value of brand and name recognition associated with the marketing of the 340B Link Business’s software-enabled services and solutions. The non-compete agreements intangible asset represents the fair value of non-compete agreements with former key members of the 340B Link Business’s management. The fair value of the customer relationships intangible asset was determined based on the excess earnings method; the fair values of the acquired technology and trade names intangible assets were determined based on the relief-from-royalty method; and the fair value of the non-compete agreements intangible asset was determined based on the lost profits method. The key assumptions used in estimating the fair values of intangible assets included forecasted financial information; customer attrition rates; royalty rates of 10.0% and 0.5% for the acquired technology and trade names intangible assets, respectively; discount rate of 14.0% for all intangible assets; and certain other assumptions. The customer relationships and acquired technology intangible assets are being amortized using a double-declining method of amortization as such method better represents the economic benefits to be obtained. The trade names and non-compete agreements are being amortized over their estimated useful lives using the straight-line method of amortization. Pro Forma Financial Information The following table presents certain unaudited pro forma consolidated financial information for the years ended December 31, 2021, 2020, and 2019 as if the FDS Amplicare, ReCept, and MarkeTouch Media acquisitions had been completed on January 1, 2020 and the 340B Link Business acquisition had been completed on January 1, 2019. The unaudited pro forma financial information is presented for informational purposes only, and is not indicative of what would have occurred had the acquisitions taken place on those respective dates. The unaudited pro forma financial information combines the historical results of the acquisitions with the Company’s consolidated historical results and includes certain adjustments including, but not limited to, amortization and depreciation of intangible assets and property and equipment acquired; imputed interest, interest expense, and amortization of debt issuance costs related to acquisitions, as applicable; and certain acquisition-related costs incurred.
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
| (In thousands)
Pro forma revenues | $ | 1,195,473 |  |  | $ | 986,310 |  |  | $ | 929,106 |
Pro forma net income | $ | 79,981 |  |  | $ | 22,615 |  |  | $ | 56,897 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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