XML 25 R16.htm IDEA: XBRL DOCUMENT
v3.23.1

Goodwill and Intangible Assets | 6 Months Ended
--- | ---
Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Intangible Assets | 6. Goodwill and Intangible Assets Goodwill represents the excess of purchase price over the fair value of net tangible and identifiable intangible assets of the businesses acquired by the Company. Goodwill is tested for impairment annually or more often if impairment indicators are present at the reporting unit level. The Company has elected April 1st as its annual goodwill impairment assessment date. If the existence of events or circumstances indicates that it is more likely than not that fair values of the reporting units are below their carrying values, the Company performs additional impairment tests during interim periods to evaluate goodwill for impairment. Application of the goodwill impairment test requires significant judgment based on market and operational conditions at the time of the evaluation, including management’s best estimate of future business activity and the related estimates of future cash flows from the assets and the reporting units that include the associated goodwill. These periodic evaluations could cause management to conclude that impairment factors exist, requiring an adjustment of these assets to their then current fair market values. Future business conditions and/or activity could differ materially from the projections made by management which could result in impairment charges. The goodwill impairment test is performed at the reporting unit level. A reporting unit is either an operating segment or one level below it, which is referred to as a “component”. The level at which the impairment test is performed requires an assessment of whether the operations below an operating segment constitute a self-sustaining business, in which case testing is generally performed at this level. In accordance with ASC 350, Intangibles-Goodwill and Other (“ASC 350”), the Company first assesses qualitative factors to determine whether the existence of events or circumstances indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the Company determines, based on this assessment, that it is more likely than not that the fair value of the reporting unit is less than its carrying value, it performs a quantitative goodwill impairment test by comparing the reporting unit’s fair value with its carrying value. An impairment loss is recognized for the amount by which the reporting unit’s carrying value exceeds its fair value, up to the total amount of goodwill allocated to the reporting unit. We determine fair values of our reporting units based on an income approach in accordance with the discounted cash flow method, or DCF Method. The DCF Method is based on projected future cash flows and terminal value estimates discounted to their present values. Terminal value represents the present value an investor would pay on the valuation date for the rights to the cash flows of the business for the years subsequent to the discrete cash flow projection period. We consider the DCF Method to be the most appropriate valuation technique since it is based on management’s long-term financial projections. In addition to determining the fair value of our reporting units based on the DCF Method, we also compare the aggregate values of our net corporate assets and reporting unit fair values to our overall market capitalization and use certain market-based valuation techniques to assess the reasonableness of the reporting unit fair values determined in accordance with the DCF Method. The key inputs used in the DCF Method include revenue growth rates, gross margin percentage, selling, general and administrative expense percentage and discount rates that are at or above our weighted average cost of capital. We derive discount rates that are commensurate with the risks and uncertainties inherent in the respective reporting units and our internally developed projections of future cash flows. Application of the goodwill impairment test requires judgment based on market and operational conditions at the time of the evaluation, including management’s best estimates of the reporting unit’s future business activity and the related estimates and assumptions of future cash flows from the assets that include the associated goodwill. Different assumptions of revenue growth rates, gross margin percentage, selling, general and administrative expense percentage and the discount rate used in the DCF Method could result in different estimates of the reporting unit’s fair value as of each testing date. In the second quarter of 2023, as part of the Company’s routine long-term planning process, the Company assessed several events and circumstances that could affect the significant inputs used to determine the fair value of its reporting units, including updates to forecasted margins and cash flows, and the overall change in the economic climate since our last impairment assessment. The Company considered the impairment indicators as described in ASC 350 and determined it appropriate to perform a quantitative assessment of both its reporting units as of March 31, 2023. The estimated fair value of the Life Sciences Services and Life Sciences Products reporting units exceeded their respective carrying values by approximately 24% and 17%, respectively as of March 31, 2023. Therefore, the Company concluded that there was no impairment to goodwill. In the event the financial performance of either of the reporting units does not meet our expectations in the future, we experience a prolonged macroeconomic or market downturn, declines in our stock price, or there are other negative revisions to key assumptions used in our DCF Method, we may be required to perform additional impairment analyses and could be required to recognize an impairment charge. Please refer to Note 8, "Goodwill and Intangible Assets" to the Company's consolidated financial statements included in the 2022 Annual Report on Form 10-K for further information on the goodwill impairment testing performed during fiscal year 2022. The changes in the Company’s goodwill by reportable segment for the six months ended March 31, 2023 are as follows (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ |  | ​ | ​ |  | ​ | ​
​ | ​ | Life Sciences | ​ | Life Sciences | ​ | ​ | ​
​ | ​ | Products | ​ | Services | ​ | Total
Balance, at September 30, 2022 | ​ | $ | 154,612 | ​ | $ | 359,011 | ​ | $ | 513,623
Acquisitions | ​ |  | 228,851 | ​ |  | — | ​ |  | 228,851
Currency translation adjustments | ​ | ​ | 47,998 | ​ | ​ | 22 | ​ | ​ | 48,020
Balance, at March 31, 2023 | ​ | $ | 431,461 | ​ | $ | 359,033 | ​ | $ | 790,494
​ During the six months ended March 31, 2023, the Company recorded goodwill related to the B Medical and Ziath acquisitions of $228.9 million and an increase in goodwill of $48.0 million related to foreign currency translation adjustments. ​ The components of the Company’s identifiable intangible assets as of March 31, 2023 and September 30, 2022 are as follows (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | March 31, 2023 | ​ | September 30, 2022
​ | ​ | ​ | ​ | Accumulated | ​ | Net Book | ​ | ​ | ​ | Accumulated | ​ | Net Book
​ |  | Cost |  | Amortization |  | Value |  | Cost |  | Amortization |  | Value
Patents | ​ | $ | 8,996 | ​ | $ | 8,911 | ​ | $ | 85 | ​ | $ | 1,225 | ​ | $ | 1,106 | ​ | $ | 119
Completed technology | ​ |  | 258,146 | ​ |  | 85,726 | ​ |  | 172,420 | ​ |  | 99,525 | ​ |  | 37,991 | ​ |  | 61,534
Trademarks and trade names | ​ |  | 8,848 | ​ |  | 2,865 | ​ |  | 5,983 | ​ |  | 400 | ​ |  | 41 | ​ |  | 359
Non-competition agreements | ​ | ​ | 731 | ​ | ​ | 553 | ​ | ​ | 178 | ​ | ​ | 681 | ​ | ​ | 439 | ​ | ​ | 242
Customer relationships | ​ |  | 321,024 | ​ |  | 176,432 | ​ |  | 144,592 | ​ |  | 246,949 | ​ |  | 130,802 | ​ |  | 116,147
Other intangibles | ​ | ​ | 896 | ​ | ​ | 227 | ​ | ​ | 669 | ​ | ​ | 202 | ​ | ​ | 202 | ​ | ​ | —
​ | ​ | $ | 598,641 | ​ | $ | 274,714 | ​ | $ | 323,927 | ​ | $ | 348,982 | ​ | $ | 170,581 | ​ | $ | 178,401
​ During the six months ended March 31, 2023, the Company recorded intangible assets related to the B Medical and Ziath acquisitions of $150.3 million. ​ Amortization expense for intangible assets was $12.4 million and $7.9 million, respectively, for the three months ended March 31, 2023 and 2022. Amortization expense for intangible assets was $24.0 million and $15.9 million, for the six months ended March 31, 2023 and 2022, respectively. ​ Estimated future amortization expense for the intangible assets for the remainder of fiscal year 2023, the subsequent four fiscal years and thereafter is as follows (in thousands):
​ | ​ | ​ | ​
2023 | ​ | $ | 24,217
2024 | ​ |  | 50,542
2025 | ​ |  | 49,151
2026 | ​ |  | 45,754
2027 | ​ | ​ | 37,573
Thereafter | ​ | ​ | 116,690
Total | ​ | $ | 323,927

X
- References No definition available. + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI https://asc.fasb.org/topic&trid=2144416 + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration