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Business Acquisitions | 12 Months Ended
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Jun. 30, 2017
Business Combinations [Abstract] |
Business Acquisitions |
2. | BUSINESS ACQUISITIONS
Assurex On August 31, 2016, the Company completed the acquisition of Assurex, pursuant to the Agreement and Plan of Merger (as amended, the “Merger Agreement”), dated August 3, 2016. Pursuant to the terms of the Merger Agreement, Myriad Merger Sub, Inc., a wholly owned subsidiary of the Company was merged with and into Assurex, with Assurex continuing as the surviving corporation, and wholly owned subsidiary of Myriad. The Company acquired Assurex for total consideration of $351.6, net of cash acquired of $5.5, including a cash payment of $216.1, and two potential performance-based milestones totaling $185.0 with a fair value of $130.0. The fair value of the performance-based milestones was determined by using the Monte Carlo method. Of the cash consideration, $19.1 was deposited into an escrow account to fund (i) any post-closing adjustments payable to Myriad based upon differences between the estimated working capital and the actual working capital of Assurex at closing, and (ii) any indemnification claims made by Myriad against Assurex within 18 months following closing. Total consideration transferred was allocated to tangible assets acquired and liabilities assumed based on their fair values as of the acquisition date including current adjustments as set forth below. The Company believes the acquisition establishes the foundation for our neuroscience business and leverages our existing preventative care business unit with the addition of a product, GeneSight, which has growth potential. These factors contributed to consideration transferred in excess of the fair value of Assurex’s net tangible and intangible assets acquired, resulting in the Company recording $119.1 in goodwill in connection with the transaction. During the year ended June 30, 2017 there were fair value reductions as of the date of the acquisition to intangible assets and equipment totaling $1.7 due to adoption of our capitalization policy which increased goodwill by that amount. During the period there was an adjustment to working capital as of the date of acquisition which required an additional $3.1 cash payment and increased goodwill by that amount, $2.0 decrease in the deferred tax liability due to a change in the blended state tax rate as well as changes in the pre-acquisition deferred tax liabilities which decreased goodwill by the same amount. Management estimated the fair value of tangible and intangible assets and liabilities in accordance with the applicable accounting guidance for business combinations and utilized the services of third-party valuation consultants. The preliminary allocation of the consideration transferred is based on a preliminary valuation and is subject to potential adjustments. Balances subject to adjustment primarily include the valuations of acquired assets (tangible and intangible), the fair value of equipment, non-controlling interest, as well as tax-related matters, including tax basis of acquired assets and liabilities in a foreign jurisdiction. During the measurement period, the Company may record adjustments to the provisional amounts recognized in the Company’s initial accounting for the acquisition. The Company expects the allocation of the consideration transferred to be final within the measurement period (up to one year from the acquisition date). The preliminary purchase price allocation as of June 30, 2017 is as follows:
|  | Estimated Fair Value |
Current assets |  | $ | 18.2 |
Intangible assets |  |  | 295.6 |
Equipment |  |  | 1.8 |
Goodwill |  |  | 119.1 |
Current liabilities |  |  | (18.6 | )
Deferred tax liability |  |  | (64.5 | )
Total fair value purchase price |  | $ | 351.6 |
Less: Contingent consideration |  |  | (130.0 | )
Less: Cash acquired |  |  | (5.5 | )
Total cash consideration transferred |  | $ | 216.1 |
Identifiable Intangible Assets The Company acquired intangible assets that consisted of developed technology which had an estimated fair value of $256.5 and a database with an estimated fair value of $39.1. The fair value of the developed technology was determined using a probability-weighted income approach that discounts expected future cash flows to present value. The fair value of the database was determined using a combination of the lost profits and replacement cost methods. The estimated net cash flows were discounted using a discount rate of 16% which is based on the estimated internal rate of return for the acquisition and represents the rate that market participants might use to value the intangible assets. The projected cash flows were based on key assumptions such as: estimates of revenues and operating profits; the time and resources needed to recreate databases and product and commercial development and approval; the life of the commercialized product; and associated risks related to viability and product alternatives. The Company will amortize the intangible assets on a straight-line basis over their estimated useful lives of 17 years for the developed technology and 5 years for the database. This amortization is not deductible for income tax purposes. During the year the internally developed software was written off as it was already included in the fair value of the developed technology. Goodwill The $119.1 of goodwill represents the excess of consideration transferred over the fair value of assets acquired and liabilities assumed and is attributable to the benefits expected from combining the Company’s research and commercial operations with Assurex’s. This goodwill is not deductible for income tax purposes. As discussed above, the change in goodwill from the date of acquisition is shown below:
|  | Carrying |
|  | amount |
Balance August 31, 2016 |  | $ | 116.3 |
Fair value adjustment to equipment and intangibles |  |  | 1.7 |
Working capital adjustment |  |  | 3.1 |
Change in deferred tax liability |  |  | (2.0 | )
Ending balance June 30, 2017 |  | $ | 119.1 |
Pro Forma Information The unaudited pro-forma results presented below include the effects of the Assurex acquisition as if it had been consummated as of July 1, 2015, with adjustments to give effect to pro forma events that are directly attributable to the acquisition which includes adjustments related to the amortization of acquired intangible assets, interest income and expense, and depreciation. The unaudited pro forma results do not reflect any operating efficiency or potential cost savings which may result from the consolidation of Assurex. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operation of the combined company would have been if the acquisition had occurred at the beginning of the period presented nor are they indicative of future results of operations and are not necessarily indicative of results that might have been achieved had the acquisition been consummated as of July 1, 2015.
|  | Years Ended |
|  | June 30, |
|  | 2017 |  |  | 2016 |
Revenue |  | $ | 782.8 |  |  | $ | 819.7 |
Income from operations |  |  | 41.9 |  |  |  | 102.2 |
Net income |  |  | 2.5 |  |  |  | 71.8 |
Net income per share, basic |  | $ | 0.04 |  |  | $ | 1.03 |
Net income per share, diluted |  | $ | 0.04 |  |  | $ | 0.98 |
To complete the purchase transaction, we incurred approximately $5.0 of acquisition costs, which were recorded as selling, general and administrative expenses. For the year ended June 30, 2017, Assurex contributed revenue of approximately $78.4. For year ended June 30, 2017 operating expenses related to Assurex were approximately $96.4. Sividon On May 31, 2016 we completed the acquisition of Sividon Diagnostics GmbH (“Sividon”), a leading breast cancer prognostic company with cash paid and total cash consideration transferred of $39.0 upfront and the potential for €15.0 ($17.1 converted at the June 30, 2017 period end exchange rate) in additional performance-based milestones. Total consideration transferred was allocated to tangible assets acquired and liabilities assumed based on their fair values at the acquisition date as set forth below. We believe the acquisition brings us the best-in-class breast cancer prognostic test and strengthens our market leading oncology portfolio of high value personalized medicine products which can be expanded internationally as well as brought to the US market. These factors contributed to consideration transferred in excess of the fair value of Sividon’s net tangible and intangible assets acquired, resulting in the Company recording goodwill in connection with the transaction. The goodwill related to the purchase is not tax deductible. Management estimated the fair value of tangible and intangible assets and liabilities in accordance with the applicable accounting guidance for business combinations and utilized the services of third-party valuation consultants. During the measurement period, the Company recorded adjustments to the provisional amounts recognized in the Company’s initial accounting for the acquisition. During the year ended June 30, 2017 there was a decrease in contingent consideration of $0.4 and intangibles of $0.4 which increased goodwill by $0.8 based upon updated fair value calculations as of the purchase date. The allocation of consideration transferred is now final.
|  | Estimated Fair |
|  | Value |
Current assets |  | $ | 2.7 |
Intangible assets |  |  | 45.8 |
Equipment |  |  | 0.3 |
Goodwill |  |  | 18.5 |
Current liabilities |  |  | (15.4 | )
Total fair value purchase price |  | $ | 51.9 |
Less: Contingent consideration |  |  | (10.9 | )
Less: Cash acquired |  |  | (2.0 | )
Total cash consideration transferred |  | $ | 39.0 |
The acquisition of Sividon has been deemed insignificant in relation to the consolidated financials. As such, pro forma financial information has not been provided.

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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 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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