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Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2024

Note 10. Goodwill and Intangible Assets

Goodwill

The following table represents the changes in the carrying value of goodwill as of June 30, 2024 and December 31, 2023 (in thousands):


	June 30,		December 31,
	2024		2023
Balance at beginning of year	$	108,403	$	151,117
Foreign currency adjustment		(1,456)		(284)
Goodwill impairment		(54,563)		(49,569)
Goodwill related to Tec4med acquisition		—		2,694
Goodwill related to Bluebird acquisition		—		4,445
Total	$	52,384	$	108,403

Impairment of Goodwill

Due to a sustained decrease in the Company’s share price in the second quarter of 2024, and a reduction in the projected operating performance of the MVE reporting unit, which management deemed to be triggering events related to goodwill and indefinite-lived intangible assets, we performed an interim impairment assessment of goodwill for the MVE and CRYOPDP reporting units as of June 30, 2024, with the assistance of an independent third party valuation specialist, using management’s updated interim financial and operational plans. Based on our analysis, we concluded that there has been no impairment of the goodwill associated with the CRYOPDP reporting unit as its carrying value did not exceed its estimated fair value. We further concluded that our MVE reporting unit’s carrying

value exceeded its estimated fair value, and as a result, we recorded an impairment charge of $54.6 million related to full impairment of the goodwill related to the MVE reporting unit in the consolidated statement of operations for the six months ended June 30, 2024.

Our goodwill impairment test was performed using a combination of both an income and a market approach to determine the fair value of the MVE reporting unit. The income approach utilized the estimated discounted cash flows for MVE while the market approach utilized comparable peer group information. Estimates and assumptions used in the income approach included projected cash flows for MVE and a discount rate determined using a weighted average cost of capital for risk factors specific to MVE and other market and industry data. The discount rate selected was 12.5%. The other key estimates and assumptions used in the discounted cash flow method include, but are not limited to, revenue and EBITDA growth rates, and a terminal growth rate. The estimates and assumptions used in our assessment represent a Level 3 measurement because they are supported by little or no market activity and reflect our own assumptions in measuring fair value. The assumptions used in our impairment analysis are inherently subject to uncertainty and, therefore, small changes in these assumptions could have a significant impact on the concluded value.

Intangible Assets

The following table presents our intangible assets as of June 30, 2024 (in thousands):


									Weighted
							Net		Average
	Gross		Accumulated				Carrying		Amortization
	Amount		Amortization		Impairment		Amount		Period (years)
Non-compete agreement	$	810	$	442	$	—	$	368	4
Technology		52,629		13,642		—		38,987	8
Customer relationships		131,785		35,005		—		96,780	11
Trade name/trademark		947		295		(265)		387	8
Agent network		14,020		10,189		—		3,831	3
Order backlog		2,600		2,600		—		—	—
Land use rights		2,198		270		—		1,928	34
Patents and trademarks		45,599		512		(8,980)		36,107	—
Total	$	250,588	$	62,955	$	(9,245)	$	178,388

The following table presents our intangible assets as of December 31, 2023 (in thousands):


							Weighted
					Net		Average
	Gross		Accumulated		Carrying		Amortization
	Amount		Amortization		Amount		Period (years)
Non-compete agreement	$	810	$	368	$	442	5
Technology		50,376		11,205		39,171	9
Customer relationships		131,578		29,964		101,614	11
Trade name/trademark		938		211		727	10
Agent network		13,761		8,148		5,613	3
Order backlog		2,600		2,600		—	—
Land use rights		2,255		247		2,008	34
Patents and trademarks		44,932		125		44,807	—
Total	$	247,250	$	52,868	$	194,382

Amortization expense for intangible assets for the three and six months ended June 30, 2024, was $4.3 million and $8.7 million, respectively. Amortization expense for intangible assets for the three and six months ended June 30, 2023 was $3.9 million and $7.7 million, respectively.

Impairment of Trademarks

As part of our interim impairment assessment as of June 30, 2024 described further above, we recorded a trademark impairment charge of $9.0 million related to our MVE reporting unit, and a $0.3 million impairment charge related to the write-off of Cell&Co’s trade name that is no longer in use as a result of the Company’s global rebranding initiative.

Expected future amortization of intangible assets as of June 30, 2024 is as follows:


Years Ending December 31,	Amount
Remainder of 2024 (excluding the six months ended June 30, 2024)	$	8,237
2025		15,041
2026		14,760
2027		14,391
2028		13,363
Thereafter		70,771
	$	136,563