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Acquisitions/Investments | 12 Months Ended
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Dec. 31, 2022
Business Combination and Asset Acquisition [Abstract] |
Acquisitions/Investments | (3) Acquisitions/Investments dp polar On October 4, 2022, we completed the acquisition of 100% of dp polar GmbH ("dp polar"), a German-based designer and manufacturer of the industry’s first additive manufacturing system designed for true high-speed mass production of customized components, for $26,695 (excluding customary post-closing adjustments), of which $19,604 was paid in cash, and the remaining $7,091 was paid via the issuance of the Company’s common stock. An additional payment of $2,229, to be settled via the issuance of 249,865 shares of the Company’s common stock, is possible upon the continued employment of a certain key individual from dp polar through October 4, 2024. Upon assessment, management concluded that this potential obligation for the payment of an additional 249,865 in shares of common stock should be accounted for as compensation expense recognized over the required service period of the individual to whom the amount will potentially be paid and, accordingly, the related $2,229 has been excluded from purchase consideration attributable to the acquisition. The Company acquired dp polar for access to dp polar's patented continuous printing process. This business and its technology are expected to contribute to the operations of the Company's Healthcare Solutions and Industrial Solutions segments. Central to dp polar’s patented continuous printing process is a large-scale, segmented, rotating print platform that eliminates the start/stop operations of virtually all additive manufacturing platforms. With dp polar’s technology and patented polar coordinate control, the print heads remain stationary above the rotating platform, providing a continuous print process. The revenue generated from the acquisition date through December 31, 2022 was immaterial and the acquisition’s near-term impact on the Company’s results of operations and cash flows is expected to be dilutive. In addition, the Company incurred $165 of acquisition-related expenses that are reported in selling, general and administrative expenses in the consolidated statements of operations. We accounted for the acquisition of dp polar using the acquisition method, as prescribed by ASC 805, "Business Combinations" (“ASC 805”). In accordance with valuation methodologies described in ASC 820, "Fair Value Measurement" (“ASC 820”), the acquired assets and assumed liabilities were recorded at their estimated fair values as of the date of the dp polar acquisition. Shown below is the preliminary purchase price allocation, which summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition:
(in thousands) |  |  |  |
Current assets, including cash acquired of $243 |  |  |  | $ | 302 |
Intangible assets: |  |  |  |
In-process research and development |  | $ | 5,014 |  |  |
Trade name |  | 3,930 |  |  |
Total intangible assets |  |  |  | 8,944 |
Goodwill |  |  |  | 15,350 |
Other assets |  |  |  | 2,376 |
Liabilities: |  |  |  |
Accounts payable and accrued liabilities |  | $ | 277 |  |  |
Total liabilities |  |  |  | 277 |
Net assets acquired |  |  |  | $ | 26,695 |
The goodwill recognized is attributable to synergies which are expected to enhance and expand the Company’s overall product portfolio and opportunities in new and existing markets, future products that have yet to be determined and dp polar’s assembled workforce. This goodwill is not expected to be deductible for tax purposes. As of December 31, 2022, the purchase price allocation for dp polar is preliminary. The Company continues to review the final closing balance sheet of dp polar and may further adjust the acquisition-date fair values of acquired assets and assumed liabilities based on this review. The Company also continues to review dp polar’s pre-acquisition tax returns to determine the final tax positions, including net operating losses and any required valuation allowance. The final purchase price allocations will be completed when the Company has finished its valuation activities and the review of dp polar’s closing balance sheet and the pre-acquisition tax returns. These final allocations could differ materially from the current preliminary allocations. The final allocations may include (1) changes in the preliminary allocations to acquired intangible assets and goodwill and (2) changes in the preliminary allocations to other assets and liabilities, including but not limited to tax assets and liabilities, inclusive of deferred taxes. The estimated useful lives of acquired intangible assets are also preliminary. Kumovis On April 1, 2022, we completed the acquisition of 93.75% of Kumovis GmbH ("Kumovis") for an all-cash purchase price of $37,726, plus an estimated RNCI of $1,559. $3,628 of the cash payment is deferred for up to fifteen months from the closing date. Kumovis, which is part of the Healthcare Solutions segment and reporting unit, utilizes polyether ether keton or “PEEK” materials, which has properties that lend it to many medical applications that fit into our personalized healthcare solutions operations, including many implant applications. The revenue generated from the acquisition date through December 31, 2022 was immaterial and the acquisition’s near-term impact on the Company’s results of operations and cash flows is expected to be dilutive. In addition, the Company incurred $126 of acquisition-related expenses that are reported in selling, general and administrative expenses in the consolidated statements of operations. In conjunction with the Kumovis acquisition, the Company and the non-controlling shareholders entered into a put/call option agreement, whereby, at a later date, the Company has the option to purchase from the non-controlling shareholders, and the non-controlling shareholders have the option to sell to the Company, the remaining 6.25% ownership interest in Kumovis for an exercise price calculated based on the achievement of pre-determined revenue and gross profit targets. Fifty percent of the Kumovis common shares related to the put/call can be exercised upon the achievement of an initial revenue and gross profit target, while the remaining 50% can be exercised upon the achievement of a second revenue and gross profit target. If one or both sets of targets have not been met within 5.75 years from the acquisition date, there is a floor strike price that must be exercised. Up to 50% of the exercise price can be paid in Company common stock at the election of 3D Systems. This arrangement results in the recognition of RNCI, for which an estimated fair value of $1,559 was recorded as of the acquisition date. We accounted for the acquisition of Kumovis using the acquisition method, as prescribed by ASC 805. In accordance with valuation methodologies described in ASC 820, the acquired assets and assumed liabilities were recorded at their estimated fair values as of the date of the Kumovis acquisition. The table below reflects the fair value of both the consideration transferred and the RNCI.
(in thousands) |
Cash paid at acquisition | $ | 34,098 |
Deferred cash consideration | 3,628 |
Estimated fair value of RNCI | 1,559 |
Total fair value of consideration transferred | $ | 39,285 |
Shown below is the current preliminary purchase price allocation, which summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition:
(in thousands) |  |  |  |
Current assets, including cash acquired of $125 |  |  |  | $ | 1,407 |
Intangible assets: |  |  |  |
Product technology |  | $ | 20,770 |  |  |
Trade name |  | 5,802 |  |  |
Total intangible assets |  |  |  | 26,572 |
Goodwill |  |  |  | 17,469 |
Other assets |  |  |  | 705 |
Liabilities: |  |  |  |
Accounts payable and accrued liabilities |  | $ | 332 |  |  |
Deferred revenue |  | 70 |  |  |
Deferred tax liability |  | 6,466 |  |  |
Total liabilities |  |  |  | 6,868 |
Net assets acquired |  |  |  | $ | 39,285 |
The goodwill recognized is attributable to synergies which are expected to enhance and expand the Company’s overall product portfolio and opportunities in new and existing markets, future products that have yet to be determined and Kumovis’s assembled workforce. This goodwill is not expected to be deductible for tax purposes. The Company continues to review the final closing balance sheet of Kumovis and may further adjust the acquisition-date fair values of acquired assets and assumed liabilities based on this review. The Company also continues to review Kumovis’s pre-acquisition tax returns to determine the final tax positions, including net operating losses and any required valuation allowance. The final purchase price allocations will be completed when the Company has finished its valuation activities and the review of Kumovis’s closing balance sheet and the pre-acquisition tax returns. The final allocations could differ materially from the current preliminary allocations. The final allocations may include (1) changes in allocations to acquired intangible assets and goodwill, (2) changes to other assets and liabilities, including but not limited to tax assets and liabilities, inclusive of deferred taxes, and (3) changes to the initial acquisition-date RNCI balance. The estimated useful lives of acquired intangible assets are also preliminary. Titan On April 1, 2022, we completed the acquisition of 100% of Titan Additive LLC ("Titan") for an all-cash purchase price of $39,040. Titan, which is part of the Industrial Solutions segment and reporting unit, is a pellet-based extrusion platform that addresses customer applications requiring large build volumes, superior performance, and improved productivity at significantly lower cost. We believe the acquisition of Titan will open up new markets in the Industrial Solutions segment. The revenue generated from the acquisition date through December 31, 2022 was immaterial and the acquisition’s near-term impact on the Company’s results of operations and cash flows is expected to be dilutive. In addition, the Company incurred $612 of acquisition-related expenses that are reported in Selling, general and administrative expenses in the consolidated statements of operations. We accounted for the acquisition of Titan using the acquisition method, as prescribed by ASC 805. In accordance with valuation methodologies described in ASC 820, the acquired assets and assumed liabilities were recorded at their estimated fair values as of the date of the Titan acquisition. Shown below is the current preliminary purchase price allocation, which summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition:
(in thousands) |  |  |  |
Current assets |  |  |  | $ | 661 |
Intangible assets: |  |  |  |
Product technology |  | $ | 15,940 |  |  |
Trade name |  | 5,580 |  |  |
Total intangible assets |  |  |  | 21,520 |
Goodwill |  |  |  | 17,430 |
Other assets |  |  |  | 68 |
Liabilities: |  |  |  |
Accounts payable and accrued liabilities |  | $ | 229 |  |  |
Deferred revenue |  | 410 |  |  |
Total liabilities |  |  |  | 639 |
Net assets acquired |  |  |  | $ | 39,040 |
The goodwill recognized is attributable to synergies which are expected to enhance and expand the Company’s overall product portfolio and opportunities in new and existing markets, future products that have yet to be determined and Titan’s assembled workforce. This goodwill is expected to be deductible for tax purposes. The Company continues to review the final closing balance sheet of Titan and may further adjust the acquisition-date fair values of acquired assets and assumed liabilities based on this review. The Company also continues to review Titan’s pre-acquisition tax returns in order to determine the final tax positions, including net operating losses and any required valuation allowance. The final purchase price allocations will be completed when the Company has finished its valuation activities and the review of Titan’s closing balance sheet and the pre-acquisition tax returns. The final allocations could differ materially from the current preliminary allocations. The final allocations may include (1) changes in allocations to acquired intangible assets and goodwill and (2) changes to other assets and liabilities, including but not limited to tax assets and liabilities, inclusive of deferred taxes. The estimated useful lives of acquired intangible assets are also preliminary. Dussur In March 2022, we and the Saudi Arabian Industrial Investments Company ("Dussur") signed an agreement to form a joint venture intended to expand the use of additive manufacturing within the Kingdom of Saudi Arabia and surrounding geographies, including the Middle East and North Africa. The joint venture is to enable the development of Saudi Arabia's domestic additive manufacturing production capabilities, consistent with the Kingdom’s ‘Vision 2030,’ which is focused on diversification of the economy and long-term sustainability. Once the joint venture is formed, 3D Systems will own approximately 49% and is committed to an initial investment of about $6,500, of which $3,435 has been deposited in an escrow account and is reported as restricted cash within other assets on the balance sheet as of December 31, 2022. Use of the amount deposited in escrow is limited to funding the Company's initial investment in the joint venture, and such amount is expected to be deposited into a bank account of the joint venture for use in its operations or to pay outstanding liabilities upon legal formation. Additional future investments are contingent upon achievement of certain milestones by the joint venture. The impact on the Company’s financial position, results of operations and cash flows is not expected to be material other than the cash outflow(s) related to the initial and contingent investments. Enhatch In March 2022, we made a $10,000 investment in convertible preferred shares for an approximate 26.6% ownership interest in Enhatch Inc. ("Enhatch"), the developer of the Intelligent Surgery Ecosystem. We simultaneously entered into a supply agreement with Enhatch. We also obtained warrants to purchase additional shares of Enhatch, as well as the right to purchase in the future ("call option") the remaining shares of Enhatch that 3D Systems does not own if certain revenue targets are achieved. The investment, including the embedded call option and the warrants, are recorded in other assets on the consolidated balance sheet. Enhatch's Intelligent Surgery Ecosystem provides technologies which streamline and scale the design and delivery of patient-specific medical devices by automating the process. Incorporating these capabilities into 3D Systems’ workflow for patient-specific solutions, which includes advanced software, expert treatment planning services, custom implants and instrumentation design, and industry-leading production processes, will help more efficiently meet the growing demand for personalized medical devices. As of the investment date, a fair value was determined for each element of the Enhatch transaction, including the convertible preferred shares, inclusive of the embedded call option, and the warrants, for which the total fair value was $10,000. As of the investment date, the fair values of the convertible preferred shares, inclusive of the embedded call option, and warrants were $9,670 and $330, respectively. The convertible preferred shares and call option were recorded at their initial fair value and are subsequently evaluated for impairment or the existence of an orderly and observable transaction indicating that a change in carrying value is appropriate, for which any adjustment will be recorded through the statement of operations. The warrants are marked to market on a quarterly basis, with the changes in fair value recorded through the statement of operations. During the third quarter of 2022, the Company recorded an impairment charge of $2,770 related to the carrying value of the convertible preferred stock, inclusive of the embedded call option, held in Enhatch. This impairment charge was the result of lower than projected revenues recognized by Enhatch during the third quarter of 2022, as well as a reduction to near-term forecasted revenues due to a delay in receiving certain regulatory approvals. In addition, the carrying value of the Enhatch warrants, which are required to be recorded at their fair value as of the end of each quarter, has been reduced from their initial fair value of $330 to $200 during the year ended December 31, 2022. The Company has recorded the impairment charge related to its Enhatch investment, as well as the change in the fair value of the Enhatch warrants, within interest and other income (expense), net on the statement of operations for the year ended December 31, 2022. See Note 21 for additional information related to Enhatch. Volumetric On December 1, 2021, we acquired Volumetric Biotechnologies, Inc. (“Volumetric”) for $40,173, of which $24,814 was paid in cash, and the remainder was paid via the issuance of 720 shares of the Company's common stock having a fair value on the date of issuance of $15,359. We also incurred approximately $1,306 of acquisition-related expenses during the year ended December 31, 2021, which are reported in selling, general and administrative expenses in the consolidated statements of operations. Additional payments of up to $355,000 are possible upon (1) the attainment of seven non-financial milestones, each of which requires achievement prior to either December 31, 2030 or December 31, 2035, and (2) the continued employment of certain key individuals from Volumetric. Any additional payments made will be paid approximately half in cash and half in shares of the Company’s common stock. The additional payments are considered compensation expense, which will be recorded ratably from the time a milestone is deemed probable of achievement through the estimated time of achievement. Any compensation expense recorded will be reversed if the milestone is no longer deemed probable of achievement. As of December 31, 2022 and 2021, one of the seven milestones was considered probable of achievement, resulting in the recognition of $15,918 and $1,326 of expense during the years ended December 31, 2022 and 2021, respectively. The impact of potential share issuances related to the achievement of milestones is not included in dilutive shares for purposes of calculating diluted earnings per share until the milestone is met. Volumetric’s mission is to develop the ability to manufacture human organs using bioprinting methods and the underlying technologies required to create these highly complex biological structures. With this acquisition, 3D Systems seeks to expand our capabilities and capacity in 3D printing related to bio-printing and regenerative medicine. Combining 3D Systems' regenerative medicine group with Volumetric’s highly complementary skill sets of biological expertise and cellular engineering is expected to accelerate our core regenerative medicine strategies which include the bio-printing of human organs, additional non-organ applications and bio-printing technologies for research labs. We accounted for the acquisition of Volumetric using the acquisition method, as prescribed by ASC 805. In accordance with valuation methodologies described in ASC 820, the acquired assets and assumed liabilities were recorded at their estimated fair values as of the date of acquisition. Shown below is the final purchase price allocation, which summarizes the fair values of the acquired assets and liabilities assumed at the date of acquisition:
(in thousands) |  |  |  |
Current assets, including cash acquired of $389 |  |  |  | $ | 3,143 |
Intangible assets: |  |  |  |
Product technology |  | $ | 1,100 |  |  |
Distributor relationship |  | 400 |  |  |
Total intangible assets |  |  |  | 1,500 |
Goodwill |  |  |  | 37,492 |
Other assets |  |  |  | 1,194 |
Liabilities: |  |  |  |
Accounts payable and accrued liabilities |  | $ | 3,156 |  |  |
Total liabilities |  |  |  | 3,156 |
Net assets acquired |  |  |  | $ | 40,173 |
During the year ended December 31, 2022, the Company updated its preliminary valuation of the fair value of acquired assets and assumed liabilities. As a result of the incremental valuation procedures performed during the current year, the preliminary acquisition-date fair value assigned to the acquired intangible assets increased by $861. This increase in fair value was offset by a corresponding decrease in the acquisition-date fair value of goodwill and resulted in an immaterial cumulative catch-up adjustment to amortization expense. The goodwill recognized is attributable to synergies which are expected to enhance and expand the Company’s overall product portfolio and opportunities in new and existing markets, future products that have yet to be determined and Volumetric’s assembled workforce. Goodwill is not expected to be deductible for tax purposes. Volumetric is part of the Healthcare Solutions reporting unit and segment. The acquisition’s impact on the Company's results of operations and cash flows has been dilutive. Oqton On November 1, 2021, we acquired Oqton, Inc. (“Oqton”) for $187,775, of which $107,078 was paid in cash, and the remainder was paid via the issuance of 2,553 shares of the Company’s common stock having a fair value at the date of issuance of $80,697. We also incurred approximately $1,780 of acquisition related expenses during the year ended December 31, 2021, which are reported in selling, general and administrative expenses in the consolidated statements of operations. Oqton is a software company that creates an intelligent, cloud-based Manufacturing Operating System ("MOS") platform tailored for flexible production environments that increasingly utilize a range of advanced manufacturing and automation technologies, including additive manufacturing solutions, in their production workflows. The cloud-based solution leverages the Industrial Internet of Things, artificial intelligence, and machine learning technologies to deliver a solution for customers to automate their digital manufacturing workflows, scale their operations and enhance their competitive position. The Oqton acquisition will allow the Company to expand its existing additive manufacturing software suite to the entire additive industry. We accounted for the acquisition of Oqton using the acquisition method, as prescribed by ASC 805. In accordance with valuation methodologies described in ASC 820, the acquired assets and assumed liabilities were recorded at their estimated fair values as of the date of the Oqton acquisition. Shown below is the final purchase price allocation, which summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition:
(in thousands) |  |  |  |
Current assets, including cash acquired of $7,603 |  |  |  | $ | 8,344 |
Intangible assets: |  |  |  |
Product technology |  | $ | 12,600 |  |  |
Trade name |  | 7,300 |  |  |
Total intangible assets |  |  |  | 19,900 |
Goodwill |  |  |  | 165,904 |
Other assets |  |  |  | 760 |
Liabilities: |  |  |  |
Accounts payable and accrued liabilities |  | $ | 6,643 |  |  |
Deferred revenue |  | 490 |  |  |
Total liabilities |  |  |  | 7,133 |
Net assets acquired |  |  |  | $ | 187,775 |
During the year ended December 31, 2022, the Company updated its preliminary valuation of the fair value of acquired assets and assumed liabilities. As a result of the incremental valuation procedures performed during the current year, the preliminary acquisition-date fair value assigned to the acquired product technology and trade name increased by $1,400 and $500, respectively. These increases in fair value were primarily offset by a corresponding decrease in the acquisition-date fair value of goodwill and resulted in an immaterial cumulative catch-up adjustment to amortization expense. The goodwill recognized is attributable to synergies which are expected to enhance and expand the Company’s overall product portfolio and opportunities in new and existing markets, future products that have yet to be determined and Oqton’s assembled workforce. Goodwill is non-deductible for tax purposes. Oqton's operating results are reported in the Industrial Solutions segment. The acquisition’s impact on the Company’s results of operations and cash flows has been dilutive. Other In May 2021, we purchased Allevi, Inc. ("Allevi") to expand regenerative medicine initiatives into medical and pharmaceutical research and development laboratories. Additionally, in June 2021, we closed the acquisition of a German software firm, Additive Work s GmbH (“Additive”). Additive expands the simulation capabilities for rapid optimization of industrial-scale 3D printing processes. The purchase price for both acquisitions, individually and combined, as well as the impacts to the Company’s financial position, results of operations and cash flows, are not material. Acquisitions of Non-controlling Interests We own 100% of the capital and voting rights of Robtec, a service bureau and distributor of 3D printing and scanning products in Brazil. Approximately 70% of the capital and voting rights of Robtec were acquired on November 25, 2014. On January 7, 2020, we made a payment equal to the redemption price of $10,000 and acquired the remaining 30% of the capital and voting rights. As of December 31, 2018, the Company owned approximately 70% of the capital and voting rights of Easyway, a service bureau and distributor of 3D printing and scanning products in China. The remaining 30% of the capital and voting rights of Easyway were acquired on January 21, 2019 for $13,500, which has been paid in installments. Of the total installment payments made, $2,300, $6,300, and $2,500 were paid during the years ended December 31, 2022, 2021 and 2020, respectively. As of December 31, 2022, there are no more installments due.

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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 https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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