XML 21 R10.htm IDEA: XBRL DOCUMENT
v3.22.2.2

Acquisitions | 9 Months Ended
--- | ---
Sep. 30, 2022
Acquisitions |
Acquisitions | Note 4. Acquisitions On September 8, 2021, we entered into an Asset Purchase Agreement (“AffloVest APA”) to acquire the AffloVest airway clearance business from IBC. Under the terms of the AffloVest APA, we agreed to pay IBC a total of up to $100.0 million for the purchase of substantially all of the assets related to its branded high frequency chest wall oscillation vest therapy business, other than specifically identified excluded assets. We acquired AffloVest to further expand our position as a leader in treating patients with underserved chronic conditions in the home. The acquired assets included inventory, tooling, intellectual property, permits and approvals, data and records, and customer and supplier information. At closing, $80.0 million of the purchase price was paid, of which a total of $0.5 million was deposited into an escrow account at closing for purposes of satisfying certain post-closing purchase price adjustments and indemnification claims. Subsequent to closing, $0.2 million was returned to us as a result of working capital adjustments. The AffloVest acquisition was funded through a combination of cash on hand and proceeds from borrowings. ​ On November 4, 2022, we entered into an Amendment to the AffloVest APA (the “APA Amendment”) with IBC, which modifies the terms of the earn-out arrangement under the AffloVest APA, as follows: ​
| ● | Initial Earn-Out: The AffloVest APA provided for an initial earn-out equal to 1.5 times the amount by which the AffloVest U.S. revenues in the period from October 1, 2021 to September 30, 2022 (the “Initial Earn-Out Period”) exceed a specified amount; provided that in no event will the payment exceed $10.0 million.
| o | The APA Amendment provides that the calculated amount of the initial earn-out payment is $10.0 million, of which the Company will pay $5.0 million on or before November 28, 2022, and of which the Company will pay $5.0 million, plus an imputed interest payment of $250,000, on or before May 26, 2023.
​
| ● | Second Earn-Out: The AffloVest APA provided for a second earn-out equal to 1.5 times the amount by which the AffloVest U.S. revenues in the period from October 1, 2022 to September 30, 2023 exceed the revenues recognized during the Initial Earn-Out Period; provided that in no event will the payment exceed $10.0 million.
| o | The APA Amendment changes the 1.5 times multiplier to 3.0 times, but still provides that in no event will the second earn-out payment exceed $10.0 million.
​ The fair value of the earn-out as of the acquisition date was $6.4 million. The fair value of the earn-out, reflecting management’s estimate of the likelihood of achieving these targets, was determined by employing a Monte Carlo Simulation model. This amount and the current versus non-current allocation is remeasured at the end of each reporting period until the payment requirement ends, with any adjustments reported in income from operations (see Note 15 – “Fair Value Measurements”). ​ On the date of AffloVest Acquisition, we allocated the assets acquired based on an estimate of their fair values. The following table summarizes the purchase price allocation: ​
​ | ​ | ​ | ​
(In millions) |  | Allocated Fair Value
Inventories | ​ | $ | 1.6
Property and equipment(1) | ​ | ​ | —
Intangible assets | ​ | ​ | 53.5
Goodwill | ​ | ​ | 31.1
Purchase price | ​ | $ | 86.2
(1) | The purchase price included less than $0.1 million of property and equipment.
The goodwill reflects expected synergies of combining the acquired products and customer information with our existing operations, and is deductible for tax purposes over 15 years. ​ ​ ​ ​ The following table reflects the allocation of the purchase price to the acquired intangible assets and related estimated useful lives:
​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​
(In millions) |  | Allocated Fair Value | ​ | Estimated Useful Life
Customer relationships | ​ | $ | 31.0 | ​ | 13 years
Developed technology | ​ | ​ | 13.0 | ​ | 11 years
Tradenames | ​ |  | 9.5 | ​ | Indefinite
Total intangible assets | ​ | $ | 53.5 | ​ | ​
​ The weighted-average amortization period of the acquired definite-lived intangible assets was 12.3 years. ​ The fair market valuations associated with the assets acquired fall within Level 3 of the fair value hierarchy, due to the use of significant unobservable inputs to determine fair value. The fair value measurements were calculated using unobservable inputs, primarily using the income approach, specifically the discounted cash flow method. The amount and timing of future cash flows within our analysis was based on our due diligence models, most recent operational budgets, long-range strategic plans and other estimates.

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

X
- Definition The entire disclosure for asset acquisition. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 50 -Section 15 -Paragraph 3 -URI https://asc.fasb.org/extlink&oid=6911878&loc=d3e8732-128492 + Details
Name: | us-gaap_AssetAcquisitionTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration